throbber
Case 6:21-cv-00898-ADA Document 141 Filed 08/30/23 Page 1 of 20
`
`
`
`IN THE UNITED STATES DISTRICT COURT
`WESTERN DISTRICT OF TEXAS
`WACO DIVISION
`
`
`
`
`
`Civil Action No. 6:21-cv-00898-ADA-DTG
`
`
`JURY TRIAL DEMANDED
`
`
`
`v.
`
`Defendants.
`
`ALMONDNET, INC.,
`
`
`Plaintiff,
`
`
`AMAZON.COM, INC., AMAZON.COM
`SERVICES LLC, and AMAZON WEB
`SERVICES, INC.,
`
`
`
`
`
`
`
`
`
`
`
`AMAZON’S MOTION TO EXCLUDE THE UNRELIABLE TESTIMONY OF
`ALMONDNET’S DAMAGES EXPERT JIM W. BERGMAN
`
`
`
`

`

`Case 6:21-cv-00898-ADA Document 141 Filed 08/30/23 Page 2 of 20
`
`TABLE OF CONTENTS
`
`
`
`Page
`
`I.
`
`FACTUAL BACKGROUND ..............................................................................................2
`
`A.
`
`B.
`
`C.
`
`D.
`
`The patents-in-suit claim particular business methods relating to serving
`off-site advertisements. ............................................................................................2
`
`Amazon’s sophisticated ad platform uses real-time bidding, machine
`learning, and Amazon’s extensive customer data to help advertisers and
`publishers efficiently deliver targeted advertisements. ............................................3
`
`Mr. Bergman’s damages model captures value from unclaimed features. ..............5
`
`Mr. Bergman estimates an arbitrary bargaining split. ..............................................8
`
`II.
`
`MR. BERGMAN’S UNRELIABLE TESTIMONY SHOULD BE EXCLUDED ..............9
`
`A.
`
`B.
`
`Mr. Bergman’s failure to apportion value to the claimed inventions
`renders his testimony unreliable. ...........................................................................10
`
`Mr. Bergman’s arbitrary bargaining split renders his opinions unreliable. ...........12
`
`III.
`
`CONCLUSION ..................................................................................................................14
`
`
`
`
`
`i
`
`

`

`Case 6:21-cv-00898-ADA Document 141 Filed 08/30/23 Page 3 of 20
`
`TABLE OF AUTHORITIES
`
`
`
`Page(s)
`
`CASES
`
`Bayer HealthCare LLC v. Baxalta Inc.,
`No. 16-cv-1122-RGA, 2019 WL 330149 (D. Del. Jan. 25, 2019).....................................12, 13
`
`BMC Software, Inc. v. ServiceNow, Inc.,
`No. 2:14-cv-903-JRG, Dkt. No. 328 (E.D. Tex. Feb. 1, 2016)................................................13
`
`CSIRO v. Cisco Sys.,
`809 F.3d 1295 (Fed. Cir. 2015)................................................................................................10
`
`Daubert v. Merrell Dow Pharms., Inc.,
`509 U.S. 579 (1993) .......................................................................................................2, 13, 14
`
`Ericsson, Inc. v. D-Link Sys.,
`773 F.3d 1201 (Fed. Cir. 2014)..........................................................................................10, 11
`
`Finjan, Inc. v. Blue Coat Sys., Inc.,
`879 F.3d 1299 (Fed. Cir. 2018)................................................................................................11
`
`Kumho Tire Co. v. Carmichael,
`526 U.S. 137 (1999) ...................................................................................................................9
`
`LaserDynamics, Inc. v. Quanta Comput., Inc.,
`694 F.3d 51 (Fed. Cir. 2012)........................................................................................12, 13, 14
`
`Power Integrations, Inc. v. Fairchild Semiconductor Int’l, Inc.,
`711 F.3d 1348 (Fed. Cir. 2013)..................................................................................................9
`
`Uniloc USA, Inc. v. Microsoft Corp.,
`632 F.3d 1292 (Fed. Cir. 2011)....................................................................................12, 13, 14
`
`VirnetX, Inc. v. Cisco Sys., Inc.,
`767 F.3d 1308 (Fed. Cir. 2014)................................................................................................10
`
`OTHER AUTHORITIES
`
`Federal Rule of Evidence 702 ....................................................................................................9, 14
`
`
`
`ii
`
`

`

`Case 6:21-cv-00898-ADA Document 141 Filed 08/30/23 Page 4 of 20
`Case 6:21-cv-00898-ADA Document 141 Filed 08/30/23 Page 4 of 20
`
`TABLE OF EXHIBITS
`
`Exhibit No.|Description
`
`2780
`
`2794
`
`3557
`
`3612
`
`3669
`
`
`
`Expert Report of Dr. Eric Koskinen Regarding Infringement, served June 16,
`Ex.A|2023
`Ex. B
`Rebuttal Expert Report of Dr. Henry Houh, served July 28, 223
`Ex. C
`Expert Report of Jim W. Bergman, served June 16, 2023
`Ex.D
`Excerpted transcript from the deposition of Jim W. Bergman, taken August 9,
`‘
`2023
`Ex. E
`Excerpted transcript from the deposition of Eric Koskinen, taken August 15,
`‘
`2023
`Ex. F
`:
`Ex.G
`,
`Ex.H
`*
`Ex I
`.
`Ex. J
`‘
`Ex.K
`‘
`Ex. L
`.
`Ex.M
`
`
`
`, produced at ALMONDNET-AMAZON-0002775-
`
`, produced at ALMONDNET-AMAZON-0002790-
`
`, produced at ALMONDNET-AMAZON-0003547-
`
`, produced at ALMONDNET-AMAZON-0003608-
`
`, produced at ALMONDNET-AMAZON-0003665-
`
`, produced at ALMONDNET-AMAZON-0046010-
`
`46015
`Plaintiffs’ Fourth Supplemental Objections and Responses to Defendants’
`First Set of Interrogatories
`(Nos. 1 and 9), served April 11, 2023
`Excerpted transcript from the deposition of Roy Shkedi, taken March 21,
`2023
`
`ill
`
`

`

`Case 6:21-cv-00898-ADA Document 141 Filed 08/30/23 Page 5 of 20
`
`
`
`The Court should exclude the unreliable testimony of AlmondNet’s damages expert, Jim
`
`Bergman, because his analysis includes two fatal errors. First, Mr. Bergman does not perform an
`
`appropriate apportionment analysis to isolate the incremental value of the claimed inventions—
`
`i.e., the specific value Amazon purportedly derives from the asserted claims. Indeed, though Mr.
`
`Bergman’s task is ultimately to value the asserted claims, he admits he did not even consider the
`
`claims, or what they actually require, in performing his analysis. He also neither asked for nor
`
`received an opinion from any of AlmondNet’s technical experts regarding which of the hundreds
`
`of features of Amazon’s accused advertising system fall within the scope of the asserted claims
`
`under AlmondNet’s infringement theory. Instead, he purports to value a vague and high-level
`
`characterization of the purported “benefits” of the claims—i.e., the functionalities the patents
`
`purportedly enable. As a result, by Mr. Bergman’s own admission, his damages estimate captures
`
`value from numerous unpatented features—such as real-time bidding, machine-learning
`
`algorithms, and Amazon’s data regarding its customer’s behavior (“Amazon first-party data”)—
`
`that AlmondNet’s technical expert concedes are neither disclosed in nor enabled by the patents.
`
`Mr. Bergman’s damages estimate thus cannot reflect the incremental value provided by the asserted
`
`claims, as Federal Circuit law requires, and it must be excluded.
`
`Second, Mr. Bergman estimates an arbitrary “bargaining split,” under which AlmondNet
`
`would receive between 35% and 50% of the accused revenue. The only “support” he provides for
`
`this bargaining split is (1)
`
`; and (2) Mr. Bergman’s experience,
`
`
`
`
`
`.
`
`Mr. Bergman’s opinion is unsupported, arbitrary, and unreliable: the only quantitative evidence
`
`1
`
`

`

`Case 6:21-cv-00898-ADA Document 141 Filed 08/30/23 Page 6 of 20
`
`
`
`he cites is irrelevant on its face, and his “experience”
`
`
`
`cannot be meaningfully tested or challenged. Mr. Bergman should not be permitted to present
`
`these opinions at trial; the Court should exercise its gatekeeping responsibilities under Daubert
`
`and exclude his testimony in its entirety.
`
`I.
`
`FACTUAL BACKGROUND
`A.
`
`The patents-in-suit claim particular business methods relating to serving off-
`site advertisements.
`
`The three patents-in-suit generally relate to business arrangements used in targeted
`
`advertising on the Internet. (U.S. Patent Nos. 7,822,639 (“the ’639 patent”); 8,244,586 (“the ’586
`
`patent”); 8,671,139 (“the ’139 patent”).) The’639 patent and ’586 patent generally provide a
`
`business solution to the problem of saturation—when a first website cannot accommodate
`
`additional advertisements and overflow ads for a particular visitor are instead displayed on a
`
`second website. The asserted claims of the ’639 and ’586 patents1 generally require a process
`
`wherein a user that visits a first website is tagged (i.e., using a cookie), and a second website with
`
`capacity displays a targeted ad upon recognizing the tagged user. (See ’639 patent, claim 24; ’586
`
`patent, claim 1). The first and second websites share the advertiser revenue from the display of
`
`the targeted ad on the second website. (Id.) The ’139 patent generally discloses an “automatic
`
`system” for calculating profit for an ad placement and placing ads only when it is profitable. The
`
`asserted claims of the ’139 patent2 require a process wherein an attribute about an electronic visitor
`
`to a website is recorded, and that attribute is used to send targeted ads to the visitor when they
`
`access the second website provided a condition—e.g., the profitability of displaying the ad—is
`
`met. (See ’139 patent, claim 37.) Thus, each of the patents-in-suit generally requires collecting
`
`
`1 AlmondNet accuses Amazon of infringing claims 24, 29, 31, 32 and 44 of U.S. Patent No.
`7,822,639 and claims 1, 3, 4, 11–13, 16, 17, and 20 of U.S. Patent No. 8,244,586..
`2 AlmondNet accuses Amazon of infringing claims 37, 42, 43, 45, and 48 of the ’139 patent.
`
`2
`
`

`

`Case 6:21-cv-00898-ADA Document 141 Filed 08/30/23 Page 7 of 20
`
`
`
`information about and tagging a visitor to a first website and recognizing and presenting an ad to
`
`the user on a second website. But the patents do not claim or describe any new solution for tagging
`
`or identifying users, targeting users with advertisements, or delivering advertisements for display
`
`on websites.
`
`B.
`
`Amazon’s sophisticated ad platform uses real-time bidding, machine
`learning, and Amazon’s extensive customer data to help advertisers and
`publishers efficiently deliver targeted advertisements.
`
`AlmondNet accuses certain systems of the Amazon Ads Platform that assist advertisers
`
`who want to display targeted advertisements on Internet sites operated by third party publishers
`
`through real-time bidding. (Ex. A3 (Koskinen Rep.) ¶¶ 43-48, 300.)
`
`
`
`
`
`
`
`
`
`
`
`
`
`Real-time bidding (RTB) is an automated, programmatic way for advertisers to bid for
`
`advertisement opportunities through a real-time auction that runs when a visitor arrives at a
`
`website. (Ex. B (Houh Reb. Rep.) ¶ 65). In a simplified real-world example, a publisher’s website
`
`like cnn.com may have space to display a banner advertisement. (Id. ¶ 66.) When the user visits
`
`cnn.com, the opportunity to fill the ad spot with an ad to that user triggers a bid request—an
`
`opportunity for advertisers to submit bids to a real-time auction. (Id.) The winner of the auction
`
`then has their ad shown to the user. (Id.) The entire process occurs within around 100
`
`
`3 Each Exhibit referenced herein is attached to the Declaration of Ravi R. Ranganath submitted
`herewith.
`
`3
`
`

`

`Case 6:21-cv-00898-ADA Document 141 Filed 08/30/23 Page 8 of 20
`
`
`
`milliseconds. (Id.)
`
`As real-time bidding has grown in sophistication and complexity, large internet companies
`
`like Google, Meta, Amazon, and others have leveraged their own extensive, high-quality data and
`
`expertise in machine learning and artificial intelligence to optimize real-time bids. (Id. ¶ 81; Ex.
`
`C (Bergman Rep.) ¶ 118.)
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`Amazon’s bid optimization systems maximize
`
`advertisers’ budgets while improving the performance of the advertisements based on an
`
`advertiser’s campaign goal (e.g., increased reach, clicks, views, subsequent purchases, and other
`
`actions as a result of the ad). (Id.; see generally id. ¶¶ 148-181
`
`
`
`4
`
`

`

`Case 6:21-cv-00898-ADA Document 141 Filed 08/30/23 Page 9 of 20
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`C. Mr. Bergman’s damages model captures value from unclaimed features.
`
`Mr. Bergman does not account for the sophisticated, unclaimed features employed by
`
`Amazon’s advertising platform in his damages analysis.
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`Notably, Mr. Bergman made no attempt to determine if those features were attributable in
`
`5
`
`

`

`Case 6:21-cv-00898-ADA Document 141 Filed 08/30/23 Page 10 of 20
`
`
`
`any way to the asserted claims.4
`
`
`
`
`
`
`
`
`
`
`
`Nor did Mr. Bergman ask AlmondNet’s technical expert, Dr. Koskinen, for an opinion with
`
`respect to
`
`
`
`In fact, if Mr. Bergman had asked Dr. Koskinen, he would have learned
`
`
`4 Mr. Bergman did concede that
` (Ex. D (Bergman Dep.) at 78:21–79:6 (emphasis added).)
`
`6
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`

`

`Case 6:21-cv-00898-ADA Document 141 Filed 08/30/23 Page 11 of 20
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`
`Mr. Bergman also made no attempt to quantify the value Amazon derives from real-time
`
`bidding, machine learning, or Amazon’s first-party data.
`
`
`
`
`
`
`
`
`
` Thus, Mr.
`
`Bergman does not, and cannot, remove the value of these unclaimed features from his royalty
`
`calculation. (See Ex. D (Bergman Dep) at 85:8–13
`
`
`
`
`
`
`
`Although he does not excise the value of unpatented features from his damages calculation,
`
`Mr. Bergman does make two adjustments to Amazon’s advertising revenue which he labels
`
`“apportionment” to arrive at what he claims is the “incremental benefit” from the asserted claims.
`
`First, he attempts to reduce
`
`
`
`(Ex. C (Bergman Rep.) ¶¶ 238, 253–54.) Next, Mr. Bergman claims to
`
`
`
`7
`
`

`

`Case 6:21-cv-00898-ADA Document 141 Filed 08/30/23 Page 12 of 20
`
`
`
` But neither of these purported “apportionment”
`
`steps seeks to distinguish value from claimed versus unclaimed features. His royalty base—
`
`—is what Mr. Bergman asserts is
`
`
`
`
`
` (Id. ¶ 268.) In other words, Mr. Bergman’s final damages
`
`calculation captures revenue that advertisers pay to Amazon—in the form of first-party targeting
`
`fees—to utilize Amazon’s vast user dataset and sophisticated machine-learning algorithms that
`
`optimize bids to maximize performance and value.
`
`D. Mr. Bergman estimates an arbitrary bargaining split.
`
`Once Mr. Bergman determines what he claims is the incremental benefit from the asserted
`
`claims, he opines that AlmondNet would receive between 35% and 50% of that value. (Ex. C
`
`(Bergman Rep.) ¶¶ 419, 433–34; Ex. D (Bergman Dep.) at 162:16–25.)
`
`Mr. Bergman provides two bases for this estimated bargaining split. First, Mr. Bergman
`
`relies on his experience
`
` (Ex. C ¶ 420.) Despite purporting to rely on these
`
`. (Ex. D (Bergman Dep.) at 162:5–
`
`
`
`
`
`15.) Second, Mr. Bergman relies on a handful of
`
` entered into
`
`by non-party
`
`, (Ex. D (Bergman Dep) at 165:9–16), and various third parties, (Ex. C
`
`(Bergman Rep.) ¶¶ 428–29); Exs. F-K (
`
` ).)
`
`
`
`
`
`
`
`8
`
`
`
`
`
`
`
`
`
`
`
`
`
`

`

`Case 6:21-cv-00898-ADA Document 141 Filed 08/30/23 Page 13 of 20
`
`
`
` Nor does Mr. Bergman rely on an opinion of a technical expert to determine that the technology
`
`at issue
`
` is comparable to the accused Amazon products. (See Ex. C
`
`(Bergman Rep.) ¶¶ 426–33.) They are obviously not comparable:
`
` (Id. ¶ 126; Ex. M (Shkedi Mar. 21, 2023 30(b)(6) Dep.) at 132:21–133:1
`
`
`
`
`
`
`
`
`
`); Exs. F-K.) Moreover, Mr. Bergman
`
`concedes that
`
` would not have been part of the hypothetical negotiation between
`
`AlmondNet and Amazon that would have occurred in or around August 2012—because
`
`
`
`did not own, and has never owned, any of the asserted patents. (Ex. D at 174:12–16; Ex. C
`
`(Bergman Rep.) ¶ 436.)
`
`In other words, the only quantitative evidence supporting Mr. Bergman’s incremental
`
`benefit split comes from
`
`agreements entered into between non-parties for noncomparable
`
`technology dated
`
` after the hypothetical negotiation.
`
`II. MR. BERGMAN’S UNRELIABLE TESTIMONY SHOULD BE EXCLUDED
`
`Under Federal Rule of Evidence 702, expert testimony must “be the product of reliable
`
`principles and methods applied to sufficient facts or data.” Power Integrations, Inc. v. Fairchild
`
`Semiconductor Int’l, Inc., 711 F.3d 1348, 1373 (Fed. Cir. 2013). This standard places a special
`
`obligation upon the court to act as a “gatekeeper” and ensure that expert testimony “is not only
`
`relevant, but reliable.” Kumho Tire Co. v. Carmichael, 526 U.S. 137, 147 (1999) (quoting Daubert
`
`v. Merrell Dow Pharms., Inc., 509 U.S. 579, 589 (1993)). Mr. Bergman’s failure to apportion his
`
`royalty analysis to the incremental value of the claimed inventions and his arbitrary bargaining
`
`9
`
`

`

`Case 6:21-cv-00898-ADA Document 141 Filed 08/30/23 Page 14 of 20
`
`
`
`split each independently render his damages opinions both irrelevant and unreliable, and warrant
`
`excluding the entirety of his testimony.
`
`A. Mr. Bergman’s failure to apportion value to the claimed inventions renders
`his testimony unreliable.
`
`“[A] patentee ‘must in every case give evidence tending to separate or apportion the
`
`defendant’s profits and the patentee’s damages between the patented feature and the unpatented
`
`features . . . [unless] the entire value of the whole machine, as a marketable article, is properly and
`
`legally attributable to the patented feature.” VirnetX, Inc. v. Cisco Sys., Inc., 767 F.3d 1308, 1326
`
`(Fed. Cir. 2014) (quoting Garretson v. Clark, 111 U.S. 120, 121 (1884)). Proof of damages must
`
`be carefully tied to “the claimed invention’s footprint in the market place.” Ericsson, Inc. v. D-
`
`Link Sys., 773 F.3d 1201, 1226 (Fed. Cir. 2014) (“The essential requirement is that the ultimate
`
`reasonable royalty award must be based on the incremental value that the patented invention adds
`
`to the end product.”); CSIRO v. Cisco Sys., 809 F.3d 1295 (Fed. Cir. 2015) (“[D]amages awarded
`
`for patent infringement must reflect the value attributable to the infringing features of the product,
`
`and no more”); VirnetX, 767 F.3d at 1326 (“No matter what the form of the royalty, a patentee
`
`must take care to seek only those damages attributable to the infringing features.”).
`
`Despite conceding
`
`Bergman fails to do so. He acknowledges
`
`
`
` Mr.
`
`
`
`, (id. at 70:15–17; 77:20–78:6; 82:2–9; 95:17–96:14; 105:18–25), and that he never
`
`, (id. at 88:2–12; 104:24–105:9; 115:14–21.)
`
`
`
`Lacking the bare minimum information required to apportion between unclaimed and claimed
`
`features, Mr. Bergman takes no steps to do so, or even assign value to the numerous unclaimed
`
`10
`
`

`

`Case 6:21-cv-00898-ADA Document 141 Filed 08/30/23 Page 15 of 20
`Case 6:21-cv-00898-ADA Document 141 Filed 08/30/23 Page 15 of 20
`
`features—such as real-time bidding, machine learning, and Amazon’s first-party data—in the
`
`accused system.(Jd. at 83:3-10; 91:20-92:2: 100:1-6.) Mr. Bergmanadmits|i
`
`i. at 7526-11; 77:11-18; 78:18-20; 81:19-25; 82:11-15; 88:21-89:3; 91:8-13;
`
`105:11—17; 106:12—107:9; accord Ex. E (Koskinen Dep.) at 66:3-67:12.)
`
`Mr. Bergman’s only explanation for his failure to consider the value contributed by these
`
`citcl es5s
`I> (22:22Dep) at 1172-
`
`10.) In other words, Mr. Bergman appearsto be estimating “hold-up” damages. But this analysis
`
`violates black-letter Federal Circuit law, which provides “whether viewed as valuable, important,
`
`or even essential, the patented feature must be separated.” Finjan, Inc. v. Blue Coat Sys., Inc., 879
`
`F.3d 1299, 1311 (Fed. Cir. 2018) (emphases added).
`
`In other words, even if Mr. Bergman is
`
`I5 2220 separate the valve fom
`
`the claimed technology from the unclaimed technology and other value provided by Amazon—
`
`i.e., Amazon’s first-party data and machine learning algorithms which optimize advertising bids
`
`used in the real-time-bidding process. His failure to do so renders his opinion unreliable and
`
`inadmissible. Ericsson, 773 F.3d at 1226 (“[T]he ultimate reasonable royalty award must be based
`
`on the incrementalvaluethat the patented invention adds to the end product.”).®
`
`> As explained in Amazon’s concurrently filed Motion for Summary Judgment of
`Unpatentability Under § 101, AlmondNet’s incredibly broad reading of these claims renders them
`patent-ineligible.
`® Even Mr. Bergman’s assumption
`
`1s unsupported,
`by a technical expert opinion
`
`or otherwise.
`
`11
`
`

`

`Case 6:21-cv-00898-ADA Document 141 Filed 08/30/23 Page 16 of 20
`
`
`
`The Court should also reject Mr. Bergman’s post-hoc explanation that he apportioned
`
`between claimed and unclaimed features through his bargaining split, for at least two reasons. (Ex.
`
`D (Bergman Dep.) at 92:10–21.) First, he estimates and applies his bargaining split only after he
`
`claims to identify the incremental benefit from the claimed inventions. (Ex. C (Bergman Rep.) ¶
`
`268 (identifying the “incremental benefit”; ¶¶ 417–418 (bargaining split)).) Thus, the bargaining
`
`split cannot itself be a form of apportionment. Second, as explained below, Mr. Bergman’s
`
`bargaining split is also arbitrary and unreliable, and should also be excluded for the reasons below.
`
`B. Mr. Bergman’s arbitrary bargaining split renders his opinions unreliable.
`
`Courts routinely exclude expert testimony based on arbitrary and unsupported profit splits.
`
`Uniloc USA, Inc. v. Microsoft Corp., 632 F.3d 1292, 1317-18 (Fed. Cir. 2011) (finding a 25/75
`
`profit split “arbitrary” and “fundamentally flawed”); LaserDynamics, Inc. v. Quanta Comput., Inc.,
`
`694 F.3d 51, 69 (Fed. Cir. 2012) (finding a 33/67 profit split arbitrary and “alone justify[ing]
`
`excluding” expert’s testimony); Bayer HealthCare LLC v. Baxalta Inc., No. 16-cv-1122-RGA,
`
`2019 WL 330149, *6 (D. Del. Jan. 25, 2019) (similar). This Court should do the same.
`
`Here, Mr. Bergman’s opinion that Amazon and AlmondNet would agree that AlmondNet
`
`would take
`
`of the “incremental benefit” from the patented technology is unsupported
`
`and arbitrary. The only record evidence he relies on, and in fact the basis for his
`
`numbers, are
`
` between non-party
`
` and other non-parties
`
`(Exs. F-K.)
`
`
`
`
`
`
`
`
`
` (Id.; Ex. C (Bergman Rep.) ¶¶ 126, 426–33; Ex. D (Bergman Dep) at 165:9–16; id. at
`
`166:12–15; Ex. M (Shkedi Mar. 21 2023 30(b)(6) Dep.) at 132:21–133:1.) Nor does Mr. Bergman
`
`rely on any opinion that the technology at issue
`
` are comparable in any
`
`way to the accused Amazon technology. (See Ex. C (Bergman Rep.) ¶¶ 426–33 (
`
`
`
`12
`
`

`

`Case 6:21-cv-00898-ADA Document 141 Filed 08/30/23 Page 17 of 20
`
`
`
`).) Moreover,
`
`not only is not a party to this case and did not own any of the
`
`patents-in-suit as of the date of the hypothetical negotiation,
`
`.
`
`(Ex. C (Bergman Rep.) ¶¶ 426–33; Ex. D (Bergman Dep) at 166:12–15; Ex. L at 7-8.) Thus, no
`
`reliable or relevant record evidence supports Mr. Bergman’s bargaining split.
`
`Mr. Bergman alternatively purports to rely on his own personal experience
`
`
`
`. (Ex. C (Bergman Rep.) ¶
`
`420; Ex. D (Bergman Dep.) at 162:5–15.) But these sorts of opinions are “nothing more than ipse
`
`dixit statements” because they “are not based on reliable principles and methods that can be
`
`accurately reproduced, examined, and challenged.” BMC Software, Inc. v. ServiceNow, Inc., No.
`
`2:14-cv-903-JRG, Dkt. No. 328 at 3–4 (E.D. Tex. Feb. 1, 2016).
`
`Stripped of this unreliable evidence, Mr. Bergman’s bargaining split is as unsupported and
`
`arbitrary as the “25 percent rule of thumb” the Federal Circuit has repeatedly found “fundamentally
`
`flawed” and inadmissible under Daubert and the Federal Rules of Evidence. The “25 percent rule
`
`of thumb” is a generic approach used approximate the reasonable royalty rate a manufacturer of a
`
`patented product would be willing to offer to pay to a patentee during a hypothetical negotiation.
`
`Uniloc, 632 F.3d at 1312. In Uniloc v. Microsoft, plaintiff’s expert using the “25 percent rule of
`
`thumb,” a generic principle suggesting that a licensee would pay 25% of its profits as a royalty,
`
`concluded that “25% of the value of the product would go to the patent owner and the other 75%
`
`would remain with Microsoft, resulting in a baseline royalty rate of $2.50 per license issued.” Id.
`
`at 1311. Finding that there must be a “basis in fact to associate the royalty rates . . . to the particular
`
`hypothetical negotiation at issue in the case,” the Federal Circuit rejected the use of the “25 percent
`
`rule of thumb” as “unrelated to the facts of the case,” “arbitrary,” and “fundamentally flawed,”
`
`and confirmed inadmissibility of the expert opinions under Daubert. Id. at 1312, 1318. Since
`
`13
`
`

`

`Case 6:21-cv-00898-ADA Document 141 Filed 08/30/23 Page 18 of 20
`
`
`
`Uniloc, the Federal Circuit and numerous district courts have excluded expert opinions relying on
`
`similarly arbitrary and unsupported bargaining splits, like the one Mr. Bergman employs in this
`
`case. For example, in LaserDynamics, the patent owner’s expert applied a one-third profit split
`
`but offered no analysis to support it. LaserDynamics, 694 F.3d at 69. The Federal Circuit found
`
`this profit split “echo[ed] the kind of arbitrariness of the ‘25% Rule,’” and would “alone justify
`
`excluding” the expert’s opinion. Id.
`
`Under Uniloc and its progeny, Mr. Bergman’s bargaining split opinions are arbitrary,
`
`unsupported, and inadmissible under Daubert. Mr. Bergman failed to tie his
`
`bargaining
`
`split range to any reliable evidence of record. The Court should therefore exclude his testimony
`
`under Fed. R. Evid. 702 for this reason alone.
`
`III. CONCLUSION
`
`As Mr. Bergman failed to apportion value derived from the accused products to the claimed
`
`inventions, and as he relies on an arbitrary and unsupported bargaining split, his opinions should
`
`be struck in their entirety.
`
`
`
`
`
`14
`
`

`

`Case 6:21-cv-00898-ADA Document 141 Filed 08/30/23 Page 19 of 20
`
`
`
`Dated: August 23, 2023
`
`
`
`
`Of Counsel:
`
`Deron R. Dacus (TX Bar #00790553)
`ddacus@dacusfirm.com
`THE DACUS FIRM, P.C.
`821 ESE Loop 323, Suite 430
`Tyler, TX 75701
`Tel: (903) 705-1117
`Fax: (903) 581-2543
`
`
` Respectfully submitted,
`
`
`
`By: /s/ Ravi R. Ranganath
`J. David Hadden (CA Bar No. 176148)
`Email: dhadden@fenwick.com
`Saina S. Shamilov (CA Bar No. 215636)
`Email: sshamilov@fenwick.com
`Ravi R. Ranganath (CA Bar No. 272981)
`Email: rranganath@fenwick.com
`Johnson K. Kuncheria (TX Bar No. 24070092)
`Email: jkuncheria@fenwick.com
`Johnathan L. Chai (CA Bar No. 339315)
`Email: jchai@fenwick.com
`FENWICK & WEST LLP
`801 California Street
`Mountain View, CA 94041
`Tel: (650) 988-8500
`Fax: (650) 938-5200
`
`Eric B. Young, (CA Bar No. 318754)
`Email: eyoung@fenwick.com
`Dargaye Churnet (Admitted Pro Hac Vice)
`Email: dchurnet@fenwick.com
`Christopher L. Larson (Admitted Pro Hac Vice)
`Email: clarson@fenwick.com
`FENWICK & WEST LLP
`555 California Street, 12th Floor
`San Francisco, CA 94104
`Tel: (415) 875-2300
`
`Jeffrey A. Ware (WA Bar No. 43779)
`Email: jware@fenwick.com
`FENWICK & WEST LLP
`401 Union Street, 5th Floor
`Seattle, WA 98101
`Tel: (206) 389-4510
`
`Jessica Lin (NY Bar No. 5035860)
`Email: jessica.lin@fenwick.com
`Eric Menist (NY Bar No. 5721568)
`Email: emenist@fenwick.com
`FENWICK & WEST LLP
`902 Broadway, 18th Floor
`New York, NY 10010
`Tel: (212) 921-2001
`
` Counsel for Defendants
`AMAZON.COM, INC., AMAZON.COM SERVICES
`LLC, and AMAZON WEB SERVICES, INC.
`
`15
`
`

`

`Case 6:21-cv-00898-ADA Document 141 Filed 08/30/23 Page 20 of 20
`
`CERTIFICATE OF SERVICE
`
`
`
`I hereby certify that all counsel of record who are deemed to have consented to electronic
`
`service are being served with a true and correct copy of this document on August 23, 2023, via
`
`the Court’s CM/ECF system per Local Rule CV 5(a)(3). Additionally, this document and the
`
`attachments thereto were served via email on all counsel of record.
`
` /s/ Ravi R. Ranganath
` Ravi R. Ranganath
`
`
`
`
`
`16
`
`

This document is available on Docket Alarm but you must sign up to view it.


Or .

Accessing this document will incur an additional charge of $.

After purchase, you can access this document again without charge.

Accept $ Charge
throbber

Still Working On It

This document is taking longer than usual to download. This can happen if we need to contact the court directly to obtain the document and their servers are running slowly.

Give it another minute or two to complete, and then try the refresh button.

throbber

A few More Minutes ... Still Working

It can take up to 5 minutes for us to download a document if the court servers are running slowly.

Thank you for your continued patience.

This document could not be displayed.

We could not find this document within its docket. Please go back to the docket page and check the link. If that does not work, go back to the docket and refresh it to pull the newest information.

Your account does not support viewing this document.

You need a Paid Account to view this document. Click here to change your account type.

Your account does not support viewing this document.

Set your membership status to view this document.

With a Docket Alarm membership, you'll get a whole lot more, including:

  • Up-to-date information for this case.
  • Email alerts whenever there is an update.
  • Full text search for other cases.
  • Get email alerts whenever a new case matches your search.

Become a Member

One Moment Please

The filing “” is large (MB) and is being downloaded.

Please refresh this page in a few minutes to see if the filing has been downloaded. The filing will also be emailed to you when the download completes.

Your document is on its way!

If you do not receive the document in five minutes, contact support at support@docketalarm.com.

Sealed Document

We are unable to display this document, it may be under a court ordered seal.

If you have proper credentials to access the file, you may proceed directly to the court's system using your government issued username and password.


Access Government Site

We are redirecting you
to a mobile optimized page.





Document Unreadable or Corrupt

Refresh this Document
Go to the Docket

We are unable to display this document.

Refresh this Document
Go to the Docket