Case 6:21-cv-00898-ADA Document 181 Filed 09/14/23 Page 1 of 20
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`UNITED STATES DISTRICT COURT
`FOR THE WESTERN DISTRICT OF TEXAS
`WACO DIVISION
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`Plaintiff,
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`v.
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`Case No. 6:21-cv-00898-ADA
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`JURY TRIAL DEMANDED
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`ALMONDNET, INC.,
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`AMAZON.COM, INC.; AMAZON.COM
`SERVICES LLC; and AMAZON WEB
`SERVICES, INC.,
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`Defendants.
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`OPPOSITION TO MOTION TO EXCLUDE THE “UNRELIABLE”
`TESTIMONY OF ALMONDNET’S DAMAGES EXPERT JIM W. BERGMAN
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`Case 6:21-cv-00898-ADA Document 181 Filed 09/14/23 Page 2 of 20
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`TABLE OF CONTENTS
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`I.
`II.
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`III.
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`B.
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`INTRODUCTION ............................................................................................................... 1
`FACTS ................................................................................................................................. 2
`A. Mr. Bergman Apportions to the Incremental Benefit of Amazon’s
`Infringement over the Next-Best Alternative .......................................................... 2
`Mr. Bergman Analyzed How the Parties to the Hypothetical Negotiation
`Would Have Split the Incremental Benefit of Amazon’s Infringement .................. 5
`ARGUMENT ...................................................................................................................... 7
`A.
`Legal Standard ......................................................................................................... 7
`B.
`Mr. Bergman’s Determination of the Incremental Benefit of Amazon’s
`Infringement Fully Apportions to the Value of the Patents In Suit ......................... 8
`Mr. Bergman’s Bargaining Split Is Based On Extensive Case-Specific
`Evidence ................................................................................................................ 12
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`C.
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`TABLE OF AUTHORITIES
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`Cases
`Apple Inc. v. Motorola, Inc.,
` 757 F.3d 1286 (Fed. Cir. 2014) ................................................................................................ 1
`Aqua Shield v. Inter Pool Cover Team,
`774 F.3d 766 (Fed. Cir. 2014) ............................................................................................... 1, 9
`AstraZeneca AB v. Apotex Corp.,
`782 F.3d 1324 (Fed. Cir. 2015) ............................................................................................... 12
`Bayer HealthCare LLC v. Baxalta Inc.,
`2019 WL 330149 (D. Del. Jan. 25, 2019) ............................................................................... 13
`Carnegie Mellon Univ. v. Marvell Tech. Grp.,
`807 F.3d 1283 (Fed. Cir. 2015) ................................................................................................. 9
`Daedalus Blue, LLC v. Microstrategy Inc.,
`2023 WL 5598456 (E.D. Va. Aug. 29, 2023) ......................................................................... 10
`Daubert v. Merrell Dow Pharms., Inc.,
`509 U.S. 579 (2003) ............................................................................................................ 7, 10
`Droplets, Inc. v. Yahoo! Inc.,
`2021 WL 9038355 (N.D. Cal. Aug. 9, 2021) .......................................................................... 13
`DSM IP Assets, B. V. v. Lallemand Specialties, Inc.,
`2018 WL 1950413 (W.D. Wis. Apr. 25, 2018) ....................................................................... 12
`Finjan, Inc. v. Blue Coat Sys., Inc.,
`879 F.3d 1299 (Fed. Cir. 2018) ............................................................................................... 10
`LaserDynamics, Inc. v. Quanta Comput., Inc.,
`694 F.3d 51 (Fed. Cir. 2012) ................................................................................................... 12
`Mobile Equity Corp. v. Walmart Inc.,
`2022 WL 4492403 (E.D. Tex. Sept. 27, 2022) ......................................................................... 8
`Prism Techs. LLC v. Sprint Spectrum L.P.,
`849 F.3d 1360 (Fed. Cir. 2017) ............................................................................................. 1, 9
`Robocast, Inc. v. Microsoft Corp.,
`2014 WL 350062 (D. Del. Jan. 29, 2014) ............................................................................... 12
`Smith v. State Farm Lloyds,
`2023 WL 359495 (E.D. Tex. Jan. 23, 2023) ............................................................................. 7
`Summit 6, LLC v. Samsung Elecs. Co.,
` 802 F.3d 1283 (Fed. Cir. 2015) ................................................................................................ 8
`Uniloc USA, Inc. v. Microsoft Corp.,
`632 F.3d 1292 (Fed. Cir. 2011) ............................................................................................... 12
`Wells v. SmithKline Beecham Corp.,
`601 F.3d 375 (5th Cir. 2010) ..................................................................................................... 7
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`Williamson v. Citrix Online, LLC,
`792 F.3d 1339 (Fed. Cir. 2015) ................................................................................................. 9
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`iii
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`I.
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`INTRODUCTION
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`Amazon’s motion asserts that Mr. Bergman does not sufficiently apportion because he
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`does not separately value each infringing and non-infringing element of the accused products.
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`But Mr. Bergman employs the commonly accepted methodology of valuing the incremental
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`benefit of the infringing features over the next-best alternative. As recognized by the Federal
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`Circuit, by affirmatively valuing the incremental value of Amazon’s infringement, this
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`methodology accounts for non-infringing features and the contributions of the infringer, even if
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`it does not calculate the specific value of each such feature and contribution. See Prism Techs.
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`LLC v. Sprint Spectrum L.P., 849 F.3d 1360, 1376 (Fed. Cir. 2017); Aqua Shield v. Inter Pool
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`Cover Team, 774 F.3d 766, 770-72 (Fed. Cir. 2014); Apple Inc. v. Motorola, Inc., 757 F.3d
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`1286, 1315 (Fed. Cir. 2014). Amazon’s claim that Mr. Bergman should have used a different
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`methodology is not a proper basis to exclude Mr. Bergman’s opinion. Amazon also disagrees
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`with Mr. Bergman’s definition of the accused functionality, his understanding of the scope of
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`the patents in suit, and his identification of the next-best alternative, but Mr. Bergman relies on
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`the technical opinions of AlmondNet’s technical expert, Dr. Koskinen, for these opinions. It is
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`appropriate for Mr. Bergman to rely on these technical opinions, and Amazon has not moved to
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`exclude any of Dr. Koskinen’s opinions, choosing instead an improper collateral attack on these
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`opinions through the present motion.
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`Mr. Bergman determines the incremental benefit of Amazon’s use of the infringing
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`features through an extensive, multi-step analysis that apportions Amazon’s revenues from sales
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`of the infringing products down to the portion of those revenues solely derived from the
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`infringing features, and then further apportions that sliver of revenue. He then analyzes how the
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`parties to the hypothetical negotiation would divide this incremental benefit in a “bargaining
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`split” analysis that further accounts for the contributions of both the parties to these sales.
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`Amazon falsely claims that this bargaining split methodology is disfavored by the Federal
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`Circuit, but the caselaw is clear that such an approach is acceptable where the expert relies on
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`case-specific evidence rather than mere assumption and theory. Mr. Bergman does exactly this,
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`relying, in part, on agreements from AlmondNet’s operating subsidiary that specifically address
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`how to divide the incremental benefits from advertising targeted using user data. Amazon’s
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`motion is based on incorrect statements of both the law and the facts, and should be denied.
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`II.
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`FACTS
`A. Mr. Bergman Apportions to the Incremental Benefit of Amazon’s
`Infringement over the Next-Best Alternative
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`Mr. Bergman starts his analysis by identifying the features accused of infringement in
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`this case, relying on the opinions of AlmondNet’s infringement expert, as “the use of
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`.” Ex. 1 (Bergman Rpt.) ¶ 195 (citing discussions
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`with Dr. Koskinen)); Ex. 3 (Koskinen Rpt.) ¶¶ 23, 30 (describing the benefits of the inventions
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`including the ability to use of
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`). See also Ex. 1 at
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`¶¶ 165-194 (describing the components through which the infringing features are implemented);
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`¶¶ 195-202 (describing the specific products within Amazon Advertising in which the accused
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`targeting advertising is offered); Ex. 3 ¶¶ 86-88 (same). Amazon seems to disagree with this
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`definition of the accused functionality, but Mr. Bergman is entitled to rely on Dr. Koskinen for
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`his understanding of AlmondNet’s infringement case, and Amazon has made no effort to
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`exclude Mr. Koskinen’s opinion. Indeed, the entire point of Mr. Bergman’s, or any damages
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`expert’s, opinion is to value plaintiff’s claim of infringement, as the jury does not consider that
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`opinion unless it finds infringement. Amazon, on the other hand, has its own, idiosyncratic
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`definition of infringement that has little relationship to either AlmondNet’s infringement
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`theories or the asserted claims as construed by this Court.
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`Mr. Bergman then seeks to measure the incremental benefit
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`to Amazon of its
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`infringement by employing the accepted methodology ofcalculating that benefit over “the next-
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`best non-infringing alternative.” Ex.
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`1 §§ 203-205. Mr. Bergman looks first at the putative
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`alternatives identified by Amazon in discovery, but based on his own analysis and that of Dr.
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`Koskinen, concludes that each is either not in fact non-infringing, is described too vaguely to
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`analyze, or would not be a commercially acceptable alternative to the accused products because
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`it would eliminate all of the benefits to Amazon. Jd. §§ 206-222. See also Ex. 3 at §§ 282-297.2
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`In the absence of any commercially acceptable non-infringing alternatives, Mr. Bergman
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`relies on Dr. Koskinen’s identification of the next-best alternative, which “for all three of the
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`ee” Ex.
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`1 § 223. Based on this definition of the next-best
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`alternative, Mr. Bergman sought to calculate the incremental benefit attributable to Amazon’s
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`2oa
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`1 See Mot. at 2, defining the scope of the 639 and ’586 patents as being limitedto “a solution to
`saturation,”; Dkt. 134 (Plaintiff's Motion to Exclude Certain Opinions of Dr. Henry Houh)at 5-
`6, moving to strike Amazon non-infringement arguments based on this notion as inconsistent
`with the Court’s Markmanorder; Mot. at 2, stating that “[t]he asserted claims of the ’639 and
`’586 patents generally require a process wherein a userthat 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”; Dkt. 134 at 11-12, moving to strike Amazon’s non-infringement arguments
`importing a requirement for past tagging into the asserted claims; Mot. at 2, defining the ’139
`patent as “disclos[ing] an ‘automatic system’ for calculating profit for an ad placement and
`placing ads only whenit is profitable”; Dkt. 134 at 12-13, moving to strike Amazon’s non-
`infringement arguments importing a requirement for the determination of expected profit into
`the asserted claims.
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`? Amazon’s experts ultimately relied on one of the alternatives that wouldstill infringe under
`AlmondNet’s theory of infrmgement. See Dkt. 134 at 1-4; Dkt. 129 (Plaintiff's Motion to
`Exclude Certain Opinions of W. Christopher Bakewell) at 7-8.
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`Mr. Bergmanstarted this calculation from Amazon’sPo
`Ee
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`products), “as it represented the revenue mostclosely tied to the patents-in-suit.” Jd. § 228.
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`In
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`doing so, Mr. Bergman excluded all revenue from non-accused products. Jd. § 229. He then
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`computed the cost of goods sold (COGS) for this gross accused revenue, and calculated the net
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`revenue for the accused products. Jd. § 235. This deduction of COGS cuts out about|| of
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`the gross accused revenue.
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`Up to this point, Mr. Bergman could rely on the revenue data produced by Amazon, but
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`more granular apportionment required estimates based on other Amazon documents and
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`testimony.* Using both qualitative and quantitative evidence from Amazon, Mr. Bergman
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`identified the portion of the revenue ofPe products
`derived onymres. 95238
`254; Ex. 2 (Bergman Dep.) at 131:8-132:13. This apportionmentstep cut anotherIj percent
`from net accused revenues, for a combined reduction from accused gross revenues of ||
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`percent. Ex. | at Ex. 1.2.
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`At this point, Mr. Bergman had fully apportioned to the revenues derived only from the
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`accused functionality of “ihevse
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`a. However, Mr. Bergman wentfurther. Amazon advertising revenues come from
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`4 Amazon was asked during discovery to specifically identify revenues it contends should be
`excluded from the royalty
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`base. and while Amazon respondedthat
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` erroga ories 1-27, at 24-27.
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`. Ex. 1 ¶ 255; Ex. 2 at 138:20-141:14. Mr. Bergman calculated the portion of the
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`revenue attributable to
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`, the fees most “directly related to Amazon’s
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`use of the patents-in-suit Amazon’s use of the patents-in-suit,” and as a result cut an additional
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` of accused revenue. Ex. 1 ¶¶ 255-264; Ex. 2 at 155:25-156:10.
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`As a result of all these steps, Mr. Bergman apportioned down to
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` of gross accused
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`revenue, or
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` of net accused revenue. He did not, however, stop there.
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`B. Mr. Bergman Analyzed How the Parties to the Hypothetical Negotiation
`Would Have Split the Incremental Benefit of Amazon’s Infringement
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` Mr. Berman analyzes in Factor 15 of his Georgia Pacific analysis how the parties to
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`the hypothetical negotiation would split the incremental benefit of Amazon’s infringement that
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`he calculated above. Ex. 1 ¶¶ 417-419. Contrary to Amazon’s claim in its motion at 12, Mr.
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`Bergman specifically notes that this analysis acts to further apportion between the benefits the
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`patents in suit and non-infringing contributions by Amazon. See id. ¶ 410 (noting, in addressing
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`Georgia Pacific Factor 13 on apportionment, that “further allocations to non-infringing
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`functionalities and costs are performed in Georgia-Pacific Factor 15 below”); ¶ 420 (“[I]n
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`situations whereby one party creates and/or manufactures a product and another enables its sale,
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`parties tend to split those benefits based on the relative contributions of each party.”)
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`(emphasis added); ¶ 427 (The bargaining split would take into account “the portion of the
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`incremental benefit that Amazon brings to the table based on the value of its
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`.”).
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`See also Ex. 2 at 92:10-94:4 (describing how “as part of the bargaining split you’re figuring out
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`the relative contributions of each party and determining how much of that incremental benefit
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`would be applied”); 122:16-123:15 (same).
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`Mr. Bergman posits that among the factors the parties would look to in dividing the
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`incremental benefit are
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`.5
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`1 ¶¶ 121-123.
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` (id. ¶ 122),
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` (id. ¶ 132).
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`. Ex.
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` Id. ¶¶ 125-126. Mr.
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`Bergman finds
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`’s contracts with its
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` customers informative of how the
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`parties would split the incremental benefit for several reasons. First, these agreements are
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`specifically structured to divide the incremental revenues attributable to
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`, “mirroring the determination of a
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`reasonable royalty under the income approach and provides strong guidance for the amount
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`AlmondNet would have received in a hypothetical negotiation.” Id. ¶¶ 426, 428-429; Ex. 4.
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`ALMONDNET-AMAZON-0002775 (exemplary
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` cited by Bergman
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`stating:
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`). Second, “the incremental revenue
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`split reflected in the
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` Agreements would be considered by the parties to be a reasonable
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`proxy for the portion of the incremental benefit that Amazon brings to the table based on the
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`5 Other factors the parties would look to in determining how to split the marginal benefit are
`“(1) AlmondNet’s preference to license its products over its patents, (2) the significant
`derivative benefits available to Amazon through its use of the patents-in-suit, (3) the lack of any
`commercially acceptable non-infringing alternatives.” Id. ¶ 434.
`6 The hypothetical negotiation would take place just after this, in August 2012. Id. ¶ 36.
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`value of its
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`.” Id. ¶ 427. This is because
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`citing Ex. 5 (Shkedi 3/21/23 Dep.) at 132:1-14, 132:21-133:1 (
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`); see also Ex. 6 at 2775 (
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`).
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`Mr. Bergman opines the parties would agree to a bargaining split of
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` Id.,
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`,
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`consistent with the
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` agreements. Ex. 1 ¶ 434. The resulting lump sum royalty would be
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` of accused net revenue, or
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` of accused gross revenue. Id. at Ex. 1.
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`III. ARGUMENT
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`A.
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`Legal Standard
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`An expert’s testimony should be excluded if his or her methodology is unreliable or the
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`expert provides opinions divorced from the facts of the case. Wells v. SmithKline Beecham
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`Corp., 601 F.3d 375, 378 (5th Cir. 2010) (citation omitted) (“Daubert requires admissible
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`expert testimony to be both reliable and relevant.”). But simply disagreeing with the expert’s
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`opinion, or the weight he or she assigns to evidence, is not a sufficient basis to warrant
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`exclusion. Smith v. State Farm Lloyds, 2023 WL 359495, at *2 (E.D. Tex. Jan. 23, 2023)
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`(quoting Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 595 (2003)) (“When evaluating
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`Daubert challenges, courts focus ‘on [the experts’] principles and methodology, not on the
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`conclusions that [the experts] generate.’”). “[I]ssues with [an expert’s] … conclusions, not his
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`methodology … are best addressed by ‘[v]igorous cross-examination, presentation of contrary
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`evidence, and careful instruction on the burden of proof.’” Mobile Equity Corp. v. Walmart Inc.,
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`2022 WL 4492403, at *3 (E.D. Tex. Sept. 27, 2022) (quoting Daubert, 509 U.S. at 596).
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`B. Mr. Bergman’s Determination of the Incremental Benefit of Amazon’s
`Infringement Fully Apportions to the Value of the Patents In Suit
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`As described in detail above in Section II.A., Mr. Bergman apportions to the incremental
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`benefit to Amazon’s infringement of the asserted claims, through an extensive, multi-step
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`analysis that ultimately arrives at apportioned incremental revenues that are
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` percent of gross
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`accused revenue, or
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` percent of net accused revenue. He then further applies a bargaining
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`split that, among other things, takes into account the relative contributions of the parties, to
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`arrive at a lump-sum royalty that is
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` percent of accused net revenue, or
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` percent
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`of accused gross revenue. Amazon’s claim that Mr. Bergman fails to apportion is thus not
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`credible. What Amazon is really arguing is that Mr. Bergman was required to employ a specific
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`methodology of apportionment calculating values for each infringing and non-infringing
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`element of the accused system. See, e.g., Mot. at 7, 10. But the Federal Circuit has recognized
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`that there is more than one way to apportion, and while “all approaches have certain strengths
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`and weaknesses … it is common for parties to choose different, reliable approaches” depending
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`on the unique facts and circumstances of the particular case. Summit 6, LLC v. Samsung Elecs.
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`Co., 802 F.3d 1283, 1296 (Fed. Cir. 2015).7
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`The approach Mr. Bergman takes of analyzing the benefit from Amazon’s infringement
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`over the next-best alternative is a well-accepted methodology for analyzing the value of the
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`7 Notably, even Amazon’s own damages expert, Mr. Bakewell, does not adopt the approach to
`apportionment Amazon now demands Mr. Bergman follow, choosing instead not to apportion at
`all. See Dkt. 134 at 1-4.
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`infringing features alone:
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`In hypothetical-negotiation terms, the core economic question is what the
`infringer, in a hypothetical pre-infringement negotiation under hypothetical
`conditions, would have anticipated the profit-making potential of use of the
`patented
`technology
`to
`be,
`compared
`to
`using
`non-infringing
`alternative…[V]arious kinds of evidence, such as … value enhancements
`compared to alternatives … may be used in the inquiry to determine the
`economic value of the patented technology in the marketplace at the relevant
`time.
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`Aqua Shield, 774 F.3d at 770-72 (emphasis added and removed, internal quote omitted). See
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`also Apple, 757 F.3d at 1315 (overruled on other grounds by Williamson v. Citrix Online, LLC,
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`792 F.3d 1339 (Fed. Cir. 2015)) (“a party may … estimate the value of the benefit provided by
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`the infringed features by comparing the accused product to non-infringing alternatives”)
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`(emphasis added, internal citation omitted); Prism Techs., 849 F.3d at 1376 (The “requirement
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`for valuing the patented technology can be met if the patentee adequately shows that the
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`defendant’s infringement allowed it to avoid taking a different, more costly course of action.”);
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`Carnegie Mellon Univ. v. Marvell Tech. Grp., 807 F.3d 1283, 1304 (Fed. Cir. 2015) (“A key
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`inquiry in the [hypothetical negotiation] is what it would have been worth to the defendant, as it
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`saw things at the time, to obtain the authority to use the patented technology, considering the
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`benefits it would expect to receive from using the technology and the alternatives it might have
`pursued.”). This methodology does not require the separate valuation of each non-infringing
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`feature or component of the accused products, or each element of the asserted claims, as
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`demanded by Amazon. See Ex. 2 at 86:4-15 (“If I have a product that has ten features, and one
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`of those features is implicated by the patented technology, and the other nine aren’t, if I
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`determine -- and my only goal is to determine the value of that one feature, if I go through a
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`methodology and I determine the value of that one feature, I now have the value of the patent. I
`don’t need to go through and value independently the other nine.”).
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`Further, while, Amazon has a much narrower definition of the infringing features and
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`the scope of the patents-in-suit than AlmondNet, Mr. Bergman is entitled to rely on Dr.
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`Koskinen’s definition of the infringing functionality as “the use of
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`,” as well as Dr. Koskinen’s definition of the next-best
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`alternative, particularly as Amazon has made no attempt to exclude Dr. Koskinen’s opinions.
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`See Daedalus Blue, LLC v. Microstrategy Inc., 2023 WL 5598456, at *9 (E.D. Va. Aug. 29,
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`2023) (“Bergman is entitled to rely on the opinion of [Plaintiff’s technical expert] as to the
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`respective functionalities of the various products in question. … And, particularly where
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`Defendant did not raise any Daubert challenges to Dr. Malek’s report or testimony, the Court
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`finds no reason that Bergman would not be entitled to rely on Dr. Malek’s opinion that there
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`were no ‘next-best’ non-infringing alternatives to evaluate that would provide the same precise
`functionalities.”).
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`The only case Amazon cites in support of its criticism of this approach is the holding in
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`Finjan that “whether viewed as valuable, important, or even essential, the patented feature must
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`be separated.” Mot. at 11, citing Finjan, Inc. v. Blue Coat Sys., Inc., 879 F.3d 1299, 1311 (Fed.
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`Cir. 2018). Finjan is not addressing the particular approach of valuing the infringing feature
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`over the next-best alternative, and so is not directly relevant to the acceptability of Mr.
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`Bergman’s methodology. But it nevertheless illustrates why Mr. Bergman’s apportionment is
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`sufficient, and in fact goes above and beyond what is required. In Finjan, the damages expert
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`looked to the component through which infringing traffic passed to quantify the extent of
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`infringement. However, while all infringing traffic passed through that component, not all
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`traffic passing through that component was infringing, and so the expert had failed to
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`sufficiently apportion. Id. (While “all of the infringing functionality occur[ed] in DRTR …
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`some DRTR functions infringe and some do not.”).
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`In this case, Mr. Bergman has gone through several steps to apportion down to just the
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`revenue from infringing targeted advertising, i.e.,
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`. There are no non-infringing ads in the mix, unlike in Finjan. Mr. Bergman has
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`then gone beyond the level of apportionment demanded by Finjan and further apportioned these
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`infringing revenues to just the
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` most directly related to Amazon’s
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`infringement. Mr. Bergman has then further apportioned between the contributions of
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`AlmondNet’s patented technology and non-patented contributions by Amazon through his
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`analysis of the bargaining split. Amazon asserts that any claim that the bargaining split has a
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`role in Mr. Bergman’s analysis is a post hoc argument first raised in deposition. Mot. at 12.
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`But as discussed above in Section II.A., he states several times in his report that the bargaining
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`split in his analysis of Georgia Pacific Factor 15 acts to further apportion between the benefits
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`the patents in suit and non-infringing contributions by Amazon. See Ex. 1 ¶¶ 410, 420, 427.
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`The effectiveness of Mr. Bergman’s methodology is illustrated by the fact it accounts in
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`several ways for the specific items that Amazon claims he fails to account for:
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`. See Mot. at 1, 5-8, 10-11. All are
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`present in the next-best alternative to the infringing features, and so are accounted for in the
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`valuation of that feature over the alternative. See, e.g., Ex. 2 at 78:21-79:6 (“I’ve determined the
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`value of the Patents-in-Suit, which would then inherently mean that I've excluded any value
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`associated with
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`.”); 122:16-123:6.
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` are addressed by Mr. Bergman’s exclusion of revenues from
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`. Ex. 1 ¶ 243. Concerning
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`, to the extent Amazon is
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`referring the fact that, due to Amazon’s size, it has
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`, the bargaining split also accounts for such factors, particularly as the
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` agreements Mr. Bergman considers at this stage are directly related to the incremental
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`benefit of
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`. Id. ¶ 427; Ex. 2 at 91:20-92:8.
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`C. Mr. Bergman’s Bargaining Split Is Based On Extensive Case-Specific
`Evidence
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`Amazon’s claim that the consideration of a bargaining or profit split by damages experts
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`has been rejected by the Federal Circuit is simply wrong. The cases Amazon cites reject not the
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`concept of a bargaining or profit split, but the application of that concept based merely on
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`theory and presumption, without support in evidence specific to the case. See Uniloc USA, Inc.
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`v. Microsoft Corp., 632 F.3d 1292, 1318 (Fed. Cir. 2011) (“[I]t is clear that Gemini’s testimony
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`was based on the use of the 25% rule of thumb as an arbitrary, general rule, unrelated to the
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`facts of this case.”); LaserDynamics, Inc. v. Quanta Comput., Inc., 694 F.3d 51, 69 (Fed. Cir.
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`2012) (“Mr. Murtha’s one-third apportionment … appears to have been plucked out of thin air
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`based on vague qualitative notions of the relative importance of the ODD technology.”).
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`However, the methodology is entirely acceptable where the expert has based such an analysis
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`on case-specific evidence. AstraZeneca AB v. Apotex Corp., 782 F.3d 1324, 1332-33 (Fed. Cir.
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`2015) (affirming a district court’s bench trial damages award based on a 50% royalty rate in the
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`hypothetical license, where based on case specific evidence); DSM IP Assets, B. V. v.
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`Lallemand Specialties, Inc., 2018 WL 1950413, at *5 (W.D. Wis. Apr. 25, 2018) (admissible
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`where the expert properly presented evidence of other instances where a party to the
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`hypothetical agreed to similar profit splits with other parties including customers); Robocast,
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`Inc. v. Microsoft Corp., 2014 WL 350062, at *2-3 (D. Del. Jan. 29, 2014) (holding that a 50/50
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`profit split may be sufficiently related to the facts of a case with “the sort of facts analogous to
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`facts usually used in reasonable royalty analyses”).
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`Bayer HealthCare LLC v. Baxalta Inc., 2019 WL 330149 (D. Del. Jan. 25, 2019),
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`another case on which Amazon relies, is particularly illustrative of how courts have addressed a
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`bargaining split. Bayer addresses the line of cases on which Amazon relies, and notes that
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`courts have accepted a profit split where the analysis is “properly tied to the facts of a case.” Id.
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`at *6. The court in Bayer rejected the opinion in that case because it was based only on a claim
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`that such a split would be “reasonable” and a vague reference to a 50/50 split in an e-mail that
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`was not an agreement or even an offer for an agreement. Id. at *6-8. Also illustrative is
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`Droplets, Inc. v. Yahoo! Inc., 2021 WL 9038355 (N.D. Cal. Aug. 9, 2021), in which the court
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`denied a motion to exclude Mr. Bergman’s profit split opinion as to one defendant, while
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`granting it as to another. The court approved Mr. Bergman’s approach in the first instance
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`because the split was based on evidence of how Yahoo split its advertising revenues with third
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`parties. The court held that “because the numbers from those costs are grounded squarely in the
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`facts of the case, Dr. Bergman’s profit split analysis ‘fits’ the case sufficiently to be helpful to
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`the jury. As such, the analytical gap between the traffic acquisition costs and Dr. Bergman's
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`conclusions is best addressed through cross-examination, rather than exclusion, and the Court
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`will allow the opinion.” Id. at *7 (case citations omitted). In the second instance, the court
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`granted the motion not because Mr. Bergman posited a bargaining split, but because he relied
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`on survey data the Court found did not measure demand for the infringing feature. Id. at *7-8.
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`In this case, in analyzing the bargaining split at the hypothetical negotiation, Mr.
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`Bergman relied on highly relevant case-specific evidence, including the
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` agreements.
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`While
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` would not be a party to the hypothetical negotiation, it is
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`. Ex. 1 ¶¶
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`121-123, 132. It would therefore have been reasonable for the parties to the hypothetical
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`negotiation to look, under the book of wisdom, to later
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` agreements that specifically
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`address the issue before the parties to that negotiation: how to divide the incremental benefit
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`from
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`. Id. ¶¶ 125-126, 426-429. For example, one agreement relied on by Mr. Bergman
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`provides that
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`.” Ex. 4, at -2775.
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`While the
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` agreements are not patent licenses, these agreements are far more
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`relevant to the problem of dividing incremental benefit than a typical patent license applying a
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`royalty rate to total licensed product revenue or on a per-unit basis. The evidence also supports
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`technical comparability of these agreements, as in addition to the agreements themselves, Mr.
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`Bergman relies on the testimony of AlmondNet’s CEO and
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` documents showing that
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`. See, e.g., Ex. 1 ¶ 427, citing Ex. 5 at 132:1-14, 132:21-133:1
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`); Ex. 1 ¶ 125, citing Ex. 6, ALMONDNET-AMAZON-0002941
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`).
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`testimony of Mr. Bergman should be denied in its entirety.
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` Amazon’s motion to exclude the
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