Case 1:20-cv-00393-LO-TCB Document 1012 Filed 02/11/22 Page 1 of 38 PageID# 28569
`
`
`
`UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF VIRGINIA
`ALEXANDRIA DIVISION
`
`
`RAI STRATEGIC HOLDINGS, INC. and
`R.J. REYNOLDS VAPOR COMPANY
`
`
`Plaintiffs and
`Counterclaim Defendants,
`
`
`v.
`
`ALTRIA CLIENT SERVICES LLC; PHILIP
`MORRIS USA INC.; and PHILIP MORRIS
`PRODUCTS S.A.
`
`
`Defendants and
`Counterclaim Plaintiffs.
`
`Case No. 1:20-cv-00393-LO-TCB
`
`ORAL ARGUMENT REQUESTED
`
`
`
`
`
`
`
`PMI/ALTRIA’S OPPOSITION TO RJR’S DAUBERT MOTION TO EXCLUDE THE
`TESTIMONY OF PMI/ALTRIA’S DAMAGES EXPERT, PAUL K. MEYER
`
`
`
`
`
`

`

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`
`TABLEOFCONTENTS
`
`I.
`
`Il.
`
`INTRODUCTION ..0..oceccecccccecceccesceeseeseeeseesseeseeeseesseesecsecsseeseeeseceaecseceaeceaeeeeeseeeseeeeeeseeeess 1
`
`FACTUAL BACKGROUNDD 00... cocccccccescesceeseesseeseesseeseeeseesaeeseeaecsaceseceseceaeeseceseeeaeeseeseesees 3
`
`A.
`
`B.
`
`Mr. Meyer’s Analysis Of Thiii For The °545,
`O11, And ?265 Patents .........cccccceccccccccesccsseesccseesseeseesscesseaeceaceseeeaeeesseeeeaeeeaeeaseess 3
`
`Mr. Meyer’s Analysis Of TheIDns
`Mr. Meyer’s Alternative a Royalty Rate For The ’545 Patent............00.000....6
`
`D.
`
`The °374 Patent ............ecccccccccccceecceesccesceeesceeseeceseceseecaeceseeceaecesseceeeeeseeeesecesseeeeeeeseeees 7
`
`a7
`
`2.
`
`Mr. Meyer’s Analysis For The ’374 Patent .......0........0.cccccceeeceeeeeesseeeeeeeseeees9
`
`TH.
`
`LEGAL STANDARDS0000........cccccccccesccescesceeseesseesecesecsecseceseesscesecesececessceseesaceeceaeeseeeaeeees 10
`
`TV.=.ARGUMENTooo ee cee eeccecceccesceeceeseeseesceesecssecsaeseesaeeseceseesaecsaeeseceaeceeceseeeseceaeeeeeaeenseeaeeees 10
`
`A.
`
`Mr. Meyer’s OpinionsFor The 545, ’911, And ’265 Patents Are
`Adamissible .............ccccceccccecceesceeceeeseeeseeeseeeseecaeeeseeeseceseeesseceseeeeseeeseeseaeeeseeeeseeeees 10
`
`B.
`
`C.
`
`Mr. Meyer’s Use OfThiii Is Proper............ 10
`1.
`Mr. MeyerProperly Analyzed ThePO veceeeeeeees 16
`2.
`The Alternative a Royalty Rate For The ’545 Patent Is Admissible.................. 18
`
`Mr. Meyer’s Royalty Opinions For The ’374 Patent Are Admissible...................20
`
`1.
`
`2.
`
`The BBRoyalty Rate Is Highly Probative...............0..ccccccesseceseeeeeeeeeees20
`Probative Value OfTheBIRoyalty Rateoo...ceeceeceeeeeeceeeeeeeseeeeeeeeeees24
`
`Additional Considerations Support The Reliability And Highly
`
`a.
`
`b.
`
`The Probative Value Of The
`
`Support
`Royalty Rate..........000..e24
`
`Rate Is Highly Probative And
`Shows The
`Reliable ..........ccecccccecccesceeceesceeeeeseeesecssecseeeseesaceseeeseeeeeeeeseenseeaseees 25
`
`3.
`
`Mr. Meyer Properly Apportioned His Baseline Royalty Rate...................26
`
`V.
`
`CONCLUSION000. o occ cccccccccccccecccceesesssseeeeeeceeeeeesssaeeeeceeseeeesesnaeeeececeeeeeessneeeeeeeeeeeeesesnaeees 30
`
`

`

`Case 1:20-cv-00393-LO-TCB Document 1012 Filed 02/11/22 Page 3 of 38 PageID# 28571
`
`
`
`TABLE OF AUTHORITIES
`
`CASES
`
`Acceleration Bay LLC v. Activision Blizzard Inc.,
`No. 16-cv-453, 2019 WL 4194060 (D. Del. Sept. 4, 2019) ...................................................... 15
`
`ActiveVideo Networks, Inc. v. Verizon Commc'ns, Inc.,
`694 F.3d 1312 (Fed. Cir. 2012) ................................................................................................. 11
`
`Applied Cap., Inc. v. The ADT Corp.,
`No. 16-cv-815, 2021 WL 1339379 (D.N.M. Apr. 12, 2021) ........................................ 20, 21, 25
`
`Arctic Cat Inc. v. Bombardier Recreational Prods. Inc.,
`950 F.3d 860 (Fed. Cir. 2020) ................................................................................................... 29
`
`Atl. Thermoplastics Co. v. Faytex Corp.,
`5 F.3d 1477 (Fed. Cir. 1993) ..................................................................................................... 21
`
`Bayer Healthcare LLC v. Baxalta Inc.,
`989 F.3d 964 (Fed. Cir. 2021) ................................................................................................... 18
`
`Bayer HealthCare LLC v. Baxalta Inc.,
`No. 16-cv-1122, 2019 WL 330149 (D. Del. Jan. 25, 2019) ...................................................... 13
`
`Biedermann Techs. GmbH v. K2M, Inc.,
`No. 18-cv-585, 2021 WL 6034269 (E.D. Va. Dec. 10, 2021)............................................. 12, 13
`
`Bio-Rad Labs., Inc. v. 10X Genomics Inc.,
`967 F.3d 1353 (Fed. Cir. 2020) .......................................................................................... passim
`
`Boeing Co. v. United States,
`86 Fed. Cl. 303 (2009) ............................................................................................................... 31
`
`Carucel Invs., L.P. v. Novatel Wireless, Inc.,
`No. 16-cv-118, 2017 WL 1215838 (S.D. Cal. Apr. 3, 2017) .................................................... 18
`
`CliniComp Int’l, Inc. v. Athenahealth, Inc.,
`507 F. Supp. 3d 774 (W.D. Tex. 2020) ............................................................................... 25, 27
`
`Comcast Cable Commc’ns, LLC v. Sprint Commc’ns Co., LP,
`218 F. Supp. 3d 375 (E.D. Pa. 2016) ......................................................................................... 13
`
`Corning Optical Commc’ns Wireless Ltd. v. Solid, Inc.,
`No. 14-cv-3750, 2015 WL 5655192 (N.D. Cal. Sept. 24, 2015) .............................................. 19
`
`Daubert v. Merrell Dow Pharms., Inc.,
`509 U.S. 579 (1993) .................................................................................................................. 14
`
`ii
`
`

`

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`
`
`
`ePlus, Inc. v. Lawson Software, Inc.,
`700 F.3d 509 (Fed. Cir. 2012) ................................................................................................... 16
`
`ePlus, Inc. v. Lawson Software, Inc.,
`764 F. Supp. 2d 807 (E.D. Va. 2011) ........................................................................................ 13
`
`Ericsson, Inc. v. D-Link Sys., Inc.,
`773 F.3d 1201 (Fed. Cir. 2014) ........................................................................................... 14, 29
`
`Ericsson Inc. v. TCL Commc’n Tech. Holdings, Ltd.,
`No. 15-cv-11, 2017 WL 5137401 (E.D. Tex. Nov. 4, 2017),
`vacated on other grounds, 955 F.3d 1317 (Fed. Cir. 2020) .......................................................22
`
`EVM Sys., LLC v. Rex Med., L.P.,
`No. 13-cv-184, 2015 WL 4911090 (E.D. Tex. Aug. 17, 2015) ................................................ 18
`
`Exmark Mfg. v. Briggs & Stratton Power Prod. Grp., LLC,
`879 F.3d 1332 (Fed. Cir. 2018) ................................................................................................. 20
`
`Fujitsu Ltd. v. Belkin Int’l, Inc.,
`No. 10-cv-03972, 2012 WL 5835741 (N.D. Cal. Nov. 16, 2012) ............................................. 20
`
`GPNE Corp. v. Apple, Inc.,
`No. 12-cv-2885, 2014 WL 1494247 (N.D. Cal. Apr. 16, 2014) ............................................... 12
`
`Hanson v. Alpine Valley Ski Area, Inc.,
`718 F.2d 1075 (Fed. Cir. 1983) ........................................................................................... 23, 25
`
`Immersion Corp. v. HTC Corp.,
`No. 12-cv-259, 2015 WL 834209 (D. Del. Feb. 24, 2015) ........................................... 18, 28, 29
`
`In re Koninklijke Philips Patent Litig.,
`No. 18-cv-1885, 2020 WL 7398647 (N.D. Cal. Apr. 13, 2020) ................................... 23, 24, 26
`
`Intell. Ventures II LLC v. Sprint Spectrum, L.P.,
`No. 17-cv-661, 2019 WL 1877309 (E.D. Tex. Apr. 26, 2019) ................................................. 29
`
`Intuitive Surgical, Inc. v. Auris Health, Inc.,
`No. 18-cv-1359, 2021 WL 3662842 (D. Del. Aug. 18, 2021) ............................................ 11, 16
`
`Kumho Tire Co. v. Carmichael,
`526 U.S. 137 (1999) .................................................................................................................. 10
`
`LaserDynamics, Inc. v. Quanta Computer, Inc.,
`694 F.3d 51 (Fed. Cir. 2012) ..................................................................................................... 25
`
`LifeNet Health v. LifeCell Corp.,
`No. 13-cv-486, 2014 WL 5529679 (E.D. Va. Oct. 31, 2014) ................................................... 21
`
`iii
`
`

`

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`
`
`
`LifeNet Health v. LifeCell Corp.,
`93 F. Supp. 3d 477 (E.D. Va. 2015) .............................................................................. 21, 22, 23
`
`Limelight Networks, Inc. v. XO Communications, LLC,
`No. 15-cv-720, 2018 WL 678245 (E.D. Va. Feb. 2, 2018) ....................................................... 30
`
`Lucent Technologies, Inc. v. Gateway, Inc.,
`580 F.3d 1301 (Fed. Cir. 2009) ........................................................................................... 15, 16
`
`Magnetar Techs. Corp. v. Six Flags Theme Parks Inc.,
`No. 07-cv-127, 2014 WL 533425 (D. Del. Feb. 7, 2014) ......................................................... 29
`
`Medtronic, Inc. v. Boston Scientific Corp.,
`No. 99-cv-1035, 2002 WL 34447587 (D. Minn. Aug. 8, 2002)................................................ 29
`
`MiiCs & Partners, Inc. v. Funai Elec. Co.,
`No. 14-cv-804, 2017 WL 6268072 (D. Del. Dec. 7, 2017) ....................................................... 19
`
`Mobility Workx, LLC v. Cellco P’hip,
`No. 17-cv-872, 2019 WL 5721814 (E.D. Tex. Nov. 5, 2019) .................................................. 19
`
`Mondis Tech., Ltd. v. LG Elecs., Inc.,
`No. 07-cv-565, 2011 WL 2417367 (E.D. Tex. June 14, 2011) ........................................... 22, 23
`
`Network-1 Techs., Inc. v. Alcatel-Lucent USA, Inc.,
`No. 11-cv-492, 2017 WL 4769037 (E.D. Tex. Oct. 23, 2017) ............................................ 13, 14
`
`Open Text S.A. v. Box, Inc.,
`No. 13-cv-4910, 2015 WL 349197 (N.D. Cal. Jan. 23, 2015) .................................................. 20
`
`Open Text S.A. v. Box, Inc.,
`No. 13-cv-4910, 2015 WL 393858 (N.D. Cal. Jan. 29, 2015) ............................................ 16, 29
`
`Oracle America, Inc. v. Google, Inc.,
`No. 10-cv-3561, 2012 WL 850705 (N.D. Cal. Mar. 13, 2012) ................................................. 30
`
`Personalized Media Commc’ns, LLC v. Apple, Inc.,
`No. 15-cv-1366, 2021 WL 662238 (E.D. Tex. 2021) ................................................................28
`
`Plastic Omnium Advanced Innovation and Research v. Donghee America, Inc.,
`387 F. Supp. 3d 404 (D. Del. 2018) .................................................................................... 22, 26
`
`ReedHycalog, UK, Ltd. v. Diamond Innovations Inc.,
`727 F. Supp. 2d 543 (E.D. Tex. 2010) ...................................................................................... 12
`
`ResQNet.com, Inc. v. Lansa, Inc.,
`594 F.3d 860 (Fed. Cir. 2010) ....................................................................................... 12, 16, 17
`
`iv
`
`

`

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`
`
`Speedfit LLC v. Woodway USA, Inc.,
`No. 13-cv-1276, 2019 WL 1436306 (E.D.N.Y. Mar. 29, 2019) ............................................... 20
`
`Sportspower Ltd. v. Crowntec Fitness Mfg. Ltd.,
`No. 17-cv-2032, 2020 WL 3213704 (C.D. Cal. Feb. 3, 2020) .................................................. 26
`
`State Contracting & Eng’g Corp. v. Condotte Am., Inc.,
`346 F.3d 1057 (Fed. Cir. 2003) ..................................................................................................21
`
`Summit 6, LLC v. Samsung Elecs. Co.,
`802 F.3d 1283 (Fed. Cir. 2015) ........................................................................................... 10, 18
`
`TecSec, Inc. v. Adobe Sys., Inc.,
`No. 10-cv-115, 2018 WL 3649615 (E.D. Va. June 14, 2018) ....................................... 10, 18, 28
`
`Unisplay, S.A. v. Am. Elec. Sign Co.,
`69 F.3d 512 (Fed. Cir. 1995) ............................................................................................... 20, 21
`
`VS Techs., LLC v. Twitter, Inc.,
`No. 11-cv-43, 2011 WL 4744572 (E.D. Va. Oct. 5, 2011) ....................................................... 19
`
`Westberry v. Gislaved Gummi AB,
`178 F.3d 257 (4th Cir. 1999) ..................................................................................................... 28
`
`Whitserve, LLC v. Computer Packages, Inc.,
`694 F.3d 10 (Fed. Cir. 2012) ................................................................................... 20, 22, 23, 24
`
`Wi-LAN Inc. v. LG Elecs., Inc.,
`No. 18-cv-1577, 2019 WL 5681622 (S.D. Cal. Nov. 1, 2019) ........................................... 23, 24
`
`Zak v. Facebook, Inc.,
`No. 15-cv-13437, 2021 WL 4481588 (E.D. Mich. Sept. 30, 2021) .......................................... 28
`
`
`
`
`
`v
`
`

`

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`
`
`I.
`
`INTRODUCTION
`
`RJR does not challenge the (a) qualifications of PMI/Altria’s damages expert, Paul Meyer,
`
`or the (b) relevance of his opinions. Instead, RJR contends that his opinions are unreliable based
`
`on a blunderbuss of arguments that mischaracterize his opinions, ignore the factual record and, at
`
`most, go to their weight, not admissibility. The Court should deny RJR’s motion for three reasons.
`
`First, as RJR recognizes, Mr. Meyer properly assessed damages for the ’545, ’911, and
`
`’265 Patents “by considering executed license agreements that are economically and technically
`
`comparable.” Mot. at 1. He relies on (i) an agreement between
`
`
`
` that RJR admits
`
`is technically comparable, and (ii) an apportionment analysis that RJR does not challenge. Mr.
`
`Meyer in turn calculates baseline royalty rates for these three patents using those unchallenged
`
`apportionment figures, and adjusts those rates based on his Georgia-Pacific analysis that, again,
`
`RJR does not challenge. By detailing why the
`
` is economically
`
`comparable, Mr. Meyer has shown the “baseline comparability” required to provide the basis in
`
`fact for the jury to properly consider the agreement when assessing damages. Bio-Rad Labs., Inc.
`
`v. 10X Genomics Inc., 967 F.3d 1353, 1372-74 (Fed. Cir. 2020). RJR’s arguments to the contrary
`
`are legally erroneous and at most raise questions of fact for the jury to decide at trial.
`
`Mr. Meyer did not “ignore” the
`
` which, the
`
`evidence will show, is not the “most relevant” license. Mot. at 1. Even if it were, controlling law
`
`from the Federal Circuit and this District hold that an expert is not required to rely on only the
`
`“most relevant” license. While RJR may raise disputes about “the degree of comparability,” that
`
`issue is “one of sufficiency of the evidence, not admissibility.” Bio-Rad, 967 F.3d at 1373-74.
`
`The same is true for RJR’s arguments that Mr. Meyer “ignored” certain provisions of the
`
` and, instead, relied on a “hypothetical”
`
`royalty rate. Mot. at
`
`1
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`

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`16-20, Tha ate wasnds
`
`|| that RJR admits are technically comparable to the 545, 911, and ’265 Patents. And Mr.
`Meyerproperly choseto use this rate, as opposedto less reliablei orai
`PO which,in any event, has no bearing on the admissibility ofhis opinions.
`Second, Mr. Meyer properly increased his royalty rate for the ’545 Patent fomi
`
`Thatrate is not “arbitrary.” It properly accounts for the significant regulatory benefits RJR enjoyed
`
`by infringing the ’545 Patent, as reflected in evidence including the FDA’s guidance, RJR’s own
`
`documents and testimony, and PMI/Altria’s technical and regulatory experts’ analyses.
`
`Third, Mr. Meyerproperly calculates a baseline royalty rate for the ’374 Patent using the
`
`ESoo:
`eee
`
`was merely a “promotional”offer that has no probative value mischaracterizes the evidence. That
`
`ee
`5:
`ee. as the law requires. While RJR’s disagreements with the
`
`extent ofhis apportionment may beripe for cross-examination, they provide no basis for exclusion.
`
`The Court should deny RJR’s “scattershot” Daubert motion to exclude Mr. Meyer’s
`
`opinions. RJR seeks, through Daubert, to pre-try damages issues which are properly decided by
`
`the jury. RJR’s arguments are unsupported by the law andthe record and, at best, go to the weight
`
`not the admissibility of Mr. Meyer’s opinions.
`
`

`

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`
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`II.
`
`FACTUAL BACKGROUND
`
`RJR does not challenge Mr. Meyer’s qualifications—nor could they. He has been a
`
`consultant specializing in financial and valuation analyses for more than 20 years, and has testified
`
`as a damages expert in over 100 trials, including 25 patent infringement cases. Ex. A (Meyer
`
`Op.) ¶¶ 7-16, Attach. 1.U. As explained below, in this case Mr. Meyer calculates a running royalty
`
`for each patent at issue using the market approach, which RJR’s own damages expert admits is a
`
`A. Mr. Meyer’s Analysis Of
`’911, And ’265 Patents
`
` Ex. B (Sullivan Dep.) at 45:21-46:5.
`
` For The ’545,
`
` Ex. A (Meyer
`
`Op.) ¶ 335. Mr. Meyer therefore derives a baseline royalty rate for these three patents using the
`
`because it is
`
`Meyer also analyzes
`
`Technical Comparability.
`
`
`
` Id. ¶ 27. Mr.
`
` Id.
`
`
`
`
`
` Id. ¶¶ 243-
`
`47, Attach. 10.1. Based on input from PMI/Altria’s technical experts, Mr. Meyer opines that
`
`
`
` are
`
`technically comparable to the ’545, ’911, and ’265 Patents, respectively. Id. ¶¶ 255-57. RJR’s
`
`technical experts
`
` See Ex. B (Sullivan Dep.) at 84:16-84:5; Ex. C (Sullivan Rbt.) ¶ 263 & n.587.
`
`Economic Comparability. Mr. Meyer opines that
`
`
`
` is
`
`“economically comparable” to the hypothetical negotiation. Ex. A (Meyer Op.) ¶ 258. He
`
`3
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`

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`
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`explains that this agreement and the hypothetical negotiation (for at least the ’545 Patent) involve
`
`¶¶ 259-61. And he explains that both licenses are
`
`
`
`. Id.
`
`
`
`between them, but finds
`
`The Royalty Rate.
`
`. See id. ¶ 262. He accounts for the differences
`
` “highly instructive.” Id. ¶¶ 263-65.
`
`
`
`
`
`
`
`
`
`
`
`
`
` Mr. Meyer relies on the
`
` rate because it is
`
`, (ii)
`
`between
`
` and hypothetical negotiation, and (iii)
`
`explains that this rate
`
`. Ex. A (Meyer Op.) ¶¶ 248-51, 265-69. Mr. Meyer
`
`
`
`
`
`
`
`.1 Id. ¶¶ 249, 268.
`
`
`
`
`
` Id. ¶ 249 & n.390, Attach. 9-10; Ex. D (Meyer Dep.) at 58:24-
`
`59:19, 67:2-68:16. That the consideration in these agreements
`
`
`
`
`1 All emphasis added, and internal citations and quotation marks omitted, unless otherwise noted.
`
`4
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`

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`I 5.8 (yer 09.) 1195 60.321
`Sporion
`I29.081's echnical
`
`expert, Mr. McAlexander, performed a technical apportionment analysis, assigning a percentage
`
`
`
`
`
`Id. 225-32, 270-81; Ex. E (McAlexander Op.) {f 694-795.iS
`Po Ex. B (Sullivan Dep.) at 92:4-21; Ex. C at Attach. D-6 to D-8.
`As shown (column D), Mr. Meyercalculates baseline royalty ratesPo
`PO and adjusts those rates in view ofhis Georgia Pacific
`
`analysis (which RJR does not challenge). Ex. A (Meyer Op.) 4 270-72. That yields a reasonable
`
`royalty off for the °545 and 911 Patents, andl for the ’265 Patent. See id. §§ 508-31.
`B.
`Mr. Meyer’s Analysis Of Thit
`
`eS
`| 196-242. Using two methodologies, he analyzesPo and finds it
`consistent with the rate in heiT Id. § 268, Attach. 11.U, 22.
`First, Mr. Meyer uses the apportionment shown above to allocateTy
`ee
`
`

`

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`
`
`Meyer calculated the
`
`Attach. 22.
`
`22, 99:17-10, 101:3-10.
`
`. Id. ¶¶ 231-42. Second, Mr.
`
`. Id. at n.409,
`
`
`
`
`
`
`
` Ex. F (Peddycord Dep.) at 92:1-
`
`
`
`
`
`
`
`
`
`. Ex. A (Meyer Op.) at n.409, Attach. 22. Unlike RJR’s expert’s rate, these
`
` See Dkt. 915 at 6-7.
`
`C. Mr. Meyer’s Alternative
`
`Royalty Rate For The ’545 Patent
`
`Mr. Meyer opines that a
`
`royalty is appropriate to account for the significant value that
`
`RJR’s infringement of the ’545 Patent provides to its efforts to obtain FDA authorization, which
`
`is required to legally sell the accused products in the U.S. Ex. B at 291:16-292:5; Dkt. 922 at 2-3.
`
`To obtain FDA authorization, RJR must submit a Premarket Tobacco Application
`
`(“PMTA”) that requires, inter alia, the accused products to meet certain safety specifications. Ex.
`
`A (Meyer Op.) ¶¶ 401-02. Based on technical input, Mr. Meyer identifies the FDA guidance and
`
`factors considered relevant to the ’545 Patent. Id. ¶ 403. That patent claims an e-cigarette with a
`
`heater(s) electrically connected to a lithium ion battery and a circuit that modulates the power from
`
`the battery to the heater(s). Id. ¶ 70. This “pulse width modulation” technique varies the energy
`
`to the heater and yields numerous benefits, including preventing damage to the battery, enabling
`
`safe use of lithium ion batteries, extending battery life, allowing for a “consistent puff,” and
`
`delivering quick and intense heat. Id. ¶¶ 394-400.
`
`
`
`6
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`

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`
`
` Id. ¶ 405.
`
`
`
`
`
`
`
`
`
`
`
` Id. ¶ 406. Based on
`
`this evidence, Mr. Meyer increases the royalty rate for the ’545 Patent
`
` Id. ¶¶ 514-15.
`
`D.
`
`The ’374 Patent
`1.
`
`
`
`The ’374 Patent claims an e-cigarette with an improved “puff sensor” that helps prevent
`
`inadvertently activating the heater when the user is not drawing on the device. Id. ¶¶ 79-80.
`
`11, 103:7-12.
`
` Ex. G (Hawes Dep.) at 99:4-
`
` Id. at 103:20-105:2, 108:9-110:8, 123:2-124:25.
`
`During negotiations,
`
` contemplated royalty rates around
`
` Id. at 123:21-124:25, 125:7-15.
`
`for Family A.
`
` Mot., Ex. 8 at -204.
`
`7
`
`
`
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`Case 1:20-cv-00393-LO-TCB Document 1012 Filed 02/11/22 Page 14 of 38 PageID# 28582
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`Id. at -205; see also Ex. H (Lam Dep.) at 74:24-75:7, 76:4-12.
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` See Ex. I.
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` Ex. A (Meyer Op.) ¶¶ 150-51.
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` Mot., Ex. 8 at -202.
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` had considered using
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`this technology, but did not because it was too expensive,
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` See Ex. A (Meyer Op.) ¶¶ 150-51.
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` Id. ¶¶ 136-40.
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` Id. ¶ 142.
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` Id. ¶ 168 (citing Ex. G at 144:9-145:3).
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` Ex. A (Meyer Op.) ¶¶ 148-49,
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`152-53.
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`(Lam Dep.) at 76:20-77:24 (referring to Mot., Ex. 8 at -249).
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` Ex. H
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`116:10-117:1, 119:9-18.
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` Id. at 114:5-115:23.
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`120:1.
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`8
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` Ex. G (Hawes Dep.) at
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` Id. at 119:6-
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`Case 1:20-cv-00393-LO-TCB Document 1012 Filed 02/11/22 Page 15 of 38 PageID# 28583
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` Id. at 120:12-20
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`2.
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`Mr. Meyer’s Analysis For The ’374 Patent
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` Ex. H at 78:1-15.
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` See generally Ex. A (Meyer
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`Op.) ¶¶ 28, 135-73. An overview of his general analysis is described below. Id. ¶ 143.
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`First, Mr. Meyer analyzes the
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`IP
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`. Based on interviews of ACS and Minilogic employees, testimony, and contemporaneous
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`documents, Mr. Meyer explains
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` Id. ¶¶ 144-46. He also relies on the evidence (discussed above),
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`Second, Mr. Meyer analyzes the bargaining power
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` Id. ¶¶ 148-53.
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` at the September 2019 hypothetical negotiation for the ’374 Patent.
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`Id. ¶¶ 143, 158.
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`Third, Mr. Meyer determines a baseline royalty rate using
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`Id. ¶ 143, 163. He finds that the
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`, but is consistent
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`9
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`.
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` Id. ¶¶ 158-62.
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`Case 1:20-cv-00393-LO-TCB Document 1012 Filed 02/11/22 Page 16 of 38 PageID# 28584
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` Id. ¶¶ 164-68. He concludes “a royalty rate of
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`appropriate and supported. Id. ¶ 170.
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`” is
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`. ¶¶ 169-73.
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`Fourth, Mr. Meyer extensively analyzed the Georgia-Pacific factors. Id. ¶¶ 28, 127-28.
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`He opines that certain factors would have upward pressure, but finds the appropriate royalty rate
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` Id. ¶¶ 30, 539-44.
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`III. LEGAL STANDARDS
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`Rule 702 has “three requirements for the admission of expert testimony—qualification,
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`reliability, and fit.” TecSec, Inc. v. Adobe Sys., Inc., No. 10-cv-115, 2018 WL 3649615, at *1
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`(E.D. Va. June 14, 2018). RJR does not contend that Mr. Meyer is unqualified or that his opinions
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`are irrelevant. This Court has “considerable leeway” when determining reliability. Kumho Tire
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`Co. v. Carmichael, 526 U.S. 137, 152 (1999). Where, as here, “the methodology is reasonable and
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`its data or evidence are sufficiently tied to the facts of the case, the gatekeeping role of the court
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`is satisfied, and the inquiry on the correctness of the methodology and of the results” belongs to
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`the jury. Summit 6, LLC v. Samsung Elecs. Co., 802 F.3d 1283, 1296 (Fed. Cir. 2015).
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`IV. ARGUMENT
`A. Mr. Meyer’s Opinions For The ’545, ’911, And ’265 Patents Are Admissible
`1.
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`Mr. Meyer’s Use Of
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` Is Proper
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`RJR’s motion smacks of concern that its lawyers will have to cross-examine Mr. Meyer on
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`the merits of his opinions. If so, those concerns are well placed because his opinions are admissible
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`and highly probative of an appropriately conservative and well-supported damages number.
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`“To determine a reasonable royalty on a hypothetical license, parties frequently consider
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`comparable license[s].” Intuitive Surgical, Inc. v. Auris Health, Inc., No. 18-cv-1359, 2021 WL
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`10
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`

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`Case 1:20-cv-00393-LO-TCB Document 1012 Filed 02/11/22 Page 17 of 38 PageID# 28585
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`
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`3662842, at *4 (D. Del. Aug. 18, 2021). When an expert shows that a license is economically and
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`technically comparable, a “baseline comparability” exists and the testimony is admissible. Bio-
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`Rad, 967 F.3d at 1373. Thus, in Bio-Rad, the Federal Circuit affirmed an order admitting
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`testimony about three licenses because “baseline comparability” was shown and “[t]he degree of
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`comparability was appropriately left for the jury.” Id. at 1373-4. Similarly, in ActiveVideo
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`Networks, Inc. v. Verizon Communications, Inc., the Federal Circuit affirmed an order declining
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`to exclude testimony about two licenses because “[t]he degree of comparability” and “any failure
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`on the part of [the] expert to control for certain variables are factual issues best addressed by cross
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`examination.” 694 F.3d 1312, 1333 (Fed. Cir. 2012); Intuitive, 2021 WL 3662842, at *5 (same).
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`The same result follows here. RJR admits
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` Ex. B (Sullivan Dep.) at 84:16-
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`84:5. RJR also admits that Mr. Meyer explains that this agreement is economically comparable,
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`Mot. at 3, including that it
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` Ex. A (Meyer Op.) ¶¶ 259-65. Mr. Meyer explains that
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`. Id. ¶ 262. And,
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`having not challenged them (Mot. at 6 n.4), RJR concedes his Georgia Pacific analysis and reliance
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`on Mr. McAlexander’s apportionment conclusions are proper. Supra at 5. His opinions are based
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`on a well-accepted methodology, establish a baseline comparability, and are admissible.
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`RJR contends that Mr. Meyer’s opinions should be excluded because he purportedly
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`“ignored” the “more relevant”
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`. Mot. at 1. This argument fails thrice.
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`First, the law does not require an expert to use only “the most reliable license.” Mot. at
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`12. RJR cites no case holding otherwise. Instead, Federal Circuit law allows an expert to “use the
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`11
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`Case 1:20-cv-00393-LO-TCB Document 1012 Filed 02/11/22 Page 18 of 38 PageID# 28586
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`
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`royalty rate from sufficiently comparable licenses,” and “[t]hat one approach may better account
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`for one aspect of a royalty estimation does not make other approaches inadmissible.” Summit 6,
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`802 F.3d at 1296. If RJR were correct, an expert could never rely on multiple licenses, but that is
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`not the law. Bio-Rad, 967 F.3d at 1374 (rejecting argument that expert erred by relying on three
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`licenses, rather than the “the most comparable license,” because a baseline comparability existed
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`for each license); GPNE Corp. v. Apple, Inc., No. 12-cv-2885, 2014 WL 1494247, at *9 (N.D. Cal.
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`Apr. 16, 2014) (“To survive GPNE’s Daubert challenge, Apple must only show that Mr. Meyer’s
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`consideration of GPNE’s patent litigation settlements is sufficiently reliable to be admissible under
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`Daubert. Apple has certainly met this standard.”).
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`RJR misleadingly quotes ResQNet.com, Inc. v. Lansa, Inc., Mot. at 12, but omits language
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`showing that the Federal Circuit only made a factual finding “that the most reliable license in this
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`record arose out of litigation.” 594 F.3d 860, 872 (Fed. Cir. 2010); accord ReedHycalog, UK, Ltd.
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`v. Diamond Innovations Inc., 727 F. Supp. 2d 543, 546 (E.D. Tex. 2010) (“[T]he Federal Circuit’s
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`observation [in ResQnet] was not the adoption of a bright-line rule regarding the reliability of
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`litigation licenses nor even a ruling on their admissibility. It was merely a reflection on the
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`evidence before it.”). To be sure, courts in this District considering ResQNet and RJR’s exact
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`argument have “reject[ed] [the] assertion that the comparability threshold for settlement licenses
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`requires a finding that the disputed licenses are the most reliable ones in the record” because no
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`Federal Circuit decision “impose[s] such a requirement.” Biedermann Techs. GmbH v. K2M, Inc.,
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`No. 18-cv-585, 2021 WL 6034269, at *9 n.13 (E.D. Va. Dec. 10, 2021); accord Comcast Cable
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`Commc’ns, LLC v. Sprint Commc’ns Co., LP, 218 F. Supp. 3d 375, 385 (E.D. Pa. 2016) (rejecting
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`argument that expert must rely on “most reliable license” as that “interpretation of LaserDynamics
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`strains the Federal Circuit’s decision”). That should be dispositive; RJR’s motion fails.
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`12
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`Case 1:20-cv-00393-LO-TCB Document 1012 Filed 02/11/22 Page 19 of 38 PageID# 28587
`Case 1:20-cv-00393-LO-TCB Document 1012 Filed 02/11/22 Page 19 of 38 PagelD# 28587
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`Second, the undisputed facts and controlling law confirmBP
`EE x. D (Meyer Dep.) at 58:24-59:23. RJR
`ignores—and its expert did not consider—thatPe
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`NS 23 0105: 0p)
`4195. Further, while the hypothetical negotiation would be forPo
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`that carries “minimal, if any, probative value in establishing a
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`reasonable running royalty.” ePlus, Inc. v. Lawson Software, Inc., 764 F. Supp. 2d 807, 814 (E.D.
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`Va. 2011). The “fundamental differences” between these royalty structures require “different
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`considerations,” such as calcvinsIE |
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`HealthCare LLC v. Baxalta Inc., No. 16-cv-1122, 2019 WL 330149,at *5 (D. Del. Jan. 25, 2019).
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`Dkt. 908 at 11-17.
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`as the hypothetical negotiation does not make it more comparable. Mot. at 5. Even if it did, RJR’s
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`“contentionthat[it] is a more reliable license than the baseline license[] is a challenge to the weight
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`rather than admissibility.” Network-1 Techs., Inc. v. Alcatel-Lucent USA, Inc., No. 11-cv-492,
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`2017 WL 4769037, at *4 (E.D. Tex. Oct. 23, 2017). Thatis particularly true here, because a
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`e®
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`13
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`Case 1:20-cv-00393-LO-TCB Document 1012 Filed 02/11/22 Page 20 of 38 PageID# 28588
`Case 1:20-cv-00393-LO-TCB Document 1012 Filed 02/11/22 Page 20 of 38 PagelD# 28588
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`Ex. A (MeyerOp.) §] 261-65; supra at 4-5. Even if RJR’s criticisms were correct, “that a license
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`is not perfectly analogous generally goes to the weight of the evidence,” and disputes about“[t]he
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`degree of comparability’ and Mr. Meyer’s “use of particular licenses and not others” is
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`“appropriately left for the jury.” Ericsson, Inc. v. D-Link Sys., Inc., 773 F.3d 1201, 1227 (Fed.
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`Cir. 2014); Bio-Rad, 967 F.3d at 1374; Network-1 Techs., 2017 WL 4769037,at *4.
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`Third, RJR’s claim that Mr. Meyer “ignored” is false. Mot.
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`at 1. He analyzedit across 50 paragraphsofhis report. Ex. A (Meyer Op.) 4] 192-242. Mr. Meyer
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`explineds,s
`a. Id. § 268. He also calculatedSi
`Po which, unlike Dr. Sullivan’s much lowerrate, is consistent
`I 1%: 008 3117-22. white
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`RJR argues that his opinion is “plain wrong,” Mot. at 14, that is incorrect and irrelevant because
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`the Court’s inquiry at this stage is “solely on principles and methodology, not on the conclusions
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`that they generate.” Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 595 (1993).?
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`PORes
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`Theopposites»
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`? RJR’s argument that Mr. Meyer
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`that he also calculated the
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`is belied by its admission
`See Mot. at 14 n.7.
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`3 Contrary to RJR’s suggestion, Mr. Meyer“fully disclosed” these opinions, which RJR never
`movedto strike. Ex. A (Meyer Op.) §§ 252-54; Ex. D (Meye