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`1
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`UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF VIRGINIA
`
`Civil Action
`No. 1:20-cv-00393-LMB/TCB
`June 8, 2022
`8:51 a.m.
`
`)))))))))))))
`
`PHILIP MORRIS PRODCUTS S.A.,
`
`Counterclaim Plaintiff,
`v.
`R.J. REYNOLDS VAPOR COMPANY,
`
`Counterclaim Defendant.
`
` VOLUME 1 - MORNING SESSION
`TRANSCRIPT OF JURY TRIAL PROCEEDINGS
`BEFORE THE HONORABLE LEONIE M. BRINKEMA,
`UNITED STATES DISTRICT COURT JUDGE
`
`APPEARANCES:
`For the Plaintiffs:
`
`Maximilian Antony Grant, Esq.
`Latham & Watkins LLP (DC)
`555 11th Street, NW
`Suite 1000
`Washington, DC 20004-1304
`202-637-2200
`Email: Max.grant@lw.com
`Clement Joseph Naples, Esq.
`Latham & Watkins, LLP
`885 Third Avenue 25th Floor
`New York, NY 10022
`212-906-1200
`Email: Dement.naples@lw.com
`Gregory K. Sobolski, Esq.
`Latham & Watkins, LLP
`505 Montgomery Street
`Suite 2000
`San Francisco, CA 94111-6538
`202-637-2267
`Email: Max.grant@lw.com
`
`Scott L. Wallace, RDR, CRR
`Official Court Reporter
`
`
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`and his client. I don't know why that is. We certainly didn't
`hold anything back from him. He represented those entities, as
`did Ms. Weiswasser.
`So the parties were able to reach a settlement. That's
`why there's a stipulation of dismissal of those parties, which
`has now narrowed the case, but unfortunately it creates a
`scheduling issue with Dr. Suhling given his condition.
`THE COURT: All right. But it also opens the door. I
`mean, have you not tried to settle the remaining issues? Has
`there been any effort made to do that?
`MR. BURNETTE: There has been multiple years of effort,
`Your Honor. I can tell you I've been involved since the
`beginning. I tried the ITC case for Reynolds that you heard
`about this morning. There are cases all over the world between
`these parties relating to patents on e-cigarettes and
`heat-not-burn products, so it's not just this case.
`Unfortunately, the parties have been engaged in years of
`discussions trying to resolve this.
`THE COURT: You can't divide the world between the two
`types of technology? I mean, yours is the moist vapor and theirs
`is the dry vapor. You've not thought about it that way?
`MR. BURNETTE: Well, I wish it was that simple, Your
`Honor. Our client has dry vapor products elsewhere in the world.
`Both companies have moist products, as you've coined them,
`throughout the world. So it is -- the companies are trying to
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`reach a resolution. There's been some progress on that, but I
`don't expect that's going to happen during the timeframe of this
`case.
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`THE COURT: Or divide the world. I've done patent cases
`in the past where that's exactly what happened. Somebody got
`Asia and somebody got Europe. I mean, you know, again, it's
`smart to always settle these cases if you can.
`MR. BURNETTE: Yeah, and we've been -- as Mr. Grant said,
`our client and Altria have been working because Altria entities
`are different companies from Philip Morris Products. They have
`different issues, different competitive balances, so we were able
`to reach a resolution with them but, unfortunately, haven't been
`able to do so with Philip Morris Products which is the Swiss
`entity.
`THE COURT: All right. Well, as I said, if you don't
`settle it at this level, I'm sure the Federal Circuit, like the
`4th Circuit, has a mediation program at it is well, and that
`certainly is an option out there. It's too bad that -- did you
`ever try to work with Judge Buchanan here to try to settle?
`MR. BURNETTE: We have not but we have done -- the parties
`have done a -- the parties have done a mediation with Retired
`Judge Hochberg as part of the ITC case, and I can't say -- and
`Mr. Grant can elaborate if he feels it necessary -- but there has
`been some positive movement over the last few months between the
`Swiss entities and our client. I'm not optimistic, Your Honor,
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` UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF VIRGINIA
`
`Civil Action
`No. 1:20-cv-00393-LMB/TCB
`June 9, 2022
`9:20 a.m.
`
`)))))))))))))
`
`PHILIP MORRIS PRODCUTS S.A.,
`
`Counterclaim Plaintiff,
`v.
`R.J. REYNOLDS VAPOR COMPANY,
`
`Counterclaim Defendant.
`
` VOLUME 2 - MORNING SESSION
`TRANSCRIPT OF JURY TRIAL PROCEEDINGS
`BEFORE THE HONORABLE LEONIE M. BRINKEMA,
`UNITED STATES DISTRICT COURT JUDGE
`
`APPEARANCES:
`For the Plaintiffs:
`
`Maximilian Antony Grant, Esq.
`Latham & Watkins LLP (DC)
`555 11th Street, NW
`Suite 1000
`Washington, DC 20004-1304
`202-637-2200
`Email: Max.grant@lw.com
`Clement Joseph Naples, Esq.
`Latham & Watkins, LLP
`885 Third Avenue 25th Floor
`New York, NY 10022
`212-906-1200
`Email: Dement.naples@lw.com
`Gregory K. Sobolski, Esq.
`Latham & Watkins, LLP
`505 Montgomery Street
`Suite 2000
`San Francisco, CA 94111-6538
`202-637-2267
`Email: Max.grant@lw.com
`
`Scott L. Wallace, RDR, CRR
`Official Court Reporter
`
`
`
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`A.
`Yes. When I look at the U.S. patents that were a part of
`the license -- Fontem license agreement, as a whole, that meant
`the value of the patent portfolio as a whole would be
`100 percent. So then I looked at the various five families
`within these set of patents and identified which groupings of
`patents would be of the greatest value.
`And what I found is based upon the criteria that I
`reviewed, and analyzed these patents, that the spray atomizer
`and the shell design patent families were really the greater
`value in term of the sets of patents. And so I ascribed a
`70 percent to those two groups, split 35 percent each.
`For the other three, I did find value associated with
`them and they were litigated at some point, which adds
`additional interest from a value standpoint. But I found that
`the -- that they were a little bit narrower in their claim
`scope. They would not provide the same level of benefits, so I
`ascribed a 10 percent evaluation to the each of those.
`Q.
`And the air channel patents, did you just hear
`Mr. Walbrink testify about the air channel patents?
`A.
`Yes, I did.
`Q.
`Please let's turn to PX 142.
`What is PX 142?
`A.
`PX 142 in my binder is a set of patents, and this is part
`of the -- this is a number of patents that are part of the spray
`atomizer family of patents.
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`Q.
`And just so the record is clear, even though only one
`patent is shown on the screen, PX 142 is a collection of
`patents that --
`A.
`Yes, PX 14 is a collection of --
`(Court reporter clarification.)
`BY MR. MOORE:
`Q.
`So just so the record is clear, although only one patent
`is shown on the screen, PX 142 is a -- the collection of patents
`that make up the spray atomizer family, correct?
`A.
`That's correct. This is a collection of patents. The
`957 is just the first page in this set of patents.
`Q.
`At a high level, can you describe the technology of the
`spray atomizer family?
`A.
`Yes. The spray atomizer family is -- if we look at the
`claims as a whole, they're directed to the electronic cigarette
`as a whole. But there are very specific benefits that they
`afford, one of which is controlling the discharge of current
`from the battery. And that's got a -- several great benefits
`because, number one, you're controlling the discharge from a
`safety standpoint so that you don't get into an overdischarge
`condition. And the second major benefit that comes from that is
`that you can control the heating, and then the replacement of
`the battery or the recharge of the battery doesn't have to be as
`often.
`Q.
`Okay. Let's look at the '957 Patent, which is the first
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`one in PX 142. What is the '957 Patent, the one at the top?
`A.
`The '957 Patent is one of the patents in the family of
`spray atomizer patent family.
`Q.
`And let me direct you to Column 5, lines 36 through 42 of
`the '957 Patent, and we'll put it up on the screen as well.
`A.
`Okay.
`Q.
`Okay. Can you please describe to the jury what this
`describes?
`A.
`Yes, this is -- in Column 5, at lines 36 and following,
`defines essentially what I was saying earlier, characterizing
`this patent. Specifically a micro control unit, which is
`labeled as MCU, accomplishes the discharging of the battery and
`the protection of battery using what's called pulse-width
`modulation. This is a technique by which rather than turning on
`access to the battery and discharging it continually, you
`discharge it in pulses, so it's not on all the time. So this is
`a mechanism where you can control the discharge from a safety
`standpoint, and you can also allow it to be done repetitively
`and, therefore, you don't have to recharge the battery as often.
`Q.
`Can you tell the jury what the benefit of the spray
`atomizer patents are?
`A.
`Well, one of the main benefits is that it's a very clean
`patent, set of patents. It's -- the scope of the claims is
`pretty broad. It's difficult to design around these particular
`patent claims, and there's a benefit that's afforded not only to
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`the seller of the -- of products that would be commercialized
`based upon these patents, but -- excuse me -- there's also a
`benefit to the user because the user would not have to recharge
`or replace the batteries as often.
`Q.
`Okay. Now, in PX 142, let me direct you to one of the
`other patents, the '205 Patent.
`THE COURT: Do you have a Bates number?
`MR. MOORE: It ends in 3856.
`THE COURT: Thank you.
`BY MR. MOORE:
`Q.
`What is the '205 Patent?
`A.
`The '205 Patent is another patent within that spray
`atomizer family of patents.
`Q.
`Now, let's -- let me direct you to Claim 1 of the
`'205 Patent. Can you tell the jury what this shows?
`A.
`Yes. This is a representative claim. This is Claim 1 of
`the '205 Patent, but it's representative of the claims that are
`associated with and combined within the patent family for spray
`atomizer.
`Q.
`Why did you apportion 35 percent of the value for the
`Fontem patents to the spray atomizer patent family?
`A.
`Well, the -- if we look at the scope of the claims, the
`claims are directed to an entirety of an electronic cigarette,
`including the battery assembly and the atomizer unit and the
`electrodes are necessary for heating, so it's an entirety.
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`These claims are basic and based on -- they're very
`difficult to design around. So if the -- if one was to design
`around them, one would be spending far more money. So it's a
`cost factor savings as well as a fundamental aspect of the
`patent claim.
`Q.
`Let's turn to PX 140. Can you please tell the jury what
`PX 140 is?
`A.
`PX 140 is the set of patents. There are a number of
`patents in this that are part of what I call the shell design
`patents. And what's shown here is the first patent in that
`group, which is the 944 patent at PX 140.
`Q.
`And just so the record is clear, while only one patent is
`shown on the screen, PX 140 actually includes all the shell
`design patent family, correct?
`A.
`Yes, that is correct.
`Q.
`At a high level, can you describe the technology of the
`shell design family to the jury?
`A.
`Yes. The technology is directed to one of the concerns
`that a user and/or a commercial manufacturer of these electronic
`cigarettes has, and that is when you heat the cartridge or heat
`the liquid in the cartridge, it creates a vapor. That vapor is,
`of course, going to be what, during a draw or a puff, the user
`is going to be experiencing.
`The difficulty is, is that as that vapor transports
`across down the air channel, droplets can be formed inside that
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`path. And if the droplets are formed, they can get larger.
`They can actually create a clogging in that area. But they can
`also potentially leak out of the e-cigarette. And, of course,
`if they leak, then that's a problem for the user. It could be
`staining their clothes, staining the skin, a tremendous cost
`factor for that, and obviously it's not something one wants to
`do. So the spray atomizer patents provide a way in which that
`could be remedied.
`Q.
`Now, let me direct you to the '742 Patent within PX 140.
`A.
`Okay, I have it.
`Q.
`What is the '742 Patent?
`A.
`The 742 Patent is one of the patents in the shell design
`family of patents.
`Q.
`And let me direct to you Column 4, lines 32 through 36 of
`the '742 Patent. Can you describe to the jury what this shows?
`A.
`Yes. As I had mentioned, this capitalizes on that. It
`says, "When the aerosol enters the cigarette holder shell,
`multiple small liquid drops are condensed into bigger ones,
`which fall into the clearance between the cigarette holder shell
`and the air channel without being absorbed by the air channel."
`So this is what I mentioned earlier is the potential for
`leakage because of the fact that you've got these air
`droplets -- these droplets forming in the channel.
`Q.
`And now let's turn to the '944 Patent within PX 140.
`What is this?
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`A.
`The '944 Patent is, again, one of the patents in the set
`of patents for the -- for the shell design patent family.
`Q.
`And let's turn to Claim 42 of the '944 Patent.
`What is this?
`A.
`This is a representative claim for the shell design
`patents.
`Q.
`Why did you apportion 35 percent of the value of the
`Fontem patents to the shell design patent family?
`A.
`Apportioned the value because it does -- the patent
`claims are directed to a very important feature, which is the
`air droplet formation and making sure that that does not exit
`the mouthpiece. And the claims are broad and I find that they
`are patent -- they are claims that were not easy to design
`around without expending additional cost.
`Q.
`Please, let's turn to another exhibit, PX 144.
`Do you have it?
`A.
`Yes, I have it in front of me.
`Q.
`Can you please tell the jury what this is?
`A.
`This is the third family set of patents. There are a
`number of patents in this family. What we're looking at here is
`the first in that set of patents, which is the '410 Patent.
`Q.
`So, again, while only one patent is shown on the screen,
`PX 144 is actually a collection of patents, correct?
`A.
`Yes, that is correct.
`Q.
`And what does that collection of patents represent?
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`A.
`They represent a particular category that I referred to
`as the reed switch, and this is a set of patents that is
`specifically directed to a way in which one was to create a
`mechanism for sensing and detecting and controlling the turning
`on of the heater element.
`THE COURT: Counsel, it's about 11:00, and we normally
`take our break around now, so I'm going to give the jury a
`20-minute stretch break, get some coffee, and move around a bit,
`and we'll be back in session at 20 after.
`(Jury out at 11:02 a.m.)
`(Thereupon, a recess in the proceedings occurred from
`11:02 a.m. until 11:20 a.m.)
`THE COURT: All right, Counsel. The jury is ready to come
`in, and I know Philip Morris just provided the Court with two
`motions in limine. I assume they've been filed downstairs?
`MR. GRANT: They have, Your Honor. All I wanted to say
`was, after this witness -- I just want to let the Court know
`what's coming -- there are a couple -- three deposition clips
`that are found additional for damages, there are some
`stipulations that are not agreed to, and then there's at least
`one stipulation we'll need to talk about that is not -- there are
`stipulations that are and there's one that is not. So I just
`wanted to inform the Court so that when this witness completes
`redirect or recross, I'll stand up and describe the depositions.
`THE COURT: All right. That's fine. Let's bring the jury
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`in.
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`THE COURT SECURITY OFFICER: Yes, Judge.
`THE COURT: Is Paul Meyer your last witness, or is there a
`witness after that?
`MR. GRANT: He's the last witness in our case-in-chief.
`THE COURT: All right. Thank you.
`(Jury in at 11:22 a.m.)
`THE COURT: All right, ladies and gentlemen, we're all
`set. We'll continue with the questioning of McAlexander.
`BY MR. MOORE:
`Q.
`Welcome back, Mr. McAlexander.
`A.
`Thank you.
`Q.
`Before we broke we were talking about PX 144 in the reed
`switch family. Do you remember?
`A.
`Yes.
`Q.
`Can you describe the technology of the reed switch patent
`family to the jury at a high level?
`A.
`At a high level within electronic cigarette, there is a
`mechanism by which you need to sense whether or not the person
`is desiring to draw on the cigarette, and so there are various
`techniques that are used for accomplishing that, and the reed
`switch set of patents identifies one of those.
`Q.
`And let's look at the '410 Patent, which is at the top of
`PX 144. What is the '410 Patent?
`A.
`The '410 Patent is one of the patents within this reed
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`family set of patents.
`Q.
`Now, let's go to Claim 1 of the '410 Patent. What is
`Claim 1 of the '410 Patent?
`A.
`Claim 1 is a representative claim from the set of patents
`that are created as part of the reed family switch of patents.
`Q.
`And why did you apportion 10 percent of the value of the
`Fontem patents to the reed switch patent family?
`A.
`Well, it's an important benefit to the industry to have
`some mechanism to detect when a puff is occurring and to be able
`to calibrate according to that, so there's value to it, but the
`cost that's associated with this type of an implementation is
`higher, and there are other options that are even less costly
`for design-arounds, so that's why I assigned a lesser value to
`it, 10 percent.
`Q.
`What are some of the benefits of the reed switch patents?
`A.
`Well, some of the benefits are the fact that you can make
`a detection as to when a puff is occurring, and you can then
`adjust the delivery according to that.
`Q.
`Why did you say those claims are more narrow?
`A.
`Because they require a specific type of switch and
`different features within the claims that, if you look at it,
`they're costly, and they are just a very narrow way of doing it.
`Q.
`Are any of those features shown in Claim 1 of the '410
`Patent?
`A.
`Yes. For example, about two-thirds of the way down
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`there's one that's called a ripple film. This is a specific
`type of metallic structure that is used. Also, you will find it
`requires a first magnetic steel, a second magnetic steel and a
`magneto device. A magneto device is basically a magnetic type
`of sensor, and so these are costly, and the drawback from using
`these is that this type of a sensor, like a reed switch or a
`magneto type of switch, is because it's magnetically inclined.
`That means that the environment that you're in can
`sometimes cause a false trigger, so they could actually turn on,
`assuming that there was a puff when really one did not exist.
`Q.
`Thank you. Let's turn to PX 146. It's a big notebook.
`A.
`It is.
`Q.
`Can you please tell the jury what PX 146 is?
`A.
`PX 146 is a set of patents that are in the fourth family
`that I identified called the body sensors family.
`Q.
`Can you describe the technology of the body sensitive
`sensor and atomizer patent family for the jury?
`A.
`Yes. Generally, it is directed to a particular way in
`which you combine the nozzle end of the electronic cigarette
`with the heating element. It's a very specifically defined way
`to do it. It can be done, but it's the type of thing that would
`be costly and it's easily designed around.
`Q.
`And let's look at the '318 Patent, which is shown here at
`the top of PX 146. What is that?
`A.
`That is one of the patents within the set of patents that
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`are part of the family that I've identified as the body sensor
`patents.
`Q.
`And let's go to Claim 1 of the '318 Patent. Can you tell
`the jury what Claim 1 of the '318 Patent is?
`A.
`Claim 1 is -- of the '318 Patent is a representative
`claim from the body of patents that are part of this particular
`family.
`Q.
`And why did you apportion 10 percent of the value of the
`Fontem patents to the body sensitive sensor and atomizer patent
`family?
`A.
`Well, I attached value to the patent as I did with the
`other patents because there's at least one patent within this
`group that was part of an infringement action in the United
`States, but I also looked at it from the perspective of if it is
`directed to something that is beneficial to the industry, to the
`user, but at the same time, since the claims are very narrowly
`drawn, then that means that the ease of design-around is
`greater, and, therefore, it defined a less value.
`Q.
`Can you show an example of why the claims are narrowly
`drawn in Claim 1 of the '318 Patent?
`A.
`Yes. I paid particular attention to the element called
`the vaporization nozzle, and the patent claim states that "that
`vaporization nozzle comprising a coil heating element having a
`longitudinal axis substantially parallel to the longitudinal
`axis of the nozzle," so it's very specifically structurally
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`defined that it has to be a certain way.
`And then it also says that "wherein the electric heating
`element," that which creates the vaporization, "is arranged on
`the outside of the vaporization nozzle."
`This is not really the -- I think the most beneficial way
`to do it, but it is a way, but it's very narrow; therefore, if
`one arranges the nozzle in such a way that the heating element
`is not on the outside, you do not practice this invention, so I
`therefore gave it less weight, less value.
`Q.
`Now let's turn to PX 136.
`A.
`Okay. I have it.
`Q.
`What is PX 136?
`A.
`Well, this is a set of five patents that are part of the
`air channel category or family of patents that I defined.
`Q.
`Can you describe the technology of the air channel patent
`family at a high level?
`A.
`Yes, in the air channel, clearly from the liquid storage
`reservoir to the end of the mouthpiece that is going to be
`puffed by or drawn upon by the user, there is going to be some
`mechanism by which you need to channel that vapor, and so this
`is directed generally to that area.
`Q.
`Okay. Now, let me direct to you '300 Patent in PX 136.
`A.
`All right. I have it.
`Q.
`What is the '300 Patent?
`A.
`It is one of the patents in this air channel family.
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`Q.
`And let's go to Claim 1 of the '300 Patent.
`A.
`I have it.
`Q.
`What does this show?
`A.
`This shows a representative claim from the air channel
`family of patents.
`Q.
`Why did you apportion 10 percent of the value of the
`Fontem patents to the air channel patent family?
`A.
`Well, directing it -- directing the attention to the air
`channel is an important feature of the electronic cigarette, but
`I apportioned a lower percentage, 10 percent, to this because
`it's very specific on how that air channel is formed.
`If you look, as an example, in the last section called
`"the channel forming part," it states that "the channel has a
`uniform diameter between the wire coil and the inhalation port,"
`so that's perfectly fine to have a uniform channel diameter, but
`that means that you can at any one point in that channel make
`the diameter different if it's not uniform; therefore, you can
`design around it.
`Q.
`Okay. Let's go back to your Slide 3. So in summary, how
`did the value of the five patent families in the Fontem
`agreements compare to each other?
`A.
`I have shown in this demonstrative -- it's what I have
`indicated before -- is that I looked at these five primarily --
`primary family of patents that I felt, based upon my analysis,
`were the most important. The remaining families were of
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`de minimis value, and so when I then looked at these particular
`five families in more detail, I found that the spray atomizer
`and shell design patent families were the more -- were the most
`value within the set of five, and I apportioned 35 percent
`valuation to each of those.
`The remaining three, which I've defined as the reed
`switch, the body sensitive sensor and atomizer, and the air
`channel, these three were of lesser value for the reasons that
`I've stated, and so I apportioned a 10 percent valuation to
`those three, so the sum total is a hundred percent divided
`across these five families.
`Q.
`Have any of Reynolds' experts provided an alternative
`apportionment analysis?
`A.
`No, they have not.
`MR. MOORE: No further questions at this time.
`THE COURT: All right. Cross-examination?
`MS. BAKER: May I proceed, Your Honor?
`THE COURT: Yes.
`CROSS-EXAMINATION OF JOE McALEXANDER
`BY MS. BAKER:
`Q.
`Good morning, Mr. McAlexander.
`A.
`I guess it is still morning. Good morning.
`Q.
`It is just barely.
`I don't believe you and I have met before, but my name is
`Emily Baker, and I represent Reynolds in this case.
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`"royalty" a few times. Can you just please explain what a
`royalty is and how that fits into your negotiation?
`A.
`Yes. I heard the openings, and Mr. Grant referred to it
`as rent you pay for property, but basically with a patent --
`with a license, you don't own the patent, you just get a right
`to use it so you have to pay rent. Basically you're paying a
`royalty, so sometimes the best word is a fee. It's like a fee
`you pay to use something, so you figure out the value of what
`you're using and you set the fee, so it's consideration given to
`use someone's property.
`Q.
`And on Slide 5 here, PX 5, you're showing a couple of
`people at a table and describing a hypothetical negotiation.
`Can you explain to the jury what that is?
`A.
`Yes. I mean, there's this Georgia-Pacific Factor 15.
`We'll talk about it. It's really a structure from the courts to
`figure out these royalties, but the last factor is
`Georgia-Pacific 15; it's called "Hypothetical Negotiation."
`So we're in a setting where we're trying to figure out
`how much should Reynolds pay Philip Morris if we assume these
`patents are valid and infringed. So the patents are valid and
`they're being used, so I get that assumption from the Court to
`do my work and Georgia-Pacific 15 in this setting, and I bring
`Reynolds into this room with Philip Morris and I say, "Let's get
`in here and let's get all the information we have."
`So everybody gets me all the information, and really what
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`happens is, it's really a recreation of what happens in the real
`world when you enter into a royalty. You figure out what
`products are used in the patents, what are the sales, both in
`the past and then you make projections, so that's the sales
`base, and then you say, "How is each party -- what's each party
`doing?" Someone's giving something up, Reynolds is gaining a
`patent use, and Philip Morris is saying, "I'm going license this
`to you," so there's a give and a get, and you do all that and we
`have 15 factors that really mirror what happens in the real
`world. We'll show you a picture of that in a second, and the
`outcome is reasonable royalty, so we have to assume willing
`licensor, willing licensee, so that's Philip Morris and
`Reynolds, and they come in with all the data from both sides and
`we try to reach a reasonable determination of what they would
`pay in an negotiation that never actually occurred.
`I've been doing this since 1992, and everyone you have --
`everyone is a little different. You have to get in there and do
`it, so I'm going to describe how I did that in these
`circumstances.
`Q.
`And as part of your analysis did you determine when the
`hypothetical negotiation would occur for the two Philip Morris
`patents in this case?
`A.
`Yes, I have to determine that.
`Q.
`Let's talk about that. Let's go to Slide 6, and we've
`got the two patents, '265 and the '911, on the screen. Can you
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`didn't happen.
`As everybody knows in this case, these patents have never
`been licensed, and I'll discuss that in a second. So there's no
`Factor 1 licenses, which then go to the Factor 2, and you start
`looking at other information that may be helpful because you
`need to, once again, address what they're going to pay.
`Q.
`And what's Georgia-Pacific Factor 2, which is highlighted
`on the screen?
`A.
`Well, that's a situation where the court says, since
`there's no Philip Morris license for these two patents, let's go
`to Reynolds and see what they've done historically with their
`licensing, and is there some licensing history like an agreement
`where they've licensed comparab
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