Case 1:20-cv-00393-LO-TCB Document 874-7 Filed 01/21/22 Page 1 of 3 PageID# 23307
`Case 1:20-cv-00393-LO-TCB Document 874-7 Filed 01/21/22 Page 1 of 3 PagelD# 23307
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`EXHIBIT 7
`EXHIBIT 7
`(PUBLIC)
`(PUBLIC)
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`Case 1:20-cv-00393-LO-TCB Document 874-7 Filed 01/21/22 Page 2 of 3 PageID# 23308
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`RAI Strategic Holdings, Inc.
`and
`R.J. Reynolds Vapor Company
`v.
`Altria Client Services LLC,
`Philip Morris USA, Inc.,
` and Philip Morris Products S.A.
`
`
`Civil Action No. 1:20-cv-00393-LO-TC
`
`Amended and Supplemental Opening Expert Report
`of Paul K. Meyer
`
`TM Financial Forensics, LLC
`April 26, 2021
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`CONFIDENTIAL BUSINESS INFORMATION – SUBJECT TO THE PROTECTIVE ORDER
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`

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`Case 1:20-cv-00393-LO-TCB Document 874-7 Filed 01/21/22 Page 3 of 3 PageID# 23309
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` for a license to the technology claimed in the ’545 Patent through December 31,
`2020.730
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`514. In addition, the
` reasonable royalty rate addressed above does not account for the ’545
`Patent’s importance to the Accused VUSE Products receiving PMTA authorization from
`the FDA. I understand from Stacy Ehrlich that, without the battery safety features as
`expressed in the ‘545 Patent, it would be unlikely for the FDA to grant the VUSE
`
`PMTAs.731 Furthermore,
`
`
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`732 In my opinion, when considering the significant importance of the
`technology claimed in the ’545 Patent to the PMTA authorization process (in addition to
`the considerations that formed my basis for the
` royalty rate), a
` reasonable royalty
`rate would result from the hypothetical negotiation between the parties. From a royalty
`valuation and financial and economic perspective, the increased royalty is reasonable as
`it allows Reynolds to avoid identified PMTA authorization risks and considers: (1) the
`investments made by Reynolds in the Accused VUSE Products; (2) the significant
`commercial success achieved by the Accused VUSE Products including sales and market
`share;733 and (3) RJRV’s investments in the accused product PMTAs.
`
`515. Applying a
` royalty rate to RJRV’s net sales of Accused VUSE Products for the ’545
` (based on the sales data available to date), results in royalty
`Patent of
` for a license to the technology claimed in the ’545 Patent through
`damages of
`December 31, 2020.734
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`730 Attachment 5A.U. .
`731 Based on discussions with Mr. McAlexander; Based on discussions with Ms. Ehrlich.
`732 [ITC] Deposition of James N. Figlar (Executive Vice President of Scientific and Regulatory Affairs and R&D at
`Reynolds), September 25, 2020: pp. 50; Expert Report of Nisha M. Mody, Ph.D. dated October 5, 2020, In the
`Matter of Certain Tobacco Heating Articles and Components ThereOf, United States International Trade
`Commission, INV. No. 337-TA-1199, pp. 98-99. See also, Deposition of Eric Hunt (Senior Manager, RJRV Vapor
`Products Development), April 14, 2021: p. 306.
`733 See Attachments 6, 12.1.U and Attachment 17.U series.
`734 Attachment 5A.U.
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`CONFIDENTIAL BUSINESS INFORMATION – 169 of 178
`SUBJECT TO PROTECTIVE ORDER
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