Case 1:20-cv-00393-LO-TCB Document 997 Filed 02/11/22 Page 1 of 8 PageID# 27832
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`UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF VIRGINIA
`ALEXANDRIA DIVISION
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`Case No. 1:20-cv-00393-LO-TCB
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`ORAL ARGUMENT REQUESTED
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`Plaintiffs and
`Counterclaim Defendants,
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`RAI STRATEGIC HOLDINGS, INC. AND
`R.J. REYNOLDS VAPOR COMPANY
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`v.
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`ALTRIA CLIENT SERVICES LLC; PHILIP
`MORRIS USA INC.; and PHILIP MORRIS
`PRODUCTS S.A.
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`Defendants and
`Counterclaim Plaintiffs.
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`PMI/ALTRIA’S OPPOSITION TO RJR’S MOTION IN LIMINE NO. 10
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`Case 1:20-cv-00393-LO-TCB Document 997 Filed 02/11/22 Page 2 of 8 PageID# 27833
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`TABLE OF CONTENTS
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`Page
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`RJR’S MIL #10: PMI/Altria Should Be Allowed to Present Argument, Evidence, and
`Testimony Regarding the Fontem Litigation and Fontem-RJR Settlement Agreement on
`Which RJR’s Own Damages Expert Relies .....................................................................................1
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`i
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`Case 1:20-cv-00393-LO-TCB Document 997 Filed 02/11/22 Page 3 of 8 PageID# 27834
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`TABLE OF AUTHORITIES
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`CASES
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`Digital Reg of Texas, LLC v. Adobe Sys., Inc.,
`No. 12-cv-1971, 2014 WL 4090550 (N.D. Cal. Aug. 19, 2014) ................................................. 2
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`In re Namenda Direct Purchaser Antitrust Litig.,
`No. 15-cv- 7488, 2019 WL 6242128 (S.D.N.Y. Aug. 2, 2019) .................................................. 1
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`Novartis Pharms. Corp. v. Teva Pharms. USA, Inc.,
`No. 05-cv-1887, 2009 WL 3754170 (D.N.J. Nov. 5, 2009) ........................................................ 3
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`TecSec, Inc. v. Adobe Inc.,
`No. 10-cv-115, 2018 WL 11388472 (E.D. Va. Nov. 21, 2018) .................................................. 1
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`United States v. Mickens,
`53 F.3d 329 (4th Cir. 1995) ......................................................................................................... 3
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`RULES
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`FED. R. EVID. 703 ............................................................................................................................ 3
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`FED. R. EVID. 801(c) ....................................................................................................................... 3
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`ii
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`Case 1:20-cv-00393-LO-TCB Document 997 Filed 02/11/22 Page 4 of 8 PageID# 27835
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`RJR’S MIL #10: PMI/Altria Should Be Allowed to Present Argument, Evidence, and
`Testimony Regarding the Fontem Litigation and Fontem-RJR Settlement Agreement on
`Which RJR’s Own Damages Expert Relies
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`RJR contends that the Court should bar PMI/Altria from referencing third-party
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`infringement allegations against RJR or suggesting that RJR “is a serial infringer.” Mot. at 1.
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`PMI/Altria agreed to do neither during the meet and confer process. PMI/Altria also sought to
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`make clear that the parties could reference the infringement allegations that Fontem made against
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`RJR, which resulted in RJR taking a license that RJR’s damages expert opines is comparable to
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`the hypothetical negotiations in this case. Id. at 2. RJR refused to agree and filed this motion.
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`After RJR filed its motion, PMI/Altria proposed the stipulation below to resolve the issue:
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`No party will present argument, evidence, or testimony that Reynolds infringed or
`has been accused of infringing a patent owned by a third-party, other than a Fontem
`entity. For clarity, this agreement does not preclude any party from presenting
`argument, evidence, or testimony relating to PMI/Altria’s infringement allegations
`in this case or Fontem’s infringement[] allegations against Reynolds in their prior
`litigations.
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`Ex. A (1/26/21 Schubert Email). RJR rejected it, admitting that it actually wants to bar “testimony
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`about Fontem’s infringement[] allegations against [RJR].” Ex. B (1/27/21 Michalik Email). There
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`is no basis for excluding such evidence. RJR’s motion should be denied for four reasons.
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`First, PMI/Altria agreed not to reference third-party infringement allegations against RJR
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`(other than Fontem’s allegations) or suggest that RJR is a serial infringer. Ex. A. The Court should
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`accept PMI/Altria’s representation, enter PMI/Altria’s proposed stipulation, and deny RJR’s MIL
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`No. 10 as moot. See TecSec, Inc. v. Adobe Inc., No. 10-cv-115, 2018 WL 11388472, at *4 (E.D.
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`Va. Nov. 21, 2018) (adopting Adobe’s proposed MIL stipulation “as binding” where Adobe
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`proposed the stipulation, “but rather than agree to jointly file the stipulation, TecSec instead
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`brought [a] Motion in Limine”); In re Namenda Direct Purchaser Antitrust Litig., No. 15-cv- 7488,
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`2019 WL 6242128, at *6 (S.D.N.Y. Aug. 2, 2019) (same).
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`1
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`Second, RJR’s request to exclude Fontem’s infringement allegations against RJR is
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`baseless and invites legal error. Mot. at 1. RJR admits that “[the Fontem-RJR] agreement and the
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`underlying litigation may be referenced” for damages. Id. That is dispositive. RJR also admits
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`that both parties have “proffered expert opinions on damages that discuss th[at] agreement.” Id.
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`at 6. Indeed, RJR’s expert relies on that agreement to form his royalty opinions for four asserted
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`patents and, as the law requires, discusses the underlying litigations. Ex. C (Sullivan Rbt.) ¶¶ 169,
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`220, 263-66; Digital Reg of Texas, LLC v. Adobe Sys., Inc., No. 12-cv-1971, 2014 WL 4090550,
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`at *12 (N.D. Cal. Aug. 19, 2014) (explaining that, when relying on settlement agreements, experts
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`must consider the underlying litigation to ensure the consideration paid reflects the value of the
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`licensed technology, not the cost of avoiding further litigation); see also Ex. D (Meyer Op.) ¶¶ 192-
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`242. The Court should not exclude this highly probative evidence.
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`RJR’s proposed “carve out” to allow the parties “to discuss the [Fontem-RJR] Agreement”
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`for “the sole purpose of damages” should be rejected. Mot. at 2, 6. There is no basis for limiting
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`evidence about the Fontem-RJR Agreement or the underlying litigation to “the scope of the
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`disclosed expert opinions.” Id. at 6. PMI/Altria can examine any competent witnesses on the
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`license in the Fontem-RJR Agreement and the underlying litigation, including RJR’s corporate
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`witness on this topic (Nick Gilley) who is identified on RJR’s trial witness list. Ex. E (RJR’s Trial
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`Witness List) at 3; Ex. F (12/3/20 Gilley Dep.) at 210:3-223:22. Moreover, there is no basis for
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`barring “lawyers []or witnesses” from “expound[ing] on any of the facts [about the Fontem-RJR
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`Agreement or underlying litigation] in any of the expert reports.” Id. Counsel for PMI/Altria may
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`properly “expound on” those topics during opening statements and closing argument, consistent
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`with the rules of evidence. RJR cites no case suggesting otherwise.
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`2
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`Third, RJR contends that third-party allegations of infringement are inadmissible hearsay.
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`Mot. at 5. RJR is wrong. As explained above, PMI/Altria agreed not to reference such allegations,
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`except for Fontem. See supra at 1. In addition, Fontem’s infringement allegations are not hearsay
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`because they will be offered for damages purposes and not for the truth of the matter asserted (i.e.,
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`to prove that RJR actually infringed Fontem’s patents). FED. R. EVID. 801(c); United States v.
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`Mickens, 53 F.3d 329 (4th Cir. 1995). RJR’s sole cited case is inapposite for this very reason. See
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`Novartis Pharms. Corp. v. Teva Pharms. USA, Inc., No. 05-cv-1887, 2009 WL 3754170, at *7
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`(D.N.J. Nov. 5, 2009) (excluding out-of-court statements in complaint where they were used “to
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`prove the truth of the matter asserted, namely that the profit and sales forecast were inflated”).
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`Finally, even if Fontem’s allegations were hearsay, PMI/Altria’s experts may rely on them under
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`Rule 703, which permits experts to rely on hearsay so long as it is of the kind normally employed
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`by experts in the field. FED. R. EVID. 703.
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`Fourth, there are no Rule 403 concerns that substantially outweigh the highly probative
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`value of the subject evidence on which both parties’ damages experts rely. RJR’s assertions to the
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`contrary are speculative and, even if credited, are resolved by PMI/Altria’s representation that it
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`will not “portray” RJR “as a serial infringer.” Mot. at 7. It would be unfairly prejudicial to
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`PMI/Altria to allow RJR’s damages expert to rely on the Fontem-RJR Agreement but preclude
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`PMI/Altria from eliciting testimony about the underlying litigation that refutes his opinions.
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`PMI/Altria respectfully requests that the Court deny RJR’s motion and, instead, adopt
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`PMI/Altria’s proposed stipulation contained in Exhibit A.
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`3
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`Case 1:20-cv-00393-LO-TCB Document 997 Filed 02/11/22 Page 7 of 8 PageID# 27838
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`Dated: February 11, 2022
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`Respectfully submitted,
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`By: /s/ Maximilian A. Grant
`Maximilian A. Grant (VSB No. 91792)
`max.grant@lw.com
`Lawrence J. Gotts (VSB No. 25337)
`lawrence.gotts@lw.com
`Matthew J. Moore (pro hac vice)
`matthew.moore@lw.com
`Jamie Underwood (pro hac vice)
`jamie.underwood@lw.com
`LATHAM & WATKINS LLP
`555 Eleventh Street, N.W., Suite 1000
`Washington, DC 20004
`Telephone: (202) 637-2200
`Facsimile: (202) 637-2201
`
`Clement J. Naples (pro hac vice)
`clement.naples@lw.com
`LATHAM & WATKINS LLP
`1271 Avenue of the Americas
`New York, NY 10020
`Tel: (212) 906-1200; Fax: (212) 751-4864
`
`Gregory J. Sobolski (pro hac vice)
`greg.sobolski@lw.com
`LATHAM & WATKINS LLP
`505 Montgomery Street, Suite 2000
`San Francisco, CA 94111
`Telephone: (415) 391-0600
`Facsimile: (415) 395-8095
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`Brenda L. Danek (pro hac vice)
`brenda.danek@lw.com
`LATHAM & WATKINS LLP
`330 North Wabash Avenue, Suite 2800
`Chicago, IL 60611
`Tel: (312) 876-7700
`Fax: (312) 993-9767
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`Counsel for Plaintiffs Altria Client Services
`LLC, Philip Morris USA Inc., and Philip
`Morris Products S.A.
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`Case 1:20-cv-00393-LO-TCB Document 997 Filed 02/11/22 Page 8 of 8 PageID# 27839
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`CERTIFICATE OF SERVICE
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`I hereby certify that on this 11th day of February, 2022, a true and correct copy of the
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`foregoing was served using the Court’s CM/ECF filing system, with electronic notification of
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`such filing to all counsel of record.
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`/s/ Maximilian A. Grant
`Maximilian A. Grant (VSB No. 91792)
` LATHAM & WATKINS LLP
`555 Eleventh Street, N.W., Suite 1000
`Washington, DC 20004
`Telephone: (202) 637-2200
`Facsimile: (202) 637-2201
`Email: max.grant@lw.com
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`Counsel for Plaintiffs Altria Client
`Services LLC, Philip Morris USA Inc.,
`and Philip Morris Products S.A.
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`5
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