Case 1:20-cv-00034-ADA Document 210 Filed 04/08/21 Page 1 of 15
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE WESTERN DISTRICT OF TEXAS
`AUSTIN DIVISION
`
`ANCORA TECHNOLOGIES, INC.,
`
`Plaintiff,
`
`CIVIL ACTION NO. 1:20-CV-00034-ADA
`
`v.
`
`LG ELECTRONICS INC. and LG
`ELECTRONICS U.S.A., INC.,
`
`Defendants.
`
`ANCORA TECHNOLOGIES, INC.,
`
`JURY TRIAL DEMANDED
`
`Plaintiff,
`
`CIVIL ACTION NO. 1:20-CV-00034-ADA
`
`v.
`
`SAMSUNG ELECTRONICS CO., LTD.,
`and SAMSUNG ELECTRONICS
`AMERICA, INC.,
`
`Defendants.
`
`JURY TRIAL DEMANDED
`
`DEFENDANT LG ELECTRONICS INC. AND LG ELECTRONICS U.S.A., INC.’S
`DAUBERT MOTION TO EXCLUDE AND STRIKE
`CERTAIN OPINIONS OFFERED BY MR. ROBERT MILLS
`
`PUBLIC VERSION
`
`

`

`Case 1:20-cv-00034-ADA Document 210 Filed 04/08/21 Page 2 of 15
`
`TABLE OF CONTENTS
`
`I.
`
`II.
`
`III.
`
`INTRODUCTION .............................................................................................................. 1
`
`LEGAL STANDARDS ...................................................................................................... 1
`
`ARGUMENT ...................................................................................................................... 2
`
`A.
`
`Mr. Mills’s Opinions Relying on Samsung’s E-FOTA Should Be
`Excluded as Untimely. ............................................................................................ 2
`
`1.
`
`2.
`
`3.
`
`Samsung’s E-FOTA is not important evidence. ......................................... 2
`
`LGE is prejudiced by Ancora’s Late Disclosure. ....................................... 3
`
`Ancora cannot show good cause for its failure to disclose
`Samsung’s E-FOTA and a continuance would reward Ancora’s
`late disclosure.............................................................................................. 4
`
`B.
`
`Mr. Mills’s Per-Update Theory Should Be Excluded. ............................................ 4
`
`1.
`
`2.
`
`Mr. Mills’s per-update theory is based on a flawed understanding
`of infringement that facilitates unreliable damages calculations. ............... 4
`
`Mr. Mills’s Reliance on
`
` is Improper. .......... 6
`
`C.
`
`Mr. Mills’s Per-Unit Theory Should be Excluded. ................................................. 7
`
`IV.
`
`CONCLUSION ................................................................................................................. 10
`
`i
`
`

`

`Case 1:20-cv-00034-ADA Document 210 Filed 04/08/21 Page 3 of 15
`
`TABLE OF AUTHORITIES
`
`CASES
`
`PAGE(S)
`
`Chicago Mercantile Exch., Inc. v. Tech. Research Grp., LLC,
`782 F. Supp. 2d 667 (N.D. Ill. 2011) .....................................................................................4, 6
`
`Daubert v. Merrell Dow Pharm., Inc.,
`509 U.S. 579 (1993) ...................................................................................................................1
`
`Finjan, Inc. v. Secure Computing Corp.,
`626 F.3d 1197 (Fed. Cir. 2010)..................................................................................................6
`
`Johnson v. Arkema, Inc.,
`685 F.3d 452 (5th Cir. 2012) .....................................................................................................1
`
`Katrinecz v. Motorola Mobility,
`No. A-12-CV-235-LY, 2014 WL 12160772 (W.D. Tex. Aug. 11, 2014) .................................2
`
`Primrose Operating Co. v. Nat’l Am. Ins. Co.,
`382 F.3d 546 (5th Cir. 2004) .....................................................................................................2
`
`RULES
`
`FED. R. CIV. P.
`33(d) ...........................................................................................................................................3
`37(c)(1) ......................................................................................................................................2
`
`FED. R. EVID. 702 .......................................................................................................................1, 10
`
`ii
`
`

`

`Case 1:20-cv-00034-ADA Document 210 Filed 04/08/21 Page 4 of 15
`
`I.
`
`INTRODUCTION
`
`Defendants LG Electronics Inc. and LG Electronics U.S.A., Inc. (collectively, “LGE”)
`
`move to exclude certain unreliable opinions offered by Plaintiff Ancora Technologies, Inc.’s
`
`damages expert, Mr. Robert Mills (Ex. A, “Mills Report”). Mr. Mills offers opinions on what
`
`damages Plaintiff is purportedly owed under two theories: (1) a “per-update” theory, which is
`
`based on the alleged number of successfully installed updates by each accused product (Ex. A,
`
`¶¶ 210–12); and (2) a defective “per-unit” theory based on the number of sales of accused products
`
`(Id., ¶¶ 185–209). As discussed herein, both theories are flawed in their conclusions and premised
`
`on unreliable information such that they should be excluded. The Court should assume its
`
`gatekeeping role now rather than allowing the jury to consider damages theories and evidence that
`
`is disconnected from the facts and circumstances of this case.
`
`II.
`
`LEGAL STANDARDS
`
`Rule 702 bars expert testimony unless: (1) “the testimony is based on sufficient facts or
`
`data;” (2) “the testimony is the product of reliable principles and methods;” and (3) “the expert has
`
`reliably applied the principles and methods to the facts of the case.” FED. R. EVID. 702. Rule 702
`
`assigns to the trial judge the task of “ensuring that an expert’s testimony both rests on a reliable
`
`foundation and is relevant to the task at hand.” Daubert v. Merrell Dow Pharm., Inc., 509 U.S.
`
`579, 597 (1993) (discussing Fed. R. Evid. 702). “The relevance prong [of Daubert] requires the
`
`proponent [of the expert testimony] to demonstrate that the expert’s reasoning or methodology can
`
`be properly applied to the facts in issue.” Johnson v. Arkema, Inc., 685 F.3d 452, 459 (5th Cir.
`
`2012) (internal quotations and citations omitted). “The reliability prong mandates that expert
`
`opinion be grounded in the methods and procedures of science and . . . be more than unsupported
`
`speculation or subjective belief.” Id.
`
`1
`
`

`

`Case 1:20-cv-00034-ADA Document 210 Filed 04/08/21 Page 5 of 15
`
`III.
`
`ARGUMENT
`
`A.
`
`Mr. Mills’s Opinions Relying on Samsung’s E-FOTA Should Be Excluded as
`Untimely.
`
`Mr. Mills’s opinion—to the extent that it relies on Samsung’s E-FOTA technology—
`
`should be excluded because this theory was never disclosed to LGE during fact discovery. Ancora
`
`never disclosed Samsung’s E-FOTA or its price—let alone that Mr. Mills intended to rely upon it.
`
`Nor had it been disclosed that Samsung’s E-FOTA is a comparable service to LGE’s OTA update
`
`functionality. To be clear, LGE did not learn that Ancora was taking the position that Samsung’s
`
`E-FOTA was in any way comparable or even relevant to LGE’s OTA update functionality until
`
`Ancora served its expert reports after the close of fact discovery.
`
`A party may not use at trial information that was not timely disclosed during discovery
`
`unless such failure to disclose is “substantially justified or harmless.” FED. R. CIV. P. 37(c)(1); see
`
`also Katrinecz v. Motorola Mobility, No. A-12-CV-235-LY, 2014 WL 12160772, at *3 (W.D.
`
`Tex. Aug. 11, 2014). The Fifth Circuit evaluates four factors to determine if an error is harmless:
`
`(1) “the importance of the evidence;” (2) “the prejudice to the opposing party of including the
`
`evidence;” (3) “the possibility of curing such prejudice by granting a continuance;” and (4) “the
`
`explanation for the party’s failure to disclose.” Primrose Operating Co. v. Nat’l Am. Ins. Co., 382
`
`F.3d 546 (5th Cir. 2004).
`
`1.
`
`Samsung’s E-FOTA is not important evidence.
`
`Samsung’s E-FOTA is primarily relied upon in Mr. Mills’s alternate per-update theory for
`
`damages and is one of four purported indicators of value for the ’941 Patent. Ex. A, ¶ 194. Ancora
`
`also never referenced Samsung’s E-FOTA during discovery, underscoring its lack of importance.
`
`That being said, Ancora had plenty of opportunities to disclose this information to LGE.
`
`During fact discovery, LGE served no less than six interrogatories seeking factual information in
`
`2
`
`

`

`Case 1:20-cv-00034-ADA Document 210 Filed 04/08/21 Page 6 of 15
`
`support of Ancora’s damages theory or theories—specifically, Interrogatory Numbers 6–9 and 23–
`
`24. Ex. B (Ancora’s 2nd Supp. Responses to LGE’s 1st Set of Rogs); Ex. C (Ancora’s 1st Supp.
`
`Reponses to LGE’s 3rd Set of Rogs). In particular in Interrogatory No. 6, LGE sought all facts
`
`related to “any assessment of potential monetary or other damages that could be recovered as a
`
`result of this lawsuit. . . .” Id. In response, Ancora envoked Rule 33(d) and identified only four
`
`documents:
`
`
`
`
`
`
`
`
`
`. Id.
`
`Relatedly, in LGE’s Interrogatory No. 23, LGE sought Ancora’s complete factual basis for
`
`damages, including establishing a royalty. Ex. C. In response, Ancora stated that it could not yet
`
`state the full amount of damages it sought, it identified the damages period, incorporated various
`
`other documents, and again envoked Rule 33(d)—this time identifying over 300 documents. Not
`
`one of these approximately 300 documents identified Samsung’s E-FOTA—let alone any
`
`information that would provide LGE with any indication that Ancora intended to rely upon
`
`Samsung’s E-FOTA.
`
`2.
`
`LGE is prejudiced by Ancora’s late disclosure.
`
`Mr. Mills relies on a $12 “list price” for Samsung’s E-FOTA and an $8 discount price
`
`because Samsung’s E-FOTA is “very comparable” to LGE’s accused functionalities. Ex. A,
`
`¶¶ 169–70, 205, 207. Similar to the arguments made in LGE’s Motion to Strike Certain Opinions
`
`Offered by Dr. David Martin, LGE has not been afforded any opportunity to conduct discovery on
`
`Samsung’s E-FOTA. Consequently, at this late stage in the case, LGE cannot adequately test Mr.
`
`Mills’s opinions as they relate to Samsung’s pricing or technical information related to E-FOTA.
`3
`
`

`

`Case 1:20-cv-00034-ADA Document 210 Filed 04/08/21 Page 7 of 15
`
`LGE has similarly been denied the opportunity to analyze how the LGE OTA update
`
`functionalities compete with Samsung products compatible with E-FOTA. Accordingly, if Ancora
`
`were permitted to assert at trial that E-FOTA was a comparable technology to LGE’s OTA update
`
`functionalities, LGE would be severely prejudiced by Ancora’s lack of timely disclosure.
`
`3.
`
`Ancora cannot show good cause for its failure to disclose Samsung’s
`E-FOTA and a continuance would reward Ancora’s late disclosure.
`
` Ancora has been aware of Samsung’s E-FOTA since at least November 2020 when it
`
`served Mr. Mills’s original damages expert report on Samsung. See Dkt. No. 133-4 (“Expert
`
`Report of Robert Mills Regarding Samsung”). After serving its damages expert report on
`
`Samsung, Ancora served LGE with at least two supplemental interrogatory responses in December
`
`2020 that included responses regarding Ancora’s damages theories against LGE. Ex. B; Ex. C.
`
`Ancora clearly knew of Samsung’s E-FOTA and that it would likely rely on Samsung’s E-FOTA
`
`as a comparable functionality. Accordingly, any reliance on Samsung’s E-FOTA should be
`
`excluded as untimely.
`
`Moreover, a continuance to conduct additional discovery would not cure the prejudice to
`
`LGE. If anything, a continuance would reward Ancora because Ancora could reevaluate LGE’s
`
`confidential information with the benefit of hindsight.
`
`B.
`
`Mr. Mills’s Per-Update Theory Should Be Excluded.
`
`1.
`
`Mr. Mills’s per-update theory is based on a flawed understanding of
`infringement that facilitates unreliable damages calculations.
`
`Mr. Mills’s calculation of damages is flawed from the outset and should be excluded
`
`because it is based on actions not contemplated by the Asserted Patent. “[E]vidence based upon a
`
`mistaken construction of a patent is irrelevant.” Chicago Mercantile Exch., Inc. v. Tech. Research
`
`Grp., LLC, 782 F. Supp. 2d 667, 673 (N.D. Ill. 2011).
`
`In its Supplemental Claim Construction Order (Dkt. No. 93), the Court construed the last
`
`4
`
`

`

`Case 1:20-cv-00034-ADA Document 210 Filed 04/08/21 Page 8 of 15
`
`limitation of claim 1—“acting on the program according to the verification” (’941 Patent at 7:4)—
`
`to have its “plain and ordinary meaning, wherein the step of ‘acting on the program’ may include,
`
`but is not limited to, ‘restricting the program’s operation with predetermined limitations, informing
`
`the user on the unlicensed status, halting the operation of the program under question, and asking
`
`for additional user interactions.” Dk. No. 93 at 28. The Court expressly noted that it “cannot find
`
`support that the term has an associated positive action” and that “[t]he only specific ‘acting’ actions
`
`disclosed by the specification are negative.” Id. at 27. A “construction allowing for positive
`
`‘acting’ actions is incorrect.” Id. at 28 (emphasis added). In its Supplemental Claim Construction
`
`Order, the Court precluded positive—or successful—actions from the scope of claim 1.
`
`Yet Mr. Mills contradicts the Court’s construction in characterizing his understanding of
`
`what constitutes infringement, compare Ex. A, ¶¶ 45, 47, 150–51 with Dkt. No. 93 at 28, because
`
`applying a construction using “successful” or “positive” actions to his per-update theory vastly
`
`inflates the number of purportedly infringing actions.
`
` For the LGE mobile devices, Mr. Mills states that the claims of the ’941 Patent are
`practice, in part, “
`.” Ex. A, ¶¶ 45,
`150 (emphasis added).
`
` Likewise, for the accused LGE TVs, Mr. Mills understands that the claims of the
`’941 Patent are practiced, in part,
`
`
`.” Id., ¶¶ 47, 151 (emphasis added).
`
`Both of these actions are distinctly “positive” actions that facilitate the expert’s reliance on a vastly
`
`inflated royalty base for his “per-update” theory.
`
`The expert’s focus on “successful” installations leads him to rely on data that is wholly
`
`disconnected from the facts of this case. For LGE’s mobile devices, Mr. Mills estimates that
`
` software updates were successfully installed between
`
`. Ex. A, ¶ 210. The mobile device estimate is also based on the expert’s assumption that
`
`
`
`
`
`
`
`of users downloaded and installed an update within
`5
`
` after receipt of the update. Id.,
`
`

`

`Case 1:20-cv-00034-ADA Document 210 Filed 04/08/21 Page 9 of 15
`
`¶ 158. However, this
`
` is arbitrarily derived from
`
` data. Id. Mr. Mills fails to
`
`explain how data from
`
` is reliable when evaluating user downloads and updates from
`
` except to say that
`
` Id., ¶¶ 158–59.
`
`For LGE’s TVs, the expert continues to make unreliable assumptions when arriving at his
`
`estimates. Indeed, Mr. Mills estimates that
`
` software updates were installed between
`
`, but bases his per-update royalty on
`
`
`
`, which matches the number of accused units. Ex. A, ¶¶ 163, 210. Despite recognizing
`
`that
`
`, Mr. Mills—again without explanation—assumes that
`
`. Id., ¶¶ 164–65.
`
`
`
`
`
`Ultimately, Mr. Mills’ per-update calculation of damages is based on an unsupported and
`
`speculative estimation that
`
` between
`
`
`
`
`
`. Ex. A at ¶¶ 158, 163, 210. The expert’s estimation as to the number of
`
`updates is not supported by evidence and invites error based on speculation designed to increase
`
`the damages calculation. See Ex. A, ¶¶ 210–12. The calculation should be excluded as unreliable.
`
`2.
`
`Mr. Mills’s reliance on the
`
`Mr. Mills’s reliance on the
`
` is improper because he failed to
`
`consider the circumstance under which it was entered. See Finjan, Inc. v. Secure Computing Corp.,
`
`626 F.3d 1197, 1211 (Fed. Cir. 2010) (stating that use of past licenses must account for the
`
`“economic circumstances of the contracting parties”). By way of background:
`
` Ancora entered into an “Alliance Agreement” with
`. Ex. A, ¶¶ 10, 93–97; see also Ex. D
`
`Mills states that
`
` Ex. A, ¶¶ 10, 94.
`
`6
`
`
`). Mr.
`
`
`

`

`Case 1:20-cv-00034-ADA Document 210 Filed 04/08/21 Page 10 of 15
`
`
`
`
`
`. Id., ¶ 95; see also Ex. D.
`
`When offering opinions as to the hypothetical negotiation between the parties in this case,
`
`Mr. Mills disregards inconvenient facts. First, he applies
`
` to his
`
`per-update analysis as if LGE were similarly situated to
`
`. He makes no effort to account for
`
`the differences in circumstances. Second, Mr. Mills relies solely on Ancora’s corporate
`
`representative—Mr. Miki Mullor—for the proclamation that
`
` Id., ¶ 96. Mr. Mills does not identify any provision in
`
`
`
`
`
`
`
`in support of that conclusion, and will not be able to do so as the
`
` states
`
`on its face that
`
` See Ex. D. Third, Mr. Mills
`
`does not take into account that any party to a hypothetical negotiation with Ancora in 2012 would
`
`have known that
`
`. Ex. A, ¶ 95. In fact, Mr. Mills admits that
`
`Ultimately, the expert’s failure to consider these differences between the
`
`
`
`
`
`
`
` Id.
`
`and the hypothetical license in this case is improper, and it would be error to let the
`
`jury consider such evidence. The expert testimony directed to this Agreement should be excluded.
`
`C.
`
`Mr. Mills’s per-unit theory should be excluded.
`
`Mr. Mills bases his “per-unit” theory on a number of “royalty rate indicators”—
`
`specifically, indicators that are categorized as either an “indication of value” or an “indicated
`
`per-unit royalty.” Ex. A, ¶ 194. The identified “indications of value” are:
`
`
`
`
`
`7
`
`

`

`Case 1:20-cv-00034-ADA Document 210 Filed 04/08/21 Page 11 of 15
`
` and (4) “Samsung E-FOTA.” Id. As discussed below, each of these “indicators” is
`
`based on unreliable representations for the accused technology, purely speculative projections, or
`
`improperly apportioned calculations. As with the per-update theory, Mr. Mills’s “per-unit” theory
`
`(Id., ¶¶ 210–12) should be excluded.
`
`1.
`
`In determining a reasonable royalty for the alleged infringement, Mr. Mills heavily relies
`
`on
`
` established by a prior assignee of the ’941 Patent, Beeble, Inc.
`
`(“Beeble”). Ex. A, ¶¶ 8, 194. Mr. Mills looked to
`
` and in particular, adopted
`
`. Id., ¶ 192. The
`
`
`
`
`
`
`
`
`
`royalty rate for
`
` is adopted wholesale by Mr. Mills and adopted as an
`
`“indicator” in his value analysis, but there is an absence of real-world support for this figure. The
`
`evidence instead demonstrates that this royalty rate is aspirational and not tied to any circumstance
`
`that the parties would face here during the hypothetical negotiation.
`
`9 years before any hypothetical negotiation—
`
` Id., ¶¶ 191–92.
`
`—
`
`
`
`
`
`
`
` Id., ¶ 191.
`
`
`
`
`
`
`
` Id. Mr. Mills further relies on statements from
`
`8
`
`

`

`Case 1:20-cv-00034-ADA Document 210 Filed 04/08/21 Page 12 of 15
`
`
`
`
`
`.
`
`
`
`Id., ¶¶ 192, 192 n.378.
`
`(citing Ex. E at ANCORA_00048189
`
`(ANCORA_00048029–199, “Mullor Apple Depo. Tr.”)).
`
`Ultimately
`
` are not representative of what
`
`LGE would agree to pay to Ancora at the time of the hypothetical negotiation. In those
`
`circumstances, Ancora would discount
`
`
`
`
`
`. Id., ¶ 8. Mr. Mills fails to provide any explanation as to why a party to
`
`any hypothetical negotiation with Ancora would enter into any license agreement based on
`
`
`
`.
`
`2. Ancora’s expectations regarding
`
`.
`
`The next two intertwined “indications of value” are based on Ancora’s
`
`
`
`. Ex. A, ¶¶ 190, 194. Mr. Mills opines that
`
`Ancora considered
`
`. Id., ¶ 190. At that time, Ancora and
`
`
`
`. Id. Mr. Mills opines that
`
`Next, Mr. Mills relies on testimony from Mr. Mullor that
`
`. Id.
`
`
`
`
`
`
`
`
`
`
`
`
`
`Mr. Mullor does not provide any support for why
`
`
`
`. Id. (citing Ex. E at ANCORA_00048189).
`
`9
`
`

`

`Case 1:20-cv-00034-ADA Document 210 Filed 04/08/21 Page 13 of 15
`
` Ex. E at ANCORA_00048189.
`
` and does not recall how
`
`
`
`Mr. Mills ignores that any parties to a hypothetical negotiation with Ancora would discount
`
`
`
`. Id., ¶¶ 10, 95. Even though Ancora claims the terms of the
`
`
`
`
`
`, Mr. Mills fails to provide any explanation why a party
`
`to any hypothetical negotiation with Ancora would enter into any license agreement based on
`
`
`
`3. Samsung E-FOTA.
`
`. Id., ¶¶ 95–96.
`
`Mr. Mills predominantly relies on Dr. Martin for the premise that E-FOTA is
`
`
`
` to LGE’s OTA update functionalities. Ex. A, ¶ 169. In LGE’s contemporaneously
`
`filed Motion to Exclude Certain Opinions Offered by Dr. David Martin, LGE points out the
`
`contradictions and inaccuracies in the determination that Samsung’s E-FOTA is
`
`
`
` to LGE’s OTA update functionalities. For the reasons articulated there explaining
`
`that the functionalities are not comparable, Mr. Mills’s reliance on Samsung’s E-FOTA as a
`
`“royalty rate indicator” should be excluded.
`
`IV.
`
`CONCLUSION
`
`For the foregoing reasons, the above-identified opinions of Mr. Mills should be excluded
`
`under Rule 702 the Federal Rules of Evidence as unreliable and extremely prejudicial.
`
`10
`
`

`

`Case 1:20-cv-00034-ADA Document 210 Filed 04/08/21 Page 14 of 15
`
`Date: March 31, 2021
`
`Respectfully submitted,
`
`/s/ Elizabeth M. Chiaviello
`
`
`
`Winstol D. Carter, Jr.
`Texas Bar No. 03932950
`winn.carter@morganlewis.com
`Thomas R. Davis
`Texas Bar No. 24055384
`thomas.davis@morganlewis.com
`MORGAN, LEWIS & BOCKIUS LLP
`1000 Louisiana Street, Suite 4000
`Houston, Texas 77002-5006
`T. 713.890.5000
`F. 713.890.5001
`
`Collin W. Park
`collin.park@morganlewis.com
`District of Columbia Bar No. 470486
`Natalie A. Bennett
`natalie.bennett@morganlewis.com
`Illinois Bar No. 6304611
`MORGAN, LEWIS & BOCKIUS LLP
`1111 Pennsylvania Avenue, NW
`Washington, D.C. 20004-2541
`T. 202.739.3000
`F. 202.739.3001
`
`Elizabeth M. Chiaviello
`Texas Bar No. 24088913
`elizabeth.chiaviello@morganlewis.com
`MORGAN, LEWIS & BOCKIUS LLP
`1717 Main Street, Suite 3200
`Dallas, Texas 75201-7347
`T. 214.466.4000
`F. 214.466.4001
`
`Attorneys for Defendants LG Electronics
`Inc. and LG Electronics U.S.A., Inc.
`
`11
`
`

`

`Case 1:20-cv-00034-ADA Document 210 Filed 04/08/21 Page 15 of 15
`
`CERTIFICATE OF SERVICE
`The undersigned certifies that a true and correct copy of the foregoing document was served
`via the Court’s CM/ECF system on all counsel of record who have appeared in this case via
`electronic mail per Local Rule CV-5.
`
`/s/ Elizabeth M. Chiaviello
`Elizabeth M. Chiaviello
`
`12
`
`