Read this again and tell me you don't think the original jury verdict gets reinstated? This is the final document submitted by our stud lawyer Lamken.
Everything in this appeal rests on our expert Madisetti's opinion that the invention and the $1.22 licensing value was tied to voice quality while multitasking. This report led to the $0.85 royalty from our damages expert.
The judge made an error in ordering a new trial by stating that Madisetti's $1.25 licensing value was related to VoLTE generally. And that Madisetti didn't apportion the value of the invention as a portion of VoLTE.
If they rule that the expert report was admissible, every other key licensing issue is moot as the jury would have heard evidence that led to their original verdict. The original jury verdict would stand.
If a major part of the CAFC line of inquiry is targeted at this Madisetti issue, the original verdict will be going in our favour big time.
Again, I think WiLan's position is incredibly strong on this appeal. I am hopeful that every day Motorola is delayed it increases the odds of a joint resolution including Apple.
INTRODUCTION
Apple admits that the district court’s decision to overturn the jury’s original damages verdict rested on a fundamental error. The district court ordered a new trial based on its view that Dr. Madisetti, Wi-LAN’s expert, did not measure the benefits of “VoLTE associated with improved voice quality ‘during loading,’” where Wi-LAN’s patented technology ensures that time-sensitive voice packets are not delayed by competing data. Appx41 (emphasis added). Instead, the court asserted, Madisetti measured the benefits of VoLTE “in general terms.” Id. Apple now concedes, however, that “Madisetti’s methodology . . . ‘compare[d] VoLTE and Skype call-quality during loading.’ ” Apple.Resp.47 (emphasis added). And Apple admits that loading (i.e., multitasking) is “where the patented technology matters most.” Apple.Resp.43. Those concessions are fatal to the district court’s conclusion that Madisetti lacked “a sufficient factual basis” to testify about the benefits of the patented technology. Appx37.
Apple quibbles that Madisetti did not pepper every sentence of testimony with the words “during loading” or “during multitasking.” But it cannot deny that Madisetti’s actual measurement of the invention’s benefits—a 2.3-point increase in Mean Opinion Score (“MOS”)—was expressly limited to improved call quality “while multitasking.” Appx7563; see Appx10265-10266. Nor can Apple deny that Wi-LAN’s other experts used the same 2.3-point increase under loading conditions
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to produce their damages estimates. It is thus indisputable that Wi-LAN’s damages evidence was directed to the benefit of the patented technology during loading. The district court erred in ruling otherwise.
Rather than seriously defend the district court’s rationale, Apple concocts a new theory. In Apple’s view, it was not enough that Madisetti measured VoLTE’s improved voice quality during multitasking, “where the patented technology matters most.” Apple.Resp.43. Instead, Apple insists, Madisetti was required to categor- ically exclude every hypothetical contribution that (unspecified) other technology might have made. The law has never demanded that. If Apple thought Madisetti failed to account for other (unidentified) technology, it was free to cross-examine him about that. Apple never did.
Apple likewise fails to defend the district court’s ruling that other damages evidence—Wi-LAN’s rate sheets and its license with Samsung—was inadmissible. Apple recognizes that such evidence could not itself justify discarding the jury award; Apple concedes that Wi-LAN’s new-trial cross-appeal “rises and falls solely with the admissibility of Madisetti’s evidence.” Apple.Resp.55. Regardless, the rate sheets and Samsung license were plainly relevant to and admissible on the hypo- thetical negotiation between Apple and Wi-LAN. The original damages award should be reinstated.
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Apple’s defense of the ruling insulating Intel-based iPhones from liability— based on an expired term license—fares no better. That agreement expired before the chipsets in the accused phones were sold to Apple. And while the license stated, “[f]or clarity,” that it would survive expiration with respect to past “Licensed Activ- ities that were actually engaged in during the Term License Period,” Appx5432 (emphasis added), the agreement nowhere authorized Intel to conduct additional, future activities after the Term License Period. Apple implausibly reads a modest “clari[fying]” clause as transforming an express term license into a virtual perpetual license.
I. THE JURY’S ORIGINAL DAMAGES VERDICT SHOULD BE REINSTATED
A. Wi-LAN’s Direct Valuation Evidence Was Properly Admitted
At the first trial, Wi-LAN supported its proposed $0.85/phone royalty—which
the jury ultimately awarded—with evidence showing the value of the call-quality improvements the ’145 patent provides during “multitasking” or “loading” condi- tions (i.e., when multiple applications are using the phone’s network connection). Dr. Madisetti relied on an independent study comparing VoLTE—which uses “express lanes” for voice packets as claimed in the ’145 patent—to Skype, Apple’s non-infringing alternative, Appx8331-8335, under multitasking conditions, see Appx10262. Under those conditions, Madisetti explained, VoLTE offered at least a 2.3-point improvement in MOS over Skype. Appx10265-10266. Wi-LAN’s other
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experts then calculated that Apple would have paid up to $1.22/phone for a 2.3-point voice-quality improvement during multitasking. Wi-LAN.Br.71-73; Appx10628- 10629.
1. The District Court’s Rationale for Granting a New Trial Cannot Be Sustained
After trial, the district court deemed that evidence inadmissible because it mistakenly thought the benefit Madisetti had calculated did not reflect “improved voice quality ‘during loading’”—the benefit provided by the ’145 patent—but instead reflected VoLTE’s improved voice quality generally. Appx36; Appx41; see Wi-LAN.Br.79-80. Before this Court, Apple does not seriously defend the district court’s assertion that Madisetti’s evaluation was not directed to “voice quality ‘during loading.’” Appx41. To the contrary, Apple concedes that “Madisetti’s methodology ... ‘compare[d] VoLTE and Skype call-quality during loading.’” Apple.Resp.47 (emphasis added).
The district court thought that Madisetti merely evaluated “voice call quality using VOLTE compared to voice call quality using Skype.” Appx36. Madisetti’s analysis, however, measured voice-quality improvements resulting from VoLTE’s use of the patented invention. The ’145 patent addresses the problem of “voice packets” being “delay[ed]” behind data packets from other applications, resulting in “degrade[d]” quality. Appx10109; see Appx10109-10113. The invention creates
an “express lane” for voice packets, allowing them to “bypass” data packets from 4
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other applications. Appx10114-10115. VoLTE practices the invention by using two “connections”—one for voice packets, one for other data. Appx10262. Skype, by contrast, lacks an “express lane” for voice packets. See id. Consequently, when phone applications are transferring data, or when the network is “congest[ed],” VoLTE should perform better than Skype, which should suffer degraded call quality from delayed and dropped voice packets. Appx10112-10113.
Madisetti evaluated the benefits of VoLTE’s use of the patented express lanes by comparing the performance of VoLTE and Skype under loading conditions. Appx10265. He relied on testing by Signals Research Group, whose testers made calls while running software that performed downloads to simulate multitasking— “synching email, updating applications, etc.” Appx1026. VoLTE fared well under such conditions, with an average MOS of 3.7—thanks to Wi-LAN’s express-lane technology:
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Appx1024 (VoLTE During Loading); see Appx1013 (VoLTE “seemed immune to [the] additional network traffic”).
By contrast, Skype—which lacks the patented express lanes—became virtually unusable while multitasking. Without multitasking, Skype worked well, its quality often indistinguishable from VoLTE. Appx1023. During multitasking, however, “Skype perform[ed] very poorly”—usually, “no sound” could be heard. Appx10265; see Appx10268. The Skype call’s MOS was typically zero—and never higher than 1.4—during the multitasking download test (data points 1-6 and 9 in the figure below), because Skype “failed to deliver the voice packets.” Appx1007:
Appx1026 (Skype During Loading); see Appx1009 (“background traffic download- ing on the smartphone could bring Skype Voice to its knees”).
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Comparing VoLTE’s average MOS (3.7) with Skype’s highest MOS (1.4) during the multitasking download test, Madisetti quantified the benefit of the inven- tion as a 2.3-point improvement in MOS “under load[ed] conditions.” Appx10266.
The district court deemed Madisetti’s opinion “without factual basis” because the court did not perceive any “connection” between the patented invention and the testing Madisetti invoked. Appx36-37. Yet the Signals report itself attributed VoLTE’s superior voice quality during loading to its support for “giv[ing] the voice data packets preferential treatment over best effort data packets,” Appx1013, as claimed by the ’145 patent, Appx10262-10265; Wi-LAN.Br.79, and pinned Skype’s poor showing on the fact that Skype “treated all packets equally instead of giving preferential treatment to real time voice packets,” Appx1026 (emphasis added); see Appx1007.
The suggestion that Wi-LAN’s other expert, David Kennedy, understood Madisetti’s benefits analysis to address VoLTE as a whole, Appx37; Apple.Resp.51, misconceives Kennedy’s testimony. Kennedy did not take the “ ‘benefits’ ” Madisetti measured and “ ‘further apportion’ ” them between the invention and other technology. Appx37; Apple.Resp.51. Kennedy used Madisetti’s estimate of a 2.3- point improvement in MOS during loading—along with Professor Prince’s consumer-survey analysis showing customers would pay up to $121.70 extra per phone for that improvement—to determine that the value of the patented invention
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was about $121/phone. Appx10628; see Wi-LAN.Br.80.1 Given Apple’s enormous “negotiating leverage,” Kennedy then reasoned that Apple would have claimed the lion’s share of that value; he thus allocated just 1% of that value to Wi-LAN. Appx10628. That does not further “apportion” between the patented invention and other technology. It reflects the principle that negotiating parties will split the incremental value added by the invention based on (among other things) their relative bargaining power. Appx10628-10629; see Summit 6, LLC v. Samsung Elecs. Co. Ltd., 802 F.3d 1283, 1297 (Fed. Cir. 2015); Wi-LAN.Br.80.
2. Apple’s Attack on Madisetti’s Trial Testimony Fails
Apple concedes that “Madisetti’s methodology . . . ‘compare VoLTE and
Skype call-quality during loading,’ ” “where the patented technology matters most.” Apple.Resp.43, 47. But it erroneously urges that his “testimony at trial” departed from that methodology and “conflated the patented invention with VoLTE generally.” Apple.Resp.51-52.
Madisetti was clear that he analyzed the “benefits that [the patent] claims pro- vide when used in the iPhones,” Appx10259 (emphasis added), by assessing call
1 While seemingly large at first glance, that figure makes sense: During multi- tasking, Skype, the non-infringing alternative, was effectively unusable. See p. 6, supra. That customers would place a high value on the ability to use apps and download files while making calls is unsurprising. The district court did not contest (nor does Apple contest on appeal) that Prince reasonably measured the consumer value according to standard customer-survey methodology; it objected to Prince’s opinion based solely on his reliance on Madisetti. Appx37-38.
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quality “under conditions of loading,” Appx10266. He told the jury precisely that at the beginning of his benefits opinion, Appx10259-10260—all while showing the jury a slide declaring that the benefit of the invention was “2.3 points better” voice quality “while multitasking”:
Appx7563 (annotated).
Madisetti tied that 2.3-point improvement during loading to use of the patent-
ed invention. He explained that Apple’s iPhone, using VoLTE, infringes because it contains a “VoLTE connection” separate from the “data connection” to give voice packets priority. Appx10261-10262. Skype, by contrast, “doesn’t have an HOV lane,” and “[does] not use” the invention. Appx10262. Madisetti emphasized that the 2.3-point difference was “under loaded conditions.” Appx10266. He explained how tests were performed on a “loaded network” with “background applications” using bandwidth, Appx10265—the scenario the invention was created to address,
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Appx10092-10096. The Signals report, admitted into evidence, Appx1005, also tied VoLTE’s better voice-call quality during loading to its giving “voice data packets preferential treatment” as claimed in the ’145 patent, Appx1013; see p. 7, supra.
At the conclusion of that testimony, Madisetti again showed a summary slide explaining that the 2.3-point improvement in MOS score was “while multitasking”:
Appx7563 (annotated); see Appx10385-10386.
The snippets of testimony Apple invokes do not prove otherwise. Apple urges
that Madisetti conflated the invention with VoLTE generally when he testified that “‘you get great quality from the VoLTE, that is 2.3 MOS better.’” Apple.Resp.52 (quoting Appx10386). As Madisetti was making that very statement, however, he was showing the jury the above slide (“Slide 54”), which made clear the 2.3-point improvement was “while multitasking.” Appx7563; Appx10385-10386. Apple’s assertion that Madisetti “got it wrong in front of the jury,” Apple.Resp.53, does not
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hold water. He told and showed the jury, time after time, that he was measuring the benefit of the patented invention during multitasking specifically.
Madisetti’s statements that “VoLTE” has better call quality than “Skype,” Apple.Resp.52 (quoting Appx10261), are also benign. Madisetti occasionally used “VoLTE” and “Skype” as shorthand to refer to the products evaluated in the Signals testing. But the slides he showed the jury while giving that testimony made clear that the testing involved making a call “while emailing and updating apps”—i.e., while multitasking:
Appx7571; see Appx7570; Appx10265. In all events, observations that the patent offers “‘much higher quality calls’” and “‘improve the iPhone as a whole for voice and cellular data,’ ” Apple.Resp.52 (quoting Appx10259; Appx10271-10272),
are unobjectionable. Users are constantly multitasking. “[M]any applications 11
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automatically connect to the network and generate traffic without any user intervention,” making it “very difficult to prevent” network data use while making a call. Appx1024. Because voice-call packets almost invariably compete with data packets from other applications, nearly all calls benefit from the invention.
Apple’s complaint about Wi-LAN’s closing argument, Apple.Resp.53 (quot- ing Appx11308-11309), likewise fails. Wi-LAN’s counsel accurately stated that licensing the ’145 patent would have helped Apple “keep up with the voice quality of its competitors” (who had licensed the patent). Appx11308-11309. Because multitasking is ubiquitous, the patented technology improves voice quality nearly all the time. See pp. 11-12, supra. And on the transcript page immediately preceding the one Apple quotes, Wi-LAN’s counsel described the invention as a “feature” of VoLTE that “separates [the] voice packets” to ensure “good sound.” Appx11307 (emphasis added). The jury was not left confused when counsel used “VoLTE” as a shorthand just moments after explaining that the invention was simply one VoLTE “feature.”
Regardless, the fact remains that Madisetti’s quantification of the patent’s benefits—a 2.3-point improvement—was laser-focused on voice quality during loading. Appx10261-10266; see pp. 5-7, 9-10, supra. And that 2.3-point improve- ment was the express basis for the analysis of Wi-LAN’s other experts, who put a dollar value on those benefits in the context of loading. Appx10528 (Prince
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surveyed willingness to pay “for 2.3 better VoLTE call [quality] while multitasking” (emphasis added)); Appx10627 (Kennedy addressed benefits “associated with the claims,” not VoLTE’s “full” value). Apple does not explain how the jury could have thought it was awarding the value of VoLTE as a whole when no one even tried to estimate that value.
3. Apple’s “Isolation” Argument and Newly Invented “Baseline” Theory Cannot Sustain the New-Trial Order
Because it cannot dispute that “Madisetti’s methodology . . . ‘compare[d] VoLTE and Skype call-quality during loading,’” so as to measure the patented invention’s contribution, Apple contends that Madisetti did not fully “isolate” the invention’s benefits. Apple.Resp.43, 47. Apple insists that Wi-LAN was required to “prove the absence” of any and all non-infringing features that might have also contributed to improved voice quality during loading. Apple.Resp.48. The law does not insist on the “absolute precision” Apple demands. VirnetX, Inc. v. Cisco Sys., Inc., 767 F.3d 1308, 1328 (Fed. Cir. 2014). Courts have long recognized that “‘approximation and uncertainty’” are inevitable when it comes to apportionment. Aqua Shield v. Inter Pool Cover Team, 774 F.3d 766, 771 (Fed. Cir. 2014); see Dow- agiac Mfg. Co. v. Minn. Moline Plow Co., 235 U.S. 641, 647 (1915). Accordingly, admissibility under Daubert requires only that expert damages testimony be “reasonable” and “sufficiently tied to the facts of the case.” Summit 6, 802 F.3d at
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1296. The rest is for “the jury.” i4i Ltd. P’ship v. Microsoft Corp., 598 F.3d 831, 856 (Fed. Cir. 2010).
That standard was amply satisfied here. Madisetti’s analysis was tied to the contribution of the patented technology—enhanced call quality during loading. Madisetti relied on testing that compared VoLTE, which uses Wi-LAN’s patented “express lanes,” to Skype, which does not. See pp. 5-7, supra. Specifically, he compared VoLTE and Skype voice-call quality while multitasking, where (Apple concedes) “the patented technology matters most.” Apple.Resp.43. And the evidence showed that VoLTE’s advantage under those conditions derived from the “key VoLTE feature” of giving “voice data packets preferential treatment over [other] data packets,” as the ’145 patent claims, Appx1013; see p. 7, supra. Madisetti thus tied his analysis to the specific aspect of VoLTE that was claimed: its use of Wi-LAN’s patented technology to create express lanes for voice packets to improve call quality during loading. That amply established the requisite connection between the patent and his estimate. The objections Apple gins up on appeal fail to undermine the reliability of Madisetti’s opinions.
Insofar as Apple believes Madisetti “could have done more,” Apple.Resp.49, that was a basis for cross-examination, not exclusion. See Summit 6, 802 F.3d at 1295-96 (“‘vigorous cross-examination’” is “‘traditional and appropriate means’” for challenging damages testimony); Arctic Cat Inc. v. Bombardier Recreational
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Prods. Inc., 876 F.3d 1350, 1369-70 (Fed. Cir. 2017) (defendant who found expert’s “comparison problematic” should address that through “‘cross-examination’”). If Apple believed that features of VoLTE other than Wi-LAN’s patented express lanes contributed to the dramatic call-quality differences measured during loading, it could have presented that theory to the jury. But Apple did not. It never raised that theory on cross-examination, much less identified some “other” responsible feature. Nor did Apple’s expert address the issue. His rebuttal to Madisetti’s benefits opinion spans seven transcript pages and contains no analysis of the Signals study except for a perfunctory dismissal. Appx10957; see Appx10953-10960. Apple’s post-trial briefing did not address the issue. Appx631-663. This Court should not entertain Apple’s “attempt to raise” that newly minted argument “for the first time on appeal.” Gieg v. DDR, Inc., 407 F.3d 1038, 1046 n.10 (9th Cir. 2005); see Bailey v. Dart Container Corp. of Mich., 292 F.3d 1360, 1362 (Fed. Cir. 2002) (“appellee can present . . . all arguments supported by the record” only insofar as they were “advanced in the trial court”).
Even on appeal, Apple merely speculates that “there could be numerous innovations that impact the call-quality difference between VoLTE and Skype” during multitasking—but never identifies such an invention. Apple.Resp.48 (emphasis added). Speculation about non-infringing features Madisetti could have overlooked—which Apple never raised below—cannot justify exclusion of
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Madisetti’s opinion. See Summit 6, 802 F.3d at 1295-96; cf. Prism Techs. LLC v. Sprint Spectrum L.P., 849 F.3d 1360, 1376 (Fed. Cir. 2017) (upholding damages theory based on non-infringing alternative where defendant failed “to introduce argument or evidence” regarding “different non-infringing” technology).
Finally, Apple contends that Madisetti was required to factor out some “base- line call-quality difference” between VoLTE and Skype. Apple.Resp.48-50. Apple again never raised that argument at trial, Appx10418-10425, or in post-trial motions, Appx631-663. The district court never advanced that theory. Appx33-41. Apple cannot raise it for the first time now.
Regardless, the record does not support Apple’s new theory that VoLTE has a “baseline” call-quality advantage absent loading. The Signals report explained that a “typical user wouldn’t notice the difference” between Skype and VoLTE call quality absent loading or multitasking. Appx1023. Apple claims that some Signals tests show a voice-quality advantage for VoLTE in a “baseline scenario” without load. Apple.Resp.50 (citing Appx1022-1023). But the tests Apple cites actually involved “[h]eavy to [m]oderate [n]etwork [l]oading,” “[w]hen . . . the network had some of the highest loading [the testers] ha[d] observed.” Appx1021-1023. Those tests show the invention at work, not a baseline advantage for VoLTE. Indeed, Signals pointed to VoLTE’s giving “voice data packets preferential treatment”—
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which VoLTE does using the patented technology—as the reason for its better call quality under “loading” conditions. Appx1013; see p. 7, supra.
Wi-LAN never stated that there was a 0.6-point MOS difference between VoLTE and Skype under “ideal-quality” conditions. Apple.Resp.49-50 (citing Wi-LAN.Br.79). Wi-LAN described the test in Figure 9 of the Signals report, which involved making a call while downloading a file to simulate “synching email, updating applications, etc.” Appx1026. While the download was paused, Skype’s score rose to 3.1. But that score did not reflect Skype’s quality under “ideal” condi- tions. In other tests, Skype scored as high as 3.5, see Appx1023 (Fig. 3), nearly matching (and sometimes exceeding) VoLTE’s performance, see Appx1022 (Fig. 2, showing 3.4 VoLTE score)
Apple overlooks, moreover, that Madisetti’s opinion reflected conservative assumptions that rendered any supposed “baseline” difference immaterial. Madisetti calculated that the invention produced a 2.3-point improvement in MOS during loading by comparing Skype’s highest score during the file download test (1.4) to VoLTE’s average score during that test (3.7). Appx1024; Appx1026; Appx10266. That was exceedingly generous to Skype: In every other measurement during the file download (six out of seven data points), Skype’s score was zero, giving it an average score of 0.2. Id. Madisetti thus used a score for Skype that was 1.2 points
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higher (1.4 - 0.2) than the average score he reasonably could have used. That wipes out, twice over, Apple’s supposed “baseline” difference of 0.6. Apple.Resp.50.
The refinements Madisetti made to his expert report in anticipation of the second trial did not, as Apple urges, suggest that his earlier opinion was unreliable. Apple.Resp.49. They merely reflect that, after the district court (erroneously) rejected the opinion he gave at the first trial, an even more conservative approach could be found. Madisetti treated Skype’s MOS during the period when the download was paused as a “baseline.” See Appx989. Signals testing showed that Skype’s MOS improved after pausing the download, from a previous maximum of 1.4 (data point 2) to 3.1 (data point 8):
Appx1026. Madisetti therefore treated 3.1 as the ceiling for Skype, compared to VoLTE’s average score of 3.7—an ostensible baseline difference of 0.6. He accordingly reduced his estimate of the patented invention’s marginal benefit during 18
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loading by 0.6, from 2.3 (as he testified at the first trial) to 1.7. Appx989. But that approach was almost too conservative. As explained above, p. 17, supra, the 3.1 score was not actually Skype’s ceiling: In some tests, Skype scored as high as 3.5 (while VoLTE scored as low as 3.4). Appx1022-1023. Under ideal network condi- tions, without loading, Skype’s voice quality is essentially indistinguishable from VoLTE’s. Appx1023.
All that underscores why Apple’s made-for-appeal quibbles cannot support the new-trial order. What inferences to draw from the Signals report, or how the invention’s incremental value would be split by the negotiating parties, are classic “battle of the experts” issues. By failing to cross-examine Madisetti on those issues, or have its own expert address them, Apple chose not to engage in battle. That choice is no basis for overturning the jury verdict.
B. Wi-LAN’s Rate Sheets and the Samsung License Were Admissible
Apple does not contend that the supposed inadmissibility of Wi-LAN’s rate sheets and license with Samsung would themselves justify overturning the original damages award. Apple thus concedes—and Wi-LAN agrees—that the new-trial issue presented by Wi-LAN’s cross-appeal “rises and falls solely with the admis- sibility of Madisetti’s [benefits] evidence.” Apple.Resp.55. Accordingly, if the Court determines that Madisetti’s benefits opinion was properly admitted, it need go
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CONFIDENTIAL MATERIAL FILED UNDER SEAL REDACTED
no further: The jury’s initial verdict should be reinstated.2 Regardless, the rate sheets and Samsung license were properly admitted at the first trial.
1. Rate Sheets Bearing on Wi-LAN’s License Negotiations Were Admissible
The district court erroneously held that Wi-LAN’s rate sheets, which showed $0.65-$1.10/unit licensing offers that Wi-LAN made in real-world negotiations, were inadmissible. This Court has long permitted evidence of patentees’ licensing practices as relevant to the hypothetical negotiation. See Wi-LAN.Br.76-77.
Apple nowhere defends the district court’s assertion that the rate sheets were not “relevant.” Appx42; see Apple.Resp.59. This Court’s precedent is clear that “proposed licenses may have some value for determining a reasonable royalty.” Whitserve, LLC v. Computer Packages, Inc., 694 F.3d 10, 29-30 (Fed. Cir. 2012).
2 While the district court’s new-trial order did not reach other arguments Apple raised, see Appx32 n.2, those arguments do not warrant a remand, contra Apple. Resp.46 n.15. Apple raised and lost those arguments at the retrial, and raises them again here on appeal. See Appx648-650 (arguing that baseband processor must be used as royalty base); Apple.Br.51 n.8 (same); Appx656-657 (objecting to compa- rable licenses); Apple.Br.56-64 (same); Appx661 (objecting to inclusion of Sprint phones); Apple.Br.44-45 (same). Apple’s remaining argument, that Wi-LAN “skewed” the “damages horizon” with evidence that Licensing Terms to
, Appx660-661, was pure makeweight. That evidence was presented by Wi-LAN’s infringement expert to rebut Apple’s argument that Wi-LAN’s patents were limited to WiMAX, which Apple charac- terized as having failed in the market. Appx10426-10451. Apple identified no place where Wi-LAN even remotely characterized that evidence as relevant to damages. Appx656-657. There was no risk the jury mistakenly thought that evidence related
to damages, much less prejudice that could warrant a new trial. 20
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While the district court suggested (as does Apple) that Wi-LAN’s rate sheets were “ ‘outrageous offers’ ” like those in Whitserve, Appx42 (quoting 694 F.3d at 30), that claim is absurd. Whitserve involved an unaccepted 31% royalty rate offered to justify a 19% royalty. Here, the rate sheets’ $0.65-$1.10/unit range was below the $1.25/unit rate some licensees actually paid. Appx11161; Wi-LAN.Br.76-77.
Apple denies “these rates had been accepted in the real world.” Apple.Resp.60. But the report of Apple’s own expert, Lance Gunderson, included a “listing of Wi-LAN license agreements,” Appx11161, that showed Wi-LAN had negotiated rates up to $1.25/unit—well above the royalties in the rate sheets:
Confidential Royalty Payments
Appx8270.
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Confidential Royalty Payments
Appx8272.
Confronted with that at trial, Gunderson claimed he had not “looked at these”
specific licenses and was not personally “aware of ” licensees paying those amounts. Appx11162. But he offered no explanation why his own report said the opposite— that Wi-LAN, in fact, received those amounts. Apple cannot avoid its own expert’s admission in his report by invoking a convenient bout of trial-induced amnesia.
Apple erroneously asserts that the rate sheets were not apportioned to address that they were portfolio licenses. Apple.Resp.60. Wi-LAN’s expert David Kennedy considered various portfolio licenses, including the rate sheets, to produce a range of royalty rates, which he then adjusted to account for the smaller number of patents at issue here. See Wi-LAN.Br.59-62; Appx10666-10667. Apple likewise fails to distinguish CSIRO v. Cisco Systems, Inc., 809 F.3d 1295, 1303 (Fed. Cir. 2015). There, as here, rate cards were “presented to prospective licensees,” contra Apple. Resp.61, and the expert adjusted those rates to account for their portfolio nature, Appx10462-10465. And in VirnetX, this Court upheld expert damages testimony
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that (among other things) relied on the patentees’ established licensing “policy.” VirnetX, Inc. v. Cisco Sys., Inc., 767 F.3d 1308, 1330 (Fed. Cir. 2014). While Apple denies VirnetX considered the issue, Apple.Resp.61, Apple expressly challenged the expert’s reliance on the “licensing policy” there, Apple Br.61 n.16 in No. 13-1489 (Fed. Cir.), and this Court affirmed.
2. Admission of Samsung’s License Does Not Support a New Trial The district court erred in ruling that Wi-LAN’s license with Samsung,
Apple’s closest competitor, was inadmissible. Appx42. The license was highly relevant—it gave Samsung an “adjustment right” that would have “cost Wi-LAN a Royalty Payment ” if Wi-LAN granted Apple a cheaper license. Appx10664. It would have made no sense for Wi-LAN to grant Apple a license that would have triggered Samsung’s adjustment right and created a net loss for Wi-LAN. That evidence of Wi-LAN’s “economic circumstances,” CSIRO, 809 F.3d at 1303, was clearly relevant to the hypothetical negotiation. See Studiengesellschaft Kohle, m.b.H. v. Dart Indus., Inc., 862 F.2d 1564, 1569 (Fed. Cir. 1998) (“most favored licensee” clause was a “very good reason” for patentee to insist on particular royalty
structure).
While Apple insists that economic evidence is “relevant” only when it directly
establishes the invention’s value or is “need[ed] to adjust some other prior license,” Apple.Resp.62-63, it cites no authority imposing that restrictive view. Economic-
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circumstances evidence was used for those purposes in LaserDynamics, Inc. v. Quanta Computer, Inc., 694 F.3d 51, 67-68 (Fed. Cir. 2012), and Finjan, Inc. v. Secure Computing Corp., 626 F.3d 1197, 1211 (Fed. Cir. 2010), but neither case held those were the only permissible uses. And Georgia-Pacific analysis includes factors that contradict Apple’s narrow view, such as the parties’ “commercial rela- tionship” and the infringing product’s “popularity.” Georgia-Pacific Corp. v. U.S. Plywood Corp., 318 F. Supp. 1116, 1120 (S.D.N.Y. 1970); see Vectura Ltd. v. Glaxosmithkline LLC, 981 F.3d 1030, 1042 (Fed. Cir. 2020) (considering “leverage in the hypothetical negotiation”). Georgia-Pacific considers what “amount would have been acceptable by a prudent patentee.” 318 F. Supp. at 1120. Here, a “prudent patentee” would not have agreed to suffer a net loss by granting Apple a cheaper license than Samsung.
Samsung’s license, moreover, was admitted to help “adjust . . . prior license”—which Apple concedes is a permissible purpose. Apple.Resp.62-63. As Wi-LAN explained, its prior licenses with Doro, Vertu, and Unnecto did not trig- ger Samsung’s adjustment right—only a license to Apple would. Wi-LAN.Br.77. The Samsung license thus helped the jury understand why Wi-LAN would not necessarily agree to license Apple on the same terms as those prior licensees, and to adjust the prior licenses accordingly. Id.
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Apple’s argument that the Samsung license did not help value the patented
technology, Apple.Resp.63-64, is beside the point. Wi-LAN did not seek the
license’s admission for that purpose; rather, Kennedy considered its “adjustment
right” as one “factor” affecting the terms Wi-LAN would agree to in a hypothetical
negotiation with Apple. Appx10708; see Appx10656-10657; pp. 23-24, supra.
While Apple complains that Samsung was a portfolio license, Kennedy accounted
for that. See Appx10640; Wi-LAN.Br.78. And given that the Royalty Wi-LAN
received from Samsung was markedly less than the proposed $145.1 million royalty
supported by Wi-LAN’s other evidence—including Wi-LAN’s comparable licenses,
rate sheets, and direct-valuation analysis, see pp. 3-23, supra; Wi-LAN.Br.71-74,
76-80, Apple can hardly argue it improperly “skew[ed] the damages horizon for the
jury.”