Case 3:15-cv-00700-JLS-NLS Document 163 Filed 11/06/17 PageID.12884 Page 1 of 9
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`MICHAEL J. SACKSTEDER (CSB No. 191605)
`msacksteder@fenwick.com
`BRYAN A. KOHM (CSB No. 233276)
`bkohm@fenwick.com
`LAUREN E. WHITTEMORE (CSB No. 255432)
`lwhittemore@fenwick.com
`FENWICK & WEST LLP
`555 California Street, 12th Floor
`San Francisco, CA 94104
`Telephone: 415.875.2300
`Facsimile: 415.281.1350
`Attorneys for Defendant
`ZEPP LABS, INC.
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`SAN FRANCISCO
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`ATTORNEYS AT LAW
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`FENWICK & WEST LLP
`
`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF CALIFORNIA
`SAN DIEGO DIVISION
`Case No. 15-cv-0700-JLS-NLS
`BLAST MOTION, INC., a California
`corporation,
`ZEPP LABS, INC.’S REPLY IN
`SUPPORT OF ITS MOTION TO
`EXCLUDE THE TESTIMONY OF
`C. PAUL WAZZAN, PH.D.
`Date: November 30, 2017
`Time: 1:30 p.m.
`Courtroom: 4D
`Hon. Judge Janis L. Sammartino
`
`)))))))))))
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`
`)
`)
`)
`
`Plaintiff,
`
`v.
`ZEPP LABS, INC., a Delaware
`corporation,
`
`Defendant.
`
`[REDACTED VERSION] OF ZEPP LABS, INC.’S
`REPLY IN SUPPORT OF ITS MOTION TO EXCLUDE THE TESTIMONY
`OF C. PAUL WAZZAN, PH.D. PORTIONS OF WHICH HAVE BEEN
`CONDITIONALLY FILED UNDER SEAL
`
`
`
`
`[REDACTED] ZEPP’S REPLY ISO MOTION TO
`EXCLUDE THE TESTIMONY OF C. PAUL WAZZAN
`
`
`
`
`
`CASE NO. 15-cv-0700-JLS-NLS
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`

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`Case 3:15-cv-00700-JLS-NLS Document 163 Filed 11/06/17 PageID.12885 Page 2 of 9
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`INTRODUCTION
`Rather than identify the missing evidence or analysis by Dr. Wazzan,
`Plaintiff Blast Motion, Inc. (“Blast Motion”) relies instead on hand-waving, non-
`responsive citations to the record, and an attack on Zepp’s damages expert (whose
`testimony is not at issue here). Ultimately, Blast Motion fails to establish that Dr.
`Wazzan’s opinions are reliable, and therefore they should be excluded.
`I.
`DR. WAZZAN APPLIES IMPROPER MARKET SHARE
`ASSUMPTIONS
`
`Blast Motion attempts to justify Dr. Wazzan’s opinions regarding market
`share by arguing that he carefully considered the evidence available to him. But no
`level of consideration can make up for the lack of evidence necessary to provide
`reliable opinions regarding market share.
`Both parties acknowledge a lack of third party market share data. This
`makes Blast Motion’s effort to establish a market share for a lost profits analysis all
`the more challenging. Dr. Wazzan begins by identifying all competitors in the
`marketplace for golf and baseball sports sensors during the time of alleged
`infringement. Dr. Wazzan also examines testimony by Blast Motion and Zepp
`employees and concludes that Blast Motion and Zepp each considered the other its
`primary competitor. But even if true, the fact that the parties are significant
`competitors does not provide sufficient evidence from which to determine the
`market share held by each party in the industry. Rather than examine the sales of
`third party competitors to determine each company’s footprint in the market,
`Dr.Wazzan relies on unsubstantiated assumptions.
`In support of Dr. Wazzan’s speculative estimate of market share, Blast
`Motion cites his testimony stating that while he believes, based on the “totality of
`the evidence,” more sales should be allocated to Blast Motion than Zepp, he instead
`“defaulted to an equal share.” Opp. at 5. This “carefully considered” evidence
`does not support his “default” assumption that all entrants in the market would have
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`[REDACTED] ZEPP’S REPLY ISO MOTION TO
`EXCLUDE THE TESTIMONY OF C. PAUL WAZZAN
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`CASE NO. 15-cv-0700-JLS-NLS
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`SAN FRANCISCO
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`ATTORNEYS AT LAW
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`FENWICK & WEST LLP
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`had an equal share—a clear example of speculation. Grain Processing Corp. v.
`Am. Maize-Prods. Co., 185 F.3d 1341, 1350 (Fed. Cir. 1999) (“To prevent the
`hypothetical from lapsing into pure speculation, this court requires sound economic
`proof of the nature of the market and likely outcomes with infringement factored
`out of the economic picture.”). Therefore, Dr. Wazzan’s faulty market share
`analysis should be excluded.
`A. Dr. Wazzan Fails to Provide Sufficient Analysis of the Causal
`Connection Between the Alleged Infringement and Lost Profits
`
`Blast Motion attempts to paper over Dr. Wazzan’s failure to provide a causal
`connection between the infringement and Blast Motion’s claimed lost profits by
`first by (helpfully) citing to Dr. Wazzan’s entire 90-page report (Opp. at 9, fn. 5)
`and second by citing to twelve paragraphs in the 90-page report. Opp. at 10. Those
`twelve paragraphs—190 to 202—are in a section entitled “Economic Discussion of
`Apportionment.” The section first discusses the purported value of the patented
`features of the allegedly infringing products and concludes with the statement: “I
`have therefore concluded that a reasonable apportionment factor for those Claims
`lies in the range of 60% to 75%.” But Dr. Wazzan never explains the methodology
`underlying this conclusion. Indeed, there is no way to know whether he reached
`this conclusion using scientific/mathematical analysis, or how, and even if, he
`applied certain weights to different features. Such opinions are neither reliable nor
`helpful to a jury. Power Integrations, Inc. v. Fairchild Semiconductor Int’l, Inc.,
`711 F.3d 1348, 1373 (Fed. Cir. 2013) (district court abused its discretion in
`admitting damages expert’s testimony that was unreliable and based on unverifiable
`assumptions).
`Dr. Wazzan later considers his “apportionment factor” in his Georgia-Pacific
`analysis and his discussion of a reasonable royalty. However, Dr. Wazzan provides
`no analysis in this section regarding how the “apportionment factor” relates to his
`lost profits analysis and makes no effort to connect his “range of 60% to 75%” to
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`[REDACTED] ZEPP’S REPLY ISO MOTION TO
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`CASE NO. 15-cv-0700-JLS-NLS
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`SAN FRANCISCO
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`ATTORNEYS AT LAW
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`FENWICK & WEST LLP
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`his lost profits analysis. Despite Blast Motion’s attempt to point to some portion of
`his report to support a causal nexus, Dr. Wazzan’s flawed testimony does not aid
`the jury in determining “damages adequate to compensate [Blast Motion] for the
`infringement,” and therefore his testimony should be excluded. Power
`Integrations, 711 F.3d at 1371.
`B. Additional Factual Errors or Omissions
`Prior to April 19, 2017, Blast Motion did not offer a separate softball sensor
`product, nor did it record separate sales for baseball and softball sensors. Zepp did
`because Zepp offered a specific softball sensor product. Blast Motion attempts to
`explain away Dr. Wazzan’s improper inclusion of Zepp’s softball sensor sales by
`arguing that Blast Motion’s baseball product could also be used for softball.
`However, Blast Motion offers no evidence that any customers used its Baseball 360
`product for softball before it introduced its Softball 360 product on April 19, 2017.
`Therefore, counting Zepp’s softball sensor sales is improper.
`Second, Dr. Wazzan makes no attempt to account for sales in Canada, but
`simply includes them. Even his “default to equal shares” strategy fails him here.
`Because Dr. Wazzan failed to remove any sales outside of the United States, his
`figures are not accurate and should not be the basis for any calculation. Further,
`Blast Motion fails to explain how its theory that some shipments of products may
`pass through the United States applies to method claims. Even assuming arguendo
`that Blast Motion would be entitled to damages for certain sales based on apparatus
`claims, Blast Motion’s failure to exclude those foreign sales for method claims
`results in an over-inclusive damages base.
`Third, Blast Motion again fails to provide any evidence that Blast Motion
`was manufacturing their products at
` as early as December
`2014. Blast Motion instead attempts to shift the burden to Zepp, arguing that Zepp
`failed to uncover the necessary evidence to prove Blast Motion’s manufacturing
`location and capabilities in 2014. But the burden lies with Blast Motion to establish
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`[REDACTED] ZEPP’S REPLY ISO MOTION TO
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`CASE NO. 15-cv-0700-JLS-NLS
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`SAN FRANCISCO
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`ATTORNEYS AT LAW
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`FENWICK & WEST LLP
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`those facts. Welker Bearing Co. v. PHD, Inc., 550 F.3d 1090, 1095 (Fed. Cir.
`2008) (“[T]he burden remains with the patentee to prove infringement, not on the
`defendant to disprove it.”). Under Federal Rule of Civil Procedure 26(a)(2)(b)(i),
`Dr. Wazzan’s report must include the factual basis his opinions. And his report
`lacks any evidence that Blast Motion was using that facility in 2014, as is required
`to support Dr. Wazzan’s opinion that it could have ramped up manufacturing at that
`time. Blast Motion cannot justify Dr. Wazzan’s unsubstantiated opinions by
`arguing that it possibly may provide support at trial. Such an approach falls far
`short of providing sufficient notice of his expert opinions and the bases thereof.
`Indeed, under such an approach, any party could avoid a Daubert motion by
`asserting that the factual foundation for the opinions will be provided at trial.
`Because Dr. Wazzan’s lost profits analysis is based on incorrect assumptions
`and is not supported by a sufficient factual foundation, his testimony should be
`excluded.
`II. DR. WAZZAN’S REASONABLE ROYALTY ANALYSIS IS
`UNRELIABLE
`
`A.
`Swing “accuracy” versus “false positive detection”
`Blast Motion attempts to generate confusion regarding the distinction
`between “accuracy” versus “false positive detection.” Dr. Wazzan asserts that both
`parties and their customers place a high value on the accuracy of the swing data,
`citing evidence of studies by third parties examining accuracy of the sensor’s swing
`statistics. But the claim language refers to “false positive detection,” which is
`directed to determining whether a swing occurred—the benefits of false positive
`detection are reducing the amount of memory required to store data in the sensor
`and reducing the amount of data transmitted to the user’s mobile device. ’855
`patent at 5:24-28. If a motion does not qualify as a swing, the data is not stored or
`transferred. The “accuracy” of the data comes into play only after it is determined a
`given motion is a valid swing, as opposed to someone simply picking up a bat or
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`[REDACTED] ZEPP’S REPLY ISO MOTION TO
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`golf club. For example, if the Blast Motion and Zepp sensors had unlimited
`memory and bandwidth and there was no limitation in the amount of data to be
`collected and transmitted to the user’s mobile device, and thus false positive
`detection was unnecessary, the “accuracy” of the swing data would be precisely the
`same. Dr. Wazzan’s conflation of these two entirely separate concepts renders his
`opinions unreliable, and therefore his opinions should be excluded.1
`B.
`Lack of “sharing”
`Both Blast Motion and Zepp have marketed the social media sharing feature
`and employees of both parties have stated on the record that the ability to share
`swing data via social media is something they consider to be an important feature.
`That is not in doubt. But those marketing statements and employee opinions do not
`establish that the feature is what drives demand.
`The evidence relied on by Dr. Wazzan highlights this problem. For example,
`Dr. Wazzan relies on press releases from before the ’527 patent issued to support
`his opinion that the not-yet patented feature described in those press releases drove
`sales for yet to be released products. In lieu of a customer survey, which Blast
`Motion chose not to employ, usage of the “sharing” feature by customers who put
`down their own money for the product is the only available evidence of whether the
`feature is considered to be valuable by customers.
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`Whittemore Decl. to opening brief, Exs. K and L.
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` But this does not prove that the “sharing” feature
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`1 Blast Motion’s conflation of these concepts is coupled wi
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`f
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`response, Dr. Mody never testified as Blast Motion now misstates she did.
`CASE NO. 15-cv-0700-JLS-NLS
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`[REDACTED] ZEPP’S REPLY ISO MOTION TO
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`drives demand for the entire product. LaserDynamics, Inc. v. Quanta Computs.,
`Inc. 694 F.3d 51, 67-68 (Fed. Cir. 2012) (“It is not enough to merely show that the
`[feature] is viewed as valuable, important, or even essential to the user of the”
`product; it must be shown that the feature drives demand for the entire product.).
`Indeed, despite employees’ beliefs, the evidence of customer usage of the feature,
`which is more reliable and relevant, demonstrates the “sharing” feature is not what
`drives demands for the products.
`Nor does Blast Motion address the issue that simply “sharing” swing data
`from the sensor is not sufficient. In order to perform the patented feature, the user
`must be able to “share” a combined image of swing metrics and a representation of
`the user’s swing. Whittemore Decl. to opening brief, Ex. A, ¶¶ 199-200. Blast
`Motion’s failure to address further renders Dr. Wazzan’s opinion unreliable, and
`therefore they should be excluded.
`C. Dr. Wazzan’s unreliable “apportionment” methodology
`Blast Motion claims that the factual evidence cited by Dr. Wazzan “describes
`the methodology and support for his apportionment opinions. . . .” Opp. at 17. But
`Zepp is not claiming that Dr. Wazzan failed to read documents or talk to any Blast
`Motion employees. Zepp simply argues that Dr. Wazzan’s has failed to provide
`analysis explaining his approach of starting with an apportionment rate of 65% for
`the patented features.
`In its defense, Blast Motion inexplicably argues that it is “notable” that
`Zepp’s damages expert, Dr. Mody, failed to test the products. What this “notable”
`fact has to do with Dr. Wazzan’s unsupported 65% apportionment is anyone’s
`guess.
`Blast Motion’s reliance on Good Tech. Corp. v. MobileIron, Inc. is
`unavailing, as that opinion addressed the feasibility of non-infringing alternatives,
`not apportionment. [No. 5:12-cv-05826-PSG, 2015 U.S. Dist. LEXIS 90676, at *9-
`17 (“On this record, the court finds no basis on which to exclude Gray’s opinion on
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`CASE NO. 15-cv-0700-JLS-NLS
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`SAN FRANCISCO
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`ATTORNEYS AT LAW
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`FENWICK & WEST LLP
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`non-infringing alternatives.”)]. Arguing over sufficiency of evidence is not the
`issue here. The utter lack of analysis by Dr. Wazzan is the issue, and that is one
`that cannot be addressed via cross-examination.
`III. DR. WAZZAN’S “WINNER-TAKE-ALL” ANALYSIS IS
`UNSUPPORTED BY FACTS AND IRRELEVANT TO THE ISSUE OF
`BOTH LOST PROFITS AND A REASONABLE ROYALTY
`Blast Motion again mischaracterizes Zepp’s argument on Dr. Wazzan’s
`unsupported “winner-take-all” opinion. Zepp does not dispute that Dr. Wazzan’s
`report provided citations to factual evidence. Zepp argues that Dr. Wazzan does not
`tie his analysis to the facts of this case. His opinion is essentially a recitation of the
`economic theory, citations to the record, and a naked conclusion that the sports
`sensor market is a “winner-take-all” market. The only citation to Dr. Wazzan’s
`deposition that Blast Motion can point to is equally conclusory. Opp. at 25. Dr.
`Wazzan has failed to provide a basis for his conclusion and therefore his opinion
`should be excluded.
`
`CONCLUSION
`For the reasons stated above, Zepp respectfully requests that the Court
`exclude Dr. Wazzan’s damages opinions and testimony regarding the “winner-take-
`all” market, lost profits, and reasonable royalty based upon its reliance on
`unreliable assumptions and insufficient facts.
`
`Dated: November 2, 2017
`
`FENWICK & WEST LLP
`
`By: /s/ Bryan A. Kohm
`Bryan A. Kohm
`Attorneys for Defendant
`ZEPP LABS, INC.
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`[REDACTED] ZEPP’S REPLY ISO MOTION TO
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`SAN FRANCISCO
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`ATTORNEYS AT LAW
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`FENWICK & WEST LLP
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`CERTIFICATE OF SERVICE
`The undersigned hereby certifies that all counsel of record who are deemed
`to have consented to electronic service are being served with a copy of the
`foregoing Zepp Labs, Inc.’s [REDACTED VERSION] OF ZEPP LABS, INC.’S REPLY IN
`SUPPORT OF ZEPP LABS, INC.’S MOTION EXCLUDE THE TESTIMONY OF C. PAUL
`WAZZAN, PH.D. via the Court’s CM/ECF system per Civil Local Rule 5.4 on this
`date.
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`
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`Dated: November 6, 2017
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`/s/ Bryan A. Kohm
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`Bryan A. Kohm
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`SAN FRANCISCO
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`ATTORNEYS AT LAW
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`FENWICK & WEST LLP
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