Case 1:17-cv-00825-EMR Document 329 Filed 12/07/22 Page 1 of 46
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`In the United States Court of Federal Claims
`
`
`SCIENCE APPLICATIONS
`INTERNATIONAL CORP.,
`
`
`Plaintiff,
`
`
` v.
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`THE UNITED STATES,
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`
`
`
`
`
`
`Defendant,
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`and
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`MICROSOFT CORPORATION,
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` Intervenor-Defendant,
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` and
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`L3 TECHNOLOGIES, INC.,
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` Third-Party Defendant.
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`No. 17-cv-825
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`Filed Under Seal: November 29, 2022
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`Publication: December 7, 20221
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`
`
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`Stephen R. Smith, Cooley LLP, Washington, D.C. for Plaintiff. With him on the briefs were
`DeAnna D. Allen, Cooley LLP, Washington, D.C.; Douglas P. Lobel, Cooley LLP, Reston,
`Virginia; and Gwendolyn Tawresey, Troutman Pepper Hamilton Sanders LLP, Washington, D.C.
`
`Alex Hanna, United States Department of Justice, Civil Division, Washington, D.C. for Defendant.
`With him on the briefs were Brian M. Boynton, Principal Deputy Assistant Attorney General,
`Washington, D.C.; Gary L. Hausken, United States Department of Justice, Civil Division,
`Washington, D.C.; Scott Bolden, United States Department of Justice, Civil Division, Washington,
`D.C.; and Hayley A. Dunn, United States Department of Justice, Civil Division, Washington, D.C.
`
`Thomas L. Halkowski, Fish & Richardson P.C., Washington, D.C. for Intervenor-Defendant. With
`him on the briefs were Ahmed J. Davis, Fish & Richardson P.C., Washington, D.C.; Kenton W.
`
`
`1 This Memorandum and Order was filed under seal in accordance with the Protective Order
`entered in this case (ECF No. 34) and was publicly reissued after incorporating all redactions
`proposed by the parties. (ECF No. 328.) The sealed and public versions of this Memorandum and
`Order are otherwise identical, except for the publication date and this footnote.
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`

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`Case 1:17-cv-00825-EMR Document 329 Filed 12/07/22 Page 2 of 46
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`Freeman, Jr., Fish & Richardson P.C., Washington, D.C.; and Tracea L. Rice, Fish & Richardson
`P.C., Washington, D.C.
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`William C. Bergmann, Baker & Hostetler LLP, Washington, D.C. for Third-Party Defendant.
`With him on the briefs were Charles C. Carson, Baker & Hostetler LLP, Washington, D.C.; and
`Cassandra Simmons, Baker & Hostetler LLP, Washington, D.C.
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`
`
`MEMORANDUM AND ORDER
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`Pending before the Court are dueling motions for varying levels of sanctions, brought
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`pursuant to Rule 37 of the Rules of the United States Court of Federal Claims (Rules). First,
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`Plaintiff Science Applications International Corporation (Plaintiff or SAIC) filed a Combined
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`Motion for Sanctions Pursuant to Rule 37 and Partial Motion to Strike Invalidity Contentions
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`against Defendant the United States (the Government), Intervenor-Defendant Microsoft
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`Corporation (Microsoft), and Third-Party Defendant L3 Technologies, Inc. (L3) (collectively,
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`Defendants). ECF No. 289 (Pl.’s Mot. or Combined Motion). Specifically, Plaintiff seeks
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`sanctions pursuant to Rules 37(d) and 16(f) in its Combined Motion, urging the Court to (i)
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`preclude the Government and L3 from introducing evidence concerning the qualification of non-
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`patent references as prior art, and (ii) strike obviousness defenses and certain indefiniteness
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`theories from Defendants’ Final Invalidity Contentions. See id.; ECF No. 314 (Pl.’s Reply). In
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`response to Plaintiff’s Combined Motion, Defendants lodged a Cross-Motion to Exclude
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`Plaintiff’s Undisclosed Damages Theory, pursuant to Rule 37. ECF No. 308 (Defs.’ Resp.).
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`Defendants urge the Court to impose the Rule 37(c) sanction of exclusion to preclude any evidence
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`pertaining to Plaintiff’s damages theory from consideration during future proceedings. See id.;
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`ECF No. 319 (Defs.’ Reply).
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`2
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`

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`Case 1:17-cv-00825-EMR Document 329 Filed 12/07/22 Page 3 of 46
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`For the reasons explained below, Plaintiff’s Motion for Sanctions Pursuant to Rule 37 is
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`DENIED, Plaintiff’s Partial Motion to Strike Invalidity Contentions is DENIED, and Defendants’
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`Rule 37 Cross-Motion to Exclude Plaintiff’s Undisclosed Damages Theory is DENIED.
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`BACKGROUND
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`This action has a lengthy history, familiarity with which is presumed.2 See, e.g., Sci.
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`Applications Int'l Corp. v. United States, 135 Fed. Cl. 661 (2018); Sci. Applications Int'l Corp. v.
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`United States, 154 Fed. Cl. 594 (2021); Sci. Applications Int'l Corp. v. United States, 156 Fed. Cl.
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`486 (2021); Sci. Applications Int'l Corp. v. United States, 161 Fed. Cl. 373 (2022); Sci.
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`Applications Int'l Corp. v. United States, 162 Fed. Cl. 213 (2022). A background summary
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`pertinent to the current motions follows.
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`Plaintiff alleges the Government infringed Plaintiff’s patent, U.S. Patent No. 9,229,230
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`(the ’230 patent), related to a heads-up display for night vision goggle weapons systems “by
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`entering into contracts with Plaintiff’s competitors for the manufacture and subsequent use of night
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`vision goggle weapon systems with specialized heads up displays that allegedly use Plaintiff’s
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`patented technology.” Sci. Applications Int’l Corp. v. United States, 148 Fed. Cl. 268, 269 (2020).
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`The following claim elements are common to the ’230 patent’s claims3:
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`(a) receive video images from the first video source and from the second video
`source,
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`(b) receive motion data indicative of motion of the first and second video sources,
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`2 Since its inception in June 2017, this action has been reassigned four times to different judges.
`See Sci. Applications Int’l Corp. v. United States, 148 Fed. Cl. 268, 270 (2020); see also ECF No.
`25 (Notice of Reassignment, dated April 5, 2018); ECF No. 68 (Notice of Reassignment, dated
`June 21, 2019); ECF No. 85 (Notice of Reassignment, dated July 23, 2019); ECF No. 113 (Notice
`of Reassignment to undersigned judge, dated February 27, 2020).
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` Independent claims 15 and 29 — method and computer-readable medium claims, respectively
`— rephrase steps (a)–(e) as gerunds. See ’230 patent at 26:27–47 (Claim 15), 28:16–38 (Claim
`29).
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` 3
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`3
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`Case 1:17-cv-00825-EMR Document 329 Filed 12/07/22 Page 4 of 46
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`(c) identify, based on the received motion data, a part of a first video source image
`that potentially represents a portion of the external environment represented in a
`part of a second video source image;
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`(d) evaluate, based on a comparison of data from the first and second video source
`images, the identification performed in operation (c); and
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`(e) display at least a portion of the first video source image and at least a portion of
`the second video source image such that the second video source image portion
`overlays a corresponding region of the first video source image portion, wherein
`the corresponding region represents a portion of the external environment
`represented in the second video source portion.
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`’230 patent at 24:25–51 (Claim 1), 26:27–30:42 (Claims 15–41).
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`I.
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`Plaintiff’s Motion for Rule 37 Sanctions
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`A. Interrogatory No. 18
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`Plaintiff moves to sanction the Government and L3 pursuant to Rule 37(d)(1)(A)(ii) for
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`allegedly deficient responses to Plaintiff’s Interrogatory No. 18. Pl.’s Mot. at 15.4 On February
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`18, 2022, Plaintiff served Interrogatory No. 18 on the Government, and subsequently, on March
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`31, 2022, served the same Interrogatory No. 18 on L3. Pl.’s Mot. at 7; Pl.’s Mot., Exhibit 1 (ECF
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`No. 289-1); Pl.’s Mot., Exhibit 4 (ECF No. 289-4). Plaintiff did not serve Interrogatory No. 18 on
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`Microsoft. See Pl.’s Mot. at 8 n.3. Specifically, in its Motion, Plaintiff seeks the exclusion of “all
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`evidence that the Government or L3 would offer or benefit from to qualify non-patent references
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`as prior art because they refused to respond to Plaintiff’s Interrogatory No. 18.” Pl.’s Mot. at 15.
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`Plaintiff’s Interrogatory No. 18 states:
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`For each non-patent reference (e.g., non-patent literature or system art) that You
`contend is prior art that invalidates any asserted claim of any Asserted Patent alone
`or in combination with other prior art and that is included in Your Preliminary
`Election of Asserted Prior Art (or any revision or amendment thereof) and/or that
`You intend to rely upon in any dispositive motion or at trial, identify all factual and
`legal bases for Your contention that the reference qualifies as prior art under any
`subsection of 35 U.S.C. § 102. A complete response should state the subsections
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`4 Citations throughout this Memorandum and Order reference the ECF-assigned page numbers,
`which do not always correspond to the pagination within the document.
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`4
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`Case 1:17-cv-00825-EMR Document 329 Filed 12/07/22 Page 5 of 46
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`of 35 U.S.C. § 102 under which the reference allegedly qualifies as prior art,
`identify all evidence supporting your contention that the reference qualifies as prior
`art under any subsection of 35 U.S.C. § 102, state the critical dates on which the
`reference was first known, used, offered for sale, sold, publicly used, or made in
`this country, and the identity and knowledge of each Person who possesses
`knowledge regarding the reference’s qualification as prior art.
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`Id. at 7–8.
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`On March 21, 2022, the Government served its objections and response to Interrogatory
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`No. 18. Pl.’s Mot., Exhibit 1 (ECF No. 289-1). The Government’s objections were multiple:
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`The government objects to this Interrogatory to the extent it imposes an obligation
`on the government to respond with information that does not relate to the only
`remaining asserted U.S. Pat. No. 9,229,230. The government objects to this
`Interrogatory to the extent it seeks to impose on the government obligations that
`are not required by or inconsistent with the Scheduling Order, the Rules of the Court
`of Federal Claims, the Patent Rules of the Court of Federal Claims, or any other
`Order in this case. The government further objects to this Interrogatory as vague
`and ambiguous, particularly in its use of the phrase “non-patent reference (e.g., non-
`patent literature or system art)” that the Army “contend[s] is prior art that
`invalidates any asserted claim of any Asserted Patent alone or in combination with
`other prior art”. The government further objects to this Interrogatory as expressly
`calling for a legal conclusion, including as to any “non-patent reference (e.g., non-
`patent literature or system art)” that the Army “contend[s] is prior art that
`invalidates any asserted claim of any Asserted Patent alone or in combination with
`other prior art”, and as to “all . . . legal bases for [the Army’s] contention that the
`reference qualifies as prior art”. The government further objects to this
`interrogatory to the extent it calls for the government to speculate as to its future
`“inten[t]”, or disclosure its work-product, vis-à-vis what the government will “rely
`upon in any dispositive motion or at trial[.]” The government also objects to this
`Interrogatory as containing multiple subparts, being unduly prolix, unduly complex
`and violating [Rules] 33(a)(1) & (2).
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`Pl.’s Mot., Exhibit 1 (ECF 289-1) at 22.
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`In addition to its objections, the Government’s response to Interrogatory No. 18 stated:
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`The government will disclose its invalidity contentions in accordance with the
`Rules and Orders of this Court. In accordance with the Court’s Scheduling Order,
`the government has served its initial and revised listing of prior art and invalidity
`claim charts, as well as a preliminary election of asserted prior art (dated November
`1, 2021). The government hereby incorporates by reference as if fully set forth
`herein any identified prior art and invalidity contentions that have been served or
`will be served by Microsoft and/or L3. To the extent the government understands
`this Interrogatory, the government will serve final invalidity contentions, which are
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`5
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`Case 1:17-cv-00825-EMR Document 329 Filed 12/07/22 Page 6 of 46
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`currently due on May 31, 2022, as well as an invalidity expert report, which is
`currently due on August 12, 2022, in accordance with the Court’s Scheduling Order
`(see Dkt. 203, 262)[.]
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`Id. at 23.
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`Plaintiff’s counsel contacted the Government’s counsel via e-mail on March 30, 2022,
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`requesting a “meet-and-confer” to discuss “[r]esponses and objections to Interrogatories Nos. 15,
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`16, and 18.” Defs.’ Resp., Exhibit 7 (ECF No. 308-7) at 2. In the ensuing e-mail correspondence,
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`Plaintiff’s counsel sought “clarification regarding whether the Government will fully answer
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`[Interrogatory No. 18] on [May 31, 2022].” Pl.’s Mot., Exhibit 3 (ECF 289-3) at 4, 9. The
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`Government’s counsel responded by stating “the responses and objections speak for themselves,
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`and the government is aware of, and intends to fully cooperate with, the Rules, including the duty
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`to supplement under [Rule] 26(e).” Id. at 2 (E-mail dated June 6, 2022).
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`On March 31, 2022, one day after Plaintiff’s counsel contacted the Government’s counsel
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`requesting a meet-and-confer, Plaintiff served Interrogatory No. 18 on L3. Pl.’s Mot., Exhibit 2
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`(ECF No. 289-2) at 12–13. L3 served its objections and response on May 2, 2022. Pl.’s Mot.,
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`Exhibit 4 (ECF No. 289-4) at 18. L3’s response was substantively identical to that of the
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`Government. See id.; Pl.’s Mot., Exhibit 1 (ECF No. 289-1) at 23. Specifically, L3 objected to
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`Interrogatory No. 18 on the following grounds:
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`L3 incorporates its general objections as though the same were set forth fully
`herein. L3 objects to this interrogatory to the extent that it seeks information subject
`to the attorney client privilege, work product immunity, common interest doctrine
`of joint defense privilege, or other applicable immunity. L3 also objects that this
`interrogatory is vague, ambiguous, overly broad, unduly burdensome, not relevant
`to any party’s claim or defense, and not proportional to the needs of the case to the
`extent it seeks identification of information relating to claims and patents not
`specifically identified in SAIC’s Infringement Contentions and seeks a response
`regarding “knowledge of each Person who possesses knowledge regarding the
`reference’s qualification as prior art.” L3 objects to this Interrogatory as containing
`multiple subparts, being unduly prolix, unduly complex and violating [Rules]
`33(a)(1) & (2). L3 objects to this interrogatory to the extent it purports to require
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`6
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`Case 1:17-cv-00825-EMR Document 329 Filed 12/07/22 Page 7 of 46
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`L3 to produce documents in the possession of third parties (such as other parties to
`this litigation). L3 also objects that this interrogatory is premature to the extent it
`seeks expert disclosures or other information prior to the deadlines created by the
`Court.
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`Pl.’s Mot., Exhibit 4 (ECF 289-4) at 16.
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`
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`On June 30, 2022, Defendants served their Final Invalidity Contentions, which totaled over
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`600 pages. See Pl.’s Mot., Exhibit 13 (ECF No. 289-13) at 2–3. According to the Government
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`and L3, they incorporated their Final Invalidity Contentions by reference into their responses to
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`Interrogatory No. 18. Id. Subsequently, on July 8, 2022, Plaintiff’s counsel contacted the
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`Government’s and L3’s counsel requesting a conference regarding several points of contention,
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`including the responses to Interrogatory No. 18. Pl.’s Mot., Exhibit 9 (ECF No. 289-9) at 3. The
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`parties ultimately conferred on July 11, 2022, but did not resolve their dispute. See Pl.’s Mot.,
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`Exhibit 13 (ECF No. 289-13) at 2–4.
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`II.
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`Plaintiff’s Motion to Strike Defendants’ Invalidity Contentions
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`A. Obviousness Combinations and Motivations
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`Plaintiff moves, pursuant to Rule 16(f)(1), to strike Defendants’ obviousness defenses from
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`their Final Invalidity Contentions for failing “to obey a scheduling or other pretrial order.” Rule
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`16(f)(1)(C); Pl.’s Mot. at 19. Plaintiff advances two arguments to this end. First, Plaintiff alleges
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`Defendants’ Final Invalidity Contentions disclose a near-infinite amount of obviousness
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`combinations of prior art. Id. at 20–23. Second, Plaintiff asserts the specific combinations
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`provided by Defendants are not accompanied by contentions and evidence as to each
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`combination’s obviousness. Id. at 23–27.
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`Consistent with this Court’s June 14, 2022 Scheduling Order, Defendants served their Final
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`Invalidity Contentions on June 30, 2022. See Pl.’s Mot., Exhibit 13 (ECF No. 289-13) at 2–3;
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`Scheduling Order dated June 14, 2022 (ECF No. 285). Defendants’ Final Invalidity Contentions
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`7
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`Case 1:17-cv-00825-EMR Document 329 Filed 12/07/22 Page 8 of 46
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`include “a cover pleading (discussing groups of related claim elements)” and “seven (7) specific
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`element-by-element claim charts mapping particular disclosures from prior art to the asserted
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`claims.” Defs.’ Resp. at 36. The cover pleading’s use of “groups of related claim elements”
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`creates, in effect, “buckets” of prior art references.5 Defendants cite to these buckets throughout
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`their claim charts, including two paragraphs in each claim chart row referring to specific groupings
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`of prior art references in the cover pleading. For example, a row in the Dobbie claim chart states:
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`Other image alignment systems also disclose a first video source configured to
`generate images representing portions of an external environment. See Cover
`Pleading §§ IV.A.1 and IV.A.2.b.
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`Regardless of whether Dobbie and/or Roberts is found to disclose this element, it
`would have been obvious to modify and/or combine it with any of the references
`discussed in Cover Pleading §§ IV.A.1 and IV.A.2.b, including ‘993 Publication,
`Desert’s Edge Report, Desert’s Edge Videos, Land Warrior Review, Land Warrior
`Report, Roberts Case Study, Roberts SPIE Paper, Equinox Phase I, Equinox Phase
`II, Naval SBIR Proposal, Valery, Hanson, Dobbie, Belt, and You CGE to obtain it.
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`Pl.’s Mot., Exhibit 16 (ECF 289-16) at 4.
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`
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`In addition to the language found in the second paragraph included in each claim chart row,
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`Defendants’ cover pleading also addresses obviousness motivations for combining prior art
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`references:
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`Accordingly, if SAIC argues that the concept of using rapid target acquisition, or
`any aspect thereof, is missing from any reference, it would have been obvious at
`the time of the ‘230 Patent’s purported invention to modify the reference to include
`that feature or to combine it with any of the references that disclose the feature,
`including the ‘993 Publication, both in light of the knowledge of one of skill in the
`art and of the specific teachings discussed here. A person of ordinary skill would
`have been motivated to make the modification combination in order to obtain the
`benefits discussed above. Such a modification or combination would have been a
`conventional and well known substitution according to known methods to yield
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`5 These buckets list groups of prior art that reference a given concept relevant to the asserted patent
`claims. Elements upon which buckets are based include the following: rapid target acquisition;
`system components to generate and display graphical and video images; system components to
`compute orientation and motion of rifle and head; aligning weapon scope images with the shooter’s
`view; displaying graphical or video images; and a computer to perform image registration steps.
`Pl.’s Mot., Exhibit 10 (ECF No. 289-10) at 11-178.
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`8
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`Case 1:17-cv-00825-EMR Document 329 Filed 12/07/22 Page 9 of 46
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`predictable results, the use of known technique to improve similar devices in the
`same way, and would also have been obvious to try.
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`Pl.’s Mot., Exhibit 10 (ECF No. 289-10) at 22–23.
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`B. Microsoft’s Indefiniteness Theories
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`Plaintiff also moves, pursuant to Rule 16(f)(1), to strike Microsoft’s indefiniteness theories
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`from Defendants’ Final Invalidity Contentions for failing “to obey a scheduling or other pretrial
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`order.” Rule 16(f)(1)(C); Pl.’s Mot. at 19. Specifically, Plaintiff contends the introduction of new
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`indefiniteness theories is improper at this point in the litigation, as they “should have been
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`disclosed years ago, before issues of claim construction were briefed, argued, and decided.” Pl.’s
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`Mot. at 29.
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`A review of pertinent background information is helpful. On August 27, 2020, this Court
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`held an oral argument and status conference regarding a previously-filed motion to strike and
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`several issues raised in a Joint Status Report. See Hearing Transcript, August 27, 2020 (ECF No.
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`139). During the hearing and status conference, the parties discussed, among other topics, how
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` could affect claim construction and could
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`potentially create a need for supplemental claim construction after a Markman hearing. Defs.’
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`Resp., Exhibit 4 (ECF 308-4); Hearing Transcript, August 27, 2020 (ECF No. 139). In response,
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`the Court stated that it would conduct a Markman hearing to interpret the claims as asserted against
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`, and would consider conducting supplemental claim construction
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`related to
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`, to the extent necessary. See Hearing Transcript, August 27,
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`2020 (ECF No. 139) at 61:11–22.
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`The Court held a Markman hearing on December 15, 2020, and subsequently issued its
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`Claim Construction Opinion. See Markman Hearing Transcript, December 1, 2020 (ECF No.
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`159); Claim Construction Opinion (ECF No. 192). The Markman Opinion specifically addressed
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`9
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`Case 1:17-cv-00825-EMR Document 329 Filed 12/07/22 Page 10 of 46
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`indefiniteness. Claim Construction Opinion (ECF No. 192) at 28–29, 61–81. In view of the
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`holdings in that Opinion, Plaintiff provided a “narrowed list of asserted claims” in November 2021,
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`and supplemental infringement contentions on January 6, 2022. See Defs.’ Resp. at 24; Defs.’
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`Resp., Exhibit 20 (ECF No. 308-20) (Plaintiff’s Amended Infringement Contentions).
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`On February 11, 2022, Microsoft provided updated invalidity contentions, which raised
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`new indefiniteness defenses related to terms Microsoft contends are newly-relevant
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`
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` and Plaintiff’s January 2022 infringement contentions. See Defs.’
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`Resp. at 23, 53–54. These allegedly newly-relevant terms include “potentially represents,”
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`“represent,” and “overlays a corresponding region.” See Defs.’ Resp. at 22. On February 18,
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`2022, Plaintiff requested that Microsoft “withdraw its new indefiniteness claims, as they are not a
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`legally cognizable theory.” Pl.’s Mot., Exhibit 11 (ECF No. 289-11) at 2. Microsoft declined to
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`do so.
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`III. Defendants’ Motion to Strike Plaintiff’s Damages Disclosures Pursuant to Rule 37(c)
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`A. Plaintiff’s Rule 26(a)(1)(A)(iii) Initial Disclosures
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`On May 4, 2018, Plaintiff served its initial Rule 26(a)(1)(A)(iii) disclosure concerning
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`damages pursuant to the Court’s April 30, 2018 Scheduling Order. Scheduling Order, dated April
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`30, 2018 (ECF No. 31) at 1. Plaintiff’s 2018 initial disclosure of its damages computation reads
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`as follows:
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`Discovery has not yet commenced. Accordingly, SAIC is still developing its
`damages theories. SAIC reserves the right to continue developing its damages
`theories through document production requests, written discovery, depositions of
`parties and non-parties, and expert discovery. As a result of its ongoing
`investigation, SAIC may rely on the evidence it discovers while conducting its
`investigation and will supplement its response to include such evidence as required
`by the [Rules].
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`Defs.’ Resp., Exhibit 30 (ECF No. 308-30) at 10. Plaintiff supplemented its initial Rule
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`26(a)(1)(A)(iii) disclosure three times throughout fact discovery. Plaintiff served its first and
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`10
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`second supplemental disclosures on October 28, 2021, and May 13, 2022, respectively, but did not
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`substantially alter the language of the disclosures or provide additional clarification regarding its
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`damages theories.6 See Defs.’ Reply, Exhibit 29 (ECF No. 308-29) at 14 (First Rule 26(a)
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`Supplement); Defs.’ Reply, Exhibit 28 (ECF No. 308-28) at 14 (Second Rule 26(a) Supplement).
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`The parties conducted a meet-and-confer on July 11, 2022, during which Defendants requested
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`Plaintiff supplement the damages portion of its Rule 26(a)(1)(A)(iii) disclosures. See Pl.’s Reply
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`at 28–29. Shortly after the meeting, Defendants also advised Plaintiff via e-mail that “should
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`[Plaintiff] trouble the Court with [Plaintiff’s] motion regarding [Defendants’] invalidity
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`contentions, [Defendants] will also raise the issue of [Plaintiff’s] failure to provide the defendants
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`with damages contentions.” Pl.’s Mot., Exhibit 13 (ECF 289-13) at 2 (July 14, 2022 e-mail from
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`W. Bergmann to O. Armon); see Defs.’ Resp. at 56.
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`On August 2, 2022, Plaintiff filed its Third Supplemental Rule 26(a)(1)(A)(iii) Initial
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`Disclosure (Third Rule 26(a) Supplement). Defs.’ Resp., Exhibit 27 (ECF No. 308-27). In its
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`Third Rule 26(a) Supplement, Plaintiff states it had “not yet obtained sufficient information to
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`permit a full calculation of damages,” and notes that Plaintiff had recently learned of
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`
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`Plaintiff’s damages claims. Id. at 14. The Third Rule 26(a) Supplement does not, therefore,
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` additional Accused Instrumentalities, which would affect
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`6 The October 28, 2021 and May 13, 2022 supplements both read as follows:
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`Discovery is ongoing. Accordingly, SAIC is still developing its damages theories.
`SAIC reserves the right to continue developing its damages theories through
`document production requests, written discovery, depositions of parties and non-
`parties, and expert discovery. As a result of its ongoing investigation, SAIC may
`rely on the evidence it discovers while conducting its investigation and will
`supplement its response to include such evidence as required by the [Rules].
`
`
`First Rule 26 Supplement (ECF No. 308-29) at 14; Second Rule 26 Supplement (ECF No. 308-
`28) at 14.
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`11
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`Case 1:17-cv-00825-EMR Document 329 Filed 12/07/22 Page 12 of 46
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`include any numerical computations or estimations of the reasonable royalty rate or damages.
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`Instead, Plaintiff discloses potential damages methodologies its expert may use, but does not
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`commit to adopting a specific approach. Id. The Third Rule 26(a) Supplement indicates that
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`Plaintiff’s expected recovery under 28 U.S.C. § 1498 will include “the value of a license at the
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`time it was taken by the government and compensation for the government’s delay in paying for
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`that license.” Id. at 15. Plaintiff hypothesizes that its expert may calculate the license as either a
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`lump sum or as a reasonable royalty and will analyze “the benefits that the government obtains
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`from its use of the patented technology.” Id. at 15–16 (citing Decca Ltd. v. United States, 640
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`F.2d 1156 (Fed. Cir. 1980)).
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`Plaintiff also provided Defendants with a list of the evidence it may use to determine the
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`economic value of the patented technology, such as “testimony, documents, information, and other
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`types of evidence that is made of record during fact and expert discovery.” Id. at 16. According
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`to Plaintiff, this evidence may include, for example, executed and draft license agreements
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`produced by all parties; the parties’ “produced financial information, business plans, pricing
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`studies,” and other financial information; or analyses that “compare the pricing, features,
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`functionality, and/or value of products that incorporate the patented technology to similar attributes
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`of products that do not incorporate the patented technology.” Id. at 16. Plaintiff noted that the
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`start date for the recovery period, or the “‘instant the invention is first used or manufactured by [or
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`for] the Government,’” was still the subject of ongoing discovery, though Plaintiff asserted that it
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`expects the evidence will demonstrate Defendants “took delivery of an infringing instrumentality
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`on or around the date of issuance of the ‘230 Patent,” January 5, 2016. Id. at 17 (quoting Decca,
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`640 F.2d at 1166). Plaintiff also stated that it expects its damages expert to use January 5, 2016,
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`as the date on which the “hypothetical negotiation” for a licensing agreement, simulated as part of
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`the expert’s reasonable royalty valuation approach, will take place. Id. at 18.
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`Plaintiff explained that if the damages expert performs a valuation based on a reasonable
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`royalty, its royalty rate will either be expressed as a lump sum or as a series of running payments.
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`Id. at 18–19. Plaintiff also stated that its experts will estimate the royalty rate either using a
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`hypothetical negotiation under the Georgia-Pacific7 framework or using the “analytical
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`approach.”8 Id. Plaintiff’s Third Rule 26(a) Supplement includes a general discussion of the
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`Georgia-Pacific factors and groups them into three general buckets: Licensing Considerations,
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`Business Considerations, and Technical Considerations. Id. at 19–25. Within the Licensing
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`Considerations bucket, Plaintiff identifies several specific licensing agreements and licensing
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`offers produced by Microsoft, L3, and Plaintiff, but notes additional discovery and analyses are
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`required before Plaintiff can discern the relevance and comparability of these transactions to the
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`nature and value of the ‘230 patent. Id. at 19–20. Under the Business Considerations bucket,
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`Plaintiff identifies documents conveying parties’ licensing policies, the Government’s use of the
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`‘230 patent, and the incremental value of the patented invention. Id. at 20. Plaintiff indicates that
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`independent experts will “offer opinions regarding the extent to which business considerations will
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`impact its damages claims.” Id.
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`Finally, under the Technical Considerations bucket, Plaintiff references certain documents
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`“relevant to the technical and economic benefits gained by those that have used the patented
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`invention, including the utility and advantages of the patented invention relative to other non-
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`7 Georgia-Pacific Corp. v. United States Plywood Co., 318 F. Supp. 1116 (S.D.N.Y. 1970),
`modified and aff’d, 446 F.2d 295 (2d Cir. 1971).
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` See TWM Mfg. Co. v. Dura Corp., 789 F.2d 895, 899 (Fed. Cir. 1986).
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`infringing technologies.” Id. at 20. Plaintiff also mentions interrogatory responses and witness
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`depositions which, it contends, may prove relevant for a damages expert’s consideration of these
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`issues. Id. Within this section, Plaintiff identifies non-accused devices that the Government has
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`purchased, including the Squad Binocular Night Vision Goggle, which the Government had
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`. Id. at 21. Citing various produced documents, deposition
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`
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`testimony, and the Government’s interrogatory responses, the Plaintiff notes that the Government
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`has “continued to purchase Accused Instrumentalities for the Army
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`
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`.” Id. Plaintiff indicates it may
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`use this information to inform an analytical approach to identify the value of the patented
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`technology. Id. Finally, Plaintiff expresses its intent to use quantitative and qualitative
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`information about the patented invention’s benefits relative to other devices to further inform its
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`valuation analysis. Id.
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`B. Plaintiff’s Responses to Microsoft’s Interrogatory No. 7
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`Microsoft also requested information on Plaintiff’s damages theory in the form of an
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`interrogatory. See Defs.’ Resp., Exhibit 31 (ECF 308-31) at 22. Microsoft’s Interrogatory No. 7,
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`first served on Plaintiff on July 26, 2019, reads as follows:
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`Describe in complete detail the factual and legal basis and supporting evidence for
`the relief You seek for any alleged act of infringement Related to any Microsoft
`product (i.e., describe any royalty You contend You are entitled to as a result of the
`alleged infringement and the complete basis for that royalty; describe each sale that
`You contend You would have made but for the alleged infringement and the basis
`for Your contention that You would have made the sale and the amount of profit
`that You contend You lost from such sale; and describe each sale You made at a
`reduced price because of the alleged infringement and the basis for Your contention
`that You would have made such sale at a higher price).
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`Id. at 22. In addition to listing a series of objections to the content of Microsof