Case 1:17-cv-00770-JDW Document 245-14 Filed 10/19/23 Page 1 of 5 PageID #: 24659
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`Exhibit N
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`Case 1:17-cv-00770-JDW Document 245-14 Filed 10/19/23 Page 2 of 5 PageID #: 24660
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`HIGHLY CONFIDENTIAL—SUBJECT TO PROTECTIVE ORDER
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`IN THE UNITED STATES DISTRICT COURT
`BEFORE THE
`DISTRICT OF DELAWARE
`WIRTGEN AMERICA, INC.
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`Plaintiff
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`v.
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`CATERPILLAR, INC.
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`Defendant
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`C.A. No. 17-770-JDW
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`REPLY EXPERT REPORT OF
`DR. PALLAVI SETH
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`ON BEHALF OF
`WIRTGEN AMERICA, INC.
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`JULY 7, 2023
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`Case 1:17-cv-00770-JDW Document 245-14 Filed 10/19/23 Page 3 of 5 PageID #: 24661
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`HIGHLY CONFIDENTIAL—SUBJECT TO PROTECTIVE ORDER
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`service was actually implemented in 2020.178 However, Mr. Reed provides no verifiable citation
`for his claims, and I understand that Caterpillar has not identified by serial number which of the
`Accused Products has the software change implemented or when such changes occurred.
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`85. Mr. Reed also contends that there ought to be an “effectively shorter license term” for
`the ’530, ’641, and ’309 patents, as Wirtgen does not accuse some machines of infringing these
`patents at a later date.179 I have already discussed in Section II.B above why this approach is
`incorrect. Mr. Reed ignores the fact that in 2017, a full year after the Hypothetical Negotiation,
`Caterpillar still believed no design around was possible for the ’530 and ’641 patents, and that a
`design around for the ’309 patent would have been costly.180 Regardless, even if these patents
`ceased to be infringed, I understand that the Accused Products would continue to infringe the other
`Asserted Patents, and thus a license would continue to be in force until the last expiry.
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`86. Finally, Mr. Reed criticizes me for considering a negotiation on the date of first infringement when
`Wirtgen America was not the assignee of some of the Asserted Patents on that date.181 However,
`this distinction makes no difference to my analysis. Mr. Reed puts forward no evidence, nor I am
`aware of any evidence, that Wirtgen GmbH would not have assigned the patents to Wirtgen
`America, its wholly-owned US subsidiary, in the normal course of establishing a license to
`Caterpillar for use in the U.S. I understand that the only sales in the U.S. that Wirtgen made during
`the relevant time were through Wirtgen America; Wirtgen GmbH did not sell any machines in the
`U.S. during the relevant time independent of Wirtgen America. The economic interests of Wirtgen
`GmbH and Wirtgen America would therefore have been aligned at the Hypothetical Negotiation,
`and they would have negotiated similarly.182 I confirmed this understanding with Mr. Jim McEvoy,
`President and Chief Executive Officer, Wirtgen America.183 For example, as I discussed in my
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`178 Reed Rebuttal Report, p. 19, FN 28.
`179 Reed Rebuttal Report, pp. 85-86.
`180 “Caterpillar Presentation - ITC Conference,” November 3, 2017, CAT_00007715, at slide 4.
`181 Reed Rebuttal Report, p. 67. In May 2017, Wirtgen GmbH assigned the ’309, ’641, ’530, ’788, and ’474 patents
`to Wirtgen America. See, Deposition Transcript of James McEvoy (Wirtgen), March 31, 2023, 80:1-9; and
`Deposition Transcript of Brad McKinney (Wirtgen), March 31, 2023, Exhibit 15. See also, Reed Opening Report,
`pp. 50-51.
`182 Conversation with Mr. McEvoy, July 5, 2023.
`183 Conversation with Mr. McEvoy, July 5, 2023.
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`Reply Expert Report of Pallavi Seth, Ph.D.
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`C.A. No. 17-770-JDW | Page 37 of 48
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`Case 1:17-cv-00770-JDW Document 245-14 Filed 10/19/23 Page 4 of 5 PageID #: 24662
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`HIGHLY CONFIDENTIAL—SUBJECT TO PROTECTIVE ORDER
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`Opening Report, Wirtgen America does not license patents and would have only licensed the
`Asserted Patents if they could make more money by licensing than by maintaining the patented
`technology to itself. Mr. Reed himself noted that the same applies for Wirtgen GmbH: Wirtgen
`GmbH told Caterpillar that they would need to change its design or remove the infringing features
`because Wirtgen did not wish to license its patents to Caterpillar.184 In fact, I understand that
`Wirtgen America has never licensed any patents and the only entity Wirtgen GmbH has ever
`allowed to use any of its U.S. patents is Wirtgen America. I am aware of no changes—and Mr.
`Reed does not identify any—between how Wirtgen America would have negotiated for itself and
`how Wirtgen GmbH would have negotiated on behalf of Wirtgen America.185
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`II.D.2. The Remaining Errors Identified by Mr. Reed have no
`Material Impact on my Conclusions
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`87. Mr. Reed identifies an arithmetic error in Tables A.3 and A.5 of my Opening Report.186
`Correcting for these arithmetic errors has absolutely no impact on my analysis, my
`conclusions, or my estimates of damages.
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`88. Table A.3, which summarizes net prices of the Accused Products, averaged these prices by
`machine model and year, which reduced presented average prices in years where sales of the
`Accused Products did not occur in all quarters. I have included an updated version as Updated
`Table A.3 in Appendix A. Again, as Table A.3 is a summary table, this correction has no impact
`on my analysis, my conclusions, or my estimates of damages.
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`89. Table A.5, which summarizes the gross margin earned on the Accused Products, displayed those
`margins for the first quarter of each year instead of the entire year. I have included an updated
`version as Updated Table A.5 in Appendix A. Again, as Table A.5 is a summary table, this
`correction has no impact on my analysis, my conclusions, or my estimates of damages.
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`184 See, Reed Rebuttal Report, p. 82, FN 170.
`185 Conversation with Mr. McEvoy, July 5, 2023
`186 Reed Rebuttal Report, p. 63.
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`Reply Expert Report of Pallavi Seth, Ph.D.
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`C.A. No. 17-770-JDW | Page 38 of 48
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`Case 1:17-cv-00770-JDW Document 245-14 Filed 10/19/23 Page 5 of 5 PageID #: 24663
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`HIGHLY CONFIDENTIAL—SUBJECT TO PROTECTIVE ORDER
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`that the water spray system is a “talking point[]” with Wirtgen customers, he does not include any
`direct customer evidence showcasing that the accused spray bar component is relevant to their
`purchasing decision.197 Neither does Mr. Reed consider that the accused spray bar component
`embodies additional functionality above and beyond the features claimed by the ’618 patent, as
`discussed in my Rebuttal Report.198
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`96. Even if there were evidence connecting the accused spray bar component directly to customers’
`purchase decisions (which Mr. Reed has not put forward), that evidence would not be sufficient to
`establish nexus. Caterpillar would need to further show that the reason the accused spray bar
`component was important to the purchase decision was because of the ’618 patent. Again,
`Mr. Reed has not established such a connection.
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`97. Further, if the accused spray bar was truly driving the success of the Wirtgen Accused Products
`and responsible for a “market share of approximately 80% or more,” then surely Caterpillar would
`have found it beneficial to incorporate the component in its own machines.199 However, I
`understand that Caterpillar has confirmed that it does not include the patented feature in any
`product it sells.200
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`Respectfully Submitted,
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`Pallavi Seth, Ph.D.
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`197 Reed Commercial Success Report, pp. 8-9.
`198 Seth Rebuttal Report, ¶¶ 15, 28, and 42.
`199 Reed Commercial Success Report, p. 3.
`200 Caterpillar Inc.’s Responses and Objections to Wirtgen America, Inc’s First Set of Interrogatories (Nos. 1-20),
`Wirtgen America, Inc. v. Caterpillar, Inc, C.A. No. 17-770-JDW, February 7, 2023, response to Interrogatory
`No. 18.
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`Reply Expert Report of Pallavi Seth, Ph.D.
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`C.A. No. 17-770-JDW | Page 41 of 48
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