Case 1:17-cv-00770-JDW Document 248 Filed 10/25/23 Page 1 of 50 PageID #: 24974
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF DELAWARE
`
`
`
`
`C.A. No. 17-770-JDW
`
`JURY TRIAL DEMANDED
`
`
`)))))))))
`
`
`
`WIRTGEN AMERICA, INC.,
`
`
`
`
`
`CATERPILLAR INC.,
`
`
`
`
`Defendant.
`
`Plaintiff,
`
`
`
`v.
`
`
`
`CATERPILLAR INC.’S OPENING BRIEF IN SUPPORT OF
`MOTIONS TO EXCLUDE CERTAIN EXPERT TESTIMONY AND FOR
`SUMMARY JUDGMENT
`
`
`
`Bindu A. Palapura (#5370)
`Andrew L. Brown (#6766)
`POTTER ANDERSON & CORROON LLP
`Hercules Plaza, 6th Floor
`1313 N. Market Street
`Wilmington, DE 19801
`Tel: (302) 984-6000
`bpalapura@potteranderson.com
`abrown@potteranderson.com
`
`Attorneys for Defendant Caterpillar Inc.
`
`
`OF COUNSEL:
`
`James C. Yoon
`Christopher D. Mays
`WILSON SONSINI GOODRICH & ROSATI, P.C.
`650 Page Mill Road
`Palo Alto, CA 94304
`Telephone: (650) 493-9300
`
`Ryan R. Smith
`WILSON SONSINI GOODRICH & ROSATI, P.C.
`701 Fifth Avenue, Suite 5100
`Seattle, WA 98104
`Telephone: (206) 883-2500
`
`Lucy Yen
`WILSON SONSINI GOODRICH & ROSATI, P.C.
`1301 Avenue of the Americas, 40th Floor
`New York, NY 10019
`Telephone: (212) 999-5800
`
`Dated: October 5, 2023
`11097043/11898.00005
`
`
`
`
`Public Version Dated: October 25, 2023
`
`PUBLIC VERSION
`
`

`

`Case 1:17-cv-00770-JDW Document 248 Filed 10/25/23 Page 2 of 50 PageID #: 24975
`
`TABLE OF CONTENTS
`
`
`
`
`INTRODUCTION .......................................................................................................................... 1
`
`PAGE
`
`PROCEDURAL BACKGROUND ................................................................................................. 1
`
`ARGUMENT .................................................................................................................................. 2
`
`I.
`
`THE COURT SHOULD EXCLUDE THE IMPROPER OPINION TESTIMONY
`OF WIRTGEN AMERICA’S EXPERTS ........................................................................... 2
`
`A.
`
`Daubert #1: Dr. Seth’s Opinions Regarding Damages Are Deficient ................... 2
`
`1.
`
`2.
`
`3.
`
`4.
`
`5.
`
`Summary of Opinions ................................................................................. 2
`
`Form of Damages ........................................................................................ 2
`
`The Court Should Exclude Dr. Seth’s Claimed “Reasonable
`Royalty” ...................................................................................................... 3
`
`Dr. Seth Failed to Apportion Her “Reasonable Royalty” Damages ......... 10
`
`Dr. Seth Failed to Establish That Convoyed Sales Are Recoverable ....... 12
`
`Daubert #2: Wirtgen America’s Experts Cannot Establish That Wirtgen-
`Branded Machines Practice the Asserted Patents ................................................. 13
`
`Daubert #3: Wirtgen America’s Experts Cannot Opine Regarding Mental
`State or Subjective Intent ...................................................................................... 18
`
`Daubert #4: Wirtgen America’s Experts Cannot Establish Infringement
`Under the Doctrine of Equivalents ....................................................................... 19
`
`B.
`
`C.
`
`D.
`
`II.
`
`CATERPILLAR IS ENTITLED TO PARTIAL SUMMARY JUDGMENT .................. 21
`
`A.
`
`MSJ #1: Caterpillar Does Not Infringe Claim 17 of the ’641 Patent ................... 21
`
`1.
`
`2.
`
`3.
`
`Claim 17 .................................................................................................... 21
`
`Accused Products ...................................................................................... 22
`
`The Accused Products Cannot Perform Method of Claim 17 When
`Driven in Reverse ..................................................................................... 23
`
`B.
`
`MSJ #2: Caterpillar Does Not Infringe Claims 17 and 18 of the ’641
`Patent..................................................................................................................... 23
`
`i
`
`

`

`Case 1:17-cv-00770-JDW Document 248 Filed 10/25/23 Page 3 of 50 PageID #: 24976
`
`C.
`
`D.
`
`E.
`
`F.
`
`MSJ #3: Caterpillar Does Not Infringe Claim 10 of the ’309 Patent ................... 25
`
`MSJ #4: Caterpillar Does Not Infringe Claim 13 of the ’972 Patent.................... 28
`
`MSJ #5: Caterpillar Does Not Infringe Any Asserted Claim of the ’474
`and/or ’788 Patents ............................................................................................... 30
`
`MSJ #6: Caterpillar Does Not Willfully Infringe the Asserted Patents ................ 32
`
`1.
`
`2.
`
`3.
`
`4.
`
`Wirtgen America Cannot Establish the Scienter Element of
`Willfulness ................................................................................................ 33
`
`Plaintiff Cannot Establish Pre-Suit Knowledge of the ’268 Patent .......... 35
`
`Plaintiff Cannot Establish That Caterpillar Had Pre-Suit
`Knowledge of Infringement of the ’530 Patent ........................................ 37
`
`Knowledge for Post-Suit Willfulness Cannot Be Based on
`Complaint .................................................................................................. 39
`
`G.
`
`MSJ #7: The ’268 Reissue Claims 1 and 23 Were Improperly Broadened ......... 39
`
`CONCLUSION ............................................................................................................................. 40
`
`
`
`ii
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`

`

`Case 1:17-cv-00770-JDW Document 248 Filed 10/25/23 Page 4 of 50 PageID #: 24977
`
`TABLE OF AUTHORITIES
`
`PAGE(S)
`
`CASES
`Advanced Fiber Techs. Trust v. J & L Fiber Servs., Inc.,
`2010 WL 3703048 (N.D.N.Y. Sept. 13, 2010), aff’d, 674 F.3d 1365 (Fed.
`Cir. 2012) .....................................................................................................................34, 36
`Am. Seating Co. v. USSC Grp., Inc.,
`514 F.3d 1262 (Fed. Cir. 2008)..........................................................................................13
`Asyst Techs., Inc. v. Emtrak, Inc.,
`402 F.3d 1188 (Fed. Cir. 2005)..........................................................................................30
`Axcess Int’l, Inc. v. Savi Techs., Inc.,
`2013 WL 6839112 (N.D. Tex. Jan. 25, 2013) .....................................................................6
`Baltimore Aircoil Co., Inc. v. SPX Cooling Techs., Inc.,
`2016 WL 4426681 (D. Md. Aug. 22, 2016) ........................................................................8
`BASF Plant Sci., LP v. Commonwealth Sci. & Indus. Rsch. Organisation,
`28 F.4th 1247 (Fed. Cir. 2022) ..........................................................................................38
`Bayer Healthcare LLC v. Baxalta Inc.,
`989 F.3d 964 (Fed. Cir. 2021)......................................................................................33, 38
`Bicon, Inc. v. Straumann Co.,
`441 F.3d 945 (Fed. Cir. 2006)......................................................................................27, 31
`bioMerieux, S.A. v. Hologic, Inc.,
`2020 WL 759546 (D. Del. Feb. 7, 2020) ...........................................................................36
`Cambrian Sci. Corp. v. Cox Commc’ns, Inc.,
`617 F. App’x 989 (Fed. Cir. 2015) ....................................................................................20
`Cirba Inc. v. VMware, Inc.,
`2023 WL 3151852 (D. Del. Apr. 18, 2023) .................................................................34, 38
`Comcast IP Holdings I LLC v. Sprint Commc’ns Co. LP,
`2014 WL 12775192 (D. Del. Sep. 29, 2014) .....................................................................10
`Cooper Indus., Inc. v. Leatherman Tool Grp., Inc.,
`532 U.S. 424 (2001) ...........................................................................................................14
`Daedalus Blue LLC v. SZ DJI Tech. Co. Ltd.,
`2022 WL 831619 (W.D. Tex. Feb. 24, 2022) ......................................................................7
`Deere & Co. v. AGCO Corp.,
`2019 WL 668492 (D. Del. Feb. 19, 2019) ................................................................... 37-38
`Dynamic Data Techs., LLC v. Brightcove Holdings, Inc.,
`2020 WL 4192613 (D. Del. July 21, 2020) .................................................................33, 37
`
`iii
`
`

`

`Case 1:17-cv-00770-JDW Document 248 Filed 10/25/23 Page 5 of 50 PageID #: 24978
`
`Eko Brands, LLC v. Adrian Rivera Maynez Enters., Inc.,
`946 F.3d 1367 (Fed. Cir. 2020)..........................................................................................33
`Elcock v. Kmart Corp.,
`233 F.3d 734 (3d Cir. 2000)...............................................................................................16
`Eli Lilly & Co. v. Hospira, Inc.,
`933 F.3d 1320 (Fed. Cir. 2019)..........................................................................................31
`Ethicon Endo–Surgery, Inc. v. U.S. Surgical Corp.,
`149 F.3d 1309 (Fed.Cir.1998)............................................................................................31
`Exmark Mfg. Co. Inc. v. Briggs &. Stratton Power Prod. Grp., LLC,
`879 F.3d 1332 (Fed. Cir. 2018)..........................................................................................10
`Exxon Chem. Patents, Inc. v. Lubrizol Corp.,
`64 F.3d 1553 (Fed. Cir. 1995)............................................................................................26
`Greatbatch Ltd. v. AVX Corp.,
`2016 WL 7217625 (D. Del. Dec. 13, 2016).................................................................33, 38
`Halo Elecs., Inc. v. Pulse Elecs., Inc.,
`579 U.S. 93 (2016) .......................................................................................................32, 33
`iFIT Inc. v. Peloton Interactive, Inc.,
`2022 WL 609605 (D. Del. Jan. 28, 2022) ..........................................................................35
`In re GPAC Inc.,
`57 F.3d 1573 (Fed. Cir. 1995)............................................................................................14
`Intel Corp. v. Qualcomm Inc.,
`21 F.4th 801 (Fed. Cir. 2021) ............................................................................................40
`Intell. Ventures I LLC v. Symantec Corp.,
`234 F. Supp. 3d 601 (D. Del. 2017), aff’d, 725 F. App’x 976 (Fed. Cir.
`2018) ..................................................................................................................................32
`Intellectual Ventures I LLC v. Symantec Corp.,
`2015 U.S. Dist. LEXIS 7739 (D. Del. Jan. 23, 2015) ..........................................................7
`Intuitive Surgical, Inc. v. Auris Health, Inc.,
`549 F. Supp. 3d 362 (D. Del. 2021) .......................................................................32, 33, 38
`KCJ Corp. v. Kinetic Concepts, Inc.,
`223 F.3d 1351 (Fed. Cir. 2000)..........................................................................................31
`Laser Dynamics, Inc. v. Quanta Comput., Inc.,
`694 F.3d 51 (Fed. Cir. 2012)..........................................................................................7, 10
`LoggerHead Tools, LLC v. Sears Holdings Corp.,
`2016 WL 5112062 (N.D. Ill. Sept. 20, 2016) ....................................................................19
`Lucent Techs., Inc. v. Gateway, Inc.,
`580 F.3d 1301 (Fed. Cir. 2009)....................................................................................2, 3, 5
`
`iv
`
`

`

`Case 1:17-cv-00770-JDW Document 248 Filed 10/25/23 Page 6 of 50 PageID #: 24979
`
`Magnetar Techs. Corp. v. Six Flags Theme Parks Inc.,
`2014 U.S. Dist. LEXIS 15674 (D. Del. Feb. 7, 2014) .......................................................16
`Meadows v. Anchor Longwall & Rebuild, Inc.,
`306 F. App’x 781 (3d Cir. 2009) .......................................................................................15
`Medtronic Inc. v. Bos. Sci. Corp.,
`558 F. App’x 998 (Fed. Cir. 2014) ....................................................................................19
`Medtronic, Inc. v. Guidant Corp.,
`465 F.3d 1360 (Fed. Cir. 2006)..........................................................................................40
`Mentor Graphics Corp. v. EVE-USA, Inc.,
`851 F.3d 1275 (Fed. Cir. 2017)....................................................................................11, 12
`Microchip Tech. Inc. v. Aptiv Servs. US LLC,
`2020 U.S. Dist. LEXIS 158507 (D. Del. Sep. 1, 2020) (Wolson, J.) ................................11
`Moore U.S.A., Inc. v. Standard Register Co.,
`229 F.3d 1091 (Fed.Cir.2000)............................................................................................27
`nCube Corp. v. SeaChange Int’l, Inc.,
`436 F.3d 1317 (Fed. Cir. 2006)..........................................................................................20
`Opticurrent, LLC v. Power Integrations, Inc.,
`2018 WL 6727826 (N.D. Cal. Dec. 21, 2018) .................................................................7, 8
`Oxford Gene Tech., Ltd. v. Mergen Ltd.,
`345 F. Supp. 2d 431 (D. Del. 2004) .............................................................................18, 19
`Pact XPP Schweiz AG v. Intel Corp.,
`2023 WL 2631503 (D. Del. Mar. 24, 2023), reconsideration denied, 2023
`WL 3934058 (D. Del. June 9, 2023) .................................................................................39
`Panduit Corp. v. Stahlin Bros. Fibre Works,
`575 F.2d 1152 (6th Cir. 1978) ................................................................................... passim
`Phillips v. AWH Corp.,
`415 F.3d 1303 (Fed. Cir. 2005)..........................................................................................29
`Power Integrations, Inc. v. Fairchild Semiconductor Int’l, Inc.,
`904 F.3d 965 (Fed. Cir. 2018)............................................................................................10
`Robertson Transformer Co. v. Gen. Elec. Co.,
`2016 WL 4417019 (N.D. Ill. Aug. 19, 2016) ....................................................................15
`Seattle Box Co., Inc. v. Indus. Crating & Packing, Inc.,
`731 F.2d 818 (Fed. Cir. 1984)......................................................................................36, 40
`Sentius Int’l, LLC v. Microsoft Corp.,
`78 F. Supp. 3d 967 (N.D. Cal. 2015) .................................................................................36
`Shopify Inc. v. Express Mobile, Inc.,
`2021 WL 4288113 (D. Del. Sept. 21, 2021) ......................................................................34
`
`v
`
`

`

`Case 1:17-cv-00770-JDW Document 248 Filed 10/25/23 Page 7 of 50 PageID #: 24980
`
`Sloan Valve Co. v. Zurn Indus., Inc.,
`33 F. Supp. 3d 984 (N.D. Ill. 2014) ...................................................................................12
`Sonos, Inc. v. D & M Holdings Inc.,
`297 F. Supp. 3d 501 (D. Del. 2017) ...................................................................................19
`Sprint Commc’ns Co. L.P. v. Cequel Commc’ns, LLC,
`2022 WL 421336 (D. Del. Jan. 13, 2022) ..........................................................................38
`State Indus., Inc. v. Mor-Flo Indus., Inc.,
`883 F.2d 1573 (Fed. Cir. 1989)........................................................................................3, 5
`Syneron Med. Ltd. v. Invasix, Inc.,
`2018 U.S. Dist LEXIS 220514 (C.D. Cal. Aug. 27, 2018), adopted by,
`2018 U.S. Dist. LEXIS 220505, (C.D. Cal. Sept. 28, 2018)........................................5, 6, 9
`Texas Instruments, Inc. v. Cypress Semiconductor Corp.,
`90 F.3d 1558 (Fed. Cir. 1996)......................................................................................17, 20
`Trs. of Bos. Univ. v. Everlight Elecs. Co.,
`141 F. Supp. 3d 147 (D. Mass. 2015) ................................................................................17
`Uniloc USA, Inc. v. Microsoft Corp.,
`632 F.3d 1292 (Fed. Cir. 2011)............................................................................................8
`United Nat’l Ins. Co. v. Aon Ltd.,
`2008 U.S. Dist. LEXIS 61453 (E.D. Pa. Aug. 7, 2008).....................................................16
`Victaulic Co. v. ASC Engineered Sols., LLC,
`2022 WL 17250376 (D. Del. Nov. 28, 2022) ....................................................................18
`VirnetX, Inc. v. Cisco Sys. Inc.,
`767 F.3d 1308 (Fed. Cir. 2014)......................................................................................5, 11
`Warner-Jenkinson Co. v. Hilton Davis Chem. Co.,
`520 U.S. 17 (1997) .............................................................................................................27
`Warsaw Orthopedic, Inc. v. Nuvasive, Inc.,
`2016 WL 4536740 (S.D. Cal. June 15, 2016) ......................................................................7
`Wasica Fin. GmbH v. Cont’l Auto. Sys.,
`853 F.3d 1272 (Fed. Cir. 2017)..........................................................................................26
`Wrinkl, Inc. v. Facebook, Inc.,
`2021 WL 4477022 (D. Del. Sept. 30, 2021) ......................................................................39
`Zimmer Surgical, Inc. v. Stryker Corp.,
`365 F. Supp. 3d 466 (D. Del. 2019) ...................................................................................13
`
`
`
`
`vi
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`Case 1:17-cv-00770-JDW Document 248 Filed 10/25/23 Page 8 of 50 PageID #: 24981
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`STATUTES
`35 U.S.C. § 284 ............................................................................................................................3, 5
`RULES
`FED. R. CIV. P. 26(a) (2)(B)(i)-(ii) .......................................................................................... passim
`FED. R. EVID. 702(a) ..................................................................................................................1, 15
`FED. R. EVID. 703 .....................................................................................................................17, 18
`
`
`
`
`
`
`
`vii
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`

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`Case 1:17-cv-00770-JDW Document 248 Filed 10/25/23 Page 9 of 50 PageID #: 24982
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`
`
`
`
`TABLE OF ABBREVIATIONS
`
`Caterpillar
`Wirtgen America
`’309 Patent
`’641 Patent
`’530 Patent
`’788 Patent
`’474 Patent
`’268 Patent
`’972 Patent
`Dr. Lumkes
`
`REFERENCE
`Caterpillar Inc.
`Wirtgen America, Inc.
`U.S. Patent 7,828,309
`U.S. Patent 7,530,641
`U.S. Patent 9,656,530
`U.S. Patent 7,946,788
`U.S. Patent 8,690,474
`U.S. Patent RE48,268
`U.S. Patent 8,424,972
`Dr. John Lumkes
`Wirtgen America’s expert on ’309, ’530, and
`’972 Patents
`Dr. John Meyer
`Wirtgen America’s expert on ’641 Patent
`Dr. Christopher David Rahn
`Wirtgen America’s expert on ’268, ’788, and
`’474 Patents
`Dr. Pallavi Seth
`Wirtgen America’s expert on damages
`Dr. Ricardo Valerdi
`Wirtgen America’s expert on source code
`Dr. Joseph F. Rakow
`Caterpillar’s technical expert on ’309 and
`’530 Patents
`Brett L. Reed
`Caterpillar’s expert on damages
`The products identified on a patent-by-patent
`basis in the table on page *
`The patents identified in the table on page *
`Exhibit to the Lucy Yen Declaration attaching
`supporting documents and materials
`Doctrine of Equivalents
`DOE
`International Trade Commission
`ITC
`** All emphasis herein is added, and all internal citations and quotations are omitted unless
`otherwise noted.
`
`
`ABBREVIATION
`
`Dr. Meyer
`
`Dr. Rahn
`
`Dr. Seth
`
`Dr. Valerdi
`
`Dr. Rakow
`
`Mr. Reed
`
`Accused Products
`
`Asserted Patents
`Ex.__
`
`
`
`viii
`
`

`

`Case 1:17-cv-00770-JDW Document 248 Filed 10/25/23 Page 10 of 50 PageID #: 24983
`
`INTRODUCTION
`
`Six years since filing its original complaint against Caterpillar, Wirtgen America’s case
`
`remains expansive, but unprovable. It asserts willful infringement of seven patents and 20 claims
`
`and seeks a minimum of over $50 million in damages. Wirtgen America falls far short of being
`
`able to meet its burden of proof on liability and damages. Its experts rely on innuendo and
`
`speculation to suggest “copying,” when Wirtgen America cannot even prove that it has patent-
`
`practicing machines to copy. It claims willful infringement of some patents which did not exist at
`
`the time of the Complaint and others which Caterpillar already designed around. The infringement
`
`theories at issue are inconsistent with the plain meaning of the claims, contravene the testimony
`
`of their own experts, and were never adequately identified in their infringement contentions and
`
`expert reports, violating the requirements of Rule 26. Wirtgen America seeks a minimum of $53
`
`million in lost profit damages without even a nod to the required Panduit factors, and then
`
`constructs a hypothetical negotiation involving the wrong parties and the wrong starting point, all
`
`the while contravening black letter law on apportionment.
`
`Wirtgen America has had years to prove its case. It cannot do so by relying on the
`
`speculative, conclusory opinions of experts who fail to comply with the requirements of Rule 702.
`
`Caterpillar respectfully requests that the Court exclude the unsupported opinions of Wirtgen
`
`America’s experts and grant Caterpillar’s motions for summary judgment.
`
`PROCEDURAL BACKGROUND
`
`For the convenience of the Court, Caterpillar summarizes the remaining Asserted Patents,
`
`asserted claims, and Accused Products below.
`
`Asserted Wirtgen Patent
`7,828,309 (“the ’309 Patent”)
`7,530,641 (“the ’641 Patent”)
`9,656,530 (“the ’530 Patent”)
`
`Asserted Claims
`10, 29
`11, 17, 18
`5, 13, 16, 22
`
`Accused Products
`PM600 and PM800 series machines*
`PM300, PM600, and PM800 series machines*
`PM600 and PM800 series machines*; RM600
`and RM800 series machines
`
`1
`
`

`

`Case 1:17-cv-00770-JDW Document 248 Filed 10/25/23 Page 11 of 50 PageID #: 24984
`
`7,946,788 (“the ’788 Patent)
`8,690,474 (“the ’474 Patent)
`RE48,268 (“the ’268 Patent”)
`
`5
`19, 21
`1, 23, 30, 32
`
`PM300, PM600, and PM800 series machines
`PM300, PM600, and PM800 series machines
`PM600 and PM800 series machines; RM600
`and RM800 series machines
`PM600 and PM800 series machines
`12, 13, 15, 27
`8,424,972 (“the ’972 Patent”)
` * Wirtgen America accuses only machines sold prior to certain design changes. Wirtgen America is not accusing
`the updated designs of these machines for the Asserted Patents indicated.
`
`
`
`ARGUMENT
`
`I.
`
`THE COURT SHOULD EXCLUDE THE IMPROPER OPINION TESTIMONY
`OF WIRTGEN AMERICA’S EXPERTS
`A.
`
`Daubert #1: Dr. Seth’s Opinions Regarding Damages Are Deficient
`1.
`
`Summary of Opinions
`
`Dr. Pallavi Seth, Wirtgen America’s damages expert, opines that Wirtgen America is
`
`entitled to at least $56.1 million and up to $72.3 million in damages through 2022 across all
`
`Accused Products. Ex. 1 (Seth Opening Rpt.) ¶ 15. Expressed as a share of Caterpillar’s machine
`
`sales revenue, that is a royalty rate of 31.6% to 40.7%. Id. ¶ 22. While Dr. Seth purportedly
`
`conducts a reasonable royalty analysis, she sets Wirtgen America’s lost profits from sales of
`
`machines and parts, estimated to be
`
`, as the damages floor. Id. ¶¶ 17, 203. She then
`
`“apportions” using a patent citations analysis her “joint surplus value” – the difference between
`
`Caterpillar’s incremental profits and Wirtgen America’s lost profits – and divides the “apportioned
`
`joint surplus value” between the parties using a bargaining model. Id. ¶¶ 18-20. The divided,
`
`apportioned joint surplus value is added to the
`
` damages floor for a total royalty
`
`amount. Id. ¶ 242. Dr. Seth’s opinions are excludable under long-standing precedent.
`
`2.
`
`Form of Damages
`
`The patentee bears the burden of proving damages. Lucent Techs., Inc. v. Gateway, Inc.,
`
`580 F.3d 1301, 1324 (Fed. Cir. 2009). A prevailing patentee is entitled to “damages adequate to
`
`compensate for the infringement,” which must be “no . . . less than a reasonable royalty for the use
`
`2
`
`

`

`Case 1:17-cv-00770-JDW Document 248 Filed 10/25/23 Page 12 of 50 PageID #: 24985
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`made of the invention by the infringer.” 35 U.S.C. § 284.
`
`Patentees may also claim damages in the form of lost profits. However, proving lost profits
`
`is difficult, because the patent owner must “demonstrate that there was a reasonable probability
`
`that, but for the infringement, it would have made the infringer’s sales.” State Indus., Inc. v. Mor-
`
`Flo Indus., Inc., 883 F.2d 1573, 1577 (Fed. Cir. 1989). Typically, this is done through establishing
`
`the Panduit factors. Id. (“A standard way of proving lost profits . . . is for the patent owner to
`
`prove: ‘(1) demand for the patented product, (2) absence of acceptable noninfringing substitutes,
`
`(3) manufacturing and marketing capability to exploit the demand, and (4) the amount of the profit
`
`he would have made.’” (quoting Panduit Corp. v. Stahlin Bros. Fibre Works, 575 F.2d 1152, 1156
`
`(6th Cir. 1978)). Here, Wirtgen America’s damages expert expressly states that she “ha[s] not
`
`done a lost profits analysis.” Ex. 3 (Seth Reply Rpt.) ¶ 14.
`
`Absent establishing lost profits, a patentee is entitled only to a reasonable royalty. “The
`
`determination of a reasonable royalty [] is based not on the infringer’s profit, but on the royalty to
`
`which a willing licensor and a willing licensee would have agreed at the time the infringement
`
`began.” Lucent Techs., Inc., 580 F.3d at 1324-25. Reasonable royalties are analyzed through an
`
`approach “called the hypothetical negotiation or the ‘willing licensor-willing licensee’ approach,
`
`[which] attempts to ascertain the royalty upon which the parties would have agreed had they
`
`successfully negotiated an agreement just before [the] infringement began.” Id. at 1324.
`
`
`
`3.
`
`The Court Should Exclude Dr. Seth’s Claimed “Reasonable Royalty”
`
`Dr. Seth seeks reasonable royalty damages in name only. Although Dr. Seth claims not to
`
`be assessing lost profit damages, she proceeds to do exactly that under the guise of a “reasonable
`
`royalty,” concluding that a reasonable royalty would be between $56.1 million to $72.3 million.
`
`While Dr. Seth asserts that her reasonable royalty is based on a hypothetical negotiation at the time
`
`3
`
`

`

`Case 1:17-cv-00770-JDW Document 248 Filed 10/25/23 Page 13 of 50 PageID #: 24986
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`of first infringement in 2016 (see Ex. 1 (Seth Opening Rpt.) ¶¶ 129-134), she calculates a royalty
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`floor by using Wirtgen America’s alleged lost profits through 2022. Id. ¶ 203; see also id. ¶¶ 186,
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`200, 226-27. Worse, defying analytical coherency, Wirtgen America claims the same royalty floor
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`regardless of the number of infringed patents, the infringed claims at issue, or the feasibility of
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`design-arounds. See Ex. 2 (Seth Tr.) 108:11-109:2, 112:15-116:17.
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`Dr. Seth’s analysis is fundamentally flawed with respect to both the lost profits and
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`reasonable royalty components. As to lost profits, Dr. Seth seeks to support a minimum award of
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`100% of lost profits without meeting the high burden of proving entitlement to any amount of lost
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`profits. That is, although Dr. Seth did not prove that Wirtgen America lost a single sale, Wirtgen
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`America seeks the benefit of tens of millions of dollars in profit. And, with respect to a
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`
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`royalty floor, Dr. Seth undertook no apportionment analysis at all, limiting her attempt at
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`apportionment to 5% of her minimum royalty award. See Ex. 1 (Seth Opening Rpt.) ¶¶ 18-20.
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`As to her limited reasonable royalty analysis, Dr. Seth constructed a hypothetical
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`negotiation using the wrong party and starting point, with an unsupported amount. First, Dr. Seth
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`used Wirtgen America, who did not own the patents at the time of first alleged infringement.
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`Second, she used the wrong starting point (unproven lost profits). Third, she provides no
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`examination of expected profits and instead baselessly uses actual profits in place of actual
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`analysis of what the parties would have expected at the time of first alleged infringement.
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`Dr. Seth Failed to Establish Entitlement to Lost Profits: Dr. Seth never claims that
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`Wirtgen America can meet the requirements of the Panduit test. She instead dismisses the Panduit
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`test as “irrelevant.” See Ex. 3 (Seth Reply Rpt.) ¶ 14. As the Panduit factors are the most accepted
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`way of proving lost profits to the court, they are far from irrelevant - particularly since lost profits,
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`despite how she defines them, form the majority of Dr. Seth's damages opinion. As described
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`4
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`

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`Case 1:17-cv-00770-JDW Document 248 Filed 10/25/23 Page 14 of 50 PageID #: 24987
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`supra I.B.2., “[p]roving lost profits is difficult” and requires the patentee to demonstrate a
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`“reasonable probability that, but for the infringement, it would have made the infringer’s sales.”
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`Syneron Med. Ltd. v. Invasix, Inc., 2018 U.S. Dist LEXIS 220514, at *6-13 (C.D. Cal. Aug. 27,
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`2018), adopted by, 2018 U.S. Dist. LEXIS 220505, (C.D. Cal. Sept. 28, 2018), at *3 (citing State
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`Indus., Inc., 883 F.2d at 1577). If a patentee fails to meet that bar, then, as a matter of law, lost
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`profits are not permitted, and the patentee is entitled only to a reasonable royalty under 35 U.S.C.
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`§ 284. See Lucent Techs., Inc., 580 F.3d at 1324-25.
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`Instead of trying to meet the applicable requirements, Dr. Seth disguises her lost profits
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`opinions as a reasonable royalty award, skirting altogether the requirements for proving
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`entitlement to lost profits. But a damages expert cannot “proffer[] a reasonable royalty damages
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`calculation that is mathematically indistinguishable from that of a lost profit calculation.” Syneron
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`Med. Ltd, 2018 U.S. Dist LEXIS 220514, at *13 (citing VirnetX, Inc. v. Cisco Sys. Inc., 767 F.3d
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`1308, 1328 (Fed. Cir. 2014)) (striking damages opinion calculating reasonable royalty as equal to
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`patentee’s lost profits). “Otherwise, a patent owner could always sidestep the heightened
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`requirements of proving lost profits by recasting his request for lost profits as a reasonable royalty
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`in the amount of his lost profits.” Id. at *10-11. What Dr. Seth attempts to do is worse – she
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`opines that Wirtgen America is entitled to 100% of Wirtgen America’s lost profits, plus more.
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`The floor for Dr. Seth’s “royalty rate” is not just “mathematically indistinguishable” from
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`Wirtgen America’s purported lost profits, but is admittedly exactly that (Ex. 1 (Seth Opening Rpt.)
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`¶ 203):
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`Wirtgen’s [Minimum Willingness to Accept] is defined by the profits it anticipates
`to lose should Caterpillar practice the Asserted Patents. Again, these profits can be
`estimated as Wirtgen’s lost profits due to infringement (defined above as the “Lost
`Profits”).
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`See id. ¶ 17 (“bounds of the Hypothetical Negotiation are estimated at the lower end as Wirtgen’s
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`5
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`

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`Case 1:17-cv-00770-JDW Document 248 Filed 10/25/23 Page 15 of 50 PageID #: 24988
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`MWA [lost profits] of
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` . . .”). However, as described supra, under Federal Circuit
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`precedent, a patentee seeking lost profits must establish that, but for the infringement, it could and
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`would have made the infringer’s sales. See supra I.B.3; see also Axcess Int’l, Inc. v. Savi Techs.,
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`Inc., 2013 WL 6839112, at *8 (N.D. Tex. Jan. 25, 2013) (purported reasonable royalty analysis is
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`in fact a lost profits analysis, requiring heightened burden of proof under Panduit). Yet, Dr. Seth
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`does not even attempt to address Panduit in her opening report, or any other proxy for but-for
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`causation. This failure forecloses any lost profit damages, much less the 100% claimed by Dr.
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`Seth.
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`Under appropriate circumstances, lost profits can be considered in a reasonable royalty
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`analysis (e.g., Georgia-Pacific Factor 8). But under no circumstance can Dr. Seth ignore the
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`premise underpinning a lost profits award: that the patentee can only be compensated for sales it
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`would have made but for infringement. Whether part of a Panduit or Georgia-Pacific analysis,
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`in order to award lost profits either directly or indirectly, they must be part of a reasoned analysis.
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`But Dr. Seth never undertook a Panduit analysis. And, Dr. Seth’s Georgia-Pacific analysis merely
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`assumed those profits and then used them as the starting point for her analysis. “[A]lthough
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`Georgia-Pacific sanctions consideration of the licensor’s anticipated lost profits in calculating a
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`reasonable royalty, it does not authorize the direct [s]etting of reasonable royalty in the amount of
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`the licensor’s lost profits.” Syneron Med. Ltd., 2018 U.S. Dist LEXIS 220514, at *10.
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`Dr. Seth Failed to Establish a Sound Starting Point for Her Georgia-Pacific Analysis:
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`While Dr. Seth’s Panduit analysis was wholly absent, her Georgia-Pacific analysis fares no better,
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`involving the wrong parties, an improp