Case 1:17-cv-00770-JDW Document 249-5 Filed 10/25/23 Page 1 of 6 PageID #: 25117
`Case 1:17-cv-00770-JDW Document 249-5 Filed 10/25/23 Page 1 of 6 PagelD #: 25117
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`EXHIBIT 5
`EXHIBIT 5
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`Case 1:17-cv-00770-JDW Document 249-5 Filed 10/25/23 Page 2 of 6 PageID #: 25118
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF DELAWARE
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`Wirtgen America, Inc.,
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`Plaintiff/Counterclaim-Defendant,
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`v.
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`Caterpillar Inc.,
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`Defendant/Counterclaim-Plaintiff.
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`Case No. 1:17-cv-00770-JDW
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`EXPERT REBUTTAL REPORT OF BRETT L. REED
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`June 16, 2023
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`Highly Confidential – Outside Attorneys’ Eyes Only
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`Case 1:17-cv-00770-JDW Document 249-5 Filed 10/25/23 Page 3 of 6 PageID #: 25119
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`ii. Caterpillar’s Cold Planer Modifications Regarding Three Asserted
`Patents
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`In Appendix D of her report, Dr. Seth removes Caterpillar machine units for
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`certain previously accused cold planer models from her royalty base relating to
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`three of the asserted patents, as follows:
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`• Regarding the ’309 patent, Dr. Seth removed certain PM6xx/PM8xx units
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`starting in build 02A because Caterpillar removed the feature that Wirtgen
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`America accused of infringement. Dr. Seth implicitly acknowledges this non-
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`infringing alternative, because after this change, the ’309 patent is no longer
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`asserted by Plaintiff regarding Caterpillar cold planers, which Caterpillar
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`continues to sell.27
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`• Regarding the ’641 patent, Dr. Seth removed all PM3xx/PM6xx/PM8xx units
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`that were manufactured after Caterpillar issued the July 13, 2021 service
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`letter which modified the feature accused by Wirtgen America.28 Dr. Seth
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`implicitly acknowledges this non-infringing alternative, because Wirtgen
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`27 Seth Report 1 at 119 ¶ 300. Based on the current Caterpillar data, she removed
` units from the
`royalty base that she associates with the ’309 patent. This reduction in units is summarized in Tab
`27, based on serial numbers reported in Seth Report 1 at 119-120 ¶ 302.
`28 Seth Report 1 at 120-121 ¶ 303. I note that while Dr. Seth claims that this change was
`implemented with the July 2021 service letter, this change actually started at an earlier date.
`Specifically, Caterpillar made the software change that modified what was accused regarding the
`’641 patent in 2020. This change was detailed to U.S. Customs and Border Protection to permit
`importation of accused cold planers that were subject to ITC rulings. Wirtgen America participated
`in the inter partes proceeding before the U.S. Customs and Border Protection, which acknowledged
`the changed design as non-infringing regarding the ’641 patent, and yet Dr. Seth ignores changes
`made before the July 2021 service letter. This is yet another error in Dr. Seth’s calculations.
`Moreover, as discussed below, Caterpillar and its dealers have changed the software for existing
`cold planers, such that as of 2023 more than 85% of all PM3xx/PM6xx/PM8xx machines worldwide
`use the modified software that is not accused of infringing the asserted claims of the ’641 patent.
`This is important evidence of the acceptability of the alternative.
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`Highly Confidential – Outside Attorneys’ Eyes Only
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`Page 19
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`Case 1:17-cv-00770-JDW Document 249-5 Filed 10/25/23 Page 4 of 6 PageID #: 25120
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`America does not claim that cold planers Caterpillar continues to sell after
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`making this change infringe the ’641 patent.29
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`• Dr. Seth removed from her royalty base with respect to the ’530 patent all
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`PM6xx/PM8xx units starting with build 02B, because Caterpillar removed the
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`“accused position-sensing leg cylinders”—the feature that Wirtgen America
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`accused of infringing certain claims of the ’530 patent. Dr. Seth implicitly
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`acknowledges this non-infringing alternative, because Wirtgen America does
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`not claim that cold planers Caterpillar continues to sell after making this
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`change infringe the ’530 patent.30
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`While Dr. Seth implicitly acknowledges these non-infringing alternatives for
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`three of the four patent groups Wirtgen America initially asserted (in the original
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`29 Based on the current Caterpillar data, Dr. Seth removed
` units from the royalty base she
`associates with the ’641 patent. This reduction in units is summarized in Tab 28, based on serial
`numbers reported in Seth Report 1at 121-123 ¶ 305. She does add another comment relating to
`certain serial numbers that were not removed: “any machine that was identified in the July 13, 2021
`service letter as having received the modified driving backwards design via software flash was
`included in the royalty base because, if it received the software flash, then it must have been
`manufactured with the original driving backwards design.” Seth Report 1 at 121 ¶ 303. Even if
`Wirtgen America chooses to count it as an allegedly infringing unit (if it was imported and used with
`the accused aspect), ultimately the customer acceptance of the modification is telling about the
`limited value added from the original implementation. In any event, as noted previously, Dr. Seth
`understated the units that were modified, and continued to count units shipped in 2020 and 2021
`that had the software modification and should not be viewed as infringing units regarding the ’641
`patent. For my purposes of counting units that allegedly infringed the ’641 patent at first sale with
`use by customers, I accept Dr. Seth’s assumptions. I conservatively include in my royalty
`calculations all the machine serial numbers she counts and includes as infringing units regarding the
`’641 patent, where she assumes these machines were all obtained by customers before the
`software change and where she implicitly assumes the particular capability accused by Wirtgen
`America was actually used by the customers before the software change took place. In this way, I
`overstate the royalty base, while also recognizing that even if customers used the capability with the
`prior software, the vast majority of U.S. customers have accepted the modified software.
`30 Seth Report 1 at 123 ¶ 306. Based on the current Caterpillar data, she removed
` units from the
`royalty base in years 2020 to 2022 that she associates with the ’530 patent. This reduction in units
`is summarized in Tab 29, based on serial numbers reported in Seth Report 1 at 124. Tab 29 shows
`Dr. Seth also removed, for purposes of this patent,
` units from 2016 to 2019, mostly associated
`with the fact that the ’530 patent issued May 23, 2017, and she does not count in this royalty base
`certain early units.
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`Highly Confidential – Outside Attorneys’ Eyes Only
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`Page 20
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`Case 1:17-cv-00770-JDW Document 249-5 Filed 10/25/23 Page 5 of 6 PageID #: 25121
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`complaint) against Caterpillar’s PM6xx/PM8xx models, and one of the two patent
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`groups asserted against Caterpillar’s PM3xx compact cold planer machines, she
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`nonetheless inexplicably assumes that Wirtgen America could successfully argue in
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`a hypothetical negotiation that Caterpillar would be entirely excluded from the U.S.
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`market without a patent license agreement. Once again, Dr. Seth did not evaluate
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`the availability of acceptable, non-infringing alternatives (Panduit Factor 2), and
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`evidence presented in her own report shows that actually implemented alternatives,
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`as well as other potential alternatives, were available and acceptable to customers.
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`iii. Customer Acceptance of Caterpillar’s Cold Planer Modifications for
`Three Asserted Patents
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`Dr. Seth does not appear to have evaluated evidence regarding customer
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`acceptance of the modifications made by Caterpillar that were implemented in
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`machines actually purchased by customers in the 2020 to 2022 time period. 31 For
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`example, there is no indication that she surveyed or otherwise analyzed the
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`reactions of customers who purchased Caterpillar machines after the July 2021
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`service letter, or after other changes relating to three modified features. She is
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`silent on customer feedback about the changes. She does not explore evidence
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`about whether customers (new or past) continued to purchase machines after the
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`modifications.32 Instead of considering whether customers who purchased non-
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`31 Instead, as addressed under Panduit Factor 1, Dr. Seth used Voice of Customer (“VOC”)
`information from 2010 to 2014, when Caterpillar was getting information about dozens of potential
`features, and she focused on comments from a select group of customers to assert that the features
`she associates with the asserted claims of the patents-in-suit were essential to any customer
`interested in the accused cold planers. In this way, Dr. Seth asserts the claimed features are
`critical/essential, with no further assessment of details about the acceptability of alternatives
`available to Caterpillar, including the three actual modifications Caterpillar implemented.
`32 She did implicitly acknowledge that some customers bought machines after the modifications,
`because she removed these units from the analysis for the specific patents, as noted above.
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`Highly Confidential – Outside Attorneys’ Eyes Only
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`Page 21
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`Case 1:17-cv-00770-JDW Document 249-5 Filed 10/25/23 Page 6 of 6 PageID #: 25122
`Case 1:17-cv-00770-JDW Document 249-5 Filed 10/25/23 Page 6 of 6 PagelD #: 25122
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`Cc.
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`Reasonable Royalty
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`The calculation of reasonable royalties for actual and estimated units
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`through 2024 Q1 are set forth in Tab 27 to Tab 32 and summarized in Table C.
`4
`Table C
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`Accused
`Products
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`Asserted
`Patents
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`PM6xx/
`PM8xx
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`PM3xx
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`RM600/
`RM800
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`'972
`'530
`474/788
`‘641
`309
`RE268
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`‘641
`‘474/788
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`530
`RE268
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`Total
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`Total
`Units
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`Royaity
`Rate
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`Total Royalties
`Through 2024 Q1
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`$2,497,900
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`$133,200
`$277,200
`$478,500
`$243,000
`$678,400
`$140,600
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`$123,000
`$276,000
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`$ 72,000
`$ 76,000
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`Source
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`Tab 32
`Tab 29
`Tab 30
`Tab 28
`Tab 27
`Tab 31
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`Tab 28
`Tab 30
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`Tab 29
`Tab 31
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`Vil.
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`PREJUDGMENT INTEREST
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`The above calculations do not include computations of prejudgmentinterest.
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`If it would prove useful to the Court, | would be prepared to submit a calculation ata
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`later date after the parameters for the calculation are determined in a hearing or
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`order.
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`Dated: June 16, 2023
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`Brett L. Reed
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`Highly Confidential - Outside Attorneys’ Eyes Only
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`Page 120
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