Case 1:17-cv-00770-JDW Document 293-1 Filed 01/19/24 Page 1 of 6 PageID #: 29706
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`Exhibit A
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`Case 1:17-cv-00770-JDW Document 293-1 Filed 01/19/24 Page 2 of 6 PageID #: 29707
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`Wirtgen America, Inc.,
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF DELAWARE
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`Case No. 1:17-cv-00770-JDW
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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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`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 293-1 Filed 01/19/24 Page 3 of 6 PageID #: 29708
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`Wirtgen America’s machines (or perhaps non-infringing Roadtec machines). The
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`few customer comments she relied on from customers who purchased Caterpillar’s
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`accused cold planers were associated with the ’641 patent, where the evidence
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`indicates there has long been an available, acceptable non-infringing alternative.
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`Thus, this evidence does not support lost profits.
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`v. Availability of Non-Infringing Alternatives for the Other Asserted
`Patents
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`Caterpillar had access to a prior art solution introduced long ago regarding
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`the asserted claims of the ’474 and ’788 patents. This relates to the feature
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`sometimes referenced by “sensor switching” and called “hot swap” or “switching
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`sensors on the fly” by some customers. At the hypothetical negotiation in mid-
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`2014, Caterpillar would have known what specifically was accused and asserted to
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`be infringing, and thus unavailable for use without a patent license. At the same
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`time, Caterpillar would understand the available modifications, which are not
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`accused to infringe the asserted claims of each patent-in-suit. One such available
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`modification regarding the ’474 and ’788 patents is the software that existed in the
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`PM465.
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`Importantly, in the prior subsection I addressed that VOC comments from
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`customers who highlighted “sensor switching” type issues were generally
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`customers who purchased Wirtgen America’s machines.47 This is consistent with
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`47 This is seen in Tab 22, where all the U.S.-based and surveyed end customers that Dr. Seth
`claimed addressed this capability asserted to be associated with the ’474 and ’788 patents (ID #’s
`34, 36 and 108) had Wirtgen America machines and did not buy accused machines from Caterpillar.
`In addition, survey ID # 27, Villager Construction, had a W2100 in the 2010 time period and noted
`liking the “ability to switch from grade/grade to grade/slope quickly and when on the move.”
`CAT0115869 at Sheet2, row 135. Dr. Seth did not mention comments from this U.S. customer, but
`like the other three U.S. customers Dr. Seth did comment on regarding the ’474 and ’788 patents
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`Highly Confidential – Outside Attorneys’ Eyes Only
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`Page 30
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`Case 1:17-cv-00770-JDW Document 293-1 Filed 01/19/24 Page 4 of 6 PageID #: 29709
`Case 1:17-cv-00770-JDW Document 293-1 Filed 01/19/24 Page 4 of 6 PagelD #: 29709
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`the Q1 data.''? Because sheis calculating the margin percent (estimated variable
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`margin/U.S. estimated sales), this error does not have a huge impactasit inflates
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`the numerator and the denominator. However, as can be seenin the table below,
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`this math error overstates the Caterpillar spare parts margins in 2019, 2020, and
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`2022, and only in 2021 is the margin understated:
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`ii.
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`Error in Assumed Date of First Infringement
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`There is a substantial error in the date offirst infringement assumedby Dr.
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`Seth, which impacts the date of the hypothetical negotiation and, in turn, impacts
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`her bargaining model.
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`It also affects what she claims to be the “likely outcome of
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`the Hypothetical Negotiation,” because her “reasonable royalty estimate takes this
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`factor into account by construction.”'2°
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`Dr. Seth assumesfirst infringement occurred on April 29, 2016. She
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`sourced this assumption to the Complaint and Amended Complaint and effectively
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`tied the first infringement date to thefirst importation date of a production PM6xx.'2!
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`However, Dr. Seth did not know,or ignored, that a prototype Caterpillar PM6xx
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`machine with the same accused functionality was imported and usedin the U.S.
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`119 |.e., Dr. Seth’s Q1 data actually reflects 5 quarters of data, Q1+Q1+Q2+Q3+Q4, for every Q1.
`120 Seth Report 1 at 53, 59 II] 134, 155.
`121 Seth Report 1, Table 3.
`In Caterpillars answer to the Amended Complaint, paragraph 37,
`Caterpillar noted Wirtgen America’s use of “unidentified records of U.S. Customs.” Defendant
`Caterpillar Inc.’s Answer to Amended Complaint and Counterclaims, paragraph 37.
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`Highly Confidential — Outside Attorneys’ Eyes Only
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`Page 65
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`Case 1:17-cv-00770-JDW Document 293-1 Filed 01/19/24 Page 5 of 6 PageID #: 29710
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`starting July 2014.122 This was confirmed with Caterpillar witnesses who were not
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`asked about this issue in depositions.123 Similarly, Mr. Engelmann confirmed the
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`prototype for the PM312 was imported approximately 2 years before the production
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`units, which Dr. Seth implicitly acknowledged.124
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`Therefore, the first importation and first use in the U.S. of a product reflecting
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`asserted infringement of the patents-in-suit were in mid-2014, not on April 29, 2016.
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`Consequently, this indicates a much earlier hypothetical negotiation date. Dr. Seth
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`does not consider the implications of a much earlier hypothetical negotiation date. I
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`leave it to Dr. Seth to determine the impact of the date changes on her Bargaining
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`Model, as in my opinion the errors in the entire concept and premise of her
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`122 The PM6xx prototype was built in Italy in early 2014 and was shipped to the U.S. in mid-2014. It
`was tested at least in the July 2014 to early 2015 time period, and had 245 hours testing by early
`February 2015 (when it was at the operator A-Brothers in West Texas) (CAT0127253 at 305).
`There were some design changes between the PD (“proved design”—which can be called
`prototype, B. Rife Deposition, 2/27/2023 at 96) and the pilot units (which were scheduled for
`shipment in early 2015, CAT0127253 at 282). However, I understand the prototype had the
`accused functionality. The timing of the prototype unit shipment to the U.S. is verified in the
`Caterpillar July 8, 2014 Meeting Minutes (CAT0099697 at 701, 703). The prototype arrived in
`Baltimore in late June 2014 and then was shipped to Minnesota over the July 4th holiday week. The
`serial number for the prototype was JFC00100 (CAT0099697 at 704), the first of the 01A build of the
`PM6xx. This was confirmed in a conversation with Mr. Eric Engelmann.
`123 Mr. Eric Engelmann recalled that the PM6xx prototype was shipped to Minnesota around the July
`4th holiday weekend in 2014, nearly two years before the first importation of a production unit. He
`also confirmed that the prototype (as well as a subsequent pilot unit) had the same functionality with
`respect to the aspects accused by Wirtgen America as the 2016 production models. The accused
`capabilities associated with at least the ’309, ’474/’788, ’530 (which issued later), and ’641 patents
`were in place on the prototype unit with the same implementation as in the PM6xx production units.
`He also noted that while the capability of the PM6xx machines may have changed with respect to
`operation associated with Wirtgen America’s allegations of infringement of the ’972 patent, if the
`prototype did not have accused capability as asserted by Wirtgen America, then that earlier
`implementation in the prototype was another non-infringing alternative regarding the ’972 patent that
`was acceptable and actually implemented.
`124 See Seth Report, Table 3 (first importation of a PM312 May 26, 2016, with the PM3xx being
`“launched” in 2018, where she cites the testimony of Caterpillar’s Mr. Nathan Just for the 2018
`date). In that same page of his testimony, Mr. Just addressed customer shipments of the PM6xx
`starting in 2016 stating: "by ‘launch,’ if you mean shipping machines to customers.” He was not
`asked about the first importation or first use of the PM6xx machine in the U.S. Deposition of N. Just,
`3/8/2023, at 30.
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`Highly Confidential – Outside Attorneys’ Eyes Only
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`Page 66
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`Accused
`Products
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`PM6xx/
`PM8xx
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`PM3xx
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`RM600/
`RM800
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`Asserted
`Patents
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`"972
`530
`474/788
`641
`309
`RE268
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`641
`474/788
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`Total
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`Case 1:17-cv-00770-JDW Document 293-1 Filed 01/19/24 Page 6 of 6 PageID #: 29711
`Case 1:17-cv-00770-JDW Document 293-1 Filed 01/19/24 Page 6 of 6 PagelD #: 29711
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`C.
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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.
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`Table©
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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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`‘530
`RE268
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`Vill.
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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,
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`| would be prepared to submit a calculation at a
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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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`Highly Confidential - Outside Attorneys’ Eyes Only
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`Page 120
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