Case 1:17-cv-00770-JDW Document 320 Filed 02/07/24 Page 1 of 19 PageID #: 30626
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF DELAWARE
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`C.A. No. 17-770-JDW
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`JURY TRIAL DEMANDED
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`)))))))))
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`WIRTGEN AMERICA, INC.,
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`CATERPILLAR INC.,
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`Plaintiff,
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`v.
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`Defendant.
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`CATERPILLAR INC.’S MOTION TO EXCLUDE IMPROPER DAMAGES
`TESTIMONY FROM DR. SETH AND WIRTGEN AMERICA WITNESSES
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`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
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`Attorneys for Defendant Caterpillar Inc.
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`OF COUNSEL:
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`James C. Yoon
`Ryan R. Smith
`Christopher D. Mays
`WILSON SONSINI GOODRICH & ROSATI, P.C.
`650 Page Mill Road
`Palo Alto, CA 94304
`Telephone: (650) 493-9300
`
`Lucy Yen
`Cassie Leigh Black
`WILSON SONSINI GOODRICH & ROSATI, P.C.
`1301 Avenue of the Americas, 40th Floor
`New York, NY 10019
`Telephone: (212) 999-5800
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`Dated: February 7, 2024
`11314469 /11898.00005
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`

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`Case 1:17-cv-00770-JDW Document 320 Filed 02/07/24 Page 2 of 19 PageID #: 30627
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`TABLE OF CONTENTS
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`
`PAGE
`INTRODUCTION ............................................................................................................1
`PROCEDURAL BACKGROUND ...................................................................................3
`LEGAL STANDARDS ....................................................................................................4
`ARGUMENT ....................................................................................................................5
`A.
`Dr. Seth’s New Opinion Is Untimely ....................................................................5
`B.
`Dr. Seth’s New Opinion Fails to Reflect Proper Apportionment .........................6
`1. Dr. Seth’s Flawed Patent Citations Analysis ........................................................7
`2. Dr. Seth Never Remediates Her Error in Including Parts Profits .......................10
`Dr. Seth’s Remaining Opinions Do Not Constitute Expert Analysis and Are
`Not Admissible ...................................................................................................11
`As Amendment Is Futile, Wirtgen America Should Be Limited to Rebutting
`the Damages Offered by Caterpillar’s Expert .....................................................12
`Discussion of Damages from Fact Witnesses Must Be Limited to Prevent
`Prejudice .............................................................................................................13
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`C.
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`D.
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`E.
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`I.
`II.
`III.
`IV.
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`i
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`TABLE OF AUTHORITIES
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`
`PAGE
`
`CASES
`Acceleration Bay LLC v. Activision Blizzard Inc.,
`2018 WL 5045186 (D. Del. Oct. 17, 2018) .......................................................................13
`Commonwealth Sci. & Indus. Rsch. Org.,
`809 F.3d 1295 (Fed. Cir. 2015)..................................................................................5, 6, 10
`Content Guard Holdings, Inc. v. Amazon.com, Inc.,
`2015 WL 11089749 (E.D. Tex. Aug. 6, 2015) ..................................................................14
`Daubert v. Merrell Dow Pharms., Inc.,
`509 U.S. 579 (1993) ................................................................................................... passim
`Elcock v. Kmart Corp.,
`233 F.3d 734 (3d Cir. 2000).................................................................................................5
`Ericsson, Inc. v. D-Link Sys., Inc.,
`773 F.3d 1201 (Fed. Cir. 2014)....................................................................................10, 14
`Finjan, Inc. v. Blue Coat Sys., Inc.,
`2015 WL 4272870 (N.D. Cal. July 14, 2015) ................................................................9, 15
`LaserDynamics, Inc. v. Quanta Comput., Inc.
`694 F.3d 51 (Fed. Cir. 2012) ...................................................................................6, 11, 14
`Mfg. Res. Int’l, Inc. v. Civiq Smartscapes, LLC,
`2019 WL 4198194 (D. Del. Sept. 4. 2019) ..........................................................................9
`Microchip Tech. Inc. v. Aptiv Servs. US LLC,
`2020 WL 5203600 (D. Del. Sept. 1, 2020) ......................................................................5, 9
`Mosley-Lovings v. AT&T Corp.,
`2020 WL 6865787 (N.D. Tex. Aug. 12, 2020) ..................................................................15
`NexStep, Inc. v. Comcast Cable Commc'ns, LLC,
`2021 WL 5356293 (D. Del. Nov. 17, 2021) ........................................................................6
`Pineda v. Ford Motor Co.,
`520 F.3d 237 (3d Cir. 2008).................................................................................................5
`Power Integrations, Inc. v. Fairchild Semiconductor Int’l, Inc.,
`904 F.3d 965 (Fed. Cir. 2018)..............................................................................................6
`Promethean Insulation Tech. LLC v. Sealed Air Corp.,
`2015 WL 11027036 (E.D. Tex. Aug. 14, 2015) ................................................................15
`Sikkelee v. Precision Airmotive Corp.,
`522 F. Supp. 3d 120 (M.D. Pa. 2021) ..................................................................................5
`
`ii
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`Supply & Bldg. Co. v. Estee Lauder Int’l, Inc.,
`2001 WL 1602976 (S.D.N.Y. Dec. 14, 2001) ...................................................................12
`TecSec, Inc. v. Adobe Inc.,
`978 F.3d 1278 (Fed. Cir. 2020)..........................................................................................13
`Unicom Monitoring, LLC v. Cencom, Inc.,
`2013 WL 1704300 (D.N.J. Apr. 19, 2013) ........................................................................13
`Uniloc USA, Inc. v. Microsoft Corp.,
`632 F.3d 1292 (Fed. Cir. 2011)....................................................................................10, 14
`Webasto Thermo & Comfort N. Am., Inc. v. Bestop, Inc.,
`2019 U.S. Dist. LEXIS 124062 (E.D. Mich. July 25, 2019) .............................................12
`RULES
`Fed. R. Evid. 702 .........................................................................................................................4, 5
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`iii
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`I.
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`INTRODUCTION
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`Dr. Seth’s “Supplemental Report” violates the Court’s Daubert Order and contravenes
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`representations made by counsel at the February 1, 2024 hearing. The Supplemental Report
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`includes brand-new opinions which were never permitted by the Court as a procedural matter,
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`violate long-standing Federal Circuit precedent, and conflict with an express representation by
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`Wirtgen America’s counsel that Dr. Seth would not be providing any additional opinion “as to
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`what . . . her opinion on the royalty would be.” February 1, 2024 Hearing Transcript (“H’rg Tr.”)
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`at 73:13-22 (“where we would stop is in terms of offering opinion as to what the -- what her opinion
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`on the royalty would be”).
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`After the Court excluded the unreliable opinions of Dr. Seth for seeking damages “without
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`determining if any particular patented technology justified such a recovery,” D.I. 308 (“Daubert
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`Op.”) at 12, Wirtgen America never requested leave to file a new damages report, and instead
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`maintained that Dr. Seth’s existing report could be salvaged. The Court granted Wirtgen America
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`the opportunity to propose “parts of Dr. Seth’s opinion that she can still offer” for consideration.
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`Id.; D.I. 309. Although it was never granted leave to serve a new expert report—in flagrant
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`disregard of the Court’s Daubert Order—Wirtgen America produced a Supplemental Report with
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`a revised damages theory (never permitted by the Court) and calculations (expressly disclaimed
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`by counsel for Wirtgen America). Not only is the Supplemental Report unauthorized, but it is also
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`futile, as Dr. Seth still cannot cure the fundamental deficiencies in her report.
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`Wirtgen America’s Supplemental Report, along with all of Dr. Seth’s opinions, should be
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`excluded in its entirety. First, the Supplemental Report fails to remedy the fundamental flaws in
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`Dr. Seth’s prior opinions and continues to rely on unfounded and improper assumptions. Although
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`Wirtgen America now reduces its requested damages from full lost profits to a percentage of
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`Caterpillar’s profits, Wirtgen America continues to rely on entire profits (including from machine
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`and parts sales) as the basis for a reasonable royalty. Most egregiously, Dr. Seth starts from the
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`premise of “Accused Profits,” which include Caterpillar’s profits from sales of accused machines
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`and parts unrelated to the accused features. Dr. Seth recognizes that the Accused Products
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`incorporate “value from other patents, know-how, human capital, and raw materials,” but her
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`“forward patent citation analysis” improperly assumes without basis that the non-patented features
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`of Caterpillar’s cold planer machines have zero value. That approach is contrary to Federal Circuit
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`law. Further, even if the methodology were viable (which it is not), her analysis is deeply flawed
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`because it arbitrarily excludes a range of considerations that render the opinion unreliable.
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`Second, any further amendment or supplementation is futile. Wirtgen America already
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`served an unauthorized Supplemental Report with brand-new opinions, including ultimate
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`opinions on the royalties allegedly owed. Wirtgen America had ample opportunity to propose a
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`reliable and apportioned damages opinion at each stage of expert discovery but repeatedly sought
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`damages beyond what are legally permitted. Allowing Wirtgen America to assert new damages
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`opinions at this stage—or to offer facts untethered from expert analysis to support damages at
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`trial—would be highly prejudicial and clearly futile, given Dr. Seth’s lack of any technical
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`expertise and inability to offer any patent-specific valuation opinions without such expertise.
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`Accordingly, Caterpillar moves herein to preclude (1) Dr. Seth from testifying at trial
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`except to rebut the affirmative damages opinions of Caterpillar’s damages expert, Mr. Brett Reed;
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`(2) Wirtgen America witnesses from offering any lay opinions on royalties or apportionment; and
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`(3) Wirtgen America witnesses from using enterprise-wide or machine-based revenue and
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`profitability numbers in a manner that would be prejudicial and unapportioned to reflect the accused
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`features or Asserted Patents.
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`2
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`II.
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`PROCEDURAL BACKGROUND
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`Dr. Seth’s original opinion was based principally on two components: (i) Wirtgen
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`America’s minimum willingness to accept (“MWA”), which was based on assumptions about
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`Wirtgen America’s purported lost profits, plus (ii) a share of the “joint surplus value” (“JSV”) that
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`would be divided between the parties. The JSV component of the damages was between 5-25%
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`of the total damages opinions, and relied on an analysis of patent forward citations. D.I. 213-1,
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`Ex. 1 (Seth Opening Rpt.) ¶¶ 18-22.
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`On February 1, 2024, the Court granted Caterpillar’s Daubert motion, “rul[ing] that Dr.
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`Seth’s reasonable royalty analysis was deficient” for failure “to apportion her damages to account
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`for non-infringing elements of the cold planers at issue.” Daubert Op. at 2, 5. The Court
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`explained, “Because [Dr. Seth] fails to apportion to ensure that Wirtgen would receive only the
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`benefit of its patented technologies in her damages analysis, Dr. Seth’s analysis runs afoul of
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`governing Federal Circuit precedent and requires exclusion.” Id. at 12.
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`After the Court issued its decision excluding Dr. Seth’s opinions, Wirtgen America’s
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`counsel requested the opportunity to preserve certain aspects of Dr. Seth’s opinions for trial (rather
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`than serving any new reports), such as “background of the parties, the industry . . . her opinions on
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`each of the Georgia-Pacific factors.” But Wirtgen America’s counsel confirmed that “where we
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`would stop is in terms of offering opinion as to what the -- what her opinion on the royalty would
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`be.” H’rg Tr. at 73:13-22. Given those representations, the Court agreed to consider a proposal
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`from Wirtgen America on what may still be admissible from Dr. Seth’s report, but made clear “it
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`wouldn’t be anything beyond what’s in the report.” Id. at 78:9-16. The Court further clarified that
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`it would admit only parts that “can be pulled out of the report and offered as proper expert
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`testimony.” Id. The Court subsequently issued a corresponding order that Wirtgen America could
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`propose “parts of Dr. Seth’s opinion that she can still offer.” D.I. 309.
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`3
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`At approximately 3:00 p.m. eastern, on February 6, 2024, Wirtgen America’s counsel
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`produced a Supplemental Report. In her new report, Dr. Seth premises her reasonable royalty
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`figures on her patent forward citations analysis, effectively dividing Caterpillar’s total profits from
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`the sale of cold planers and parts between Wirtgen and Caterpillar based on citation frequency for
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`an arbitrarily selected category of patents (subject to adjustments based on unsupported
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`assumptions about the frequency by which Caterpillar incorporates its own technology in its
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`machines and a bargaining split). That analysis was previously used in her calculation of a small
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`percentage of the total royalty. Demonstrating the lack of any scientific rigor, Dr. Seth’s new
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`approach now applies the forward citation analysis to the entire damages amount. This produces
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`a breathtakingly wide “range” of potential outcomes, ranging from $10,051,967 to $69,532,925.
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`Supp. Rpt. ¶ 4. Like her prior opinions, this new approach remains unreliable and contrary to
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`settled Federal Circuit law and this Court’s order.
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`Wirtgen America’s damages re-do is improper both procedurally and substantively and
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`should be rejected for the reasons described herein.
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`III. LEGAL STANDARDS
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`The Supreme Court has made clear that courts have a gatekeeping role with respect to
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`experts. Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579 (1993). Pursuant to Federal Rule
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`of Evidence 702, a party can offer testimony of an expert witness at trial so long as the expert is
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`qualified, the methodology the expert uses is reliable, and the opinion fits the facts of the case.
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`FED. R. EVID. 702; see Elcock v. Kmart Corp., 233 F.3d 734, 741 (3d Cir. 2000). The Third
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`Circuit has confirmed that a trial judge is tasked with being a “‘gatekeeper’ to ensure that ‘any
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`and all expert testimony is not only relevant, but also reliable.’” Pineda v. Ford Motor Co., 520
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`F.3d 237, 243 (3d Cir. 2008); Daubert, 509 U.S. at 600. The Court’s role is not limited by party
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`4
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`arguments, and the Court can assess the admissibility of expert testimony at any time because
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`“the Court has an underlying, separate responsibility to fulfill its function as a gatekeeper of
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`expert testimony.” Sikkelee v. Precision Airmotive Corp., 522 F. Supp. 3d 120, 152 (M.D. Pa.
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`2021).
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`No matter how a royalty is structured, “a patentee must in every case give evidence
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`tending to separate or apportion the defendant’s profits and the patentee’s damages between the
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`patented feature and the unpatented features, and such evidence must be reliable and tangible,
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`and not conjectural or speculative.” Microchip Tech. Inc. v. Aptiv Servs. US LLC, 2020 WL
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`5203600, at *5 (D. Del. Sept. 1, 2020). “To be admissible,” an expert opinion on damages must
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`“separate the value of the allegedly infringing features from the value of all other features.”
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`Daubert Op. at 7 (quoting Commonwealth Sci. & Indus. Rsch. Org., 809 F.3d 1295, 1301 (Fed.
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`Cir. 2015)). The apportionment requirement serves a critical role in “ensur[ing] that a reasonable
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`[sic] royalty does not overreach and encompass components not covered by the patent.”
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`Microchip, 2020 WL 5203600, at *5. An expert opinion that fails to do so is not admissible. Id.
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`at *6.
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`IV. ARGUMENT
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`A.
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`Dr. Seth’s New Opinion Is Untimely
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`As an initial matter, Dr. Seth’s opinion is untimely. Expert reports were due nearly a year
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`ago. Dr. Seth’s deposition took place in August. Caterpillar has had no opportunity to depose her
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`on this new opinion or submit a rebuttal report. Caterpillar first saw this opinion six days before
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`trial. The disclosure is contrary to what Plaintiff’s counsel told the Court just last week. The late
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`disclosure is an independent basis on which to exclude this opinion in its entirety. See NexStep,
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`Inc. v. Comcast Cable Commc'ns, LLC, No. 19-1031, 2021 WL 5356293, at *1 (D. Del. Nov. 17,
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`5
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`Case 1:17-cv-00770-JDW Document 320 Filed 02/07/24 Page 10 of 19 PageID #: 30635
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`2021) (excluding damages theory presented shortly before trial because defendant would be
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`prejudiced by new royalty percentage that “cobbled together a new theory using some parts of the
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`old theory and some parts that were previously ignored by both sides”).
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`B.
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`Dr. Seth’s New Opinion Fails to Reflect Proper Apportionment
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`Plaintiff’s newly minted reasonable royalty opinion fails to comply with Plaintiff’s legal
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`obligation to apportion damages. The Court determined that Dr. Seth did not invoke or prove
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`entitlement to the entire market value rule. Daubert Op. at 8. The Court was clear that conducting
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`an assessment of the value of each of the asserted patents and the non-accused elements is
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`necessary to properly apportion reasonable royalty damages. Id. Despite having the benefit of the
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`Court’s guidance, Dr. Seth’s damages analysis remains fundamentally flawed because Dr. Seth
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`“fails to isolate the value of the allegedly infringing features from the value of all other features.”
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`Id. at 9.
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`Critically, the revised opinion still does not “separate the value of the allegedly infringing
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`features from the value of all other features.” Id. at 7 (emphasis added); accord id. at 9 (same);
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`Commonwealth, 809 F.3d at 1301. As the Court already recognized, it is blackletter law that an
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`apportionment analysis must give appropriate value to both patented and unpatented features. See
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`LaserDynamics, 694 F.3d 51, 67 (Fed. Cir. 2012) (patentee must apportion “between the patented
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`feature and the unpatented features”); Power Integrations, Inc. v. Fairchild Semiconductor Int’l,
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`Inc., 904 F.3d 965, 978 (Fed. Cir. 2018) (patentee must apportion “other valuable features” —
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`“patented or unpatented”).
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`Dr. Seth admits that “[t]he Accused Product as a whole incorporates value from other
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`patents, know-how, human capital, and raw materials, in addition to the value contributed by the
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`technology embodied in the Asserted Patents,” yet Dr. Seth never conducted an analysis of the
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`6
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`value of these non-infringing elements. See Daubert Op. at 10 (quoting D.I. 213-11 ¶ 195); see
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`also Deposition Transcript of Dr. Seth, D.I. 213-2, Ex. 2 (“Seth Dep. Tr.”) at 173:17-174:4, 175:6-
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`14, 176:19-22, 177:20-178:8 (acknowledging there are numerous important features of accused
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`machines—including engine, fuel efficiency, cutting and rotors, and operator’s environment—on
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`which she conducted no analysis of the value). She also never conducted an analysis of the spare
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`and replacement parts, the majority of which she admits are unrelated to the accused features. Id.
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`at 288:10-16.
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`Dr. Seth also does not conduct any assessment of the value of the Asserted Patents to the
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`parties at the time of the hypothetical negotiation, which underlies a reasonable royalty damages
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`award. As the Court described in its Daubert opinion, an example presented at the hearing
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`“demonstrate[d] some of the problems with Dr. Seth’s analysis.” Daubert Op. at 10. The Court
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`noted that Dr. Seth did not consider the relative value of the patents “to Caterpillar,” including
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`based on the potential that Caterpillar could design around patents. Id. at 11. Dr. Seth’s new
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`methodology—which is similarly arbitrary and disregards the possibility of design arounds and
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`non-infringing alternatives—does not correct this flaw. Dr. Seth’s patent citations analysis cannot
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`resuscitate any aspect of her opinions. As discussed below, that analysis is also fatally flawed.
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`1.
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`Dr. Seth’s Flawed Patent Citations Analysis
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`Dr. Seth’s forward patent citation analysis is not a proper apportionment. First, it simply
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`assumes that 100% of the profits associated with a cold planer come from its patented features
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`(whether held by Caterpillar or Wirtgen) and assumes that the unpatented features have zero value.
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`See D.I. 213-1, Ex. 1, Seth Op. Rpt. ¶ 206 (“If the Accused Products practice only the Asserted
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`Patents . . . then the entirety of the [amount to be apportioned] is attributable to the Asserted
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`Patents.”); Seth Op. Rpt. ¶ 208 (Dr. Seth’s “approach ensures that all patentees are appropriately
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`compensated.”). This assumption is unfounded and has no place in a case involving products like
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`cold planers that have been on the market for decades, and include highly valuable and useful
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`features that may not be patented by anyone, such as the rotor, the tracks, and parts of the engine.
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`See Seth Op. Rpt. ¶ 37 (Caterpillar introduced cold planers in 2005); D.I. 213-2, Ex. 2 (Seth Dep.
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`Tr.) at 173:17-174:4, 175:6-14, 176:19-22, 177:20-178:8 (acknowledging non-infringing features
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`are valuable).
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`Dr. Seth did not undertake any consumer analysis or conjoint surveys regarding the accused
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`and non-accused features. Dr. Seth never conducted any technical or economic valuation of the
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`Asserted Patents, and does not have the qualifications to offer a technical opinion. Although Dr.
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`Seth claims to rely on Wirtgen America’s technical experts, she cites to their reports for only
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`general discussions about the nature of the patents, not their specific economic value relative to
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`other unpatented features in the parties’ milling machines. See, e.g., Seth Op. Rpt. ¶¶ 41, 43, 45,
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`47, 49, 51, 68 (relying on technical experts for general description of asserted features and their
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`uses).
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`We are aware of no authority permitting an expert to use a forward citation analysis as the
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`basis for apportionment in this manner where the Accused Products include unpatented features
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`or benefits. Counsel for Wirtgen America could provide us with none during the parties’
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`conference on February 7. The absurdity of relying on such a measure should be obvious: if the
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`defendant owns no patents, the approach would by definition attribute 100% of the defendant’s
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`profit to the patented feature no matter how trivial or unimportant the feature. And while some
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`courts have allowed reliance on forward citation analysis when looking at comparable license
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`agreements, courts have rejected the kind of blind overreliance on the approach here. See Finjan,
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`Inc. v. Blue Coat Sys., Inc., 2015 WL 4272870, at *8 (N.D. Cal. July 14, 2015) (stating that
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`“[w]ithout facts tying her analysis to the facts of this case, [the expert’s] reliance on [forward
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`citation analysis] has little more probative value than the 25 percent rule of thumb and Nash
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`Bargaining Solution analyses the Federal Circuit rejected” and observing that the approach fails to
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`“account for the value of the accused features as a portion of the accused products”); cf., e.g., Mfg.
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`Res. Int’l, Inc. v. Civiq Smartscapes, LLC, 2019 WL 4198194, at *3 (D. Del. Sept. 4. 2019)
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`(permitting reliance on forward citation analysis as aide in valuing comparable license).
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`The issue is not whether forward citation analysis can be an accepted method in some cases;
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`the issue is that Dr. Seth’s forward citation analysis does not answer the right question. Her failure
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`to attribute any value to unpatented features goes to admissibility, not weight. Daubert Op. at 7
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`(“[A]n expert’s failure to properly apportion damages justifies exclusion of that expert’s testimony
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`at trial”); Microchip, 2020 WL 5203600, at *6 (“an approach that runs afoul of established legal
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`rules” renders an opinion inadmissible).
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`Second, even if the approach could be sound in theory, the particular opinion contains
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`multiple unreasonable assumptions and improperly places the burden of proof on Caterpillar.
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`Among other defects, Dr. Seth’s forward citation analysis is supported by no technical opinion on
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`the comparability of technologies and arbitrarily assumes the relevant patents are those associated
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`with certain “cooperative patent classification” classes. Seth Op. Rpt. ¶ 275-76. She provides no
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`basis for ignoring Caterpillar patents on engines, picks, or other components. See Seth Rpt. Table
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`A. 13 (excluding CPC classes on, among other things, engines). She also makes a host of
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`assumptions about the rate at which Wirtgen and Caterpillar practice their patents. Seth Op. Rpt.
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`¶ 209 n.324 (assuming, apparently for only illustrative purposes, that “Accused Products practice
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`the same fraction of Caterpillar’s relevant patents as they do Wirtgen’s relevant patents”). Dr.
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`Seth then puts the burden on Caterpillar to fill in the blanks of these opinions. See Supp. Rpt. ¶ 4
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`Case 1:17-cv-00770-JDW Document 320 Filed 02/07/24 Page 14 of 19 PageID #: 30639
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`(providing a reasonable royalty range depending on the rate at which Caterpillar practices its
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`patents in the Accused Products). That is not consistent with the law or this Court’s prior order.
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`Daubert Order at 7-8; see Uniloc USA, Inc. v. Microsoft Corp., 632 F.3d 1292, 1315 (Fed. Cir.
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`2011) (“The patentee bears the burden of proving damages”).
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`2.
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`Dr. Seth Never Remediates Her Error in Including Parts Profits
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`After using a wholly flawed methodology to derive her so-called apportionment
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`percentages, Dr. Seth simply applies those “apportionment” rates to Caterpillar’s profits on entire
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`multi-component machines and their spare parts. Wirtgen America has not, and can never,
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`properly claim parts profits. Dr. Seth concedes that the parts are unrelated to the asserted features.
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`D.I. 213-2, Ex. 2, Seth Dep. Tr. at 288:10-16. Indeed, she cites no evidence that any parts are
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`related to the asserted features. Therefore, she cannot claim that the apportionment percentages
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`should be applied to parts profits when those profits are not “attributable to the infringing features
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`of the product.” Ericsson, Inc. v. D-Link Sys., Inc., 773 F.3d 1201, 1226 (Fed. Cir. 2014).
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`Moreover, because Dr. Seth has not proven that Wirtgen America is entitled to the benefit
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`of the entire market value rule, Federal Circuit precedent requires that “where a damages model
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`apportions from a royalty base, the model should use the smallest salable patent-practicing unit as
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`the base.” Commonwealth, 809 F.3d at 1302.1 Of course, Dr. Seth cannot establish that the multi-
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`component Accused Products—of which only a handful of discrete features are accused—are the
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`smallest salable patent-practicing unit, let alone the Accused Products and all their spare parts
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`1 Although her royalty percentage may misleadingly be expressed as a percentage of
`Caterpillar’s revenues on machines, there is no doubt that Dr. Seth uses as her royalty base
`“Accused Profits,” which she defines in her Opening Report as including both machines and
`parts profits. Seth Op. Rpt ¶ 17 n.10 (explaining that “Accused Profits amount . . . includes both
`the sales of machines and of spare and replacement parts associated with those machines”)
`(emphasis added).
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`10
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`

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`Case 1:17-cv-00770-JDW Document 320 Filed 02/07/24 Page 15 of 19 PageID #: 30640
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`combined. And, just like in LaserDynamics, the deficiencies in Dr. Seth’s analysis are even more
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`inexcusable where she has no justification for failure to “obtain and use alternative pricing
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`information” about “individual components” when Wirtgen America possesses such information.
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`694 F.3d at 70; see Trial Ex. 4062 (document with values assigned to various machine features).
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`In sum, Dr. Seth’s mechanical application of her apportionment percentages to an unjustifiably
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`large base consisting of both entire machine profits and parts profits is a failure to apportion, which
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`goes to admissibility.
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`For all these reasons, Dr. Seth has not properly apportioned her reasonable royalty.2
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`C.
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`Dr. Seth’s Remaining Opinions Do Not Constitute Expert Analysis and Are
`Not Admissible
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`In addition to the defects in Dr. Seth’s new reasonable royalty opinion, the sections of Dr.
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`Seth’s earlier reports that Wirtgen America seeks to admit are not appropriate for expert testimony
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`and contravene the Court’s guidance at the Daubert hearing. As the Court correctly explained at
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`the hearing, evidence related to the Georgia-Pacific factors and background on the parties is
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`“expert repetition of fact,” not an admissible expert opinion. H’rg Tr. at 74:4-76:1 (“I am not
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`going to have her get up at the trial just to tell everyone, you know, background of the parties and
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`things like that. That’s not her expertise, right. That’s groundwork and things she may have
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`considered for purposes of rendering a damages opinion … But not on its own”); see also Supply
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`& Bldg. Co. v. Estee Lauder Int’l, Inc., 2001 WL 1602976, at *4 (S.D.N.Y. Dec. 14, 2001)
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`(“Assumptions based on conclusory statements of the expert’s client, rather than on the expert’s
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`independent evaluation are not reasonable.”); Webasto Thermo & Comfort N. Am., Inc. v. Bestop,
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`2 Other problems plague Dr. Seth’s damages analysis. For example, Dr. Seth does not
`calculate a patent-by-patent bargaining split and keeps it at a constant 81.9%, which “fails to
`account for” whether a patent “was less valuable to Caterpillar.” D.I. 308 at 11.
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`11
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`

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`Case 1:17-cv-00770-JDW Document 320 Filed 02/07/24 Page 16 of 19 PageID #: 30641
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`Inc., 2019 U.S. Dist. LEXIS 124062, at *16 (E.D. Mich. July 25, 2019) (excluding opinions which
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`are entirely based on the expert’s discussions with defendant’s executive because “[the damages
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`expert] is nothing but a mouthpiece for [the executive]”).
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`Yet, Wirtgen America is preserving the right to have Dr. Seth testify to exactly that. For
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`example, Wirtgen America has preserved the right that Dr. Seth will still “opine” on the Georgia-
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`Pacific factors, even though such “opinions,” as set forth in the report, appear to constitute nothing
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`more than impermissible, inadmissible factual recitations. See, e.g., Rpt. ¶¶ 24-56 (identifying
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`multiple paragraphs of factual recitations relating to parties’ corporate structure, relationship, and
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`product offerings as part of Dr. Seth’s purported Georgia-Pacific “analysis”).
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`D.
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`As Amendment Is Futile, Wirtgen America Should Be Limited to Rebutting
`the Damages Offered by Caterpillar’s Expert
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`Wirtgen America was aware of the requirement to apportion, which is a longstanding
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`tenet of patent law and was acknowledged by Dr. Seth in her opening report. But Wirtgen
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`America ignored that requirement for 95% of requested damages. See Daubert Op. at 10 (noting
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`that Dr. Seth “acknowledges the rule of apportionment” but did not “apportion[] her damages
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`properly”). Wirtgen America also elected to maintain its damages opinion when Caterpillar’s
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`rebuttal expert raised Dr. Seth’s failure to properly apportion. See 6/16/23 B. Reed rebuttal
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`report at 4, 78. Even after the Daubert hearing, Wirtgen America elected to proceed to trial on
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`the existing, flawed expert opinion.
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`The Court should not permit Wirtgen America any more chances to put forth a legally
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`sufficient damages model.