Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-5_13-cv-02024/USCOURTS-cand-5_13-cv-02024-50/pdf.json

Nature of Suit Code: 830
Nature of Suit: Patent
Cause of Action: 35:271 Patent Infringement

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5:13-cv-02024-RMW

ORDER REGARDING MOTION FOR CLARIFICATION ON LOST PROFITS

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

RADWARE, LTD., et al.,

Plaintiffs,

v.

F5 NETWORKS, INC.,

Defendant.

Case No. 5:13-cv-02024-RMW 

ORDER REGARDING MOTION FOR 

CLARIFICATION ON LOST PROFITS

Re: Dkt. No. 466

Plaintiff Radware seeks clarification regarding whether this court’s February 13, 2016 

order on motions in limine allows Radware to pursue lost profits for 12% of F5’s sales of GTM 

software “add-ons” to BIG-IP devices that were previously sold with F5’s LTM module enabled. 

Dkt. No. 466. For the reasons set forth below, the court concludes that Radware may not pursue 

such profits. 

This court’s prior order concluded that “[b]ecause LTM alone cannot perform cost-based, 

outbound link load balancing, [Radware’s expert] Mr. Malackowski’s methodology requires him 

to exclude damages calculations aimed at LTM alone.” Dkt. No. 456 at 18. A customer wanting to 

enable the accused link load balancing would not have purchased a license to LTM alone because 

LTM alone does not enable the accused link load balancing. The court noted, however, that “its 

ruling does not preclude Radware from seeking lost profits or a reasonable royalty for BIG-IP 

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ORDER REGARDING MOTION FOR CLARIFICATION ON LOST PROFITS

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units in which both GTM and LTM were licensed and enabled.” Id. at 19.

Mr. Malackowski’s expert report argues that 12% of the customers who bought an F5 BIGIP device with GTM and LTM1

enabled would have purchased both an Alteon and a LinkProof 

product from Radware but for F5’s infringement and that Radware is entitled to lost profits for 

such F5 device sales. Dkt. No. 274-17 at 72. Radware argues that it should be able to base its lost 

profits claim not only on BIG-IP units that were initially sold with GTM and LTM enabled, but 

also on BIG-IP devices that were originally sold with only LTM enabled and onto which a user 

later enabled GTM as “add-on” software. Dkt. No. 466 at 1.

A fatal flaw with Radware’s position, however, is that Mr. Malackowski’s report does not 

argue that Radware is entitled to lost profits for standalone software sales (i.e., add-ons or virtual 

editions) of the LTM, GTM, or Link Controller modules independent of the sale of a BIG-IP 

device. Rather, Mr. Malackowski argues that Radware is entitled to lost profits only for device 

sales and a reasonable royalty for add-on or virtual edition sales. See Dkt. No. 445-6 

(Malackowski Ex. 3.1, Summary of Radware’s Damages). Radware’s counsel confirmed that this 

was Mr. Malackowski’s methodology at the pretrial conference in this matter. See Dkt. No. 453 at 

6:24-7:25. Radware’s attempt to have Mr. Malackowski present a new theory at trial thus violates 

Federal Rule of Civil Procedure 26(a)(2).

In an apparent attempt to argue that its proffered damages theory is not untimely, Radware 

asserts that “GTM ‘add-ons’ were excluded from Radware’s lost profits calculation to avoid 

double counting because the underlying device sale had already been included in Radware’s lost 

profits damages calculation for LTM devices.” Dkt. No. 479 at 1. Even if Radware was merely 

trying to avoid double counting, Mr. Malackowski provides no analysis for why Radware is 

entitled to lost profits based on 12% of F5’s GTM add-on sales, as opposed to another figure. 

Radware’s argument assumes that but for the accused functionality, which was not added until 

after the initial purchase of a device with LTM enabled, the customer would not have bought the 

 

1 Radware argues that the sales figures Mr. Malackowski cites under the heading of “GTM” cover 

units with both GTM and LTM licensed and enabled.

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device with LTM in the first place. Radware’s assumption is tenuous, at best, especially 

considering that some of the BIG-IP devices on which GTM was later licensed and enabled may 

have been sold before Radware was even entitled to damages.

Moreover, Radware has presented no evidence or analysis for why the combination of an 

Alteon device and a LinkProof device is an appropriate substitute for GTM add-on software. See

BIC Leisure Prods. v. Windsurfing Int'l, 1 F.3d 1214, 1218 (Fed. Cir. 1993) (“If the patentee’s and 

the infringer’s products are not substitutes in a competitive market, Panduit’s first two factors do 

not meet the ‘but for’ test -- a prerequisite for lost profits.”). Even if one assumes that Radware’s 

experts have adequately explained why the purchaser of a BIG-IP device with GTM and LTM 

would have turned to the combination of an Alteon and a LinkProof device if F5’s product had 

been unavailable, Radware has provided no such explanation for why a user in search of an 

appropriate substitute for GTM add-on software would have purchased an Alteon and a LinkProof 

device.

Accordingly, the court concludes that Radware and its expert may not present an argument, 

which argument was not disclosed in Mr. Malackowski’s report, that Radware is entitled to lost 

profits for F5’s sales of GTM software “add-ons” to BIG-IP devices that were previously sold 

with F5’s LTM module enabled. Rather, Radware’s expert may testify, consistent with the 

analysis in his report, that Radware is entitled to a reasonable royalty for add-on and virtual 

edition sales. If Radware believes that its damages disclosures explain a basis on which Radware 

can seek lost profits for add-on sales, then Radware may submit an offer of proof showing the 

profits Radware lost and how Radware computed those losses. However, a showing must be made 

on the disclosures existing in this case and not on information or analysis not previously disclosed.

IT IS SO ORDERED.

Dated: February 22, 2016

______________________________________

Ronald M. Whyte

United States District Judge

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