Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_18-cv-01885/USCOURTS-cand-4_18-cv-01885-81/pdf.json

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

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United States District Court 

Northern District of California 

UNITED STATES DISTRICT COURT 

NORTHERN DISTRICT OF CALIFORNIA 

IN RE KONINKLIJKE PHILIPS PATENT 

LITIGATION 

This Document Relates To:

ALL ACTIONS 

Case No. 18-cv-01885-HSG 

ORDER REGARDING DAUBERT 

MOTIONS 

Re: Dkt. Nos. 711, 713, 766, 742 

PUBLIC VERSION 

 

Pending before the Court are Defendants ASUSTeK Computer Inc. and ASUS Computer 

International (collectively, “ASUS”) and Plaintiffs Koninklijke Philips N.V. and U.S. Philips 

Corporation (collectively, “Philips”) motions to exclude expert testimony. Philips seeks to 

exclude testimony from three ASUS technical experts: (1) Mark Dunlop, (2) Markus Jakobsson, 

and (3) Dick Bulterman. See Dkt. Nos. 711, 713, 766. ASUS seeks to exclude testimony from 

Philips’s damages expert, Michael Tate. Dkt. No. 742. Having carefully considered the parties’ 

arguments and evidence submitted, the Court (1) DENIES without prejudice Philips’s motion to 

exclude Dr. Dunlop’s opinions, (2) GRANTS IN PART and DENIES IN PART Philips’s motion 

to exclude Dr. Jakobsson’s opinions, (3) DENIES Philips’s motion to exclude Dr. Bulterman’s 

opinions, and (4) GRANTS IN PART and DENIES IN PART ASUS’s motion to exclude Mr. 

Tate’s opinions. 

I. BACKGROUND 

Philips contends that ASUS infringes six of its patents: U.S. Patent Nos. 5,910,797 (“’797 

Patent”), 7,184,064 (“’064 Patent”), 7,529,806 (“’806 Patent”), 9,436,809 (“’809 Patent”), and 

RE43,564 (“’564 Patent”), and RE44,913 (“’913 Patent”). On January 6, 2020, the Federal 

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Circuit found all claims of the ’913 Patent unpatentable. See Dkt. No. 949. In response, Philips 

agreed to stay all claims related to the ’913 Patent pending further appeal. Dkt. No. 970. 

According to the schedule adopted in this case, fact discovery closed on January 4, 2019, 

with opening expert reports due on March 14, 2019 and rebuttal expert reports due on May 16, 

2019. Dkt. No. 573. After multiple extensions, the opening expert report deadline was extended 

to April 25, 2019 and the rebuttal expert report deadline to June 20, 2019. Dkt. Nos. 631, 644. 

Although the scheduling order did not permit reply expert reports, Philips filed supplemental 

expert reports to rebut certain allegedly new theories in Dr. Dunlop’s and Dr. Jakobsson’s rebuttal 

reports. See Dkt. Nos. 710-11, 713-6. 

II. LEGAL STANDARD 

A. Federal Rule of Evidence 702 

Federal Rule of Evidence 702 governs the admission of expert testimony. Rule 702 

permits a qualified expert to testify based on “scientific, technical, or other specialized 

knowledge” if (1) it will “help the trier of fact to understand the evidence or to determine a fact in 

issue,” (2) “the testimony is based on sufficient facts or data,” (3) “the testimony is the product of 

reliable principles and methods,” and (4) “the expert has reliably applied the principles and 

methods to the facts of the case.” Fed. R. Evid. 702. In permitting expert testimony, district 

courts play a “‘gatekeeping role,’ the objective of which is to ensure that expert testimony 

admitted into evidence is both reliable and relevant.” Sundance, Inc. v. DeMonte Fabricating Ltd., 

550 F.3d 1356, 1360 (Fed. Cir. 2008) (citing Daubert v. Merrell Dow Pharmas., Inc., 509 U.S. 

579 (1993)). In so doing, “[t]he district court is not tasked with deciding whether the expert is 

right or wrong, just whether his testimony has substance such that it would be helpful to a jury.” 

Alaska Rent-A-Car, Inc. v. Avis Budget Grp., Inc., 738 F.3d 960, 969-70 (9th Cir 2013); see also 

Daubert, 509 U.S. at 595 (“The focus, of course, must be solely on principles and methodology, 

not on the conclusions that they generate.”); Primiano v. Cook, 598 F.3d 558, 565 (9th Cir. 2010) 

(“Under Daubert, the district judge is ‘a gatekeeper, not a fact finder.’” (citation omitted)).

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 The decision to admit expert testimony in a patent case follows the law of the regional circuit. 

Micro Chem., Inc. v. Lextron, Inc., 317 F.3d 1387, 1390-91 (Fed. Cir. 2003). 

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The test for reliability is “fluid and contextual”; district courts have “‘broad latitude’ to 

‘decide how to test an expert’s reliability’ and ‘whether or not [an] expert’s relevant testimony is 

reliable.” Murray v. S. Route Maritime SA, 870 F.3d 915, 923 (9th Cir. 2017). “Reliable expert 

testimony need only be relevant, and need not establish every element that the plaintiff must 

prove.” Primano, 598 F.3d at 565. Testimony is relevant if it “will assist the trier of fact to 

understand or determine a fact in issue.” Cooper v. Brown, 510 F.3d 870, 942 (9th Cir. 2007). 

When expert opinion meets the reliability and relevance threshold, “the expert may testify and the 

jury decides how much weight to give that testimony.” Primano, 598 F.3d at 565. “Shaky but 

admissible evidence is to be attacked by cross examination, contrary evidence, and attention to the 

burden of proof, not exclusion.” Id. (quoting Daubert, 509 U.S. at 594, 596). 

B. Federal Rule of Civil Procedure 26 

Federal Rule of Civil Procedure 26 also applies to expert testimony. Rule 26(e) requires a 

party “who has responded to an interrogatory” to “supplement or correct its disclosure or 

response” “in a timely manner if the party learns that in some material respect the disclosure or 

response is incomplete or incorrect, and if the additional or corrective information has not 

otherwise been made known to the other parties during the discovery process or in writing.” Fed. 

R. Civ. P. 26(e)(1). Rule 37 “gives teeth” to Rule 26 requirements by “forbidding the use at trial 

of any information that is not properly disclosed” in discovery unless the failure was “substantially 

justified or harmless.” Goodman v. Staples The Office Superstore, LLC, 644 F.3d 817, 827 (9th 

Cir. 2011); Fed. R. Civ. P. 37(c)(1). Under Rules 26 and 37, an expert opinion may be excluded 

for including information not disclosed during fact or expert discovery. See, e.g., Goodman, 644 

F.3d at 827; Berman v. Knife River Corp., 687 F. App’x 616, 617 (9th Cir. 2017).

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 The party that 

failed to disclose information bears the burden to demonstrate that the failure was “substantially 

justified or harmless.” Torres v. City of L.A., 548 F.3d 1197, 1213 (9th Cir. 2008). 

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 As an unpublished Ninth Circuit decision, Berman is not precedent, but can be considered for its 

persuasive value. See Fed. R. App. P. 32.1; CTA9 Rule 36-3. 

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III. PHILIPS’S DAUBERT MOTIONS 

Philips seeks to exclude the testimony of Dr. Dunlop, Dr. Jakobsson, and Dr. Bulterman. 

According to Philips, all three experts introduced new theories in their rebuttal reports that were 

not disclosed during fact discovery. Philips also challenges the reliability of Dr. Jakobsson’s 

invalidity opinions on the grounds that they employ improper hindsight analysis. Because Philips 

agreed to stay all claims and defenses related to the ’913 Patent, which includes Dr. Dunlop’s 

opinions at issue, the Court DENIES Philips’s motion to exclude Dr. Dunlop’s testimony without 

prejudice to renewal if the Federal Circuit’s invalidity finding is reversed on banc or by the U.S. 

Supreme Court. The remaining expert opinions are addressed below. 

A. Dr. Jakobsson’s Invalidity Opinions

Philips seeks to exclude Dr. Jakobsson’s invalidity opinions for the ’809 Patent under 35 

U.S.C. § 103 (obviousness) on the basis that they employ improper hindsight reasoning. A patent 

is invalid for obviousness if “the differences between the subject matter sought to be patented and 

the prior art are such that the subject matter as a whole would have been obvious at the time the 

invention was made to a person having ordinary skill in the art to which said subject matter 

pertains.” 35 U.S.C. § 103. Importantly, “[a]n invention is not obvious simply because all of the 

claimed limitations were known in the prior art at the time of the invention.” Forest Labs., LLC v. 

Sigmapharm Labs., LLC, 918 F.3d 928, 934 (Fed. Cir. 2019). Instead, there must be “a reason, 

suggestion, or motivation in the prior art that would lead one of ordinary skill in the art to combine 

the references, and that would also suggest a reasonable likelihood of success.” Id. (quoting 

Smiths Indus. Med. Sys., Inc. v. Vital Signs, Inc., 183 F.3d 1347, 1356 (Fed. Cir. 1999)); see also 

In re Kotzab, 217 F.3d 1365, 1369-70 (Fed. Cir. 2000) (“Most if not all inventions arise from a 

combination of old elements . . . . [T]o establish obviousness based on a combination of the 

elements disclosed in the prior art, there must be some motivation, suggestion or teaching of the 

desirability of making the specific combination that was made by the applicant.”). 

Motivation to combine “can be found explicitly or implicitly in the prior art references 

themselves, in market forces, in design incentives, or in ‘any need or problem known in the field 

of endeavor at the time of invention and addressed by the patents.’” Forest Labs., 918 F.3d at 934 

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(quoting Arctic Cat Inc. v. Bombardier Rec. Prods. Inc., 876 F.3d 1350, 1359 (Fed. Cir. 2017)). 

However, the Federal Circuit has cautioned against using hindsight reasoning to “piece together 

elements to arrive at the claimed invention” using the patent itself. In re NTP, Inc., 654 F.3d 

1279, 1299 (Fed. Cir. 2011); see InTouch Techs., Inc. v. VGO Comms., Inc., 751 F.3d 1327, 1351-

52 (Fed. Cir. 2014) (rejecting as hindsight bias expert testimony that relied on the patent at issue 

as a “roadmap” for putting the “jigsaw puzzle” of prior art elements together); Grain Processing 

Corp. v. Am. Maize-Products Co., 840 F.2d 902, 907 (Fed. Cir. 1988) (“Care must be taken to 

avoid hindsight reconstruction by using ‘the patent in suit as a guide through the maze of prior art 

references, combining the right references in the right way so as to achieve the result of the claims 

in the suit.’” (citation omitted)). 

At the outset, the Court notes that this is not a typical hindsight analysis case. In NTP,

InTouch, and Grain Processing, the party challenging validity relied on the patent-at-issue to piece 

together the solution described by the patented invention. For example, in NTP, the Federal 

Circuit rejected a finding of obviousness based on a “piecemeal analysis” that selectively plucked 

missing elements from the prior art to arrive at the patented invention. 654 F.3d at 1298-99. 

Here, on the other hand, Dr. Jakobsson relies on the specification of the ’809 Patent to provide the 

problem motivating the combination of prior art. He opines that “[g]iven the object of invention” 

of the ’809 Patent, and “once the goal of the invention and problem to be solved are set forth,” the 

combination of prior art references would have been obvious. Dkt. No. 713-3 (“Jakobsson 

Report”) ¶ 154; see also id. ¶¶ 168 (“[A] POSITA would have been motivated to look closely at 

Willey to address concerns raised in the [’]809 Patent.”), 187 (opining that a POSITA facing the 

problem set forth by the ’809 Patent would combine the elements of the prior art), 212 (same), 251 

(same), 281 (same), 317 (same). Dr. Jakobsson does not independently consider or provide 

evidence that the problem described in the ’809 Patent was known in the art at the time of the 

invention. See Dkt. No. 713-5 (“Jakobsson Depo.”) at 92:19-93:7, 98:4-100:15, 102:1-9. 

Relying on the specification to supply a problem presumably poses less risk of hindsight 

bias than relying on it for the solution. Inventors typically invent solutions, not problems. 

Nevertheless, the Federal Circuit has recognized that “an invention can often be the recognition of 

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a problem itself.” Leo Pharma. Products, Ltd. v. Rea, 726 F.3d 1346, 1353 (Fed. Cir. 2013); see 

also Mintz v. Dietz & Watson, Inc., 679 F.3d 1372, 1377 (Fed. Cir. 2012) (“Often the inventive 

contribution lies in defining the problem in a new and revelatory way.”). In Leo Pharmaceutical 

Products, the Federal Circuit reversed a finding of obviousness for a composition comprising 

ingredients that were well-known in the art. Id. at 1353. Although a person of ordinary skill 

would have been “familiar” with each ingredient and would have known how to combine them in 

a composition, the Federal Circuit concluded that the inventors “recognized and solved a problem” 

involving the stability of existing compositions “that the prior art did not recognize.” Id. Since 

none of the prior art recognized the problem to be solved, “the record show[ed] no reason for one 

of ordinary skill in the art to attempt to improve [the prior art]” by adding additional ingredients 

and the invention was not obvious. Id. at 1354. 

Accordingly, since the inventive contribution may lie in “defining the problem in a new 

revelatory way,” relying on the specification of a challenged patent to supply the motivation to 

combine prior art presents impermissible hindsight bias.3

 See Insite Vision Inc. v. Sandoz, Inc., 

783 F.3d 853, 858-60 (Fed. Cir. 2015) (“Defining the problem in terms of its solution reveals 

improper hindsight in the selection of the prior art relevant to obviousness.”); Mintz, 679 F.3d at 

1377-78 (vacating invalidity finding where “[t]he district court has used the invention to define the 

problem that the invention solves”); see also Purdue Pharma L.P. v. Depomed, Inc., 643 F. App’x 

960, 966 (Fed. Cir. 2016) (“[T]o the extent that Purdue relies on the problem to be solved to 

supply the reason to combine the prior art, it failed to demonstrate . . . that the problem was known 

in the art or that Purdue’s formulation of the problem was derived directly from the prior art, 

rather than from the challenged claims.”). 

Philips’s motion is nevertheless overbroad in seeking to exclude the entirety of Dr. 

Jakobsson’s invalidity opinions. Dr. Jakobsson provides additional opinions concerning the 

motivation to combine prior art elements that do not rely on the ’809 Patent. For example, he 

3

 Of course, if the specification itself admits that either the problem or elements of the solution 

were known in the art, the parties may rely on the admission without additional analysis. See, e.g., NTP, 654 F.3d at 1297 (discussing “applicant’s admitted prior art”). Here, however, the 

specification does not suggest that its specific framing of the problem was previously known. 

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opines that the ISO 9798 and ISO 11770 standards themselves suggest making their combination 

and that Willey discusses the desirability of using public key certificates, such as those described 

in the specifications. Jakobsson Report ¶¶ 161, 164. Since these opinions rely on motivation to 

combine found in the prior art, they are both relevant and reliable in helping determine invalidity. 

See Forest Labs., 918 F.3d at 934 (motivation to combine may come from teachings in the prior 

art). Moreover, to the extent that ASUS can lay the foundation to show that the problem described 

in the ’809 Patent was known in the art, Dr. Jakobsson may testify that “given” that problem, a 

person of ordinary skill confronting the same challenge would have combined the prior art as 

stated. Thus, the Court GRANTS Philips’s motion to exclude Dr. Jakobsson’s invalidity opinions

to the extent that they rely on the ’809 Patent specification to supply the motivation to combine 

but DENIES the motion as to opinions regarding the teachings of the prior art references and the 

motivation to combine found outside of the ’809 Patent specification.

4

 

B. Dr. Jakobsson’s Noninfringement and Noninfringing Alternative Theories

Philips also moves to exclude the following theories disclosed in Dr. Jakobsson’s rebuttal 

expert report: (1) a noninfringement theory based on “additional steps” performed after the

locality check, (2) a noninfringing alternative theory based on “DTCP IP,” (3) a noninfringing 

alternative theory based on providing the first signal before the second device is determined to be 

compliant, and (4) a noninfringing alternative theory based on using a key exchange protocol. 

Dkt. No. 713-4 (“Jakobsson Rebuttal Report”) ¶¶ 83-84, 99-100, 101-02. Philips contends that 

none of these theories or alternatives were disclosed in ASUS’s interrogatory responses in 

violation of Federal Rule of Civil Procedure 26. 

 ASUS concedes that three of these theories were not disclosed in interrogatory responses 

and agrees not to introduce expert testimony regarding those theories. However, for the DTCP IP 

noninfringing alternative, ASUS contends that it disclosed that alternative in its interrogatory 

4 The parties dispute whether Philips disclosed the novelty of the problem solved by the ’809 

Patent in its validity contentions and whether the inventor of the ’809 Patent admitted that the 

problem was known in the art. Neither of those disputes is relevant to the question of whether Dr. 

Jakobsson’s opinion used reliable methods. In any case, Philips appeared to have sufficiently 

disclosed hindsight reasoning as part of its validity contentions and the inventor testimony is 

sufficiently contradictory to be best left for the parties’ cross-examination. 

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responses. Specifically, in response to Philips’s interrogatory number 16, ASUS stated that “the 

code could be modified to use DTCP IP for content protection for proximal devices rather than 

PlayReady-ND and MBDRM-ND.” Dkt. No. 713-11 (“ASUS ROG 16 Responses”) at 8-9. 

According to the parties, PlayReady-ND and MBDRM-ND were additional accused products that 

Philips withdrew prior to expert discovery. In other words, ASUS identified DTC IP as a 

noninfringing alternative for a different set of products than the ones currently accused. The 

currently-accused products (based on HDCP 2.x functionality) were separately addressed in the 

interrogatory responses. For those products, ASUS stated that code could be modified to remove 

HDCP 2.x functionality and rely on HDCP 1.x instead. Id. at 9. 

The Court finds that ASUS’s disclosures were not sufficient to disclose DTCP IP as a 

noninfringing alternative. ASUS’s responses clearly identify DTCP IP as a noninfringing 

alternative to the PlayReady-ND and MBDRM-ND products only. If ASUS intended to rely on 

the functionality as a noninfringing alternative to the currently-accused products, it was obligated 

to supplement its responses to clearly indicate its intention. See Fed. R. Civ. P. 26(e)(1)(A). 

Having failed to do so, ASUS denied Philips the opportunity to conduct fact discovery on the 

noninfringing alternative in relation to the currently-accused products and to perform full expert 

discovery on the theory. ASUS’s disclosure of the noninfringing alternative in relation to other

products is not sufficient; Philips was justified in relying on ASUS’s interrogatory responses in 

believing the theory was no longer relevant. Accordingly, ASUS fails to show that the violation 

of Rule 26 was substantially justified or harmless and exclusion applies. See Asia Vital 

Components Co., Ltd. v. Asetek Danmark A/S, 377 F. Supp. 3d 990, 1003-05 (N.D. Cal. 2019) 

(excluding theories disclosed in rebuttal expert report but not interrogatory responses); Apple, Inc. 

v. Samsung Elecs. Co., Ltd., No. 11-CV-01846-LHK, 2012 WL 3155574, at *5 (N.D. Cal. Aug. 2, 

2012) (same). The Court therefore GRANTS Philips’s motion to exclude Dr. Jakobsson’s new 

noninfringement and noninfringing alternative theories. 

C. Dr. Bulterman’s Noninfringement Theories 

Philips next moves to exclude noninfringement theories in Dr. Bulterman’s rebuttal expert 

report for the ’806 Patent on the ground that they were not disclosed in ASUS’s noninfringement 

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contentions. Contention interrogatories are a special type of discovery disclosure intended to 

“require parties to crystallize their theories of the case early in the litigation.” O2 Micro Int’l Ltd. 

v. Monolithic Power Sys., Inc., 467 F.3d 1355, 1364 (Fed. Cir. 2006). Contentions “act as forms

of pleading that disclose the parties’ theories of their case and thereby shape discovery and the 

issues to be determined at trial.” Apple Inc. v. Samsung Elecs. Co., No. 12-CV-0630-LHK PSG, 

2013 WL 3246094, at *3 (N.D. Cal. June 26, 2013). They do not, however, require parties to 

disclose specific evidence or prove their case. AntiCancer, Inc. v. Pfizer, Inc., 769 F.3d 1323, 

1331, 1338 (Fed. Cir. 2014); Finjan, Inc. v. Symantec Corp., No. 14-cv-02998-HGS (JSC), 2018 

WL 620169, at *2 (N.D. Cal. Jan. 30, 2018). Thus, in deciding whether to exclude expert 

testimony, “[t]he dispositive inquiry . . . [is] whether the allegedly undisclosed ‘theory’ is in fact a 

new theory . . . or whether the ‘theory’ is instead the identification of additional evidentiary 

proof.” Finjan, 2018 WL 620169, at *2; see also Apple Inc. v. Samsung Elecs. Co., Ltd., No. 

5:12-cv-0630-LHK-PSG, 2014 WL 12917334, at *1 (N.D. Cal. Jan. 9, 2014) (framing the 

question as “has the expert permissibly specified the application of a disclosed theory, or has the 

expert impermissibly substituted a new theory altogether”).

Here, the parties dispute whether the allegedly undisclosed noninfringement theories are, 

in fact, theories. Philips contends that ASUS failed to disclose (1) the theory and (2) the 

 theory of noninfringement. Because the parties dispute the characterization of

these theories, the Court looks at the underlying opinions in Dr. Bulterman’s report and compares 

them to ASUS’s final interrogatory responses. See Dkt. Nos. 766-2 (“Bulterman Report”); 766-3

(“ASUS ROG Response”).

Philips cites pages 129-132, 149-150 and 170 in Dr. Bulterman’s report for the 

theory. In these pages, Dr. Bulterman explains that the functionality is an

. Bulterman Report at 129. Because the asserted claims of the ’806 Patent 

require the client device to perform the downloading method, the accused products do not practice 

the claims when the . Id.

at 150. In its noninfringement contentions, ASUS disclosed that “Philips’ source-code contentions 

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do not correctly describe the functionality of the YouTube application, at least by failing to 

include the functionality of YouTube.” ASUS ROG Responses at 108. The Court finds 

that this response adequately put Philips on notice of ASUS’s theory that the accused products do 

not practice the claimed method when the functionality is enabled. Cf. Finjan, 2018 WL 

620169, at *2 (finding disclosures sufficient if they “provide reasonable notice” of “why the 

[party] believes it has a reasonable chance of proving” its case (quotation and citation omitted)).

Philips cites pages 30-31, 85, 96-103, and 122-123 of Dr. Bulterman’s report as evidence 

of the “ ” theory. In these pages, Dr. Bulterman rebuts Philips’s expert’s opinion

that the “protocol buffer file” is the “control information file” recited in the asserted claims 

because, among other reasons, it is not a file and does not contain information required for the 

“control information file.” Bulterman Report at 97. The Court finds that ASUS adequately 

disclosed this theory in its noninfringement contentions. Specifically, in its interrogatory 

responses, ASUS stated that the accused products do not satisfy the claims because they do not 

contain a “control information file.” ASUS ROG Responses at 107. Although ASUS’s responses 

do not mention “ ,” “ ,” or “protocol information file,” neither do Philips’s 

infringement contentions. See Dkt. No. 832-17 (“Philips Infringement Contentions”). Instead, Dr. 

Bulterman’s opinion appears to respond to Dr. Polish’s report that identifies the

 as the “control information file.” See Bulterman Report at 99-100.

Because ASUS had disclosed that the accused products do not have a “control information file,” 

Philips was put on notice that ASUS intended to argue that whichever components Philips accused

for this limitation did not meet the claim requirements.

Philips argues that even though ASUS disclosed these theories, it nonetheless failed to

disclose them in sufficient detail, citing KlausTech, Inc. v. Google LLC, No. 10-cv-05899-JSW 

(DMR), 2018 WL 5109383 (N.D. Cal. Sept. 14, 2018) and Thought, Inc. v. Oracle Corp., No. 12-

cv-05601-WHO, 2016 WL 3230696 (N.D. Cal. June 13, 2016). The current situation is different

from those cases, however. In KlausTech and Thought, the court rejected arguments that a party 

had “implicitly” disclosed certain accused components because it disclosed other components that 

included the accused components. See KlausTech, 2018 WL 5109383, at *4 (rejecting argument 

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that KlausTech implicitly disclosed “operating systems” as the claimed browsers where the term 

“operating system” did not appear in the contentions); Thought, 2016 WL 3230696, at *6 

(rejecting argument that Thought “implicitly” accused wrapped sessions where infringement 

contentions referred generally to TopLink functionality without mentioning wrapped sessions).

Here, on the other hand, ASUS expressly identified the “ ” functionality as preventing 

infringement and expressly argued that the accused products did not contain a “control information 

file.” These disclosures gave Philips “reasonable notice” as to why ASUS “believes it has a 

reasonable chance of proving” noninfringement and allowed it to structure its discovery and 

evidence in anticipation of ASUS’s arguments. See Finjan, 2018 WL 620169, at *2; Shared 

Memory Graphics LLC v. Apple, Inc., 812 F. Supp. 2d 1022, 1025 (N.D. Cal. 2010).

5

Accordingly, the Court DENIES Philips’s motion to exclude Dr. Bulterman’s “ ” and 

“ ” noninfringement theories.

IV. ASUS’S DAUBERT MOTION

ASUS seeks to exclude the opinions of Philips’s damages expert, Mr. Tate, on the ground 

that they are not reliable. Specifically, ASUS argues that Mr. Tate (1) did not conduct an 

independent economic assessment of the asserted patents and instead applied aspirational royalty

rates derived from Philips’s licensing program, without evaluating whether those rates were 

reasonable, (2) failed to apportion damages by relying on a hypothetical negotiation that includes 

unasserted patents, (3) failed to meaningfully assess the comparability of certain licenses, (4) 

ignored relevant data, and (5) failed to provide any evidence or analysis to support a “blended 

rate” royalty in his report. The Court agrees that Mr. Tate’s opinions are not helpful.

35 U.S.C. § 284 provides that damages for patent infringement shall be “adequate to 

compensate for the infringement” but “in no event less than the reasonable royalty for the use 

made of the invention by the infringer, together with interest and costs as fixed by the court.” 35

5 The parties discuss at length Philips’s fraught history of seeking discovery from Google Inc. The 

Court agrees with Philips that these disputes are “largely irrelevant” to the question of the 

adequacy of ASUS’s noninfringement contentions. The proper remedy for document production 

failure is to move to compel or to seek to exclude specific evidence not timely disclosed during 

fact discovery. See Civolution B.V. v. Doremi Labs, Inc., No. LA CV14-00962 JAK (RZx), 2015 

WL 11072167, at *2 (C.D. Cal. June 11, 2015). 

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U.S.C. § 284. The best measure of a reasonable royalty is an established royalty—i.e., the royalty 

that the patentee actually charges for the patent-in-suit—because it “removes the need to guess at 

the terms to which parties would hypothetically agree.” Monsanto Co. v. McFarling, 488 F.3d 

973, 978-79 (Fed. Cir. 2007). A patentee can demonstrate an established royalty by showing that 

it “has consistently licensed others to engage in conduct comparable to the defendant’s at a 

uniform royalty.” Id.; see also Trell v. Marlee Elecs. Corp., 912 F.2d 1443, 1446 (Fed. Cir. 1990) 

(requiring evidence that a royalty was “paid by such a number of persons as to indicate a general 

acquiescence in its reasonableness”). For example, in Monsanto, the patent owner showed that it 

consistently licensed farmers patent-protected seeds under a standard license agreement, and the 

Federal Circuit affirmed a jury award based on the royalty rates derived from that agreement, 

adjusted to account for license restrictions. 488 F.3d at 979-81. 

Where evidence of an established royalty is not available, the Federal Circuit has approved 

the use of a “hypothetical negotiation” framework that “attempts to ascertain the royalty upon 

which the parties would have agreed had they successfully negotiated an agreement just before 

infringement began.” Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d 1301, 1324 (Fed. Cir. 2009). 

The hypothetical negotiation framework “tries, as best as possible, to recreate the ex ante licensing 

negotiating scenario and to describe the resulting agreement.” Id. at 1325. A list of nonexhaustive factors for determining a reasonable royalty in a hypothetical negotiation is outlined in 

Georgia-Pacific Corp. v. U.S. Plywood Corp., 318 F. Supp. 1116, 1120 (S.D.N.Y. 1970), and 

includes an examination into the value of the patent, the parties’ economic circumstances, and 

comparable past licenses of the patent-in-suit. ResQNet.com, Inc. v. Lansa, Inc., 594 F.3d 860, 

869 (Fed. Cir. 2010). However, the Federal Circuit has cautioned against relying on noncomparable licenses and reversed damage awards based on “radically different” license 

agreements. Uniloc USA, Inc. v. Microsoft Corp., 632 F.3d 1292, 1316-17 (Fed. Cir. 2011) 

(summarizing cases); see, e.g., Lucent, 580 F.3d at 1325-32; ResQNet.com, 594 F.3d at 870-71. 

Here, Mr. Tate employs a hypothetical negotiation framework and analyzes the GeorgiaPacific factors. See Dkt. No. 742-3 (“Tate Report”) at 12. He also analyzes past licenses and 

settlement agreements, including ones that included the asserted patents. Id. at 13-40. However, 

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at the end of the analysis, he concludes that “the reasonable royalty in the hypothetical negotiation 

would be determined using the rates reflected in Philips’ Portable Features program.” Id. at 62. 

The Portable Features program is a licensing program set up by Philips in 2009 that bundles 

patents by feature set (e.g., “Touch Screen Interfaces”) that have associated royalty rates. Id. at 8. 

Each feature set includes one or more patents, which change over time as patents expire and new 

patents issue. Id. Under the program, a prospective licensee may enter into a “Blended Rate” 

agreement and pay Philips a flat rate of $0.99 for all of the patents in the program. Id. at 9. 

Alternatively, a licensee may enter into a “Discrete Rate” agreement to pay a smaller royalty rate

for only the patents in a particular feature set. Id. Under both types of agreements, the royalty rate 

is the same regardless of the number of patents the licensee ultimately uses. Id.

Using the information from the Portable Features program, Mr. Tate opines that ASUS 

could have selected either the blended rate or the discrete rate in a hypothetical negotiation. Id. at 

62. Mr. Tate then calculates the royalty obligation if ASUS had paid $0.99 for all patents in the

program, as well as if it had paid discrete rates for the four functional areas that it is accused of 

using. Id. Because the Portable Features program involves the same rate regardless of the number 

of patents used in each feature set, Mr. Tate opines that the reasonable royalty would be the same 

regardless of whether ASUS infringes one or multiple patents in a given feature set. See id. at 63; 

Dkt. No. 742-4 (“Tate Depo.”) at 155:1-15. And he concludes that the Georgia-Pacific factors 

would have no effect on the rates set by Philips. See id. at 127:17-128:1. ASUS criticizes this 

approach by claiming that it blindly adopts Philips’s aspirational royalty rates without tying those 

rates to the economic value of the patented technology. ASUS points out that 

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6 See id. at 54:9-55:24; Dkt. No. 742-6

(“Wieghaus Depo.”) at 70:10-72:23.

As an initial matter, because Philips advertises the Portable Features program royalty rates

to prospective licensees, they are properly considered offers to license. Offers to license (without 

6 The discrete rates also did not change as the asserted patents expired, which further suggests that 

they are not tied to the value of any patent. See Tate Depo. at 100:24-102:24.

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more) are not sufficient to demonstrate an established royalty rate. See Hanson v. Alpine Valley 

Ski Area, Inc., 718 F.2d 1075, 1078 (Fed. Cir. 1983) (requiring “actual licenses” to show an 

established royalty); Trell, 912 F.2d at 1446 (requiring “general acquiescence” to an established 

royalty rate). They may, nevertheless, be probative of reasonable royalty under a hypothetical 

negotiation framework where they are consistent with the “commercial value and profitability” of 

the patented technology. Atlantic Themoplastics Co., Inc. v. Faytex Corp., 5 F.3d 1477, 1482 

(Fed. Cir. 1993). However, their evidentiary value “is limited” by “the fact that patentees could 

artificially inflate the royalty rate by making outrageous offers.” Whitserve, LLC v. Comp. 

Packages, Inc., 694 F.3d 10, 30 (Fed. Cir. 2012). For this reason, multiple courts have excluded 

evidence of offers that lacked “indicia of reliability.” See, e.g., MLC Intellectual Prop., LLC v. 

Micron Tech., Inc., No. 14-cv-03657-SI, 2019 WL 2716512, at **13-15 (N.D. Cal. June 28, 2019)

(excluding offer made in the context of litigation); Wi-Lan Inc. v. LG Elecs., Inc., No. 18-cv01577-H-BGS, 2019 WL 5681622, at *7 (S.D. Cal. Nov. 1, 2019) (excluding “rate sheet” used as 

a starting point in negotiations where each negotiation ended at a lower rate); Apple Inc. v. WiLAN, Inc., No. 14CV2235 DMS (BLM), 2019 WL 4253832, at *2 (S.D. Cal. Mar. 26, 2019)

(affirming exclusion of rate sheets as prejudicial).

In line with those decisions, the Court finds that Mr. Tate’s damages opinions lack 

sufficient reliability to be helpful to the jury. Mr. Tate erred by taking Philips’s advertised rates as 

both the starting and the ending points of a hypothetical negotiation,

. See Dkt. No. 742-7 (“Tate Depo. II”) at 39:11-41:9. The 

purpose of the hypothetical negotiation framework is to approximate the fair market value of the 

patented invention. See Aqua Shield v. Inter Pool Cover Team, 774 F.3d 766, 770 (Fed. Cir. 

2014). By definition, the fair market value must reflect “the two-sided nature of the posited 

negotiation.” Id. at 771. As the Ninth Circuit explained in an analogous copyright context, “[f]air 

market value in a voluntary licensing transaction . . . ordinarily lies somewhere between the two 

poles of cost to the seller and benefit to the buyer.” Oracle Corp. v. SAP AG, 765 F.3d 1081, 1089 

(9th Cir. 2014). But Mr. Tate improperly assumed a one-sided negotiation where Philips dictates 

the terms of the hypothetical agreement based on its Portable Features program and ASUS 

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passively accepts them. Had he wished to rely on Philips’s advertised rates, Mr. Tate must have at 

least corroborated the reasonableness of those rates by tying them to the economic value of the 

invention, , or explaining 

why the rates are consistent with ASUS’s willingness to pay for the right to use the invention. Mr. 

Tate did none of this.

ASUS’s remaining critiques of Mr. Tate opinions underscore the lack of reliability. Mr. 

Tate did not conduct an independent economic analysis of the value of the asserted patents—

which shows that he cannot demonstrate that Philips’s rates are reasonable compared to the value

of the invention. Mr. Tate also did not “apportion” the value of the asserted patents compared to 

the unasserted patents in each portable feature set.

7 Among other concerns, this failure means that 

Mr. Tate cannot show the licenses he analyzes in his report are comparable to the current case. In 

particular, if Philips’s existing licensees use multiple patents in Philips’s Portable Features 

portfolio—or use patents having significantly greater value compared to the asserted patents—

they may have a different willingness to pay compared to ASUS in a hypothetical negotiation.

And even if Mr. Tate had shown that the licenses were comparable, 

, which does not support Mr. Tate’s conclusions that

ASUS would accept the discrete royalty rates in a hypothetical negotiation.8 See Tate Report at 

13-39.

Mr. Tate’s also fails to meaningfully consider the Georgia-Pacific factors. Although he 

lists the factors in his report, his analysis is conclusory and focuses on how those factors would

7 Apportionment requires damages in a patent case to “reflect the value attributable to the 

infringing features of the product, and no more.” Ericsson, Inc. v. D-Link Sys., Inc., 773 F.3d 

1201, 1226 (Fed. Cir. 2014). ASUS argues that Mr. Tate’s opinions violate the apportionment 

rule because they are based on a hypothetical license that includes the value of unasserted patents. 

Philips counters that Mr. Tate properly considered a negotiation for the asserted patents only, 

which happens to “throw in” additional patents. The Court finds that the parties’ dispute stems 

from the same failures as described above. A license that includes additional patents could be the 

result of a hypothetical negotiation if the asserted patents alone are worth the royalty rate. But Mr.

Tate failed to show that they are. And regardless of whether portfolio licenses violate the

apportionment rule, they make it exceedingly difficult to determine whether past licenses are 

comparable to the case-at-issue and may be excluded for that reason. See, e.g., DataQuill Ltd. v. 

High Tech Comp. Corp., 887 F. Supp. 2d 999, 1023 (N.D. Cal. 2011).

8 Mr. Tate withdrew his blended rate opinions during deposition. See Tate Depo. II at 28:10-33:3.

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“revise” the rates set by the Patent Portfolio program. See Tate Report at 41-63. Courts in this 

district have rejected similar analysis that begins with a “starting point” based on non-case specific 

data and then revises upward or downward based on the Georgia-Pacific factors. See Open Text 

S.A. v. Box, Inc., No. 13-cv-04910-JD, 2015 WL 349197, at *6 (N.D. Cal. Jan. 23, 2015) 

(rejecting approach that picks a starting point based on industry-wide data and revises upward or 

downward based on the Georgia-Pacific factors); Digital Reg of Tex., LLC v. Adobe Sys., Inc., No. 

C 12-1971 CW, 2014 WL 4090550, at *2 (N.D. Cal. Aug. 19, 2014) (cautioning that “a starting 

point should be tied to case-specific factors grounded in reliable data”); Dinetix Design Solutions,

Inc. v. Synopsys, Inc., No. C 11-05973 PSG, 2013 WL 4538210, at *4 (N.D. Cal. Aug. 22, 2013) 

(requiring a “case and party specific starting point”). Damages in a patent case must be tied to 

“the claimed invention’s footprint in the market place.” ResQNet.com, 594 F.3d at 869. Portfoliowide license rates are simply not a reasonable starting point for measuring the fair market value of 

an invention. See Golden Bridge Tech. v. Apple Inc., No. 5:12-CV-04882-PSG, 2014 WL 

4057187, at *2 (N.D. Cal. June 1, 2014); see also Exmark Mfg. Co., Inc. v. Briggs & Stratton 

Power Prods. Grp., LLC, 879 F.3d 1332, 1349 (Fed. Cir. 2018) (affirming exclusion of expert 

testimony that failed to tie Georgia-Pacific factors to resulting royalty rate).

At bottom, Mr. Tate improperly conflates an established royalty rate analysis with a 

hypothetical negotiation analysis. A licensing program cannot demonstrate an established royalty 

unless it enjoys “widespread acquiescence” from licensees. , Mr. Tate 

was required to recreate the hypothetical negotiation scenario “as best as possible” to approximate 

the bargaining power and willingness to pay of each party. Lucent Techs., 580 F.3d at 1324.

Instead, Mr. Tate assumed—without evidence—that Philips would dictate the terms through the 

Portable Features program, that ASUS would acquiesce to those terms without modification, and 

that the rates made sense in the context of the value of the infringing feature. These assumptions 

are unsubstantiated and therefore not reliable. Accordingly, the Court GRANTS ASUS’s motion 

to exclude Mr. Tate’s analysis as to the reasonable royalty in this case.

Nevertheless, the Court is cognizant that Philips is entitled to reasonable royalties in the 

event of infringement even if it has no evidence to proffer for that royalty. See Info-Hold, Inc. v. 

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Muzak LLC, 783 F.3d 1365, 1372 (Fed. Cir. 2015) (reversing summary judgment of zero royalties 

where patentee failed to prove damages); Dow Chem. Co. v. Mee Indus., Inc., 341 F.3d 1370, 1381 

(Fed. Cir. 2003) (rejecting conclusion that failure to prove damages means no damages could be 

awarded). Accordingly, since the jury will have to determine a reasonable royalty regardless, the 

Court finds that Mr. Tate’s opinions about the royalty base would be helpful in that regard and 

DENIES ASUS’s motion as to those opinions.

V. CONCLUSION 

For the reasons stated in this Order, the Court DENIES without prejudice Philips’s motion 

to exclude Dr. Dunlop’s opinions (Dkt. No. 711), GRANTS IN PART and DENIES IN PART

Philips’s motion to exclude Dr. Jakobsson’s opinions (Dkt. No. 713), DENIES Philips’s motion to 

exclude Dr. Bulterman’s opinions (Dkt. No. 766), and GRANTS IN PART and DENIES IN 

PART ASUS’s motion to exclude Mr. Tate’s opinions (Dkt. No. 742).

IT IS SO ORDERED. 

Dated: April 13, 2020 

 

HAYWOOD S. GILLIAM, JR. 

United States District Judge 

HAYWOOD S GILLIAM JR

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