UNITED STATES DISTRICT COURT FOR THE 

SOUTHERN DISTRICT OF FLORIDA 

MIAMI DIVISION 

Case Number: 20-23391-CIV- GOODMAN 

[Consent Case] 

ADT LLC; and The ADT Security 

Corporation, 

Plaintiffs/Counterclaim Defendants, 

v. 

Vivint Smart Home, Inc. f/k/a Mosaic 

Acquisition Corp.; and Legacy Vivint Smart 

Home, Inc. f/k/a Vivint Smart Home, Inc., 

Defendants/Counterclaimants. 

/ 

ADT’S OPPOSITION TO VIVINT’S 

MOTION TO EXCLUDE DR. ERIC MATOLO 

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Vivint’s sales representatives have misled numerous ADT customers into believing, among 

many other things: (1) that the agent is there to simply “update” or “upgrade” the ADT customer’s 

equipment, when in reality he or she is switching out the ADT system for Vivint’s; (2) that ADT 

has been bought out or is going out of business and/or that Vivint is taking over ADT accounts; 

and/or (3) that Vivint is a subcontractor, installer or is otherwise affiliated with or acting at the 

direction of ADT. Such misrepresentations allow Vivint to freeride on the goodwill of ADT, they 

harm ADT’s brand and reputation, and they lead ADT’s customers to do business with Vivint 

under false pretenses. In effect, Vivint took without permission a license to use the ADT brand in 

the market for its own profit in violation of both the Lanham Act and the common law of unfair 

competition. 

The Lanham Act broadly permits a plaintiff to recover for all forms of damage caused by 

the defendant’s unlawful conduct, including the defendant’s profits, “any damages sustained by 

the plaintiff,” and costs of the action. 15. U.S.C. § 1117(a). Consistent with this broad statutory 

language and in recognition of the Act’s express intent to protect parties “engaged in . . . commerce 

against unfair competition” and to “prevent fraud and deception in such commerce,” 15 U.S.C. § 

1127, courts in the Eleventh Circuit and elsewhere have recognized a wide breadth of available 

remedies, including royalty awards. See, e.g., Howard Johnson Co. v. Khimani, 892 F.2d 1512, 

1519-20 (11th Cir. 1990) (recognizing forced royalties as an appropriate measure of damages for 

Lanham Act violations). Here, ADT seeks to present the expert testimony of Dr. Eric Matolo 

regarding a royalty rate that should be paid by Vivint to account for its misconduct. Dr. Matolo’s 

proposed royalty rate is not hypothetical – it is based on market measures directly tied to how ADT 

shares revenue with its existing authorized dealers. Dr. Matolo’s opinion and methodology are also 

neither unique nor novel. Over the past decade Dr. Matolo and his colleague Dr. Russell Mangum 

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have presented virtually identical expert opinions employing the same methodology in numerous 

courts on behalf of ADT (including to this very Court in three separate cases), each of which have 

allowed those opinions and methodology to be presented to the jury. In fact, in 2017 Judge 

Middlebrooks allowed Dr. Mangum to present a virtually identical opinion using the exact same 

methodology in a prior identical case against Vivint. 

Vivint cannot (and has not even attempted to) argue that Dr. Matolo lacks the requisite 

knowledge, skill, experience and training to testify. Dr. Matolo’s opinions are plainly appropriate 

here as they will assist the jury in determining the proper amount of a royalty award to compensate 

ADT for its lost profits and to similarly disgorge Vivint’s wrongful gains. As this and other courts 

have previously found, his opinions are methodologically sound, and rooted in reliable facts and 

data supplied by real-world licensing arrangements already negotiated by ADT with hundreds of 

authorized dealers in the marketplace. Vivint offers no valid ground for exclusion of his opinions. 

Vivint’s motion should be denied. 

STANDARDS 

In performing its “gate-keeping” role, the Court is instructed to make a “preliminary 

assessment of whether the reasoning or methodology underlying the testimony is scientifically 

valid and of whether that reasoning or methodology can be applied to the facts at issue.” Daubert 

v. Merrell Dow Pharm., 509 U.S. 579, 592–93, 113 S.Ct. at 2796 (1993). Many factors may bear 

on this inquiry, but whether Daubert’s suggested indicia of reliability apply to any given testimony 

depends on the nature of the issue at hand, the witness’s particular expertise, and the subject of the 

testimony. See Kumho Tire Co., Ltd. v. Carmichael, 526 U.S. 137, 119 S.Ct. 1167, 1174-76 

(1999). Further,“[t]he presumption is that expert testimony is admissible, so that once a proponent 

has made the requisite threshold showing, further disputes go to weight, not admissibility.” 

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Simmons v. Ford Motor Co., 576 F. Supp. 3d 1136, 1140 (S.D. Fla. 2021). In exercising its 

“gatekeeping” role, therefore, the trial court “must remain chary not to improperly use the 

admissibility criteria to supplant a plaintiff’s right to a jury trial: ‘Vigorous cross-examination, 

presentation of contrary evidence, and careful instruction on the burden of proof are the traditional 

and appropriate means of attacking shaky but admissible evidence.’” Moore, 995 F.3d at 850

(quoting Daubert). The Eleventh Circuit has cautioned, “the rejection of expert testimony is the 

exception rather than the rule.” Moore v. Intuitive Surgical, Inc. 995 F.3d 839, 851 (11th Cir. 

2021) (reversing exclusion of expert and citing Fed. R. Evid. official notes). 

ARGUMENT 

I. Dr. Matolo’s royalty damages methodology is a recognized and accepted measure of 

Lanham Act damages in this Court, and numerous others. 

ADT alleges that Vivint in effect took without permission a license to use the ADT brand 

in the market for its own profit, in violation of both the Lanham Act and state law on unfair 

competition. A reasonable royalty based on market measures or a hypothetical negotiation can be 

a measure of actual damage in a trademark infringement case. See Sands, Taylor & Wood v. 

Quaker Oats Co., 34 F.3d 1340, 1350 (7th Cir. 1994) (“[O]ne measure of actual damages that, if 

ascertained with reasonable certainty, could be said to reflect the actual loss of [the trademark 

owner]--the cost of a reasonable royalty[.]”); Howard Johnson Co. v. Khimani, 892 F.2d 1512, 

1519-20 (11th Cir. 1990) (“The use of lost royalties to determine the actual damages incurred by 

a victim of trademark misuse is well established in this court.”); Source Perrier, S.A. v. Waters of 

Saratoga Springs, Inc., No. 81 CIV. 0178, 1982 WL 51044, at *5 (S.D.N.Y. Dec. 9, 1982) 

(awarding hypothetical royalty of 50% of the infringer’s net profits); Ramada Inns, Inc. v. Gadsden 

Motel Co., 804 F.2d 1562, 1565 (5th Cir. 1986) (noting that loss of royalty payments during the 

period of infringement is a proper measure of damages for the misuse of the mark); Go Medical 

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Industries PTY, Ltd. v. Inmed Corp. d/b/a Rusch International, Civil Action No. 1:01-CV-313, 

2005 U.S. Dist. LEXIS 19588, *16 (N.D. Ga. Jan. 25, 2005); Boston Prof’l Hockey Ass’n, Inc. v. 

Dallas Cap & Emblem Mfg., Inc., 597 F.2d 71, 78 (5th Cir. 1979) (upholding royalty award based 

on the rate offered by the plaintiff to the defendant prior to the defendant’s infringing conduct). 

The Khimani case states the controlling law of this Circuit with respect to the applicability 

of forced royalty damages in Lanham Act cases. There, plaintiff Howard Johnson sought damages 

for contempt of an injunction. Noting that “[t]he use of lost royalties to determine the actual 

damages incurred by a victim of trademark misuse is well established in [the Eleventh Circuit],” 

id. at 1519-20, the Khimani Court discussed at length the policies behind the use of an implied 

royalty theory of recovery to compensate the mark holder – among other reasons, the defendant’s 

misuse of the mark “takes advantage of perhaps the most significant benefit” of the mark holder’s 

brand name and “exploits the goodwill” of the mark holder in the market. Id. at 1520. “Likewise, 

any unfavorable reaction of the imitator’s patrons are likely to be attributed to the franchise as a 

whole and diminish its reputation.” Id. Accordingly, the Eleventh Circuit concluded, it is “not an 

abuse of discretion for the district court to use lost royalty payments to replicate the actual damages 

suffered by” the plaintiff. Id. 

This is exactly the measure of damages Dr. Matolo seeks to apply in this case. Further, 

unlike the many Lanham Act cases where the value of an avoided licensing agreement requires a 

fact finder to make assumptions as to the value of the “hypothetical” licensing arrangement that 

might have been reached with the wrongdoer, the value of a license to affiliate with ADT is actually 

known and well-established in this case. As Dr. Matolo explains, over 200 authorized ADT dealers 

have already negotiated a right to use the ADT name and trademarks in return for sharing a portion 

of the revenues generated by new accounts with ADT (and on the condition of abiding by ADT’s 

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rules). See Expert Report of Eric Matolo, PH.D. (“Matolo Rep.”), DE 119-116, ¶¶ 27, 32. 

Authorized dealers pay this to ADT not in the form of an express “royalty,” but instead by selling 

alarm accounts they generate on behalf of ADT to ADT at steep discounts to the actual value of 

the accounts. Also, in reaching agreements with its authorized dealers on revenue sharing, and 

based on actual data derived from those agreements, ADT developed and actually uses and relies 

upon an analytical model, called the “ADT Revenue Sharing Model,” to determine the portion of 

customer contract revenue retained by the dealer vs. the portion owed to ADT. Id. at ¶ 33. Thus, 

as Dr. Matolo opines, there is an established market rate that authorized dealers—i.e., those who 

validly license a right to affiliate with ADT—pay to ADT for use of its brand, name and 

trademarks. Id. at ¶¶ 27-36. That same rate is what Vivint should be required to pay for its 

unauthorized use of ADT’s name in violation of the Lanham Act. Id. 

Vivint’s Motion ignores Khimani. It also disregards this Court’s application of Khimani to 

Lanham Act cases involving claims of deceptive sales practices between alarm industry 

competitors – in other words, the exact set of facts present here. For example, in ADT LLC v. 

Alarm Protection LLC, Case No. 9:15-cv-80073 (S.D. Fla. May 9, 2017),Judge Rosenberg agreed 

that ADT’s request for a royalties measure of damages was proper in light of Khimani. Alarm 

Protection, 2017 WL 2212541 at 5*. Judge Rosenberg also agreed that while ADT’s dealers 

do not pay a royalty per se to ADT, the dealers pay ADT an implied royalty under the respective 

ADT dealer agreement (i.e., the ADT Revenue Sharing Model), and that this implied royalty (here, 

about 22 percent) was a fair measure of the value of the forced royalty that an unauthorized user 

of the ADT mark should pay as a consequence of the expropriation. See id., 2017 WL 2212541 at 

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*3-4.1 The methodology used by Dr. Matolo’s colleague in that case, Dr. Russell Mangum, was 

the exact same methodology that Dr. Matolo utilizes here. See id.

The same methodology was also approved by this Court in ADT’s prior litigation against 

Vivint. In ADT LLC and ADT US Holdings, Inc. v. Vivint, Inc., Case No. 9:17-cv-80432-

DMM/DLB, DE 170 (S.D. Fla. Nov. 15, 2017), Judge Middlebrooks permitted Dr. Mangum to 

testify regarding the same implied royalty rate sought here, including testimony as to Dr. 

Mangum’s reliance on the ADT Revenue Sharing Model to determine the appropriate implied 

royalty rate. See Judge Middlebrooks Order dated November 15, 2017, attached as Exhibit B. As 

acknowledged in Vivint’s Motion, Judge Middlebrooks’ only limitation on such testimony 

concerned the application of the royalty to the proportion of households in the market with the 

plaintiff’s alarm systems consistent with Mangum’s testimony, see Ex. B, which is exactly how 

Dr. Matolo’s royalty is applied in this case. 

Most recently, Judge Cannon fell in line with Judges Rosenberg and Middlebrooks when 

she denied a motion to exclude Dr. Matolo from providing expert testimony in support of damages 

sought by ADT against Safe Home (another competitor engaged in the same deceptive door-todoor sales practices at issue in this case). Judge Cannon held that Safe Home’s challenges to Dr. 

Matolo’s “forced royalty” theory of damages, at most, “go to the weight of Dr. Matolo’s opinions 

and can be probed more properly via the conventional means of cross-examination and contrary 

evidence.” See ADT LLC v. Safe Home Sec. Inc., Case No. 20-23918-CIV, 2022 WL 3702839, at 

*2 (S.D. Fla. June 21, 2022), attached as Exhibit C. 

1

 After issuing the initial order denying the defendants’ motion to exclude Mangum, the Honorable 

Robin Rosenberg also considered and rejected the defendants’ remaining legal arguments in ruling 

on defendants’ motion for summary judgment on the issue of a reasonable royalty award. ADT 

attaches this order as Ex. A, as it is by far the most comprehensive analysis of the propriety of 

royalty damages like those offered by Drs. Matolo and Mangum. 

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Other courts have also considered and rejected motions to exclude expert testimony 

virtually identical to the opinions and methodologies reflected in Dr. Matolo’s report, i.e., the 

appropriate amount of royalty percentage when an alarm company falsely affiliates with ADT by 

engaging in deceptive door-to-door sales that falsely suggest affiliation. See e.g., ADT LLC v. 

Capital Connect, Inc., No. 3:15-cv-02252, DE 409 (N.D. Tex. June 2, 2017) (paperless order 

denying motion to exclude Dr. Mangum); ADT LLC and ADT US Holdings, Inc. v. Alder Holdings 

LLC, et al., Case No. 9:17-cv-81237, DE 408 (S.D. Fla. June 30, 2019) (trial testimony of Dr. 

Mangum regarding reasonable royalty based on the same methodology used by colleague Dr. 

Matolo in this case). 

Bottom line: the complaints now levied by Vivint have been considered and repeatedly 

rejected by very intelligent, highly-respected judges on this Court. This case is no different. 

II. ADT’s existing revenue sharing model is an established market measure upon which 

an expert can rely, not a “theory” or “opinion” that itself must be tested, peerreviewed or generally accepted. 

Dr. Matolo will opine, as he and Dr. Mangum have previously opined in the numerous 

cases cited above, that ADT’s revenue sharing agreements and model are an appropriate “market 

measure” for determining a royalty rate applicable to Vivint. Dr. Matolo’s analysis focuses on the 

relationships between ADT and its existing network of authorized dealers, as those relationships 

demonstrate what ADT is willing to accept, and what dealers are willing to actually pay, for the 

use of ADT’s brand. This analysis employs a three-step process: (1) determining the effective 

royalty in ADT’s existing dealer revenue sharing model; (2) identifying necessary adjustments to 

that model to account for the unique aspects applicable to the present situation (i.e., Vivint’s 

unauthorized use of ADT’s name and brand); and (3) applying those adjustments to compute a 

royalty rate to be applied to Vivint’s sales revenues. 

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Dr. Matolo explains the full methodology used to calculate the royalty in his report, but his 

calculations can be distilled down to an intuitive process. As between ADT and its existing 

authorized dealers, each entity benefits from the relationship; the dealer retains some of the profits 

of accounts it generates, and so does ADT. In a typical arrangement, the dealer takes a cut of the 

up-front payments, as well as a cut of the recurring monthly revenue. (Generally, the more the 

dealer takes up front, the less percentage interest it will take in the recurring revenue). The upfront payment is based on a multiple of the monthly recurring revenue. Converting both up-front 

and residual revenues to a present value for a typical contract, ADT’s portion of new accounts 

yields a sharing of customer revenue between the dealer and ADT whereby ADT gets 37.6% and 

the dealer is paid the remainder, 62.4%. See Matolo Rep., DE 119-116, ¶ 36. These economics of 

the ADT/Dealer relationship are the basis of the ADT Revenue Sharing Model. It is not some 

contrived “expert” opinion that Dr. Matolo relies upon in rendering his opinions; it is an established 

economic model that ADT actually uses in the real world to run its authorized dealer business. 

To calculate what the appropriate “implied royalty” would be for a competitor that 

infringes ADT’s mark and falsely affiliates, Dr. Matolo then reduces the amount ADT typically 

retains in its relationship with authorized dealers by the costs ADT is not required to incur in an 

“unauthorized” use scenario – such as monitoring costs and additional costs to serve.2 After 

applying those reductions, Dr. Matolo calculated the amount of revenue ADT should retain for use 

of the ADT brand to be 22% of Vivint’s revenues generated from alarm monitoring, security and 

automation products/services, limited to door-to-door sales, during the relevant period. Again, Dr. 

Matolo’s 22% royalty rate is not based on hypotheticals or conjecture; it is rather an established 

2

 ADT would normally incur these costs under its Authorized Dealer agreements because ADT is 

the one monitoring and servicing the customer’s account. But here, because ADT and Vivint are 

competitors and Vivint has effectively stolen that customer from ADT, ADT does not incur costs 

to monitor and service that stolen account. 

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market measure, based on the amount ADT actually receives from authorized dealers for use of 

ADT’s brand.3 Judges Rosenberg, Middlebrooks and Cannon have all concluded that this is a 

reliable analysis a jury should hear. This Court should do the same. 

In its Motion, Vivint now complains that Dr. Matolo’s reliance on the ADT Revenue 

Sharing Model is somehow inappropriate because the model itself is an “opinion” or “theory” that 

must satisfy the reliability requirements for an independent expert opinion. First, as expressly 

acknowledged in the decisions of Judge Rosenberg and Judge Middlebrooks, the ADT Revenue 

Sharing Model reflects the actual economics of the agreements ADT has with its authorized 

dealers. The model is not a “theory.” Nor is it an “opinion.” The model is an existing business 

tool that allows ADT to calculate the Net Present Value (“NPV”) to ADT for any particular dealer 

relationship regardless of the amounts the dealer takes up-front versus through recurring revenue. 

The notion that the actual economic model used by ADT to calculate the compensation paid by 

dealers to affiliate with ADT must itself be a “reliable” expert opinion borders on the absurd. ADT 

uses this model to run its dealer business and has for many years. 

Second, not one of the cases cited by Vivint in support of its contention that the ADT 

Revenue Sharing Model is unreliable concern a royalty rate calculation, let alone an expert’s 

utilization of or reliance upon the actual economics of a party’s existing contractual relationships 

to extract a royalty rate. Rather, each case cited by Vivint concerns an expert’s theory or opinion 

3

 As one prominent treatise states, “In order to determine a reasonable royalty, a court should first 

look to any established royalty for the mark preexisting the infringement. In the absence of an 

established royalty, a court must base the reasonable royalty on a ‘hypothetical negotiation’ 

between a willing trademark owner and a willing licensee . . . . In conducting this hypothetical 

negotiation, a court may well want to consider the ‘Georgia-Pacific factors’ used in deriving a 

reasonable royalty in patent infringement litigation.” Terence P. Ross, Intellectual Property Law 

Damages & Remedies, § 4.03[2], 4-24 (emph. added). Here, as Dr. Matolo opines, it is not 

necessary to venture into any hypothetical negotiation between ADT and Vivint because there is 

already an established royalty in the marketplace between ADT and its 200+ authorized dealers. 

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that the Court concluded did not meet one of the traditional indicia of reliability. See e.g., Dishman 

v. Wise, Civil Action No. 7:08-cv-45 (HL), 2009 WL 1938968, at *3-5 (M.D. Ga. July 7, 2009) 

(in personal injury case, excluding opinion testimony by treating physician that a delay in diagnosis 

caused injuries due to lack of any medical literature, studies, or any other information supporting 

the opinion’s reliability); Affiliati Network, Inc. v. Wanamaker, No. 1:16-cv-24097-UU, 2017 WL 

7361048, * 7 (S.D. Fla. Aug. 14, 2017) (excluding expert testimony when damages calculation 

was solely based on purported “common practice” of dividing the number of chargebacks by the 

revenue on sales for one website and comparing figures to chargebacks and revenue figures of 

other affiliate websites); Benkwith v. Matrixx Initiatives, Inc., 467 F. Supp. 2d 1316, 1330 (M.D. 

Ala. 2006) (in toxic tort case, excluding opinion testimony by doctor regarding whether Zicam can 

reach olfactory epithelium when used as directed, and cause damage). 

Further, Vivint’s criticisms (see Motion at 6) that the economics reflected in the ADT 

Revenue Sharing Model (i) only apply to ADT, and (ii) have not been applied by other experts in 

other litigations, and (iii) are not available outside of ADT, reflect a fundamental misunderstanding 

of the data at issue and the purpose for which it is being used. It is axiomatic that ADT’s contractual 

relationships with its own dealers, and an expert’s reliance on the economics of those relationships 

as the basis for determining a reasonable royalty rate for wrongful affiliation, is limited to cases 

involving ADT. That is not to say that other courts and other experts have not relied upon an 

applicable party’s own licensing agreements (or comparable agreements) to determine royalty 

rates. To the contrary, such information is a recognized basis for determining royalty damages in 

all manner of industries. See, e.g., Georgia-Pacific Corp. v. U.S. Plywood-Champion Papers Inc., 

446 F.2d 295, 300 (2d Cir. 1971) (“We realize that no one can be sure what the parties would have 

done had they actually negotiated. But determination of an assumed royalty is in essence a device 

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for retroactively reaching a just result . . . .”); Ross, Intellectual Property Law: Damages and 

Remedies, § 4.03[2] at 4-24. 

More importantly, as explained by Judge Rosenberg in the Alarm Protection case, the 

economic relationship between ADT and its Authorized Dealers is “the economic functional 

equivalent of a royalty.” See Ex A. As in the Alarm Protection case, ADT is not now seeking 

compensation from a hypothetical system – ADT is seeking instead to recover damages from 

Vivint according to the same economic system by which revenue is and has been obtained from 

its own authorized dealers. ADT’s existing authorized dealer system licenses its dealers to use 

ADT’s name and marks in exchange for “the functional equivalent of a royalty.” Id. Judge 

Middlebrooks, citing to Judge Rosenberg’s reasoning in Alarm Protection, reached a similar 

conclusion in the prior 2017 Vivint case, holding that “whether or not the ADT dealer model is a 

proper reference point is a question for the jury and does not affect the evidence’s admissibility.” 

See Ex. B at 4. Both decisions concern the same ADT Revenue Sharing Model about which Vivint 

now complains. 

Vivint also argues that Dr. Matolo’s reliance on the ADT Revenue Sharing Model to 

calculate a reasonable royalty rate was inappropriate because the members of ADT’s finance team 

that developed the model for ADT’s business are not themselves “experts.” See Motion at 9. 

Vivint once again fundamentally misconstrues the purpose and substance of the model. The model 

reflects the actual economics of ADT’s past and present agreements with its dealers, i.e., it 

constitutes the established royalty rate to affiliate with ADT. As Terrence Ross explains, “In order 

to determine a reasonable royalty, a court should first look to any established royalty for the mark 

preexisting the infringement.” Ross, Intellectual Property Law: Damages and Remedies, § 4.03[2] 

at 4-24. (emphasis added). If such an established royalty exists, it is not necessary to then engage 

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in the speculative process of a “hypothetical” royalty negotiation under the Georgia-Pacific 

factors. See id. Here, the ADT Revenue Sharing Model is the measure and method actually used 

by ADT in its business to enter into agreements with dealers so that those dealers can use ADT’s 

brand and affiliate with ADT to sell alarm accounts. It is not a “theory” or the “opinion” of another 

expert. As a recognized market measure, Dr. Matolo’s use of the model to establish a reasonable 

royalty percentage for a violation of the Lanham Act is entirely consistent with royalty calculation 

jurisprudence, including the prevailing law in this Circuit. Dr. Matolo is not “parroting” ADT’s 

opinion, he is properly relying on ADT’s actual and current contractual relationships to reach his 

own expert conclusion applicable to Vivint in this case. 

III. Dr. Matolo is not required to “verify” ADT’s business data. 

Without identifying a single piece of data or any aspect of the ADT Revenue Sharing 

Model that Vivint contends is inaccurate, Vivint argues that the entirety of Dr. Matolo’s expert 

opinions in this case should be excluded on the basis that Matolo “undertook no substantive 

analysis of ADT’s data on his own, nor does he understand the cases and inputs ADT used in 

creating the model.”4 However, contrary to the implications of Vivint’s argument, “courts often 

conclude that experts are permitted to rely on information provided by clients without confirming 

the accuracy.” Companhia Energetica Potiguar v. Caterpillar Inc., No. 14-cv-24277, 2016 WL 

11547499, at *12–13 (S.D. Fla. June 13, 2016), R&R adopted, No. 14-24277-CIV, 2016 WL 

7497339 (S.D. Fla. Sept. 20, 2016). Rule 703 itself expressly recognizes, “An expert may base an 

opinion on facts or data in the case that the expert has been made aware of or personally observed.” 

Fed. R. Evid. 703. Thus in Caterpillar, when the defendant moved to exclude the plaintiff’s expert 

4

 Omitted from Vivint’s motion is the fact that Vivint noticed a 30(b)(6) deposition of ADT and 

included express topics on the factual bases underlying Dr. Matolo’s opinions. Vivint had more 

than a fair opportunity to examine the facts supplied by ADT to Dr. Matolo in that deposition. 

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for his failure to “independently verify” data provided by the client, Judge Goodman held that the 

issue went to the weight, not the admissibility, of the testimony. Judge Goodman explained: 

A party confronted with an expert accountant’s damages opinion is, of course, free 

to challenge the accuracy, completeness and relevance of the material provided to 

the expert during cross-examination (and in post-case motions and/or closing 

argument). If the information given to the expert accountant is incorrect, unreliable 

or speculative, then the jury will take that into consideration when deciding what 

weight, if any, to give the expert's conclusions. And if the information is incorrect 

enough (or speculative enough) to justify a case-dispositive ruling from the trial 

court, then the party challenging the expert’s conclusions will obtain the requisite 

relief. 

2016 WL 11547499, at *12–13 (citing numerous other authorities holding the same). 

Vivint cites three cases supposedly supporting its contention that Dr. Matolo’s failure to 

properly analyze ADT’s data renders his opinion inadmissible. But the cases cited say no such 

thing. In fact, as with the cases Vivint cited in support of its contention that the ADT Revenue 

Sharing Model is an “opinion,” the three cases Vivint claims require an expert to analyze client 

data do not actually deal with client data at all. Instead, each of the cited cases merely stand for 

the unremarkable proposition that an expert is not permitted to blindly rely on the opinions of other 

experts—a proposition that is frankly irrelevant to the issues here. See e.g., Mamani v. Berzain, 

No. 07-22459-CIV-COHN/SELTZER, 2018 WL 1090546, *4 (S.D. Fla. Feb. 28, 2018) 

(precluding an expert from blindly relying on the opinion of another expert); Sofillas v. Carnival 

Corp., Civil Action No 14-23920-Civ-Scola, 2016 WL 5407889, *4 (S.D. Fla. July 7, 2016) 

(same); MasForce Europe v. Mastyr Marine & Indus. Design, Inc., No. 8:11-CV-1814-T-24AEP, 

2013 WL 8148666, *4-5 (M.D. Fla. Aug. 27, 2013) (same). 

Ultimately, if Vivint takes issue with the accuracy of Dr. Matolo’s opinions, or the data 

that underlies his opinions, or even Dr. Matolo’s alleged lack of understanding of the data that 

underlies his opinions, Vivint may cross-examine Dr. Matolo at trial. (Indeed, Vivint has already 

spent several hours questioning ADT’s corporate representatives on those facts at deposition.) As 

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this very Court has explained, the jury can decide what weight, if any, to give Dr. Matolo’s 

calculations based on those issues, but this complaint is not a basis for exclusion. 

IV. Dr. Matolo’s opinion does not depend on the Representative Industry Model; it uses 

it only as a “check” on the ADT-specific model used to calculate the royalty applicable 

to Vivint. 

As discussed above, Dr. Matolo’s opinion that the appropriate royalty rate is 22% is based 

on the real-world licensing arrangements already negotiated by ADT in the marketplace that are 

represented by the ADT Revenue Sharing Model. In addition, and as a means of testing the validity 

of his conclusions, Dr. Matolo also performed a similar royalty analysis using a different model 

that was not tied exclusively to ADT’s dealer agreements. Deposition of Dr. Matolo (“Matolo 

Dep.”), DE 119-117, 182:14-22, 185:8-22. This model, called the Representative Industry Model, 

was developed by Dr. Matolo and his colleague Dr. Mangum. The model relies on multiple 

different market measures from various dealer programs in the alarm industry – as opposed to a 

singular revenue sharing model for a specific alarm service provider like ADT. Based on specific 

and reliable industry data drawn from revenue sharing arrangements for multiple dealer programs 

in the alarm services industry (revenue sharing data that Vivint does not appear to dispute), Dr. 

Matolo was able to determine an alternative royalty rate using the same methodology applied to 

the ADT Revenue Sharing Model. As noted in Dr. Matolo’s report, the data utilized for the 

Representative Industry Model resulted in an implied royalty rate that was in line with, but slightly 

higher than, the royalty rate using ADT data exclusively. Matolo Rep., DE 119-116, ¶ 47. 

Notwithstanding the fact that Dr. Matolo’s 22% Royalty Rate opinion does not actually 

reference or rely upon the higher royalty rate supported by the Representative Industry Model, 

Vivint seeks to exclude the entirety of Dr. Matolo’s opinion in this case for the mere fact that the 

Representative Industry Model is even mentioned. In support, Vivint points to the one case where 

the royalty rate opinion of Dr. Mangum has been excluded. In that case, CPI Security Systems, 

Case 1:20-cv-23391-JG Document 127 Entered on FLSD Docket 01/24/2023 Page 15 of 23
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Inc. v. Vivint Smart Home, Inc., 3:20-CV-0504-FDW-DSC (W.D. N.C. Jan 14, 2022), Dr. Mangum 

sought to apply a royalty rate derived solely from the Representative Industry Model for an alarm 

company that, unlike ADT, did not have its own dealer program and therefore did not have its own 

market measure from which to derive an appropriate royalty rate. Vivint complained in the CPI 

case that the Representative Industry Model was not properly tied to the actual economics of the 

specific alarm company at issue, CPI. The Court in CPI ultimately precluded Dr. Mangum’s 

testimony because, in the Court’s view, Dr. Mangum did not establish that the industry-wide data 

used to develop the Representative Industry Model was an appropriate market measure for a 

specific company (CPI) that did not itself have a dealer program. See Jan. 10, 2022 Hrg. Tr., CPI 

v. Vivint, No. 3:20-CV-00504 (W.D. N.C.), 20:19-27:8, 45:25-46:15, attached hereto as Exhibit 

D. 

Contrary to Vivint’s argument, the exclusion of Dr. Mangum in the CPI case has no bearing 

on the admissibility of Dr. Matolo’s opinions in this case. First, as discussed above, Dr. Matolo’s 

opinion supporting a 22% implied royalty rate is based on ADT’s specific agreements and 

relationships with its dealers and the ADT Revenue Sharing Model, not the Representative 

Industry Model at issue in CPI. Second, Dr. Mangum’s opinion in CPI was precluded specifically 

because unlike ADT, CPI did not have an existing dealer program from which direct licensing 

market measures could be derived. See id.; see also Matolo Dep., DE 119-117, at 232:5-9. There 

is no evidence that the CPI court took issue with the concept of deriving a royalty rate from 

evidence of a party’s own licensing agreements; in fact, the Court based its exclusion of Dr. 

Mangum on the fact that there was not an established rate specific to CPI and Dr. Mangum’s rate 

was based solely on an industry-wide model. 

In contrast, here the opinion expressed by Dr. Matolo, and the methodology applied by Dr. 

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Matolo to reach his opinions, is based on ADT’s own revenue sharing model. Dr. Matolo cites the 

Industry model only as verification that the ADT-specific model “checks out” when you compare 

it to other similar economic relationships between other providers and dealers in the industry. 

Matolo Dep., DE 119-117, 115:2-116:1-7, 182:14-22, 185:8-22. As Judges Rosenberg, 

Middlebrooks and Cannon each found, Dr. Matolo’s ADT-specific methodology is sufficiently 

supported and reliable to present to a jury. 

V. Dr. Matolo reliably applies his methodology to the facts of this case. 

Vivint’s final argument is that Dr. Matolo has not reliably applied his principles and 

methods to the facts of this case. More specifically, Vivint complains that because Dr. Matolo’s 

calculations supposedly fail to differentiate or quantify the Vivint subscribers that originated from 

ADT, a fact that is virtually undisputed because Vivint says it does not track its customers’ former 

providers, the calculations are “entirely divorced from the misconduct ADT alleges in this case.” 

Motion at 14. Vivint’s argument reflects both a fundamental misunderstanding as to the purpose 

of a royalty rate damages analysis, which does not tie application of the royalty to a sale-by-sale 

basis, and a refusal to acknowledge that any perceived difficulties with tying the royalty rate to 

specific instances of misconduct is the result of Vivint’s own obfuscation and self-serving refusal 

to disclose the true scope of its deceptive sales practices. The Court should reject Vivint’s recycled 

attempt to have the Court rule differently than Judge Middlebrooks already did in the first case. 

Throughout its Motion, Vivint points out that Dr. Matolo’s opinion and supporting exhibits 

are virtually identical to opinions and exhibits he and Dr. Mangum have offered in other ADT 

cases against other defendants. Based on these similarities, Vivint argues that Dr. Matolo’s royalty 

rate calculations are necessarily “divorced” from the facts of this particular case, meaning that 

somehow the royalty rate itself is dependent on the scope of Vivint’s misconduct, i.e., that the rate 

and methodology should somehow change depending upon the number of ADT customers 

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deceived by Vivint. See Motion at 14. However, as discussed in detail above, the royalty rate 

calculated by Dr. Matolo is derived from the existing market measure evidenced by ADT’s 

business arrangement with its own dealers. The rate has nothing to do with the number of times 

Vivint actually misuses ADT’s brand; rather, it is based on what the established rate is to have a 

right of affiliation with ADT—regardless of the number of times a given authorized dealer actually 

invokes ADT’s name. In other words: you either have a license to claim an affiliation with ADT, 

or you don’t. If you do, you (i.e., an authorized dealer) must pay the market rate to ADT for all 

accounts generated, regardless of the weight ADT’s name played in consummating any given sale. 

(Notably, all authorized dealers have exclusivity with ADT, requiring them to tender all contracts 

generated to ADT.) Here, having used ADT’s brand and name without permission, Vivint does 

not get to choose on the backend, after its unlawful conduct, in which specific transactions it 

actually used ADT’s name and which ones it didn’t—that would give Vivint the wrongdoer a 

better deal than ADT’s authorized dealers receive. As explained by Judge Rosenberg, the dealers 

pay ADT an implied royalty under the ADT dealer agreement (i.e., the ADT Revenue Sharing 

Model) which is a fair measure of the value of the forced royalty that an unauthorized user of the 

ADT mark should pay as a consequence of the expropriation. See Ex. B, 2017 WL 2212541 at *3-

4. 

Vivint also argues that Dr. Matolo should be precluded from testifying about his calculation 

of the royalty base. In doing so Vivint again wrongly suggests that Dr. Matolo’s analysis would 

result in payment of damages that were not actually attributable to Vivint’s misconduct. This is 

simply not true, for the same reasons noted above. And, Dr. Matolo’s analysis limits the applicable 

royalty base to the proportion of U.S. households with ADT alarm systems. In his report, Dr. 

Matolo opines: “With the targeting of ADT customers, market share data can be applied to isolate 

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the share of new sales potentially related to prior ADT customers.” Matolo Rep., DE 119-116, ¶ 

28 (emphasis added). In other words, Dr. Matolo would not apply the 22% royalty to all revenues 

generated by Vivint during the relevant time-period. Instead, just as Judge Middlebrooks 

previously recognized with respect to application of Dr. Mangum’s royalty rate in the prior action 

between these parties, Dr. Matolo adjusts the royalty base to account for the proportion of 

households in the market with ADT’s system.5

Finally, Vivint complains that Dr. Matolo’s analysis is deficient because he admits that he 

does not know the total number of new subscribers that were actually subjected to Vivint’s 

misconduct. See Motion at 15. Apart from ignoring that that information is irrelevant to the 

application of Dr. Matolo’s forced royalty, apparently lost on Vivint is the fact that such 

information is simply not available or it is exclusively in the possession of Vivint, and it has refused 

to produce it.6 As with its motion to exclude the testimony of ADT’s marketing expert Dr. Winer, 

5

 Again, Dr. Matolo’s analysis is in-line with the general concept of any licensing arrangement. A 

party subject to such an agreement is not permitted to reduce its royalty obligation based on its 

post-hoc contention that in a given particular sale it did not actually use the relevant license. And, 

for ADT, the agreements with its authorized dealers require exclusivity in tendering all accounts 

generated by the dealer to ADT. By applying the royalty rate to revenue gained only where ADT 

has market share and only in the amount of that market share, Dr. Matolo ensures that ADT is 

fairly receiving royalty in an amount tied to Vivint’s actual misconduct. See Matolo Dep., DE 

119-117, 252:11-21 (explaining that Matolo’s base calculation is limited “to the share of the 

market where the affiliation with ADT could be potentially relevant.”). 

6

 At the time Dr. Matolo rendered his report, Vivint had not provided any information about the 

volume of reports Vivint has received about deceptive sales conduct by its sales force, even though 

the academic literature is clear that Vivint would be the entity most likely to receive complaints 

about its salesforce’s conduct. Since that time, following this Court’s order compelling production, 

Vivint has produced a spreadsheet with over 75,000 complaint entries (what Vivint calls “feedback 

cases”). Vivint claims it investigates each such complaint and comes to a conclusion about the 

nature and validity of the complaint. Yet, Vivint has redacted the column in the spreadsheet it 

produced showing its conclusion classifying the respective complaints, despite this Court’s order 

overruling Vivint’s claims of privilege relating to such information. [See DE 62.] Other documents 

make clear that the information withheld would show how many complaints Vivint classified as 

“affiliation misrepresentations” or “slams,” terms it uses to refer to the same sales misconduct at 

issue in this case. At Vivint’s 30(b)(6) deposition, Vivint continued to claim it ‘just doesn’t know’ 

how many complaints about deceptive sales practices it has received from ADT customers and 

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Vivint now seeks to benefit from its refusal to monitor and record the misconduct of its sales 

representatives. Essentially, Vivint seeks to exclude Dr. Matolo’s testimony because Vivint has 

made it impossible to know who has been deceived. However, it is a fundamental tenet of damages 

law both generally and under the Lanham Act that where the tortfeasor’s conduct makes it difficult 

to pinpoint or prove the scope of damage, that difficulty is construed against the wrongdoer—not 

the victim—and does not preclude recovery. E.g., Story Parchment Co. v. Paterson Parchment 

Paper Co., 282 U.S. 555, 563 (1931). As stated in Ramada Inns, “Lanham Act damages may be 

awarded even when they are not susceptible to precise calculations.” 804 F.2d at 1565 (emphasis 

added). The court explained: 

Where the wrong is of such a nature as to preclude exact ascertainment of the 

amount of damages, plaintiff may recover upon a showing of the extent of damages 

as a matter of just and reasonable inference, although the result may be only an 

approximation. The wrongdoer may not complain of inexactness where his actions 

preclude precise computation of the extent of the injury. 

Id. (internal citations to Supreme Court precedent omitted); Howard Johnson Co., Inc. v. Khimani, 

892 F.2d 1512, 1520 (11th Cir. 1990) (same). By applying the royalty rate only to the portion of 

Vivint’s revenue based on its overlap with ADT’s actual market share, Dr. Matolo reasonably 

approximates the royalty base attributable to Vivint’s actions, subject to any rebuttal proof that 

Vivint may try to offer showing what specific accounts may not have been generated using ADT’s 

name and brand. The fact that Vivint purposely sticks its head in the sand, refuses to disclose 

which ADT customers reported deceptive sales practices to Vivint, and refuses to disclose the 

incidents Vivint itself determined to be valid based on its investigation of such reports does not 

serve as a basis for excluding such testimony. 

classified as slams or affiliation misrepresentations. Vivint’s refusal to provide such information 

in direct contravention of this Court’s orders does not supply a basis to exclude Dr. Matolo. 

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Significantly, Vivint’s argument is also contrary to the burden-shifting framework 

established by the Lanham Act related to disgorgement of Vivint’s profits. As Dr. Matolo opines, 

the amount Vivint avoided paying to rightfully license a right of affiliation with ADT represents 

both lost profits to ADT, and wrongfully obtained profits by Vivint. E.g., Matolo Rep., DE 119-

116, ¶ 52 (“[T]here is a connection between the avoided royalty discussed above and royalty 

revenue received by ADT. Whatever royalty was avoided by Defendants was at the same time lost 

to ADT. Thus, any calculation of avoided royalty is also a calculation of lost royalties . . . .”). 

Under the Lanham Act’s burden-shifting framework for disgorgement of a defendant’s profits, 

ADT is required to prove Vivint’s gross sales only, and it is Vivint’s burden to show which sales 

or other deductions should be applied to reduce that number. 15 U.S.C. § 1117(a) (“In assessing 

profits the plaintiff shall be required to prove defendant’s sales only; defendant must prove all 

elements of cost or deduction claimed.”); Hamilton-Brown Shoe Co. v. Wolf Bros. & Co., 240 U.S. 

251, 261 (1916) (holding where a plaintiff is unable to apportion profits specifically attributable 

to the infringement either “because of the action of the wrongdoer” or the “inherent impossibility 

of making an approximate apportionment,” that the issue should be resolved against the infringer); 

Wesco Mfg., Inc. v. Tropical Attractions of Palm Beach, Inc., 833 F.2d 1484, 1487-88 (11th Cir. 

1987) (“A plaintiff need not demonstrate actual damage to obtain an accounting of the infringer’s 

profits under section 35 of the Lanham Act. It is enough that the Plaintiff proves the infringer’s 

sales. The burden then shifts to the Defendant, which must prove its expenses and other deductions 

from gross sales.” (citations omitted)); Mishawaka Rubber & Woolen Mfg. Co. v. S.S. Kresge Co., 

316 U.S. 203, 206-07 (1942) (“The burden is the infringer’s to prove that his infringement had no 

cash value in sales made by him. If he does not do so, the profits made on sales of goods bearing 

the infringing mark properly belong to the owner of the mark. There may be a windfall to the tradeCase 1:20-cv-23391-JG Document 127 Entered on FLSD Docket 01/24/2023 Page 21 of 23
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mark owner where it is impossible to isolate the profits which are attributable to the use of the 

infringing mark. But to hold otherwise would give the windfall to the wrongdoer.”); Bigelow v. 

RKO Radio Pictures, 327 U.S. 251, 265 (1946) (“The most elementary conceptions of justice and 

public policy require that the wrongdoer shall bear the risk of the uncertainty which his own wrong 

has created.”). Thus, if Vivint takes issue with Dr. Matolo’s royalty base, the law charges Vivint 

with the burden of showing what deductions should be applied. Vivint’s refusal to identify the 

scope of confirmed reports of its only deceptive sales practices is construed against Vivint, not 

ADT, and does not support exclusion of Dr. Matolo’s opinion. 

CONCLUSION 

Vivint’s Motion to Exclude the Testimony of Dr. Eric Matolo should be denied. 

Dated: January 24, 2023 Respectfully submitted, 

SHOOK, HARDY & BACON L.L.P. 

s/ Jennifer A. McLoone

Jennifer A. McLoone 

Florida Bar No. 029234 

jmcloone@shb.com 

201 S. Biscayne Blvd., #3200 

Miami, Florida 33131 

Tel: (305) 358-5171 

Fax: (305) 358-7470 

-ands/ Charles C. Eblen 

Charles C. Eblen (admitted pro hac vice) 

ceblen@shb.com 

2555 Grand Blvd. 

Kansas City, Missouri 64108 

Tel: (816) 474-6550 

Fax: (816) 421-5547 

-andCase 1:20-cv-23391-JG Document 127 Entered on FLSD Docket 01/24/2023 Page 22 of 23
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s/ Daniel E. Rohner 

Daniel E. Rohner (admitted pro hac vice) 

drohner@shb.com 

Eric J. Hobbs (admitted pro hac vice) 

ehobbs@shb.com 

1660 17th Street, Suite 450 

Denver, Colorado 80202 

Tel: (303) 285-5300 

Fax: (303) 285-5301 

Counsel for Plaintiffs/Counterclaim 

Defendants ADT LLC and The ADT Security 

Corporation

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