IN THE UNITED STATES DISTRICT COURT 

FOR THE NORTHERN DISTRICT OF ILLINOIS 

EASTERN DIVISION 

COSTAR REALTY INFORMATION, INC., 

 Plaintiff, 

 v. 

CIVIX-DDI, LLC, 

 Defendant. 

Case No. 1:12-cv-04968 (Lead Case) 

Judge James F. Holderman 

CIVIX-DDI, LLC, 

 Plaintiff, 

 v. 

LOOPNET, INC., 

 Defendant. 

Consolidated for pretrial purposes with: 

Case No. 1:12-cv-07091 

Case No. 1:12-cv-08632 

JURY TRIAL DEMANDED

COSTAR’S AND LOOPNET’S MEMORANDUM IN SUPPORT OF THEIR 

DAUBERT MOTION TO EXCLUDE THE TESTIMONY OF FRANCES McCLOSKEY 

REDACTED - PUBLIC VERSION 
 i 

TABLE OF CONTENTS 

I. INTRODUCTION..............................................................................................................1

II. BACKGROUND. ...............................................................................................................1

III. THE DAUBERT STANDARD. .........................................................................................4

IV. MS. McCLOSKEY USED THE WRONG HYPOTHETICAL 

NEGOTIATION DATE. ...................................................................................................5

A. Ms. McCloskey Used Only 2011 Data To Calculate Damages. ..............................6

B. Ms. McCloskey Did Not Adjust For The Nine-Year Time Gap. .............................8

C. Ms. McCloskey’s Reasons For Relying Only On 2011 Data Fail. ..........................8

V. MS. McCLOSKEY’S COSTAR DAMAGES OPINION VIOLATES THE 

ENTIRE MARKET VALUE RULE. .............................................................................10

A. Ms. McCloskey Uses The Entire Value Of CoStar’s Products As The 

Royalty Base Despite No Evidence That The Patented Feature Is The 

Basis For Demand. .................................................................................................11

B. Ms. McCloskey Misunderstands The Entire Market Value Rule. .........................13

VI. MS. McCLOSKEY’S LOOPNET DAMAGES OPINION IS ARBITRARY. ...........14

VII. CONCLUSION. ...............................................................................................................16
 ii 

TABLE OF AUTHORITIES 

Cases

ActiveVideo Networks, Inc. v. Verizon Commc’ns, Inc., 

694 F.3d 1312 (Fed. Cir. 2012) ................................................................................................... 7 

AVM Techs., LLC v. Intel Corp., 

No. 10-610-RGA, 2013 WL 126233 (D. Del. Jan. 4, 2013) ..................................................... 13 

Avocent Huntsville Corp. v. ClearCube Tech., Inc., 

No. CV-03-S-2875-NE, 2006 WL 2109503 (N.D. Ala. July 28, 2006) ................................... 10 

Cornell Univ. v. Hewlett-Packard Co., 

No. 01-CV-1974, 2008 WL 2222189 (N.D.N.Y. May 27, 2008) ............................................... 5 

Daubert v. Merrell Dow Pharms., Inc., 

509 U.S. 579 (1993) ........................................................................................................... passim 

Dynetix Design Solutions, Inc. v. Synopsys, Inc., 

No. 5:11-cv-05973, 2013 WL 4538219 (N.D. Cal., Aug. 22, 2013) ........................................ 13 

Fromson v. W. Litho Plate & Supply Co., 

853 F.2d 1568 (Fed. Cir. 1988) ................................................................................................... 5 

Garretson v. Clark, 

111 U.S. 120 (1884) ............................................................................................................ 10, 13 

Integra Lifesciences I, Ltd. v. Merck KGaA, 

331 F.3d 860 (Fed. Cir. 2003) ................................................................................................. 5, 7 

Knorr-Bremse Systeme Fuer Nutzfahrzeuge GmbH v. Dana Corp., 

383 F.3d 1337 (Fed. Cir. 2004) ................................................................................................... 5 

Kumho Tire Co. v. Carmichael, 

526 U.S. 137 (1999) .................................................................................................................... 4 

LaserDynamics, Inc. v. Quanta Computer, Inc., 

694 F.3d 51 (Fed. Cir. 2012) .............................................................................................. passim 

Lewis v. Citgo Petroleum Corp., 

561 F.3d 698 (7th Cir. 2009) ....................................................................................................... 4 

Lucent Techs., Inc. v. Gateway, Inc., 

580 F.3d 1301 (Fed. Cir. 2009) ................................................................................. 5, 10, 11, 13 

Micro Chem., Inc. v. Lextron, Inc., 

317 F.3d 1387 (Fed. Cir. 2003) ................................................................................................... 4 
 iii 

Network Protection Scis., LLC v. Fortinet, Inc., 

No. C 12-01106 WHA, 2013 WL 5402089 (N.D. Cal. Sept. 26, 2013) ................................... 13 

Odetics, Inc. v. Storage Tech. Corp., 

185 F.3d 1259 (Fed. Cir. 1999) ................................................................................................... 7 

ResQNet.com, Inc. v. Lansa, Inc., 

549 F.3d 860 (Fed. Cir. 2010) ..................................................................................................... 5 

Riles v. Shell Exploration & Prod. Co., 

 298 F.3d 1302 (Fed. Cir. 2002) .................................................................................................. 5 

Uniloc USA, Inc. v. Microsoft Corp., 

632 F.3d 1292 (Fed. Cir. 2011) .......................................................................................... passim 

Wang Labs., Inc. v. Toshiba Corp., 

993 F.2d 858 (Fed. Cir. 1993) ..................................................................................................... 5 
1 

I. INTRODUCTION. 

CIVIX’s damages expert, Ms. Frances McCloskey, opines that appropriate damages in 

this case are reasonable royalties of from CoStar and from LoopNet. 

Her opinions, however, violate fundamental principles governing patent damages. First, 

although the date of first alleged infringement was mid-2002, Ms. McCloskey calculates both 

parties’ damages based exclusively on facts occurring a full nine years later, in 2011, which 

effectively results in her using the wrong hypothetical negotiation date. Second, Ms. McCloskey 

calculates CoStar’s damages as a percentage of total revenues, in contravention of the entire 

market value rule. Third, she calculates LoopNet’s damages based on an arbitrary metric that is 

belied by the very license upon which she relies. Because her opinions are based on methods 

that are unreliable and/or not reliably applied to the facts of the case, they must be excluded 

under Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 589 (1993). 

II. BACKGROUND. 

CIVIX accuses CoStar and LoopNet of infringing three patents: U.S. Patent Nos. 

6,385,622; 6,415,291; and 8,296,335 (“the ’622 patent;” “the ’291 patent;” and “the ’335 patent,” 

respectively). The parties agree that, if the patents are found valid and infringed, the appropriate 

measures of damages are lump-sum reasonable royalties, determined via construction of a 

CoStar-CIVIX hypothetical negotiation and a LoopNet-CIVIX hypothetical negotiation. (See

Ex. A,1

 November 25, 2013 Expert Report on Damages by Frances M. McCloskey, CPA, CFF, 

MBA (“McCloskey Report”), at 46-47; Ex. B, January 6, 2014 Rebuttal Expert Report of James 

E. Malackowski (“Malackowski Report”), at 56-57, 80). Likewise, the parties agree that 

 

1

 Cites to Exhibits in this Memorandum refer to Exhibits to the Declaration of Mary Zaug in 

Support of CoStar’s and LoopNet’s Daubert Motion to Exclude the Testimony of Frances 

McCloskey, filed concurrently herewith. 
 2 

CoStar/LoopNet and CIVIX would have negotiated a license to all three patents-in-suit, 

encompassing all accused products, at the same time. (See Ex. A, McCloskey Report, at 50-51; 

Ex. B, Malackowski Report, at 58, 80). Because CoStar and LoopNet already had accused 

products on the market when the ’622 and ’291 patents issued in May and July, 2002, 

respectively, the parties further agree that the correct hypothetical negotiation date is mid-2002. 

(See Ex. A, McCloskey Report, at 50; Ex. B, Malackowski Report, at 58). 

As of mid-2002, CIVIX had entered into licenses for the patents-in-suit. (See Ex. 

A, McCloskey Report, at App. D; Ex. B, Malackowski Report, at 30-31). Specifically, those 

agreements granted a license to 

. (See Exs. C-I, M). The 

“going rate” for a license to the patents-in-suit in the mid-2002 time frame was, on average, 

about : 

Date Licensee(s) Amount 

(Exs. C-K). 

Nevertheless, Ms. McCloskey’s opinion is that CoStar should pay a royalty of 

, and LoopNet should pay a royalty of , if they are found to infringe the 

patents-in-suit. (Ex. A, McCloskey Report, at 46). Ms. McCloskey calculates these royalties 
 3 

based on license agreements that CIVIX executed nine years after the hypothetical negotiation, 

in 2011. (See id. at 67-72). 

For LoopNet, Ms. McCloskey calculates damages as follows: 

(i)

(ii)

(iii)

(iv)

(v)

(vi)

(Id. at 68-70). Ms. McCloskey selects the high end of the range to arrive at her 

conclusion that is the appropriate damages figure for LoopNet. (Id.; see also Ex. L, 

McCloskey Dep. Tr., at 60, 179-80). 

For CoStar, Ms. McCloskey calculates damages as follows: 

(i)

(ii)

(iii)

(iv)

(v)

(vi)
 4 

Ms. McCloskey selects the high end of the range to arrive at her conclusion that 

 is the appropriate damages figure for CoStar. (Id. at 70-72; see also Ex. L, 

McCloskey Dep. Tr., at 59, 189-90).2

III. THE DAUBERT STANDARD. 

This Court has a gatekeeper obligation under Federal Rule of Evidence 702 to “ensure 

that any and all scientific testimony or evidence admitted is not only relevant, but reliable.” 

Daubert, 509 U.S. at 589; see also Kumho Tire Co. v. Carmichael, 526 U.S. 137, 147-49 (1999) 

(holding that the gatekeeping function applies to all expert matters subject to Fed. R. Evid. 702). 

A district court’s decision to admit expert testimony under Daubert 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). The burden is on the proponent of an expert to prove the admissibility of the expert’s 

opinions. Lewis v. Citgo Petroleum Corp., 561 F.3d 698, 705 (7th Cir. 2009). 

In a patent infringement case, the patentee bears the burden of proving damages. Uniloc 

USA, Inc. v. Microsoft Corp., 632 F.3d 1292, 1315 (Fed. Cir. 2011). A damages award may not 

rest on “speculative and unreliable evidence divorced from proof of economic harm linked to the 

 

2

 Ms. McCloskey’s Report suggests that she calculated damages a different way. 

 
 5 

claimed invention.” ResQNet.com, Inc. v. Lansa, Inc., 594 F.3d 860, 868 (Fed. Cir. 2010). 

“Where . . . sound economic and factual predicates are absent from a reasonable royalty analysis, 

a district court must exercise its discretion to exclude the proffered testimony.” Cornell Univ. v. 

Hewlett-Packard Co., No. 01-CV-1974, 2008 WL 2222189, at *2 (N.D.N.Y. May 27, 2008) 

(Rader, C.J., sitting by designation). 

IV. MS. McCLOSKEY USED THE WRONG HYPOTHETICAL NEGOTIATION 

DATE. 

According to well-settled Federal Circuit law, the date of the hypothetical negotiation for 

a reasonable royalty determination is the date that infringement first began.3 LaserDynamics, 

Inc. v. Quanta Computer, Inc., 694 F.3d 51, 75 (Fed. Cir. 2012). Use of the right “hypothetical 

negotiation date is essential for properly assessing damages” because the reasonable royalty 

“must relate to the time infringement occurred, and not be an after-the-fact assessment.” Id. 

(quoting Integra Lifesciences I, Ltd. v. Merck KGaA, 331 F.3d 860, 870 (Fed. Cir. 2003), and 

Riles v. Shell Exploration & Prod. Co., 298 F.3d 1302, 1313 (Fed. Cir. 2002)). 

The law does “permit[] and often requires a court to look to events and facts that occurred 

[after the hypothetical negotiation] and that could not have been known to or predicted by the 

hypothesized negotiators,” such as evidence of actual usage of the patented technology. Lucent 

Techs., Inc. v. Gateway, Inc., 580 F.3d 1301, 1333-34 (Fed. Cir. 2009) (quoting Fromson v. W. 

Litho Plate & Supply Co., 853 F.2d 1568, 1575 (Fed. Cir. 1988), overruled on other grounds by

Knorr-Bremse Systeme Fuer Nutzfahrzeuge GmbH v. Dana Corp., 383 F.3d 1337 (Fed. Cir. 

2004) (en banc)). But, the hypothetical negotiation must remain fundamentally grounded on the 

date of first infringement because “the purpose of the hypothetical negotiation framework [is] to 

 

3

 This rule applies even where, as here, the damages period begins at a later point due to lack of 

notice. Wang Labs., Inc. v. Toshiba Corp., 993 F.2d 858, 870 (Fed. Cir. 1993). 
 6 

discern the value of the patented technology to the parties in the marketplace when infringement 

began.” LaserDynamics, 694 F.3d at 76. That value can be determined only if primacy is given 

to the facts and circumstances that the parties faced when sitting across the bargaining table from 

one another on the hypothetical negotiation date. As the Federal Circuit explained, if the 

hypothetical negotiation analysis were to focus on a later date, “the damages analysis would be 

skewed because, as a legal construct, we seek to pin down how the prospective infringement 

might have been avoided via an out-of-court business solution.” Id. at 76. 

A. Ms. McCloskey Used Only 2011 Data To Calculate Damages. 

As detailed in Section I above, Ms. McCloskey calculated LoopNet’s damages based on a 

 from CIVIX’s licenses with . She calculated CoStar’s 

damages as , based on CIVIX’s licenses with . All of 

the inputs to those calculations are from 2011 or later: 

•

•

•

•

•

See Sec. I. Ms. McCloskey does not use a single data point from 2002 in arriving at her damages 

numbers. In effect, she used a hypothetical negotiation date of 2011. 

Although consideration of post-hypothetical negotiation date facts is, under some 

circumstances, permissible, Ms. McCloskey goes too far because she shuns all data from the 

time frame of the hypothetical negotiation. Her hypothetical negotiation looks exactly the same
 7 

as it would if the parties sat down at the bargaining table in 2011.4

 This is classic “after-the-fact 

assessment” that lacks any grounding in the hypothetical negotiation date mandated by Federal 

Circuit law. See LaserDynamics, 694 F.3d at 75. 

Indeed, the Federal Circuit has found reliance on post-hypothetical negotiation 

information–like the licenses that form the entire basis for Ms. McCloskey’s opinions–improper 

when such information reflects changed circumstances versus the date that infringement began. 

See id. at 77-78 (“Additionally, in light of the changing technological and financial landscape in 

the market for ODDs, the BenQ settlement, entered into a full three years after the hypothetical 

negotiation date, is in many ways not relevant to the hypothetical negotiation analysis.”); 

ActiveVideo Networks, Inc. v. Verizon Commc’ns, Inc., 694 F.3d 1312, 1332 (Fed. Cir. 2012) 

(“The Cablevision agreement post-dated the hypothetical negotiation by four years and the 

district court thus had a legitimate reason to exclude it.”); Integra Lifesciences, 331 F.3d at 870-

71 (rejecting damages based on a 1995 expectation of FDA drug approval because there was no 

such expectation as of a 1994 hypothetical negotiation date: “an earlier date will change the risks 

and expectations of the parties”); Odetics, Inc. v. Storage Tech. Corp., 185 F.3d 1259, 1276-77 

(Fed. Cir. 1999) (affirming the District Court’s finding that license agreements executed four and 

five years after the hypothetical negotiation were “much, much, too late” in view of the changing 

technology and financial landscape). Mr. Malackowski explained that, between 2002 and 2011, 

there were significant changes in the Internet-based search market, as well as in the financial 

condition of CoStar and LoopNet. (Ex. B, Malackowski Report, at 36-41). In her deposition, 

 

4

 During her deposition, Ms. McCloskey could not identify any way in which her analysis would 

change if the hypothetical negotiation date was 2011 instead of 2002. (Ex. L, McCloskey Dep. 

Tr., at 169-70, 172-73). 
 8 

Ms. McCloskey testified that she did not disagree with the facts set forth in those sections of Mr. 

Malackowski’s Report. (Ex. L, McCloskey Dep. Tr., at 212). 

B. Ms. McCloskey Did Not Adjust For The Nine-Year Time Gap. 

In her Report, Ms. McCloskey discusses a number of facts from 2002, and in her 

deposition, she testified that she attempted to “time adjust” for the period between 2002 and 

2011. (See, e.g., Ex. A, McCloskey Report, at 4, 9, 20, 36, 60-63; see also Ex. L, McCloskey 

Dep. Tr., at 157). But none of the 2002 facts in her Report affects her damages calculation in 

any way. (See Ex. A, McCloskey Report, at 67-72). Further, the three time gap “adjustments” 

that she identified amount to nothing. 

First, Ms. McCloskey testified that she 

 (Ex. L, McCloskey Dep. Tr., at 158). When pressed, however, Ms. 

McCloskey admitted that such an “adjustment” merely reflects the damages period; it does not 

adjust for the differences between 2002 and 2011 at all. (Id. at 158-59). Second, Ms. 

McCloskey testified that she 

 (Id. at 158; see also id. at 15-

18). Again, she made no actual adjustment to account for the 2002 hypothetical negotiation date. 

Third, Ms. McCloskey testified that she also 

 (Id. at 159). But again, in 

response to follow up questions, she admitted that such consideration does not, in fact, adjust for 

any differences between 2002 and 2011. (Id. at 160). 

C. Ms. McCloskey’s Reasons For Relying Only On 2011 Data Fail. 

In her Report and during her deposition, Ms. McCloskey tried to justify her reliance on 

2011 data to the exclusion of 2002 data. (See Ex. A., McCloskey Report, at 40-42; Ex. L, 
 9 

McCloskey Dep. Tr., at 146-57). Even if Federal Circuit law allowed calculation of a reasonable 

royalty based exclusively on facts occurring nine years after the hypothetical negotiation, Ms. 

McCloskey’s justifications conflict with the facts of record. 

Ms. McCloskey contends that, 

5

 (See Ex. L, McCloskey Dep. 

Tr., at 146-51, 156-57; Ex. A., McCloskey Report, at 40-42). But, it is undisputed that the pre2002 licenses granted rights in the patents-in-suit because they are continuations from the ’525 

patent. (See Exs. M, C-I). Moreover, Ms. McCloskey 

 (See Ex. L, McCloskey Dep. Tr., at 148-51). Indeed, at least licensees Mapquest and 

AOL had Internet-based products that pre-dated, and were thus covered by, their licenses. (See 

id. at 150-51; Exs. C & E). 

Ms. McCloskey also relies on the fact that the 2011 licensees are 

 (See Ex. L, McCloskey Dep. Tr., at 156-57; Ex. A., McCloskey Report, at 40-42). But 

Mr. Semple, CIVIX’s Managing Director, testified that 

 (Ex. N, Semple 5/23/07 Dep. Tr., p. 518, 531; see also Ex. L, McCloskey Dep. Tr., at

160-63). 

The bottom line is that Ms. McCloskey uses a hypothetical negotiation date of 2011, not 

2002. There is nothing about Ms. McCloskey’s damages calculation that reflects 2002. Because 

 

5

 In her Report, Ms. McCloskey states that 

 
 10 

her opinions are based on a legally flawed predicate, they are unreliable and must be excluded 

under Daubert. See Avocent Huntsville Corp. v. ClearCube Tech., Inc., No. CV-03-S-2875-NE, 

2006 WL 2109503, at *22 (N.D. Ala. July 28, 2006) (Excluding a damages expert’s testimony: 

“[h]e considered the parties’ financial results, as well as market conditions, in 1998, 1999, 2000, 

and early 2001, but he placed just as much, if not far greater emphasis, on post-infringement 

financial figures through the end of 2003. In doing so, Ratliff essentially eviscerated the Federal 

Circuit’s rule that hypothetical negotiations must be deemed to occur at the time of first 

infringement. This court cannot conclude . . . that he actually focused his analysis on the 

positions of the hypothetical negotiators during the November 2000 to February 2001 

timeframe.” (emphasis in original)). 

V. MS. McCLOSKEY’S COSTAR DAMAGES OPINION VIOLATES THE ENTIRE 

MARKET VALUE RULE. 

More than a century ago, the Supreme Court pronounced what we now refer to as the 

entire market value rule. In Garretson v. Clark, the Court held that, when a patent covers only a 

portion of the accused product, the patentee must either: (i) show that the entire value of the 

accused product is attributable to the patented feature; or (ii) apportion damages between the 

patented features and the unpatented features. 111 U.S. 120, 121 (1884). The Federal Circuit 

holds fast to that principle: “[t]he entire market value rule allows a patentee to assess damages 

based on the entire market value of the accused product only where the patented feature creates 

the ‘basis for customer demand’ or ‘substantially create[s] the value of the component parts.’” 

Uniloc, 632 F.3d at 1318 (quoting Lucent Techs., 580 F.3d at 1336). Otherwise, a royalty based 

on the value of the entire product “carries a considerable risk that the patentee will be improperly 

compensated for non-infringing components of that product.” LaserDynamics, 694 F.3d at 67. 
 11 

A. Ms. McCloskey Uses The Entire Value Of CoStar’s Products As The Royalty 

Base Despite No Evidence That The Patented Feature Is The Basis For 

Demand. 

The analysis of whether Ms. McCloskey violates the entire market value rule in this case 

is relatively straightforward. She uses as the royalty base in calculating 

CoStar’s damages. (Ex. A, McCloskey Report, at 72; Ex. L, McCloskey Dep. Tr., at 189-90; see 

also Sec. I). However, the accused products that generate 6 comprise both 

accused and substantial non-accused features and functionality. Ms. McCloskey does not 

contend that the accused searches form the basis for customer demand, nor does she apportion 

revenues between accused searches and non-accused features. 

Like the software programs at issue in Uniloc and Lucent, CoStar’s accused products are 

multi-faceted well beyond the particular features that CIVIX accuses of infringement: 

(See Ex. O, Semple CoStar Infringement Expert Report, at 41; Ex. P, CoStar Suite Brochure). 

Ms. McCloskey proffers no evidence that the accused searches, as opposed to non-accused (map-

 

6

 For the sake of simplicity, for purposes of this motion only, CoStar sets aside the fact that its 

 from sources other than the accused products. 
 12 

based) searches and/or non-search features are “the basis for customer demand” for the accused 

products. To the contrary, demand for the accused products is driven by the breadth and quality 

of verified commercial real estate information, not by any particular type of search deployed at 

the user interface. (See Ex. P, CoStar Suite Brochure). Nearly half the company’s 2000+ 

employees are professional researchers, whose job it is to continually provide CoStar’s 

customers with accurate and timely data. (See id.). Indeed, Ms. McCloskey 

 (Ex. A, McCloskey Report, at 35; see also id. at 30-35). In her deposition, Ms. 

McCloskey also acknowledged that 

 (Ex. L, McCloskey Dep. Tr., at 229-30). 

In her Report, Ms. McCloskey discusses 

 (See Ex. A, McCloskey Report, at 23-28, 54-57, 59; Ex. L, 

McCloskey Dep. Tr., at 229-30). But, she stopped far short of even suggesting that non-map 

searches are the basis for customer demand.7

 Federal Circuit precedent requires much more to 

trigger a patentee’s right to use the entire accused product as the royalty base under the entire 

market value rule. See, e.g., LaserDynamics, 694 F.3d at 68 (“It is not enough to merely show 

that the [patented feature] is viewed as valuable, important, or even essential to the use of the 

[product as a whole].”); see also AVM Techs., LLC v. Intel Corp., No. 10-610-RGA, 2013 WL 

 

7

 In her Report, Ms. McCloskey relies on 
 13 

126233, at *3 (D. Del. Jan. 4, 2013) (“Assuming for the sake of argument that dynamic logic 

circuits are the single most important part of Intel’s microprocessors, it is still a long haul to 

conclude that they ‘drive demand’ for the entire microprocessor.”). 

Therefore, Ms. McCloskey was under a duty to apportion between the 

accused (non-map searches) features and non-accused features. Having failed to do so, her 

CoStar damages opinion is unreliable under Daubert and must be excluded. See, e.g., Lucent, 

580 F.3d at 1334 (“The damages award can’t be supported by evidence that the infringers also 

used additional, non-infringing features.”); Uniloc, 632 F.3d at 1318 (explaining that, if the 

patentee cannot satisfy the entire market value rule, it “must in every case give evidence tending 

to separate or apportion the defendant’s profits and the patentee’s damages between the patented 

feature and the unpatented features”) (quoting Garretson, 111 U.S. at 121); Dynetix Design 

Solutions, Inc. v. Synopsys, Inc., No. 5:11-cv-05973, 2013 WL 4538210, at * 4 (N.D. Cal., Aug. 

22, 2013) (excluding damages expert’s opinions because he failed to apportion revenues between 

patented and non-patented features); Network Protection Scis., LLC v. Fortinet, Inc., No. C 12-

01106 WHA, 2013 WL 5402089, at *8 (N.D. Cal. Sept. 26, 2013). 

B. Ms. McCloskey Misunderstands The Entire Market Value Rule. 

During her deposition, Ms. McCloskey protested that her CoStar damages calculation 

does not violate the entire market value rule. (See Ex. L, McCloskey Dep. Tr., at 40-50, 58-60, 

190-95). Her explanations, though, reveal only that she does not truly understand the doctrine. 

First, she suggested that, 

 (Id. at 191). But, the case law makes clear that the entire market 

value rule applies to damages calculated as a as well. See, e.g., Uniloc, 

632 F.3d at 1318-1321 (rejecting a percentage of revenues reasonableness check). Second, she 

advanced the theory that 
 14 

 (Ex. L, McCloskey Dep. Tr., at 45-50, 58, 60). 

 (Id.). This rationale would eviscerate the entire market value rule, 

however, making a percent of total revenues or profits acceptable in every case because, in every 

case, That is decidedly 

not the law. 

VI. MS. McCLOSKEY’S LOOPNET DAMAGES OPINION IS ARBITRARY. 

Ms. McCloskey’s damages opinion for LoopNet is also unreliable under Daubert and 

should be excluded. As detailed in Section I above, she calculates LoopNet’s damages from 

 (See Ex. A, McCloskey Report, at 68-

70). In other words, she assumes that the royalties were based on 

 and are applicable to LoopNet on that basis. 

The license, however, says explicitly that the royalty was based on 

 (Ex. Q, 

CIVIX license, at ¶ 10). Ms. McCloskey cherry picks the first of these– –

and ignores all of the others. This approach conflicts with the license itself, which says 

that all metrics played a role in setting the royalty rate. 

 

8

 See Section V. 
 15 

The problem with using one of the metrics to the exclusion of the others is 

illustrated by the very disparate results that arise if LoopNet’s damages are calculated based on 

each of the individual metrics. For example, as Ms. McCloskey calculated, 

 

(Ex. A, McCloskey Report, at 68-70). But, use of 

9

 

Therefore, it is clearly improper to use one of the stated metrics to the exclusion of 

the others in Ms. McCloskey’s calculation of LoopNet’s damages based on the royalty 

amount. Ms. McCloskey made no effort whatsoever to understand–and account for–how each of 

the metrics affected the final royalty amount and, correspondingly, how each should affect 

the LoopNet royalty. Moreover, the license is entirely silent on the bases for 

royalty amount, leaving Ms. McCloskey’s metric without any support at all. In 

short, Ms. McCloskey’s calculation of LoopNet’s damages relies on a metric that is arbitrary. 

Her methodology is therefore not reliably applied to the facts of the case and is inadmissible 

under Daubert. 509 U.S. at 597; see Uniloc, 632 F.3d at 1315 (“If the patentee fails to tie the 

theory to the facts of the case, the testimony must be excluded.”). 

 

9

 For all four numbers, the equation is: [ ] divided by [ 

metric] times [LoopNet metric] times [LoopNet’s 3.5 year damages period]. 
 16 

VII. CONCLUSION. 

For the foregoing reasons, CoStar’s and LoopNet’s Daubert Motion to Exclude the 

Testimony of Frances McCloskey should be granted. 

DATED: March 24, 2014 Respectfully submitted, 

/s/ Craig D. Leavell 

 

 David C. Van Dyke 

Joseph W. Barber 

Emily E. Bennett 

HOWARD & HOWARD ATTORNEYS PLLC 

200 S. Michigan Avenue, Suite 1100 

Chicago, IL 60604 

Telephone: (312) 456-3641 

Facsimile: (312) 939-5617 

Email: dvd@h2law.com

jwbarber@howardandhoward.com

ebennett@howardandhoward.com

 Craig D. Leavell 

Mary E. Zaug 

Mishele Kieffer 

Jason Fitterer 

KIRKLAND & ELLIS LLP 

300 North LaSalle 

Chicago, IL 60654 

Telephone: (312) 862-2000 

Facsimile: (312) 862-2200 

Email: craig.leavell@kirkland.com

mary.zaug@kirkland.com

mishele.kieffer@kirkland.com

 jason.fitterer@kirkland.com
 17 

 Atif Khawaja (Pro Hac Vice) 

Robert A. Gretch (Pro Hac Vice) 

KIRKLAND & ELLIS LLP 

601 Lexington Avenue 

New York, NY 10022 

Telephone: (212) 446-4800 

Facsimile: (212) 446-4900 

Email: atif.khawaja@kirkland.com

robert.gretch@kirkland.com

Attorneys for 

CoStar Realty Information, Inc. & LoopNet, Inc.
CERTIFICATE OF SERVICE 

I hereby certify that on March 24, 2014, a true and correct copy of the foregoing 

document was served upon counsel of record via the Court’s CM/ECF procedures. 

 

Respectfully submitted, 

/s/ Craig D. Leavell 

 Craig D. Leavell 

Attorney for 

CoStar Realty Information, Inc. & LoopNet, Inc.