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TABLE OF CONTENTS 

Page 

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

II. BACKGROUND .................................................................................................................2

A. The Asserted Patents and Accused Products ...........................................................2

1. The ’702 Patent (-461 Action) .....................................................................2

2. The ’160 Patent (-454 Action) .....................................................................2

3. The ’902 Patent (-465 Action) .....................................................................3

B. WSOU’s Expert Reports ..........................................................................................4

1. Apportionment .............................................................................................4

2. Incremental Profits .......................................................................................5

III. LEGAL STANDARDS .......................................................................................................5

IV. WSOU’S REASONABLE ROYALTY OPINIONS SHOULD BE EXCLUDED. ............7

A. Dr. McClellan’s Technical Apportionment Analysis for the ’702 Patent

Based on Aruba ClearPass Is Conclusory And Should Be Excluded. .....................7

B. Dr. McClellan Failed To Apportion Out Non-Patented Features Of The

Accused Products For The ’160 And ’902 Patents. ...............................................13

1. The ’160 Patent ..........................................................................................13

2. The ’902 Patent ..........................................................................................15

C. Messrs. Blok’s And Bratic’s Incremental Profits Analysis Is Not Tied

To The Patents-In-Suit Or To The Accused Products. ..........................................17

V. CONCLUSION ..................................................................................................................20

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TABLE OF AUTHORITIES 

 Page(s) 

Cases 

CloudofChange, LLC v. NCR Corp., 

6:19-CV-00513-ADA (W.D. Tex. Nov. 9, 2021) ........................................................10, 11, 12 

Daubert v. Merrell Dow Pharm., Inc., 

509 U.S. 579 (1993) ...............................................................................................................6, 7 

Droplets, Inc. v. Yahoo, Inc., 

Case No. 12-cv-03733-JST (N.D. Cal. Jan. 12, 2022) .......................................................19, 20 

Elder v. Tanner, 

205 F.R.D. 190 (E.D. Tex. 2001) ...............................................................................................6 

Ericsson, Inc. v. D–Link Sys., Inc., 

773 F.3d 1201 (Fed. Cir. 2014)................................................................................................16 

Exmark Mfg. Co. Inc. v. Briggs & Stratton Power Prods. Grp., LLC, 

879 F.3d 1332 (Fed. Cir. 2018)..............................................................................10, 13, 14, 16 

Finjan, Inc. v. Blue Coat Sys., Inc., 

879 F.3d 1299 (Fed. Cir. 2018)..........................................................................................15, 16 

Guardant Health, Inc. v. Found. Med., Inc., 

No. CV 17-1616-LPS-CJB, 2020 WL 2461551 (D. Del. May 7, 2020), report 

and recommendation adopted, No. CV 17-1616-LPS-CJB, 2020 WL 5994155 

(D. Del. Oct. 9, 2020) ..............................................................................................................10 

Knight v. Kirby Inland Marine Inc., 

482 F.3d 347 (5th Cir. 2007) .....................................................................................................6 

Kumho Tire Co. v. Carmichael, 

526 U.S. 137 (1999) ...................................................................................................................6 

LaserDynamics, Inc. v. Quanta Comput., Inc., 

694 F.3d 51 (Fed. Cir. 2012)....................................................................................................10 

MLC Intell. Prop. LLC v. Micron Tech., Inc., 

10 F.4th 1358 (Fed. Cir. 2021) ....................................................................................14, 15, 16 

NetFuel, Inc. v. Cisco Sys. Inc., 

Case No. 5:18-cv- 02352-EJB, 2020 WL 1274985 (N.D. Cal. Mar. 17, 2020) ......................10 

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Niazi Licensing Corp. v. St. Jude Med. S.C., 

No. 2021-1864, __ F.4th __, 2022 WL 1072909 (Fed. Cir. Apr. 11, 2022) ......................14, 16 

Summit 6, LLC v. Samsung Elecs. Co., 

802 F.3d 1283 (Fed. Cir. 2015)..............................................................................................6, 7 

Uniloc USA, Inc. v. Microsoft Corp., 

632 F.3d 1292 (Fed. Cir. 2011)................................................................................................18 

United States v. Hicks, 

389 F.3d 514 (5th Cir. 2004) .....................................................................................................7 

United States v. Valencia, 

600 F.3d 389 (5th Cir. 2010) .....................................................................................................6 

Other Authorities 

Fed. R. Evid. 104(a) .........................................................................................................................7 

Fed. R. Evid. 702 .............................................................................................................................1 

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I. INTRODUCTION

Defendant Microsoft Corporation (“Microsoft”) hereby moves to exclude certain

damages-related opinions of Plaintiff WSOU’s experts, Dr. Stan McClellan and Messrs. Justin 

Blok and Walter Bratic, under Federal Rule of Evidence 702. In these three related cases, 

WSOU’s damages experts, Messrs. Blok and Bratic, have offered opinions through their expert 

report setting forth proposed damages related to Microsoft’s alleged infringement of three 

patents-in-suit1

 in the form of reasonable royalties. Their analysis suffers from at least two 

defects that render their opinions unreliable and correspondingly inadmissible. 

First, Messrs. Blok’s and Bratic’s jointly proposed reasonable royalties are not properly 

apportioned as to the patented inventions. For the ’702 patent, they rely on the arbitrary and 

unreliable technical apportionment opinion of Dr. McClellan, WSOU’s technical expert. Dr. 

McClellan set forth no replicable methodology for his analysis, which rests on a vague, arbitrary 

set of features for an unaccused product. Indeed, he concedes that there is no articulable 

methodology. This cannot support a reasonable royalty opinion. For the ’160 and ’902 patents, 

neither Dr. McClellan nor Messrs. Blok and Bratic perform any apportionment analysis, even 

though the accused products have both allegedly infringing and incontestably non-infringing 

features. This failure to apportion undermines the proposed royalty determination. 

 Second, Messrs. Blok and Bratic derive their reasonable royalty by applying an untested 

and arbitrary allocation of incremental profits between Microsoft and licensors of the asserted 

patents in a hypothetical negotiation. By using Microsoft’s company-wide R&D-to-operating 

1

 The three patents at issue in these cases (collectively, the “asserted patents” or “patents-insuit”) are: U.S. Patent Nos. 7,106,702 (“the ’702 patent”), 7,366,160 (“the ’160 patent”), and 

8,274,902 (“the ’902 patent”). 

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expense ratio, Messrs. Blok and Bratic fail to sufficiently tie their analysis to the patents-in-suit, 

the accused products, or any facts of these cases. 

Accordingly, the Court should exclude Dr. McClellan’s technical apportionment analysis 

and Messrs. Blok’s and Bratic’s reasonable royalty analysis. 

II. BACKGROUND 

A. The Asserted Patents and Accused Products 

1. The ’702 Patent (-461 Action)

The ’702 patent describes a system for bringing a backup server having authentication, 

authorization, and accounting (AAA) functions online when a server that performs AAA 

functions is disconnected. See, e.g., ’702 Patent, Abstract, 1:25-26, 2:7-16. In the -461 Action, 

WSOU has accused Network Policy Server (“NPS”), a feature of Windows Server, of infringing 

the ’702 patent.2

 NPS is Microsoft’ implementation of a RADIUS server. The RADIUS 

protocol is a common AAA protocol and a RADIUS server (which would run according to the 

AAA protocol) is an example of a AAA server. 

2. The ’160 Patent (-454 Action)

The ’160 patent seeks to predict when a service on a network (e.g., a video call) will fail. 

Specifically, the ’160 patent describes monitoring and measuring multiple “parameters of a 

network.” ’160 Patent, 2:67-3:3. The patent suggests that these parameters are network-health 

metrics specified in a Service Level Agreement and extrapolated or calculated from directly2

 Dr. McClellan’s infringement report refers to “Network Policy and Access Services” (NPAS), a 

“role” which includes NPS, and included additional features in older versions of Windows 

Server. (See McClellan 702 Inf. Rept., ¶10.) 

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measured network-health metrics – e.g.,“packet loss” is a parameter of a network, determined 

from directly-measured network-health metrics such as the count of packets in and packets out. 

In the -454 Action, WSOU accuses Microsoft’s Azure Monitor of infringing the ’160 

patent. Azure Monitor is a collection of network monitoring functions, services, and resources 

within Microsoft Azure, a cloud platform. https://azure.microsoft.com/enus/services/monitor/#features. Microsoft Azure offers many services, including database and 

storage services, networking, and specialized services for application development, machine 

learning and artificial intelligence, internet over things, mixed reality, game development, 

business insights, and virtual desktops. (See Coates 160 Rebuttal Rept., ¶¶35-37.) Azure 

Monitor, in turn, is a small feature that supports the services that draw users to Azure by also 

allowing them to collect and analyze the data that their services generate. (Id., ¶38.) At a high 

level, Azure Monitor collects two types of data: metrics and logs. (Id., ¶40.) As described in 

further detail below, logs are indisputably not addressed or covered by the ’160 patent. 

3. The ’902 Patent (-465 Action) 

The ’902 patent is directed to estimating the performance of links (e.g., connections 

between servers, routers, base stations) on the “inside” of a network based on measurements 

taken from nodes on the “end” of that network (e.g., mobile phones). In particular, the ’902 

patent is focused on a mechanism whereby a single “point” (e.g., a computer) on the network 

measures the “packet loss rate” of end points and uses those measurements to estimate the packet 

loss rates of network connections or “links” on the inside of the network. 

In the -465 Action, WSOU accuses Azure Monitor, Network Performance Monitor 

(“NPM”), and Network Watcher of infringing the ’902 patent. Like Azure Monitor, NPM and 

Network Watcher are small services within the Azure cloud platform. Azure Monitor and 

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Network Watcher are separate monitoring software. Azure Monitor performs a more general 

function by “collect[ing] data . . . from Azure platform and resources, custom applications, and 

agents running on virtual machines” while Network Watcher performs a more specific function 

by “provid[ing] tools to monitor, diagnose, view metrics, and enable or disable logs for resources 

in an Azure virtual network.” (Coates 902 Rebuttal Rept., ¶37 (citing McClellan 902 Inf. Rept., 

¶¶20-21).) NPM allows a user to measure specific types of data between two points on a 

network. For example, NPM allows a user to monitor packet losses and latency across a variety 

of computing environments. (Id., ¶¶39-41.) As discussed in further detail below, monitoring 

latency is indisputably not covered by the ’902 patent. 

B. WSOU’s Expert Reports 

1. Apportionment

In their joint damages report, Messrs. Blok and Bratic rely on the technical analysis of 

Dr. McClellan for a number of purposes. As part of their purported apportionment analysis, 

Messrs. Blok and Bratic asked Dr. McClellan to weight the features and functionalities in a third 

party product, Aruba ClearPass (which implements the RADIUS protocol), and to provide a 

weighting of relative technological contributions of the ’702 Patent to the features he identified. 

(See Blok Rept., Appendix B, ¶167.) Based on Dr. McClellan’s opinion, Messrs. Blok and 

Bratic then assume that 91.5 percent of the overall benefits and functionalities provided by 

Aruba ClearPass are comparable to the benefits provided by the ’702 Patent. Messrs. Blok and 

Bratic apply this 91.5 percent figure in their damages calculations. (See, e.g., id., Appendix B, 

¶¶167-70.) But as detailed below, Dr. McClellan’s opinions as to ClearPass are facially 

conclusory and not based on any replicable, reliable methodology. 

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For the ’160 and ’902 patents, neither Dr. McClellan nor Messrs. Blok and Bratic 

perform any apportionment at all. Instead, Messrs. Blok and Bratic rely on Dr. McClellan’s 

conclusory assertions that the patents cover the entirety of the accused products. (See, e.g., id., 

Appendix A at ¶¶161-62.) As explained below, however, Dr. McClellan’s own deposition 

testimony indicates that this is not true even under his infringement theories, such that failure to 

apportion renders the reasonable royalty opinions of Messrs. Blok and Bratic inadmissible under 

Rule 702. 

2. Incremental Profits

In deriving their proposed reasonable royalties as to every asserted patent, Messrs. Blok 

and Bratic apply the ratio of Microsoft’s research and development (“R&D”) expenses to 

operating expenses (the “R&D-to-operating expenses ratio”). (Blok Rept., Appendix A, ¶181, 

Appendix B, ¶183.) They assert that “it is reasonable to expect that the parties [to the 

hypothetical negotiation] would have considered Microsoft’s R&D-to-operating expenses ratio 

in order to determine how to split the incremental benefits Microsoft obtained from practicing” 

the asserted patents. Id., Appendix A, ¶183., Appendix B, ¶185. Messrs. Blok and Bratic then 

use Microsoft’s company-wide R&D expenses to operating expenses ratio to divide the alleged 

incremental profits for the accused services between the patent owner and Microsoft, rather than 

any financial data relating specifically to the accused technology or asserted patents. 

III. LEGAL STANDARDS 

An expert witness may provide opinion testimony only if “(a) the expert’s scientific, 

technical, or other specialized knowledge will help the trier of fact to understand the evidence or 

to determine a fact in issue; (b) the testimony is based on sufficient facts or data; (c) the 

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testimony is the product of reliable principles and methods; and (d) the expert has reliably 

applied the principles and methods to the facts of the case.” Fed. R. Evid. 702. 

Rule 702 requires the district court to act as a gatekeeper to “ensure that any and all 

scientific testimony or evidence admitted is not only relevant, but reliable.” Daubert v. Merrell 

Dow Pharm., Inc., 509 U.S. 579, 592–93 (1993). The “basic gatekeeping obligation” articulated 

in Daubert applies not only to scientific testimony but to all expert testimony. Kumho Tire Co. 

v. Carmichael, 526 U.S. 137, 149 (1999). Accordingly, “a district court may exclude evidence 

that is based upon unreliable principles or methods, legally insufficient facts and data, or where 

the reasoning or methodology is not sufficiently tied to the facts of the case.” Summit 6, LLC v. 

Samsung Elecs. Co., 802 F.3d 1283, 1295 (Fed. Cir. 2015). A district court shall consider 

“whether the theory or technique the expert employs is generally accepted; whether the theory 

has been subjected to peer review and publication; whether the theory can and has been tested; 

whether the known or potential rate of error is acceptable; and whether there are standards 

controlling the technique’s operation.” Knight v. Kirby Inland Marine Inc., 482 F.3d 347, 351 

(5th Cir. 2007) (citing Daubert, 509 U.S. at 593). The ultimate inquiry in a Rule 702 

determination is whether the expert’s testimony is sufficiently reliable and relevant to be helpful 

to the finder of fact and thus to warrant admission at trial. United States v. Valencia, 600 F.3d 

389, 424 (5th Cir. 2010). Accordingly, conclusory opinions “without any elaboration or 

reasoning” should be excluded as they “will not assist the trier of fact.” Elder v. Tanner, 205 

F.R.D. 190, 193-94 (E.D. Tex. 2001). “It is not sufficient simply to list the resources [the expert] 

utilized and then state an ultimate opinion without some discussion of their thought process.” Id.

at 194. 

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The proponent of expert testimony bears the burden of showing, by a preponderance of 

the evidence, that the expert is qualified under Rule 702. See Fed. R. Evid. 104(a); Daubert v. 

Merrell Dow Pharms., Inc., 509 U.S. 579, 592, n.10 (1993); United States v. Hicks, 389 F.3d 

514, 525 (5th Cir. 2004) (“The proponent of expert testimony [] has the burden of showing that 

the testimony is reliable.”). 

IV. WSOU’S REASONABLE ROYALTY OPINIONS SHOULD BE EXCLUDED. 

A. Dr. McClellan’s Technical Apportionment Analysis for the ’702 Patent Based 

on Aruba ClearPass Is Conclusory And Should Be Excluded. 

With regard to the ’702 Patent, Dr. McClellan’s “technical apportionment” analysis 

consists of twelve paragraphs that are unsupported by any citation. (See McClellan 702 Inf. 

Rept., ¶¶38-49.)3

 Dr. McClellan arrives at his technical apportionment based on a minimal 

description of the third-party Aruba ClearPass system, which he asserts contains “features . . . 

which are comparable to the Microsoft NPAS solution[.]” (Id., ¶39.) His apportionment 

analysis therefore relates to an unaccused product, rather than being tied to the specific facts of 

this case as required under Rule 702. See Summit 6, 802 F.3d at 1295. 

In comparing ClearPass to NPS, Dr. McClellan lists five allegedly similar features. 

(McClellan 702 Inf. Rept., ¶39.) This list of features is arbitrary and incomplete. As Dr. 

McClellan admitted at his deposition, ClearPass includes features far beyond the five that he 

listed. (McClellan Dep. (Rough), 39:17-41:5 (“The product offers an enormous amount of 

features that are not implicated by the asserted claims of the patent, so those are not even in 

3

 Although Dr. McClellan’s Infringement Report includes a section on legal standards, he does 

not recite any legal standards concerning apportionment. (See McClellan 702 Inf. Rept. at ¶¶61-

73.) 

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consideration in this evaluation.”).) In fact, the RADIUS standard (which ClearPass 

implements) include hundreds of features that are unaccounted for in Dr. McClellan’s 

description. (See DeKok Rebuttal Rept., ¶111.) 

The same is true for the five “feature sets” that Dr. McClellan includes in his table of the 

“Technical Importance and Weight of the Features” of ClearPass to conclude that 91.5% of the 

overall benefits and functionalities provided by Aruba ClearPass are comparable to the benefits 

provided by the ’702 Patent. (McClellan 702 Inf. Rept., ¶¶40-49): 

Ignoring hundreds of features of the RADIUS standard, and numerous additional features 

of ClearPass, Dr. McClellan simply assigns 100 percent of the “technical weight” of ClearPass to 

his arbitrarily selected set of five features. Dr. McClellan’s assumption that these features make 

up 100 percent of the weight of the patents is entirely conclusory, and inconsistent with his 

testimony that ClearPass has numerous features that are not captured by the table. (See 

McClellan Dep. (Rough), 39:17-41:5.) Dr. McClellan’s report provides no basis for identifying 

these specific features for his analysis, nor does he identify any support for his opinion that they 

provide 100 percent of the functionality and benefits of ClearPass. Indeed, Dr. McClellan 

admitted that he selectively evaluated only features of ClearPass “that were implicated by the 

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asserted claims of the ’702 patent[,]” (id., 22:12-24) while deliberately not assigning any value to 

features that “aren’t implicated by the asserted claims,” (id., 24:23-25:14); (see also id., 26:11-20 

(testifying that five or six “key features” of ClearPass are not included in his table because they 

“have no particular value in terms of being implicated by the asserted claims.ꞏ They have no 

particular value in the offering of a AAA functionality.”); (id., 40:15-18 (“any features and 

benefits of the Aruba ClearPass solution that weren’t implicated by the asserted claims of the 

patent are not something that’s even considered.”).) 

Moreover, Dr. McClellan provides no support for the specific technical weights he 

assigns to each features set. For example, for three features (“User Authentication and 

Extensible Protocol Support”, “Policy-Based Authorization”, and “AAA Server Groups and 

Failover”), Dr. McClellan states that “the technical weight for this feature is relatively high.” 

(McClellan 702 Inf. Rept., ¶¶41-42, 44.) He goes on to assign a technical weight of 30 percent 

to two of those features, and 25 percent to the other. Yet he concedes that his report provides no 

explanation for how he arrived at these different figures, and he testified at deposition that he did 

not perform any calculations or otherwise replicable process to reach these numerical weights. 

(McClellan Dep. (Rough), 32:2-6 (agreeing that his “report doesn't tell me how to replicate your 

process of arriving at these specific numbers”)); (id. at 27:20-28:4 (“it’s an apportionment. 

There are no calculations. It’s not a – it’s not something that's calculable. It’s an apportionment 

based on an assessment. There's no equation that would allow you to calculate that is what I’m 

saying.”).) 

Dr. McClellan’s evaluation of the weight of each feature attributable to the ’702 patent 

suffers from the same defect. He arbitrarily assigns values of 80 percent, 90 percent, or 100 

percent, stating in conclusory fashion that “the majority of this feature is dependent on the 

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asserted claims of the patent-in-suit” or the features “in their entirety are dependent on the 

asserted claims of the patent-in-suit.” (See McClellan 702 Inf. Rept., ¶¶46-49.) Dr. McClellan 

does not perform any analysis related to the asserted claims in stating these opinions, nor does he 

set forth any methodology or basis for how he reached these conclusions. His apportionment 

lacks any factual foundation; it is wholly ipse dixit. 

As this Court has previously recognized, this type of apportionment analysis “is exactly 

the kind of ‘plucked out of thin air’ apportionment that the Federal Circuit and many other 

district courts have rejected.” CloudofChange, LLC v. NCR Corp., 6:19-CV-00513-ADA, Dkt. 

205 at 7 (W.D. Tex. Nov. 9, 2021) (“Cloudofchange Order”) (collecting cases); see also Exmark 

Mfg. Co. Inc. v. Briggs & Stratton Power Prods. Grp., LLC, 879 F.3d 1332, 1351 (Fed. Cir. 

2018) (excluding an expert’s damages opinion where the expert “plucked the 5% royalty rate out 

of nowhere” because it “is not enough for an expert to simply assert that a particular royalty rate 

is reasonable in light of evidence without tying the proposed rate to that evidence”); 

LaserDynamics, Inc. v. Quanta Comput., Inc., 694 F.3d 51, 69 (Fed. Cir. 2012) (rejecting 

apportionment that was “plucked out of thin air based on vague qualitative notions of the relative 

importance of the [accused technology]”); NetFuel, Inc. v. Cisco Sys. Inc., Case No. 5:18-cv02352-EJB, 2020 WL 1274985, at *9 (N.D. Cal. Mar. 17, 2020) (excluding apportionment 

analysis where the expert “failed to provide the methodology underlying his apportionment 

amount or explain how he arrived at that figure based on the facts of this case”); Guardant 

Health, Inc. v. Found. Med., Inc., No. CV 17-1616-LPS-CJB, 2020 WL 2461551, at *18–19 (D. 

Del. May 7, 2020), report and recommendation adopted, No. CV 17-1616-LPS-CJB, 2020 WL 

5994155 (D. Del. Oct. 9, 2020) (excluding a technical expert’s 50% apportionment analysis, 

where the expert failed to tie the relative value of the patented features to the accused products). 

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The facts of CloudofChange are strikingly similar. The technical expert (“Crouse”) 

identified four components that he said constituted the “core functions” of the system, and 

opined that approximately 80 percent of the accused system embodied the asserted patented 

components of the patents-in-suit. CloudofChange Order at 6. He explained: 

Based on my review, it is my opinion that every element of the 

asserted claims of the CloudofChange Patents are contained in the 

accused NCR Silver Essentials system. It is my opinion that 

approximately 80% of the NCR Silver Essentials product embodies 

the asserted patented components of the CloudofChange Patents. 

My opinion of this approximate 80% apportionment is based on 

my analysis of the value of the patented components based on the 

importance of the patented components to the function of the POS 

system in the manner intended. Accordingly, because the patented 

components make up approximately 80% of the essential 

functionality of the POS system, additional options such as 

security and reporting features and other add-on features 

customized for specific uses such as restaurants, fall into categories 

that are nice to have, but that are not essential to a functioning POS 

system. Accordingly, I attribute approximately 20% to all add on 

components above the essential approximately 80% represented by 

the CloudofChange Patents for a POS system. 

Id. at 6-7. This explanation provides more detail than Dr. McClellan’s report does for any 

ClearPass feature. Compare id. with McClellan 702 Inf. Rept. at ¶¶41-49. Yet the Court agreed 

with the defendant (“NCR”) that “Crouse’s percentage calculation is conclusory and that NCR 

has ‘no way to understand or meaningfully rebut that number.’” Id. at 7. The Court explained: 

Nowhere in Crouse’s report does Crouse explain how he reached 

his “80% apportionment” of the accused product to the patented 

features, nor does he provide any factual foundation to support this 

80% apportionment. In his opening report, Crouse simply offers 

no explanation on how he reaches this 80% apportionment. 

Therefore, this Court will exclude Crouse’s apportionment opinion 

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since his ‘reasoning or methodology is not sufficiently tied to the 

facts of the case.’ 

 

Id. (quoting Summit 6, 802 F.3d at 1295). 

The same is true here. Dr. McClellan never explained how he reached the stated 

percentages, and he testified that he did not perform any calculations that could be replicated. 

Microsoft therefore cannot meaningfully rebut his apportionment opinions, which should be 

excluded. 

Similarly, Messrs. Blok and Bratic should not be permitted to rely on Dr. McClellan’s 

analysis to support their damages opinions. As the Court explained in CloudOfChange, “In 

patent infringement cases, a damages expert may rely on a technical expert’s technical analysis 

regarding which components of the accused products are attributable to the patented invention 

and the economic value of those components.” Id. at 6 (citing Realtime Data, LLC v. Oracle 

Am., Inc., 2017 U.S. Dist. LEXIS 187717 at *14 (E.D. Tex. Mar. 22, 2017). “However, ‘the 

reasoning and methodology underlying a proffered expert opinion [must be] scientifically valid 

and that the reasoning and methodology [must be] applied properly to the facts in issue.’” Id. 

(quoting Allen v. Pennsylvania Eng’g Corp., 102 F.3d 194, 196 (5th Cir. 1996). “For every 

conclusion contained in the expert’s proposed testimony, the Court must determine if the 

methodology leading to that conclusion is sound.” Id. Because Dr. McClellan did not set forth a 

scientific methodology for how he performed his apportionment analysis, WSOU’s damages 

experts cannot rely on that analysis in their own opinions or testimony. See CloudofChange

Pretrial Tr. at 23 (holding that damages expert was “not going to have a basis to talk about the 80 

percent without having a technical person explaining how he came up with it . . . in a 

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report . . . that he can then be cross-examined on.”), 25 (“I’m not going to allow [damages 

expert] to give any opinion that is based on Mr. Crouse’s opinion with regard to 80 percent.”). 

B. Dr. McClellan Failed To Apportion Out Non-Patented Features Of The 

Accused Products For The ’160 And ’902 Patents. 

1. The ’160 Patent

Dr. McClellan did not perform any apportionment analysis of the ’160 Patent. Instead, 

he simply stated that these patents cover the entirety of the accused products. See, e.g., (Blok 

Rept.) Appendix A, ¶161 (quoting McClellan 160 Inf. Rept., Section 2) (“The asserted claims [of 

the ’160 patent] thus cover the entirety of Microsoft Azure and Azure Monitor, not just a portion 

or feature of them.”).) This statement is belied by the record evidence, including Dr. 

McClellan’s own deposition testimony, and the reliance of Messrs. Blok and Bratic on this 

statement warrants and corresponding failure to apportion out unpatented features of the accused 

products warrants exclusion of their reasonable royalty opinions. 

For example, Messrs. Blok and Bratic explain that “[d]ata and information collected by 

Azure Monitor are categorized as either ‘metrics’ or ‘logs.’ (Blok Rept., Appendix A, ¶18) 

(citation omitted).) They also explicitly describe the use of “logs” in Azure Monitor. (See id.) 

(“Logs in Azure Monitor are capable of consolidating data from multiple sources into a single 

workspace and perform sophisticated analysis to identify critical patterns.”). But at his 

deposition, Dr. McClellan admitted that the claims of the ’160 patent do not cover the use of logs 

or storing data. (McClellan Dep. (Rough), 137:22-138:7 (“I don’t see where the making use of 

logs is anywhere related to the claim language.”), 135:11-18 (“The claim has nothing to do with 

logs or storage of data, as we previously discussed.”).) However, because neither Dr. McClellan 

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nor Messrs. Blok and Bratic apportioned out the use of logs to store data, this non-infringing use 

of Azure Monitor is included in their royalty base. 

WSOU attempts to circumvent the apportionment requirement by citing the Federal 

Circuit’s decision in Exmark (See Blok Rept., Appendix A, ¶¶163 & n. 348.) But nothing in 

Exmark suggests that WSOU’s conclusory damages opinion is admissible. In Exmark, the 

Federal Circuit held that using accused lawn mower sales as the royalty base was permissible 

because the claims at issue expressly recited a lawn mower. “Thus, claim 1 covers the infringing 

product as whole, not a single component of a multicomponent product. There is no unpatented 

or non-infringing feature of the product.” Exmark, 879 F.3d at 1347. That is not the case here. 

The claims of the ’160 patent are directed to “[a] method of determining communications 

network service trends[.]” ’160 Patent, Cl. 1 (Preamble). But Azure Monitor has many features 

and functions entirely unrelated to determining communications network service trends, 

including the use of logs to store data, as Dr. McClellan admitted.4

Thus, assuming arguendo that Microsoft infringes the ’160 patent, under Dr. McClellan’s 

own testimony, Azure Monitor has both patented and unpatented features. Accordingly, in order 

to recover damages, WSOU must apportion only to the patented features of the accused product. 

See Niazi Licensing Corp. v. St. Jude Med. S.C., No. 2021-1864, __ F.4th __, 2022 WL 1072909, 

4

 In their joint Report, Messrs. Blok and Bratic analyzed pricing for several different metrics in 

Azure Monitor. (See Blok Rept., Appendix A at ¶124 (showing Microsoft pricing for 

“Application Insights” and “Health Monitoring” features)); (Blok Dep. (Rough), 95:9-96:16.) At 

his deposition, Mr. Blok testified that the revenues Microsoft gains from these features are not 

convoyed, but “are generated from the teachings of the ’160 patent.” (Blok Dep. (Rough), 

96:17-97:14.) But Dr. McClellan did not perform any infringement analysis regarding these 

features. Therefore, there is no technical basis supporting Mr. Blok’s opinion, and his analysis 

related to this pricing information must be struck under Rule 702. 

Case 6:20-cv-00461-ADA Document 136 Filed 04/19/22 Page 19 of 27
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at *13 (Fed. Cir. Apr. 11, 2022) (“Damages should be apportioned to separate out noninfringing 

uses”); MLC Intell. Prop. LLC v. Micron Tech., Inc., 10 F.4th 1358, 1373 (Fed. Cir. 2021) (“We 

have repeatedly held that when the accused technology does not make up the whole of the 

accused product, apportionment is required.”) (citing Exmark, 879 F.3d at 1348); see also 

Finjan, Inc. v. Blue Coat Sys., Inc., 879 F.3d 1299, 1309 (Fed. Cir. 2018) (“[T]he ultimate 

combination of royalty base and royalty rate must reflect the value attributable to the infringing 

features of the product, and no more.”) (quoting Ericsson, Inc. v. D–Link Sys., Inc., 773 F.3d 

1201, 1226 (Fed. Cir. 2014)). The failure to do so requires exclusion of the reasonable royalty 

opinions of Messrs. Blok and Bratic. MLC, 10 4th 1358 at 1373 (affirming district court’s 

exclusion of expert opinion on reasonable royalty because expert “did not properly apportion 

either the royalty base or the royalty rate to account for the patented technology.”). 

2. The ’902 Patent

The same fatal flaw plagues WSOU’s experts’ opinions regarding the ’902 patent. Dr. 

McClellan’s technical reports regarding the ’902 patent make no mention of apportionment. He 

opines that “[t]he asserted claims of the ’902 patent cover the entire concept of collecting 

‘sparse’ data related to network performance as a means of inferring performance on segments of 

the network where the expense and complexity of deploying monitoring may be prohibitive.” 

(McClellan 902 Inf. Rept., ¶35); (see also id., ¶39 (“The ’902 Patent teaches the entire concept of 

using sparse or incomplete data related to network degradation (packet loss) to estimate network 

degradation on network paths or links which are not directly monitored.”).) 

In other words, the ’902 Patent invented the concept of the 

capabilities implemented by Microsoft in Azure and Azure 

Monitor, via monitoring capabilities such as Network Watcher and 

Case 6:20-cv-00461-ADA Document 136 Filed 04/19/22 Page 20 of 27
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Network Performance Monitor, which rely on sparse monitoring to 

estimate packet loss in a communication network. They are not 

directed to a specific feature of Microsoft Azure or Azure 

Monitor—they are directed to Azure and Azure Monitor as a 

whole. 

(Id., ¶40.) 

Again, however, Dr. McClellan’s deposition testimony belies his opinion, as he testified 

that NPM and Network Watcher include features that are not covered by the asserted claims of 

the ’902 patent. For example, Dr. McClellan’s report refers to Microsoft documentation stating 

that NPM can “[m]onitor loss and latency across various subnets and set alerts.” (Id., ¶21.) The 

’902 patent claims recite collecting packet loss data and estimating packet loss rate, but say 

nothing about latency or setting alerts. And Dr. McClellan testified that loss and latency are two 

distinct concepts, and that “setting an alert” is not the same as collecting loss data or estimating 

packet loss rate. (McClellan Dep. (Rough) 197:4-23); (see also id., 198:12-20 (“Claim 1 of the 

’902 patent . . . doesn’t say anything about setting alerts.”).) Accordingly, monitoring latency 

and setting alerts are at least two features of the accused products that WSOU is required to 

apportion out of its proposed royalty base. But neither Dr. McClellan nor Messrs. Blok and 

Bratic did so. 

For their part, Messrs. Blok and Bratic’s report does not include an independent 

discussion of the ’902 patent in addressing the issue of apportionment. Instead, they repeat Dr. 

McClellan’s misstatement that the ’902 patent entirely covers the accused products to justify 

their use of U.S. revenues for Azure Monitor as a whole to arrive at their proposed royalty base. 

(See Blok Rept., Appendix A, ¶162.) This is improper for the same reasons discussed above 

regarding the ’160 patent, and Messrs. Blok’s and Bratic’s reasonable royalty opinions for the 

’902 patent should be excluded also. See Niazi, __ F.4th __, 2022 WL 1072909, at *13; MLC 10 

Case 6:20-cv-00461-ADA Document 136 Filed 04/19/22 Page 21 of 27
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F.4th at 1373; Exmark, 879 F.3d at 1348; Finjan, Inc. v. Blue Coat Sys., Inc., 879 F.3d at 1309; 

Ericsson, 773 F.3d at 1226. 

C. Messrs. Blok’s And Bratic’s Incremental Profits Analysis Is Not Tied To The 

Patents-In-Suit Or To The Accused Products. 

Messrs. Blok’s and Bratic’s allocation of alleged incremental profits based on the ratio of 

Microsoft’s R&D-to-operating expenses is arbitrary, speculative, unreliable, and unsupported for 

the purposes of determining reasonable royalty damages. As such, it should be excluded. 

For all three patents, Messrs. Blok and Bratic assert that “[t]he parties to the hypothetical 

negotiation would have recognized that this ratio represents the portion of Microsoft’s costs 

attributable to technology development, as compared to its costs associated with 

commercializing” the accused products. (Blok Rept., Appendix A, ¶181, Appendix B, ¶183.) 

They further opine that “Microsoft’s R&D-to-operating expenses ratio is reflective of 

Microsoft’s own determination of how much money it should invest in technology development 

relative to the overall cost of product commercialization.” (Id., Appendix A, ¶183, Appendix B, 

¶185.) Accordingly, they assert that the R&D-to-operating expenses ratio is “a reasonable 

measure of the contribution of” the contributions of all three asserted patents to Microsoft’s 

apportioned incremental benefits from the accused products. (See id.) Messrs. Blok and Bratic 

do not cite any authority for these assertions. They do not nor do they identify any case in which 

a court has approved of this methodology. And Mr. Blok testified that he was not aware of any 

Microsoft documentation endorsing this methodology for evaluating any specific patent. 

Critically, this method is flawed at least because Messrs. Blok and Bratic use companywide R&D and operational expenditures to generate their proposed damages figures, rather than 

making any attempt to identify R&D and operational expenditures that actually relate to the 

Case 6:20-cv-00461-ADA Document 136 Filed 04/19/22 Page 22 of 27
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accused products (e.g., Windows Server, Azure Monitor). As a result, this methodology yields 

an identical 42.3% to 57.7% split of incremental profits between Nokia and Microsoft for both 

the ’160 and ’902 patents, despite the fact that the patents cover different technology. Indeed, 

Messrs. Blok and Bratic’s methodology would produce the same 42.3% to 57.7% incremental 

profit allocation in any patent license negotiation for any patented technology as long as the ratio 

is calculated over an identical time period. (See Stec Rept., 82.) But this ratio is admittedly 

unrelated to any specific patented technology, and has no identified relationship to incremental 

profits generated by any technology. WSOU cannot credibly argue that Messrs. Blok’s and 

Bratic’s method is reliable or based on any sound scientific principle. 

 Because Messrs. Blok and Bratic use company-wide expenses instead of isolating R&D 

and operational expenditures specific to the accused products, their methodology necessarily 

includes Microsoft’s R&D expenditures toward activities entirely unrelated to the asserted 

patents or accused products. (See id., 83 (discussing Microsoft 2017-2019 10-K forms showing 

expenses related to LinkedIn and increased investments in cloud engineering, artificial 

intelligence engineering, gaming, LinkedIn, and GitHub).) Indeed, Mr. Blok conceded that the 

R&D and operating expense line items on which he and Mr. Bratic rely are not broken out in 

relation to any particular patent or product. (Blok Dep. (Rough), 81:13-23); (see also id., 98:23-

99:16 (testifying that he does not know whether any of the R&D line items relate to the accused 

products).) Messrs. Blok and Bratic do not provide any basis for relying upon expenditures 

unrelated to the asserted patents or accused products. (See, e.g., Stec Rept., 79.) 

The failure to tie the R&D-to-operating expenses ratio to the patents-in-suit or the 

accused products constitutes an independent basis for excluding all of Messrs. Blok’s and 

Bratic’s incremental profits analyses. See Uniloc USA, Inc. v. Microsoft Corp., 632 F.3d 1292, 

Case 6:20-cv-00461-ADA Document 136 Filed 04/19/22 Page 23 of 27
19 

1315 (Fed. Cir. 2011) (quoting Daubert, 509 U.S. 579, 591 (1993) (“An additional consideration 

under Rule 702—and another aspect of relevancy—is whether expert testimony proffered in the 

case is sufficiently tied to the facts of the case that it will aid the jury in resolving a factual 

dispute.”). Instructive on this issue is the decision in Droplets, Inc. v. Yahoo, Inc., Case No. 12-

cv-03733-JST, Dkt. 1000 (N.D. Cal. Jan. 12, 2022). 

In Droplets, the court excluded a damages expert’s profit-split analysis, in part because 

the expert based his report on the defendant’s internal analysis of its ROI, and “fail[ed] to limit 

its focus to ROIs on investments in items similar to the accused features of the infringing 

product.” Droplets Order at 6. Although the expert limited his analysis to three specific ROIs, 

the court noted that “[t]he connection between these ROI estimates and [defendant’s] profits on 

[patentee’s] technology, however, is unstated.” Id. And while the patentee argued that there 

were similarities between the accused products and the ROIs, the court refused to speculate or 

gap-fill where the expert did not “offer any explanation for how the projects in the historical 

ROIs are similar to the accused features.” Id.; see also id. (“[T]he onus is on patentee to identify 

and map these similarities.”). 

The Droplets court also excluded the expert’s profit-split analysis based on his reliance 

on the defendant’s “customer lifetime values and its gross profit margins.” Id. at 7. Although 

the expert asserted that these figures were “sign[s] of what [defendant] would be willing to pay” 

for the patented technology, the court disagreed: 

There is no basis in economics for these assumptions. Neither 

Nordstrom’s gross profits on all of its products nor its costs of 

acquiring an additional customer are reliable indicators of what it 

would spend to use Droplets’s technology. See Nat’l Prod., Inc. v. 

Arkon Res., Inc., No. C15-1553-JPD, 2017 WL 5499801, at *2-3 

(W.D. Wash. Nov. 16, 2017) (excluding expert testimony that 

Case 6:20-cv-00461-ADA Document 136 Filed 04/19/22 Page 24 of 27
20 

relied on “estimated cost of goods sold” and “overhead expense” 

percentages that “were not tabulated from actual costs incurred 

from the sale and manufacture of only the accused products, but 

were instead calculated by dividing expenses incurred from the 

sales of all [defendant’s] products”). Thus, the Court excludes 

Bergman’s opinion based on these factors as well. 

Id. 

Like the expert in Droplets, Messrs. Blok and Bratic have not even attempted to explain 

how the R&D or operating expenditures they rely on relate to the accused features. Nor have 

they provided any economic basis for their assumption that Microsoft’s company-wide R&D-tooperating expenses ratio reflects its willingness to pay for the specific patented technology at 

issue in these cases. Therefore, WSOU cannot meet its burden of showing that the R&D-tooperating expenses ratio is the base of a reliable incremental profits analysis, and the Court 

should exclude this analysis. 

V. CONCLUSION 

For the foregoing reasons, the Court should exclude the technical apportionment opinions 

of Dr. McClellan and reasonable royalty opinions of Messrs. Blok and Bratic. 

DATED: April 12, 2022 Respectfully submitted, 

 

/s/ Richard A. Cederoth (by permission) 

Melissa R. Smith, Bar No. 24001351 

melissa@gillamsmithlaw.com 

James “Travis” Underwood, Bar No. 

24102587 

travis@gillamsmithlaw.com

GILLAM & SMITH, LLP 

303 South Washington Avenue 

Marshall, Texas 75670 

Case 6:20-cv-00461-ADA Document 136 Filed 04/19/22 Page 25 of 27
21 

Tel: (903) 934-8450 

Fax: (903) 934-9257 

Michael J. Bettinger

mbettinger@sidley.com 

Irene Yang 

irene.yang@sidley.com 

Brooke S. Boll 

brooke.boll@sidley.com 

SIDLEY AUSTIN LLP 

555 California Street, Suite 2000 

San Francisco, CA 94104 

Tel: (415) 772-1200 

Fax: (415) 772-7400 

Richard A. Cederoth 

rcederoth@sidley.com 

John W. McBride 

jwmcbride@sidley.com 

Richard M. Chen 

rchen@sidley.com 

Kevin Robert Oliver

kevin.oliver@sidley.com 

SIDLEY AUSTIN LLP 

1 South Dearborn St. 

Chicago, IL 60603 

Tel: (312) 853-7000 

Fax: (312) 853-7036 

ATTORNEYS FOR MICROSOFT 

CORPORATION 

Case 6:20-cv-00461-ADA Document 136 Filed 04/19/22 Page 26 of 27
22 

CERTIFICATE OF SERVICE 

I, Kevin Robert Oliver, certify that on April 12, 2022, the documents filed with the Clerk 

of Court via the Court’s CM/ECF system under seal in the above-captioned cases were 

subsequently served on all counsel of record by electronic mail. 

/s/ Kevin Robert Oliver

Kevin Robert Oliver 

Case 6:20-cv-00461-ADA Document 136 Filed 04/19/22 Page 27 of 27