FEDERAL TRADE COMMISSION’S MOTION TO EXCLUDE

EXPERT TESTIMONY OF PROFESSOR AVIV NEVO

Case No. 17-cv-00220-LHK-NMC 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Jennifer Milici, D.C. Bar No. 987096 

J. Alexander Ansaldo, Va. Bar No. 75870

Joseph R. Baker, D.C. Bar No. 490802

Geoffrey M. Green, D.C. Bar No. 428392

Nathaniel Hopkin, New York Bar No. 5191598

Daniel Matheson, D.C. Bar No. 502490

Federal Trade Commission

600 Pennsylvania Avenue, N.W.

Washington, D.C. 20580

(202) 326-3695; (202) 326-3496 (fax)

jmilici@ftc.gov

Attorneys for Plaintiff Federal Trade Commission

UNITED STATES DISTRICT COURT 

NORTHERN DISTRICT OF CALIFORNIA 

SAN JOSE DIVISION 

FEDERAL TRADE COMMISSION, 

Plaintiff 

v.

QUALCOMM INCORPORATED, a Delaware 

Corporation,

Defendant.

Case No. 5:17-cv-00220-LHK-NMC 

FEDERAL TRADE COMMISSION’S 

MOTION TO EXCLUDE EXPERT 

TESTIMONY OF PROFESSOR AVIV 

NEVO

REDACTED VERSION OF 

DOCUMENT SOUGHT TO BE SEALED 

Date: October 18, 2018 

Time: 1:30 p.m. 

Courtroom: 8, 4th Floor 

Judge: Hon. Lucy H. Koh 

REDACTED VERSION OF DOCUMENTS SOUGHT TO BE SEALED

5('$&7('9(56,212)'2&80(176628*+772%(6($/('

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 1 of 70
i

FEDERAL TRADE COMMISSION’S MOTION TO EXCLUDE

EXPERT TESTIMONY OF PROFESSOR AVIV NEVO

Case No. 17-cv-00220-LHK-NMC 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

NOTICE OF MOTION AND MOTION

To the Honorable Court, all parties, and their attorneys of record: 

Please take notice that on October 18, 2018, at 1:30 p.m., in Courtroom 8, United States 

Courthouse, 280 South 1st Street, San Jose, California 95113, Plaintiff Federal Trade 

Commission will and hereby does move the Court for an order excluding the testimony of 

Professor Aviv Nevo, designated by Defendant Qualcomm Incorporated (“Qualcomm”) as an 

expert witness in this matter, concerning Qualcomm licenses that were not produced during 

discovery. The FTC’s motion is based on the authorities and evidence set forth here, the 

accompanying declaration and exhibits, oral argument to be presented to the Court, and such 

other matters as the Court may consider. 

The FTC seeks to exclude, under Federal Rule of Evidence 403, portions of Prof. Nevo’s 

testimony that are based on documents produced months after the close of fact discovery. 

STATEMENT OF ISSUE TO BE DECIDED

Whether certain opinions offered by Professor Aviv Nevo, in reliance on documents 

produced by Qualcomm after the close of fact discovery, should be excluded under Federal Rule 

of Evidence 403. 

REDACTED VERSION OF DOCUMENTS SOUGHT TO BE SEALED

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 2 of 70
1

FEDERAL TRADE COMMISSION’S MOTION TO EXCLUDE

EXPERT TESTIMONY OF PROFESSOR AVIV NEVO

Case No. 17-cv-00220-LHK-NMC 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

I. INTRODUCTION

Qualcomm’s expert witness, Professor Aviv Nevo, submitted a report disclosing his

opinions regarding the economic effects of Qualcomm’s conduct at issue in this case. Rebuttal 

Report of Professor Aviv Nevo, June 28, 2018 [“Nevo Report”]. Prof. Nevo based some of his 

opinions on selected patent licenses that Qualcomm produced for the first time months after the 

close of fact discovery. Those opinions must be excluded under Federal Rule of Evidence 403 to 

avoid unfair prejudice to the FTC. The FTC had no opportunity to conduct discovery into these 

agreements or the negotiation thereof, and no opportunity to develop evidence to test or rebut 

Prof. Nevo’s conclusions. The FTC will suffer prejudice if Prof. Nevo’s opinions formed in 

reliance on materials produced after the close of discovery are admitted at trial. 

II. FACTUAL AND PROCEDURAL BACKGROUND

A. Discovery Deadlines in the Case

Nearly a year ago, the Parties agreed “that Qualcomm would substantially complete its

production of documents by November 28, 2017.” ECF No. 286 at 1. After proposing a limited 

refresh collection, Qualcomm was required to complete production of additional documents by 

December 18, 2017. ECF No. 389 at 1. Fact discovery closed on March 30, 2018, and this Court 

has granted only limited requests for specific forms of out of time discovery. See ECF No. 783 at 

2 (reviewing history of discovery deadlines and denying Qualcomm’s request for three more outof-time depositions). 

B. Prof. Nevo’s Opinions Based on Late-Produced Materials

Qualcomm offers Prof. Nevo’s testimony to address the FTC’s allegations that

Qualcomm’s alleged conduct, including its no license-no chips policy and its refusal to license 

rival chip makers, allowed Qualcomm to obtain elevated royalties for its cellular SEPs that tax 

rivals’ sales, with exclusionary effects. See Exhibit 1 (Nevo Report) at ¶¶ 5-7.1

 Prof. Nevo opines 

1

 All exhibits are attached to the Declaration of Jennifer Milici in Support of the Federal Trade 

Commission’s Motion to Exclude Expert Testimony of Professor Aviv Nevo. 

REDACTED VERSION OF DOCUMENTS SOUGHT TO BE SEALED

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 3 of 70
2

FEDERAL TRADE COMMISSION’S MOTION TO EXCLUDE

EXPERT TESTIMONY OF PROFESSOR AVIV NEVO

Case No. 17-cv-00220-LHK-NMC 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

that Qualcomm’s royalties cannot be above FRAND levels because “industry participants were 

aware of Qualcomm’s licensing terms” prior to the adoption of the relevant standards. Id. (Nevo

Report) at ¶ 94.2

 Prof. Nevo states that “Qualcomm recently announced licensing terms for its 

5G SEPs” and “[n]otably,

Id.

Prof. Nevo critiques FTC expert Prof. Shapiro for failing to consider “current evidence,” 

including Qualcomm’s “5G licenses,” and FTC expert Mr. Lasinski for “ignoring” Qualcomm’s 

“5G licenses.” Id. (Nevo Report) at ¶¶ 291 -297.3

 As a result, he argues, the FTC’s evidence 

“cannot justify or support the request for prospective relief” made in the FTC’s complaint. Id.

(Nevo Report) ¶ 297. 

2 Prof. Nevo cites unilateral announcements made by Qualcomm shortly before the adoption of 

WCDMA and LTE to establish that industry participants were “aware” of Qualcomm’s licensing 

terms prior to adoption of those standards. Exhibit 1 (Nevo Report) ¶ 94. Prof. Nevo does not 

know how long after the announcements the standards were adopted or whether it was 

technically possible to alter the standards to exclude Qualcomm’s technology at the time of the 

announcements. Exhibit 2 (Nevo Deposition, Aug. 10, 2018, [“Nevo Depo.”] at 89:5-14; 247:12-

248:20.

3 Although Prof. Nevo refers to the agreements as “5G licenses” the late-produced licenses also 

contain terms concerning

REDACTED VERSION OF DOCUMENTS SOUGHT TO BE SEALED

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 4 of 70
3

FEDERAL TRADE COMMISSION’S MOTION TO EXCLUDE

EXPERT TESTIMONY OF PROFESSOR AVIV NEVO

Case No. 17-cv-00220-LHK-NMC 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Prof. Nevo’s opinions are based on two agreements that Qualcomm produced after fact 

discovery had closed and the deadline for the submission of the FTC’s expert reports had passed. 

Id. (Nevo Report) ¶ 94 & n.179. According to the Nevo Report, the licenses

Id. But Qualcomm did not produce the agreements until June 22, 2018 

and June 28, 2018, respectively.4

III. LEGAL STANDARD FOR UNFAIR PREJUDICE

Federal Rule of Evidence 403 provides that the Court may exclude relevant evidence if

its probative value is substantially outweighed by a danger of unfair prejudice, confusing the 

issues, undue delay, wasting time, or needlessly presenting cumulative evidence. Fed. R. Evid. 

403. The Court also has “broad discretion to manage the conduct of a trial and the evidence

presented by the parties” to avoid unfair prejudice, pursuant to its inherent authority. Apple Inc.

v. Samsung Elecs. Co., No. 11-cv-01846-LHK, 2018 WL 1586276, at *18 (N.D. Cal. Apr. 2,

2018).

IV. ARGUMENT

Core to the FTC’s theory is Qualcomm’s ability to leverage its modem chip monopoly

power in licensing negotiations to obtain elevated royalties. Federal Trade Commission’s 

Complaint for Equitable Relief, ECF No. 1 ¶¶ 2-5; Order Denying Motion to Dismiss 8, ECF 

No. 134 at 8 (“FTC alleges that Qualcomm used its dominance in the supply of CDMA and 

premium LTE modem chips to skew SEP licensing negotiations toward outcomes that benefit 

Qualcomm and harm Qualcomm’s modem chip competitors.”). Prof. Nevo seeks to rebut that 

allegation and points to two “5G license agreements” as evidence that certain royalty rates 

unilaterally announced by Qualcomm in November 2017 are consistent with FRAND and 

unaffected by Qualcomm’s monopoly power. 

4

 These agreements were produced initially to plaintiffs in In re Qualcomm Litigation, No. 3:17-

cv-00108-GPC-MDD, (S.D. Cal.) and copied to the FTC pursuant to the Joint Stipulation and

Discovery Coordination Order, Jan. 24, 2018, ECF No. 513. Qualcomm did not produce any

documents relating to the negotiation of the two licenses.

REDACTED VERSION OF DOCUMENTS SOUGHT TO BE SEALED

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 5 of 70
4

FEDERAL TRADE COMMISSION’S MOTION TO EXCLUDE

EXPERT TESTIMONY OF PROFESSOR AVIV NEVO

Case No. 17-cv-00220-LHK-NMC 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

The FTC had no opportunity to conduct discovery regarding the two licenses cited by 

Prof. Nevo because Qualcomm did not produce these licenses until three months after discovery 

ended. On April 20, 2018, the FTC even asked Qualcomm, through its corporate representative 

Fabian Gonell, whether there were any “data points” confirming that Qualcomm’s unilaterally 

announced royalty rates for 5G were reasonable. Mr. Gonell made no mention of the licenses or 

negotiations, even though one had already been executed. Exhibit 8 (Qualcomm 30(b)(6) 

Deposition (Gonell), Apr. 20, 2018 “Gonell Depo.”)) at 267:11-268:5.5

Thus, the FTC’s ability to rebut Prof. Nevo’s opinions regarding the two purported 5G 

licenses has been substantially hampered, resulting in unfair prejudice should he testify 

concerning those licenses or any opinion informed by those licenses. See Apple v. Samsung, No. 

11-cv-01846-LHK, 2018 WL 1586276, at *23 (N.D. Cal. Apr. 2, 2018) (excluding expert

testimony based on data that was produced “hours before fact discovery closed” to avoid undue

prejudice under Rule 403 and pursuant to the court’s inherent authority). Similar to the plaintiffs

in Apple v. Samsung, the FTC received these licenses after completing fact depositions, after

serving opening expert reports, and with no opportunity to explore their origin. Id.

Qualcomm’s expert witnesses, including Prof. Nevo, have had the opportunity to 

interview Qualcomm’s licensing executives after the close of fact discovery. See Exhibit 1 (Nevo 

Report) at App’x C (disclosing “Phone Interview with Fabian Gonell (Senior Vice President of 

Licensing Strategy and Legal Counsel at QTL), June 26, 2018” as among the materials 

considered in his report). But the FTC has not had the opportunity to question fact witness about 

the two licenses and was unable to obtain any answers from Prof. Nevo about his post-discovery 

5

 Mr. Gonell’s testimony as Qualcomm’s corporate representative also refutes any notion that the 

two licenses entered in January and June of 2018 establish that Qualcomm’s unilaterally 

announced 5G royalty rate is consistent with its FRAND commitment. See Exhibit 8 (Gonell 

Depo.) at 266:14-267:1 (“Q. Has Qualcomm done any analysis of whether the rates and caps it 

has announced for 5G are FRAND? A. Any analysis of the FRAND-ness of that? ... No. I don’t 

think that analysis is possible yet because you don’t have the essential patents yet so you don’t 

have any – you don’t have products yet so you don’t have the – you know, you don’t have the 

underlying information you need.”). 

REDACTED VERSION OF DOCUMENTS SOUGHT TO BE SEALED

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 6 of 70
5

FEDERAL TRADE COMMISSION’S MOTION TO EXCLUDE

EXPERT TESTIMONY OF PROFESSOR AVIV NEVO

Case No. 17-cv-00220-LHK-NMC 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

witness interview. See Exhibit 2 (Nevo Depo.) at 27:9-29:23 (testifying that he had no general or 

specific recollection of the interview with Mr. Gonell and had no records of the interview). And 

Prof. Nevo could not remember whether he had reviewed documents concerning the negotiation 

of the “5G licenses,” and could not recall whether Qualcomm had threatened the chip supply of 

the licensees or whether Qualcomm offered financial incentives to induce the licensees to accept 

its royalty rates.6

Because Qualcomm did not produce the two licenses until after the end of fact discovery, 

and months after one had been executed, the FTC has been deprived of the opportunity to take 

discovery regarding the licenses and their negotiation, including but not limited to discovery 

concerning: whether Qualcomm leveraged its 3G or 4G market power to coerce the licensees to 

accept its terms; whether Qualcomm offered financial incentives to induce the acceptance of its 

terms; whether Qualcomm conditioned a reduction in its 3G and 4G royalty rates on the 

licensees’ acceptance of Qualcomm’s preferred 5G terms; whether these proceedings affected 

the negotiations or their outcomes; and, whether the terms are representative of other in-progress 

or concluded 5G license negotiations. Qualcomm should not be permitted to circumvent the 

6

 Exhibit 2 (Nevo Depo.) at 256:13-257:23. (“Q. Okay. You mentioned 

that signed onto 5G licenses? A. Yes, I did. Q. Do those licenses also change the terms for 3G 

and 4G? A. I don’t remember off the top of my head. Q. Have you seen any negotiation 

documents about those licenses? A. You know, those were fairly recent and I’m -- I can’t 

remember. As I said, I’ve looked at so many --so many documents I can’t remember specifically 

if I looked at those. Q. Do you know whether there was any discussion about the chip supply in 

the negotiations of those licenses? A. Again, I don’t -- I don’t remember one way or the other as 

I sit here today. Q. Do you know whether you ever knew that information? A. Again, I can’t 

remember right now. Q. So you don’t know whether there were any suggestion that chip supply 

would be interrupted, do you? A. I did not look at the specifics of -- so I can’t -- as I sit here 

today -- sorry let me just -- as I sit here today I can’t recall any of those details. Q. Do you 

know whether Qualcomm entered any other commercial arrangements with either company? A. 

As I sit here today, I can’t answer one way or the other. Q. So you don’t know whether any 

financial incentives were offered to those companies, do you? MR. EVEN: Objection. Vague as 

to the term financial incentives. A. As I said, as I sit here today, I don’t recall the specific 

details.”).

REDACTED VERSION OF DOCUMENTS SOUGHT TO BE SEALED

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 7 of 70
6

FEDERAL TRADE COMMISSION’S MOTION TO EXCLUDE

EXPERT TESTIMONY OF PROFESSOR AVIV NEVO

Case No. 17-cv-00220-LHK-NMC 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

discovery deadlines by offering expert opinions formed in reliance on cherry-picked and lateproduced documents. 

While “[v]igorous cross-examination [and] presentation of contrary evidence ... are the 

traditional and appropriate means of attacking shaky but admissible” expert testimony, in this 

case the FTC is prejudiced because it has been denied the opportunity to discover “contrary 

evidence” with which to conduct such “[v]igorous cross-examination.” See Daubert v. Merrell 

Dow Pharms., Inc., 509 U.S. 579, 596 (1993). The Court should exclude any opinion testimony 

of Prof. Nevo that relies on Qualcomm’s “5G licenses” under Rule 403 and the Court’s inherent 

authority, in order to avoid unfair prejudice to the FTC. If the Court were to permit introduction 

of these opinions and documents, the FTC would seek leave for out-of-time discovery, which 

would create significant and unnecessary delay.

V. CONCLUSION

For the reasons explained above, the Court should prohibit Qualcomm from offering

expert testimony or opinion of Professor Aviv Nevo based upon or concerning licenses that were 

not produced during the discovery period. 

Respectfully submitted,

Dated: August 30, 2018 

/s/ Jennifer Milici 

JENNIFER MILICI 

J. ALEXANDER ANSALDO

JOSEPH R. BAKER

NATHANIEL HOPKIN

GEOFFREY M. GREEN

DANIEL MATHESON

Bureau of Competition 

Attorneys for Plaintiff Federal Trade 

Commission

REDACTED VERSION OF DOCUMENTS SOUGHT TO BE SEALED

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 8 of 70
1

DECLARATION OF JENNIFER MILICI

Case No. 17-cv-00220-LHK-NMC 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Jennifer Milici, D.C. Bar No. 987096 

Joseph R. Baker, D.C. Bar No. 490802 

Geoffrey M. Green, D.C. Bar No. 428392 

Philip J. Kehl, D.C. Bar No. 1010284 

Daniel Matheson, D.C. Bar No. 502490 

Kenneth H. Merber, D.C. Bar No. 985703 

Mark J. Woodward, D.C. Bar. No. 479537 

Federal Trade Commission 

600 Pennsylvania Avenue, N.W. 

Washington, D.C. 20580 

(202) 326-3695; (202) 326-3496 (fax)

jmilici@ftc.gov

Attorneys for Plaintiff Federal Trade Commission 

UNITED STATES DISTRICT COURT 

NORTHERN DISTRICT OF CALIFORNIA 

SAN JOSE DIVISION 

FEDERAL TRADE COMMISSION, 

Plaintiff 

v.

QUALCOMM INCORPORATED, a Delaware 

Corporation,

Defendant.

Case No. 5:17-cv-00220-LHK-NMC 

DECLARATION OF JENNIFER MILICI 

IN SUPPORT OF FEDERAL TRADE 

COMMISSION’S MOTION TO EXCLUDE 

EXPERT TESTIMONY OF PROFESSOR 

AVIV NEVO 

REDACTED VERSION OF DOCUMENT

SOUGHT TO BE SEALED 

Date: October 18, 2018 

Time: 1:30 p.m. 

Courtroom: 8, 4th Floor 

Judge: Hon. Lucy H. Koh 

REDACTED VERSION OF DOCUMENTS SOUGHT TO BE SEALED

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 9 of 70
2

DECLARATION OF JENNIFER MILICI

Case No. 17-cv-00220-LHK-NMC 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

I, Jennifer Milici, do hereby declare and state as follows: 

1. I am an attorney employed by the U.S. Federal Trade Commission (“FTC”). I am

one of the attorneys of record in this matter for the FTC. I have personal knowledge of the 

matters set forth in this declaration, and if called upon as a witness I could and would testify 

competently. 

2. I respectfully submit this declaration in support of the FTC’s motion to exclude

expert testimony of Professor Aviv Nevo.

3. Attached as Exhibit 1 is a true and correct copy of excerpts from the Rebuttal

Report of Professor Aviv Nevo, Ph.D., dated June 28, 2018, and designated Highly 

Confidential—Attorneys’ Eyes Only by Qualcomm. 

4. Attached as Exhibit 2 is a true and correct copy of excerpts from the deposition of

Aviv Nevo, which took place on August 10, 2018, and was designated Highly Confidential—

Attorneys’ Eyes Only by Qualcomm. 

5. Attached as Exhibit 3 is a true and correct copy of QAPPCMSD10051179,

, designated Highly Confidential—

Attorneys’ Eyes Only by Qualcomm and produced to the Federal Trade Commission on June 22, 

2018.

6. Attached as Exhibit 4 is a true and correct copy of QAPPCMSD00009236,

, and designated Highly Confidential—

Attorneys’ Eyes Only by Qualcomm. 

7. Attached as Exhibit 5 is a true and correct copy of QAPPCMSD10052189,

, designated Highly Confidential—

Attorneys’ Eyes Only by Qualcomm and produced to the Federal Trade Commission on June 28, 

2018.

REDACTED VERSION OF DOCUMENTS SOUGHT TO BE SEALED

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 10 of 70
3

DECLARATION OF JENNIFER MILICI

Case No. 17-cv-00220-LHK-NMC 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

8. Attached as Exhibit 6 is a true and correct copy of Q2017MDL1_03114062,

“OFDMA Subscriber Unit License Agreement,” between Qualcomm Inc. and TCL Corporation, 

effective March 6, 2013, and designated Highly Confidential—Attorneys’ Eyes Only by 

Qualcomm.

9. Attached as Exhibit 7 is a true and correct copy of Q2017MDL1_02929368,

(“License of Certain Technology for the Manufacturing and Sale of Certain CDMA Subscriber 

Units,” between Qualcomm Inc. and TCL Holdings Co., effective October 8, 2001, and 

designated Highly Confidential—Attorneys’ Eyes Only by Qualcomm. 

10. Attached as Exhibit 8 is a true and correct copy of excerpts from the Rule

30(b)(6) deposition of Qualcomm, through Fabian Gonell of Qualcomm, which took place on 

April 20, 2018, and was designated Highly Confidential—Attorneys’ Eyes Only by Qualcomm. 

I declare under penalty of perjury under the laws of the United States of America that the 

foregoing is true and correct. 

Executed this 30th day of August, 2018, in Washington, DC. 

/s/ Jennifer Milici 

JENNIFER MILICI 

REDACTED VERSION OF DOCUMENTS SOUGHT TO BE SEALED

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 11 of 70
EXHIBIT 

REDACTED VERSION OF DOCUMENTS SOUGHT TO BE SEALED

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 12 of 70
HIGHLY CONFIDENTIAL – ATTORNEYS’ EYES ONLY 

UNITED STATES DISTRICT COURT 

NORTHERN DISTRICT OF CALIFORNIA 

FEDERAL TRADE COMMISSION, 

Plaintiff,

v.

QUALCOMM INCORPORATED, a 

Delaware Corporation, 

Defendant.

Case No. 17-CV-00220-LHK 

Rebuttal Report of Professor Aviv Nevo, Ph.D. 

June 28, 2018 

HIGHLY CONFIDENTIAL – ATTORNEYS’ EYES ONLY

REDACTED VERSION OF DOCUMENTS SOUGHT TO BE SEALED

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 13 of 70
Page 3

2. Allegations and Assignment

5. The Federal Trade Commission (“FTC”) alleges that Defendant Qualcomm

Incorporated (“Qualcomm”) has engaged in conduct that allegedly harms competition in 

baseband modem processors (“chips”) and raises prices paid by consumers for cell phones 

(“handsets”) and tablets.1 Counsel for Qualcomm has asked me to address certain of these 

allegations.

6. The FTC claims that Qualcomm used its alleged market power in certain alleged

chip markets to obtain elevated royalties on its cellular standard-essential patents (“SEPs”) from 

Original Equipment Manufacturers (“OEMs”) (firms that manufacture handsets and tablets). 

Although most of Qualcomm’s license agreements cover both cellular SEPs and multiple other 

patents, the FTC claims the royalties charged by Qualcomm violated Qualcomm’s commitment 

to license its SEPs (but not its other patents) on terms that were fair, reasonable, and nondiscriminatory (“FRAND”). The FTC alleges that Qualcomm obtained these elevated royalties 

by using a combination of several practices, including: 

x not selling chips to OEMs unless they first enter into license agreements with Qualcomm,

allegedly on terms preferred by Qualcomm, which the FTC refers to as “no license-no

chips”;2

x using payments referred to as strategic and marketing funds as a “carrot” to induce

acceptance of non-FRAND licensing terms; 3

x refusing to license its cellular SEPs on FRAND terms to rival chip makers; 4

7. The FTC further claims that these allegedly elevated royalties collected by

Qualcomm acted as a “tax” on OEMs’ use of rival chip makers’ chips, resulting in foreclosed 

competition in chips and harm to consumers. 

8. As part of my analysis of the above claims, I have been asked to assess whether

the Qualcomm practices at issue have procompetitive business justifications. 

9. Finally, I have also been asked to review and respond to the economic analyses

and opinions offered by the FTC’s experts, Professor Carl Shapiro, Mr. Michael Lasinski, and 

Mr. Richard Donaldson, to the extent they relate to my assignment described above.5

1

 Federal Trade Commission’s Complaint for Equitable Relief, Federal Trade Commission v. Qualcomm 

Incorporated, N.D. Cal., January 17, 2017 (“Complaint”). 2

 Complaint, ¶¶3.a, 84–86. 

3

 Complaint, ¶¶3.b, 102–106. 

4

 Complaint, ¶¶3.c, 114. 

5

 Expert Report of Carl Shapiro, May 24, 2018 (“Shapiro Report”); Expert Report of Michael J. Lasinski, May 24, 

2018 (“Lasinski Report”); Expert Report of Richard Donaldson, May 24, 2018 (“Donaldson Report”). 

HIGHLY CONFIDENTIAL – ATTORNEYS’ EYES ONLY

REDACTED VERSION OF DOCUMENTS SOUGHT TO BE SEALED

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 14 of 70
Page 4

10. I have not been asked to address and therefore offer no opinion on any of the

FTC’s other allegations. Specifically, I do not offer an opinion on allegations related to the terms 

of Qualcomm’s chip-related agreements with Apple. Furthermore, I do not address the FTC’s 

allegations related to market definition and market power. 

11. The documents and materials I relied upon in forming my opinions are listed in

Appendix C. I reserve the right to update my opinions as more information becomes available 

and to address Plaintiffs’ expert analysis when it becomes available.

12. I am being compensated at my standard billing rate of $1,000 per hour. I have

been assisted in this matter by staff of Cornerstone Research, who worked under my direction. I 

receive compensation from Cornerstone Research based on its collected staff billings for its 

support of me in this matter. Neither my compensation in this matter nor my compensation from 

Cornerstone Research is in any way contingent or based on the content of my opinion or the 

outcome of this or any other matter. 

HIGHLY CONFIDENTIAL – ATTORNEYS’ EYES ONLY

REDACTED VERSION OF DOCUMENTS SOUGHT TO BE SEALED

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 15 of 70
Page 48

should not ignore the standardization process, and should consider the options available to all 

sides. In particular, it should consider the long-run incentives of the technology developer to 

develop technology and to allow it to choose whether to be part of the standard. The FTC and 

Professor Shapiro have failed to explain how Qualcomm’s royalty terms are inconsistent with 

either of these definitions of FRAND. 

94. Qualcomm entered CDMA license agreements with major OEMs, including

AT&T, Motorola, and Nokia, prior to the adoption of the CDMA standard. These agreements 

literally satisfy the ex ante framework. Moreover, there are several facts that suggest that 

industry participants were aware of Qualcomm’s licensing terms for WCDMA, LTE, and 5G 

prior to adoption of these standards. 

x Qualcomm’s royalty rates have stayed relatively constant since it began licensing its

technology in the early 1990s and did not increase after the adoption of the relevant

standards.

x Qualcomm stated in a September 1999 investor presentation (prior to the first commercial

release of WCDMA in December 1999) that a number of “companies have licensed

Qualcomm patents for Third Generation CDMA Systems, including multi-carrier and

direct spread CDMA.”175 The presentation further noted, “Royalties paid by these

licensees for Third Generation are equal to the royalties that these licensees pay for

Second Generation.”176

x Prior to the launch of LTE as a 4G protocol Qualcomm announced its standard rates and

practices to the industry.177

x Finally, Qualcomm recently announced licensing terms for its 5G SEPs. These terms

include royalty rates of 3.25 percent for 5G multi-mode handsets and 2.275 percent for

5G single-mode handsets, and a reaffirmation that “[c]onsistent with Qualcomm’s Fair,

Reasonable and Non- Discriminatory (FRAND) commitments, European

Telecommunications Standards Institute (ETSI) Intellectual Property Right (IPR) policy

175 Qualcomm 1999 New York Analyst Meeting Presentation, “Analyst Meeting,” September 15, 1999, 

Q2014FTC04845624. See also Response to Specifications 4 and 24, p. 13 (“12/1999 -First 3GPP release of UMTS 

(including WCDMA)”) 

176 Qualcomm 1999 New York Analyst Meeting Presentation, “Analyst Meeting,” September 15, 1999, 

Q2014FTC04845624. 

177 Erik Stasik, “Royalty Rates and Licensing Strategies for Essential Patents on LTE (4G) Telecommunication 

Standards,” les Nouvelles 3, September 2010, pp. 114–119 at p. 116 (“Qualcomm ‘expects that it will charge 

royalties for a license under its standards essential LTE... patent portfolio...of approximately 3.25 percent of the 

wholesale selling price...’”) 

HIGHLY CONFIDENTIAL – ATTORNEYS’ EYES ONLY

REDACTED VERSION OF DOCUMENTS SOUGHT TO BE SEALED

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 16 of 70
Page 49

and industry practice, Qualcomm’s cellular standard essential patent licensing program is 

based upon licensing mobile handsets that fully conform to the 3GPP Standards.”178

179

95. The FTC and Professor Shapiro have failed to explain how their claim that

Qualcomm’s rates are not FRAND is consistent with (1) the wide held view that a FRAND rate 

is based what is known ex ante and (2) the evidence that industry participants were aware of 

Qualcomm’s licensing practices and royalty terms prior to adopting certain standards (i.e., that 

these terms were known ex ante). Moreover, they fail to explain why SDOs would have 

continued to incorporate Qualcomm’s technology into standards if Qualcomm’s standard royalty 

terms, which have been widely known and relatively constant for over two decades, were supraFRAND.

Professor Shapiro’s Simplistic Theory Is Incomplete and Ignores Many 

Complex Realities That Call into Question Its Predictions 

5.2.1. Professor Shapiro’s Theoretical Arguments Do Not Properly 

Consider the Many Factors That Enter into the Negotiation 

Process and That Could Drive the Ultimate Outcomes 

96. Professor Shapiro claims that Qualcomm’s royalties must be above FRAND

because of the leverage Qualcomm gets from its chip-supply practice, noting, “The fact that 

Qualcomm applies this leverage ... tells us the Qualcomm’s per unit royalty rate r exceeds the 

rate that would be negotiated separately ...”180 He continues, “[i]f not, there would be no need 

for Qualcomm to impose this conditionality.”181 This circular inference is incorrect. First, as a 

matter of logic it is incorrect to simply assume that Qualcomm applies this leverage and that the 

only reason this practice exists is to support the theoretical assumption Professor Shapiro makes. 

Second, real-world negotiations are messy, and their outcomes will depend on a variety of 

factors. The outcomes of real-world negotiations depend on the business strategy, bargaining 

178 “Qualcomm 5G NR Royalty Terms Statement”, Qualcomm, available at 

https://www.qualcomm.com/media/documents/files/qualcomm-5g-nr-royalty-terms-statement.pdf, accessed on June 

25, 2018 (emphasis added) 

179

180 Shapiro Report, ¶275. 181 Shapiro Report, ¶275. 

HIGHLY CONFIDENTIAL – ATTORNEYS’ EYES ONLY

REDACTED VERSION OF DOCUMENTS SOUGHT TO BE SEALED

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 17 of 70
Page 149

6.4.1.3. Professor Shapiro’s Analysis Ignores Current Evidence, 

Is Speculative, and Cannot Support Prospective Relief 

291. I understand that the FTC seeks prospective relief to prevent Qualcomm from

using its challenged business and licensing practices in the future. Professor Shapiro’s analysis, 

however, is backward-looking, which does not provide meaningful support to justify forwardlooking relief. His claims that Qualcomm may obtain market power in 5G chips or that 

Qualcomm might misuse this future market power to exclude its rivals are entirely speculative. 

292. In his backward-looking analysis, Professor Shapiro relies on evidence through

2016, which is now outdated, and does not consider available evidence from 2017 and 2018. In a 

dynamic and innovative industry it is crucial to use the most up-to-date data in order to even 

attempt to make predictions about the future. Professor Shapiro does not use the most recently 

available data. This is an important shortcoming. For example, he argues that Qualcomm has 

“monopoly power” in an alleged “premium” LTE market, but his analysis is based on data that 

end in 2016.506

507 The 

decrease in Qualcomm’s share is expected to continue in 2018 because of, among other things, 

Apple’s decision not to use Qualcomm’s chips in its new 2018 devices.508

293. As I showed throughout this report, Professor Shapiro has not presented a

complete theory and the necessary empirical evidence to support the FTC’s allegations that 

Qualcomm was able to use its market power in chips to obtain preferred royalty terms and 

exclude its rivals.509 Even if Qualcomm previously used its alleged market power to exclude 

rivals (which I demonstrate that it did not), Professor Shapiro cannot conclude on that basis that 

it will be able to do so in the future. 

294. First, Professor Shapiro asserts that Qualcomm will have market power in 5G,

presumably because of his allegation that Qualcomm had market power in standards for previous 

506 Shapiro Report, ¶223. 507 Shapiro Report, Figure 9. 508 Deposition of Jeff Williams (Chief Operating Officer at Apple), March 15, 2018 (“Williams (Chief Operating 

Officer of Apple) Deposition”), 34:14–35:2 (“Q. Does Apple plan to utilize Qualcomm modems for any new 

product releases in 2018? A. Unfortunately not.”) 

509 On the contrary, I found no evidence that Qualcomm used its alleged market power market to obtain preferred 

royalty terms or that Qualcomm’s conduct caused any anticompetitive effect. 

HIGHLY CONFIDENTIAL – ATTORNEYS’ EYES ONLY

REDACTED VERSION OF DOCUMENTS SOUGHT TO BE SEALED

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 18 of 70
Page 150

chips. Past evidence contradicts this: he alleges that Qualcomm had market power in CDMA 

chips but not in WCDMA, which shows that even according to his own allegations of past 

behavior Qualcomm need not have market power in 5G. In fact, rival chip makers, including 

Intel, Samsung, HiSilicon (Huawei), and MediaTek all announced the development of 5G 

chips.510

295. Second, Professor Shapiro does not claim that Qualcomm’s potential advantage in

5G will be obtained through any illegal conduct. As I discussed in this section, obtaining a 

competitive advantage through technological leadership due to innovation is not in itself 

anticompetitive. Nonetheless, Professor Shapiro speculates that Qualcomm’s innovation and 

market leadership in 5G may allow it to engage in future anticompetitive behavior.511 He 

provided no evidence that Qualcomm will be able to use any hypothesized future market power 

to exclude its rivals. 

296. Third, as I mentioned in Section 4.2.2, Qualcomm recently announced its new

licensing terms for its 5G SEPs,512 and despite the fact that Qualcomm does not have any alleged 

market power in 5G, 

.

513 Neither Professor Shapiro nor the other FTC experts have made any attempt to 

evaluate whether Qualcomm’s 5G rates are not FRAND or include any “tax.” This is particularly 

inconsistent with Mr. Lasinski’s analysis that is based on calculating standard-specific 

“reasonable royalties” and his claim that negotiations are “focus[ed] almost exclusively on ... the 

primary standard embodied in the handset,” in this case 5G.514

510 “Intel Introduces Portfolio of Commercial 5G New Radio Modems, Extends LTE Roadmap with Intel XMM 

7660 Modem,” Intel Newsroom, November 16, 2017, available at https://newsroom.intel.com/news/intel-introducesportfolio-new-commercial-5g-new-radio-modem-family/, accessed on June 25, 2018; “Exynos 9820 and 5G RF 

Chips Already in Development,” GSM Arena, April 4, 2018, available at 

https://www.gsmarena.com/exynos_9820_5g_rf_chips_development-news-30411.php, accessed on June 25, 2018; 

“Huawei Unveils Balong 5G01 5G Cellular Modem Chip, and 5G Routers,” CNXSoft, February 26, 2018, available 

at https://www.cnx-software.com/2018/02/26/huawei-unveils-balong-5g01-5g-cellular-modem-chip-and-5g-routers/, 

accessed on June 25, 2018; “MediaTek Announces Its First 5G Modem Chipset Helio M70, To Be Ready For 

Commercial Use in 2019,” Tech2, June 6, 2018, available at https://www.firstpost.com/tech/newsanalysis/mediatek-announces-its-first-5g-modem-chipset-helio-m70-to-be-ready-for-commercial-use-in-2019-

4498783 html, accessed on June 25, 2018. 

511 Shapiro Report, ¶¶313–315. 512 “Qualcomm 5G NR Royalty Terms Statement,” Qualcomm, November 19, 2017, available at 

https://www.qualcomm.com/media/documents/files/qualcomm-5g-nr-royalty-terms-statement.pdf, accessed on May 

10, 2018. 

513

APPCMSD10052189–296. 514 Lasinski Report, ¶85. 

HIGHLY CONFIDENTIAL – ATTORNEYS’ EYES ONLY

REDACTED VERSION OF DOCUMENTS SOUGHT TO BE SEALED

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 19 of 70
Page 151

297. For the all the reasons mentioned above, it is my opinion that Professor Shapiro’s

theory, which is not supported by the market outcomes, and speculations about future market 

conditions cannot justify or support the request for prospective relief. 

6.4.2. Professor Shapiro Has Not Demonstrated That the Alleged “Tax” 

Prevented Rivals from Operating Profitably or Precluded 

Innovation and Entry by Rivals 

298. Professor Shapiro does not claim that Qualcomm priced its chips below its

costs;515 consequently, an equally efficient competitor could operate profitably even if the 

outcome of short-run competition under the alleged “tax” was a decrease in chip prices. 

Professor Shapiro has also not demonstrated empirically that Qualcomm’s CDMA or “premium” 

LTE chip prices were below any relevant cost measure. I understand that Dr. Chipty has shown 

that Qualcomm historically earned positive margins on its chip sales, in particular its CDMA and 

“premium” LTE chip sales. Professor Shapiro has not explained how these positive margins are 

inconsistent with any allegation that Qualcomm lowered its short-run chip prices below its cost 

with the intention to exclude competitors. 

299. Professor Shapiro’s own analysis yields a similar conclusion. Professor Shapiro

relies on WCDMA as a competitive benchmark to which he compares CDMA chip pricing.516

His conclusion that margins benchmark is 

inconsistent with his theory of exclusion,517 which relies on Qualcomm’s conduct leading to 

suppressed margins for rival chip makers.518 His claim is that rivals were hurt by suppressed 

margins, yet he does not reconcile this with the fact that margins are higher in the market where 

the alleged conduct allegedly occurred. Furthermore, an equally efficient competitor could have 

successfully entered and competed. Indeed, Professor Shapiro acknowledges that entry into the 

alleged markets has occurred.519

515 Professor Shapiro claims that Qualcomm sold chips to Apple for use in iPad models at below-cost prices. I 

understand that this claim will be addressed by Dr. Chipty. I note that even if that claim were true, I understand the 

volumes involved to be a small share of Qualcomm’s chip sales to Apple. Therefore, they would not affect my 

overall analysis of Professor Shapiro’s theory. Shapiro Report, Section XI.D. 

516 Shapiro Report, ¶¶154–155. 517 Professor Shapiro argues that

See Shapiro Report, ¶165. 518 See, e.g., Shapiro Report, ¶263 (“If Qualcomm were unable to leverage its modem-chip market power to raise the 

royalty that it charges for its cellular SEPs, the price Qualcomm could charge for its modem chips would be 

limited...because high modem chip prices would encourage increased supply, investment, and entry by rival 

modem-chip suppliers.”) 

519 Shapiro Report, ¶¶157, 183. See also Shapiro Report Figure 5 and Figure 9. 

HIGHLY CONFIDENTIAL – ATTORNEYS’ EYES ONLY

REDACTED VERSION OF DOCUMENTS SOUGHT TO BE SEALED

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 20 of 70
Materials Relied Upon

Academic Articles

x Alexander Galetovic et al., “An Empirical Examination of Patent Holdup,” Journal of Competition 

Law and Economics 11(3), 2015, pp. 549–578. 

x Anne Layne-Farrar, “The Practicalities and Pitfalls of the Smallest Saleable Patent Practicing Unit 

Doctrine: A Review of Teece and Sherry,” les Nouvelles – Journal of the Licensing Executives Society

51(4), February 18, 2016, pp. 234–238. 

x Ariel Pakes, “A Reconsideration of Hedonic Price Indexes with an Application to PC’s,” American 

Economic Review 93(5), 2003, pp.1578-1596. 

x Ariel Rubinstein, “Perfect Equilibrium in a Bargaining Model,” Econometrica 50(1), 1982, pp. 97–

109. 

x Dan Saugstrup and Anders Henten, “3G Standards: The battle between WCDMA and CDMA2000,” 

Info 8(4), 2006, pp. 10–20. 

x Daniel G. Swanson and William J. Baumol, “Reasonable and Nondiscriminatory (RAND) Royalties, 

Standards Selection, and Control of Market Power,” Antitrust Law Journal 73(1), 2005, pp. 1–58. 

x David J. Teece and Edward F. Sherry, “On the ‘Smallest Saleable Patent Practicing Unit’ Doctrine: An 

Economic and Public Policy Analysis,” Tusher Center for the Management of Intellectual Capital,

Working Paper Series No. 11, January 20, 2016, at pp. 1–33. 

x David J. Teece and Edward F. Sherry, “Standards Setting, Standards Development and Division of the 

Gains from Standardization,” Competition Policy International, September 2016. 

x David M. Byrne and Carol A. Corrado, “Prices for Communications Equipment: Rewriting the 

Record,” Finance and Economics Discussion Series 2015-069, Washington: Board of Governors of 

the Federal Reserve System, 2015, pp. 9–10. 

x E. Glen Weyl and Michal Fabinger, “Pass-Through as an Economic Tool: Principles of Incidence 

under Imperfect Competition,” Journal of Political Economy, 121(3), June, 2013, pp. 528–583. 

x Erik Stasik, “Royalty Rates and Licensing Strategies for Essential Patents on LTE (4G) 

Telecommunication Standards,” les Nouvelles 3, September 2010, pp. 114–119. 

x Ernst R. Berndt et al., “Econometric estimates of price indexes for personal computers in the 1990’s.” 

Journal of Econometrics 68(1), 1995, pp. 243-268. 

x Frank H. Easterbrook, “When Is It Worthwhile to Use Courts to Search for Exclusionary Conduct?” 

Columbia Business Law Review, 345(2), 2003, pp. 345–358. 

x Jack E. Triplett, “Handbook on Hedonic Indexes and Quality Adjustments in Price Indexes: Special 

Application to Information Technology Products,” OECD Science, Technology and Industry Working 

Papers, 2004, available at http://dx.doi.org/10.1787/643587187107, accessed on June 28, 2018. 

x John F. Nash, Jr., “The Bargaining Problem,” Econometrica 18(2), 1950, pp. 155–162. 

x Joseph Farrell and Carl Shapiro, “Antitrust Evaluation of Horizontal Mergers: An Economic 

Alternative to Market Definition,” The B.E. Journal of Theoretical Economics, 10(1), 2010.

x Joseph Farrell and Carl Shapiro, “Recapture, Pass-Through, and Market Definition,” Antitrust Law 

Journal, 76, pp. 585–604. 

APPENDIX C

HIGHLY CONFIDENTIAL – ATTORNEYS’ EYES ONLY Page 1

REDACTED VERSION OF DOCUMENTS SOUGHT TO BE SEALED

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 21 of 70
x Deposition of Seung Ho Ahn (Head of IP Center at Samsung), March 28, 2018.

x Deposition of Steve Mollenkopf (Chief Executive Officer of Qualcomm), March 21–22, 2018.

x Deposition of Taraneh Maghame (Senior Director of Wireless Programs and Corporate Development at

Via Licensing, Former Senior Counsel at Apple), March 14, 2018.

x Deposition of Todd Madderom (Director of Procurement at Motorola), March 16, 2018.

x Deposition of Tony Blevins (Former Director of Corporate Procurement at Apple), March 13, 2018.

x Deposition of William Bernard Wyatt IV (Vice President of Finance at QCT), January 16, 2018.

x Deposition of William Bernard Wyatt IV (Vice President of Finance at QCT), May 4, 2018.

x Phone Interview with Fabian Gonell (Senior Vice President of Licensing Strategy and Legal Counsel at

QTL), June 26, 2018.

Expert Reports

x Expert Report of Carl Shapiro, May 24, 2018.

x Expert Report of Michael J. Lasinski, May 24. 2018.

x Expert Report of Richard Donaldson, May 24, 2018.

Legal Documents 

x Apple Inc.’s First Supplemental Responses to Interrogatory Nos. 1, 6, 7, 11, and 21 of Qualcomm

Incorporated’s First Set of Interrogatories, Apple Inc. v. Qualcomm Incorporated, January 5, 2018.

x Complaint for Patent Infringement and Declaratory Judgment, Nokia Corporation v. Apple Inc., October

22, 2009.

x Federal Trade Commission’s Complaint for Equitable Relief, Federal Trade Commission v. Qualcomm

Incorporated, January 17, 2017.

x Federal Trade Commission’s Opposition to Qualcomm’s Motion to Dismiss, Federal Trade Commission

v. Qualcomm Incorporation, May 12, 2017

x Findings of Fact and Conclusion of Law, Microsoft Corporation v. Motorola, Inc., et al,; Motorola

Mobility, Inc., et al., v. Microsoft Corporation, April 25, 2013.

x Joint Stipulation Regarding Final Award, BlackBerry Limited v. Qualcomm Incorporated, May 25, 2017,

QNDCAL03517938–41.

x Memorandum of Findings of Fact and Conclusions of Law, TCL Communication Technology Holdings,

Ltd., et al., v. Telefonaktiebolaget LM Ericsson, et al.; Ericsson Inc., et al., v. TCL Communication

Technology Holdings, Ltd., et al., November 8, 2017

x Memorandum Opinion, United States of America v. AT&T Inc., et al., June 12, 2018.

x Nokia Corporation v. Apple Inc., 1:09-cv-00791-GMS (D. Delaware).

x Plaintiff Federal Trade Commission’s Amended Objections and Response to Defendant Qualcomm’s

Interrogatory No. 13, Federal Trade Commission v. Qualcomm Incorporated, March 23, 2018.

x Plaintiff Federal Trade Commission’s First Amended Objections and Responses to Defendant

Qualcomm’s First Set of Interrogatories, Federal Trade Commission v. Qualcomm Incorporated, January

8, 2018.

x Plaintiff Federal Trade Commission’s First Supplemental Objections and Reponses to Defendant

Qualcomm’s Interrogatory Nos. Fourteen and Fifteen, Federal Trade Commission v. Qualcomm

Incorporated, May 24, 2018.

x Plaintiff Federal Trade Commission’s Objections and Responses to Defendant Qualcomm’s First Set of

APPENDIX C

HIGHLY CONFIDENTIAL – ATTORNEYS’ EYES ONLY Page 21

REDACTED VERSION OF DOCUMENTS SOUGHT TO BE SEALED

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 22 of 70
EXHIBIT 

REDACTED VERSION OF DOCUMENTS SOUGHT TO BE SEALED

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 23 of 70
1 IN THE UNITED STATES DISTRICT COURT

2 FOR THE NORTHERN DISTRICT OF CALIFORNIA

3 ---------------------

4 FEDERAL TRADE COMMISSION, )

5 Plaintiff, )

6 vs. ) Case No.

7 QUALCOMM, INCORPORATED, ) 5:17-cv-0220-LHK-NMC

8 Defendant. )

9 --------------------------)

10

11 Friday, August 10, 2018

12

13 825 Eighth Avenue

14 New York, New York

15

16 The above-entitled matter came on for the deposition of

17 AVIV NEVO, pursuant to notice, at 9:07 a.m.

18

19

20

21

22

23

24

25

REDACTED VERSION OF DOCUMENTS SOUGHT TO BE SEALED

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 24 of 70
27

Nevo - Highly Confidential

FTC v. Qualcomm, Inc. 8/10/2018

(301) 870-8025 - www.ftrinc.net - (800) 921-5555

For The Record, Inc.

1 that we cite in the report.

2 Q. So if you look at appendix C, page 21 --

3 A. Yeah.

4 Q. -- Page 21 --

5 A. Okay.

6 Q. -- and it's the last bullet before the

7 subheading "expert reports".

8 A. Yes.

9 Q. And you see there that you've identified a

10 phone interview with Fabian Gannel?

11 A. Yes, that's correct.

12 Q. Is that phone interview cited in your report?

13 A. I believe it is and if it's not, it's something

14 that we thought, you know, should we disclose something

15 that I relied upon, because we did have that phone

16 interview.

17 Q. Right. Tell me about that phone interview.

18 A. I'd have to go back and see exactly what it was

19 but there was some issue about Qualcomm's licensing

20 that I wanted clarification about.

21 Q. What was it about Qualcomm's licensing?

22 A. I'd have to -- I'd have to look an see exactly

23 where I cited. I don't remember the exact, the exact

24 details of that conversation but wherever it is that we

25 cite, it was some detail that we wanted to understand

REDACTED VERSION OF DOCUMENTS SOUGHT TO BE SEALED

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 25 of 70
28

Nevo - Highly Confidential

FTC v. Qualcomm, Inc. 8/10/2018

(301) 870-8025 - www.ftrinc.net - (800) 921-5555

For The Record, Inc.

1 about the licensing practices that we wanted to get

2 clarification from Fabian.

3 Q. If you wanted to understand what it was that

4 you discussed with Mr. Gannel in that interview, where

5 would you check?

6 A. Well, I would check where it was actually

7 cited.

8 Q. Let's assume that it's not cited in the report.

9 What would you check?

10 MR. EVEN: Objection.

11 Q. To find out whether -- whether -- what the

12 content of that interview was?

13 MR. EVEN: Objection. Are you representing to

14 him that it's not cited or are you asking him to assume

15 that it's not cited or?

16 MS. MILICI: I am representing that I was

17 unable to find the citation in the report. If you --

18 if you can point me to it then that would be great, but

19 I was unable to find it.

20 A. Okay. I can look through it now but it will

21 take me a long time, so.

22 Q. I'm asking -- that's why I'm suggesting that

23 instead of doing that, let's assume that it's not in

24 there. Where would you look to find out what the

25 content of that report -- of that interview was and

REDACTED VERSION OF DOCUMENTS SOUGHT TO BE SEALED

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 26 of 70
29

Nevo - Highly Confidential

FTC v. Qualcomm, Inc. 8/10/2018

(301) 870-8025 - www.ftrinc.net - (800) 921-5555

For The Record, Inc.

1 what it was you relied upon it for?

2 MR. EVEN: Objection. Asked and answered.

3 A. I will look in the report. If it's not in the

4 report I don't have notes of that phone call, so.

5 Q. So you had an interview with Fabian Gannel, you

6 relied upon it for something, but you're not sure what

7 it was and there's not a record that would tell you

8 what you -- what it was?

9 A. Well, it -- whatever -- whatever was discussed

10 to the extent that it was relied upon in the report,

11 you know, if it was relied upon in the report it should

12 be cited in the report. And I can't, you know, as I

13 sit here today, I mean, it's a long report with a lot

14 of footnotes. I can't put the exact -- put exactly

15 where it is, but I can look for it.

16 Q. So you don't have any recollection of what that

17 phone interview was about other than generally

18 licensing practices?

19 A. I don't remember specifically as I sit here

20 today.

21 Q. Do you -- do you remember generally?

22 A. Not on a level that I'm -- beyond what I've

23 just said, no.

24 Q. So you -- this -- this list is the materials

25 that are cited in your report, is your testimony?

REDACTED VERSION OF DOCUMENTS SOUGHT TO BE SEALED

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 27 of 70
89

Nevo - Highly Confidential

FTC v. Qualcomm, Inc. 8/10/2018

(301) 870-8025 - www.ftrinc.net - (800) 921-5555

For The Record, Inc.

1 what it is for 2G and generally there's this

2 announcement that the rates have stayed the same. So

3 that would form a reasonable expectation as to what

4 Qualcomm's demands will be.

5 Q. Do you know how -- how long after this

6 announcement in September 1999 the WCDMA standard was

7 adopted?

8 A. I can't certainly now, but I'm sure we can look

9 it in the exhibit, because it's there.

10 Q. Have you done any investigation to determine if

11 it was technically possible to alter the WCDMA standard

12 after September of 1999 to exclude Qualcomm's

13 inventions?

14 A. I have -- I have not, no.

15 Q. So I believe you testified that the ex ante

16 announcement important, and why is that? If the rate

17 was too high, what is it that -- that should have

18 happened?

19 A. Well, there's a variety of things that could

20 have happened. Some could have been through the

21 setting standard developing organization, considered a

22 standard setting organization to try to find a work

23 around. That's one thing and even if it can't be, you

24 know, in that particular standard, again, I don't know

25 that particular date could have actually been okay, we

REDACTED VERSION OF DOCUMENTS SOUGHT TO BE SEALED

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 28 of 70
90

Nevo - Highly Confidential

FTC v. Qualcomm, Inc. 8/10/2018

(301) 870-8025 - www.ftrinc.net - (800) 921-5555

For The Record, Inc.

1 got to move forward maybe and, you know, this next --

2 the next version we might be -- we might try to go and

3 see what is our next best alternative, is there

4 something that we could turn to.

5 Q. In your report, in the background section of

6 your report, I believe that you represent that the

7 WCDMA standard is based on Qualcomm's fundamental 2G

8 CDMA technology. Is that -- is that a fair statement?

9 A. I don't know if based is exactly the right

10 word. I think that it builds a lot of the, let me call

11 ideas, that were developed by Qualcomm and CDMA, yes.

12 Q. Would excluding Qualcomm's technology from

13 WCDMA fundamentally alter the standard?

14 A. Again, I don't know. We'd have to ask, you

15 know, the engineers would go into it, but that might

16 indeed be the case, yes.

17 Q. So would that affect your opinion that this

18 announcement that some people are saying is the same

19 rate for 2G and for 3G is relevant to what the FRAND

20 rate is?

21 A. No.

22 MR. EVEN: Objection. Go ahead.

23 A. No. I mean, it seems to me that knowing this

24 information prior to the adoption was something, again,

25 that was known and fits into exactly this idea of

REDACTED VERSION OF DOCUMENTS SOUGHT TO BE SEALED

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 29 of 70
256

Nevo - Highly Confidential

FTC v. Qualcomm, Inc. 8/10/2018

(301) 870-8025 - www.ftrinc.net - (800) 921-5555

For The Record, Inc.

1 Q. I'm just going to go back to my question. You

2 are not saying that because it was announced ex ante

3 it's a fair and reasonable rate?

4 A. And I'll repeat the same answer as before.

5 Q. Well that's a yes or no question. Are you

6 saying that because it was known ex ante, it is a fair

7 and reasonable rate?

8 MR. EVEN: Objection. Mischaracterizes

9 testimony and I think asked and answered like four

10 times now.

11 A. I can't offer an opinion one way or the other.

12 I'm saying this was known.

13 Q. Okay. You mentioned that

14 signed onto 5G licenses?

15 A. Yes, I did.

16 Q. Do those licenses also change the terms for 3G

17 and 4G?

18 A. I don't remember off the top of my head.

19 Q. Have you seen any negotiation documents about

20 those licenses?

21 A. You know, those were fairly recent and I'm -- I

22 can't remember. As I said, I've looked at so many --

23 so many documents I can't remember specifically if I

24 looked at those.

25 Q. Do you know whether there was any discussion

REDACTED VERSION OF DOCUMENTS SOUGHT TO BE SEALED

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 30 of 70
257

Nevo - Highly Confidential

FTC v. Qualcomm, Inc. 8/10/2018

(301) 870-8025 - www.ftrinc.net - (800) 921-5555

For The Record, Inc.

1 about the chip supply in the negotiations of those

2 licenses?

3 A. Again, I don't -- I don't remember one way or

4 the other as I sit here today.

5 Q. Do you know whether you ever knew that

6 information?

7 A. Again, I can't remember right now.

8 Q. So you don't know whether there were any

9 suggestion that chip supply would be interrupted, do

10 you?

11 A. I did not look at the specifics of -- so I

12 can't -- as I sit here today -- sorry let me just -- as

13 I sit here today I can't recall any of those details.

14 Q. Do you know whether Qualcomm

15 ?

16 A. As I sit here today, I can't answer one way or

17 the other.

18 Q. So you don't know whether any financial

19 incentives were offered to those companies, do you?

20 MR. EVEN: Objection. Vague as to the term

21 financial incentives.

22 A. As I said, as I sit here today, I don't recall

23 the specific details.

24 Q. Can you look at paragraph 167 of your report.

25 A. Sure.

REDACTED VERSION OF DOCUMENTS SOUGHT TO BE SEALED

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 31 of 70
EXHIBIT 

REDACTED VERSION OF DOCUMENTS SOUGHT TO BE SEALED

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 32 of 70
),/('81'(56($/

REDACTED VERSION OF DOCUMENTS SOUGHT TO BE SEALED 

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 33 of 70
EXHIBIT 

REDACTED VERSION OF DOCUMENTS SOUGHT TO BE SEALED

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 34 of 70
),/('81'(56($/

REDACTED VERSION OF DOCUMENTS SOUGHT TO BE SEALED 

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 35 of 70
EXHIBIT 

REDACTED VERSION OF DOCUMENTS SOUGHT TO BE SEALED

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 36 of 70
),/('81'(56($/

REDACTED VERSION OF DOCUMENTS SOUGHT TO BE SEALED 

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 37 of 70
EXHIBIT 

REDACTED VERSION OF DOCUMENTS SOUGHT TO BE SEALED

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 38 of 70
),/('81'(56($/

REDACTED VERSION OF DOCUMENTS SOUGHT TO BE SEALED 

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 39 of 70
EXHIBIT 

REDACTED VERSION OF DOCUMENTS SOUGHT TO BE SEALED

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 40 of 70
),/('81'(56($/

REDACTED VERSION OF DOCUMENTS SOUGHT TO BE SEALED 

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 41 of 70
EXHIBIT 

REDACTED VERSION OF DOCUMENTS SOUGHT TO BE SEALED

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 42 of 70
 UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

FEDERAL TRADE COMMISSION, Case No.

5:17-cv-00220-LHK-

 Plaintiff, NMC

v.

Case No.

QUALCOMM INCORPORATED, a 5:17-md-02773-LHK

Delaware corporation,

Defendant.

______________________________

IN RE: QUALCOMM ANTITRUST

LITIGATION

______________________________

*** TRANSCRIPT DESIGNATED HIGHLY CONFIDENTIAL UNDER THE

PROTECTIVE ORDER ***

VIDEOTAPED DEPOSITION OF FABIAN GONELL

Friday, April 20, 2018, 9:05 a.m.

4655 Executive Drive, Suite 1500, San Diego, California

Reported by:

Harry Alan Palter

CSR No. 7708, Certified LiveNote Reporter

Fabian Gonell Highly Confidential Under The Protective Order

April 20, 2018

U.S. Legal Support | www.uslegalsupport.com

REDACTED VERSION OF DOCUMENTS SOUGHT TO BE SEALED

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 43 of 70
1 of a deal that included a bunch of things from --

2 from them as well, including large up-front payments

3 in both cases.

4 Q And what about Microsoft?

5 A Microsoft is a successor-in-interest to

6 the Nokia agreements. It's the same thing.

7 Q On the next page of this, CX7286-006 --

8 A Yes.

9 Q -- this has a messaging to external

10 audience at the top -- the bullet under the title.

11 And in the second sub-bullet from the bottom, says,

12 "Rates and caps for 5G are FRAND." Do you see that?

13 A Yes.

14 Q Has Qualcomm done any analysis of whether

15 the rates and caps it has announced for 5G are

16 FRAND?

17 A Any analysis of the FRAND-ness of that?

18 MR. BORNSTEIN: So exclude from your

19 answer any litigation or legal analysis that the

20 question might call for -- if there is any.

21 THE WITNESS: No. I don't think that

22 analysis is possible yet because you don't have the

23 essential patents yet so you don't have any -- you

24 don't have products yet so you don't have the -- you

25 know, you don't have the underlying information you

Fabian Gonell Highly Confidential Under The Protective Order

April 20, 2018

U.S. Legal Support | www.uslegalsupport.com

17:49:32

17:49:50

17:50:09

17:50:29

17:50:42

Fabian Gonell Highly Confidential Under The Protective Order

April 20, 2018

266

17:49:32

17:49:50

17:50:09

17:50:29

17:50:42

Fabian Gonell Highly Confidential Under The Protective Order

April 20, 2018

U.S. Legal Support | www.uslegalsupport.com

REDACTED VERSION OF DOCUMENTS SOUGHT TO BE SEALED

266

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 44 of 70
1 need.

2 BY MS. MILICI:

3 Q Is there any way to evaluate at this

4 point whether the rate Qualcomm has announced for 5G

5 is FRAND?

6 A There's -- there's some data points you

7 can use. And there's reasons why we think it's --

8 why we think it's FRAND. But I don't know that you

9 can do an actual analysis without having products at

10 least.

11 Q Okay. And what -- what are the data

12 points that you could use that are available now?

13 A So we have existing -- we have existing

14 licenses for other technologies -- and, in

15 particular, 4G-related technologies.

16 5G foundationally is going to be based on

17 a lot of the same stuff that 4G is based on. So

18 there's going to be a lot of overlap, particularly

19 in the beginning. And the applications -- use cases

20 are going to be largely the same. Maybe there are

21 going to be some improved use cases but they're

22 going to be largely the same in many cases. So

23 those factors point to 4G rates being a good proxy

24 for 5G rates.

25 It's not certain, of course, but those

Fabian Gonell Highly Confidential Under The Protective Order

April 20, 2018

U.S. Legal Support | www.uslegalsupport.com

17:51:00

17:51:21

17:51:41

17:51:59

17:52:21

Fabian Gonell Highly Confidential Under The Protective Order

April 20, 2018

267

17:51:00

17:51:21

17:51:41

17:51:59

17:52:21

Fabian Gonell Highly Confidential Under The Protective Order

April 20, 2018

U.S. Legal Support | www.uslegalsupport.com

REDACTED VERSION OF DOCUMENTS SOUGHT TO BE SEALED

267

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 45 of 70
1 are -- that's information that's relevant.

2 Q Are there other data points one could

3 look at now to determine whether the announced 5G

4 rates are FRAND?

5 A Not that I can think of offhand.

6 Q Okay. And when you said earlier that you

7 couldn't do a full analysis based on the information

8 that's available now, what was the full analysis you

9 were referring to?

10 A Well, you know -- FRAND rates need to be

11 based on the value of the patented technologies to

12 the product. If you don't have products to analyze,

13 you can't do that analysis. That's -- it's -- yeah,

14 that's pretty much just what I meant.

15 Q When you say the, "FRAND rates need to be

16 based on the value of the patented technologies to

17 the product," how is it that you base a royalty rate

18 on the value of the patented technology to the

19 product?

20 A Um, through market forces and negotiation

21 mainly; right? So you have information that you

22 think is relevant, and you say: Okay. So I think

23 the price should be "X." -- the other side has their

24 information -- the prices rely, and the people talk

25 about it, and they agree or disagree. And if they

Fabian Gonell Highly Confidential Under The Protective Order

April 20, 2018

U.S. Legal Support | www.uslegalsupport.com

17:52:37

17:52:58

17:53:21

17:53:34

17:53:55

Fabian Gonell Highly Confidential Under The Protective Order

April 20, 2018

268

17:52:37

17:52:58

17:53:21

17:53:34

17:53:55

Fabian Gonell Highly Confidential Under The Protective Order

April 20, 2018

U.S. Legal Support | www.uslegalsupport.com

REDACTED VERSION OF DOCUMENTS SOUGHT TO BE SEALED

268

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 46 of 70
REDACTED VERSION OF DOCUMENT SOUGHT TO BE SEALED

Qualcomm’s Opposition to FTC’s Motion to 

Exclude Testimony of Prof. Aviv Nevo

Case No. 5:17-cv-00220-LHK-NMC

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

CRAVATH, SWAINE & MOORE LLP

Gary A. Bornstein (pro hac vice) 

gbornstein@cravath.com 

Yonatan Even (pro hac vice) 

yeven@cravath.com

825 Eighth Avenue 

New York, New York 10019-7475 

Telephone: (212) 474-1000 

Facsimile: (212) 474-3700 

KEKER, VAN NEST & PETERS LLP

Robert A. Van Nest (SBN 84065) 

rvannest@keker.com 

Eugene M. Paige (SBN 202849) 

epaige@keker.com

Justina K. Sessions (SBN 270914) 

jsessions@keker.com 

633 Battery Street

San Francisco, CA 94111-1809 

Telephone: (415) 391-5400 

Facsimile: (415) 397-7188 

Attorneys for Defendant 

QUALCOMM INCORPORATED

MORGAN LEWIS & BOCKIUS LLP

Richard S. Taffet (pro hac vice) 

richard.taffet@morganlewis.com 

101 Park Avenue 

New York, New York 10178-0060 

Tel: (212) 309-6000 

Fax: (212) 309-6001 

MORGAN LEWIS & BOCKIUS LLP

Willard K. Tom (pro hac vice) 

willard.tom@morganlewis.com 

1111 Pennsylvania Ave. NW 

Washington, DC 20004-2541 

Telephone: (202) 739-3000 

Facsimile: (202) 739-3001 

MORGAN LEWIS & BOCKIUS LLP

Geoffrey T. Holtz (SBN 191370) 

geoffrey.holtz@morganlewis.com 

One Market, Spear Street Tower

San Francisco, CA 94105-1596 

Telephone: (415) 442-1000 

Facsimile: (415) 442-1001 

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

FEDERAL TRADE COMMISSION,

Plaintiff,

vs. 

QUALCOMM INCORPORATED, a Delaware 

corporation, 

Defendant.

Case No. 5:17-cv-00220-LHK-NMC

DEFENDANT QUALCOMM 

INCORPORATED’S OPPOSITION TO 

FEDERAL TRADE COMMISSION’S 

MOTION TO EXCLUDE EXPERT 

TESTIMONY OF PROFESSOR AVIV 

NEVO

Date: October 18, 2018 

Time: 1:30 p.m. 

Courtroom: 8, 4th Floor 

Judge: Hon. Lucy H. Koh

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 47 of 70
1 Qualcomm’s Opposition to FTC’s Motion to 

Exclude Testimony of Prof. Aviv Nevo

Case No. 5:17-cv-00220-LHK-NMC

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

INTRODUCTION

Based on an incorrect assertion that certain documents were improperly withheld by 

Qualcomm during fact discovery, the FTC seeks to exclude highly relevant opinions offered by 

Qualcomm’s expert economist, Prof. Aviv Nevo, in direct response to opinions stated by the 

FTC’s expert. In particular, the FTC asks the Court to exclude Prof. Nevo’s opinions based on 

two executed license agreements relating to fifth-generation (“5G”) cellular technology that the 

FTC incorrectly contends were “late-produced”. (Mot. at 1, 6.) In fact, neither agreement was 

reached—and therefore neither agreement was executed or in existence—until after fact 

discovery ended. Qualcomm did not improperly withhold the agreements, and the FTC’s 

suggestion of discovery misconduct has no basis. 

The FTC’s motion is therefore not aimed at striking opinions based on belatedly produced 

documents; it is aimed at limiting the ability of Qualcomm’s expert to opine about current market 

conditions and to assess their likely effect on prospective events—even though the FTC is asking 

the Court to impose prospective injunctive relief. The FTC’s economic expert, Prof. Carl 

Shapiro, raised 5G licensing in his opening report, providing several opinions about the 

hypothesized future effects of Qualcomm’s conduct on 5G technology. Prof. Shapiro offered 

these opinions to support the FTC’s claim that forward-looking injunctive relief is necessary to 

restore competition in modem chip markets. In responding to Prof. Shapiro’s opinions, 

Prof. Nevo observed in his rebuttal report that neither the FTC nor Prof. Shapiro had attempted to 

evaluate whether Qualcomm’s announced 5G licensing terms are consistent with Qualcomm’s 

FRAND commitments or include any alleged anticompetitive “tax”. To support that point, 

Prof. Nevo noted that several companies—including those that have entered into the license 

agreements at issue on this motion—have agreed to Qualcomm’s 5G terms, at a time when 

Qualcomm does not sell 5G chips and thus cannot have any 5G market power, and at a time when 

Prof. Shapiro does not opine that Qualcomm has monopoly power in any relevant market. 

Thus, the FTC brought 5G licensing into the case, and Prof. Nevo responded by referring 

in part to recent events that are directly relevant to—and refute—the FTC’s argument. The FTC 

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 48 of 70
2 Qualcomm’s Opposition to FTC’s Motion to 

Exclude Testimony of Prof. Aviv Nevo

Case No. 5:17-cv-00220-LHK-NMC

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

now asks the Court to prohibit Prof. Nevo from relying on these recent events and instead require 

him to respond to Prof. Shapiro’s hypotheses about 5G as if these events had never occurred. 

There simply is no reason why Qualcomm’s expert should be forced to opine about these issues—

which the FTC has raised to support a request for prospective injunctive relief—without the 

benefit of real-world facts. Neither Prof. Nevo nor, eventually, the Court should have to 

speculate about events that already have transpired.

Prof. Nevo’s opinions would cause no unfair prejudice to the FTC, let alone unfair 

prejudice that substantially outweighs the probative value of his opinions. The FTC’s argument 

that it did not have the opportunity to “test or rebut Prof. Nevo’s conclusions” regarding these 

agreements is incorrect. (Mot. at 1.) Qualcomm produced the agreements nearly one month 

before the FTC served its rebuttal expert reports, giving the FTC and its experts ample 

opportunity to respond to Prof. Nevo’s opinions. By the time of Prof. Shapiro’s rebuttal report, 

the FTC and Prof. Shapiro were fully aware of the two 5G agreements at issue and of Prof. 

Nevo’s opinions based on them, but simply did not address them. Nor did the FTC raise any 

contemporaneous objection to the production of the 5G agreements, but instead waited and raised 

the issue for the first time in this motion.

To the extent the FTC advocates a blanket rule prohibiting an expert from opining about 

events occurring after the close of fact discovery, that is contrary to law, and especially so in a 

case seeking prospective injunctive relief—which must necessarily take into account current 

conditions near the time any prospective remedy would be ordered. Because the FTC has failed 

to prove that the probative value of Prof. Nevo’s opinions is substantially outweighed by any 

unfair prejudice, the FTC’s motion should be denied. 

STATEMENT OF FACTS

A. The License Agreements Were Reached After the Close of Fact Discovery.

(Declaration of J. Milici in Support of FTC’s Motion (“Milici Decl.”) Ex. 3), and the 

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 49 of 70
3 Qualcomm’s Opposition to FTC’s Motion to 

Exclude Testimony of Prof. Aviv Nevo

Case No. 5:17-cv-00220-LHK-NMC

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

(Milici Decl. Ex. 5). The FTC’s 

Motion asserts that, “[a]ccording to the [Rebuttal Report of Prof. Aviv Nevo (“Nevo Report”)], 

, 

respectively. (Mot. at 3.) Prof. Nevo’s Report, however, refers to the effective dates of the 

agreements, not to their dates of execution. As explained in the Declaration of Fabian Gonell 

accompanying this brief, it is not uncommon for parties to agree that the effective date of a 

license agreement, 

(Gonell Decl. ¶ 7.) 

On its face, the 

. (Milici Decl. Ex. 5; see also Gonell Decl. 

¶ 6.)1

 

. (Gonell Decl. ¶ 4.) Accordingly, 

Qualcomm could not have produced the agreements prior to the close of fact discovery or prior to 

the deposition of Qualcomm’s Rule 30(b)(6) designee on certain licensing topics (Mr. Gonell) 

because . Had the FTC asked Qualcomm why the 

agreements were produced after the close of fact discovery, Qualcomm could and would have 

provided information about —but the FTC did not do so. It first registered 

an objection to what it now alleges were “late-produced” agreements by bringing the instant 

motion. (Mot. at 6.) Similarly, the FTC’s allegation that at deposition Mr. Gonell improperly 

“made no mention of the licenses or negotiations, even though one had already been ” 

(Mot. at 4) is incorrect; by the date of the deposition (Gonell 

Decl. ¶¶ 4, 6), and the FTC did not ask Mr. Gonell any questions to which information about the 

1

 Indeed, at one point, the FTC’s motion acknowledges that the 

 as the motion elsewhere suggests, but repeats the 

FTC’s erroneous assumption that the . 

(Mot. at 4 n.5.) 

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 50 of 70
4 Qualcomm’s Opposition to FTC’s Motion to 

Exclude Testimony of Prof. Aviv Nevo

Case No. 5:17-cv-00220-LHK-NMC

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

negotiations of these agreements would have been responsive. 

The FTC contends that the two at-issue license agreements were produced “after . . . the 

deadline for the submission of the FTC’s expert reports had passed.” (Mot. at 3.) But the 

 was produced on June 22, 2018, and the was 

produced on June 28, 2018, four weeks before the FTC’s deadline for service of rebuttal expert 

reports, on July 26, 2018. (Declaration of M. Brent Byars in Support of Qualcomm’s Opposition 

(“Byars Decl.”) ¶¶ 2, 3.) Because the and Prof. Nevo’s 

opinions based on them were disclosed in Prof. Nevo’s report, which Prof. Shapiro responded to 

in his rebuttal report, Prof. Shapiro knew about and had access to those two 5G license 

agreements when preparing his rebuttal report. And in his rebuttal report, Prof. Shapiro 

specifically addressed 5G, claiming that he “would expect the anticompetitive effects from the 

Qualcomm policies at issue in this case to continue into the future”, including in licenses for the 

5G standard. (Byars Decl. Ex. 2 (Rebuttal Report of Prof. Carl Shapiro (“Shapiro Rebuttal 

Report”)) ¶ 113.) The fact that Prof. Shapiro decided not to consider or address the 

is therefore the result of the FTC’s tactical decision to ignore realworld evidence of 5G licensing, have Prof. Shapiro opine about future 5G licensing as if that 

evidence did not exist, and then seek to exclude Prof. Nevo’s opinions that take actual 5G 

agreements into account. 

B. The License Agreements Are Highly Relevant to Opinions Proffered by the

FTC’s and Qualcomm’s Economists.

Because the FTC seeks prospective injunctive relief that would cover 5G licensing, 

Prof. Nevo’s opinions about recently executed 5G license agreements are highly relevant. In its 

Complaint, the FTC requests that Qualcomm be “permanently enjoined from engaging in similar 

and related conduct in the future”. (Compl. Prayer for Relief ¶ 3.) To support this request, 

Prof. Shapiro’s opening report offers the opinion that although “recent erosion of Qualcomm’s 

monopoly power” in the relevant chipset markets “might eventually diminish” Qualcomm’s 

ability to engage in the alleged anticompetitive conduct, “the industry’s imminent transition to 5G 

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 51 of 70
5 Qualcomm’s Opposition to FTC’s Motion to 

Exclude Testimony of Prof. Aviv Nevo

Case No. 5:17-cv-00220-LHK-NMC

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

standards may afford Qualcomm an opportunity to renew and fortify that ability”. (Byars Decl. 

Ex. 1 (Opening Report of Prof. Carl Shapiro (“Shapiro Opening Report”)) ¶ 313.) In support of 

this opinion, Prof. Shapiro cited a document dating back to 2016 concerning then-current 

assessments of the future of 5G and of Qualcomm’s 5G chips. (Id. ¶ 314 n.595.) In Prof. Nevo’s 

rebuttal report, which Qualcomm timely served on June 28, 2018, Prof. Nevo responded to those 

opinions by explaining that Qualcomm had publicly announced its 5G licensing rates in 

November 2017, during a time when Qualcomm is not alleged to have any market power in 5G 

chips (or in any other chips) that it could bring to bear.2 (Ex. 1 to Milici Decl. (Nevo Report) 

¶ 296.) Prof. Nevo further explained that 

.

3

 (Id.) Prof. Nevo provided these 

explanations in support of his opinion that “[n]either Professor Shapiro nor the other FTC experts 

have made any attempt to evaluate whether Qualcomm’s 5G rates are not FRAND or include any 

‘tax.’” (Id.) 

ARGUMENT

The Court should exclude relevant evidence under Federal Rule of Evidence 403 only “if 

its probative value is substantially outweighed by a danger of . . . unfair prejudice, confusing the 

issues, misleading the jury, undue delay, wasting time, or needlessly presenting cumulative 

evidence”. Fed. R. Evid. 403. “‘Unfair prejudice’ within its context means an undue tendency to 

suggest decision on an improper basis, commonly, though not necessarily, an emotional one.” 

Fed. R. Evid. 403 Notes of Advisory Committee on Proposed Rules. Rule 403 is designed 

primarily to prevent a jury from being inappropriately influenced by relevant but unfairly 

 

2

 Prof. Shapiro is not offering an opinion that Qualcomm has monopoly power in any relevant 

chip market—3G, 4G or 5G—at any point after 2016. (Byars Decl. Ex. 3 (Deposition of Carl 

Shapiro) at 135:18-21.) 

3 The FTC’s Complaint alleges that Qualcomm had monopoly and market power only with 

respect to CDMA baseband processors and “premium LTE” baseband processors. (Compl. 

¶ 131.) The FTC does not allege power in 5G baseband processors. Nor could it, because such 

5G baseband processors are not yet commercially available. 

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 52 of 70
6 Qualcomm’s Opposition to FTC’s Motion to 

Exclude Testimony of Prof. Aviv Nevo

Case No. 5:17-cv-00220-LHK-NMC

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

prejudicial evidence; in bench trials, where the fact-finder is less likely to be improperly 

influenced, Rule 403 does not perform as significant a function. See EEOC v. Farmer Bros. Co., 

31 F.3d 891, 898 (9th Cir. 1994) (“[I]n a bench trial, the risk that a verdict will be affected 

unfairly and substantially by the admission of irrelevant evidence is far less than in a jury trial.”). 

The FTC does not argue that Prof. Nevo’s opinions are irrelevant. As the FTC’s motion 

explains, “[c]ore to the FTC’s theory is Qualcomm’s ability to leverage its modem chip monopoly 

power in licensing negotiations to obtain elevated royalties.” (Mot. at 3.) Therefore,

Prof. Nevo’s opinion that neither the FTC nor Prof. Shapiro had evaluated whether Qualcomm 

could engage in the alleged conduct (i.e., “leverag[ing] its modem chip monopoly power in 

licensing negotiations to obtain elevated royalties”) in the context of 5G licensing is highly 

relevant to the FTC’s claim for prospective injunctive relief and to the assessment of 

Prof. Shapiro’s opinions. Prof. Nevo observed that Qualcomm had publicly announced 5G 

licensing terms and 

that the FTC acknowledges is 

core to its theory of the case. (Mot. at 3.) 

Because a decision on whether to grant prospective relief must consider current conditions 

near the time of trial, such evidence is of critical importance. See, e.g., FTC v. Evans Prods. Co., 

775 F.2d 1084, 1087 (9th Cir. 1985) (stating that preliminary injunctive relief was precluded 

where the conduct was neither ongoing nor likely to recur, even if the defendant had engaged in 

anticompetitive conduct in the past); FTC v. AbbVie Inc., No. 14-5151, 2018 WL 3830533, at *35 

(E.D. Pa. June 29, 2018) (denying the FTC’s request for injunctive relief because there was no 

basis to conclude defendants’ misconduct was likely to recur where, despite their liability for past 

violations, “the FTC has presented no evidence that defendants are currently violating antitrust 

laws or about to violate antitrust laws”); FTC v. Merch. Servs. Direct, LLC, No. 13-CV-0279-

TOR, 2013 WL 4094394, at *3 (E.D. Wash. Aug. 13, 2013) (declining to enter temporary 

injunctive relief in a Section 5 case because the FTC’s evidence about the defendant’s conduct 

was two years old and the FTC did not present evidence of likely “future violations of the FTC 

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 53 of 70
7 Qualcomm’s Opposition to FTC’s Motion to 

Exclude Testimony of Prof. Aviv Nevo

Case No. 5:17-cv-00220-LHK-NMC

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

Act”). Indeed, to the extent that the FTC contends that neither party’s expert can rely on any 

evidence that is created after the close of fact discovery, such a rule is flatly inconsistent with the 

law governing requests for injunctive relief in FTC cases. For example, if recent news reports 

that the Apple iPhones released this month do not contain any Qualcomm chips are accurate (see, 

e.g., Byars Decl. Ex. 4), that is information the Court should have in deciding whether Qualcomm

has market power that it could exercise in the future.

Further, the FTC has cited no law suggesting that the Court must disregard highly 

probative evidence because it did not exist until after the end of fact discovery, as the FTC’s 

motion suggests—and it certainly has not cited any case law suggesting that highly probative 

evidence should be altogether excluded in an injunctive relief case, such that the parties’ experts 

must ignore its existence. Cf. Los Angeles News Serv. v. CBS Broad., Inc., 305 F.3d 924, 933 

(9th Cir. 2002) (reversing district court exclusion of evidence obtained after discovery cutoff). In

this Court’s Apple v. Samsung decision on which the FTC relies almost exclusively, the Court 

was confronted with a very different situation—belated production of old evidence, rather than 

consideration of new (and timely produced) evidence. There, the Court found that although an 

affiliate of Samsung had compiled data during the discovery period on which Samsung’s expert 

later relied, Samsung improperly failed to disclose that data until “hours before the discovery 

cutoff”, after Apple had completed fact depositions. Apple Inc. v. Samsung Elecs. Co., No. 11-

CV-01846-LHK, 2018 WL 1586276, at *24 (N.D. Cal. Apr. 2, 2018). Further, the Court found

that Samsung had not disclosed the existence of its affiliate or the custodian of the data in its

interrogatory responses, and that Samsung further represented to Apple that the data’s custodian

“did not have any additional discoverable information”—even though Samsung’s expert

continued to speak to the custodian regarding the data. Id. This conduct, the Court found,

prevented Apple from “conducting any inquiry into the reliability of the SDC data”, which would

unduly prejudice Apple’s case in front of the jury hearing the parties’ dispute concerning

damages. Id.

Unlike in Apple v. Samsung, there was no sandbagging here. Qualcomm did not 

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 54 of 70
8 Qualcomm’s Opposition to FTC’s Motion to 

Exclude Testimony of Prof. Aviv Nevo

Case No. 5:17-cv-00220-LHK-NMC

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

improperly delay producing agreements that existed during fact discovery; the agreements did not 

exist until after fact discovery had closed and the FTC had completed fact depositions. 

Qualcomm timely disclosed and produced the agreements and its expert’s reliance on them once 

they came into existence, weeks prior to the deadline for service of the FTC’s rebuttal expert 

reports. (Byars Decl. ¶¶ 2,3.) Prof. Shapiro was aware of the 

 and of Prof. Nevo’s opinions based on them; yet, he chose not to address them. 

Contrary to the FTC’s suggestion that Qualcomm has “cherry-picked” these two agreements 

(Mot. at 6), denying the FTC the opportunity to determine “whether the terms are representative 

of other in-progress or concluded 5G license negotiations” (Mot. at 5), Qualcomm has continued 

producing other concluded 5G agreements, many before the FTC filed this motion—and the FTC 

could have reviewed those productions to assess whether those agreements are consistent with the 

. (Byars Decl. ¶ 4.) 

And, unlike in a dispute over damages between private parties, such as Apple v. Samsung, 

the FTC’s request for prospective injunctive relief makes evidence concerning Qualcomm’s 

contemporaneous conduct and contemporaneous market conditions critical to the Court’s 

decision, which cannot be made on a stale record. 

Further, the FTC argues that it “had no opportunity to conduct discovery regarding the 

two licenses cited by Prof. Nevo” (Mot. at 4), but the FTC never requested such discovery. As

discussed above, in Apple v. Samsung, unlike here, through representations that Samsung lacked 

additional discoverable information, Samsung affirmatively denied Apple the opportunity to 

obtain information about the excluded data. See Apple, 2018 WL 1586276, at *24. Qualcomm 

made no such representations. In fact, Qualcomm alerted the FTC as early as November 2017 

that it believed “the Parties should have the mutual opportunity to conduct a limited update of 

document and deposition discovery closer to the time of trial to ensure that the record contains 

contemporaneous evidence bearing on the elements of the FTC’s claims . . . and whether the FTC 

is entitled to forward-looking injunctive relief.” (See Dec. 8, 2017 Suppl. Joint Case 

Management Statement, ECF No. 378 at 5.) Although the FTC “disagree[d] that, based on the 

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 55 of 70
9 Qualcomm’s Opposition to FTC’s Motion to 

Exclude Testimony of Prof. Aviv Nevo

Case No. 5:17-cv-00220-LHK-NMC

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

allegations in its Complaint, it will inevitably be necessary to reopen discovery”, it acknowledged 

that whether discovery would be reopened closer to the time of trial “will depend on the relevance 

of the additional discovery, the time to trial, and whether a party will be prejudiced, among other 

factors.” (Id. at 5-6.) 

Given the need for the Court to consider current conditions before it may issue 

prospective injunctive relief, a rigid rule excluding all expert opinions based on events occurring 

after the close of fact discovery—a rule that would require experts to ignore available evidence 

about current market conditions—would improperly deprive the Court of critical evidence. If the 

FTC believed it needed discovery to assess the reliability of Prof. Nevo’s opinions based on the 

5G agreements, it should have raised its need for such discovery with Qualcomm (as expected 

when discovery disputes arise (see Civ. L.R. 37-1)), rather than simply moving, without prior 

discussion, to exclude the opinions under Rule 403. 

CONCLUSION

For the foregoing reasons, Qualcomm respectfully requests that the Court deny the FTC’s 

motion to exclude the expert testimony and opinions of Prof. Aviv Nevo based upon or 

concerning the . 

Dated: September 24, 2018 

Respectfully submitted,

CRAVATH, SWAINE & MOORE LLP,

/s/ Gary A. Bornstein ___________ 

Gary A. Bornstein 

Yonatan Even 

Worldwide Plaza

825 Eighth Avenue 

New York, NY 10019 

Tel: (212) 474-1000 

Fax: (212) 474-3700 

gbornstein@cravath.com 

yeven@cravath.com

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 56 of 70
10 Qualcomm’s Opposition to FTC’s Motion to 

Exclude Testimony of Prof. Aviv Nevo

Case No. 5:17-cv-00220-LHK-NMC

1 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14 

15 

16 

17 

18 

19 

20 

21 

22 

23 

24 

25 

26 

27 

28 

Robert A. Van Nest

Eugene M. Paige 

Justina K. Sessions 

KEKER, VAN NEST & PETERS LLP

633 Battery Street

San Francisco, CA 94111-1809 

Tel: (415) 391-5400 

Fax: (415) 397-7188 

rvannest@keker.com 

epaige@keker.com

jsessions@keker.com

Richard S. Taffet 

MORGAN, LEWIS & BOCKIUS LLP

101 Park Avenue 

New York, NY 10178-0060 

Tel: (212) 309-6000 

Fax: (212) 309-6001 

richard.taffet@morganlewis.com 

Willard K. Tom

MORGAN, LEWIS & BOCKIUS LLP

1111 Pennsylvania Ave. NW

Washington, DC 20004-2541 

Tel: (202) 739-3000 

Fax: (202) 739 3001 

willard.tom@morganlewis.com 

Geoffrey T. Holtz

MORGAN, LEWIS & BOCKIUS LLP

One Market, Spear Street Tower

San Francisco, CA 94105-1126 

Tel: (415) 442-1000 

Fax: (415) 442-1001 

geoffrey.holtz@morganlewis.com 

Attorneys for Qualcomm Incorporated

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 57 of 70
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Declaration of M. Brent Byars

Case No. 5:17-cv-00220-LHK-NMC

CRAVATH, SWAINE & MOORE LLP

Gary A. Bornstein (pro hac vice) 

gbornstein@cravath.com 

Yonatan Even (pro hac vice) 

yeven@cravath.com

825 Eighth Avenue 

New York, NY 10019-7475 

Telephone: (212) 474-1000 

Facsimile: (212) 474-3700 

MORGAN, LEWIS & BOCKIUS LLP

Richard S. Taffet (pro hac vice) 

richard.taffet@morganlewis.com 

Willard K. Tom (pro hac vice) 

willard.tom@morganlewis.com 

Donn P. Pickett (SBN 72257) 

donn.pickett@morganlewis.com 

Geoffrey T. Holtz (SBN 191370) 

geoffrey.holtz@morganlewis.com 

One Market, Spear Street Tower

San Francisco, CA 94105-1596 

Telephone: (415) 442-1000 

Facsimile: (415) 442-1001 

Attorneys for Defendant 

QUALCOMM INCORPORATED

KEKER, VAN NEST & PETERS LLP

Robert A. Van Nest (SBN 84065) 

rvannest@keker.com 

Eugene M. Paige (SBN 202849) 

epaige@keker.com

Justina K. Sessions (SBN 270914) 

jsessions@keker.com 

633 Battery Street

San Francisco, CA 94111-1809 

Telephone: (415) 391-5400 

Facsimile: (415) 397-7188 

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

FEDERAL TRADE COMMISSION

Plaintiff,

v.

QUALCOMM INCORPORATED, a 

Delaware corporation,

Defendant.

Case No. 5:17-CV-00220-LHK-NMC

DECLARATION OF M. BRENT 

BYARS IN SUPPORT OF 

QUALCOMM’S OPPOSITION TO 

FEDERAL TRADE 

COMMISSION’S MOTION TO 

EXCLUDE EXPERT TESTIMONY 

OF PROFESSOR AVIV NEVO

Courtroom: 8, 4th Floor 

Judge: Hon. Lucy H. Koh

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 58 of 70
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

1 Declaration of M. Brent Byars

Case No. 5:17-cv-00220-LHK-NMC

DECLARATION OF M. BRENT BYARS

I, M. Brent Byars, hereby declare as follows: 

1. I am an associate at Cravath, Swaine & Moore LLP, counsel of record for

Defendant Qualcomm Incorporated (“Qualcomm”) in Federal Trade Commission v. 

Qualcomm Incorporated, Case No. 17-cv-00220-LHK-NMC. I submit this declaration in 

support of Qualcomm’s Opposition to Federal Trade Commission’s Motion to Exclude 

Expert Testimony of Professor Aviv Nevo (the “Opposition”). I have personal 

knowledge of the facts set forth herein, or my knowledge is based upon my review of 

records of this case. If called upon as a witness in this action, I could and would testify 

competently thereto.

2. The

 was produced bearing Bates number 

QAPPCMSD10051179 on June 22, 2018. 

3. The

 was produced bearing Bates number 

QAPPCMSD10052189 on June 28, 2018. 

4. Qualcomm has continued producing other concluded license agreements

covering the fifth-generation (“5G”) standard, including many license agreements 

covering the 5G standard that were produced prior to August 30, 2018. 

5. Attached hereto as Exhibit 1 is a true and correct copy of excerpts from

the Expert Report of Professor Carl Shapiro, dated May 24, 2018. Portions of Exhibit 1 

that contain or reference information designated as “Highly Confidential—Attorneys’ 

Eyes Only” by Apple Inc. and that are not relevant to the Opposition have been redacted. 

6. Attached hereto as Exhibit 2 is a true and correct copy of excerpts from

the Rebuttal Report of Professor Carl Shapiro, dated July 26, 2018. 

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 59 of 70
Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 60 of 70
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Declaration of Fabian D. Gonell

Case No. 5:17-cv-00220-LHK-NMC

CRAVATH, SWAINE & MOORE LLP

Gary A. Bornstein (pro hac vice)

gbornstein@cravath.com

Yonatan Even (pro hac vice)

yeven@cravath.com

825 Eighth Avenue

New York, NY 10019-7475

Telephone: (212) 474-1000

Facsimile: (212) 474-3700

MORGAN, LEWIS & BOCKIUS LLP

Richard S. Taffet (pro hac vice)

richard.taffet@morganlewis.com

Willard K. Tom (pro hac vice)

willard.tom@morganlewis.com

Donn P. Pickett (SBN 72257)

donn.pickett@morganlewis.com

Geoffrey T. Holtz (SBN 191370)

geoffrey.holtz@morganlewis.com

One Market, Spear Street Tower

San Francisco, CA 94105-1596

Telephone: (415) 442-1000

Facsimile: (415) 442-1001

Attorneys for Defendant

QUALCOMM INCORPORATED

KEKER, VAN NEST & PETERS LLP

Robert A. Van Nest (SBN 84065)

rvannest@keker.com 

Eugene M. Paige (SBN 202849)

epaige@keker.com

Justina Sessions (SBN 270914)

jsessions@keker.com

633 Battery Street

San Francisco, CA 94111-1809

Telephone: (415) 391-5400

Facsimile: (415) 397-7188

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

FEDERAL TRADE COMMISSION

Plaintiff,

v.

QUALCOMM INCORPORATED, a 

Delaware corporation,

Defendant.

Case No. 5:17-CV-00220-LHK-NMC

DECLARATION OF FABIAN D. 

GONELL IN SUPPORT OF 

QUALCOMM’S OPPOSITION TO 

FEDERAL TRADE 

COMMISSION’S MOTION TO 

EXCLUDE EXPERT TESTIMONY 

OF PROFESSOR AVIV NEVO

Courtroom: 8, 4th Floor

Judge: Hon. Lucy H. Koh

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 61 of 70
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Declaration of Fabian D. Gonell

Case No. 5:17-cv-00220-LHK-NMC

DECLARATION OF FABIAN D. GONELL

I, Fabian D. Gonell, hereby declare as follows:

1. I am Senior Vice President of Licensing Strategy and Legal Counsel at

Qualcomm Incorporated (“Qualcomm”). 

2. I respectfully submit this declaration in support of Qualcomm’s

Opposition to Federal Trade Commission’s Motion to Exclude Expert Testimony of 

Professor Aviv Nevo. 

3. I was involved in negotiating on behalf of Qualcomm the

, which was produced bearing Bates 

number QAPPCMSD10051179.

4.

5. I also was involved, to a lesser extent, in

 which was produced bearing Bates number QAPPCMSD10052189. 

6.

.

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 62 of 70
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

Declaration of Fabian D. Gonell

Case No. 5:17-cv-00220-LHK-NMC

7. It is not uncommon for 

.

I declare under penalty of perjury under the laws of the United States of America 

that the foregoing is true and correct.

Executed this day, September 21, 2018, in San Diego, California.

Fabian D. Gonell

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 63 of 70
Exhibit 1

REDACTED VERSION OF DOCUMENT SOUGHT TO BE SEALED

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 64 of 70
IN THE UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

FEDERAL TRADE COMMISSION,

 Plaintiff,

v.

QUALCOMM INCORPORATED, a 

Delaware Corporation, 

 Defendant.

Case No. 17-CV-00220-LHK

EXPERT REPORT OF CARL SHAPIRO

24 May 2018

HIGHLY CONFIDENTIAL—OUTSIDE ATTORNEYS’ EYES ONLY

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 65 of 70
Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 66 of 70
Expert Report of Carl Shapiro

HIGHLY CONFIDENTIAL—OUTSIDE ATTORNEYS’ EYES ONLY Page 118

598

(315) On similar lines, a November 2015 presentation delivered by consultants from the Boston Consulting 

Group (BCG) to Qualcomm’s board of directors599 observed that Qualcomm’s competitive advantage 

over other modem-chip suppliers has been “strongest at the onset of a standard.”

600 The consultants 

observed that this strength had implications for the “enablement stick” that Qualcomm deploys to 

enforce compliance with QTL’s licensing program: namely, when QCT “has a far superior product, 

OEMs want to purchase their products, and will comply in order to gain access to these chips.”

601 The 

BCG consultants observed that, though Qualcomm’s ability to wield the enablement stick had 

diminished as competitors narrowed the gap between their chips and Qualcomm’s,602 Qualcomm 

would have an opportunity to “revive” the stick as the industry transitioned to 5G.603

IX.F. Business Justifications

(316) I have considered possible business justifications for Qualcomm’s no-license/no-chips policy.

Qualcomm has offered three such business justifications that I address here.

(317) First, Qualcomm has stated: “Qualcomm is not and should not be required to assist in the 

infringement of its own patents by selling modem chips to infringers.”

604 However, selling modem 

chips to an OEM at Qualcomm’s chosen all-in price does not “assist in the infringement of its own 

 

595 Email from Todd Madderom, Motorola, to Hui Lv, Lenovo, May 18, 2016 (MOTO-QUALSUB-01147200). 

596 Deposition of Todd Madderom (Motorola), 236:7–237:3, Mar. 16, 2018.

597 Deposition of John Finbarr Moynihan (MediaTek), 350:20–353:9, Mar. 13, 2018.

598 Deposition of John Finbarr Moynihan (MediaTek), 97:10–98:10, Mar. 12, 2018.

599 See ¶ (291) for more background on Project Phoenix and the context in which this presentation was delivered.

600 Boston Consulting Group, “Project Phoenix: Considerations for Alternative Corporate Structure(s)” (draft presentation, 

Nov. 9, 2015), 11 (BCG00014896, -4910).

601 Boston Consulting Group, “Project Phoenix: Considerations for Alternative Corporate Structure(s)” (draft presentation, 

Nov. 9, 2015), 17 (BCG00014896, -4916).

602 Boston Consulting Group, “Project Phoenix: Considerations for Alternative Corporate Structure(s)” (draft presentation, 

Nov. 9, 2015), 17 (BCG00014896, -4916).

603 Boston Consulting Group, “Project Phoenix: Considerations for Alternative Corporate Structure(s)” (draft presentation, 

Nov. 9, 2015), 17 (BCG00014896, -4916).

604 Submission of Qualcomm Incorporated to the Federal Trade Commission Regarding Qualcomm’s Chip Supply Practice, 

Dec. 2, 2016, 20, footnote omitted.

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 67 of 70
Exhibit 2

REDACTED VERSION OF DOCUMENT SOUGHT TO BE SEALED

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 68 of 70
IN THE UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

FEDERAL TRADE COMMISSION,

 Plaintiff,

v.

QUALCOMM INCORPORATED, a 

Delaware Corporation, 

 Defendant.

Case No. 17-CV-00220-LHK

REBUTTAL REPORT OF CARL SHAPIRO

26 July 2018

Contains Protected Material Designated by Qualcomm and Non-Parties

Pursuant to Protective Order(s) entered in FTC v. Qualcomm Incorporated,

Case No. 17-cv-00220 (N.D. Cal.)

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 69 of 70
Rebuttal Report of Carl Shapiro

Contains Protected Material Designated by Qualcomm and Non-Parties Page 39

Pursuant to Protective Order(s) entered in FTC v. Qualcomm Incorporated,

Case No. 17-cv-00220 (N.D. Cal.)

data and other evidence, nor into the future, but that does not affect the anti-competitive 

nature of Qualcomm’s course of conduct.

(112) In addition, my initial report cited recent developments that show there is good reason to be

concerned about the continuing impact of Qualcomm’s course of conduct. For example,

Qualcomm reports that it has a significant lead over competitors in the development of 5Gcompliant chips.115 The head of Qualcomm’s chip business has similarly cited a Qualcomm

“first mover advantage” in 5G.116 Predicting that strong position in 5G a November 2015

presentation delivered by consultants from the Boston Consulting Group (BCG) to

Qualcomm’s board of directors117 observed that Qualcomm’s competitive advantage over

other modem-chip suppliers has been “strongest at the onset of a standard.”

118

(113) 5G-compliant chips are not being incorporated into commercial handsets until 2019. It is thus

not possible reliably to analyze the market for 5G chips at this time. But if the 5G lead that

Qualcomm expects materializes, and OEMs are as reliant on Qualcomm for 5G chips as they

have been in the past for CDMA and premium LTE chips, then I would expect the

anticompetitive effects from the Qualcomm policies at issue in this case to continue into the

future.

115 Shapiro Report, ¶ 66; see also Statement of Qualcomm CEO Steven M. Mollenkopf during April 25, 2018 Qualcomm 

earnings call, available at https://seekingalpha.com/article/4165969-qualcomm-qcom-q2-2018-results-earnings-calltranscript (discussing market transition to 5G and stating that “[o]ur modem leadership continues”)

116 Mike Dano, “Qualcomm touts 5G momentum amid battles with Intel, Broadcom,” FierceWireless, Feb. 8, 2018, 

https://www.fiercewireless.com/5g/qualcomm-touts-5g-momentum-amid-battles-intel-broadcom. See also Qualcomm, 

“Making 5G NR a Commercial Reality,” at 17, available at https://www.qualcomm.com/media/.../files/making-5g-nr-acommercial-reality.pdf (referencing Qualcomm’s “industry-leading 5G NR interoperability testing”).

117 See Shapiro Report, ¶¶ 290–291 for more background on Project Phoenix and the context in which this presentation was 

delivered.

118 Boston Consulting Group, “Project Phoenix: Considerations for Alternative Corporate Structure(s)” (draft presentation, 

Nov. 9, 2015), 11 (BCG00014896, -4910).

Case 5:17-cv-00220-LHK Document 1260 Filed 01/11/19 Page 70 of 70