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

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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 873 Filed 09/25/18 Page 1 of 11
1 Qualcomm’s Opposition to FTC’s Motion to 

Exclude Testimony of Prof. Aviv Nevo

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

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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 

that the 

FTC incorrectly contends were “late-produced”. (Mot. at 1, 6.) In fact, 

—until after fact 

discovery ended. Qualcomm did not improperly withhold , 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 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 

 

Thus, the FTC brought 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 

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2 Qualcomm’s Opposition to FTC’s Motion to 

Exclude Testimony of Prof. Aviv Nevo

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

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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 

is incorrect. (Mot. at 1.) Qualcomm produced the 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 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 , 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 

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

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5 Qualcomm’s Opposition to FTC’s Motion to 

Exclude Testimony of Prof. Aviv Nevo

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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 

, 

.

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. 

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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 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 

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7 Qualcomm’s Opposition to FTC’s Motion to 

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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 

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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 

, 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

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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 873 Filed 09/25/18 Page 11 of 11