The California Institute of Technology v. Broadcom Limited et al

REPLY in Support of MOTION to Strike Untimely Expert Opinions and Contentions 600

C.D. Cal.August 27, 2018

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 DEFENDANTS’ REPLY ISO MOTION TO STRIKE CASE NO. 2:16-CV-3714-GW (AGRX) MARK D. SELWYN (SBN 244180) mark.selwyn@wilmerhale.com WILMER CUTLER PICKERING HALE AND DORR LLP 950 Page Mill Road Palo Alto, California 94304 Tel: (650) 858-6000 Fax: (650) 858-6100 JAMES M. DOWD (SBN 259578) james.dowd@wilmerhale.com AARON S. THOMPSON (SBN 272391) aaron.thompson@wilmerhale.com WILMER CUTLER PICKERING HALE AND DORR LLP 350 South Grand Avenue, Suite 2100 Los Angeles, California 90071 Tel: (213) 443-5300 Fax: (213) 443-5400 Attorneys for Defendants and Counter- Claim Plaintiffs Broadcom Limited, Broadcom Corporation, Avago Technologies Limited, Apple Inc., and Cypress Semiconductor Corporation UNITED STATES DISTRICT COURT CENTRAL DISTRICT OF CALIFORNIA THE CALIFORNIA INSTITUTE OF TECHNOLOGY, Plaintiff, vs. BROADCOM LIMITED, BROADCOM CORPORATION, AVAGO TECHNOLOGIES LIMITED, APPLE INC., AND CYPRESS SEMICONDUCTOR CORPORATION, Defendants. CASE NO. 2:16-cv-3714- GW(AGRx) REPLY IN SUPPORT OF DEFENDANTS’ MOTION TO STRIKE UNTIMELY EXPERT OPINIONS AND CONTENTIONS The Hon. George H. Wu United States District Judge Hearing Date: September 10, 2018 Time: 8:30 AM Place: Courtroom 9D REDACTED VERSION OF DOCUMENT PROPOSED TO BE FILED UNDER SEAL Case 2:16-cv-03714-GW-AGR Document 637 Filed 08/27/18 Page 1 of 31 Page ID #:31843 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 DEFENDANTS’ REPLY ISO MOTION TO STRIKE CASE NO. 2:16-CV-3714-GW (AGRX) BROADCOM LIMITED, BROADCOM CORPORATION, AVAGO TECHNOLOGIES LIMITED, APPLE INC., AND CYPRESS SEMICONDUCTOR CORPORATION, Counterclaim- Plaintiffs, vs. THE CALIFORNIA INSTITUTE OF TECHNOLOGY, Counterclaim- Defendant. REDACTED VERSION OF DOCUMENT PROPOSED TO BE FILED UNDER SEAL Case 2:16-cv-03714-GW-AGR Document 637 Filed 08/27/18 Page 2 of 31 Page ID #:31844 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- DEFENDANTS’ REPLY ISO MOTION TO STRIKE CASE NO. 2:16-CV-3714-GW (AGRX) TABLE OF CONTENTS Page I. INTRODUCTION ................................................................................ 1 II. ARGUMENT ........................................................................................ 3 A. Caltech’s Damages Reports Include Entirely New Theories, Which Is Improper ...................................................... 3 1. The Lawton And Teece Reports Are Not Consistent With Caltech’s Interrogatory Response Because They Add New Theories .................................................. 7 2. Defendants Did Not Move To Compel A Further Response to DCI 8 Because They Had No Reason To Suspect Caltech Was Hiding Its Damages Theory ............................................................. 10 3. The Corrections To The Lawton And Teece Reports Are Substantive And Improper ......................... 13 4. Caltech’s Untimely Disclosures Are Neither Substantially Justified Nor Harmless ............................. 18 B. Caltech’s Surprise DOE Theories Should Be Stricken Because DOE Contentions Do Not Depend On Non- Infringement Theories .............................................................. 23 C. Caltech’s Wi-Fi Alliance Report Focuses On Improperly Obtained WFA Documents, And Should Be Stricken ............. 24 III. CONCLUSION ................................................................................... 25 REDACTED VERSION OF DOCUMENT PROPOSED TO BE FILED UNDER SEAL Case 2:16-cv-03714-GW-AGR Document 637 Filed 08/27/18 Page 3 of 31 Page ID #:31845 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 -ii- DEFENDANTS’ REPLY ISO MOTION TO STRIKE CASE NO. 2:16-CV-3714-GW (AGRX) TABLE OF AUTHORITIES Page(s) Federal Cases Apple Inc. v. Samsung Elec. Co. Ltd., 2013 WL 3246094 (N.D. Cal. June 26, 2013) ................................................... 22 Apple Inc. v. Samsung Elec. Co. Ltd., 2014 WL 173409 (N.D. Cal. Jan. 9, 2014) .......................................................... 4 Becerra v. J.C. Penny Corp., 2017 WL 1479410 (C.D. Cal. Apr. 24, 2017) .................................................... 20 Civolution B.V. v. Doremi Labs, Inc., 2015 WL 11072167 (C.D. Cal. June 11, 2015) .................................................. 10 Commonwealth Sci. & Indus. Research Org. v. Cisco Sys., Inc., 809 F.3d 1295 (Fed. Cir. 2015) ............................................................................ 9 Dalmatia Import Grp., Inc. v. Foodmatch, Inc., 2016 WL 5721161 (E.D. Pa. Oct. 13, 2016) ........................................................ 5 Fujifilm Corp. v. Motorola Mobility, LLC, 2015 WL 757575 (N.D. Cal. Feb. 20, 2015) ............................................... passim Golden Bridge Tech. v. Apple, Inc., 2014 WL 4057187 (N.D. Cal. June 1, 2014) ................................................... 3, 6 Green v. Baca, 226 F.R.D. 624 (C.D. Cal. 2005) ....................................................................... 17 Ilife Techs., Inc. v. Nintendo of Am., Inc., 2017 U.S. Dist. LEXIS 87769 (N.D. Tex. May 30, 2017) ................................... 5 Julian v. City of Houston, 2014 WL 4471385 (S.D. Tex. Sept. 10, 2014) ................................................... 11 Lanyard Toys Ltd. v. Novelty, Inc., 375 Fed. Appx. 705 (9th Cir. 2010) ................................................................... 18 LaserDynamics, Inc. v. Quanta Computer, Inc., 694 F.3d 51 (Fed. Cir. 2012) ................................................................................ 8 REDACTED VERSION OF DOCUMENT PROPOSED TO BE FILED UNDER SEAL Case 2:16-cv-03714-GW-AGR Document 637 Filed 08/27/18 Page 4 of 31 Page ID #:31846 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 -iii- DEFENDANTS’ REPLY ISO MOTION TO STRIKE CASE NO. 2:16-CV-3714-GW (AGRX) Metaswitch Networks Ltd. v. Genband US LLC, 2016 WL 874737 (E.D. Tex. Mar. 5, 2016) ....................................................... 20 Milwaukee Elec. Tool Corp. v. Chevron N. Am. Inc., 2017 WL 2445845 (E.D. Wis. June 6, 2017) ....................................................... 5 Robert Bosch, LLC v. Snap-on Inc., 2013 WL 1703328 (E.D. Mich. Apr. 19, 2013) ................................................... 5 Yeti by Molly, Ltd. v. Deckers Outdoor Corp., 259 F.3d 1101 (9th Cir. 2001) ..................................................................... passim REDACTED VERSION OF DOCUMENT PROPOSED TO BE FILED UNDER SEAL Case 2:16-cv-03714-GW-AGR Document 637 Filed 08/27/18 Page 5 of 31 Page ID #:31847 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- DEFENDANTS’ REPLY ISO MOTION TO STRIKE CASE NO. 2:16-CV-3714-GW (AGRX) I. INTRODUCTION Defendants’ opening brief demonstrates that Caltech failed to timely disclose numerous damages and infringement theories, and served an entire report that relies almost exclusively on improperly-obtained confidential documents from the Wi-Fi Alliance (“WFA”) that were never produced during fact discovery. Defendants focused their motion exclusively on those surprise theories and that improper report, and seek basic (not “extraordinary”) relief consistent with the Federal Rules of Civil Procedure. Far from asking to strike “all of the opening expert reports submitted by” Caltech, Defendants respectfully ask the Court to strike only those specific portions of Caltech’s reports that are based on theories and documents that should have been disclosed during discovery but were not. If this motion is granted, Caltech’s damages expert reports would still exceed 600 pages in length and its infringement expert report would still exceed 1,000 pages. To the extent Caltech fears many portions of its expert reports are implicated by Defendants’ motion, Caltech has no one but itself to blame. Caltech had thirteen months of fact discovery to develop and disclose its infringement and damages theories, and to seek discovery from third parties like the WFA. Caltech then had eight months after the close of fact discovery to prepare its opening expert reports consistent with the theories and documents it had disclosed. Even if Caltech had developed a new infringement or damages theory after the close of fact discovery, it should have disclosed that theory at the time it was developed, sought leave of Court to amend its contentions and interrogatory responses out of time, and given Defendants at least some opportunity to seek discovery (or move to strike) before the deadline for opening expert reports. Instead, Caltech waited, and sprung its new theories on Defendants at a time when they could no longer take fact discovery or fully account for those theories in their own opening expert reports. Fed. R. Civ. P. 37 was amended to prevent and sanction precisely this type of discovery misconduct. REDACTED VERSION OF DOCUMENT PROPOSED TO BE FILED UNDER SEAL Case 2:16-cv-03714-GW-AGR Document 637 Filed 08/27/18 Page 6 of 31 Page ID #:31848 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 -2- DEFENDANTS’ REPLY ISO MOTION TO STRIKE CASE NO. 2:16-CV-3714-GW (AGRX) Faced with the record of its misconduct, Caltech argues that its reports are consistent with its interrogatory responses (they are not), that Defendants agreed to be sandbagged (they did not), and that Caltech’s surprise theories have caused no prejudice (they have and will continue to do so). Caltech’s response is riddled with errors and does nothing to change the conclusion that Caltech’s surprise expert opinions should be excluded. First, Caltech ignores the fundamental distinction between theories—which must be timely disclosed during fact discovery—and expert opinion explaining those theories—which may be appropriately reserved for expert discovery. Defendants properly applied that critical distinction when they disclosed their damages, non-infringement, and invalidity contentions (Dkt. 616 [Defs’ Opp. to CT Motion to Strike Frey] at 17-23); Caltech did not. Moreover, while it may be “customary” to reserve the final calculation of damages for expert discovery (and Defendants never suggested to the contrary), it is still nonetheless required to disclose the theories that will be applied to calculate such damages numbers during fact discovery. Caltech wholly failed to disclose . Given the thirteen months of fact discovery and eight additional months Caltech and its experts had to prepare their opening reports, there is no valid excuse for that failure. Second, Defendants timely disclosed their theories of the case and never agreed that Caltech could hide the ball or add untimely new theories. To the contrary, Defendants pressed Caltech throughout discovery to supplement its infringement contentions and have filed multiple motions challenging those contentions as inadequate. Caltech has no excuse for omitting eleven “crucial” theories from its “Amended Final Infringement Contentions.” Regarding damages, Defendants had no way of knowing that the theory Caltech disclosed in its REDACTED VERSION OF DOCUMENT PROPOSED TO BE FILED UNDER SEAL Case 2:16-cv-03714-GW-AGR Document 637 Filed 08/27/18 Page 7 of 31 Page ID #:31849 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 -3- DEFENDANTS’ REPLY ISO MOTION TO STRIKE CASE NO. 2:16-CV-3714-GW (AGRX) interrogatory response— —was different from the theory that its experts would purport to apply to calculate damages. Indeed, Caltech’s own experts purport to reject the EMVR in their reports. Defendants took Caltech’s disclosures at face value and relied on them—as the Federal Rules intended. That is precisely why Caltech cannot change theories now. Third, Caltech’s surprise theories are neither substantially justified nor harmless. Caltech had over a year of fact discovery and then eight additional months to prepare its opening expert reports. Moreover, Caltech seeks hundreds of millions of dollars in damages for the minor functionality at issue. Given this extraordinary claim, Defendants had every right to expect Caltech to timely disclose its theories so that they could take discovery and prepare their defense. Caltech denied Defendants that opportunity by withholding so many of its theories until opening expert reports. It would be fundamentally unfair to allow Caltech to gain an advantage by such misconduct. II. ARGUMENT Caltech’s Damages Reports Include Entirely New Theories, Which Is Improper. Defendants’ brief shows how Caltech’s expert reports introduce a theory of damages that is inconsistent with the that Caltech disclosed during discovery. (Dkt. 608 [Defs’ Brief] at 17-25.) This is thus not a case where Caltech disclosed its theory during discovery and then added evidence supporting that theory in expert reports. Nor is this a situation where Caltech resisted discovery of its damages theory, such that a motion to compel would have been appropriate. In this case, Caltech disclosed a , and then its experts switched to an entirely different per unit royalty theory in their reports. See Golden Bridge Tech. v. Apple, Inc., 2014 WL 4057187, at *1 (N.D. Cal. June 1, 2014) (finding that a REDACTED VERSION OF DOCUMENT PROPOSED TO BE FILED UNDER SEAL Case 2:16-cv-03714-GW-AGR Document 637 Filed 08/27/18 Page 8 of 31 Page ID #:31850 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 -4- DEFENDANTS’ REPLY ISO MOTION TO STRIKE CASE NO. 2:16-CV-3714-GW (AGRX) per-unit royalty is a different methodology from an “entire market value” theory); see also id. (“The court gave GBT one week to submit a new report based on a new theory.”) (emphasis added). The cases striking expert opinions draw a critical distinction between additional evidence supporting a previously disclosed theory, which may be added in an expert report, and entirely new theories, which cannot. See Fujifilm Corp. v. Motorola Mobility, LLC, 2015 WL 757575, at *7 (N.D. Cal. 2015); Apple Inc. v. Samsung Elec. Co. Ltd., 2014 WL 173409, at *1 (N.D. Cal. 2014). The relevant question is “whether the expert has permissibly specified the application of a disclosed theory or impermissibly substituted a new theory altogether.” Fujifilm, 2015 WL 757575, at *7 (quoting Apple, 2014 WL 173409, at *2) (emphasis added). Defendants’ expert reports do the former, which the rules permit; Caltech’s damages expert reports do the latter, which the rules prohibit. See id. The cases do not, however, distinguish between undisclosed damages theories and other types of undisclosed theories (e.g., infringement), as Caltech suggests this Court should. See Yeti by Molly, Ltd. v. Deckers Outdoor Corp., 259 F.3d 1101, 1105-07 (9th Cir. 2001) (affirming decision to exclude a damages expert’s testimony in its entirety as a sanction for failure to disclose damages report during discovery).1 Not surprisingly, Fed. R. Civ. P. 26 and 37 apply equally to all types of substantive theories. See, e.g., id. Thus, what Caltech 1 Caltech argues that Defendants “fail[ed] to point to a single case rebutting the appropriateness of Caltech’s [damages report] under Federal Rule of Civil Procedure 26” (Dkt. 623-2 at 13) and “do not cite a single case in which a Court struck an expert’s damages report.” (Id. at 21.) Caltech overlooks Defendants’ citations to Yeti by Molly, Ltd. v. Deckers Outdoor Corp., 259 F.3d 1101 (9th Cir. 2001). (Dkt. 608 at 12, 14, 16.) In Yeti by Molly, the Ninth Circuit affirmed a district court decision excluding the testimony of a damages expert in its entirety as a sanction under Fed. R. Civ. P. 37 for failure to timely disclose the expert’s opinions under Fed. R. Civ. P. 26. Id. at 1105-07. In any event, Defendants do not seek to strike Caltech’s expert reports in their entireties, only the undisclosed theories. REDACTED VERSION OF DOCUMENT PROPOSED TO BE FILED UNDER SEAL Case 2:16-cv-03714-GW-AGR Document 637 Filed 08/27/18 Page 9 of 31 Page ID #:31851 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 -5- DEFENDANTS’ REPLY ISO MOTION TO STRIKE CASE NO. 2:16-CV-3714-GW (AGRX) describes as a “custom” to reserve the calculation of damages until expert discovery is nothing more than an application of the rule that an expert may “specify the application” of a theory disclosed during discovery. Fujifilm, 2015 WL 757575, at *7; see also Apple, 2014 WL 173409, at *2. The corollary that parties must disclose all their theories during discovery remains applicable. See, e.g., Yeti by Molly, 259 F.3d at 1106-07. Nothing in the case law, the Federal Rules, or the parties’ correspondence alters that fundamental rule or creates an exception for damages. Moreover, none of the cases Caltech cites supports a different rule. Instead, they apply the same legal framework that requires disclosure of theories during discovery, and allows calculation of a final damages figure by experts in their reports using those same disclosed theories. For example, Ilife Techs., Inc. v. Nintendo of Am., Inc., 2017 U.S. Dist. LEXIS 87769 (N.D. Tex. May 30, 2017), merely notes that it is “an allegedly common practice in patent cases . . . to defer disclosure of the computation of damages,” i.e., the amount claimed, until expert reports. Id. at *55 (emphases added). Similarly, in Robert Bosch, LLC v. Snap-on Inc., 2013 WL 1703328 (E.D. Mich. Apr. 19, 2013), the court denied a motion to compel seeking disclosure of the products for which the plaintiff claimed damages, the identity of alleged convoyed sales, and the amount of damages sought. Id. at *2 (“Defendants argue that Bosch’s response is deficient because it does not provide the products for which it will claim damages, identify the sales which constitute ‘convoyed sales,’ or provide a damages amount.”) (emphasis added). The two other cases Caltech cites likewise stand simply for the proposition that the precise amount of damages may be reserved for expert discovery; neither articulates a rule that would allow a patentee to withhold its entire theory of damages, or disclose one theory and then rely on another. See Milwaukee Elec. Tool Corp. v. Chevron N. Am. Inc., 2017 WL 2445845, at *7 (E.D. Wis. June 6, REDACTED VERSION OF DOCUMENT PROPOSED TO BE FILED UNDER SEAL Case 2:16-cv-03714-GW-AGR Document 637 Filed 08/27/18 Page 10 of 31 Page ID #:31852 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 -6- DEFENDANTS’ REPLY ISO MOTION TO STRIKE CASE NO. 2:16-CV-3714-GW (AGRX) 2017) (“[A] calculation of the ultimate damages can await expert analysis, the legal theory of damages is capable of identification without the expert’s help.”) (emphases added); Dalmatia Import Grp., Inc. v. Foodmatch, Inc., 2016 WL 5721161, at *2 (E.D. Pa. Oct. 13, 2016) (“Given the complexity of the [damages] calculations involved, it is apparent that those matters will be the subject of expert testimony.”) (emphasis added). . (See, e.g., Dkt. 608- 11 [Ex. M.1 (Lawton Report)] ¶ 30; Dkt. 608-14 [Ex. P.1 (Corrected Lawton Report)] ¶ 30; Ex. N.2 (Corrected Teece Report) ¶¶ 450-55.) Caltech’s reports thus violate the rule requiring disclosure of theories during discovery, and all such undisclosed, surprise theories should be stricken.2 Yeti by Molly, 259 F.3d at 1105- 07. Notably, Caltech does not dispute that There is thus no dispute that the two theories are distinct. See Golden Bridge Tech., 2014 WL 4057187, at *1 (finding that a per-unit royalty is a different methodology from an “entire market value” theory). Instead, Caltech argues that it 2 Defendants reserve the right to challenge Ms. Lawton’s and Dr. Teece’s opinions under Daubert at the appropriate time. REDACTED VERSION OF DOCUMENT PROPOSED TO BE FILED UNDER SEAL Case 2:16-cv-03714-GW-AGR Document 637 Filed 08/27/18 Page 11 of 31 Page ID #:31853 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 -7- DEFENDANTS’ REPLY ISO MOTION TO STRIKE CASE NO. 2:16-CV-3714-GW (AGRX) (Dkt. 623-2 [Caltech Br.] at 16-17.) Caltech’s response to Defendants’ Common Interrogatory No. 8 (“DCI 8”) belies its post hoc arguments.3 1. The Lawton And Teece Reports Are Not Consistent With Caltech’s Interrogatory Response Because They Add New Theories. Caltech’s damages contentions are generic, but clear. As illustrated in Defendants’ brief, (Dkt. 608 [Defs’ Br.] at 7-8, 18-19.) As a result, it is straightforward to identify which theories in the Lawton and Teece Reports Caltech disclosed, and which theories it did not. Despite that clear evidence, Caltech argues that its damages reports are “consistent” with its responses to DCI 8. Plainly, they are not. The plain language of Caltech’s response to DCI 8 proves the inconsistency. First, the phrase does not appear anywhere in Caltech’s response to DCI 8. Second, Caltech’s interrogatory response expressly states that Caltech seeks (Dkt. 608-10 [Ex. L (Caltech’s 10/13/17 2d Supp. Resp. to DCI 8)] at 3.) 3 Defendants’ Common Interrogatory No. 8 (“DCI 8”) seeks “all factual and legal bases for all damages Caltech contends it has suffered or will suffer in this case . . . .” (Dkt. 600-13 [Ex. K (Defendants’ First Set of Common Interrogatories)] at 9- 10.) REDACTED VERSION OF DOCUMENT PROPOSED TO BE FILED UNDER SEAL Case 2:16-cv-03714-GW-AGR Document 637 Filed 08/27/18 Page 12 of 31 Page ID #:31854 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- DEFENDANTS’ REPLY ISO MOTION TO STRIKE CASE NO. 2:16-CV-3714-GW (AGRX) Third, nothing in Caltech’s supplemental responses to DCI 8 “placed Defendants on notice” that Caltech was seeking a per unit royalty. (Dkt. 623-2 [Caltech Br.] at 17.) (Dkt. 608-10 [Ex. L (Caltech’s 10/13/17 2d Supp. Resp. to DCI 8)] at 3.) Caltech never disavowed or changed that position, and its supplements are entirely consistent with its initial response. (See id.) Caltech cannot now use hindsight and wishful thinking to read a per unit theory into its disclosure of a percentage royalty EMVR theory. Caltech similarly tries to explain away its with another implausible spin on its response to DCI 8. According to Caltech, the phrase in its interrogatory response should be interpreted to refer to Georgia-Pacific Factor 8—“The established profitability of the product made under the patent; its commercial success; and its current popularity”—rather than the EMVR, which requires proof that the patented invention drove demand for the accused products. LaserDynamics, Inc. v. Quanta Computer, Inc., 694 F.3d 51, 67 (Fed. Cir. 2012). But the same sentence in Caltech’s response to DCI 8 refers to (Dkt. 608-10 [Ex. L (Caltech’s 10/13/17 2d Supp. Resp. to DCI 8)] at 4.) If Caltech’s argument is to be believed, Caltech invoked Georgia-Pacific Factor 8 twice in one sentence. The following table may help the Court evaluate the credibility of that position: Theories In Caltech’s FDCs Georgia-Pacific Factor 8 “The established profitability of the product made under the patent; its commercial success; and its current popularity” REDACTED VERSION OF DOCUMENT PROPOSED TO BE FILED UNDER SEAL Case 2:16-cv-03714-GW-AGR Document 637 Filed 08/27/18 Page 13 of 31 Page ID #:31855 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 -9- DEFENDANTS’ REPLY ISO MOTION TO STRIKE CASE NO. 2:16-CV-3714-GW (AGRX) “The established profitability of the product made under the patent; its commercial success; and its current popularity” Moreover, just a few lines below the sentence Caltech quotes, its supplemental response states that (Id. at 4 (emphases added).) That statement was cited twice in Defendants’ brief (Dkt. 608 at 8, 22), , and Caltech’s response never addresses it. See Commonwealth Sci. & Indus. Research Org. v. Cisco Sys., Inc., 809 F.3d 1295, 1302 (Fed. Cir. 2015) (citing LaserDynamics, 694 F.3d at 67 (“Under the entire market value rule, if a party can prove that the patented invention drives demand for the accused end product, it can rely on the end product’s entire market value as the royalty base.”) (emphasis added). None of the other theories Defendants seeks to strike can be found in Caltech’s supplemental interrogatory response either. (See Dkt. 608 [Defs’ Br.] at 17-21 (comparing Caltech’s response to DCI 8 to the Lawton and Teece Reports).) REDACTED VERSION OF DOCUMENT PROPOSED TO BE FILED UNDER SEAL Case 2:16-cv-03714-GW-AGR Document 637 Filed 08/27/18 Page 14 of 31 Page ID #:31856 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 -10- DEFENDANTS’ REPLY ISO MOTION TO STRIKE CASE NO. 2:16-CV-3714-GW (AGRX) Caltech’s attempts to connect the surprise theories in the Lawton and Teece Reports to its response to DCI 8 cannot be squared with the written record. The reason is simple—Caltech failed to disclose those theories. Caltech’s undisclosed damages theories should therefore be stricken. See Yeti by Molly, 259 F.3d at 1105-07 (affirming decision excluding damages expert’s untimely opinions). 2. Defendants Did Not Move To Compel A Further Response to DCI 8 Because They Had No Reason To Suspect Caltech Was Hiding Its Damages Theory. While Caltech did not disclose many of the theories in the Lawton and Teece Reports in response to DCI 8, its supplemental responses do disclose a damages theory (Dkt. 608-10 [Ex. L (Caltech’s 10/13/17 2d Supp. Resp. to DCI 8)] at 3-8.) Moreover, as noted above, the rules and case law allow parties to defer the calculation of the amount of damages until expert reports. Based on the supplements Caltech provided during discovery, Defendants understood Caltech’s response to DCI 8 to be complete and relied on that disclosure to develop their discovery strategy and rebuttal damages case. Caltech’s argument that Defendants’ “failure” to move to compel is “fatal” to their motion to strike thus misses the point—Defendants had no indication that Caltech had withheld so many of its theories regarding damages. (Dkt. 623-2 [Caltech Br.] at 17.) The fact that Defendants did not move to compel thus demonstrates their reliance on the theories Caltech did disclose. If anything, that reliance supports Defendants’ motion to strike, because it shows that Defendants have been prejudiced by Caltech’s bait-and-switch. 4 Tellingly, Caltech cites the Lawton report (Ex. J), but does not cite its response to DCI 8 in support of that argument. (Dkt. 632-2 [Caltech Br.] at 15.) REDACTED VERSION OF DOCUMENT PROPOSED TO BE FILED UNDER SEAL Case 2:16-cv-03714-GW-AGR Document 637 Filed 08/27/18 Page 15 of 31 Page ID #:31857 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 -11- DEFENDANTS’ REPLY ISO MOTION TO STRIKE CASE NO. 2:16-CV-3714-GW (AGRX) The cases Caltech cites are similarly inapposite. In Civolution B.V. v. Doremi Labs, Inc., 2015 WL 11072167 (C.D. Cal. June 11, 2015), the party moving to strike had reason to believe that the Plaintiff’s responses to contention interrogatories were incomplete during the discovery period, yet did nothing. See id. at *3 (noting that Defendant believed Plaintiff’s objections to contention interrogatories were improper but did not move to compel).5 Here, Defendants had no indication that Caltech’s response to DCI 8 was missing the theory of damages that its experts would ultimately claim to be pursuing, and thus had no reason to move to compel.6 Julian v. City of Houston, 2014 WL 4471385 (S.D. Tex. Sept. 10, 2014), is similarly not on point, as it concerns a motion for attorneys’ fees by the plaintiff in an employment discrimination suit after the district court granted summary judgment for the defendant. Id. at *1 (“As this Court granted the City’s Motion for Summary Judgment, the only remaining sanctions issue is Mr. Julian’s request for $5,000.00 in attorneys’ fees.”). Moreover, that case was decided under Fifth Circuit law, which appears to be more lenient with regard to Rule 37 sanctions than the Ninth Circuit.7 Compare id. (citing Mendoza v. Lynaugh, 989 F.2d 191, 195 (5th Cir. 1993)) (“‘The imposition of a sanction without a prior warning is to be avoided.’”) with Yeti by Molly, 259 F.3d at 1106 (ruling that the Rule 37 enforcement provision was intended as a “broadening of the sanctioning power,” 5 See also id. at *1 (“Rule 26(e) requires that as theories mature . . . responses to interrogatories, and particularly contention interrogatories, be corrected or supplemented to reflect those changes.). 6 Defendants did move to compel supplemental infringement contentions because Caltech’s contentions were insufficient on their face. 7 Caltech concedes that Ninth Circuit law governs discovery sanctions. (Dkt. 623- 2 [Caltech Br.] at 3 n. 4 (“Ninth Circuit law, rather than that of the Federal Circuit, controls the determination of whether the expert reports should be excluded.” (citations omitted).) REDACTED VERSION OF DOCUMENT PROPOSED TO BE FILED UNDER SEAL Case 2:16-cv-03714-GW-AGR Document 637 Filed 08/27/18 Page 16 of 31 Page ID #:31858 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 -12- DEFENDANTS’ REPLY ISO MOTION TO STRIKE CASE NO. 2:16-CV-3714-GW (AGRX) creating an “automatic sanction” and “provid[ing] a strong inducement for disclosure of material”).8 Finally, Caltech’s charge of “hypocrisy” actually proves the opposite— Defendants properly disclosed their theories of damages, and Defendants’ damages expert Vince Thomas provided additional evidence in support of those theories, just as Defendants argue Caltech and its experts should have (but did not). (Dkt. 623-2 [Caltech Br.] at 17-18.) For example, Caltech admits that Defendants’ damages interrogatory response disclosed the theory (Id.) Caltech’s objection to the additional evidence in Mr. Thomas’ report again confuses additional evidence in support of a previously disclosed theory—which is permissible—with an entirely new theory, which is not. Fujifilm, 2015 WL 757575, at *7 (quoting Apple, 2014 WL 173409, at *2). Defendants likewise disclosed their theories that and Mr. Thomas provided additional support for and explanation of those theories in his report.9 (Id.) 8 Even under the Fifth Circuit standard, Julian notes that “[o]n slightly different facts, sanctions would be appropriate.” Julian v. City of Houston, 2014 WL 4471385 at *3 (S.D. Tex. Sept. 10, 2014) 9 Earlier in its brief, Caltech argues that additional portions of Mr. Thomas’ report discussing are new, but, as demonstrated above, both theories were disclosed in Defendants’ interrogatory response. (Compare Dkt. 623-2 [Caltech. Br. at 8] and Dkt. 623-9 REDACTED VERSION OF DOCUMENT PROPOSED TO BE FILED UNDER SEAL Case 2:16-cv-03714-GW-AGR Document 637 Filed 08/27/18 Page 17 of 31 Page ID #:31859 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 -13- DEFENDANTS’ REPLY ISO MOTION TO STRIKE CASE NO. 2:16-CV-3714-GW (AGRX) Defendants thus abided by the standard they now ask the Court to enforce against Caltech. 3. The Corrections To The Lawton And Teece Reports Are Substantive And Improper. If the hundreds of errors and blanks in the Lawton and Teece Reports are truly not substantive, as Caltech argues, then Caltech should have no problem striking the “corrected” versions of those reports, because the “substance” of Ms. Lawton and Dr. Teece’s opinions would still be in the timely-served versions. Defendants made exactly that point to Caltech during the meet and confer that preceded this motion and suggested that Caltech withdraw the Corrected Reports if the changes were indeed “not substantive.” (Choy Decl. ISO Reply ISO Motion To Strike ¶ 5.) In fact, as the examples in Defendants’ brief demonstrate, the errors and blanks in the Lawton and Teece Reports go to the core of their opinions— that Ms. Lawton calculates12 and Dr. Teece relies on13—and the volume of those mistakes casts grave doubt on Caltech’s representation that they went unnoticed until after those reports were served. [Ex. I (Thomas Report)] at 105-07 (aggregate royalty burden), 113-117 (apportionment) with Dkt. 623-8 [Ex. H to Caltech Br. (Defs’ Response to CT Rog. 12)] at 16.) 10 (See Ex. P.3 [Corrected Lawton Report] at 831-838.) 11 (See Ex. M.3 [Corrected Lawton Report] at 839-845.) 12 See Ex. P.3 [Corrected Lawton Report] at Section XV.H; see also id. at 831-45. 13 See Ex. N.2 [Corrected Teece Report] REDACTED VERSION OF DOCUMENT PROPOSED TO BE FILED UNDER SEAL Case 2:16-cv-03714-GW-AGR Document 637 Filed 08/27/18 Page 18 of 31 Page ID #:31860 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 -14- DEFENDANTS’ REPLY ISO MOTION TO STRIKE CASE NO. 2:16-CV-3714-GW (AGRX) First, the Lawton Report (served on June 21, 2018, the deadline for opening expert reports) does not show how Ms. Lawton calculated . (Ex. M.3 [June 21, 2018 Lawton Report] at 827-28, 834-35.) But no exhibits were served with the Lawton Report. Fed. R. Civ. P. 26(a)(2)(B) requires that an expert report contain “a complete statement of all opinions the witness will express and the basis and reasons for them.” Id. Ms. Lawton’s Report does not provide the bases for her calculations of per unit royalties from the lump sum payments in the Caltech-Hughes and CSIRO- Broadcom settlements. Those omissions go to the very foundation of her opinion that per unit royalties can be derived from lump sum payments in the Caltech- Hughes and CSIRO-Broadcom settlements, which Dr. Teece cites and relies on. Caltech cannot credibly argue that omitting the bases for Ms. Lawton’s calculations of per unit royalties was a mere “typographical error” that “did not alter the substance” of Ms. Lawton’s Report. (Dkt. 623-3 at 3.) There is simply no way to spin this issue; Caltech omitted an essential—and required—part of the Lawton Report. Second, the schedules served for the first time with the Corrected Lawton Report disclose .14 Among other critical details, those schedules disclose Ms. Lawton’s assumptions about 14 The Corrected Lawton Report also replaces citations to the never-served “Exhibits” with citations to the newly served “Schedules.” (Ex. P.3 at 837-38, 844.) REDACTED VERSION OF DOCUMENT PROPOSED TO BE FILED UNDER SEAL Case 2:16-cv-03714-GW-AGR Document 637 Filed 08/27/18 Page 19 of 31 Page ID #:31861 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 -15- DEFENDANTS’ REPLY ISO MOTION TO STRIKE CASE NO. 2:16-CV-3714-GW (AGRX) . (Dkt. 608-17 [Schedules 15.1-15.11 to Corrected Lawton Report].) None of those assumptions is disclosed in the original Lawton Report. All of them are essential to understand the bases of her opinions Nonetheless, Caltech argues that “[t]he Schedules [to the Corrected Lawton Report] do not add any new substance or opinions.” (Dkt. 623-2 at 19.) Here again, Caltech’s argument cannot be reconciled with the written record. Lest there be any doubt that the schedules add substance that was omitted from the original Lawton Report, the following chart lists the titles of the schedules served with the Corrected Lawton Report (copies of which are attached to Defendants’ opening brief as Ex. R (Dkt. 608-17)): Schedule Title 15.1 15.2 15.3 15.4 15.5 15.6 15.7 15.8 REDACTED VERSION OF DOCUMENT PROPOSED TO BE FILED UNDER SEAL Case 2:16-cv-03714-GW-AGR Document 637 Filed 08/27/18 Page 20 of 31 Page ID #:31862 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 -16- DEFENDANTS’ REPLY ISO MOTION TO STRIKE CASE NO. 2:16-CV-3714-GW (AGRX) 15.9 15.10 15.11 (Dkt. 608-17 [Ex. R (Schedules 15.1-15.11)].) As the titles show, many of the assumptions that form the basis for Ms. Lawton’s calculation Fed. R. Civ. P. 26 required Caltech to disclose that information with Ms. Lawton’s Report. Fed. R. Civ. P. 37 sets forth the consequences for Caltech’s failure to do so. Third, Caltech’s failure to disclose key assumptions and calculations that form the basis for Ms. Lawton’s opinions exacerbates the prejudice caused by Caltech’s surprise theory that purports not to rely on the EMVR. Ms. Lawton’s Report not only disclosed surprise it also omitted the basis for those theories. The fact that Caltech served a Corrected Report nine days later and (begrudgingly) agreed to a three-week extension does nothing to cure the prejudice caused by its delay in disclosing its REDACTED VERSION OF DOCUMENT PROPOSED TO BE FILED UNDER SEAL Case 2:16-cv-03714-GW-AGR Document 637 Filed 08/27/18 Page 21 of 31 Page ID #:31863 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 -17- DEFENDANTS’ REPLY ISO MOTION TO STRIKE CASE NO. 2:16-CV-3714-GW (AGRX) surprise damages theory in the first place. Caltech and its experts had thirteen months of fact discovery plus eight months after the close of fact discovery to develop their per unit royalty theory; Defendants and their expert Mr. Thomas had only eight weeks—without the benefit of fact discovery—to respond. No deposition or extension can cure that asymmetry. The appropriate remedy is therefore exclusion under Fed. R. Civ. P. 37. Finally, even a cursory review of the Lawton Report reveals dozens of blanks as well as parentheticals in all caps such as “[[INSERT TABLE]]” and “[[ROYALTY BASE]].” (Dkt. 608-12 [Ex. M.2 (Lawton Report)] at 781; Ex. M.3 at 825, n. 3491; Dkt. 623-12 [Ex. M (Errata)].) Nonetheless, Ms. Lawton signed the report representing it constituted her entire opinion and Caltech represents to the Court that it “learned” that the Lawton and Teece Reports “contained typographical errors,” including erroneous and missing figures, “[a]fter” it served those reports. (Dkt. 623-2 at 18-19 (emphasis added).) Tellingly, neither Ms. Lawton, nor Dr. Teece, nor anyone from Caltech or representing Caltech submitted a declaration stating that the errors and blanks in the Lawton and Teece Reports were discovered after those reports were served. Even more telling, when Defendants pressed Caltech about the errors and omissions in the Lawton and Teece Reports during the meet and confer preceding this motion, counsel for Caltech admitted that “we ran out of time.” (Choy Decl. ISO Reply ISO Motion To Strike ¶ 6.) And most telling of all, the attorney declaration Caltech submitted with its opposition to Defendants’ motion (Dkt. 620- 1 [Biddinger Decl.]) includes a self-serving statement about the parties’ meet and confer preceding this motion but says nothing about when the errors and omissions in the Lawton and Teece reports were discovered. (Id. ¶ 20 (“During the parties’ meet-and-confer on July 29, 2018 [sic] that I participated in . . . .”).) Caltech cannot paper over its litigation misconduct with unsupported attorney argument. REDACTED VERSION OF DOCUMENT PROPOSED TO BE FILED UNDER SEAL Case 2:16-cv-03714-GW-AGR Document 637 Filed 08/27/18 Page 22 of 31 Page ID #:31864 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 -18- DEFENDANTS’ REPLY ISO MOTION TO STRIKE CASE NO. 2:16-CV-3714-GW (AGRX) 4. Caltech’s Untimely Disclosures Are Neither Substantially Justified Nor Harmless. Caltech, not Defendants, bears the burden of proving that its new damages theories and the untimely service of the “corrected” Lawton and Teece Reports were substantially justified or harmless. Yeti by Molly, 259 F.3d at 1106-07; see also Green v. Baca, 226 F.R.D. 624, 655 (C.D. Cal. 2005) (“[T]he burden of showing harmlessness or substantial justification rests squarely on the plaintiff.”). Nonetheless, Defendants have shown, in their opening brief and above, that Caltech has no excuse for its failure to disclose so many of its damages theories, and that springing those new theories on Defendants in opening expert reports has caused and will continue to cause prejudice. (Dkt. 608 [Defs’ Br.] at 17 (“Caltech has no valid excuse for springing entirely new damages theories on Defendants during expert discovery.”); see also id. at 23 (describing prejudice caused by Caltech’s new damages theories and corrected reports).) In response, Caltech discusses four factors considered by courts in the Ninth Circuit when evaluating a party’s attempt to avoid Rule 37’s automatic sanctions.15 (Dkt. 623-2 at 20-23.) Because those four factors simply provide a framework for the “substantially justified or harmless” standard set forth in Rule 37 itself, Caltech 15 Caltech argues that Defendants have mischaracterized Rule 37’s sanctions as automatic. But the “automatic” language comes directly from the Advisory Committee’s notes on the 1993 Amendment to Rule 37, was quoted by the Ninth Circuit in Yeti by Molly, and accurately reflects the intent of that amendment, as the decision cited by Caltech notes. See Yeti by Molly, 259 F.3d at 1106 (“The Advisory Committee Notes describe [Rule 37, as amended in 1993] as a ‘self- executing,’ ‘automatic’ sanction to ‘provide[] a strong inducement for disclosure of material . . . .”); see also Lanyard Toys Ltd. v. Novelty, Inc., 375 Fed. Appx. 705, 713 (9th Cir. 2010) (“Appellants correctly note that Rule 37(c)(1), as implemented through the 1993 amendments, was intended to foster stricter adherence to discovery requirements and to broaden the power of the district courts to sanction violations of Rule 26.”) (citing Yeti by Molly, 259 F.3d at 1106). Defendants accurately described Rule 37 and the way courts in the Ninth Circuit apply it. REDACTED VERSION OF DOCUMENT PROPOSED TO BE FILED UNDER SEAL Case 2:16-cv-03714-GW-AGR Document 637 Filed 08/27/18 Page 23 of 31 Page ID #:31865 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 -19- DEFENDANTS’ REPLY ISO MOTION TO STRIKE CASE NO. 2:16-CV-3714-GW (AGRX) bears the burden of proof on each.16 See Lanyard Toys Ltd. v. Novelty, Inc., 375 Fed. Appx. 705, 713 (9th Cir. 2010) (citing Yeti by Molly, 259 F.3d at 1107) (“The burden is on the party facing exclusion of its expert’s testimony to prove the delay was justified or harmless.”). Prejudice. Caltech had at least eight months after the close of fact discovery to prepare its damages expert reports and apparently used that time to fill over 1,000 pages—excluding exhibits— (See Dkt. 608 [Defs’ Br.] at 23 (discussing prejudice).) Defendants and their expert Mr. Thomas had less than eight weeks (closer to six weeks, counting from the service of the Corrected Lawton and Teece Reports) to respond to those new theories, without the benefit of fact discovery from Caltech or third parties, because Caltech did not properly disclose its damages theories during fact discovery.17 That asymmetry is fundamentally unfair, and is the direct result of Caltech’s failure to disclose its new theories before serving its opening expert reports. Caltech argues that Defendants “expressly agreed with Caltech that detailed damages contentions should be reserved for experts.” (Dkt. 623-2 [Caltech Br.] at 21.) Here again, the written record proves the opposite. Defendants’ letter that 16 Defendants did not “ignore” the four factors, as Caltech argues. Rather, Defendants showed that Caltech bears the burden of proving and persuading the Court not to apply the automatic sanction of Rule 37. (Dkt. 608 at 13-14, 17-25.) Moreover, Defendants identified multiple ways in which they have been prejudiced by Caltech’s discovery misconduct, and explained that Caltech has no valid excuse for withholding its damages theories until opening expert reports. (Dkt. 608 at 16- 17, 22-25.) 17 Caltech argues that Mr. Thomas’ Rebuttal Report is “over 1200-page[s]” and “over 1400 pages” long. (Dkt. 623-2 (Caltech Br.) at 17, 22.) In fact, Mr. Thomas’ report is 300 pages. The exhibits to Mr. Thomas’ report are 933 pages long and were timely served. REDACTED VERSION OF DOCUMENT PROPOSED TO BE FILED UNDER SEAL Case 2:16-cv-03714-GW-AGR Document 637 Filed 08/27/18 Page 24 of 31 Page ID #:31866 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 -20- DEFENDANTS’ REPLY ISO MOTION TO STRIKE CASE NO. 2:16-CV-3714-GW (AGRX) Caltech cites expressly states “Defendants also disagree that ‘much of [Interrogatory No. 8] requires expert analysis.’” (Dkt. 620-4 [Ex. C (6/5/17 Hammon ltr to Biddinger)].) Moreover, as shown above, Defendants never agreed that Caltech could conceal its damages theories until serving its expert reports, and the rule that allows deferring calculation of the amount of damages does not allow parties to withhold entire theories of damages during discovery. Caltech also argues, without citation, that Defendants “never objected to Caltech’s withholding” of a 30(b)(6) witness “to testify regarding damages.” (Id.) To the extent that Caltech is arguing that Defendants never pressed for a fact witness to testify to the amount of Caltech’s damages claim, that is irrelevant because the calculation of the amount of damages may be performed by experts. To the extent Caltech is arguing that Defendants never moved to compel Caltech to provide a witness to testify regarding the damages theories it withheld, Defendants had no basis to press for theories that they did not know Caltech was hiding. Nor does the fact that Caltech provided 30(b)(6) witness(es) to testify about topics related to damages cure the harm caused by Caltech’s discovery misconduct, because (as discussed in Defendants’ opening brief) Defendants did not have the disclosure to which they are entitled before taking those depositions. Defendants could not cross-examine Caltech’s 30(b)(6) witnesses about theories Caltech had not disclosed at the time. Caltech argues that Defendants (Id.) But the 30(b)(6) witness Caltech provided on damages was not prepared to discuss , and Defendants had to move to compel Caltech to provide a witness who was prepared on that topic. (Dkt. 380 [Defs’ Mot. To Compel] at 6-11.) In no way does the discovery Defendants had to compel Caltech to provide justify or excuse Caltech’s failure to disclose its damages theories. REDACTED VERSION OF DOCUMENT PROPOSED TO BE FILED UNDER SEAL Case 2:16-cv-03714-GW-AGR Document 637 Filed 08/27/18 Page 25 of 31 Page ID #:31867 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 -21- DEFENDANTS’ REPLY ISO MOTION TO STRIKE CASE NO. 2:16-CV-3714-GW (AGRX) Finally, Caltech’s argument that Defendants “can hardly be prejudiced by” the original Lawton and Teece Reports presumes that the blanks and errors in those reports are “technical corrections.” (Dkt. 623-2 [Caltech Br.] at 21.) Now that Defendants have (again) debunked that premise, Caltech’s argument carries no weight, and the cases it cites in support are inapposite.18 Inability To Cure Prejudice Without Trial Disruption. To cure the prejudice caused by Caltech’s misconduct, Defendants would have to take additional fact discovery, including re-deposing Caltech’s 30(b)(6) witnesses and seeking discovery from third-parties. (See Dkt. 608 [Defs’ Br.] at 23 (listing examples of prejudice caused by Caltech’s untimely theories).) Nor can Defendants fully cure the prejudice caused by Caltech’s misconduct by deposing Caltech’s experts because they no longer can take fact discovery to collect material with which to cross-examine those experts. While the current case schedule has already been delayed due to Caltech’s deficient infringement contentions, the parties have now served opening and rebuttal expert reports, and there is no room in the current schedule to re-open fact discovery and re-do expert reports. (Dkt. 578 [Scheduling Order].) Thus, Defendants have not requested another delay to (again) accommodate Caltech’s discovery misconduct. Instead, they seek the remedy prescribed by Fed. R. Civ. P. 18 Becerra v. J.C. Penny Corp., 2017 WL 1479410 (C.D. Cal. Apr. 24, 2017) is a slip-and-fall case where the delinquent party asked opposing counsel for an extension and explained the delay in serving its damages report was due to the resignation of the lawyer primarily responsible for the report the day before it was due. Id. at *1-*2. Metaswitch Networks Ltd. v. Genband US LLC, 2016 WL 874737 (E.D. Tex. Mar. 5, 2016) was decided under Fifth Circuit law, which applies a different four-factor test than the Ninth Circuit to determine whether an untimely disclosure is harmless. Id. at *2. Moreover, the parties in Metaswitch expressly agreed “that their damages experts would serve supplemental reports” after an exchange of supplemental sales and revenue information after the close of discovery and the court found that the challenged report “does not appear to introduce any new methodologies.” Id. at *6; see also id. (“[I]t is undisputed that [the damages expert’s] methodology has not changed.”). REDACTED VERSION OF DOCUMENT PROPOSED TO BE FILED UNDER SEAL Case 2:16-cv-03714-GW-AGR Document 637 Filed 08/27/18 Page 26 of 31 Page ID #:31868 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 -22- DEFENDANTS’ REPLY ISO MOTION TO STRIKE CASE NO. 2:16-CV-3714-GW (AGRX) 37—exclusion of Caltech’s untimely theories. Moreover, Caltech fought Defendants’ proposed three-week extension for rebuttal expert reports when Defendants proposed it, and tried to use that extension to prevent Defendants from moving to strike its untimely theories and the Corrected Lawton and Teece Reports after the parties had agreed to it (which shows Caltech’s concern about its conduct in serving those Corrected Reports). (Dkt. 608-20 [emails] at 7-16.) Even with three additional weeks, Defendants had just under eight weeks to respond to Caltech’s thousands of pages of opening expert reports, including all of Caltech’s previously undisclosed theories. As noted above, Caltech had eight months to prepare those reports (as a direct result of the delay to the case schedule caused by Caltech’s deficient infringement contentions), as demonstrated by their volume. Three additional weeks cannot remedy the harm caused by Caltech’s discovery misconduct. Bad Faith. In evaluating whether Caltech acted in bad faith when it failed to disclose so many of its damages (and infringement) theories for the entirety of fact discovery, the Court should consider the fact that Caltech also failed to disclose those theories for the eight months between the close of fact discovery and opening expert reports. Surely Caltech and its experts knew that its theories would go in a different direction from (and well-beyond) its response to DCI 8 well-before the June 21, 2018 deadline for opening reports. Caltech has provided no explanation of that delay. The Court should also consider the merits of Caltech’s arguments in opposition to Defendants’ motion to strike, its mischaracterization of the blanks and errors in the Lawton and Teece Reports, and its representation that those blanks and errors were discovered “after” Caltech served those reports, all of which have now been shown to lack basis. (See Sections II.A.1-3, supra.) Caltech bears the burden of showing that it did not act in bad faith in withholding its untimely damages theories. In light of the record above, Caltech cannot carry that REDACTED VERSION OF DOCUMENT PROPOSED TO BE FILED UNDER SEAL Case 2:16-cv-03714-GW-AGR Document 637 Filed 08/27/18 Page 27 of 31 Page ID #:31869 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 -23- DEFENDANTS’ REPLY ISO MOTION TO STRIKE CASE NO. 2:16-CV-3714-GW (AGRX) burden. Moreover, because unsupported attorney arguments are not proof, Caltech cannot carry its burden on any of the four factors that could save it from sanctions under Fed. R. Civ. P. 37. Caltech’s Surprise DOE Theories Should Be Stricken Because DOE Contentions Do Not Depend On Non-Infringement Theories. Caltech offers a single defense of its eleven admittedly untimely DOE infringement theories—that they depend on and respond to Defendants’ non- infringement positions. But “DOE contentions are not dependent on the opposing party’s noninfringement theories.”19 Fujifilm, 2015 WL 757575, at *7 (quoting Apple Inc. v. Samsung Elec. Co. Ltd., 2013 WL 3246094, at *2 (N.D. Cal. 2013)) (emphasis added). Moreover, as demonstrated in Defendants’ Opposition To Caltech’s Motion For Leave To Amend Infringement Contentions (Dkt. 613-2), which is incorporated by reference herein, Defendants disclosed non-infringement theories during fact discovery for each of the eleven claim limitations for which Caltech disclosed an untimely DOE infringement theory. (Id. at 3-9.) Caltech admits that these eleven theories are new and has done nothing to show that the untimely disclosure of these theories is substantially justified or harmless. Defendants’ motion to strike these eleven grounds should be granted. 19 In fact, the Northern District of California’s Local Patent Rules—which courts in this district regularly adopt or set case deadlines to replicate, as Caltech admits (Dkt. 599-1 [Caltech’s Motion To Strike Portions Of Dr. Frey’s Expert Report] at 8)—require the party claiming patent infringement to disclose its DOE infringement theories “[n]ot later than 14 days after the Initial Case Management Conference.” N.D. Cal. Patent L.R. 3-1; see also Apple, 2013 WL 3246094, at *2 (“The [Patent L.R.s] notably do not require disclosure of theories of noninfringement nor do they provide that a party’s failure to disclose noninfringement theories justifies amendment to include DOE theories.”). REDACTED VERSION OF DOCUMENT PROPOSED TO BE FILED UNDER SEAL Case 2:16-cv-03714-GW-AGR Document 637 Filed 08/27/18 Page 28 of 31 Page ID #:31870 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 -24- DEFENDANTS’ REPLY ISO MOTION TO STRIKE CASE NO. 2:16-CV-3714-GW (AGRX) Caltech’s Wi-Fi Alliance Report Focuses On Improperly Obtained WFA Documents, And Should Be Stricken. Defendants’ opening brief showed that the primary purpose of Mr. Belanger’s surprise report is to establish him as a sponsoring witness for confidential third-party documents that Caltech improperly obtained from the WFA after the close of fact discovery. (Dkt. 608 at 11, 25.) Defendants have separately moved to enforce the Court’s Scheduling Order and to exclude all such improperly obtained confidential documents from the WFA.20 (Dkt. 563, 563-1.) If the Court grants that motion, Mr. Belanger’s report should also be stricken. Caltech argues that the Belanger Report (Dkt. 623-2 at 24.) Regardless of how many pages of Mr. Belanger’s report specifically cite confidential documents from the WFA, the core of his report remains the discussion of documents from the WFA. (See Dkt. 623-1 [Belanger Report].) The other “opinions” In Mr. Belanger’s Report merely consist of his professional background and foundation for his discussion of the improperly obtained WFA documents. (See id.) Caltech also argues that Defendants should not have been surprised by Mr. Belanger’s reliance on confidential documents from the WFA because a “substantial volume” were allegedly also produced by Defendants. (Dkt. 623-2 (Caltech Br.) at 24-25.) Mr. Belanger does not rely on documents produced by Defendants, nor could he because he has not agreed to be bound by the Protective Order in this case. Instead, Caltech chose to have Mr. Belanger rely on documents obtained from the WFA in violation of the Court’s Scheduling Order and Defendants moved to strike Mr. Belanger’s Report precisely because he relies on documents that were 20 Defendants hereby incorporate their Motion to Enforce Protective Order and Reply Brief in support of that motion by reference. REDACTED VERSION OF DOCUMENT PROPOSED TO BE FILED UNDER SEAL Case 2:16-cv-03714-GW-AGR Document 637 Filed 08/27/18 Page 29 of 31 Page ID #:31871 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 -25- DEFENDANTS’ REPLY ISO MOTION TO STRIKE CASE NO. 2:16-CV-3714-GW (AGRX) improperly obtained. Caltech’s argument about Defendants’ production is irrelevant. Finally, Caltech argues that Mr. Belanger’s reliance on confidential WFA documents is “permissible” because (Dkt. 623-2 [Caltech Br.] at 24-25.) But Caltech provides no evidence that Mr. Belanger has permission to access or use WFA documents for purposes of this litigation. Moreover, if Mr. Belanger had access to WFA documents and the right to use them for this litigation, Caltech should have asked him to collect and produce those documents during fact discovery. Again, Caltech’s explanation does not add up. Caltech has spent much of the ten months since the close of fact discovery trying to get confidential documents from third-party the WFA into the record, but has never satisfactorily explained why it did not seek such documents during the thirteen months of fact discovery that preceded the cutoff. If the information in Mr. Belanger’s report is as “critical” as Caltech now argues, Caltech should have sought discovery from the WFA before the closing days of fact discovery or had Mr. Belanger agree to be bound by the Protective Order so he could rely on the WFA documents Defendants allegedly produced. Because it did not, and instead chose to obtain documents from the WFA improperly and then have Mr. Belanger rely on those improperly obtained documents, Mr. Belanger’s report should be excluded. III. CONCLUSION For the foregoing reasons, Defendants respectfully request that the Court grant their motion to strike. REDACTED VERSION OF DOCUMENT PROPOSED TO BE FILED UNDER SEAL Case 2:16-cv-03714-GW-AGR Document 637 Filed 08/27/18 Page 30 of 31 Page ID #:31872 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 -26- DEFENDANTS’ REPLY ISO MOTION TO STRIKE CASE NO. 2:16-CV-3714-GW (AGRX) Respectfully submitted, DATED: August 27, 2018 By: /s/ James M. Dowd JAMES M. DOWD (SBN 259578) james.dowd@wilmerhale.com AARON S. THOMPSON (SBN 272391) aaron.thompson@wilmerhale.com WILMER CUTLER PICKERING HALE AND DORR LLP 350 South Grand Avenue, Suite 2100 Los Angeles, California 90071 Tel: (213) 443-5300 Fax: (213) 443-5400 MARK D. SELWYN (SBN 244180) mark.selwyn@wilmerhale.com WILMER CUTLER PICKERING HALE AND DORR LLP 950 Page Mill Road Palo Alto, California 94304 Tel: (650) 858-6000 Fax: (650) 858-6100 Attorneys for Defendants Broadcom Limited, Broadcom Corporation, Avago Technologies Limited, Apple Inc., and Cypress Semiconductor Corporation REDACTED VERSION OF DOCUMENT PROPOSED TO BE FILED UNDER SEAL Case 2:16-cv-03714-GW-AGR Document 637 Filed 08/27/18 Page 31 of 31 Page ID #:31873