[00:00:00] Speaker 05:
our case for argument today is 23-1101 Echo Factor versus Google.

[00:00:06] Speaker 03:
Ms.

[00:00:07] Speaker 03:
Anders, please proceed.

[00:00:09] Speaker 03:
Good morning, and may it please the court.

[00:00:10] Speaker 03:
I'm Ginger Anders representing Google.

[00:00:13] Speaker 03:
The district court abused its discretion in this case by holding that the reliability of Kennedy's testimony, assigning the ex-royalty lady to the three lump sum licenses, was a matter for the jury to decide for itself.

[00:00:24] Speaker 03:
Rule 702 has long required the district court to ensure reliability before

[00:00:29] Speaker 03:
admitting challenged expert testimony.

[00:00:31] Speaker 03:
Here, Kennedy's testimony was clearly unreliable.

[00:00:34] Speaker 03:
He testified that the license's non-binding recitals of EcoFactor's belief that its licenses had agreed to the royalty rate, combined with EcoFactor's CEO's unsupported and self-interested assertion that that had happened, established that every EcoFactor licensee had, in fact, agreed to the royalty rate.

[00:00:50] Speaker 10:
Let me ask you what I view it to be a somewhat of a threshold issue here.

[00:00:57] Speaker 10:
probably a little bit broader issue than the one that you were describing.

[00:01:02] Speaker 10:
But you say in your brief that rule 7.2 requires district courts to serve as rigorous gatekeepers.

[00:01:11] Speaker 10:
And throughout your brief there's other parts where you say that here the expert testimony must be subject to rigorous reliability testing.

[00:01:23] Speaker 10:
And I found

[00:01:25] Speaker 10:
numerous other places in your brief, where you use the word rigorously.

[00:01:31] Speaker 10:
And apparently, if we all carry backwards around with us, yours would say rigorously.

[00:01:38] Speaker 10:
So you believe that what happened here at the district court level is less than rigorous, correct?

[00:01:45] Speaker 10:
I do.

[00:01:46] Speaker 10:
And you believe that the district court should look at Robert and Bill 702

[00:01:52] Speaker 10:
And be more rigorous from here on out.

[00:01:54] Speaker 10:
That's why we're here.

[00:01:55] Speaker 10:
That's why this is a non-bond court.

[00:01:56] Speaker 10:
You want a more rigorous application of 702 and the dollar.

[00:02:02] Speaker 10:
You're correct.

[00:02:03] Speaker 03:
So I don't think that we're arguing that the standard should be increased from where it is today.

[00:02:07] Speaker 03:
I think what we're saying is that what we are saying is that this court should reaffirm the longstanding rule 702 principles that have been in place, I think, for decades now.

[00:02:16] Speaker 03:
And that we're reaffirming.

[00:02:17] Speaker 10:
So you're not advocating a new rule or a new requirement?

[00:02:20] Speaker 03:
We're definitely not advocating a new rule.

[00:02:22] Speaker 10:
I do think that this is a- Just that rule 702 and barbers should be applied more rigorous.

[00:02:30] Speaker 03:
I think it should be applied according to its terms.

[00:02:35] Speaker 03:
I think the district court didn't do that here.

[00:02:37] Speaker 03:
And if I could just make a comment on the statement.

[00:02:39] Speaker 10:
I think it should be applied in accordance with what the statute says and what the Supreme Court said in Dabra.

[00:02:48] Speaker 10:
But you don't feel that that's what happened here.

[00:02:51] Speaker 10:
And you want us to look at it.

[00:02:53] Speaker 10:
So we can say that the application of 7-02 and Daubert is done on a case-by-case basis.

[00:03:03] Speaker 03:
It is absolutely done on a case-by-case basis.

[00:03:06] Speaker 10:
And in which case you think that it was not done correctly.

[00:03:09] Speaker 10:
And that's because of the facts of this case, correct?

[00:03:12] Speaker 03:
It's legal error as well as the facts of this case the legal error that the district court committed was it said It looked at the Daubert motion, and it said this is a matter for cross-examination So in other words the district court didn't do the gatekeeping under rule 702 that's a legal error You're not promoting a new rule or a new requirement with respect to Daubert and rule 702 You just don't like the rule in the outcome in this case

[00:03:37] Speaker 03:
That's correct.

[00:03:38] Speaker 03:
We think that this is an abuse of discretion.

[00:03:39] Speaker 03:
And if I could explain a couple things about why that is, starting with the standard and then what the district court did.

[00:03:45] Speaker 03:
So the standard here, I think, is Rule 702B says the expert's opinion has to be based on sufficient facts and data.

[00:03:54] Speaker 03:
And that was what was the problem here, that Kennedy's testimony was not based on sufficient facts and data.

[00:03:59] Speaker 03:
I think the standard for that really comes from the Supreme Court's decision in Joyner.

[00:04:03] Speaker 03:
I think this is a good statement of it.

[00:04:04] Speaker 03:
where the Supreme Court says, what you do is you look at the expert's opinion and you examine whether the analytical gap between that opinion and the facts on which the expert relied is too great, such that essentially the expert is relying on Ipsi-Dixit rather than reason and analysis.

[00:04:21] Speaker 03:
And then the other thing that this report does, and you see this in this court's cases as well as all the cases we've cited in our brief, the court looks to whether

[00:04:27] Speaker 03:
the evidence on which the expert relied is of the sort that an expert would reasonably rely on.

[00:04:32] Speaker 03:
And that is what did not happen here, just because the district judge didn't do the reliability analysis at all.

[00:04:39] Speaker 03:
He kicked it to the jury, which, as I said, was legal error.

[00:04:42] Speaker 03:
But I think the other problem here is that it is difficult to imagine a clearer example of expert Ipsi-Dixit than what happened in this case.

[00:04:49] Speaker 03:
Ms.

[00:04:49] Speaker 04:
Anders, what about the language in 702 about demonstrating to the court that it's more likely than not

[00:04:57] Speaker 03:
that these factors

[00:05:14] Speaker 03:
to show to the district court by proponents of the evidence that the testimony is more likely than not reliable.

[00:05:20] Speaker 03:
So that has always been the standard.

[00:05:21] Speaker 03:
It was eco-factors burdened here.

[00:05:23] Speaker 03:
And I think that's another reason the district court simply didn't apply that.

[00:05:25] Speaker 01:
And what the advisory committee called out was the improper in looking back at what the many courts or some courts had been doing.

[00:05:32] Speaker 01:
But the improper application by holding the critical questions of sufficiency of an expert's basis and the application of the expert's methodology

[00:05:40] Speaker 01:
as questions of weight and non-admissibility.

[00:05:43] Speaker 01:
That's exactly right.

[00:05:44] Speaker 01:
And that is exactly the problem.

[00:05:46] Speaker 03:
That is what happened here, what the district court did.

[00:05:49] Speaker 03:
And so I think the 2023 amendment makes that very clear.

[00:05:53] Speaker 03:
It makes it unmistakable.

[00:05:54] Speaker 03:
But it was already the standard before, as you can see in the Arthur case, which was from 2022 in the Fifth Circuit.

[00:06:00] Speaker 05:
It seems a little hard to understand what the district court did, because he didn't say anything about it.

[00:06:04] Speaker 03:
I think that's correct as well.

[00:06:06] Speaker 03:
It is difficult to evaluate under abuse of discretion review when there is no reasoning to look to.

[00:06:11] Speaker 03:
So I think that's a problem.

[00:06:13] Speaker 08:
Do you think a district court should write an opinion any time there's a Daubert challenge?

[00:06:17] Speaker 03:
I think it's going to depend on the circumstances.

[00:06:19] Speaker 03:
I think, obviously, there will be some cases where it's pretty straightforward.

[00:06:22] Speaker 03:
And a district court wouldn't have to say very much.

[00:06:23] Speaker 03:
There are other cases where maybe it does have to explain a little bit.

[00:06:27] Speaker 03:
I think there's no magic words requirement to know.

[00:06:30] Speaker 10:
Should we send this back down and have the district court

[00:06:33] Speaker 10:
We viewed this in the first instance as far as providing the explanations for the rulings that he did do.

[00:06:41] Speaker 10:
We just simply had him do the rulings over.

[00:06:43] Speaker 03:
So I don't think so for a couple of reasons.

[00:06:45] Speaker 03:
I think, for one thing, I think it is very clear here.

[00:06:47] Speaker 03:
I think there's really only one right answer here.

[00:06:49] Speaker 03:
And this court has said that when there's only one right answer, you don't have to remand to have the district court do it again.

[00:06:54] Speaker 03:
And I also think it's really important for this court to give guidance as to the standard here.

[00:06:58] Speaker 03:
Because I think that if this kind of expert testimony is allowed, this really impacts a lot of important patent values here, right?

[00:07:06] Speaker 03:
This is not just about an expert taking his own client's interested assertions and sort of asserting them as expert.

[00:07:13] Speaker 03:
as the experts authoritative conclusion, which is what happened here.

[00:07:17] Speaker 03:
But there are patent values at stake.

[00:07:20] Speaker 06:
The point of using for- Before you get into that, I just want to better understand.

[00:07:23] Speaker 06:
You say the evidence here is very clear and there's only one right answer.

[00:07:27] Speaker 06:
I suppose if I agreed with that, then it follows that we should just take care of it.

[00:07:33] Speaker 06:
But what if this is like what I assume is the more common case where the evidence is not very clear and there's not just one right answer?

[00:07:42] Speaker 06:
If I see it that way, why would I not remand to Judge Albright for him to comply with Daubert in the way that you say we should remind him he needs to do?

[00:07:51] Speaker 03:
I think that course is certainly open to this court if it thinks that that should happen in the first instance.

[00:07:56] Speaker 03:
But I do think that it would be helpful here to give guidance because of the extremity of this case, because this is a case in which you have licenses

[00:08:04] Speaker 03:
that have solely a non-operative unilateral clause stating eco-friendly belief that this royalty rate was used.

[00:08:12] Speaker 09:
Is your position that those recitals, those non-binding recitals in the agreements are irrelevant to the question, or that they're not sufficient to form the basis for an expert opinion?

[00:08:27] Speaker 03:
I think they are not sufficient as a matter of law, essentially.

[00:08:30] Speaker 03:
In two of the licensees, those.

[00:08:31] Speaker 09:
But not irrelevant?

[00:08:33] Speaker 03:
I think they become irrelevant because they simply can't establish what Kennedy wanted them to establish.

[00:08:40] Speaker 03:
So in two of the licenses, there were operative clauses that said the lump sum amount is not based on the figure.

[00:08:46] Speaker 05:
Just to be clear, you're not saying the licenses are irrelevant and shouldn't have been entered into evidence, correct?

[00:08:51] Speaker 05:
No.

[00:08:52] Speaker 05:
Yes or no?

[00:08:53] Speaker 05:
No.

[00:08:53] Speaker 05:
We objected to the royalty rate in that license.

[00:08:55] Speaker 05:
But you didn't object to the – so you don't – We didn't object to the licenses in them.

[00:08:59] Speaker 05:
Did you object to the royalty rate?

[00:09:01] Speaker 05:
I mean, isn't one of the –

[00:09:03] Speaker 05:
a reasonable royalty analysis, what the patentee would want to get for its royalty rate.

[00:09:10] Speaker 05:
And so don't the licenses at least offer some evidence of what the patentee was seeking?

[00:09:16] Speaker 05:
They are relevant.

[00:09:17] Speaker 03:
They would be relevant, I think, for that purpose.

[00:09:19] Speaker 03:
But that, very importantly, is not what Kennedy testified for.

[00:09:21] Speaker 09:
There were evidence that the licenses were regarding this value, right?

[00:09:25] Speaker 03:
So what Kennedy testified to was he said, he was asked, is there evidence of a royalty rate in this license?

[00:09:31] Speaker 03:
He said there's X rate in the whereas clause per unit for the estimated past and projected sales of future sale of products.

[00:09:38] Speaker 03:
That's at 5773.

[00:09:39] Speaker 03:
So what he testified to

[00:09:40] Speaker 03:
was that these licenses reflected the licensees binding agreement to apply the ex-loyalty rate to their sales, but the licenses simply did not support that proposition.

[00:09:50] Speaker 03:
They had lump sums, but of course, again, two of the licenses had operative clauses that said the lump sum is not based on sales.

[00:09:57] Speaker 03:
and does not reflect a royalty.

[00:09:59] Speaker 03:
And even in the third license, it was simply a non-operative unilateral clause that cannot reflect the agreement of the two parties.

[00:10:06] Speaker 03:
And so just to get back to that.

[00:10:08] Speaker 09:
What about Kennedy's testimony, apart from the recitals and the licenses he relied on, the Habib testimony?

[00:10:17] Speaker 09:
Why is that not sufficient?

[00:10:20] Speaker 03:
So I think there are two problems with Habib's testimony.

[00:10:23] Speaker 03:
The first is that it simply doesn't support the conclusion, again, that the licensees agreed to apply this rate.

[00:10:28] Speaker 03:
And it's also not the sort of evidence on which an expert would reasonably rely, because it is an unsupported assertion by an interested party as to the key fact in the damages case.

[00:10:37] Speaker 03:
And I think that's true.

[00:10:38] Speaker 06:
Is there any evidence in the record that an expert who deals with damages and finances would not rely on their own client's statement as to what their financial records are?

[00:10:49] Speaker 03:
So I think it depends, actually, on the circumstances that are at issue.

[00:10:53] Speaker 03:
But I think what the cases that we cited in our brief say, what decision after decision says is that an expert may not – an expert is unreliable when he simply takes his client's unsupported assertions on faith about critical facts and then relies on them.

[00:11:08] Speaker 06:
So, for instance, the endless – Well, it turns out to be true that financial experts all the time

[00:11:12] Speaker 06:
rely on their own clients' representations about their finances.

[00:11:19] Speaker 06:
They may put a caveat in their opinion.

[00:11:21] Speaker 06:
My opinion is only as good as the inputs that were given to me.

[00:11:25] Speaker 06:
maybe as a empirical matter, experts rely on their own clients all the time.

[00:11:30] Speaker 03:
And I think there are many situations in which they can.

[00:11:32] Speaker 03:
And again, I think that this report would have to evaluate this on the circumstances.

[00:11:36] Speaker 03:
So for instance, if an expert is relying on ordinary course business data that's created all the time, not just for litigation, it seems like something that the expert wouldn't have to verify.

[00:11:44] Speaker 03:
And I also think the sort of caveat that Your Honor is talking about is very important because what Kennedy testified to here was that the licensees agreed to use the raid as a matter of fact.

[00:11:54] Speaker 03:
That's what he testified to.

[00:11:55] Speaker 03:
He didn't testify while assuming that, you know, what people have told me is correct.

[00:12:00] Speaker 03:
I'm going to just take that assumption

[00:12:01] Speaker 03:
True and so the champagne metals case that we cited in our brief makes clear that there's a big difference When an expert testifies as a matter of fact I had concluded that this was the case that is very powerful testimony and that enabled you know challenging Reliability right you don't have any specific arguments on the liability you know who challenges really about the sufficiency of facts and

[00:12:27] Speaker 03:
So I think the two things are wrapped up with each other.

[00:12:28] Speaker 03:
And that's because an expert.

[00:12:32] Speaker 10:
But you don't address directly reliability.

[00:12:36] Speaker 10:
But you do address quite a bit and devote quite a bit of space to sufficiency of facts.

[00:12:44] Speaker 03:
So we do say that we think that Kennedy's opinion was not based on a reliable methodology.

[00:12:49] Speaker 03:
But it's not really a separate argument.

[00:12:50] Speaker 03:
Because it's not a reliable methodology because he bases conclusions on insufficient facts and data.

[00:12:55] Speaker 03:
So I think the two things.

[00:12:56] Speaker 03:
in this circumstance really are intertwined.

[00:12:59] Speaker 03:
But I think that sort of makes sense, right?

[00:13:01] Speaker 10:
So with respect to that part that deals with sufficiency of facts, we give broad discretion to the trial court, correct?

[00:13:10] Speaker 03:
It's an abusive discretion standard, yes.

[00:13:12] Speaker 03:
But I think it's clear that the district court abused its discretion here.

[00:13:15] Speaker 03:
And again, I think if you look at the licenses, this unilateral whereas clause, which states only eco-factors view, and then you have Kennedy testifying that- What's the problem with the liability?

[00:13:26] Speaker 10:
a hypothetical negotiation?

[00:13:29] Speaker 10:
Is that an unreliable method?

[00:13:32] Speaker 03:
No, it's not an unreliable method, but of course, this is sort of an antecedent stage, right, where what Kennedy said, the analytical gap here is that Kennedy used these unilateral whereas clauses that stated only eco-factors belief and said, I see in that

[00:13:48] Speaker 03:
evidence that the licensees agreed to apply the rate.

[00:13:52] Speaker 03:
So there's this unbridgeable gap between evidence that EcoFactor thought this was the rate and what he wanted to establish, what he purported to establish, which was that the licensees themselves had agreed to apply the rate.

[00:14:03] Speaker 03:
I think that's very much like the sports decision in the MLC, where the experts said,

[00:14:08] Speaker 03:
I've looked at the most favored nations clause.

[00:14:10] Speaker 03:
It's got a 25% rate in there.

[00:14:13] Speaker 03:
And I am going to testify to that.

[00:14:15] Speaker 05:
When you tell me what portion of Kennedy's testimony, point me to the specific portions that you think are the most unreliable, because they're not supported by facts in record.

[00:14:24] Speaker 03:
All right.

[00:14:25] Speaker 03:
So at 5773, that's what I read before, where he's asked about the licenses specifically.

[00:14:29] Speaker 03:
He says there's X rate in the where asked clause.

[00:14:32] Speaker 03:
So he identifies this unilateral clause

[00:14:34] Speaker 03:
This unilateral whereas clause, which is a non-binding recital, he identifies that as evidence that the licensees themselves agreed to use the rate.

[00:14:43] Speaker 03:
And then later on, at 5765, he's asked what is about the form of the, quote, royalty paid in the agreement.

[00:14:49] Speaker 03:
He says it is based on sales as a running royalty.

[00:14:52] Speaker 03:
But they, the parties, agreed to a lump sum for all those royalties.

[00:14:55] Speaker 03:
So he is saying that the lump sum was derived by applying the royalty rate to sales, that the licensees had done that.

[00:15:00] Speaker 03:
So again, he is testifying that it is his conclusion that the licensees agreed to use the rate.

[00:15:05] Speaker 03:
And then later on, he says, it is x per unit that other people have paid.

[00:15:10] Speaker 03:
That's on 5778.

[00:15:10] Speaker 03:
So again, he's asserting that the licensees paid it.

[00:15:14] Speaker 00:
What does he say about Mr. Habib's testimony, which I may find misremembering that Mr. Habib said,

[00:15:21] Speaker 00:
I, of course, did not get to see the sales data, but my understanding is this is how this number was calculated, from which one might infer there was agreement to this number because it was calculated this way.

[00:15:36] Speaker 00:
What's insufficient about relying on the CEO's understanding?

[00:15:40] Speaker 03:
So several things.

[00:15:42] Speaker 03:
So what Habib is doing there is he's making a factual assertion about what that other parties read to this rate.

[00:15:47] Speaker 03:
But he doesn't have any foundation to make that kind of assertion.

[00:15:53] Speaker 03:
He was not involved in the negotiations.

[00:15:55] Speaker 03:
He didn't see the sales data.

[00:15:56] Speaker 03:
Ecofactor as a whole didn't see any sales data and this is what he admits to it 5692 and of course as I've been talking about nothing in the licenses supports the conclusion that the that the that the licensees agreed to this and I think it what's also important here is that testimony just to be clear did Mr. Kennedy have I think this word understanding came into testimony later, but pre testimony what did

[00:16:26] Speaker 00:
have from Mr. Habib?

[00:16:29] Speaker 03:
I think it was essentially the same thing, is my understanding of the record, that he had Habib's assertion that this had been used, but nothing more than that.

[00:16:37] Speaker 00:
That's my understanding of the motions.

[00:16:38] Speaker 00:
That's basically a no personal knowledge.

[00:16:41] Speaker 03:
Yes.

[00:16:41] Speaker 03:
Yes, exactly.

[00:16:42] Speaker 03:
And that's the 185, the motion eliminated that describes that testimony is that 185.

[00:16:45] Speaker 06:
Wasn't it disputable whether Habib had personal knowledge?

[00:16:49] Speaker 06:
He was apparently subject to the confidentiality order because the settlements arose from litigation.

[00:16:55] Speaker 06:
So it's very common that he, as a competitive decision maker, wouldn't himself have access to the sales data of the licensees.

[00:17:03] Speaker 06:
But that doesn't mean that outside counsel, who were advising him whether to sign the agreement, to sign the agreement and give up Echo Factor's patent litigation rights against those licensees, that he wouldn't have had a high level understanding as to what he was giving up and what the value of that was.

[00:17:21] Speaker 06:
Why is that not even a reasonable interpretation of Habib's understanding and his personal knowledge?

[00:17:28] Speaker 03:
Well, I think there's a significant leap, an influential leap between what Habib actually testified to, which is, this is just my understanding, period, full stop, I have no personal knowledge, and the idea that maybe the licensees actually did agree to this rate and somebody told Habib, et cetera.

[00:17:43] Speaker 03:
And I think it's really important that the burden here is on eco factor as the proponent of this testimony and the proponent of its damages case and the proponent of

[00:17:50] Speaker 03:
Kennedy's testimony to establish why this is reliable and what Kennedy relied on.

[00:17:55] Speaker 03:
And so, you know, the record comes to us in this way where we don't have any kind of understanding of… Who did Habib talk to about this?

[00:18:04] Speaker 03:
We don't know who Habib talked to.

[00:18:06] Speaker 09:
And so, again, this record is… Has Habib described certain conversations in his testimony, or referenced certain conversations in his testimony?

[00:18:14] Speaker 09:
Am I mistaken about that?

[00:18:16] Speaker 03:
As I stand here, I don't think that he referenced any conversations.

[00:18:20] Speaker 03:
He simply said that it was his understanding in his testimony at trial.

[00:18:23] Speaker 10:
And so I think there is a... Was there an email in this regard or something like that?

[00:18:27] Speaker 03:
So there's an email between Johnson, one of the licensees.

[00:18:32] Speaker 03:
Is that what Your Honor is referring to?

[00:18:34] Speaker 10:
So I think that email is also... Didn't he negotiate the Johnson license?

[00:18:39] Speaker 03:
That's not my understanding.

[00:18:40] Speaker 03:
He testified that he was not involved in the negotiations.

[00:18:43] Speaker 03:
So there is a Johnson email, which is not with Hubby, I think, is my understanding.

[00:18:49] Speaker 03:
And in that email, again, it doesn't establish that Johnson.

[00:18:52] Speaker 01:
Can I just interrupt you first to understand the email?

[00:18:55] Speaker 01:
My understanding of the record is the email was that Kennedy was not allowed to rely on me.

[00:19:00] Speaker 01:
It is not something that Kennedy relied on in his testimony.

[00:19:03] Speaker 01:
And recall what it appears from the record.

[00:19:05] Speaker 01:
The reason was that Kennedy was not allowed to rely on the email.

[00:19:08] Speaker 01:
I'm not sure I want to hazard.

[00:19:11] Speaker 01:
Well, I thought the record indicated it was because of the person that negotiated the Johnson license was also a person on the trial team.

[00:19:19] Speaker 03:
I believe that's correct, yes.

[00:19:21] Speaker 01:
And so this was not part of it.

[00:19:23] Speaker 01:
He said so that the email was not permissively used by Kennedy because of that.

[00:19:28] Speaker 03:
I think that's right.

[00:19:29] Speaker 03:
It came in, nonetheless, at trial, not in Kennedy's testimony.

[00:19:33] Speaker 03:
It's not something that Kennedy relied on.

[00:19:35] Speaker 03:
And I do think Rule 702 instructs the district court to determine whether the expert's testimony is reliable based on what the expert has relied on.

[00:19:43] Speaker 03:
And so that's how the analysis would be done.

[00:19:45] Speaker 06:
I think you're right about that.

[00:19:46] Speaker 06:
But we're here, technically, as I understand it, on your appeal for the denial of the motion for a new trial.

[00:19:52] Speaker 06:
So wouldn't that bring the whole trial record into question?

[00:19:56] Speaker 06:
And we should consider the whole trial record in deciding whether there was an abuse of discretion.

[00:20:01] Speaker 06:
denying your request for a new trial?

[00:20:03] Speaker 03:
I think it's a practical matter, yes.

[00:20:04] Speaker 03:
That's why we're not, I'm not here standing to say that you shouldn't think about it at all.

[00:20:09] Speaker 03:
I do think that it is.

[00:20:10] Speaker 03:
I'm sorry, I'm sorry.

[00:20:10] Speaker 06:
I just want to clear it.

[00:20:11] Speaker 06:
We can consider it a Johnson email.

[00:20:12] Speaker 03:
I think you can consider it.

[00:20:13] Speaker 03:
I do think it is relevant, however, that it is not something that Kennedy relied on himself.

[00:20:19] Speaker 01:
Well, it's great.

[00:20:20] Speaker 01:
I think the email is... Did the judge not rule that Kennedy could not rely on the email?

[00:20:24] Speaker 01:
It was admitted through Google's expert testimony later on.

[00:20:28] Speaker 01:
But my read of the record is that this is...

[00:20:31] Speaker 01:
at 1109 of your supplemental appendix?

[00:20:36] Speaker 03:
That may well be.

[00:20:36] Speaker 03:
I think you could then think about this as a harmlessness question, I suppose.

[00:20:40] Speaker 03:
You could think about whether the email sort of provides support after the fact.

[00:20:45] Speaker 03:
I don't think it does.

[00:20:46] Speaker 03:
But so I think however you get there, the email does not help.

[00:20:50] Speaker 09:
Does the email show anything more than that default factor demanded an X rate?

[00:20:56] Speaker 03:
I think that's exactly right.

[00:20:57] Speaker 03:
It showed that EcoFactor proposed to that rate, and of course, as this Court has just said in Whitserv, you know, patentee proposals are, you know, they are one thing to be considered in the damages analysis, but they are not particularly probative because of patentee naturally has the incentive to

[00:21:12] Speaker 03:
to inflate the royalty rate that they're seeking.

[00:21:16] Speaker 03:
And I think that's a critical thing to keep in mind about Kennedy's testimony here.

[00:21:20] Speaker 03:
He did not simply testify that this was a rate that Ego Factor wanted to get, that it had proposed to multiple licensees.

[00:21:26] Speaker 03:
He testified that the licensees agreed to pay this rate.

[00:21:29] Speaker 03:
And that is critical for the damages case because, of course, what you're trying to do in the damages analysis

[00:21:34] Speaker 03:
is figure out what the market value of the patent technology is and what other licensees have paid is of course very relevant to that and so it was incredibly powerful for Kennedy to come in and say every single licensee has paid this same rate which is why he repeats it again and again.

[00:21:50] Speaker 06:
If I'm asking Ms.

[00:21:51] Speaker 06:
Anders about the Schneider license this is the one that has not necessarily just a unilateral representation about the X dollar rate

[00:22:01] Speaker 06:
But it seems to me it could be reasonably read as both sides, that is, including Schneider the licensee, agreeing to the x dollar rate.

[00:22:10] Speaker 06:
I'm sure you're familiar with it.

[00:22:11] Speaker 06:
I'm looking at the copy at 10,400.

[00:22:14] Speaker 06:
But that whereas ends with nothing in this clause should be interpreted as an agreement by Schneider that the x dollar per unit is a reasonable royalty, why could one not reasonably read that as Schneider saying,

[00:22:30] Speaker 06:
I understand that you're calculating our lump sum payment based on X dollars as a rate, as a royalty rate.

[00:22:37] Speaker 06:
We just are reserving the right to say we don't agree that it's a reasonable rate.

[00:22:41] Speaker 06:
We're paying it, and that's how things are calculated.

[00:22:44] Speaker 06:
We agree to that, but it's not reasonable.

[00:22:47] Speaker 06:
What is unreasonable about that reading?

[00:22:51] Speaker 03:
That reading doesn't work because, of course, this is a legal instrument, and so we have to come through all of its terms, and there is an operative provision in the Snyder license that says that the lump sum amount is not based on sales and does not reflect or constitute a royalty.

[00:23:05] Speaker 03:
And because that is an operative provision that reflects both parties' agreement, I think it just as a matter of contract interpretation, it trumps

[00:23:13] Speaker 03:
anything that's going to be unilaterally wrong.

[00:23:15] Speaker 06:
What Echo Factor argues is that operative agreement that you've just pointed to is simply representing that the calculation was not based upon solely prior sales

[00:23:28] Speaker 06:
But it really was based on prior sales plus projected sales.

[00:23:31] Speaker 06:
And that's all that the consideration clause you're relying on is saying.

[00:23:35] Speaker 06:
What would be unreasonable about that reading?

[00:23:37] Speaker 03:
Well, I think just looking at the text of the agreement, I mean, it says such amount is not based upon sales.

[00:23:42] Speaker 03:
It doesn't say prior sales, future sales.

[00:23:44] Speaker 03:
And again, this is a legal instrument.

[00:23:46] Speaker 03:
We interpret the contract according to its terms.

[00:23:49] Speaker 06:
What if all that together means that there's a conflict?

[00:23:52] Speaker 06:
between page one and page two of the agreement.

[00:23:55] Speaker 06:
There's some ambiguity.

[00:23:58] Speaker 06:
Shouldn't the district court resolve that ambiguity?

[00:24:00] Speaker 03:
Well, I think a whereas clause can't create ambiguity when you have plain provisions in other cases that say that.

[00:24:07] Speaker 03:
There's a case that we cite in our brief talking about how whereas clauses can't trump something agreed upon by

[00:24:12] Speaker 03:
by both parties.

[00:24:14] Speaker 06:
But it could create an ambiguity.

[00:24:15] Speaker 06:
I agree they can't trump, but couldn't they create an ambiguity?

[00:24:18] Speaker 03:
I think only if the plain text of the operative provision were already ambiguous, then maybe you would look to the whereas clause to discern something about parties' intent.

[00:24:26] Speaker 03:
But this is basically like the for all evidence rule.

[00:24:28] Speaker 03:
I mean, you look at the text of the agreement, nobody has ever questioned it.

[00:24:31] Speaker 08:
I can take you in a different direction.

[00:24:33] Speaker 08:
I take your point that in your view, the analytical gap is too big between the whereas clause

[00:24:40] Speaker 08:
Mr. Kennedy's assertion of a particular rate.

[00:24:44] Speaker 08:
But what if the facts were different?

[00:24:46] Speaker 08:
What if these licenses said, instead of, whereas, Seidel, it said both contracting parties agree that this lump sum amount equates to X dollars per unit royalty rate?

[00:25:06] Speaker 08:
And then Mr. Kennedy said, yeah, my opinion is that that is, in fact, the rate of this license.

[00:25:13] Speaker 08:
The party said so in the contract.

[00:25:15] Speaker 08:
Would you agree that that's fine?

[00:25:16] Speaker 03:
And I think that, yes, I think that would be very different if you had if you had something in the agreement that suggested that both parties had negotiation documents.

[00:25:25] Speaker 08:
And I ask because I felt like in the briefing, there was a lot of discussion about how the expert's opinion in order to have sufficient data and facts

[00:25:36] Speaker 08:
to all be verifiable, verified and verifiable.

[00:25:40] Speaker 08:
And my hypothetical, you wouldn't necessarily have a situation where it's verified or verifiable.

[00:25:47] Speaker 08:
So what I'm trying to understand is where is the line, can we even describe the line of when is something with sufficient data and facts or insufficient data and facts?

[00:25:59] Speaker 03:
So just to be clear here, I do think that, as Your Honor suggests, there would simply have to be some sort of factual evidence that the licensees agreed.

[00:26:07] Speaker 03:
So that could be in the whereas clauses, reflecting that both agreed.

[00:26:11] Speaker 03:
It could be an operative term in the agreement.

[00:26:12] Speaker 03:
It could be an negotiation document.

[00:26:14] Speaker 09:
The whereas clauses would be sufficient.

[00:26:15] Speaker 09:
I mean, given the cases that suggest that whereas clauses aren't very significant, if it's a non-binding recital

[00:26:23] Speaker 09:
that's sought by the patentee and simply agreed to as an insignificant recital by the other side, that that would be sufficient?

[00:26:34] Speaker 03:
So if I could just answer very quickly, I think that if you had a situation in, I think it would be a little bit context specific, but if you had a response that says both parties agree about this,

[00:26:43] Speaker 03:
then I think that would be some evidence at least from a licensee's side.

[00:26:47] Speaker 03:
And the parties would be able to look to that.

[00:26:49] Speaker 03:
The expert would be able to testify about it.

[00:26:51] Speaker 03:
The key thing is that we don't have anything close to that here.

[00:26:54] Speaker 03:
We have EcoFactor saying what it thought the royalty rate was, and then Kennedy taking that and testifying that it said something that it didn't, which is that the licensees had agreed to that rate.

[00:27:03] Speaker 03:
If I could reserve the... Yes, of course.

[00:27:06] Speaker 03:
Thank you, Ms.

[00:27:06] Speaker 03:
Sanders.

[00:27:12] Speaker 07:
Mr. Liddell, please proceed.

[00:27:25] Speaker 07:
Good morning and may it please the court.

[00:27:26] Speaker 07:
Brian Liddell from Russ Augustine Cabot on behalf of the EcoFactor.

[00:27:32] Speaker 07:
Broadly speaking, Google's argument rests on what we consider to be three critical mischaracterizations of the issues in this case.

[00:27:41] Speaker 07:
And I'd like to address all three, but I'd like to give you at least an overview of those.

[00:27:46] Speaker 07:
The first one is really that Google argues that Mr. Kennedy shouldn't have been able to reference the rates in these three licenses from EcoFactor under Rule 702, because Google disputes that those licenses were, in fact, based on the rate that was stated.

[00:28:01] Speaker 05:
Council, I didn't hear Google at least today or in its brief say Mr. Kennedy couldn't refer to the rate.

[00:28:09] Speaker 05:
I thought, in fact, that Ms.

[00:28:11] Speaker 05:
Anders conceded that Mr. Kennedy could have relied on the rate for purposes of establishing what the patentees sought in terms of a rate.

[00:28:19] Speaker 05:
I thought that her argument was focused on whether that was in a great amount that was agreed to by the licensee.

[00:28:26] Speaker 05:
Is that fair?

[00:28:27] Speaker 07:
I think that's close to what we heard today.

[00:28:30] Speaker 07:
I don't think that's what they said in their briefs.

[00:28:32] Speaker 07:
I think that's a change in position, frankly, from what's in the briefs.

[00:28:38] Speaker 07:
What that leads to is the natural second question and the second issue, which is, what's the opinion that Mr. Kennedy's offering?

[00:28:46] Speaker 07:
It's suggested that his opinion is just, well, I saw a rate mislicensed.

[00:28:50] Speaker 07:
That's the end of the analysis.

[00:28:52] Speaker 07:
I'm done.

[00:28:52] Speaker 07:
That is absolutely not true and not at all what Mr. Kennedy did.

[00:28:57] Speaker 07:
Mr. Kennedy looked at the profit attributable to the accused products, Google's gross profit per unit.

[00:29:04] Speaker 09:
He didn't get the x rate from that calculation, right?

[00:29:07] Speaker 07:
That's correct.

[00:29:09] Speaker 07:
But what he did was he apportioned that profit.

[00:29:11] Speaker 07:
He determined what portion of that profit was attributable to the patented features.

[00:29:17] Speaker 07:
He looked at a variety of things to determine how in a hypothetical negotiation would the parties split that profit.

[00:29:23] Speaker 05:
How does that have anything at all to do with whether a particular licensee like Johnson or Deakin or Schneider

[00:29:32] Speaker 05:
agreed to pay x-rate.

[00:29:34] Speaker 05:
What does Google's apportionment or Google's

[00:29:38] Speaker 07:
Sales have to do with what those licensees it goes to exactly actually the question you asked a few moments ago Which is isn't it relevant what the patentee would expect?

[00:29:50] Speaker 07:
Regardless of whether it was agreed to isn't that a relevant fact in the hypothetical negotiation.

[00:29:55] Speaker 07:
The answer is unquestionably.

[00:29:56] Speaker 05:
Yes Nobody has I just don't understand that to be what's in dispute here I understand what is in dispute to be whether it was appropriate for mr. Kennedy

[00:30:07] Speaker 05:
to attribute to the licensees that percentage rate.

[00:30:16] Speaker 07:
My point is that Mr. Kennedy looked at that number not as the end point of the analysis, but as how did the parties split the profit?

[00:30:26] Speaker 07:
The apportioned profit was more than three times this rate.

[00:30:30] Speaker 07:
And his analysis was that based on that, at the hypothetical negotiation, the parties would have arrived at this rate as a means to split that.

[00:30:38] Speaker 05:
I don't understand.

[00:30:39] Speaker 05:
I really think that you need to address the direct issue that we spent

[00:30:43] Speaker 05:
all of our time here on, and you're not.

[00:30:47] Speaker 05:
And the issue is, was there a problem with Mr. Kennedy attributing that particular rate to those three licensees?

[00:30:56] Speaker 07:
Let's assume for the moment that that's a Rule 702 issue, and I don't really think it is.

[00:31:02] Speaker 07:
I think it's a fact question that is for the jury about whether those facts are believed, i.e.

[00:31:08] Speaker 07:
did the licensees pay that amount or not, and was the license based on that rate.

[00:31:13] Speaker 07:
But if we look at the evidence,

[00:31:16] Speaker 07:
Even if we take that question as the Rule 702 question, the evidence was far more about what Mr. Kennedy was looking at and what the evidence showed than was suggested here.

[00:31:28] Speaker 07:
There were some questions about the emails and specifically the email with Johnson.

[00:31:33] Speaker 07:
So that's at pages 797 to, or excuse me, 10797 to 799 of the appendix.

[00:31:42] Speaker 07:
And it's an email exchange back and forth where EcoFactors tells Johnson, these are the rates, and it uses the same stated rate.

[00:31:51] Speaker 07:
Johnson replies to that email.

[00:31:54] Speaker 07:
We are applying the rates to the time period that EcoFactor has said is implicated in the investigation.

[00:32:01] Speaker 07:
That's a direct quote from page 798, 10798 of the appendix.

[00:32:06] Speaker 07:
We are applying the rates.

[00:32:08] Speaker 07:
Johnson said it, not EcoFactor, Johnson.

[00:32:10] Speaker 01:
I just, I hate to interrupt your jam talk, but can we, do we rely on the emails?

[00:32:16] Speaker 01:
And I thought the judge excluded, precluded him from relying on the email.

[00:32:22] Speaker 01:
So why is that, if I'm right about that, why is that a relevant point to make?

[00:32:28] Speaker 01:
to rehabilitate the question of whether or not Kennedy's assertion of the particular rate applicable here.

[00:32:36] Speaker 07:
Sure.

[00:32:37] Speaker 07:
So two points to that.

[00:32:38] Speaker 07:
First, to correct something that was discussed with my friend, I think Mr. Kennedy didn't specifically reference those emails in his report, which is why the court didn't allow him to testify that he relied upon them, because that wasn't part of his report.

[00:32:53] Speaker 07:
It wasn't.

[00:32:54] Speaker 07:
specific to some question of privilege or anything like that.

[00:32:58] Speaker 07:
They were ultimately admitted, and because we're here reviewing a motion to grant a new trial, the record is... But couldn't the judge not preclude Kennedy

[00:33:08] Speaker 01:
from relying or testifying about those emails?

[00:33:11] Speaker 07:
I believe the judge did preclude Mr. Kennedy from specifically testifying about those emails.

[00:33:16] Speaker 01:
So they weren't part of his consideration.

[00:33:19] Speaker 01:
They're not part of his testimony or his report, the reliance on the emails.

[00:33:22] Speaker 07:
But his testimony was, one of the facts that I considered is that these are licenses that were based on a particular rate.

[00:33:30] Speaker 07:
The jury then gets to evaluate, do I believe that that fact is true or not?

[00:33:35] Speaker 07:
The sufficiency of the evidence test is, is that a fact that if true, if the jury believes it, is sufficient to support his opinion?

[00:33:42] Speaker 07:
So if the jury concludes that these licenses were in fact based on the stated rate,

[00:33:49] Speaker 07:
Will that fact support Mr. Kennedy's use of that information in his opinion?

[00:33:54] Speaker 07:
I don't think there's really a dispute that that would be sufficient facts to support him or be an underpinning of his opinion.

[00:34:01] Speaker 07:
So then the question is, well, is there enough evidence for the jury to conclude that that fact is true?

[00:34:07] Speaker 07:
That's a substantial evidence question, and it's one that we think is more than completely answered by the evidence.

[00:34:15] Speaker 07:
So the email alone we think is confirmatory.

[00:34:19] Speaker 07:
And what happened after that email?

[00:34:20] Speaker 07:
Well, they negotiated and ultimately entered into a contract where the recital that we've seen in various of these agreements

[00:34:27] Speaker 07:
was included in the agreement with Johnson.

[00:34:30] Speaker 07:
There is not one word of contradiction in the Johnson agreement that that's not the rate.

[00:34:34] Speaker 09:
What the Johnson agreement says is that echo factor believes that X was the rate that was used to calculate.

[00:34:42] Speaker 07:
That's correct.

[00:34:43] Speaker 07:
And Johnson?

[00:34:44] Speaker 09:
Isn't that sufficient?

[00:34:45] Speaker 09:
I mean, there's a risk here.

[00:34:47] Speaker 09:
Isn't there that in framing these license agreements, the patentees will put in recycles like that that they intend to use later on, even though it doesn't really reflect the reality of the agreement?

[00:34:59] Speaker 07:
Well, I think, first of all... Is there such a risk?

[00:35:02] Speaker 07:
I don't really think so.

[00:35:03] Speaker 07:
I mean, Mr. Kennedy testified, for example, that it's incredibly rare to find a provision like this in a license.

[00:35:09] Speaker 07:
He explained that he's not familiar with seeing this almost ever in litigation settlements.

[00:35:14] Speaker 07:
So it's not as though this is a provision that's very common.

[00:35:17] Speaker 07:
He acknowledged and noted that it's unusual to see this kind of a recitation.

[00:35:22] Speaker 07:
He also explained that he didn't just rely on the recitation.

[00:35:26] Speaker 07:
He relied on Mr. Khabib.

[00:35:29] Speaker 07:
who didn't simply say, well, I think that's what we were doing.

[00:35:32] Speaker 08:
What was the purpose of the recitation?

[00:35:36] Speaker 08:
Why did EcoFactor want to have this recital in there at all, given that it has no effect?

[00:35:43] Speaker 07:
Well, I wouldn't necessarily agree that it has no effect.

[00:35:45] Speaker 08:
Well, it has an effect here.

[00:35:47] Speaker 08:
I know that.

[00:35:48] Speaker 08:
I'm talking about it's for purposes of that contract.

[00:35:52] Speaker 07:
Well, I think, you know, if you're an entity that's entering into these agreements and wanting to, you know, maintain your position, you're not only talking to one licensee.

[00:36:05] Speaker 07:
And for the same reasons we're talking about it here, it's important that other licensees

[00:36:10] Speaker 07:
recognize the same rates, and when ecofactors negotiating with subsequent, they want to be able to say, look, we negotiated based on this rate.

[00:36:18] Speaker 09:
You're making exactly the point I was asking about, that there's a risk that they're putting it in there to use in future negotiations.

[00:36:26] Speaker 09:
No.

[00:36:26] Speaker 09:
Rather than as a reflection of what actually happens.

[00:36:30] Speaker 07:
I think.

[00:36:31] Speaker 07:
Whether that risk exists or not, I don't think there's evidence that that is what's happening here.

[00:36:37] Speaker 07:
Because, as I said, we have evidence from – in the Johnson instance, where they acknowledged in pre-license negotiation correspondence that they were applying the rate.

[00:36:47] Speaker 08:
Do we know how EcoFactor calculated this very specific number for the rate?

[00:36:54] Speaker 07:
You mean how they decided that that was what they felt it should be?

[00:36:57] Speaker 08:
How did they calculate it?

[00:36:59] Speaker 08:
Where did they come up with the number where they said, you know, this lump sum payment converts into this very, very specific rate?

[00:37:09] Speaker 07:
Sure, so I think one place, and Mr. Habib talked about that in his testimony at pages 56-70.

[00:37:16] Speaker 07:
They didn't get the sales data, right?

[00:37:18] Speaker 07:
That's where I tried to break it down like that.

[00:37:20] Speaker 07:
He said, how did they do it?

[00:37:22] Speaker 07:
So what he said is, he was asked exactly, where does this come from?

[00:37:26] Speaker 07:
This is at page 56-70.

[00:37:28] Speaker 07:
And he said it comes from his understanding of the market space.

[00:37:33] Speaker 07:
But this is based on his understanding of these competitors and what their sales volumes generally are.

[00:37:40] Speaker 07:
He may not have the precise numbers, but he knows who his competitors are and more or less where they sit in the marketplace.

[00:37:46] Speaker 07:
Did he say that?

[00:37:47] Speaker 05:
Yes.

[00:37:48] Speaker 05:
Where did he say it's based on my knowledge of the competitors and their sales volume?

[00:37:53] Speaker 05:
Because that's what you just said.

[00:37:54] Speaker 05:
And I didn't see that in his testimony.

[00:37:58] Speaker 07:
He speaks to that.

[00:38:01] Speaker 07:
The page that I mentioned.

[00:38:02] Speaker 05:
Page and line number.

[00:38:03] Speaker 07:
Certainly.

[00:38:04] Speaker 07:
So he specifically talks about this when he talks about each of the licenses, which begins at 5764.

[00:38:15] Speaker 07:
Excuse me.

[00:38:18] Speaker 07:
Sorry.

[00:38:19] Speaker 07:
Not 5764.

[00:38:19] Speaker 07:
5667.

[00:38:19] Speaker 07:
5667.

[00:38:22] Speaker 05:
And what line number?

[00:38:31] Speaker 07:
As we go along, I apologize, I'm trying to get you to the precise line because there was a lot of discussion of these issues.

[00:38:40] Speaker 05:
I just want to see where he said it was based on their sales volume.

[00:38:44] Speaker 09:
He says it at line 21, but then later on he says, I didn't know what the numbers were.

[00:38:51] Speaker 07:
right so so right and that's thank you that's exactly the right line though but he says my understanding is that by taking their past and future projected sales and multiplying that

[00:39:02] Speaker 07:
Now, he talks about his knowledge of each of these entities in the market.

[00:39:06] Speaker 07:
And it's also the case that he talks about his own company's origin.

[00:39:13] Speaker 05:
But he expressly says later that he had no idea what their projected sales were.

[00:39:17] Speaker 05:
Well.

[00:39:17] Speaker 05:
Or their actual sales.

[00:39:19] Speaker 05:
And no information was provided to him or anyone at Echo Factor.

[00:39:22] Speaker 05:
He had not derived any information.

[00:39:24] Speaker 05:
He didn't, you know, back at Ambrook, calculate it himself or anything else.

[00:39:28] Speaker 07:
Well, but I think the suggestion.

[00:39:30] Speaker 07:
So I guess I want to push back a little bit on the notion that that's how we test a license agreement.

[00:39:35] Speaker 07:
Because I would argue that this court's prior precedence, when we have license agreements.

[00:39:42] Speaker 07:
The good news is, this is in bank.

[00:39:46] Speaker 07:
True.

[00:39:47] Speaker 07:
I think the court has really consistently, in cases like WordTech or Wixerve and others, sort of pushed back on the notion that an expert can essentially reverse engineer a rate in a lump sum license.

[00:40:00] Speaker 07:
That it should be based on evidence that's more contemporaneous, that's tied to the license itself in some way, not something that is cooked up later and derived in some fashion.

[00:40:11] Speaker 10:
During the trial, did Google object to the admissibility, or to the admission, rather, of this evidence?

[00:40:18] Speaker 07:
No.

[00:40:19] Speaker 07:
This was admitted without objection.

[00:40:22] Speaker 07:
And the jury is entitled to consider it and give it weight.

[00:40:26] Speaker 07:
I think that the problem we have under 702 here is that this isn't a question about whether there were sufficient facts or data to support Mr. Kennedy's opinion.

[00:40:36] Speaker 07:
The facts or data, one of them, and it's certainly not the only one, was, is there a light – you know, were there these licenses that were based on a particular rate?

[00:40:46] Speaker 07:
He's saying, I take as a fact that there were.

[00:40:49] Speaker 07:
To be sure, that's not an undisputed fact.

[00:40:54] Speaker 07:
But experts aren't required to rely solely on undisputed facts.

[00:40:58] Speaker 07:
And the question for is that fact true or not?

[00:41:01] Speaker 05:
Here's the problem.

[00:41:02] Speaker 05:
For me, Mr. Kennedy walked through three different licenses and said each of these represent the licensee and the licensors agreed upon royalty rate.

[00:41:14] Speaker 05:
What do I do if I see absolutely no evidence that supports that, per se, one of the licenses or two of the licenses?

[00:41:24] Speaker 05:
What do I do then if Mr. Kennedy's testimony hinged on the concept of an industry-wide rate?

[00:41:30] Speaker 05:
Everybody's paying this percentage.

[00:41:33] Speaker 05:
But when, in fact, multiple of those licenses, I can find no record evidence to support it.

[00:41:39] Speaker 05:
What do I do?

[00:41:40] Speaker 07:
So I guess I would disagree with a couple of the premises.

[00:41:42] Speaker 05:
Well, I don't want you to disagree with the premises.

[00:41:44] Speaker 05:
I want to try and figure out what we do from a legal standpoint.

[00:41:46] Speaker 05:
Sure.

[00:41:46] Speaker 05:
Does it then become a sufficiency of the evidence question that the court would look to rather than a question for the jury?

[00:41:55] Speaker 07:
Well, I think, so first, I don't think there's any dispute.

[00:41:58] Speaker 07:
And in fact, I think Google's expert conceded this at trial.

[00:42:02] Speaker 07:
One is enough.

[00:42:03] Speaker 07:
One license would be enough to support an opinion in this regard.

[00:42:07] Speaker 07:
I don't think that was contested at trial.

[00:42:09] Speaker 07:
That one, you know, it doesn't need to be three licenses.

[00:42:12] Speaker 07:
So any one would be sufficient.

[00:42:15] Speaker 07:
And I think that that's, I don't think that's a controversial principle.

[00:42:20] Speaker 05:
I think it probably is a controversial principle because, I'll be honest, it doesn't make sense to me in light of what Mr. Kennedy testified to, which was effectively, without using these exact words, this is an industry wide rate.

[00:42:33] Speaker 05:
And I don't see any testimony by Mr. Kennedy that specifies that the Johnson license in particular is indicative of what the whole industry would pay.

[00:42:41] Speaker 05:
And even worse for you, the Johnson license is the only one that never calls out the patented issue here in this litigation.

[00:42:49] Speaker 05:
particularly, and Mr. Kennedy actually testified that we know the value derives from the expressly listed patents, and he goes further and says, the rest of the portfolio is thrown in for nothing.

[00:43:01] Speaker 05:
So this patent actually falls for the Johnson rate, Johnson license, in the category of thrown in for nothing.

[00:43:08] Speaker 07:
I disagree with that Let me start by by saying at a high level

[00:43:23] Speaker 07:
That I don't I don't think I certainly don't read mr. Kennedy's testimony as saying it's only valid valid information because it's an industry-wide practice in some fashion I don't think he said anything to that effect second.

[00:43:37] Speaker 07:
I don't think On the issue of is the Johnson license well page five seven six seven of the appendix

[00:43:49] Speaker 05:
Starting at line 19, Mr. Kennedy explains, in a hypothetical negotiation, you would consider that.

[00:43:55] Speaker 05:
Google would say, we got two patents here.

[00:43:57] Speaker 05:
These license agreements are for the portfolio.

[00:44:00] Speaker 05:
That's true.

[00:44:01] Speaker 05:
But in the real world, what the focus is on is the asserted patents.

[00:44:04] Speaker 05:
And then when the Green New is done, the rest of the patents are usually thrown in either for nothing or for very little additional value.

[00:44:13] Speaker 05:
And with regard to the Johnson license, do I remember the facts correctly that the patent at issue in this litigation is not called in.

[00:44:20] Speaker 05:
It's in the category of thrown in for little to nothing.

[00:44:23] Speaker 07:
So the Johnson license, first of all, I think the issue you're raising about does the Johnson license relate to this patent and is it adequately adjusted for that, that's more of an apportionment question that the court has indicated is not the subject of this proceeding.

[00:44:37] Speaker 05:
No, you said any one of these licenses, you brought this up by saying any one of these licenses could establish an industry wide rate with regard to this patent.

[00:44:48] Speaker 05:
And I'm saying the one license, the only license you've talked about,

[00:44:52] Speaker 05:
your own expert said was basically thrown in for nothing.

[00:44:57] Speaker 07:
And you disagree with that because what he pointed to was the technical expert's opinion explaining that although this, and he also discussed this, that although this particular patent was not one of the asserted ones, a related patent that covered the exact same benefit and that conveyed the exact same benefit technologically to the licensee,

[00:45:15] Speaker 07:
was included, and that's what made it technologically and relevantly comparable.

[00:45:20] Speaker 07:
And that wasn't meaningfully disputed at all.

[00:45:23] Speaker 05:
If I think it's important that we have to also look at what Mr. Kennedy said about Schneider and Deakin in order to assess the reliability of his testimony, what is your best evidence on those two licenses and why they established that the licensee was willing to pay X-Rate?

[00:45:42] Speaker 07:
Sure.

[00:45:43] Speaker 07:
So in the case of Deakin,

[00:45:44] Speaker 07:
Let's start there.

[00:45:46] Speaker 07:
In Deiken, there was once again pre-licensed negotiation correspondence.

[00:45:52] Speaker 07:
Now, it wasn't presented to the jury, but it was something Mr. Kennedy relied upon, and it was addressed in the Dalgert motion presented in his report and to the court.

[00:46:01] Speaker 07:
But there was also a pre-licensed negotiation correspondence specific to this rate in connection with the Deiken agreement.

[00:46:08] Speaker 07:
That's at page 16.

[00:46:09] Speaker 09:
Did he testify about that before the jury?

[00:46:11] Speaker 07:
He did not testify about it before the jury, but it is.

[00:46:14] Speaker 07:
If the question is, did he have information on which he could rely, it's information he relied upon.

[00:46:19] Speaker 07:
He didn't necessarily have to cite every piece.

[00:46:22] Speaker 07:
I mean, we're kind of cutting back.

[00:46:24] Speaker 09:
We have to judge him by what he said, not by what he might have said.

[00:46:29] Speaker 07:
I think it's information he relied upon.

[00:46:32] Speaker 07:
He also had Mr. Habeed's testimony about the market and information specifically.

[00:46:37] Speaker 05:
But where is it in the record?

[00:46:38] Speaker 05:
And the reason I ask is because Judge Prost asked you about a colloquy back and forth between your client and Judge Albright.

[00:46:46] Speaker 05:
And your client represented to Judge Albright that Mr. Kennedy was relying exclusively on the licenses.

[00:46:53] Speaker 05:
that he was not relying on anything else.

[00:46:56] Speaker 05:
And so that, I'm a little confused about how now he's relying on a document that's not in the record and that I have no access to.

[00:47:03] Speaker 05:
And he wasn't presented to the jury, and he offered no testimony on, and he didn't discuss anywhere.

[00:47:08] Speaker 07:
It is in the record.

[00:47:09] Speaker 07:
It's at page 1618 of the appendix, to be clear.

[00:47:13] Speaker 07:
The email I'm referring to is at page 1618 of the appendix.

[00:47:18] Speaker 07:
It was an exhibit in opposition to the Dowroot motion presented to the district court.

[00:47:23] Speaker 07:
So I kind of dispute the characterization of what was done there.

[00:47:30] Speaker 07:
And I don't think that's really what was said at the hearing either.

[00:47:35] Speaker 07:
But in that case, in that instance, as I said, the Diken license, there was this pre-license negotiation correspondence as well.

[00:47:43] Speaker 07:
Once again, the recitation.

[00:47:45] Speaker 07:
Once again, Mr. Khabib's testimony about his understanding based on the market in which he operates, that that's a reasonable conclusion, and that this left some room.

[00:47:54] Speaker 05:
But counsel, again, this email at 161A is simply an email from Echo Factor saying what it wants for a royalty.

[00:48:05] Speaker 05:
And indicate what the licensee is paying.

[00:48:08] Speaker 07:
Well, you're right, Your Honor.

[00:48:09] Speaker 07:
It says what the licensee wants.

[00:48:10] Speaker 07:
It follows an email from Deikin offering a certain amount.

[00:48:15] Speaker 07:
An eco factor says, well, the license needs to be based on this rate.

[00:48:19] Speaker 01:
Is it Deikin or Johnson?

[00:48:21] Speaker 07:
Deikin we're talking about now.

[00:48:23] Speaker 07:
And Diakon has given that response, no, it has to be based on this rate.

[00:48:29] Speaker 07:
And ultimately, the negotiated license is about 50 percent higher number in the lump sum than what Diakon originally proposed before receiving that email about the rate.

[00:48:41] Speaker 07:
So Diakon proposed a number of approximately $1 million.

[00:48:44] Speaker 07:
The end license was about 1.5, as I recall, 1.6.

[00:48:49] Speaker 07:
This is part of the negotiation that a reasonable fact finder could consider, certainly, and certainly that Mr. Kennedy could consider, in determining is this really how these licensees paid this rate, if that's even a Rule 702 question.

[00:49:04] Speaker 07:
With respect to Schneider, I think there's been some colloquy already about the language of the clause itself, that Schneider negotiated language that reasonably can be understood as indicating that they were paying this rate.

[00:49:18] Speaker 09:
If that's all true, why isn't it possible for you to make the case and to provide your expert with a basis for his opinion to call the Schneider and Deakin and Johnson witnesses and have them testify as to what their understanding was so that there's a sound basis for the expert opinion?

[00:49:37] Speaker 09:
Why is that not possible?

[00:49:39] Speaker 07:
I don't necessarily want to suggest it's impossible.

[00:49:41] Speaker 07:
I just don't think it's necessary.

[00:49:43] Speaker 07:
I think the question becomes, is there substantial evidence for which a fact finder could reach the factual conclusion that these licenses were based on this rate?

[00:49:53] Speaker 07:
There definitely is.

[00:49:54] Speaker 07:
Once that's true, this is a question for the jury, not for a judge to decide.

[00:50:00] Speaker 06:
As the proponent of the expert testimony, you agree that the burden is on you to show that it meets all of the requirements of 702.

[00:50:07] Speaker 06:
And by not subpoenaing

[00:50:09] Speaker 06:
the licensees, I guess you are taking the risk that you are not going to meet that burden.

[00:50:14] Speaker 07:
I agree that it's the burden of the proponent to satisfy the requirements of 702, but let's be clear about what the requirements of 702 are.

[00:50:24] Speaker 07:
702 requires that an expert's opinion be based on sufficient facts or data.

[00:50:30] Speaker 07:
The fact or data is there are licenses there at this rate.

[00:50:35] Speaker 07:
It's not sufficient evidence to prove that that fact is true.

[00:50:39] Speaker 07:
That's not what 702 demands because that's a question of how do you assess the factual truth of the fact that the expert is using in his opinion.

[00:50:49] Speaker 07:
Obviously, I don't think there's any dispute that

[00:50:52] Speaker 07:
Experts need not rely on undisputed evidence only, or that if an evidence is controversial, the expert can't rely on it.

[00:51:00] Speaker 07:
Experts can rely on disputed facts.

[00:51:02] Speaker 07:
That's painfully clear in the advisory committee notes to writing Rule 702, that that's not what the rule is about.

[00:51:09] Speaker 07:
It's not about resolving the factual dispute of is the fact that the expert is considering true.

[00:51:14] Speaker 07:
It's about is the fact, if it's true, sufficient to support the opinion.

[00:51:19] Speaker 08:
There's a confusion here, though, because everything you just said really could be going to weight and not admissibility.

[00:51:27] Speaker 08:
And we have to try to understand it.

[00:51:30] Speaker 08:
uh whether the expert's basis for his opinion was based on sufficient facts I mean that's step one before we get to the weight of the ultimate question of what was you know what could the jury decide was the actual rate we have to figure out whether the experts allowed in the front end even applying on these contested questions and so therefore

[00:51:58] Speaker 08:
702 has some work to do.

[00:52:00] Speaker 08:
And so you have to acknowledge that and try to explain to us where the line is between admissibility and weight.

[00:52:09] Speaker 07:
So I agree with you that 702 does have some work to do.

[00:52:13] Speaker 07:
But I think the work to do for 702 in this specific context is if that fact is proven to be true, is it sufficient?

[00:52:22] Speaker 07:
Is that a sufficient fact?

[00:52:24] Speaker 08:
But what if there are times where

[00:52:26] Speaker 08:
What you are relying on is just two, two slender of a read.

[00:52:30] Speaker 08:
Sure.

[00:52:31] Speaker 08:
And be something that anybody could regard as a sufficient fact.

[00:52:35] Speaker 08:
And I think that- And if they were just to isolate down on the Johnson license, and we just had this one bare recital with nothing else to go on, I guess the question is, why is that alone?

[00:52:51] Speaker 08:
enough to be deemed a sufficient fact under these circumstances?

[00:52:54] Speaker 07:
Sure.

[00:52:55] Speaker 07:
Well, I think it's – let's be clear.

[00:52:58] Speaker 07:
I don't think the Johnson license – like, again, is it a sufficient fact that the license was based on this rate?

[00:53:06] Speaker 07:
That's – that's the sufficient fact question.

[00:53:08] Speaker 04:
There is a separate question – Isn't it – isn't it – isn't the question whether, I mean, licenses bear recital of a rate?

[00:53:17] Speaker 04:
Whether that is a sufficient fact to support the conclusion that that rate represents both the licensee and the licensors' view of what the rate was.

[00:53:29] Speaker 07:
So I think that this gets to a question not so much... It does or no?

[00:53:33] Speaker 04:
Yeah, it, it, it, it... Do you think that is the question or do you have a different framing of the question?

[00:53:39] Speaker 07:
I have a different framing of the question.

[00:53:40] Speaker 07:
Okay.

[00:53:40] Speaker 07:
So I think that what you're addressing is how much evidence is there to support that fact.

[00:53:46] Speaker 04:
And is there enough evidence?

[00:53:48] Speaker 07:
And that is actually the question that I would argue is part of 702A, the relevance question.

[00:53:56] Speaker 07:
The courts have consistently looked to that relevance question as, is there a tie?

[00:54:01] Speaker 07:
So let's say the expert says, I'm assuming fact x.

[00:54:05] Speaker 07:
But there's nothing anywhere in the record that has any bearing on Fact X or that might tend to show that Fact X is true.

[00:54:11] Speaker 07:
That would make the opinion, while perhaps based on sufficient facts, irrelevant under 702A because it's not actually connected to the evidence.

[00:54:20] Speaker 07:
That's the circumstance in which there's an opportunity to evaluate, is there some evidence that a reasonable fact finder could look at and say, OK, I believe that this fact is true.

[00:54:34] Speaker 07:
But that's the level of inquiry.

[00:54:35] Speaker 07:
It's not, do I, the district judge, decide that I believe the fact to be true?

[00:54:42] Speaker 07:
The drafters of Rule 702 made very clear that's not the test.

[00:54:45] Speaker 07:
that the test is, do I believe at most that it's sufficiently tied to evidence that's going to be coming in in the record such that a reasonable fact finder could decide, yes, that fact is true.

[00:55:00] Speaker 07:
And that's a question that we review, obviously, through the lens of after a trial, facts supporting the verdict, and is there sufficient evidence

[00:55:10] Speaker 07:
I would, I would like to just briefly touch on, I know we've talked about- I'm gonna ask before you do that.

[00:55:15] Speaker 06:
One of the problems I have here is we don't really have much, if any, explanation from Judge Albright as to how he evaluated all of this.

[00:55:23] Speaker 06:
And your friends Google cite a Carlson case from the Fifth Circuit that says, at minimum, a district court must create a record of its Daubert inquiry and articulate its basis for admitting expert testimony.

[00:55:35] Speaker 06:
You don't respond to that.

[00:55:38] Speaker 06:
Did Judge Albright comply with what the Fifth Circuit requires for a Daubert inquiry?

[00:55:43] Speaker 06:
And if he didn't, why shouldn't we send it back and tell him to do it again?

[00:55:46] Speaker 07:
He did comply.

[00:55:47] Speaker 07:
He did comply.

[00:55:50] Speaker 07:
First, in Carlson, the facts were that the expert that basically was offered a trial, the district judge admitted the expert without having any proceeding of any kind as to whether there was a reliability problem, whether it met 702 or not.

[00:56:06] Speaker 07:
And the court ultimately determined that that expert should never have been allowed to testify, wasn't a qualified expert.

[00:56:12] Speaker 07:
And therefore, should have not been permitted to testify.

[00:56:16] Speaker 07:
And that the court should have.

[00:56:17] Speaker 06:
It's not as bad as that.

[00:56:18] Speaker 06:
But what did Judge Albright do?

[00:56:20] Speaker 06:
And why shouldn't we ask them to do it again?

[00:56:22] Speaker 07:
So what Judge Albright did was he received extensive briefing on a fully

[00:56:27] Speaker 07:
briefed downward motion with hundreds and hundreds of pages of exhibits and evidence supporting why the opinion was admissible.

[00:56:34] Speaker 07:
He heard oral argument and asked questions about whether, in fact, there would be evidence coming into the record through a witness.

[00:56:40] Speaker 06:
Did he articulate his basis for admitting the expert testimony of Kennedy?

[00:56:45] Speaker 07:
Don't believe he articulated in in so many words.

[00:56:48] Speaker 07:
That's the basis I think we heard counsel said in so many words.

[00:56:51] Speaker 01:
Did he say anything more than?

[00:56:53] Speaker 07:
He said he stated that he didn't believe that it was inadmissible, which is the conclusion He didn't state a reason for that conclusion in in that time for washing we haven't do it again well for two reasons and it does actually dovetail with my last point which is the first

[00:57:12] Speaker 07:
If his opinion, if the testimony was admissible, whether he said it correctly or not, there's no basis to remand just to do the trial over again.

[00:57:21] Speaker 07:
And indeed, the cases make pretty clear that are cited by Google and others in the amici that that's not appropriate.

[00:57:29] Speaker 07:
There's a number of cases that basically say it's pointless for an appellate court to send him out of back to have a retrial with the same evidence.

[00:57:37] Speaker 07:
That makes no sense.

[00:57:39] Speaker 07:
The second point is really the last one I wanted to hit on, which is the harmless error problem, which is never addressed by people.

[00:57:46] Speaker 00:
Did Mr. Kennedy at trial testify that, in his view, these licenses do reflect

[00:57:56] Speaker 00:
has agreed upon, or did he say, on the assumption that they do, I think that's a good basis for a royalty?

[00:58:03] Speaker 07:
So I think his testimony was essentially the licenses.

[00:58:07] Speaker 07:
He said essentially the true facts.

[00:58:09] Speaker 07:
The license says this, and I spoke to Mr. Habib about them.

[00:58:12] Speaker 07:
And so these are licenses at that rate.

[00:58:18] Speaker 07:
He didn't say, I analyzed it and made that conclusion.

[00:58:21] Speaker 00:
It's not an opinion.

[00:58:22] Speaker 00:
So the structure of his testimony

[00:58:28] Speaker 00:
to be, namely, on the assumption that this fact is established elsewhere, here's a conclusion about not the agreed upon.

[00:58:38] Speaker 00:
You want to put these licenses reflect an agreed upon rate at x. You want to put that as the premise and Kennedy as merely drawing an inference about what, therefore, a reasonable royalty rate.

[00:58:51] Speaker 00:
I take it the other framing is he actually testified

[00:58:58] Speaker 00:
what the agreements agreed on.

[00:59:01] Speaker 07:
He testified that that was the nature of the agreements as sort of a factual matter, which had been testified to already by Mr. De Beattie.

[00:59:11] Speaker 00:
And that testimony might be quite wavy to the jury.

[00:59:14] Speaker 07:
I wouldn't necessarily agree with that, because the same rate, for example, comes in.

[00:59:19] Speaker 07:
I think we heard that the licenses come in.

[00:59:21] Speaker 07:
The jury sees that.

[00:59:23] Speaker 07:
The jury sees that that's EcoFactor's expectation, that it's EcoFactor's belief.

[00:59:28] Speaker 07:
All of which lead to this harmless error problem, but separate from that, there were multiple independent bases, and we laid them out in our brief, why the verdict stands on other evidence unrelated.

[00:59:39] Speaker 05:
Okay, counsel, I thank you for your argument.

[00:59:41] Speaker 05:
Ms.

[00:59:42] Speaker 05:
Gander, how much time does she have left?

[00:59:44] Speaker 05:
I'll give her five minutes, because that'll balance out the time.

[00:59:46] Speaker 05:
Thank you.

[00:59:57] Speaker 03:
Thank you.

[00:59:57] Speaker 03:
I'd just like to make a couple of quick points.

[00:59:59] Speaker 03:
So first, in response to your question, Judge Dole, and your question.

[01:00:02] Speaker 10:
Let me get away too far.

[01:00:04] Speaker 10:
I wanted to address something that was coming up when your friend was arguing.

[01:00:11] Speaker 10:
Now, your expert admitted that just one license can be sufficient to support an expert's challenge and opinion, correct?

[01:00:18] Speaker 03:
He said that in the abstract, it's possible that one could be enough.

[01:00:21] Speaker 03:
It is not enough here, and let me explain why.

[01:00:24] Speaker 10:
But he did say that it is possible, the one license.

[01:00:28] Speaker 03:
It is possible, but the testimony would have had to be very different here in Kennedy.

[01:00:32] Speaker 10:
You did not argue with him that the Johnson license here was not enough.

[01:00:39] Speaker 03:
Yes, we argued that you would still have to order a new trial, even if you thought the Johnson license was enough alone.

[01:00:45] Speaker 10:
That doesn't answer my question.

[01:00:47] Speaker 03:
We said that it was not enough alone.

[01:00:48] Speaker 03:
It's not enough because it only has the unilateral whereas clause, which doesn't go far enough.

[01:00:53] Speaker 03:
You still have to order a new trial because the testimony would have had to be totally different.

[01:00:57] Speaker 10:
So if the Johnson license is enough, then the relevancy of the other two licenses doesn't matter.

[01:01:06] Speaker 03:
I think, well, I do think that they should fall out.

[01:01:08] Speaker 03:
The Johnson license is not enough because it just has the unilateral clause.

[01:01:12] Speaker 03:
There's still the same analytical gap.

[01:01:14] Speaker 03:
And the damages theory would have had to be very different.

[01:01:16] Speaker 03:
What Kennedy testified to over and over was all three licenses paid this rate.

[01:01:21] Speaker 03:
It is essentially an established rate.

[01:01:23] Speaker 03:
And therefore, Google should pay the same.

[01:01:24] Speaker 03:
That's at 57, 78 to 79.

[01:01:26] Speaker 03:
Google should pay the same rate as comparable licenses.

[01:01:29] Speaker 03:
he would have had to say something very different if it were only the Johnson license, because that license didn't include the assertive patents, and he would have had to make a lot of adjustments in the apportionment analysis.

[01:01:39] Speaker 03:
Now, if I could just make two quick points.

[01:01:41] Speaker 03:
The first is that, as I was just saying, I think there's no question about what Kennedy actually testified to here.

[01:01:46] Speaker 03:
He testified over and over again that these licensees agreed to use the X royalty rate, and that's why he was so powerful in the damages analysis.

[01:01:54] Speaker 03:
That was the entire theory of damages.

[01:01:55] Speaker 03:
It was the keystone

[01:01:56] Speaker 03:
of their theory, having chosen to have Kennedy testify that the licensees agreed to pay that rate, eco-factors subjected that assertion to the strictures of Rule 702.

[01:02:08] Speaker 03:
So that is what had to be supported.

[01:02:10] Speaker 06:
But that is all in the context of an opinion.

[01:02:14] Speaker 06:
The jury was not misled that he was a fact witness and he's saying as a factual matter the licensees agreed to it.

[01:02:20] Speaker 06:
It's all in the context of, hey,

[01:02:22] Speaker 03:
as an expert reviewing the record as a whole is my opinion that the parties agree to it.

[01:02:39] Speaker 03:
And I think that these licenses reflect the fact that the licensees paid the X rate.

[01:02:45] Speaker 03:
That is incredibly powerful.

[01:02:46] Speaker 03:
That's exactly why EcoFactor had him testify to that, because that made the damages analysis as a whole incredibly intuitive.

[01:02:54] Speaker 03:
All the licensees paid this.

[01:02:55] Speaker 03:
Google should pay it too.

[01:02:56] Speaker 03:
That's what's fair.

[01:02:57] Speaker 03:
That was the testimony.

[01:02:58] Speaker 03:
And the final point I'd like to make is that I think there is really an important role for this court on lock as an appellate court

[01:03:05] Speaker 03:
in thinking about Rule 702 and enforcing the Outer Bounds of Rule 702.

[01:03:10] Speaker 03:
As this Court said, the way we think about expert testimony and reliability is informed by the legal principles that govern the patent damages analysis.

[01:03:20] Speaker 03:
And then the other thing the Court has recognized is that those legal principles and what's permissible and what's not at trial affect primary conduct by patentees and by defendants.

[01:03:30] Speaker 03:
And so I think it's incredibly important here to keep in mind

[01:03:32] Speaker 03:
the principles at stake.

[01:03:35] Speaker 03:
And I think there are a couple that dovetail here.

[01:03:37] Speaker 03:
The first is that the court has repeatedly said that lump sum licenses are not probative of a royalty rate unless there's some basis, some reliable basis to transfer.

[01:03:46] Speaker 03:
to translate the lump sum to the royalty rate.

[01:03:49] Speaker 03:
And then the other thing the court has said that I think is really important here is that while patenting proposals, patenting offers can be relevant, they aren't the be all and end all.

[01:03:57] Speaker 03:
They can't themselves establish what the rate should be in the damages analysis because the patentee has a natural incentive to inflate the rate.

[01:04:07] Speaker 03:
And so when you put those things together, I think

[01:04:10] Speaker 05:
Patentee has to come in if it's going to say that these lump-sum licenses are what should be used as comparable licenses It has to proper a reliable basis account to transfer even just be the patentee that would have that incentive in this case when each of the licensees have an incentive to have an inflated royalty rate that doesn't correspond to what they actually are

[01:04:27] Speaker 05:
paid because then their competitors would have to pay that higher premium?

[01:04:32] Speaker 03:
Well, I guess I can't really speak to what incentives the licensees would have.

[01:04:36] Speaker 03:
They might have an incentive to not admit that there's any particular royalty rate.

[01:04:39] Speaker 03:
I think what's clear is that they don't have an incentive to negotiate the unilateral.

[01:04:42] Speaker 10:
Was there an objection made, I asked this question to the other side, an objection made at trial as to the admission?

[01:04:51] Speaker 10:
Yes, we preserved the admission.

[01:04:53] Speaker 03:
It was pre-trial and emotion eliminated?

[01:04:55] Speaker 10:
No, no, no.

[01:04:55] Speaker 10:
I mean, during the trial, when the actual evidence was admitted and submitted for consideration of the jury, was there an objection at that time?

[01:05:03] Speaker 03:
We didn't need to make an objection.

[01:05:05] Speaker 03:
There was not.

[01:05:05] Speaker 03:
There was not.

[01:05:06] Speaker 03:
We didn't need to, because under Rule 103B.

[01:05:08] Speaker 10:
You said no.

[01:05:09] Speaker 03:
There was not an objection at trial in the moment, because under Rule 103B, we didn't have to make one, because we had preserved it in the motion in Lemonaise.

[01:05:16] Speaker 03:
And if I could just make one final point, just going back to the point about how the rules were appointed.

[01:05:24] Speaker 10:
It's important to me, because if parties are allowed to seek a new trial,

[01:05:30] Speaker 10:
on the basis of evidence that they did not object to its admission, it seems to me that that kind of sets up the whole process where a party can wait until they get the verdict, make a determination as to whether they like the verdict or not, and then file a motion.

[01:05:46] Speaker 10:
And the way to prevent that is by requiring that there be an objection at the point of admissibility during the trial itself, the admissibility that mission into evidence.

[01:05:57] Speaker 03:
Well, I think under Rule 103B, there wasn't required to be an objection at trial.

[01:06:02] Speaker 03:
So Google complied with 103B by objecting pre-trial.

[01:06:05] Speaker 03:
And I would say that even if you thought that the rate in the licenses was appropriate, I think the testimony was not reliable for all the reasons we've been talking about.

[01:06:13] Speaker 03:
But it's just the last point I'd like to make, just going back to this idea of how the rules affect the conduct.

[01:06:18] Speaker 03:
You know, my friend on the other side said that this kind of unilateral clause just asserting a rate in a license is rare.

[01:06:24] Speaker 03:
It will not be rare in the future if this kind of, if this expert testimony is upheld.

[01:06:30] Speaker 03:
Patentage could enter into small, lump sum licenses.

[01:06:33] Speaker 03:
They could insert unilateral assertions about what the rate they think should be.

[01:06:38] Speaker 03:
Licensees would have little incentive to protest in many cases.

[01:06:41] Speaker 03:
And they could use expert testimony to transform those unilateral assertions into authoritative expert testimony that the licensees actually agree to this rate that I think will undermine the jury's ability to reach fair and apportioned verdicts.

[01:06:54] Speaker 03:
And it will ultimately harm innovation.

[01:06:55] Speaker 03:
So I think for that reason, the court should police the outer bounds of Rule 702 here and order a new trial.

[01:07:00] Speaker 03:
I thank both counsels in this case for taking their submissions.