Apple Inc. v. Samsung Electronics Co. Ltd. et al

Filing 2130

Declaration Reply Declaration Of John R. Hauser In Support Of Apples Motion For A Permanent Injunction filed byApple Inc.. (Attachments: # 1 Exhibit A, # 2 Exhibit B, # 3 Exhibit C, # 4 Exhibit D, # 5 Exhibit E, # 6 Exhibit F, # 7 Exhibit G)(Jacobs, Michael) (Filed on 11/9/2012)

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Exhibit D Highly Confidential - Attorneys' Eyes Only Page 1 1 2 3 4 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN JOSE DIVISION --------------------------------x APPLE INC., a California corporation, 5 Plaintiff, 6 Case No. 11-CV-01846-LHK vs. 7 8 9 10 SAMSUNG ELECTRONICS CO., LTD, a Korean business entity; SAMSUNG ELECTRONICS AMERICA, INC., a New York corporation; SAMSUNG TELECOMMUNICATIONS AMERICA, LLC, a Delaware limited liability company, 11 Defendants. 12 --------------------------------x 13 14 15 16 17 18 19 20 21 22 23 24 HIGHLY CONFIDENTIAL - ATTORNEYS' EYES ONLY VIDEOTAPED DEPOSITION OF JOHN HAUSER, a witness called by the Defendants, taken pursuant to the applicable provisions of the Federal Rules of Civil Procedure, before James A. Scally, RMR, CRR, a Notary Public in and for the Commonwealth of Massachusetts, at the offices of WilmerHale, 60 State Street, Boston, Massachusetts, on Friday, April 27, 2012, commencing at 9:31 a.m. TSG Job # 48803 25 TSG Reporting - Worldwide 877-702-9580 Highly Confidential - Attorneys' Eyes Only Page 233 1 So normally when you hear these surveys on 16:47:09 2 television, they say, you know, 55 percent for candidate A, 16:47:13 3 45 percent for candidate B, and then they give a plus or 16:47:22 4 minus. That plus or minus is actually two times the 16:47:27 5 standard deviation -- roughly two times the standard error. 16:47:30 6 So that's that sort of the precision with which I'm -- I'm 16:47:34 7 estimating this parameter. 16:47:37 8 candidate, it's, you know, the votes they're going to get 16:47:42 9 or the people favoring them or whatever. 16:47:45 10 Okay. In the case of the political In my estimates, it's the estimate of a particular partworth. 11 16:47:50 Now, just, again, for the record, kind of mixing a 16:47:55 12 little bit of philosophy here between frequentist and 16:48:01 13 Bayesian statistics, in terms of the Bayesian, it's the 16:48:06 14 posterior Bayesian confidence interval; they've got fancy 16:48:10 15 words, but it's usually best to think of it as the 16:48:15 16 confidence interval. 16:48:17 17 my population, I can give you both the estimate and in 16:48:21 18 Exhibit -- I thought it was here. 16:48:28 19 So for every one of the parameters in MR. ILLOVSKY: 20 12, K in your report? 21 THE WITNESS: 22 MR. ILLOVSKY: 23 THE WITNESS: 24 25 Are you looking for A. 16:49:17 16:49:18 Yeah. I can't find 12. Use that. 16:49:21 Okay. 16:49:22 Exhibit 12, which is K, you can see the standard error of the market level mean. TSG Reporting - Worldwide 16:49:20 16:49:23 16:49:27 877-702-9580 Highly Confidential - Attorneys' Eyes Only Page 234 1 So to interpret this, they say table K1. 2 the first feature, which is "Reliable Touch, Auto-Switch (1 16:49:38 3 to 2 Fingers, Rubberband, Tap and Re-center the Zoom," the 16:49:42 4 average market level mean is 64.5, and we also have medians 16:49:45 5 in there, and I'll explain the difference in a moment, and 16:49:51 6 the standard error is 2.1. 16:49:54 7 that's pretty good precision. 8 9 Q. We have So you can see it's, you know, 16:49:30 16:49:58 Does this mean that the willingness to pay for any given individual is measured with high precision? 16:50:00 16:50:05 10 A. Oh, no. 11 Q. Okay. 16:50:13 12 A. You know, and I actually give an example of 16:50:25 Absolutely not. 16:50:10 13 flipping coins to try and motivate this concept. You can 16:50:27 14 have high precision at the population level, but not high 16:50:31 15 precision at the level of each and every individual. 16:50:36 16 17 Q. Okay. Let's go to page 48 of Exhibit 1. Okay. So do you see -- do you see table 3A in your report? 16:50:41 16:51:00 18 A. Yes, I do. 16:51:05 19 Q. And then if you flip the page, you'll see table 16:51:06 20 3B? 16:51:08 21 A. Yes, I do. 16:51:09 22 Q. Okay. 16:51:10 23 24 25 So these are the -- here's the -- the means and the standard deviations; right? A. No. 16:51:15 Let's be clear what we have here. Okay. There is an estimate of the mean and the market TSG Reporting - Worldwide 877-702-9580 16:51:17 16:51:21 Highly Confidential - Attorneys' Eyes Only Page 235 1 heterogeneity, which is the distribution, standard 16:51:24 2 distribution, of these partworths across the population. 16:51:27 3 4 5 6 7 8 9 10 Q. This is the population of the respondents, or is this the population of -- of the 10,000? A. 16:51:36 I -- I have -- I mean I think you're confusing draw as from a posterior distribution with the population. Q. What are you -- okay. So the pop -- what do you mean by the population? A. Okay. 16:51:32 16:51:45 16:51:49 16:51:56 16:51:58 So I have four hundred and -- this is smartphones -- 455 respondents. 16:51:59 16:52:02 11 Q. Uh-huh. 16:52:05 12 A. Okay. 16:52:06 And what I'm doing is I'm estimating for 13 the target population, now, the mean level of the partworth 16:52:12 14 and how much it varies. 16:52:18 15 different partworth than I do, and Dr. Sukumar may have yet 16:52:24 16 another partworth, and Eugene may have a different 16:52:28 17 partworth, et cetera. I can't -- I can't actually -- I can 16:52:30 18 get an estimate of each one of those partworths, but -- but 16:52:34 19 not with a lot of high precision. But I can estimate how 16:52:37 20 these vary across the population. And I can do that with 16:52:40 21 high precision. 22 So think of it as you may have a 16:52:44 So it's kind of like saying if I drive in the 16:52:47 23 Southeast Expressway, it's going to take me 20 minutes plus 16:52:52 24 or minus 10 minutes. 16:52:55 25 on average it takes me 20 minutes, of course that's I can get a pretty good estimate that TSG Reporting - Worldwide 877-702-9580 16:52:58 Highly Confidential - Attorneys' Eyes Only Page 243 1 2 3 A. Yes. You shouldn't -- you should not use ACBC if you have less than five attributes. Q. That's what it means. 17:04:03 17:04:05 It doesn't -- it doesn't -- it doesn't recommend 17:04:11 4 using -- so the way you read this is not a recommendation 17:04:14 5 that you use ACBC when you have more than five attributes; 17:04:17 6 you don't read it that way? 17:04:21 7 A. Did you read the technical manual? 17:04:22 8 Q. I did not. 17:04:24 9 A. Yes, I did. 17:04:25 10 Q. And what does it say? 17:04:26 11 A. Okay. 17:04:27 12 Q. No, that's not -- that's not the question. Did you? I'm quite happy to explain ACBC to you. You 17:04:31 13 know, I've been patient today with -- with the responses 17:04:33 14 that are really nonresponsive to a lot of the questions. 17:04:38 15 But we're running out of time, and I am just asking you is 17:04:41 16 your interpretation of a printout from Sawtooth's website 17:04:49 17 where it says "When to Use ACBC" and it indicates "Five or 17:04:53 18 more attributes," it is -- it's your understanding that 17:04:57 19 ACBC should not be used when you have fewer than five 17:05:05 20 attributes; is that your understanding? 17:05:09 21 MR. ILLOVSKY: Wait. So hold on. 17:05:11 22 I've got to object to the preface. 23 answers have been perfectly responsive when 17:05:14 24 the questions have been comprehensible, 17:05:16 25 which has not been a large percentage of 17:05:18 TSG Reporting - Worldwide The 877-702-9580 17:05:12 Highly Confidential - Attorneys' Eyes Only Page 244 1 the time. 2 to the question. 3 So object to the preface, object 17:05:20 17:05:23 Go ahead. 17:05:26 4 A. Can you ask -- re-ask the question? 17:05:28 5 Q. Let's move on. Look at the -- look at the last 17:05:39 6 paragraph on page 1 of what's been marked as Exhibit 20. 17:05:41 7 It says, "In addition to the standard partworth utilities 17:05:45 8 that are useful for segmentation and market simulation, we 17:05:49 9 captured the specific 'must-have' and 'unacceptable' rules 17:05:51 that respondents expressed during the screening process." 17:05:55 10 11 12 You're familiar with that term "must-have"; right? A. 17:06:00 Well, if you had read the technical manual, you'll 17:06:03 13 see that they're pretty widely quoting many of my papers. 17:06:05 14 So, yes, I am definitely familiar with this. 17:06:12 15 Q. Okay. 17:06:14 16 A. And I'd like to also point out that we did these 17:06:14 17 tests on our data. 18 lexicography. 19 lexicographic when there are a lot of features or when the 17:06:25 20 choice task is speeded up or other things. And we did do 17:06:29 21 lexicography tests in our data, which are entirely doable 17:06:32 22 with all the information we gave you. 17:06:37 23 And what these refer to is And they're -- in many cases consumers are And I can tell you that out of seven features 17:06:17 17:06:20 17:06:39 24 times roughly, you know, 800 respondents, it's like 5600 17:06:44 25 possible tasks, exactly one was lexicographic, and it was 17:06:53 TSG Reporting - Worldwide 877-702-9580 Highly Confidential - Attorneys' Eyes Only Page 245 1 lexicographic on price. 2 whether or not we should have must-have features in there, 17:07:02 3 which can be done after the fact, and it fully essentially 17:07:05 4 confirms that there is no lexicography; because there's no 17:07:10 5 lexicography, we don't need ACBC. 17:07:13 6 So we did do the test as to 17:06:59 Now, of course, I only did this after I had the 17:07:16 7 data. 8 experience, from also the qualitative interviews, that we 17:07:23 9 probably did not need to worry about lexicography in this 17:07:26 10 particular study. 17:07:31 11 to have one out of like 5600, that can almost even be by 17:07:35 12 chance. 17:07:39 13 14 15 Q. So I made a judgment up front, again, from my 17:07:20 And that turned out to be correct. So Why didn't you -- why didn't you mention in your report that you tested for must-have features? A. 17:07:40 17:07:43 Oh, I -- I only did this test after I read Dr. 17:07:47 16 Sukumar's results, because I didn't -- I mean we did not 17:07:51 17 have any indications that there should be any lexicography. 17:07:55 18 Also, you know, I know Sawtooth says "five or more" here, 17:07:59 19 but you're really -- it's going to be very rare that you 17:08:03 20 have lexicography for as little as five attributes. 17:08:07 21 going to be upwards of 20 or so before you start having it. 17:08:10 22 I did not expect it. 17:08:13 23 Sukumar raised it, and given that I could test it with the 17:08:17 24 data that you had been given, I tested it. 17:08:21 25 Q. It's But given that he raised it, Dr. Part of your opinion is -- is the value placed on TSG Reporting - Worldwide 877-702-9580 17:08:28 Highly Confidential - Attorneys' Eyes Only Page 246 1 the '915, the '161, and the '381 patents combined. 2 able to break out the individual value of those patents? 3 4 A. Let me just add that you've been given all the code that we ran for the lexicographic tests. 5 6 Okay. Are you 17:08:32 17:08:39 17:08:42 17:08:44 So can you -- can you re-ask that question? Q. 17:08:49 Part of your opinion is the value placed on the 17:08:52 7 '915, the '161, and the '381 patents combined. 8 able to break out the individual value of those patents to 17:09:01 9 Samsung consumers? 17:09:04 10 A. Okay. 11 12 So -- 17:08:55 17:09:05 MR. ILLOVSKY: A. Are you Objection to form. Take a look at the report again. 17:09:05 17:09:07 13 MR. GALVIN: 14 Let's take a break, please. 17:09:45 15 THE VIDEOGRAPHER: 17:09:46 16 record. I withdraw the question. Going off the The time is 5:09. 17:09:23 17:09:47 17 (Recess.) 17:09:49 18 (Exhibit 21, DVD labeled "Hauser 17:20:54 19 Survey Data Files," marked.) 17:20:58 20 THE VIDEOGRAPHER: 17:20:59 21 22 23 24 25 record. We're back on the The time is 5:20. 17:21:00 BY MR. GALVIN: Q. 17:21:11 Dr. Hauser, for each of your respondents, how many records are there? A. 17:21:12 17:21:15 I am not sure I understand the -- TSG Reporting - Worldwide 17:21:21 877-702-9580 Highly Confidential - Attorneys' Eyes Only Page 253 1 at the willingness to pay estimates at some point? 2 individual level, did you examine all -- 3 A. On an 17:30:13 17:30:22 I, in fact, not only didn't I do it, but I -- I 17:30:25 4 gave the example with the head -- with the coin-flipping 17:30:28 5 example, and, again, at least nine places in the report, it 17:30:30 6 was in two of the footnotes, I'm very explicit as to why 17:30:35 7 that would -- that is not what one should do, and that that 17:30:38 8 would be a naive thing to do. 17:30:42 9 with hierarchical Bayes to know these issues are in there. 17:30:46 10 And, you know, when I read Dr. Sukumar's results, 17:30:50 11 and he's getting numbers like he modified the code, and he 17:30:52 12 got numbers that are absurd. 17:30:55 13 and say, well, gee, they are absurd. 14 absurd? I've got enough experience And you should look at those So why are they 17:30:59 Well, because the code was modified. 17:31:03 15 Q. Well, did you get results that were absurd? 17:31:05 16 A. No. 17:31:07 17 Q. But you didn't look on an individual level at 18 the -- at the calculations, did you? 19 20 I did the calculations correctly. MR. ILLOVSKY: A. 17:31:09 17:31:12 Objection to form. 17:31:16 You know, I -- I wrote a set of procedures; I 17:31:17 21 wrote the set of procedures that are correct. 22 talking about 10,000 draws for 800 consumers times -- four 17:31:23 23 times -- times 28 partworths. 17:31:31 24 billions? 25 numbers. So what is that? We're now Millions, No, I didn't look at a billion different I looked at the appropriate output of TSG Reporting - Worldwide 877-702-9580 17:31:20 17:31:35 17:31:38 Highly Confidential - Attorneys' Eyes Only Page 254 1 calculations based on whatever it is, a billion different 17:31:40 2 numbers. 17:31:43 3 Q. Did you look at the median of those calculations? 17:31:44 4 A. I looked at -- I did the median appropriately. 17:31:48 5 Q. So what was the -- what was the median? 17:31:51 6 A. The median, as described, it's -- we can look it 17:31:55 7 up, you know. 17:31:58 8 Q. Do you remember? 17:31:59 9 A. Is it a memory test? 17:32:00 10 Q. No. 17:32:02 11 It's -- I'm asking you if you remember or not. 17:32:04 12 A. Do I remember the exact number? 17:32:05 13 Q. Uh-huh. 17:32:06 14 A. The exact number's in my report. 15 We can look it up. 17:32:07 17:32:10 16 Q. Okay. 17 A. (Pause.) Let's go -- let's go there. 17:32:10 Well, it's basically footnote 72, 73, 17:33:15 18 and you'll note that in 72 it says, "For each of these 17:33:22 19 samples, I computed a median willingness to pay for the 17:33:30 20 market. 17:33:34 21 willingness to pay by taking the median of the 10,000 17:33:37 22 sample medians," okay? 17:33:41 23 in the earlier coin-flipping examples, reporting a 17:33:44 24 willingness to pay for an individual respondent would not 17:33:47 25 be sufficiently precise; however, the overall market level 17:33:50 I then computed an overall market level And then I cautioned, "As explained TSG Reporting - Worldwide 877-702-9580 Highly Confidential - Attorneys' Eyes Only Page 255 1 willingness to pay is sufficiently precise." 2 definitely cautioned that. 3 So I 17:33:54 17:33:58 Now, in -- in paragraph 73, doing those median 17:34:00 4 calculations, so doing the medians within the sampler, 17:34:04 5 okay, so in the -- getting the posterior distribution of 17:34:08 6 the medians, I then, having gotten that posterior 17:34:11 7 distribution of the medians, we can now say something like 17:34:17 8 the willingness to pay estimates at a base price of 199, 17:34:20 9 customers would be willing to pay $40 more for a smartphone 17:34:25 10 that has the functionality associated with patent '915. 17:34:28 11 And then it goes on from there. 17:34:32 12 And you'll note that how this, then, is used is up 17:34:35 13 in paragraph 104, and it says, "The median willing -- 17:34:39 14 consumer willingness to pay calculation leads price premium 17:34:44 15 estimates that are similar to what I estimate using the 17:34:48 16 market simulation." 17:34:51 17 check. 18 Q. So I'm using it for a convergent 17:34:54 So if we look at -- if we look at any one 17:34:57 19 respondent's draws, that doesn't really -- that doesn't 17:35:11 20 really tell us their willingness to pay for -- for any of 17:35:17 21 the features? 17:35:20 22 A. Again, let's go back to the coin-flipping example. 17:35:23 23 If I end up with two heads, my estimate, you know, for that 17:35:26 24 particular respondent, you know, in fact, my maximum 17:35:31 25 likelihood estimate is 100 percent. 17:35:35 You know, so I'm not TSG Reporting - Worldwide 877-702-9580 Highly Confidential - Attorneys' Eyes Only Page 256 1 going to be very precise. 17:35:38 2 Q. Okay. 17:35:40 3 A. So in -- when I look at any individual, I have 48 17:35:41 4 constraints, plus I have a number of monotonicity 17:35:47 5 constraints, and I think if we count up the number of 17:35:53 6 features, it's something like 7 times 3. 17:35:55 7 because there's -- not everything's monotone. 8 know, I basically have, what, maybe 60 constraints for 20, 17:36:04 9 21 features. 17:36:10 Not completely, So, you I can't expect that to be precise. 17:36:00 However, 10 when I get up to 20,000 constraints, which is what I have 17:36:13 11 for the population, I can expect that to be fairly precise. 17:36:18 12 So, no, you should not look at it at the 17:36:23 13 individual level, and as in the documents that you don't 17:36:26 14 like to refer to, you say, well, some of these appear to be 17:36:29 15 negative, again, just doing the arithmetic calculation, 17:36:32 16 almost none of those are sufficiently precise to -- to say 17:36:36 17 they're negative. 17:36:40 18 What we can say is that for roughly -- and also 17:36:42 19 they're conflated. 20 and say that for 94 percent of the people, they have 17:36:49 21 positive partworths for one of the patents. 17:36:52 22 want to conflate it either way. 23 We can look at it the other way around But I don't 17:36:55 The key thing is none of those are significant -- 24 I think one of those are significant out of all those 25 tests. And there are people who -- who don't value. TSG Reporting - Worldwide 17:36:45 877-702-9580 17:36:59 17:37:02 I 17:37:04

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