Kewazinga Corp. v. Google LLC

Filing 322

OPINION AND ORDER re: 281 MOTION in Limine to exclude certain portions of the opinions of Ms. Michele Riley. filed by Google LLC. It is hereby ORDERED that Defendant's motion to preclude Ms. Riley's testimony is granted i n part and denied in part. Ms. Riley may not testify to profits attributable to Google Search advertising revenue using the Maps to Street View Adjustment. The Clerk of Court is respectfully directed to close the motion at Dkt. No. 281. (Signed by Judge Lorna G. Schofield on 9/28/2023) (mml)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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:
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KEWAZINGA CORPORATION,
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Plaintiff,
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-against:
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GOOGLE LLC,
Defendant. :
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20 Civ. 1106 (LGS)
OPINION AND ORDER

LORNA G. SCHOFIELD, District Judge:
WHEREAS, Plaintiff Kewazinga Corporation (“Kewazinga”) asserts infringement of
three patents: U.S. Patent No. 9,055,234 (“Navigable Telepresence Method and System”) (the
“’234 Patent”), U.S. Patent No. 6,522,325 (“Navigable Telepresence Method and System
Utilizing an Array of Cameras”) (the “’325 Patent”) and U.S. Patent No. 6,535,226 (“Navigable
Telepresence Method and System Utilizing an Array of Cameras”) (the “’226 Patent”)
(collectively, the “Kewazinga Patents”). Following discovery, the parties cross-move for
summary judgment. In connection with the summary judgment motions, Defendant Google LLC
(“Google”) moves to preclude the testimony of Michele Riley, Kewazinga’s damages expert.
A. Legal Standard
WHEREAS, “[w]hen reviewing damages in patent cases, [the Federal Circuit] appl[ies]
regional circuit law to procedural issues and Federal Circuit law to substantive and procedural
issues pertaining to patent law.” Exmark Mfg. Co. v. Briggs & Stratton Power Prods. Grp., LLC,
879 F.3d 1332, 1347 (Fed. Cir. 2018).1 In reviewing motions to exclude expert testimony related
to patent royalties, the Federal Circuit has applied its own law. See, e.g., MLC Intell. Prop., LLC

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Unless otherwise indicated, in quoting cases, all internal quotation marks, alterations,
emphases, footnotes and citations are omitted.

v. Micron Tech., Inc., 10 F.4th 1358, 1373 (Fed. Cir. 2021). Federal Circuit law applies.
WHEREAS, Federal Rule of Evidence 702 provides that:
A witness who is qualified as an expert by knowledge, skill, experience, training,
or education may testify in the form of an opinion or otherwise if [] (a) the
expert’s scientific, technical, or other specialized knowledge will help the trier of
fact to understand the evidence or to determine a fact in issue; (b) the testimony
is based on sufficient facts or data; (c) the testimony is the product of reliable
principles and methods; and (d) the expert has reliably applied the principles and
methods to the facts of the case.
Under Rule 702, the trial judge plays a “gatekeeping role,” which “entails a preliminary
assessment of whether the reasoning or methodology underlying the testimony is scientifically
valid and of whether that reasoning or methodology properly can be applied to the facts in
issue.” Apple Inc. v. Wi-LAN, Inc., 25 F.4th 960, 971 (Fed. Cir. 2022) (quoting Daubert v.
Merrell Dow Pharms., Inc., 509 U.S. 579, 592-93, 595, 597 (1993)). “A reasonable or
scientifically valid methodology is nonetheless unreliable where the data used is not sufficiently
tied to the facts of the case.” Id.
WHEREAS, in the context of a reasonable royalty, “when the accused technology does
not make up the whole of the accused product, apportionment is required.” MLC Intell. Prop.,
10 F.4th at 1373. “The ultimate combination of royalty base and royalty rate must reflect the
value attributable to the infringing features of the product, and no more.” Id. “This is so even
where the proposed royalty base is the smallest saleable patent practicing unit or SSPPU.” Id.
“[T]he patentee must give evidence tending to separate or apportion the infringer’s profits and
the patentee’s damages between the patented feature and the unpatented features, and such
evidence must be reliable and tangible, and not conjectural or speculative.” Finjan, Inc. v. Blue
Coat Sys., Inc., 879 F.3d 1299, 1310 (Fed. Cir. 2018). “That the gatekeeping role of the judge is
limited to excluding testimony based on unreliable principles and methods is particularly

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essential in the context of patent damages.” Apple Inc. v. Motorola, Inc., 757 F.3d 1286, 1315
(Fed. Cir. 2014), overruled on other grounds, Williamson v. Citrix Online, LLC, 792 F.3d 1339
(Fed. Cir. 2015).
B. Royalty Base – Revenues from Street View, the Allegedly Infringing Product
WHEREAS, Riley’s approach to measuring Plaintiff’s damages is to calculate a
hypothetical royalty payable by Defendant for its infringing use of the Kewazinga Patents. Riley
first calculated Defendant’s revenues from the infringing use of the patents and then determined
and applied a royalty rate for the use of the patents. She calculated the revenues, or “royalty
base,” by seeking to measure Defendant’s revenues from Defendant’s use of Plaintiff’s patented
technology in Google Street View (Street View and the Dynamic Street View API), a feature of
Google Maps.
WHEREAS, one component of Riley’s royalty base is advertising revenue from Google
Search, because Google Maps (which incorporates the infringing product, Street View) is closely
tied to Google searches. “Local searches” -- i.e., those that seek information about a specific
location -- often yield a map and link to Google Maps as part of the search results. Local
searches also produce other results, including images, recipes, social media posts, and
advertisements.
WHEREAS, because Google does not compile the data, Riley uses the following
methodology to calculate Plaintiff’s Street View revenues associated with Google Search: first,
she begins with Google’s worldwide advertising revenue from Google searches. The
advertising revenue figure is limited to ad revenue attributable to the United States and then
further limited to revenue from “local searches” as described above. The domestic advertising
revenue for local searches is adjusted to subtract revenue specific to Google Maps (accounted for

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elsewhere in Riley’s calculation) and the costs to acquire Street View images (which Riley
understands to be outside the scope of the Kewazinga Patents). Finally, this number -- adjusted
local search revenue -- is further reduced by multiplying it by the percentage of daily active users
of Google Maps who use Street View (the “Maps to Street View Adjustment”), and then by the
percentage of those users who are provided transition imagery between panoramas.
WHEREAS, Riley’s methodology to allocate a portion of Google search advertising
revenue to the alleged infringement is not reliable. The problem is at the Maps to Street View
Adjustment. Riley says that applying this percentage (which is the percentage of Google Maps
users who used Street View) to the calculated search ad revenues approximates revenue from
users who “performed a local search and interacted with Street View in Google Maps.” It is
unreasonable to use the percentage of Google Maps users who use Street View to allocate local
search revenue to Street View. Google Maps and Google Search are distinct products, that serve
different purposes, and have different user metrics. Defendant introduces unrebutted evidence
that the percentage of local search users who click through to Street View is an order of
magnitude smaller than the percentage of Maps users who click through to Street View.
Although reasonable minds may disagree on how best to determine Street View revenues
associated with Google Search, the Maps to Street View Adjustment is unreliable. Defendant’s
remaining objections to Riley’s calculation of the royalty base are for the jury and do not raise
issues that warrant exclusion of the testimony.
WHEREAS, Plaintiff’s arguments in defense of the Maps to Street View Adjustment are
unpersuasive. First, Plaintiff argues that Riley’s damages methodology accurately apportions
search revenue, because her calculations reflect deductions for the fact that only some daily
active users of Google Maps use Street View, and only some users of Street View use the

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infringing feature. This argument is irrelevant because these deductions do not address the main
error in Riley’s methodology: conflating Google Search users with Google Maps users, a distinct
category.
WHEREAS, Plaintiff also argues that Street View is part of the ecosystem of products
that Google offers in response to local search queries, meaning that it provides value to all users
who conduct a local search, regardless of whether that user uses Street View. This argument
does not remedy the problem because Plaintiff does not explain why Riley’s methodology
captures this ecosystem value. In particular, Riley’s testimony does not explain why using the
percentage of Google Maps users who use Street View captures any ecosystem value provided to
Google search users. Plaintiff cites Lucent Techs. v. Gateway, Inc., 580 F.3d 1301 (Fed. Cir.
2009), to support the idea that its damages need not be limited to only the portion of local
searches where users click through to Street View and instead can reflect a portion of revenue
from all local searches. This misunderstands Lucent. There, the Circuit stated only that a royalty
does not necessarily have to reflect only “specific instances of infringement proven with direct
evidence,” in part because users of a product can gain value from a feature, even if they do not
directly use it. Id. at 1334. The problem with Riley’s methodology is not that it assumes search
users gain some value from the presence of Street View; it is that she offers no basis to conclude
that her methodology accurately reflects that value.
WHEREAS, Plaintiff argues throughout its briefing that Defendant’s objections to
Riley’s methodology should be left to the jury to decide. However, “Daubert’s gatekeeping
requirement . . . ensure[s] the reliability and relevancy of expert testimony” and “the court must
judge admissibility based on the particular facts of the case.” Summit 6, LLC v. Samsung Elecs.
Co., Ltd., 802 F.3d 1283, 1298 (Fed. Cir. 2015). Here, Plaintiff’s proposed method for

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calculating the Google Search portion of the royalty base, and specifically the Maps to Street
View Adjustment, is unreliable.
C. Royalty Rate
WHEREAS, Defendant’s motion to exclude Riley’s testimony regarding the royalty rate
is denied. Riley developed her opinion about the appropriate royalty rate using the three
standard quantitative valuation methods and a qualitative analysis using well-recognized factors
for determining a reasonable royalty. Using one of the valuation methods, Riley determined a
royalty rate by halving the profitability of “the Google segment operating margin earned during
the damages period . . . as indicative of the value of the [Kewazinga Patents] at the hypothetical
negotiation.” Defendant objects because the segment includes all of Google’s main products,
some of which are more profitable than others and some of which are excluded from the royalty
base in other ways, making the rate unreliable. Defendant’s argument fails because it goes to
whether Riley’s opinion is accurate, rather than whether Riley’s methodology is unreliable. See
id. at 1295-96 (contrasting exclusion based on unreliable methods with “whether the expert is
credible or the opinion is correct”). Riley’s testimony can be subject to “vigorous crossexamination [and] presentation of contrary evidence” at trial. Id. at 1296. Such crossexamination and contrary evidence shall comply with the parties’ stipulation that in exchange for
not having to produce certain documents, Defendant agreed not to challenge expert testimony on
grounds that it “failed to rely on more granular information concerning its revenues and profits
. . . [including] profit data from product areas other than the Geo product area.” This stipulation
further counsels against granting Defendant’s motion as to the royalty rate. It is hereby
ORDERED that Defendant’s motion to preclude Ms. Riley’s testimony is granted in part
and denied in part. Ms. Riley may not testify to profits attributable to Google Search advertising

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revenue using the Maps to Street View Adjustment.
The Clerk of Court is respectfully directed to close the motion at Dkt. No. 281.
Dated: September 28, 2023
New York, New York

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