SimpleAir, Inc. v. Microsoft Corporation et al

Filing 765

MEMORANDUM OPINION AND ORDER. Signed by Judge Rodney Gilstrap on 12/10/2014. (nkl, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF TEXAS
MARSHALL DIVISION
SIMPLEAIR, INC.,
Plaintiff,
v.
GOOGLE INC.
Defendant.

§
§
§
§
§
§
§
§
§
§

CASE NO. 2:11-CV-416-JRG

MEMORANDUM OPINION AND ORDER
I.

Introduction.
Plaintiff SimpleAir, Inc. (“SimpleAir”) filed this patent infringement action against Google

on September 15, 2011. At trial, SimpleAir alleged that the operation of Google’s Cloud
Messenger (GCM) and Cloud to Device Messenger (C2DM) (collectively the “Accused
Services”) infringe independent claim 1, and dependent claims 2, 3, 7, and 22 (the “asserted
claims”) of U.S. Patent No. 7,035,914 (the “’914 Patent”). A jury trial commenced on January
13, 2014. On January 18, 2014, the jury reached and returned its unanimous verdict, finding that
the Accused Services infringed each of the asserted claims, and that the asserted claims were not
invalid. Dkt. No. 601.
However, the same jury was unable to reach a unanimous verdict with respect to the amount
of damages. Accordingly, the Court entered judgment with respect to the separate issues of
validity and infringement, and ordered a new trial on damages to be set for March 17, 2014. Dkt.
No. 634; 635. A new jury was seated and a trial concerning damages only began on March 17,
2014. On March 19, 2014, that jury returned a unanimous verdict awarding $85 million in
damages to SimpleAir. Dkt. No. 718.

In the motion presently before the Court, Google seeks to overturn the jury’s damages
verdict, arguing that SimpleAir failed to offer sufficient evidence to support the jury’s award of
$85 million, and more specifically, that SimpleAir’s expert witnesses provided unreliable
testimony, which should have been excluded or stricken under Federal Rule of Evidence 702. See
Google’s Renewed Motion for Judgment as a Matter of Law (Dkt. No. 748).
Having considered the arguments of the parties, and for the reasons stated below, Google’s
motion is DENIED.
II.

Applicable law regarding Rule 50.
Judgment as a matter of law (JMOL) is only appropriate when “a reasonable jury would not

have a legally sufficient evidentiary basis to find for the party on that issue.” Fed. R. Civ. P.
50(a). “The grant or denial of a motion for judgment as a matter of law is a procedural issue not
unique to patent law, reviewed under the law of the regional circuit in which the appeal from the
district court would usually lie.” Finisar Corp. v. DirectTV Group, Inc., 523 F.3d 1323, 1332
(Fed. Cir. 2008). The Fifth Circuit applies an “especially deferential” standard in reviewing a
jury verdict. Brown v. Bryan County., 219 F.3d 450, 456 (5th Cir. 2000).
In deciding a motion under Rule 50, the Court reviews all evidence in the record and must
draw all reasonable inferences in favor of the nonmoving party; moreover, the Court may not make
credibility determinations or weigh the evidence, as those are solely functions of the jury. Reeves
v. Sanderson Plumbing Prods., Inc., 530 U.S. 133, 150-51 (2000). “A JMOL may only be
granted when, ‘viewing the evidence in the light most favorable to the verdict, the evidence points
so strongly and overwhelmingly in favor of one party that the court believes that reasonable jurors
could not arrive at any contrary conclusion.’” Versata Software, Inc. v. SAP Am., Inc., 717 F.3d

2

1255, 1261 (Fed. Cir. 2103) (quoting Dresser-Rand Co. v. Virtual Automation, Inc., 361 F.3d 831,
838 (5th Cir. 2004)).
III.

Applicable law regarding damages.
Upon a showing of infringement, a patentee is entitled to an award of damages “adequate to

compensate for the infringement, but in no event less than a reasonable royalty for the use made of
the invention by the infringer, together with interest and costs as fixed by the court.” 35 U.S.C. §
284. However, “[t]he burden of proving damages falls on the patentee.” Lucent Techs., Inc. v.
Gateway, Inc., 580 F.3d 1301, 1324 (Fed. Cir. 2009).
There are two alternative categories of damages typically recovered in a patent case: the
patentee’s lost profits; or the “reasonable royalty [the patentee] would have received through
arms-length bargaining.” Id. In this case, Plaintiff sought to recover only the second category of
damages, a reasonable royalty.
To determine an appropriate reasonable royalty, patentees (and courts) commonly employ
the hypothetical negotiation, or “willing licensor-willing licensee” model. Id. at 1324-25. The
hypothetical negotiation “attempts to ascertain the royalty upon which the parties would have
agreed had they successfully negotiated an agreement just before infringement began,” assuming
that the patent is valid, enforceable, and infringed. Id.; see also Georgia-Pacific Corp. v. U.S.
Plywood Corp., 318 F. Supp. 1116, 1120 (S.D.N.Y. 1970); Rite-Hite Corp. v. Kelley Co., 56 F.3d
1538, 1554 n.13 (Fed. Cir. 1995) (en banc). Such a reasonable royalty analysis “necessarily
involves an element of approximation and uncertainty.” Unisplay, S.A. v. Am. Elec. Sign Co., 69
F.3d 512, 517 (Fed. Cir. 1995). However, the Court must ensure that a jury’s damages award is
supported by substantial evidence. Id.

3

IV.

Substantial evidence supports the jury’s verdict.
During trial, SimpleAir presented two explicit damages theories to the jury through the

testimony of its expert, Mr. Robert Mills. The first theory (hereafter the “settlement analysis”)
was based on SimpleAir’s past settlement agreements, with particular emphasis given to the
license agreements with Microsoft and Apple. The second theory (hereafter the “Georgia-Pacific
analysis”) applies the factors enumerated in Georgia-Pacific Corp. v. U.S. Plywood Corp., 318 F.
Supp. 1116, 1120 (S.D.N.Y. 1970), in order to construct a hypothetical negotiation and
corresponding reasonable royalty.
Having reviewed the parties’ briefing and the entire record, the Court is persuaded that
SimpleAir introduced substantial evidence under both the settlement and Georgia-Pacific
analyses—evidence that is more than adequate to support the jury’s verdict.
A. Plaintiff’s settlement analysis and its reliance on the Microsoft license support the
jury’s verdict.
Applying his settlement analysis, Mr. Mills told the jury that Google should pay a royalty of
nearly $1271 million in compensation for its infringement of the ’914 Patent. See Dkt. No. 712,
at 14:5-8. To arrive at that figure, Mr. Mills:
took the $5 million he calculated as Microsoft’s payment for use of the technology
claimed in the ’914 patent;
multiplied it by a factor of 40 (to account for the fact that the accused Google messaging
services receive significantly more messages that the licensed Microsoft services); and

1

As discussed in more detail below, Mr. Mills performed an alternative reasonable royalty calculation using the
Georgia-Pacific framework. Applying that analysis, he opined that the appropriate reasonable royalty would be $146
million. Hereafter the $127 million figure is used in connection with Google’s challenge to the settlement analysis,
and the $146 million figure is used in connection with Google’s challenge to the Georgia-Pacific analysis.

4

applied certain other adjustment to arrive at a reasonable royalty of $127 Million. Dkt.
No. 712 at 11:4-14:8; Dkt No. 714 at 7:1-12.
At trial, Google disputed the comparability of the Microsoft license, and presented
competing testimony from its expert that analyzed SimpleAir’s licenses with Yahoo! and
Facebook. Dkt. No. 717 at 22:17-25:5. In fact, both parties’ experts and attorneys went back
and forth during the trial with respect to which “neighborhood” of licenses Google belonged to.
See, e.g., Dkt. No. 717 at 37:17-47:19. After hearing both parties’ arguments, and carefully
deliberating, the jury awarded SimpleAir $85 million in damages—essentially coming out
somewhere between the parties’ competing “neighborhoods.”
Google now asks the Court to Grant its motion for JMOL, arguing that Mr. Mills’ reliance on
the Microsoft license was improper as a matter of law, because he used it (and the Apple license,
discussed below) to “inflate” his reasonable royalty analysis, while ignoring other licenses that
Google claims are “comparable.” Dkt No. 748 at 9-11. Google cites two cases in support of its
argument: ResQNet.com, Inc. v. Lansa, Inc., 594 F.3d 860, 872-73 (Fed. Cir. 2010), and
LaserDynamics, Inc. v. Quanta Computer, Inc., 694 F.3d 51, 80-81 (Fed. Cir. 2012). In addition
to this general attack on Mr. Mills’ reliance on the Microsoft license, Google also argues that
SimpleAir’s damages model attempts to recover for foreign infringement and/or is insufficiently
tied to specific instances of Google’s infringement in the United States. For the reasons stated
below, the Court is not persuaded by Google’s arguments.
1. Google relies on inapposite case law.
As stated above, Google’s motion relies on ResQNet and LaserDynamics. However,
neither of these cases square with the facts and circumstances at issue here. In ResQNet, the
Federal Circuit concluded that the plaintiff’s damages expert impermissibly “inflated” his
5

damages calculations by considering licenses that had no connection to the claimed invention.
594 F.3d at 870, 871 (“Notably, none of these licenses even mentioned the patents in suit or
showed any other discernible link to the claimed technology”). Likewise in LaserDynamics, the
Federal Circuit rejected the plaintiff’s damages calculation because its expert relied on patent
licensing programs that did not involve the patent in suit, while ignoring the “many licenses
expressly for the [patent in suit].” 694 F.3d. at 80.
Mr. Mills’ analysis is fundamentally different from those which the Federal Circuit rejected
in ResQNet and LaserDynamics. For instance, this is simply not a case where “none of these
licenses even mentioned the patents in suit.” ResQNet, 594 F.3d at 870, 871. To the contrary, it
is undisputed that all of the licenses considered by the Mr. Mills—including the Microsoft
license—expressly cover the ’914 patent. See Dkt. No. 717 at 17:1-13 (Google’s expert, Dr.
Ugone, summarizing the license agreements covering the ’914 patent2).
In this case, Mr. Mills analyzed the universe of potentially relevant licenses, and
distinguished the settlement agreements he relied upon (those with providers of infringing
notification services (including Microsoft)) from those agreements he determined to be irrelevant
to the hypothetical negotiation between SimpleAir and Google (those with “content providers”
(e.g., Yahoo! and Facebook)). See Dkt. No. 712 at 2:15-14:8; Dkt. No. 714 at 5:2-14. Google
disagreed, and its expert and attorneys urged the jury to place Google within a different
“neighborhood” of licenses. Dkt. No. 717 at 22:17-33:15. However, even Google’s damages
expert admitted that the relevant Apple and Microsoft services were similar in certain crucial
respects to Google’s infringing messaging services. See Dkt. No. 717 at 44:18-47:19.

2

In fact, only Dr. Ugone considered agreements that did not involve the ’914 patent. Dkt. No. 717 at 59:20-61:13.

6

Having reviewed then entire record, the Court is persuaded that Mr. Mills’ testimony was
adequate to “tie proof of damages to the claimed invention’s footprint in the market place” and
support the jury’s verdict. ResQNet.com, 594 F.3d at 869. Contrary to Google’s assertions, the
fact that the jury’s award came out closer to Plaintiff’s proposed “neighborhood” than to the
Defendant’s does not invalidate the verdict. Confronted with the parties’ contradictory expert
testimony, “the jury was free to ‘make credibility determinations and believe the witness it
considers more trustworthy.’” Kinetic Concepts, Inc. v. Smith & Nephew, Inc., 688 F.3d 1342,
1362 (Fed. Cir. 2012) (citing Streber v. Hunter, 221 F.3d 701, 726 (5th Cir. 2000)); see also
VirnetX, Inc. v. Cisco Sys., 767 F.3d 1308, 1331 (Fed. Cir. 2014) (citing i4i, 598 F.3d at 856).
Further, “[t]he jury was entitled to choose a damages award within the amounts advocated by the
opposing parties.” Powell, 663 F.3d at 1241 (internal citation omitted). The jury performed its
duty, and rendered a verdict that is supported by substantial evidence.
2. SimpleAir’s damages model does not attempt to recover for foreign
infringement.
Google further attacks Mr. Mills’ testimony by complaining about his use of worldwide
figures for Google and Microsoft’s respective use of messaging services. Google argues that
SimpleAir is attempting to exact damages for foreign infringement of the ’914 Patent. Dkt. No.
748 at 5-9 (citing Power Integrations, Inc. v. Fairchild Semiconductor Int’l, Inc., 711 F.3d 1348
(Fed. Cir. 2013)). The Court disagrees.
SimpleAir responds that Mr. Mills did not have U.S. only figures for the number of
notifications sent by Google and Microsoft’s infringing services—either because. Dkt. No. 712
at 9:11-10:7; Dkt. No. 714 at 9:13-17. Mr. Mills’ (unrebutted) position is that Google’s U.S. only
figures either do not exist or Google did not produce them. Id. Accordingly, he used the global

7

numbers in order to make an “apples-to-apples” comparison of the two companies’ respective use
of the infringing services. Dkt. No. 756 at 10. Further, Mr. Mills used this comparative
worldwide use to estimate comparative domestic use between an infringer (Google) and a licensee
(Microsoft).
Google’s attack on Mr. Mills’ testimony is based on a faulty premise: that an infringer’s use
cannot be reliably compared to a licensee’s use unless the plaintiff obtains precise figures for each
entity’s use of the claimed technology solely within the United States. Such is not the case. “A
reasonable royalty analysis ‘necessarily involves an element of approximation and uncertainty.’”
Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d 1301, 1336 (Fed. Cir. 2009) (citing Unisplay, 69
F.3d at 517.). Moreover, an expert may properly estimate the extent of infringing use in the
United States where, as here, the actual data is unavailable. See i4i Ltd. P’ship v. Microsoft Corp.,
598 F.3d 831, 855-56 (Fed. Cir. 2010).
In today’s global marketplace, the ability to obtain domestic-only data is an increasing rarity.
Although Google purported to identify the components of the infringing messaging system that are
used to process and deliver messages, in many instances the location of one or more component is
simply listed as “unknown.” See Defendant’s Exhibit (“DX”) 40. Such gaps in the data make it
impossible to establish Google’s precise domestic use. Id. Accordingly, SimpleAir’s expert,
Mr. Mills, turned to the information regarding Google and Microsoft’s global use of the infringing
messaging services, in order to estimate domestic infringement.
This is fundamentally distinguishable from the damages model that the Federal Circuit
rejected in Power Integrations. 711 F.3d. 1348. In that case, the plaintiff sought damages for
worldwide sales on the theory “it was foreseeable that [the defendants’] infringement in the United
States would cause [the plaintiff] to lose sales in foreign markets.” Id. at 1371. The Federal
8

Circuit rejected that argument, holding that the plaintiff could not recover damages for “injury
caused by infringing activity that occurred outside the territory of the United States.” Id. Here,
SimpleAir is not attempting to recover for extra-territorial infringement, but merely to use Google
and Microsoft’s global figures as a benchmark from which to estimate those companies’
comparative use in the United States.

The Federal Circuit has long recognized that such

estimation is permissible (and in some cases required). See i4i, 598 F.3d at 855-56 (damages
expert used a survey to “estimate the amount of infringing use”); Lucent, 580 F.3d at 1325 (Fed.
Cir. 2009); Apple Inc. v. Motorola, Inc., 757 F.3d 1286, 1315 (Fed. Cir. 2014) (“This court has also
recognized that estimating a ‘reasonable royalty’ is not an exact science.”). Power Integrations is
therefore inapposite, and Google’s attack on Mr. Mills’ testimony should not succeed.
3. Mr. Mills’ damages model is sufficiently tied to Google’s infringement
within the United States.
Google further complains about Mr. Mills’ reliance on global figures as unreliable. See
e.g., Dkt. No. 758 at 3. However, both parties’ experts testified that worldwide figures can be
used to estimate two companies’ comparative infringement within the United States. Dkt. No.
712 at 9:20-10:7; Dkt. No. 717 at 56:19-57:2. Specifically, Google’s expert, Dr. Ugone, admitted
the following:
Q. Well, when you calculated [the] extent of use for Facebook and did an
adjustment for Google, you did it based upon worldwide notifications, right?
A. The -- the data we had for the percent that was Facebook, yes, I will agree with
that.
Q: And you believe it’s useful and reliable to use worldwide notifications to make
an adjustment for extent of use, right?
A: Within the framework that I'm using, yes.
Dkt. No. 717 at 57:5-9.

9

Mr. Mills, used the same “useful and reliable” tools to compare Google and Microsoft’s
global use of the infringing messaging services, and from those figures, he developed an estimate
of the companies’ comparative domestic infringement. He then specifically informed the jury
that he was using such worldwide numbers, and explained why and how he was using the same to
estimate infringement within the United States. Dkt. No. 711 at 56:1-15; Dkt. No. 712 at
9:3-10:10. It is significant that Google offered no evidence showing that the global figures Mr.
Mills relied upon were unreasonable or inconsistent with the companies’ comparative domestic
infringement.
Having considered the consensus of both experts that global figures are generally “useful and
reliable,” and in the absence of any rebuttal from Google showing that Mr. Mills’ methodology
was improperly applied to the specific comparison between Google and Microsoft, the Court is
persuaded that Google’s post-verdict attack on SimpleAir’s Microsoft license theory misses the
mark. Fundamentally, Google’s arguments are nothing more than an attack on the weight of the
evidence.

As such, Google’s effort is materially flawed because the Court must draw all

reasonable inferences in favor of the nonmoving party, and may not make credibility
determinations or weigh the evidence. Reeves, 530 U.S. at 150-51 (2000).
4. Google’s use of selective and fragmented quotations from the record further
undermines its argument and weakens its credibility before the Court.
Google quotes the following colloquy from the cross examination of Mr. Mills in support of
its argument that “Mr. Mills expressly disregarded comparable licensing agreements for the ’914
Patent”:
Q: And even though the first Georgia-Pacific factor says to look at the license
agreements, you rely on only one agreement in calculating your royalty?

10

A. Well, if [by] rely upon you mean I've only been able to adjust one of those
agreements to reflect the value for Google, then that’s correct.
Dkt. No. 748 at 9 (citing Dkt. No. 714 at 5:5-11). However, Google’s quotation omits the final
sentence in Mr. Mills’ answer; the complete exchange reads:
Q: And even though the first Georgia-Pacific factor says to look at the license
agreements, you rely on only one agreement in calculating your royalty?
A: Well, if [by] rely upon you mean I've only been able to adjust one of those
agreements to reflect the value for Google, then that’s correct. But I have
considered all of those agreements in my analysis.
Dkt. No. 714 at 5:10-11 (emphasis added to indicate omitted testimony).
Google’s statement that “Mr. Mills expressly disregarded comparable licensing
agreements,” combined with the selectively edited quotation, inaccurately communicates that Mr.
Mills omitted the other license agreements from his analysis. This is clearly not the case. The
Court does not assume this to be an intentional effort to mislead; nevertheless, it is a serious error
that bears correcting. It is certainly one that should have been caught by Google’s counsel prior to
filing their motion. Errors of this particular nature, even if unintentional, unavoidably lessen the
overall credibility of the offending advocate before the Court. For future guidance to both of the
parties and their lawyers: incomplete quotations should be used with the utmost care, or better
yet, not used at all.
B. The Apple license likewise supports SimpleAir’s settlement analysis and the
jury’s verdict.
Mr. Mills also relied on SimpleAir’s agreement with Apple to support his settlement
analysis. See Plaintiff’s Exhibit (“PX”) 181 (the Apple license). Much of this testimony related
to the parties’ dispute about the appropriate “neighborhood” of licenses that the jury should have
considered in order to determine a reasonable royalty for Google’s infringement. See, e.g., Dkt.

11

No. 712 at 3:20-8:4; Dkt No. 714 at 37:17-47:19, 56:19-59:19. For the same reasons discussed
above, the Court is not persuaded that SimpleAir selected the Apple license simply in order to
“inflate” its damages calculations. To the contrary, both parties’ experts presented their opinions
as to which agreements would have been germane to the hypothetical negotiation between the
parties. Confronted with such competing testimony, the jury was free to consider the credibility
of the witnesses, weigh the competing evidence, determine who had persuaded them, and then
award damages accordingly. Powell, 663 F.3d at 1241; Kinetic Concepts, 688 F.3d at 1362;
VirnetX, 767 F.3d at 1331.
C. Mr. Mills’ Georgia-Pacific analysis supports the jury’s verdict.
Mr. Mills’ second damages analysis was based on the analytical framework set out in
Georgia-Pacific Corp. v. United Plywood Corp., 318 F. Supp. 1116 (S.D.N.Y. 1970) 318 F. Supp.
1116. That case sets out fifteen non-exclusive and largely overlapping factors that frame the
reasonable royalty inquiry. See LaserDynamics, 694 F.3d at 60, n.2. During trial, Mr. Mills
walked the jury through his application of the Georgia-Pacific framework, and concluded that a
hypothetical negotiation based on said framework would have resulted in Google paying a lump
sum royalty of $146 million.3 Dkt. No. 711 at 141:24-165:8. Dr. Ugone performed a competing
Georgia-Pacific analysis, and testified that the resulting royalty would not exceed $6 million.
Dkt. No. 717 at 2:18-3:1. The jury ultimately awarded $85 million in damages. Dkt. No. 718.
Google first attacks the jury’s damages award of $85 million as “so outrageously high . . . as
to be unsupportable as an estimation of a reasonable royalty.” Dkt. No. 748 at 5 (citing Powell v.
Home Depot U.S.A., Inc., 663 F.3d 1221, 1241 (Fed. Cir. 2011)). Google further argues that Mr.

3

As discussed above, Mr. Mills testified that a reasonable royalty would be $146 million under the Georgia-Pacific
analysis. He calculated a lower royalty ($127 million) when applying the settlement analysis. The jury’s award of
$85 million is well below either of these figures.

12

Mills’ analysis fails in four additional respects: (1) it is unrelated to Google’s actual infringement;
(2) it is not based on the smallest saleable unit; (3) it fails to account for non-infringing
alternatives; and, (4) it fails to show how the Georgia-Pacific factors impact the hypothetical
negotiation. Each of Google’s arguments lacks merit.
1. The jury’s award lies within the range of damages encompassed by the
record as a whole.
At trial, each party presented its reasonable royalty calculation to the jury. Mr. Mills
testified that the appropriate royalty would be $146 million; Dr. Ugone testified that the
appropriate royalty would not exceed $6 million. Dkt. No. 711 at 141:24-165:8 (Mills); Dkt. No.
717 at 2:18-33:14 (Ugone). Ultimately, the jury awarded SimpleAir a lump-sum reasonable
royalty that was well within the competing amounts advocated by the opposing parties—as it was
entitled to do. See Powell, 663 F.3d at 1241 (internal citations omitted). Contrary to Google’s
arguments, the award is not “so outrageously high . . . as to be unsupportable as an estimation of a
reasonable royalty.”

Rite-Hite, 56 F.3d at 1554.

Rather, it is clearly “within the range

encompassed by the record as a whole.” Unisplay, S.A. v. Am. Elec. Sign Co., 69 F.3d 512, 519
(Fed. Cir. 1995).
2. SimpleAir’s royalty base rests on actual use of the patented method.
Google’s further attacks Mr. Mills’ Georgia-Pacific analysis, alleging that it “calculates
damages based on the basis that each [Android] device is ‘capable’ of infringing the ’914 patent.”
Dkt. No. 748 at 13 (emphasis in original). According to Google, Mr. Mills’ calculation therefore
“fails to provide a ‘legally sufficient basis’ for the [jury’s] damages award.” Dkt. No. 748 at 13
(citing i4i, 598 F.3d at 841; Powell, 663 F.3d at 1241; and Cardiac Pacemakers, 576 F.3d a5
1359-59).

13

This argument is wrong on the facts, and it misunderstands the law. With respect to the
former, Google relies upon what the entire record shows to be brief, out-of-context statements
from Mr. Mills’ testimony to support its arguments. Specifically, Google cites Mr. Mills’
testimony that: “the base is U.S. sales of Android smartphones that are capable of using the
service.” Dkt. No. 711 at 161:4-5. However, Google ignores the fact that Mr. Mills previously
limited his damages calculations to add no value for users who do not use the infringing system.
See Dkt. No. 711 at 85:18-106:11; 134:15-135:25; 152:3-153:8. Mr. Mills explained his process
in testimony that immediately follows the very excerpts Google upon which relies.
Q. And why did you consider all of the phones, even though some people don't
really care about notifications or use the service?
A. Because if you recall a few moments ago, I applied that to get an average
revenue per phone and an average profit for phone. So this analysis already has
built into it the understanding that some people either don’t value notifications or
don't value them enough to be willing to pay that much for them.
Q. So when you decided to use the 193 million phones, you considered the fact that
notifications aren’t important to some people at all?
A. Yes.
Dkt. No. 711 at 162:9-25.
Further, Google misunderstands the law by arguing that the damages analysis must be
directly tied to the specific instances of actual infringing use. It is true that SimpleAir “can only
receive infringement damages on those devices that actually performed the patented method
during the relevant infringement period.” Cardiac Pacemakers, 576 F.3d at 1359. However, the
Federal Circuit has also unequivocally stated that the quantum of that infringement may be
established using: “[u]sage (or similar) data [that] may provide information that the parties would

14

frequently have estimated during the negotiation.” Lucent, 580 F.3d at 1334 (emphasis added).
The Federal Circuit further clarified that:
Such data might, depending on the case, come from sales projections based on past
sales, consumer surveys, focus group testing, and other sources. Even though
parties to a license negotiation will usually not have precise data about future
usage, they often have rough estimates as to the expected frequency of use.
and:
On the other hand, we have never laid down any rigid requirement that damages
in all circumstances be limited to specific instances of infringement proven with
direct evidence. Such a strict requirement could create a hypothetical negotiation
far-removed from what parties regularly do during real-world licensing
negotiations. As shown by the evidence in this case, companies in the high-tech
computer industry often strike licensing deals in which the amount paid for a
particular technology is not necessarily limited to the number of times a patented
feature is used by a consumer. A company licensing a patented method often has
strong reasons not to tie the royalty amount strictly to usage. The administrative
cost of monitoring usage can be prohibitively expensive.
Lucent, 580 F.3d at 1334 (emphasis added).
In other words, while damages may only be awarded for actual infringement of the
patented method, the hypothetical negotiation and the resulting royalty may be informed by
estimates of the quantum of that actual infringement. Id. As the Federal Circuit has observed,
parties in the real world—and especially in high-tech industries—frequently assign a royalty rate
to every unit of a device sold, despite the fact that consumers may not use the patented feature in
every instance. Id. In this case, Mr. Mills reduced his royalty calculations to account for the
amount of actual infringement, see Dkt. No. at 85:18-106:11; 134:15-135:25; 152:3-153:8, and
then assigned that rate to the universe of potentially infringing products. Id. at 161:4-162:25.
Not only is this procedure permissible under Lucent, it mirrors the real-world negotiations
recognized by the Federal Circuit. Id.

15

3.

Google’s entire market value rule arguments are inapposite.

The entire market value rule applies when a plaintiff seeks to apply a certain royalty rate to
the total revenue generated by an infringing product, despite the fact that the patent-in-suit covers
only certain elements or components of that product. See Lucent Techs., Inc. v. Gateway, Inc.,
580 F.3d 1301, 1336 (Fed. Cir. 2009) (the entire market value rule must be satisfied when
“applying a royalty percentage to a total sales figure of the infringing software products”). In
such cases, the plaintiff can seek damages based on total revenue only if “it can be shown that the
patented feature drives the demand for an entire multi-component product.” LaserDynamics, 694
F.3d at 67. Otherwise, the plaintiff may seek damages based only on the revenue of the smallest
saleable patent-practicing unit.
However, the entire market value rule argument applies only where the expert seeks to apply
a royalty percentage (e.g., 5%) to the revenues generated by an entire product (e.g., the Android
smartphones or the “hypothetical app” that Google’s counsel creates as a framework for describing
Mr. Mills’ theory). This is not what SimpleAir’s experts (Mr. Mills and Dr. Srinivasan) did. To
the contrary, SimpleAir’s experts conducted a detailed analysis of the incremental value Google
generates through the use of the method claimed in the ’914 patent to enable notification for all
apps on Android devices. Dr. Srinivasan relied on the price of smartphones (the product that is
charged for) as one of the factors he used to determine the incremental value of the said infringing
notification service (a product that is not charged for). Mr. Mills then used the incremental value
of the claimed technology—or its “footprint in the marketplace”—as part of his Georgia-Pacific
analysis; not only is such an analysis permissible, it is the antithesis of the entire market value rule.

16

Uniloc USA, Inc. v. Microsoft Corp., 632 F.3d 1292, 1317 (Fed. Cir. 2011) (citing ResQNet, 594
F.3d at 869).4
4. Mr. Mills’ Georgia-Pacific analysis is tied to the hypothetical negotiation
between SimpleAir and Google.
In its original motion, Google further contends that that Mr. Mills’ analysis “fails to tie the
Georgia-Pacific factors to a hypothetical negotiation that would have taken place between the
parties.” Dkt. No. 748 at 18. Google’s argument is conclusory 5 and it is not compelling. 6
During the trial Mr. Mills specifically and methodically took the jury through his application of the
Georgia-Pacific factors and their application to his calculations.

See Dkt. No. 711 at

141:24-165:8.
D. Google’s proposed non-infringing alternative does not cap damages.
At trial, Google presented evidence that it could avoid infringing the ’914 patent by
redirecting traffic over the infringing messaging services to at least one server located outside of
the United States. See Dkt. 711 at 72:2-76:5; Dkt No. 713 at 58:4-59:12. Google’s expert
further testified that the cost of implementing this non-infringing alternative would have been
approximately $4.8 million. Dkt. No. 717 at 27:12-20. Based on this testimony, Google argues
that Mr. Mills’ damages calculations are “divorced of all relation to a potential non-infringing
4

In a footnote in its reply, Google also argues that SimpleAir failed to introduce sufficient evidence that Google
generates any revenue from products for which it does not charge (e.g., the Android operating system), and that
SimpleAir failed to establish any nexus between the infringing services and the revenue Google receives. Dkt. No.
758 at n.7. The first argument is clearly wrong, as uncontroverted evidence presented by Mr. Mills and Google’s own
witnesses establishes that Google generates significant revenue from many products and services, despite not charging
directly for such services. See Dkt. No. 711 at 146:3-149:10; Dkt. No. 714 at 566:21-70:1; Plaintiff’s Exhibit 49.
SimpleAir likewise introduced substantial evidence showing that the nexus between the infringing services and such
revenue. See, e.g., Dkt. No. 711 at 149:20-150:12.
5
The only binding authority cited by Google is the portion of the Federal Circuit’s opinion in Uniloc USA, Inc. v.
Microsoft Corp., 632 F.3d 1292, 1312 (Fed. Cir. 2011), rejecting the 25% “rule-of-thumb.” Contrary to the argument
from Google’s lawyers, there is no indication that any such “rule-of-thumb” was applied as any part of Mr. Mills’
analysis.
6
It is also a procedurally improper attempt to argue a Daubert challenge under Rule 50. See Versata, 717 F.3d at
1264.

17

alternative,” and therefore fail to provide a legally sufficient evidentiary basis for the jury’s award.
Dkt. No. 748 at 17 (citing Riles v. Shell Exploration & Prod. Co., 298 F.3d 1302, 1312 (Fed. Cir.
2002).
In other words, Google asserts that Mr. Mills’ analysis is not properly tied to the facts of this
case. Such an argument “should be resolved under the framework of the Federal Rules of
Evidence and through a challenge under Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579.”
Versata Software, Inc. v. SAP Am., Inc., 717 F.3d 1255, 1284 (Fed. Cir. 2013). Google failed to
raise this issue in its Daubert motions, and has therefore waived it. Id.
However, even if Google had not waived, its argument falls short on the merits. To the
extent Google’s argument that Mr. Mills’ calculation and/or the jury’s damages award is
“outrageously high” is an attempt to cap damages at the cost of implementing its non-infringing
alternative; that argument fails as a matter of law. Mars, Inc. v. Coin Accepters, Inc., 527 F.3d
1359, 1373 (Fed. Cir. 2008) (“[Defendant] is wrong as a matter of law to claim that reasonable
royalty damages are capped at the cost of implementing the cheapest available, acceptable,
noninfringing alternative . . . To the contrary, an infringer may be liable for damages, including
reasonable royalty damages, that exceed the amount that the infringer could have paid to avoid
infringement.”).
SimpleAir presented substantial evidence that re-routing traffic to foreign servers would not
have been the best—or even an acceptable—alternative to infringement. Specifically, SimpleAir
presented substantial evidence that Google’s best non-infringing alternative would not have been
to move its servers or re-route traffic, but to provide notifications through a persistent connection
between the notification app and its corresponding application server. Dkt. 711 at 57:15-64:3

18

(Dr. Knox). Dr. Srinivasan and Mr. Mills then expressly considered this alternative in their
analyses. Id. at 94:7-20, 104:15-105:8 (Dr. Srinivasan); 151:14-159:2 (Mr. Mills).
SimpleAir also presented substantial evidence that Google’s proposed alternative would
merely substitute its exposure under the ’914 Patent for exposure under another SimpleAir patent,
the ’279 Patent. See Dkt. No. 711 at 65:9-66:23. Google argues that it is improper for SimpleAir
to rely on the ’279 patent because it issued well after the date of the hypothetical negation, and that
SimpleAir failed to introduce evidence that Google infringes the ’279 Patent (or would infringe
under its proposed alternative). The first argument fails as a matter of law. See Lucent, 580 F.3d
at 1333 (quoting Sinclair Refining Co. v. Jenkins Petroleum Process Co., 289 U.S. 689, 698
(1933)).

The second argument is inapposite.

SimpleAir introduced expert testimony

demonstrating that the proposed alternative would expose Google to a significant risk of liability
under the ’279 Patent. See Dkt. No. 711 at 65:9-66:23. Drawing all reasonable inferences in
favor of the non-moving party, that is all that is required to show that Google’s proposed
alternative was unacceptable, and therefor to support the jury’s verdict. See Spectralytics, Inc. v.
Cordis Corp., 649 F.3d 1336, 1346 (Fed. Cir. 2011) (“We agree with the district court that a
reasonable jury could have found that the alleged alternatives were either not acceptable or not
available, and that such a finding was supported by substantial evidence.”). This Court need not,
and does not, decide whether such evidence would be sufficient to prove infringement of the ’279
Patent.
Determining the weight to be given to proposed noninfringing alternatives is “a task for the
jury, and a reasonable jury could have chosen to give very little weight to this evidence.”
Spectralytics, 649 F.3d at 1346. After considering this evidence, the jury was entitled to choose a
damages award within the amounts advocated by the opposing parties. Powell, 663 F.3d at 1241.
19

The jury did just that, awarding SimpleAir $85 million in damages—a figure that is between the
$4.8-$6 million advocated by Google, and the $127-$146 million advocated by SimpleAir.
Having reviewed the entire record, the Court is persuaded that substantial evidence supports that
award.
V.

Google’s renewed Daubert challenges are not properly before the Court.
As the Court noted above, many of the arguments raised in Google’s motion for JMOL

merely re-urge Google’s Daubert challenges. As the Federal Circuit recently explained, this is
improper:
Under the guise of sufficiency of the evidence, [Defendant] questions the
admissibility of [Plaintiff’s] expert testimony and whether his damages model is
properly tied to the facts of the case. Such questions should be resolved under the
framework of the Federal Rules of Evidence and through a challenge under
Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579, 113 S. Ct. 2786, 125 L. Ed.
2d 469 (1993).
...
Whether evidence is inadmissible is a question clearly within the scope of the rules
of evidence and Daubert. However, [Defendant] has not appealed a Daubert ruling.
Instead, it argues that the jury could have not had sufficient evidence to award lost
profits because the expert's testimony was fatally flawed and should not have been
admitted. This is the improper context for deciding questions that, by [Defendant]’s
own admissions, boil down to the admissibility of evidence.
Versata, 717 F.3d at1264 (internal citations omitted).
Like the defendant in Versata, Google argues that SimpleAir’s expert testimony was fatally
flawed and should not have been admitted, see, e.g., Dkt. No. 748 at 18-34. However, Google
also expressly admits that these questions “boil down to the admissibility of evidence.” Id.; Dkt.
No. 748 at 18 (“Google renews its objection that the testimony of Plaintiff’s damages expert, Dr.
Seenu Srinivasan, should have been excluded or stricken under Federal Rule of Evidence 702 and
Daubert.”); Dkt. No. 748 at 22 (“Google renews its objection that the testimony of Plaintiff’s
20

.
damages expert, Mr. Robert Mills, should have been excluded or stricken under Federal Rule of
Evidence 702 and Daubert.”). These arguments are improper in a Rule 50 motion for JMOL, and
the Court declines to consider them.7
VI.

Conclusion.
For all the reasons stated herein, Google’s Renewed Motion for Judgment as a Matter of Law

(Dkt. No. 748) is DENIED in its entirety.

SIGNED this 19th day of December, 2011.
So ORDERED and SIGNED this 10th day of December, 2014.

____________________________________
RODNEY GILSTRAP
UNITED STATES DISTRICT JUDGE

7

Contrary to Google’s argument, nothing in Brooke Group v. Brown & Williamson Tobacco Corp., 509 U.S. 209, 242
(1993) requires the Court to re-hear Daubert challenges at the JMOL stage. Under Rule 50, Google may challenge
the sufficiency of the evidence, including expert testimony, supporting the jury’s verdict; it has done so in several
portions of its motion. However, Rule 50 does not allow Google to re-argue the admission of that evidence, as it is
expressly seeking to do in Sections II and III of its motion.

21