Eolas Technologies Incorporated v. Adobe Systems Incorporated et al

Filing 1243

NOTICE by Eolas Technologies Incorporated, The Regents of the University of California PLAINTIFFS' STATEMENT ON ITS DAMAGES MODEL (McKool, Mike) (Entered: 01/16/2012)

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IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF TEXAS TYLER DIVISION Eolas Technologies Incorporated, Plaintiff, vs. Adobe Systems Inc., Amazon.com, Inc., Apple Inc., Argosy Publishing, Inc., Blockbuster Inc., CDW Corp., Citigroup Inc., eBay Inc., Frito-Lay, Inc., The Go Daddy Group, Inc., Google Inc., J.C. Penney Company, Inc., JPMorgan Chase & Co., New Frontier Media, Inc., Office Depot, Inc., Perot Systems Corp., Playboy Enterprises International, Inc., Rent-A-Center, Inc., Staples, Inc., Sun Microsystems Inc., Texas Instruments Inc., Yahoo! Inc., and YouTube, LLC Defendants. § § § Civil Action No. 6:09-CV-00446-LED § § § § § § § § § § § § § § § § § PLAINTIFFS’ STATEMENT ON ITS DAMAGES MODEL McKool 406946v1 Pursuant to the Court's Order dated January 10, 2012, Plaintiffs The Regents of the University of California and Eolas Technologies Inc. (“Plaintiffs”) submit this pleading showing its approximate damages model. For the most part, Defendants are accused of infringing Plaintiffs patents-in-suit by including videos, product viewers, product sliders, interactive advertising, search suggest, and interactive applications on their web pages. Plaintiffs damages model is based on each Defendants’ use of the infringing technology on their own web pages (although some Defendants such as Amazon and J.C. Penney have indicated they intend to attribute the value of their use to Adobe and/or Google, see e.g., Dkt. Nos. 1133). Plaintiffs employ a similar damages model for all Defendants. Plaintiffs have used the well-recognized Nash Bargaining Solution (NBS) developed by the Nobel Prize winning Princeton economist, Dr. John Nash, to calculate damages. Plaintiffs employ the NBS to measure the incremental benefit experienced by Defendants, measured as Defendants’ incremental profits directly attributable to use of the patents-in-suit. This is the approach contemplated by Georgia-Pacific Factor 13, i.e. the portion of the realizable profit that should be credited to the inventions as distinguished from non-patented elements. For each Defendant, Plaintiffs identify the revenue generated by the accused products. Based on the Defendants’ operating profit margin, Plaintiffs calculate the profit generated by the accused products. Next, Plaintiffs apportion the profit attributable to the inventions disclosed in the patents-in-suit to determine the incremental benefit from the patents-in-suit. In other words, Plaintiffs identify the profit that would not exist but for Plaintiffs’ invention. The apportionment factor or uplift due to the invention varies depending on the accused website/feature and is based on discovery provided by Defendants. Using the NBS, Plaintiffs determine the reasonable 1 McKool 406946v1 royalty damages by sharing the incremental benefits of the patents-in-suit between Plaintiffs and each Defendant.1 Based on an analysis of the impact of the patents-in-suit on the revenues and profits of each Defendant, past damages based on currently available financial data are as follows: Google /YouTube -- $176.4 million; Amazon -- $135.2 million; Yahoo -- $41.8 million; J.C. Penney -$27.7 million; Staples -- $20.2 million; CDW -- $14.7 million; Adobe -- $12.1 million; Go Daddy -- $3.6 million; Citigroup -- $6.5 million. Plaintiffs anticipate updating these figures to include damages through time of trial and, accordingly, these figures will increase by approximately fifty percent. 1 Plaintiffs’ damages model also includes a fixed-price component for each Defendant. 2 McKool 406946v1 Dated: January 16, 2012. MCKOOL SMITH, P.C. /s/ Mike McKool Mike McKool Lead Attorney Texas State Bar No. 13732100 mmckool@mckoolsmith.com Douglas Cawley Texas State Bar No. 04035500 dcawley@mckoolsmith.com Holly Engelmann Texas State Bar No. 24040865 hengelmann@mckoolsmith.com MCKOOL SMITH, P.C. 300 Crescent Court, Suite 1500 Dallas, Texas 75201 Telephone: (214) 978-4000 Telecopier: (214) 978-4044 Kevin L. Burgess Texas State Bar No. 24006927 kburgess@mckoolsmith.com Josh W. Budwin Texas State Bar No. 24050347 jbudwin@mckoolsmith.com Gretchen K. Curran Texas State Bar No. 24055979 gcurran@mckoolsmith.com Matthew B. Rappaport Texas State Bar No. 24070472 mrappaport@mckoolsmith.com J.R. Johnson Texas State Bar No. 24070000 jjohnson@mckoolsmith.com MCKOOL SMITH, P.C. 300 West Sixth Street, Suite 1700 Austin, Texas 78701 Telephone: (512) 692-8700 Telecopier: (512) 692-8744 McKool 406946v1 Robert M. Parker Texas State Bar No. 15498000 rmparker@pbatyler.com Robert Christopher Bunt Texas Bar No. 00787165 rcbunt@pbatyler.com Andrew T. Gorham Texas State Bar No. 24012715 tgorham@pbatyler.com PARKER, BUNT & AINSWORTH, P.C. 100 E. Ferguson, Suite 1114 Tyler, Texas 75702 (903) 531-3535 (903) 533-9687- Facsimile ATTORNEYS FOR PLAINTIFF EOLAS TECHNOLOGIES INC. AND THE REGENTS OF THE UNIVERSITY OF CALIFORNIA McKool 406946v1 CERTIFICATE OF SERVICE The undersigned certifies that the foregoing document was filed electronically in compliance with Local Rule CV-5(a). As such, this document was served on all counsel who have consented to electronic services on January 16, 2012. Local Rule CV-5(a)(3)(A). /s/ John B. Campbell John B. Campbell McKool 406946v1

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