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)

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.

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PLAINTIFFS’ STATEMENT ON ITS DAMAGES MODEL

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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

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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.

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Plaintiffs’ damages model also includes a fixed-price component for each Defendant.
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Dated: January 16, 2012.

MCKOOL SMITH, P.C.
/s/ Mike McKool
Mike McKool
Lead Attorney
Texas State Bar No. 13732100
[e-mail]
Douglas Cawley
Texas State Bar No. 04035500
[e-mail]
Holly Engelmann
Texas State Bar No. 24040865
[e-mail]
MCKOOL SMITH, P.C.
300 Crescent Court, Suite 1500
Dallas, Texas 75201
Telephone: [phone]
Telecopier: [phone]
Kevin L. Burgess
Texas State Bar No. 24006927
[e-mail]
Josh W. Budwin
Texas State Bar No. 24050347
[e-mail]
Gretchen K. Curran
Texas State Bar No. 24055979
[e-mail]
Matthew B. Rappaport
Texas State Bar No. 24070472
[e-mail]
J.R. Johnson
Texas State Bar No. 24070000
[e-mail]
MCKOOL SMITH, P.C.
300 West Sixth Street, Suite 1700
Austin, Texas 78701
Telephone: [phone]
Telecopier: [phone]

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Robert M. Parker
Texas State Bar No. 15498000
[e-mail]
Robert Christopher Bunt
Texas Bar No. 00787165
[e-mail]
Andrew T. Gorham
Texas State Bar No. 24012715
[e-mail]
PARKER, BUNT & AINSWORTH, P.C.
100 E. Ferguson, Suite 1114
Tyler, Texas 75702
[phone]
[phone]- Facsimile
ATTORNEYS FOR PLAINTIFF
EOLAS TECHNOLOGIES INC.
AND THE REGENTS OF THE
UNIVERSITY OF CALIFORNIA

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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

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