Mara 124 v Apple

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IN THE UNITED STATES DISTRICT COURTFOR THE NORTHERN DISTRICT OF NEW YORK

ALBANY DIVISION

RENSSELAER POLYTECHNIC

INSTITUTE ANDDYNAMIC ADVANCES, LLC,

Plaintiffs,v.

APPLE INC.,

Defendant.

Civil Action No.1:13-cv-00633-DNH-DEP

JURY TRIAL DEMANDED

PLAINTIFFS’ MOTION TO COMPEL DISCOVERY FROM DEFENDANT APPLE INC.

Case 1:13-cv-00633-DEP Document 124 Filed 08/22/14 Page 1 of 31

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TABLE OF CONTENTS

INTRODUCTION ............................................................................................................. 1

BACKGROUND .............................................................................................................. 2

I. Apple’s Siri Service Infringes All of RPI’s Presumptively ValidClaims ........................................................................................................ 2

II. Several Alternative Reasonable Royalty Models are PotentiallyAvailable to Determine Apple’s Infringement Damages ............................. 3

III. RPI Discovery Requests Seek Information on Seven TopicsRelevant to Reasonable Royalty Models that Apple Has Refused toProduce ..................................................................................................... 4

ARGUMENT .................................................................................................................... 7

I.

Discovery of Apple Information that Informs a Reasonable RoyaltyAnalysis Is Necessary and Routine ........................................................... 7

II. The Court Should Order Apple to Produce Responsive Informationfor the Seven Topics at Issue .................................................................... 9

A. Apple’s Prior Litigation Statements, Testimony, and JudicialAdmissions Related to Siri’s Value .................................................. 9

B. Apple’s Valuation of Siri’s Impact on Revenue, Profit,Smartphone / Mobile Operating System Market Share, andSiri Marketing Strategy .................................................................. 11

C.

Apple’s Agreements with Nuance and Other Third-PartiesRelated to Siri’s NL or Speech Recognition Technology ............... 16

D. Apple Agreements with Siri Partner Websites ............................... 18

E. Apple’s Agreements with Automobile ManufacturesAdvertising Siri .............................................................................. 19

F. Apple’s Internal Licenses Related to Siri ....................................... 21

G. Apple’s Deferred Revenue Accounting Related to Siri .................. 24

CONCLUSION .............................................................................................................. 25


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TABLE OF AUTHORITIES

Cases

Adrian Shipholding, Inc. v. Lawndale Group S.A., 2012 U.S. Dist. LEXIS 4234, at *26–

27 (S.D.N.Y. Jan. 13, 2012) ....................................................................................... 15 AGA Med. Corp. v. W.L. Gore & Assocs., 2011 U.S. Dist. LEXIS 157787, at *22–24 (D.

Minn. Oct. 18, 2011) .................................................................................................... 8

Cornell Research Found. v. Hewlett Packard Co., 2005 U.S. Dist. LEXIS 47720(N.D.N.Y, Oct. 11, 2005).............................................................................................. 4

Cornell Research Found. v. Hewlett Packard Co., 223 F.R.D. 55, 62–63 (N.D.N.Y 2003) .................................................................................................................................... 4

Fed. R. Civ. P. 26(b)(1 .................................................................................................... 7

Georgia-Pacific Corp. v. U.S. Plywood Corp., 318 F. Supp. 1116, 1120 (S.D.N.Y. 1970).

.................................................................................................................................... 8Georgia-Pacific Corp., 318 F. Supp. 1116 at 1139 ........................................................ 23

Golden Trade v. Lee Apparel Co., 143 F.R.D. 514, 525 (S.D.N.Y. 1992) ..................... 24

Grigoleit at *38–39 .......................................................................................................... 9

Grigoleit Co. v. Whirlpool Corp., 2014 U.S. Dist. LEXIS 686, at *38–39 (C.D. Ill. Jan. 3,2014) ........................................................................................................................... 8

High Point Sarl v. Sprint Nextel Corp., 2011 U.S. Dist. LEXIS 83126, at *15–16 (D. Kan.July 29, 2011) ............................................................................................................ 23

Hubbell v. O.W. Hubbell & Sons, Inc., 2008 U.S. Dist. LEXIS 26030, at *1–2 (N.D.N.Y

Mar. 28, 2008). ............................................................................................................ 8

Johns-Manville Corp. v. Guardian Indus. Corp., 718 F. Supp. 1310, 1315 ( E.D. Mich.1989) ......................................................................................................................... 23

Johnson & Johnson Vision Care, Inc. v. Ciba Vision Corp. , 712 F. Supp. 2d 1285, 1289(M.D. Fla. 2010). ........................................................................................................ 23

King v. Pratt & Whitney, 161 F.R.D. 475, 476 (S.D. Fl. 1995) ....................................... 15

Lucent Techs., Inc. v. Gateway, Inc., 580 F.3d 1301, 1324 (Fed. Cir. 2009) .................. 3

P&G Co. v. Paragon Trade Brands, Inc., 989 F. Supp. 547, 613 (D. Del. 1997) ............. 9

Positive Techs., Inc. v. Sony Elecs., Inc., 2013 U.S. Dist. LEXIS 26289, at *12–15 (N.D.Cal. Feb. 26, 2013) ...................................................................................................... 8

Rahman v. Smith & Wollensky Rest. Group, Inc., 2009 U.S. Dist. LEXIS 30275, at *5(S.D.N.Y. Mar. 18, 2009) ........................................................................................... 15

Realtime Data, LLC D/B/A/ Ixo, v. Morgan Stanley, 1:11-cv-06696-KBF Dkt. No. 459, 2– 3 (S.D.N.Y. May 1, 2012) ............................................................................................. 8

Starlight Int’l Inc. v. Herlihy, 186 F.R.D. 626, 638-640 (D. Kan. 1999) .......................... 15


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Tailored Lighting, Inc. v. Osram Sylvania Prods., Inc., 255 F.R.D. 340, 2009 WL367584, at *7 (W.D.N.Y. 2009) .................................................................................. 15

United States v. Taylor , 166 F.R.D. 356, 360–63 (M.D.N.C. 1996) ............................... 15

W.L. Gore & Assocs. v. AGA Med. Corp., 2012 U.S. Dist. LEXIS 4942, at *4–5 (D. Del.

Jan. 17, 2012) ............................................................................................................ 23


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INTRODUCTION

Apple has spent nearly $ acquiring and developing the Siri personal

assistant service that infringes RPI’s asserted patent. But in response to RPI’s

discovery requests directed to the value of Siri, Apple has either refused to produce

information in its possession about the value of Siri, or claims such information does not

exist. RPI knows this pertinent information is in Apple’s possession, both because

and because Apple

relied on such information in its lawsuit against Samsung filed in February 2012.

In that lawsuit, Apple accused Samsung of infringing several Apple patents,

including two patents that cover Siri. Apple sought and obtained a preliminary injunction

and a $120 million jury verdict against Samsung based primarily on Siri’s importance to

Apple in its global competition against Samsung’s Android-operated smartphones.

While the Federal Circuit later reversed the preliminary injunction, it ratified the lower

court’s findings—based on Apple evidence—that Siri is a significant source of consumer

demand for Apple’s mobile devices.

The discovery RPI seeks is uncontroversial. RPI requested from Apple the

information it used to obtain a preliminary injunction and nine-figure damages award

against Samsung. Both awards were based largely on the evidence Apple submitted

about Siri’s value. Despite RPI’s repeated and specific requests, Apple has refused to

produce that information, and other information like it. Such information is highly

probative of the reasonable royalty Apple would have paid to RPI in a hypothetical

negotiation that would have occurred just months before Apple sued Samsung for

infringing Apple patents covering Siri. Apple’s discovery misconduct is improper and the

Court should compel Apple to produce the discovery RPI seeks.


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this method, infringement damages are calculated by subtracting theinfringer’s usual or acceptable net profit from its internal projections of itsexpected net profit derived from its infringement. Id.

Where (as here) a patent does not have an established royalty based on prior

license agreements, each of the aforementioned reasonable royalty damages models

depends primarily on documents and information the patentee seeks and receives from

the accused infringer during discovery. See, e.g., Cornell Research Found. v. Hewlett

Packard Co., 223 F.R.D. 55, 62–63 (N.D.N.Y 2003) (Peebles, M.J.) (reasonable royalty

analysis depends on information uniquely in the possession of defendant).1

III. RPI Discovery Requests Seek Information on Seven Topics Relevant toReasonable Royalty Models that Apple Has Refused to Produce

RPI served, and Apple objected and responded to, five sets of requests for

production containing 134 document requests. Exs. 1–7 (Apple Resps. to RPI’s

Requests for Production, Sets 1–5, and amended responses to Sets 2 and 3).2 RPI also

served, and Apple objected and responded to, four sets of interrogatories containing 23

interrogatories. Exs. 8–11 (Apple Resps. to RPI’s Interrogatories, Sets 1–4). Finally, RPI

served Apple with three 30(b)(6) Deposition Notices containing 69 total topics. Exs. 12–

14 (RPI’s 30(b)(6) Notices to Apple, 1–3). With respect to every noticed topic Apple

objected and either stated it would present a witness to testify generally about a

substitute topic Apple unilaterally defined, refused to present a witness altogether, or

1 As the Court is no doubt aware, some portions of its Order were subsequentlymodified. See Cornell Research Found. v. Hewlett Packard Co., 2005 U.S. Dist. LEXIS47720 (N.D.N.Y, Oct. 11, 2005).

2 Citations to “Ex.” or “Exs.” refer to the exhibits described and attached to theconcurrently-filed Declaration of Alexander E. Gasser (“Gasser Decl.”).


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has not yet responded. See Exs. 15–16 (Apple Resps. to Plaintiffs’ 30(b)(6) Notices, 1–

2); Gasser Decl. ¶¶ 16–19.3

RPI’s discovery requests seek specific information on seven topics related to

potential reasonable royalty models and damages theories:

1) Apple documents, statements, and test imony about Siri ’s value inother litigation. Documents, pleadings, testimony, exhibits,demonstratives, declarations, etc. from other litigation that contains Applerepresentations about Siri’s technology and value to Apple, including

Apple v. Samsung, Case No. 5:12-cv-00630 [RFP 63]; and Appleinterrogatory responses concerning Apple’s representations in otherlitigation about Siri’s technology and its value to Apple [Apple Resp. toInterrogatory 13].

2) Apple’s assessment of Siri ’s value. Apple documents concerningApple’s reason for acquiring Siri, Inc., and Siri’s impact on Apple iOS unitsales, revenues, profits, customer loyalty, first-time smartphone buyers,and smartphone / mobile operating system market share [RFPs 83, 106– 109, 112]; Apple interrogatory responses describing Siri’s value to Apple[Apple Resp. to Interrogatories 8–18; 20–21]; and Apple witnessesprepared to testify about these issues [Noticed Topics 1–6; 8, 11–12; 15– 17; 23, 25–26; 63, 65–66].

3) Nuance and speech recognit ion agreements . Apple documents

(including any agreements and licenses) concerning Apple payments forand Siri use of NLP technology, speech recognition technology, andNuance NL or speech recognition technology used in Siri [RFPs 102–109;124–217]; Apple interrogatory responses regarding Apple’s payments forand Siri’s use of speech recognition technology, and Nuance NL orspeech technology used in Siri [Apple Resp. to Interrogatory 19]; and anApple witness prepared to testify about these issues [Noticed Topics 20– 22; 37, 52–53; 56–58; 61, 64–66].

4) Siri Partner agreements. Apple and Siri, Inc. documents, licenses, andagreements related to Apple’s third-party Siri partners with which Siriinterfaces to respond to user queries, such as OpenTable, Wolfram|Alpha,Fandango, Rotten Tomatoes, and Yelp. [RFPs 91, 102–109]; Appleinterrogatory responses regarding Apple agreements with its third-party

3 To date, Apple has presented only three 30(b)(6) witnesses for deposition on just 15 ofRPI’s noticed topics. And of the three depositions RPI has taken, two Apple witnesseswere only prepared to cover a small fraction of their designated topics—and the otherwas not prepared to testify at all (see infra pp. 11–15).


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Siri partners [Apple Responses to Interrogatory 19]; and an Apple witnessprepared to testify about these issues [Noticed Topics 21–22; 37].

5) Automobile manufacturer agreements . Apple documents, licenses, andagreements between Apple and automobile manufacturers deploying Siri

for use in the car, including products known as iOS in the Car and SiriEyes Free [RFPs 91, 94–96]; Apple interrogatory responses regardingApple agreements with automobile manufacturers deploying Siri [AppleResp. to Interrogatory 19]; and an Apple witness prepared to testify aboutthese issues [Noticed Topic 67].

6) Apple internal licenses covering Siri technology. Apple documentsconcerning Apple internal licenses that cover or relate to Siri or Siritechnology [RFPs 91–109]; Apple interrogatory responses describing andexplaining such internal licenses [Apple Resp. to Interrogatories 19, 21];and an Apple witness prepared to testify about these issues [Noticed

Topics 13–14; 20, 23, 61, 63].

7) Apple deferred revenue and estimated sell ing price (ESP) related toSiri. Apple documents concerning Apple’s deferred revenue and ESPamounts and methodology concerning Siri [RFPs 83, 97]; Appleinterrogatory responses describing and explaining deferred revenue andESP concerning Siri [Apple Resp. to Interrogatories 14–15; 18, 20–21];and an Apple witness prepared to testify about these issues [NoticedTopics 16–17; 24, 63].

Apple has objected to producing documents responsive to any of the RPI

requests for production concerning the above seven topics. Apple has also largely

defaulted in providing meaningful responses to RPI’s interrogatories concerning the

same seven topics. Id. ¶¶ 11–12, 28, 36, 41, 47. Likewise, Apple has either refused to

produce a corporate witness prepared to testify on the seven topics described above,

presented an unprepared witness, or presented witnesses on topics that Apple

redefined into vague and meaningless generalities. Id. ¶¶ 13–16, 19, 25.

public reports have widely publicized) the existence

of Apple information responsive to the seven information categories—and yet Apple still

refuses to produce such information. Id. ¶¶ 40–43, 45. Apple’s discovery misconduct is


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contrary to the broad scope of discovery authorized by Fed. R. Civ. P. 26.4 Moreover,

Apple’s refusal to produce properly noticed and requested documents, interrogatory

responses, and prepared witnesses essential to analyzing the hypothetical negotiation

over a reasonable royalty prejudices RPI. Because RPI is required to present a

damages model rooted in the facts of the case, Apple has made a determined effort to

prevent RPI’s access to those critical facts. Id.

ARGUMENT

I. Discovery of Apple Information that Informs a Reasonable Royalty AnalysisIs Necessary and Routine

RPI is entitled to discovery from Apple regarding any non-privileged matter that is

relevant to its claim. Fed. R. Civ. P. 26(b)(1). Discoverable information is not limited to

information based on Apple’s view of what is relevant—and Apple should not be

permitted to pick and choose from RPI’s discovery requests and unilaterally announce

which of RPI’s properly served and noticed requests it will respond to or ignore. Instead,

discoverable information encompasses any evidence “reasonably calculated to lead to

the discovery of admissible evidence.” Id. A party resisting discovery bears the burden

of showing “specifically how, despite the broad and liberal construction afforded the

federal discovery rules,” each discovery request “is not relevant or how each question is

overly broad, burdensome, or oppressive, by submitting affidavits or offering evidence

4 Apple’s discovery antics in this case do not appear to be an isolated incident. See Ex.17 (annotated list summarizing 13 published orders issued in the last 30 monthsgranting motions to compel Apple to produce responsive documents that werewithheld—including cases assessing costs against Apple or precluding Apple fromputting in certain evidence at trial based on its failure to produce responsiveinformation during discovery related to such evidence).


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revealing the nature of the burden.” Hubbell v. O.W. Hubbell & Sons, Inc., 2008 U.S.

Dist. LEXIS 26030, at *1–2 (N.D.N.Y Mar. 28, 2008).

Particularity with respect to patent damages, parties are entitled to broad

discovery into potentially relevant information—even if by itself such information would

be inadmissible at trial. Positive Techs., Inc. v. Sony Elecs., Inc., 2013 U.S. Dist. LEXIS

26289, at *12–15 (N.D. Cal. Feb. 26, 2013) (ordering information produced concerning

non-infringing accessories and content of infringing product because of potential

relevance to reasonable royalty rate, even though LaserDynamics precluded its

admissibility). The reason is that failing to require production of information that could

inform a damages analysis becomes, in effect, a premature Daubert ruling. See

Realtime Data, LLC D/B/A/ Ixo, v. Morgan Stanley, 1:11-cv-06696-KBF Dkt. No. 459, 2–

3 (S.D.N.Y. May 1, 2012) (granting Plaintiff’s motion to compel despite “serious

questions” about admissibility to avoid making “a preclusive ruling on a potential

damages theory.”). As a result, courts routinely grant such discovery and permit experts

to rely upon it. See, e.g., AGA Med. Corp. v. W.L. Gore & Assocs., 2011 U.S. Dist.

LEXIS 157787, at *22–24 (D. Minn. Oct. 18, 2011) (granting motion to compel sales

data for non-accused product); Grigoleit Co. v. Whirlpool Corp., 2014 U.S. Dist. LEXIS

686, at *38–39 (C.D. Ill. Jan. 3, 2014) (ordering discovery into per-unit royalty within 12-

cent range and directing parties to provide evidence supporting the proper royalty).

The most common method for ascertaining a reasonable royalty rate is the

fifteen-factor framework set forth in Georgia-Pacific Corp. v. U.S. Plywood Corp., 318 F.

Supp. 1116, 1120 (S.D.N.Y. 1970). Factor fifteen sets forth the willing buyer/willing

seller hypothetical negotiation that takes place at the time of first infringement, and


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through which all other factors are considered. See P&G Co. v. Paragon Trade Brands,

Inc., 989 F. Supp. 547, 613 (D. Del. 1997). This fact-intensive reconstruction of the

hypothetical world at the time of first infringement requires “thorough, substantive, and

comprehensive” evidence for trier of fact. Grigoleit at *38–39.

II. The Court Should Order Apple to Produce Responsive Information for theSeven Topics at Issue

A. Apple’s Prior Litigat ion Statements, Test imony, and Judic ial AdmissionsRelated to Siri’s Value

RPI has repeatedly requested documents from Apple related to Apple’s other

litigation involving the value of Siri—particularly Apple’s lawsuit filed against Samsung in

February 2012 asserting two patents covering Siri. See Gasser Decl. ¶ 41. The only

documents Apple produced were two damages expert declarations (Exs. 18 and 19,

Vellturo Declarations) and a damages expert report (Ex. 20, Vellturo Report). The three

documents are heavily redacted. And they were each produced without any of the

attachments or cited evidence, and without any of the exhibits including Apple business

records, Apple witness declarations, Apple deposition testimony, or any other

documents. Apple has refused to produce anything more from its case against

Samsung that resulted in the district court entering a preliminary injunction against

Samsung based on an Apple Siri patent (subsequently reversed by the Federal Circuit),

and also resulting in a $120 million jury verdict for Apple. See Gasser Decl. ¶¶ 21–23,

41, 45; see also Ex. 21 (deposition excerpts from Apple technical expert on Siri

patents).

The three heavily redacted documents Apple produced after months of delay

establish the existence and importance of hundreds of documents from Apple’s litigation

with Samsung over Apple’s Siri patent that are not only probative but contain Apple


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judicial admissions that go to the heart of certain damages issues in this case. For

example, in addition to an unknown number of documents produced, Apple put forth at

least two experts and three fact witnesses that testified in declarations, depositions,

hearings, and trial about Siri’s value and Siri’s importance to Apple in its global

competition for market share against Samsung’s Android-operated mobile devices.

Those witnesses and the subject of their testimony include the following:

Apple’s damages expert, Dr. Vellturo, testified that during the time periodaround RPI and Apple’s hypothetical negotiation (the period leading up tothe iPhone 4S launch in October 2011), the smartphone marketplace wasat a critical inflection point

ee Ex. 18, ¶¶ 5, 17–64; Ex. 19, ¶¶ 10–71. Healso testified about

(see Ex. 18, ¶¶ 7–8, 13, 44, 49; Ex. 19, ¶¶ 96–106), andcalculated reasonable royalties for Apple patents covering Siri (see Ex. 20,¶¶ 79–83, 192–206, 330–433);

Apple’s technical expert for its asserted Siri patents, Dr. Polish, testifiedthat the speech recognition function of Siri is not as important to customerdemand as Siri’s ability to find information a user seeks (see Ex. 18, ¶¶

99–101; Ex. 21, pp. 154–58);

Apple’s marketing expert, Dr. Hauser,

(see Ex. 20, ¶¶ 164, 255–88, citingHauser testimony);

Mr. Joswiak, Apple’s worldwide Vice President for iPhone ProductMarketing, testified about

ee Ex.

18, ¶ 100; Ex. 20, ¶¶ 195, 356, 363, citing Joswiak testimony);

Mr. Sinclair, an Apple Product Marketing Manager for iPhone, testified that

(see Ex. 18, ¶ 7, 10, 42, 44, citing Sinclairtestimony).


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Apart from Dr. Vellturo’s redacted reports, Apple has not produced any of the

evidence it used—and the district court relied upon5 —to establish Siri’s value to Apple.

B. Apple’s Valuation of Siri’s Impact on Revenue, Profit, Smartphone / Mobile

Operating System Market Share, and Siri Marketing Strategy

Apple has not only refused to produce the specific evidence it relied upon to

establish Siri’s value to Apple in its case against Samsung, it has virtually not produced

any document, interrogatory response, or witness with information showing how Apple

values Siri. See Ex. 42 (Email between counsel dated May 20, 2014); see also Gasser

Decl. ¶¶ 41, 47. Apple has spent in the neighborhood of $ to acquire and build-

out Siri, yet it has repeatedly asserted in this litigation that such documents do not exist.

Id. These claims are not credible, particularly in light of the fact that Apple had little

difficulty producing documents and witnesses establishing Siri’s value when it sued

Samsung. Thus, Apple should produce documents that tie Siri’s contribution to the

general financial information Apple did produce, including the specific information RPI

has requested (see supra at 5–6, listing the specific discovery requests directed to Siri’s

value).

Apple’s discovery intransigence on these issues is best illustrated in the 30(b)(6)

deposition RPI took of Allen Denison, Apple’s Senior Product Manager for iOS

The deposition occurred on August 6, 2014—two weeks

after the July 22, 2014 telephonic hearing with the Court when RPI sought leave to file

this motion. That Mr. Denison was unprepared to testify on the topics for which he had

5 See Ex. 40 at 65–85 (order granting preliminary injunction based on Apple’s Siri patentonly, and the importance of first-time purchasers in the smartphone market). Althoughthe Federal Circuit reversed the preliminary injunction order, it first ratified the keyfindings of the district court that matter in this case. Apple v. Samsung, 695 F.3d 1370,1375–76 (Fed. Cir. 2012).


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(table of citations to Apple objections and Mr. Denison’s response). Mr. Denison’s

testimony did not provide any meaningful information to RPI—but instead consisted of

questions, disruptive objections, and non-responses keyed to counsel’s objection.

“A corporation has an affirmative duty to prepare the designee ‘to the extent

matters are reasonably available, whether from documents, past employees, or other

sources’." Rahman v. Smith & Wollensky Rest. Group, Inc., 2009 U.S. Dist. LEXIS

30275, at *5 (S.D.N.Y. Mar. 18, 2009) (quoting Tailored Lighting, Inc. v. Osram Sylvania

Prods., Inc., 255 F.R.D. 340, 2009 WL 367584, at *7 (W.D.N.Y. 2009)). The case law in

the Second Circuit and nationally makes it abundantly clear that “[t]he production of an

unprepared witness as a 30(b)(6) representative ‘is tantamount to a failure to appear’ for

the ordered deposition.” Adrian Shipholding, Inc. v. Lawndale Group S.A., 2012 U.S.

Dist. LEXIS 4234, at *26–27 (S.D.N.Y. Jan. 13, 2012) (citations omitted).6 See also

Starlight Int’l Inc. v. Herlihy, 186 F.R.D. 626, 638-640 (D. Kan. 1999) (corporations have

a duty to designate knowledgeable 30(b)(6) witnesses and to “prepare them to fully and

unevasively answer questions about the designated subject matter”); King v. Pratt &

Whitney, 161 F.R.D. 475, 476 (S.D. Fl. 1995) (same). As the Samsung case illustrates,

Apple knows which of its employees have knowledge and how to prepare them to testify

about the value of Siri and Apple’s marketing strategy for Siri.

6 While there is limited in-district case law on this subject, the origin of the quotation,and seminal case on the duty to instruct and prepare a witness for a 30(b)(6)deposition, is United States v. Taylor , 166 F.R.D. 356, 360–63 (M.D.N.C. 1996). Thiscase outlines the history and purpose of Rule 30(b)(6), and makes it clear that suchpurpose is essentially to prevent exactly what Apple has done. Courts in every circuitexcept the Federal Circuit, which defers to the law of regional circuits on evidentiaryquestions not unique to its jurisdiction, have endorsed this case and its holding.


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C. Apple’s Agreements with Nuance and Other Third-Parties Related to Siri’sNL or Speech Recognition Technology

See Ex. 23 (Stasior

Dep. 46:11–15; 84:3–9).

See Ex. 24 (Email from P. Oppenheimer to S. Forstall

APL-DynAdv_00099576-78).

(see Ex. 23 (Stasior Dep.

27:24–29:3))

that information is relevant to RPI’s

patent damages. Georgia Pacific factor

two: the rates paid by the licensee for the use of other patents comparable to the

patent-in-suit.

Apple contends, ipse dixit, that speech to text agreements and licenses are not

“comparable” licenses and has refused to produce such information. But precisely

because Apple refuses to produce any speech to text documents or agreements, no

one knows whether such licenses are comparable—or whether they are probative to

any other reasonable royalty or hypothetical negotiation issue. See Ex. 25 (Email from


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Apple counsel declining RPI’s request for speech agreements stating, “[w]e reiterate our

position that this case is about NLP technology and that is what defines the scope of

relevant information.”).

Apple’s document requests to RPI specifically define “Relevant Patents” to

include speech to text patents—and that definition further reveals Apple’s concession

that speech to text technology “is comparable” to RPI’s patent technology:

patents or patent applications, other than the patent-in-suit or relatedpatents/applications, relating to speech to text, natural languageprocessing technology, or any other technology that is comparableto that claimed in the patent-in-suit.

Ex. 26 (Apple’s First Requests for Production Requests to RPI at 3) (emphasis added).

Apple used that definition of “Relevant Patents” in numerous document requests, email

requests, and 30(b)(6) notices served on RPI. Gasser Decl. ¶¶ 29–30.

Moreover,

See, e.g., Ex. 27

and Ex. 28

.7

Apple cannot selectively produce

. Because this information

is relevant and discoverable—and particularly because Apple has conceded and even

7 Apple also proposed and consented to defining speech processing as relevant andcomparable to NLP when defining the scope of the Protective Order’s prosecution bar.The Order specifically defines “Affected Technologies” as, “computer-implementedmethods or systems for natural language processing technology, speech processingtechnology, or intelligent personal assistant technologies that provide naturallanguage processing or speech processing features.” (Dkt. 55, Agreed ProtectiveOrder, ¶¶ 1(j), 5(b); emphasis added.)


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Ex. 23 (Stasior Dep. 49:7–21).

Id. at 49:15–25; 50:18–52:8. Apple’s marketing behavior is far more consistent

with than Chang’s assertion. Apple’s CarPlay webpage features Siri,

as does the product itself, which is designed to be used without touching the iPhone.

See Ex. 32 (Apple CarPlay, https://www.apple.com/ios/carplay). Apple’s webpage

states that five car manufacturers (Ferrari, Honda, Hyundai, Mercedes-Benz, and Volvo)

will have CarPlay available in models in 2014, while 24 additional “committed partners”

will have CarPlay on future models.

More likely,

Apple possesses but is withholding such agreements—possibly because these

agreements refer to the use of the iOS system or CarPlay rather than the “use of Siri

technology” per se. But any agreements between Apple and automobile manufacturers

regarding CarPlay are responsive to RPI’s discovery requests regarding agreements

with makers and sellers of non-Apple products (including RFPs 91, 94–96) and must be

produced. These agreements are relevant to at least Georgia-Pacific factor eleven: “The

extent to which the infringer has made use of the invention; and any evidence probative


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of the value of that use.” 318 F. Supp. at 1120. The terms and conditions of such

agreements could inform an expert’s analysis of the extent to which Apple and third

parties use Siri and its NLP—as well as the value of such use.

F. Apple’s Internal Licenses Related to Siri

RPI properly served document requests and interrogatories seeking information

concerning Apple internal licenses (license between two Apple entities) related to Siri or

its technology, including at least RFPs 91–109, which broadly cover all internal or

external licenses or acquisitions including as a party, or any values given or received by

Apple and/or its subsidiaries relating to Siri or any natural language interface

technology. See supra pp. 16–19. Apple has refused to produce or provide any

documents or interrogatory responses responsive to RPI’s discovery requests regarding

internal licenses. See Gasser Decl. ¶¶ 28–32; 38.

Counsel for Plaintiff previously tried to resolve this issue through its email, dated

June 23, 2014, requesting that Apple confirm

(e.g., APL-DynAdv_00092873-96949) upon

which Apple will rely for apportionment. See Ex. 11 (Apple’s Resp. to Interrogatory No.

21 at 9–11).


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Apple first claimed that

. See Ex. 33 (Email from C. Chang dated June 26, 2014). Apple now more

generally states See Ex. 31

(Email from C. Chang dated July 29, 2014). Given Apple’s practice of defining relevant

responsive documents so narrowly, we request that the Court order Apple to produce all

internal licenses within the above four categories, as well as any internal license

documents embodying or relating to: (5) patents on NLP and virtual assistant

technology assigned to Apple and containing the terms “virtual assistant,” “intelligent

assistant,” or “digital assistant;” (6) the universal search patent asserted against

Samsung that Apple attributed to Siri in collateral litigation; and (7) any international or

foreign counterparts to the above.

Apple is known to have financial arrangements concerning IP interests with at

least its own foreign subsidiaries. In 2013, the U.S. Senate Permanent Subcommittee

on Investigations found that Apple regularly assigns “economic rights” in its IP to two of

its Irish subsidiaries, Apple Operations International and Apple Sales International.

Ex. 34 (Levin Memorandum dated May 21, 2013 at 17, DA 0011077). An adequate

response to Plaintiff’s RFP 83 would include, at a minimum, the documents Apple

provided to the Senate investigation Committee. An adequate response to the other

requests would require all documents showing the specific arrangements between

Apple and its subsidiaries with respect to assigning “economic rights” to its IP, including

cost sharing agreements. Even if not a “license” such agreements reflect a measure of

the value of Apple’s IP, including Siri-related IP.


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Internal Apple licenses from one entity to another are potentially important data

points in a reasonable royalty analysis. See, e.g., Mars, Inc. v. Coin Acceptors, Inc., 527

F.3d 1359, 1373–74 (Fed. Cir. 2008) (finding no error where district court considered,

and ultimately decided upon a rate exceeding, the rate contemplated by an intra-firm

license); Johns-Manville Corp. v. Guardian Indus. Corp., 718 F. Supp. 1310, 1315 ( E.D.

Mich. 1989) (characterizing intra-firm licenses as “a logical analytical floor for the

running royalty damages component”), aff’d 1991 U.S. App. LEXIS 1075 (Fed. Cir. Jan.

24, 1991). Such licenses are also relevant to ascertain the extent of Apple’s discovery

obligations. See W.L. Gore & Assocs. v. AGA Med. Corp., 2012 U.S. Dist. LEXIS 4942,

at *4–5 (D. Del. Jan. 17, 2012) (granting limited jurisdictional discovery to determine

identity and control of, and thus jurisdiction over, purported infringer). Licenses to third

parties outside the U.S. are relevant and discoverable; baseless objections to such

discovery, even if routine, are sanctionable. See, e.g., High Point Sarl v. Sprint Nextel

Corp., 2011 U.S. Dist. LEXIS 83126, at *15–16 (D. Kan. July 29, 2011) (granting motion

to compel licensing communications with foreign third parties) and 2011 U.S. Dist.

LEXIS 101700 (sanctioning High Point for its objection). The use of foreign patent

licenses under the Georgia-Pacific framework dates back to Georgia-Pacific itself. See

Georgia-Pacific Corp., 318 F. Supp. 1116 at 1139 (evaluating three foreign licenses and

holding that foreign licenses were consistent with patentee’s policy of reserving its

exclusive rights to sell products where it was in the market). Indeed, such patents may

provide value precisely because they are not entered into under the threat of U.S.

patent litigation. See Johnson & Johnson Vision Care, Inc. v. Ciba Vision Corp. , 712 F.

Supp. 2d 1285, 1289 (M.D. Fla. 2010). Moreover, since Apple intends to rely upon


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foreign patents for apportionment, investigation of foreign licenses is essential to

Plaintiff’s apportionment analysis. Such licenses are also relevant to ascertain the

extent of Apple’s discovery obligations. See Golden Trade v. Lee Apparel Co., 143

F.R.D. 514, 525 (S.D.N.Y. 1992) (holding that rights under a foreign license agreement

oblige licensor to secure documents from its licensee’s patents agents).

G. Apple’s Deferred Revenue Accounting Related to Siri

As a result of significant additions to Apple’s offerings of software upgrade rights

and non-software services such as Siri, Apple expects “about a $900 million sequential

increase in the net amount of revenue deferred.” See Ex. 35 (Apple’s 2013 Q4 Earnings

Call Tr. at 8, RPI0008174–90;

Significantly,

(id. at 116:14–23)

(id. at 112:11–113:11).

(id. at

113:5–11)

See id. at 114:4–19.

Yet in response to an interrogatory seeking information regarding revenue Apple

defers from sales of products containing Siri, how Apple calculates a per-unit selling

price if Siri were regularly sold by Apple as a stand-alone product or service, and

Apple’s best estimates of its selling price (“ESP”), Apple (1) reiterated stock objections;

(2) ignored the request regarding deferred revenue;


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Date: August 15, 2014

Nicholas Mesiti (102192)HESLIN ROTHENBERG FARLEY &MESITI

5 Columbia Cir.Albany, New York 12203(518) 452-5600 (telephone)(518) 452-5579 (facsimile)[email protected]

Counsel for PlaintiffRensselaer Polytechnic Institute

James R. Muldoon (506772)HARRIS BEACH PLLC

333 W. Washington StreetSuite 200Syracuse, New York 13202(315) 423-7100 (telephone)(315) 422-9331 (facsimile)

[email protected]

Steven P. Nonkes (517931)HARRIS BEACH PLLC99 Garnsey RoadPittsford, New York 14534

(585) 419-8800 (telephone)(585) 419-8813 (facsimile)[email protected]

Counsel for PlaintiffDynamic Advances, LLC

Respectfully submitted:

/s/ Paul J. Skiermont Paul J. Skiermont (107001)G. Donald Puckett

Donald E. Tiller (107002)Alexander E. Gasser (603023)Shellie Stephens (107164)

SKIERMONT PUCKETT LLP2200 Ross Avenue, Suite 4800WDallas, Texas 75201(214) 978-6600 (telephone)(214) 978-6601 (facsimile)[email protected]@skiermontpuckett.com

[email protected]

Counsel for PlaintiffsRensselaer Polytechnic Institute andDynamic Advances, LLC


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CERTIFICATE OF SERVICE

I hereby certify that, on August 15, 2014, a true and correct copy of the foregoing

document, PLAINTIFFS’ MOTION TO COMPEL DISCOVERY FROM DEFENDANT

APPLE, INC. was served on the following counsel of record via one or more of the

following: the individual email addresses set forth below, the Court’s regular ECF filing

procedures, and counsel’s provided list service address:

[email protected].

Mitchell J. Katz (301057)MENTER, RUDIN & TRIVELPIECE, P.C.

308 Maltbie Street Suite 200Syracuse, New York 13204-1498(315) 474-7541 (telephone)(315) 474-4040 (facsimile)[email protected]

David M. Lacy KustersRyan J. Marton

FENWICK & WEST LLP555 California Street, 12th FloorSan Francisco, California 94104(415) 875-2300 (telephone)(415) 281-1350 (facsimile)[email protected]@[email protected]

Hector J. RiberaWilliam A. Moseley, Jr.

Joe D. HaddenCarolyn ChangFENWICK & WEST LLPSilicon Valley Center801 California StreetMountain View, California 94041(650) 988-8500 (telephone)(650) 938-5200 (facsimile)[email protected]@[email protected]

[email protected]

/s/ Paul J. SkiermontPaul J. Skiermont
