Contract analysis

I. INTRODUCTION Plaintiff Optiwave Semiconductor Corp. ("OWS") respectfully submits this opposition to the anticipated motion by Defendant Lumicore Technologies, Inc. ("Lumicore") to exclude the expert testimony of Dr. Lawrence Keating, Managing Director of Meridian Economic Consulting Group, LLC, under Federal Rule of Evidence 702 and Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993). Dr. Keating ser

II. LEGAL STANDARD A. Federal Rule of Evidence 702 and *Daubert* Framework Federal Rule of Evidence 702 governs the admissibility of expert testimony and provides: 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 the proponent demonstrates to the court that it is more likely than not that: (a) the expert's scientific,

III. DR. KEATING'S QUALIFICATIONS Dr. Lawrence Keating is a Managing Director of Meridian Economic Consulting Group, LLC, headquartered at 233 South Wacker Drive, Suite 4400, Chicago, Illinois 60606. He was retained by Calderwood & Harkness LLP on behalf of Optiwave Semiconductor Corp. on August 5, 2024, to provide expert opinions on damages resulting from Lumicore's infringement of the asserted patents. His current

IV. OVERVIEW OF DR. KEATING'S DAMAGES OPINIONS Dr. Keating's expert report, served on June 15, 2025, presents three complementary damages theories. Each theory applies a distinct, well-established methodology to a specific subset of Lumicore's accused-product sales, ensuring that the total damages calculation reflects the full scope of economic harm caused by Lumicore's infringement without any overlap or double-coun

1. OWS-Terralink Semiconductor License (2020): A 6.5% running royalty on approximately $45 million in licensed revenue. This license involved a subset of OWS's silicon-photonics transceiver patents, including the '847 Patent, and was negotiated at arm's length between two commercial entities in the same technology space. Dr. Keating identifies this as the most conservative comparable, as the Terralink license involve

2. OWS-NovaWave Corp. License (2021): A 9.0% running royalty on approximately $22 million in licensed revenue. This license covered a subset of the same OWS patent portfolio at issue here, including the '193 Patent and the '562 Patent, and was negotiated in the context of OWS's assertion of those patents against NovaWave. Dr. Keating considers this a strong comparable given the technological overlap with the instant

3. OWS-Helix Integrated Photonics License (2022): A 7.75% running royalty plus a $2.5 million upfront payment on approximately $68 million in licensed revenue. This is the most recent OWS license and the closest temporal comparable to the hypothetical negotiation date. It involved a broader subset of OWS's patent portfolio and a larger licensee, making it a particularly probative data point.

4. Stratos Photonics v. ArcLight Systems Settlement (2019): An 8.0% royalty rate agreed upon in settlement of patent infringement litigation involving optical transceiver technology. Dr. Keating considers this an informative industry comparable, acknowledging the inherent limitations of settlement-derived royalty data while noting that the technology and market context are closely analogous.

5. Coreline Technologies v. Prisma Semiconductor Cross-License (2021): An effective royalty rate of 10.2% in a bilateral cross-license involving photonic integrated circuit patents. Dr. Keating acknowledges that cross-license structures involve bilateral value exchange that can inflate the effective rate attributable to any one party's patents, and he adjusts accordingly. These comparable licenses were identified in

V. ARGUMENT A. Dr. Keating's Application of the Entire Market Value Rule Is Reliable and Properly Supported

1. The EMVR Is a Recognized and Accepted Methodology Under Federal Circuit Law The entire market value rule is a well-established principle of patent damages law that permits a patentee to base its damages — whether lost profits or a reasonable royalty — on the entire value of an infringing product where the patented feature constitutes the basis for customer demand for that product. The rule reflects the economic re

2. Dr. Keating Properly Applied the EMVR to the Accused Transceiver Modules Dr. Keating's damages analysis uses the transceiver module as the royalty base. This is appropriate for two independently sufficient reasons: (a) the transceiver module is the smallest salable patent-practicing unit ("SSPPU"); and (b) even under a broader EMVR analysis, substantial evidence supports the conclusion that the patented features a

3. Lumicore's Anticipated Apportionment Objection Goes to Weight, Not Admissibility Lumicore is expected to argue that the accused transceiver modules include unpatented components — such as driver electronics, transimpedance amplifiers, control firmware, digital signal processing circuitry, and packaging — and that Dr. Keating should have apportioned the royalty base to isolate only the value attributable to the pat

1. The Market-Share Displacement Figure Is Derived from Detailed Customer-by-Customer Analysis Lumicore is anticipated to challenge Dr. Keating's conclusion that OWS would have captured 38.2% of Lumicore's accused-product sales in the "but for" world, characterizing this figure as speculative or unsupported. This challenge is without merit. The 38.2% displacement figure is not an assumption pulled from thin air; it i

2. Dr. Keating's Analysis Is Supported by Corroborating Evidence Dr. Keating's market-share displacement figure is further supported by multiple independent lines of corroborating evidence. Price erosion. Dr. Keating documents an 18.7% decline in average selling price ("ASP") for 400G-ZR transceivers from Q3 2022 (when Lumicore launched its first accused product) to Q4 2023. This price erosion is attributable in sign

3. Methodological Criticisms Are Matters of Weight for the Jury Lumicore, through its damages expert, Dr. Natasha Volkov of Pinnacle Analytics Partners LLP, Houston, Texas, may challenge the 38.2% displacement figure by arguing that some Lumicore customers would have purchased from other competitors (not OWS) absent infringement, or that OWS's approved-vendor-list adjustments were insufficient, or that Dr. Keating's