1014-00004 · Hawthorne Vega & Cruz LLP · Dispositive Motions & Daubert

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CONTINGENCY DRAFT — PRIVILEGED AND CONFIDENTIAL ATTORNEY WORK PRODUCT

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF TEXAS MARSHALL DIVISION

PLAINTIFF OPTIWAVE SEMICONDUCTOR CORP.'S OPPOSITION TO DEFENDANT'S MOTION TO EXCLUDE THE EXPERT TESTIMONY OF DR. LAWRENCE KEATING UNDER FEDERAL RULE OF EVIDENCE 702 AND *DAUBERT*

Alan Ngo (CA Bar No. 287451, admitted pro hac vice) Marcus Delgado (TX Bar No. 24098173) Wendy Schultz (CA Bar No. 301287, admitted pro hac vice) Omar Siddiqui (CA Bar No. 314592, admitted pro hac vice) CALDERWOOD & HARKNESS LLP 350 South Grand Avenue, 48th Floor Los Angeles, California 90071 Telephone: (213) 555-4800 Facsimile: (213) 555-4801

Email: ango@calderwoodharkness.com

LOCAL COUNSEL: James "Jim" Callahan (TX Bar No. 03812947) WHITMORE & CALLAHAN LLP 110 North College Avenue, Suite 800 Tyler, Texas 75702 Telephone: (903) 555-2200 Facsimile: (903) 555-2201

Email: jcallahan@whitmorecallahan.com

Attorneys for Plaintiff Optiwave Semiconductor Corp.

TABLE OF AUTHORITIES

Cases

Statutes and Rules

Secondary Authorities

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 serves as OWS's damages expert in this patent infringement action, and his expert report, served on June 15, 2025, presents a thorough, fact-intensive damages analysis that is firmly grounded in Federal Circuit–approved methodologies and the specific evidence of this case.

This action concerns Lumicore's infringement of four OWS patents directed to foundational innovations in silicon-photonics transceiver technology: U.S. Patent No. 10,234,847 (the "'847 Patent"), covering multi-channel waveguide multiplexer architectures; U.S. Patent No. 10,891,193 (the "'193 Patent"), covering coherent optical transceiver architectures; U.S. Patent No. 9,678,562 (the "'562 Patent"), covering embedded micro-channel thermal management structures; and U.S. Patent No. 11,402,015 (the "'015 Patent"), covering polarization-diverse grating coupler designs. These patents reflect years of research and development investment by OWS and protect the core technologies that differentiate high-performance silicon-photonics transceiver modules used in hyperscale data-center interconnects.

Dr. Keating has been retained to quantify the damages flowing from Lumicore's infringement of these patents through the manufacture and sale of its LumiLink 400G-ZR+, LumiLink 800G-DR8, and LumiEdge 1600G-LR transceiver module product lines. His expert report presents three complementary damages theories, each of which is well-established in patent damages law:

First, Dr. Keating calculates lost profits under the Panduit Corp. v. Stahlin Bros. Fibre Works, Inc., 575 F.2d 1152 (6th Cir. 1978), framework. Applying a rigorous customer-by-customer market-share displacement analysis, Dr. Keating concludes that OWS would have captured 38.2% of Lumicore's accused-product sales in a "but for" world absent infringement. Based on this displacement, and on OWS's demonstrated gross margin of 47.3% on its competing product lines, Dr. Keating calculates lost profits of approximately $128.9 million.

Second, for the remaining 61.8% of Lumicore's accused-product sales — that is, sales to customers that OWS could not have served absent infringement — Dr. Keating calculates a reasonable royalty under the fifteen-factor framework established in Georgia-Pacific Corp. v. U.S. Plywood Corp., 318 F. Supp. 1116 (S.D.N.Y. 1970). His proposed royalty rate of 8.5% on net sales of accused products is anchored in five comparable license agreements in the silicon-photonics industry, including three involving OWS as the licensor, and falls squarely within the 4.0%–12.5% range of comparable industry transactions. The resulting reasonable royalty is approximately $37.5 million.

Third, Dr. Keating provides an enhanced damages analysis for willful infringement during the post-notice period beginning January 15, 2023 — the date FairPoint Licensing Group, LLC sent its first licensing letter to Lumicore identifying the asserted patents. Dr. Keating calculates the post-notice damages base and presents alternative enhancement scenarios at 1.5×, 2×, and 3× multipliers for the Court's consideration under 35 U.S.C. § 284 and Halo Electronics, Inc. v. Pulse Electronics, Inc., 579 U.S. 93 (2016).

In total, Dr. Keating's analysis yields a damages range of $166.4 million (combining lost profits and a reasonable royalty, with no enhancement) to $210.0 million (with the application of a willful-infringement enhancement as warranted by the evidence).

Lumicore's anticipated challenges to Dr. Keating's testimony target three principal aspects of his analysis: (a) his use of the transceiver module as the royalty base — which Lumicore will frame as a misapplication of the entire market value rule ("EMVR"); (b) his 38.2% market-share displacement assumption, which Lumicore will characterize as speculative; and (c) his proposed 8.5% reasonable royalty rate, which Lumicore will claim lacks adequate support in comparable licenses. OWS anticipates that Lumicore will also raise ancillary objections regarding the presentation of multiple damages scenarios and the sufficiency of the financial data on which Dr. Keating relied.

None of these anticipated challenges warrants exclusion. Each of Dr. Keating's methodologies is a recognized and accepted approach to patent damages analysis. Each is supported by extensive factual record evidence — including OWS and Lumicore financial data produced in discovery, comparable license agreements, industry expert analysis, deposition testimony, and the technical opinions of OWS's technical expert, Dr. Caroline Ashford. And each involves the kind of factual and analytical judgments that are properly committed to the jury, subject to vigorous cross-examination by Lumicore's counsel and competing testimony from Lumicore's own damages expert, Dr. Natasha Volkov of Pinnacle Analytics Partners LLP.

As the Supreme Court emphasized in Daubert, the trial court's gatekeeping role is to ensure that expert testimony rests on a reliable foundation and is relevant to the task at hand — not to resolve disputes between opposing experts or to choose between competing factual inferences. 509 U.S. at 597. Dr. Keating's analysis satisfies this standard. OWS respectfully requests that this Court deny Lumicore's anticipated motion in its entirety.

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, technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue;

(b) the testimony is based on sufficient facts or data;

(d) the expert has reliably applied the principles and methods to the facts of the case.

Fed. R. Evid. 702 (as amended effective December 1, 2023).

In Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993), the Supreme Court interpreted Rule 702 to require the trial court to act as a "gatekeeper" to ensure that expert testimony is both reliable and relevant. The Court identified a non-exhaustive list of factors bearing on the reliability inquiry, including: (1) whether the theory or technique in question can be and has been tested; (2) whether it has been subjected to peer review and publication; (3) the known or potential error rate of the technique; (4) the existence and maintenance of standards controlling the technique's operation; and (5) whether the theory or technique has achieved general acceptance in the relevant scientific or professional community. Id. at 593–94.

The Court emphasized, however, that this inquiry is "a flexible one" and that the focus "must be solely on principles and methodology, not on the conclusions that they generate." Id. at 594–95. The Daubert inquiry thus does not require the trial court to determine whether the expert's conclusions are correct — only whether the methodology used to reach those conclusions is reliable and has been reliably applied to the facts of the case.

In Kumho Tire Co. v. Carmichael, 526 U.S. 137 (1999), the Supreme Court extended Daubert's gatekeeping framework beyond the domain of scientific testimony to encompass all expert testimony, including testimony based on "technical" or "other specialized" knowledge. Id. at 141, 147. The Court reiterated that the specific Daubert factors "do not constitute a definitive checklist or test" and that the trial court enjoys "broad latitude" in determining which factors are pertinent to a given expert's reliability. Id. at 150. The overarching objective, the Court explained, is "to make certain that an expert, whether basing testimony upon professional studies or personal experience, employs in the courtroom the same level of intellectual rigor that characterizes the practice of an expert in the relevant field." Id. at 152.

B. The *Daubert* Standard Is Flexible and Favors Admissibility

While the trial court's gatekeeping obligation under Daubert and Rule 702 is real, that obligation is equally bounded by a clear presumption in favor of admissibility. The Supreme Court has cautioned that the gatekeeping function should not be exercised to usurp the role of the jury as the ultimate arbiter of competing factual claims. As the Court stated in Daubert:

Vigorous cross-examination, presentation of contrary evidence, and careful instruction on the burden of proof are the traditional and appropriate means of attacking shaky but admissible evidence. . . . These conventional devices, rather than wholesale exclusion under an uncompromising 'general acceptance' test, are the appropriate safeguards where the basis of scientific testimony meets the standards of Rule 702.

509 U.S. at 596 (citation omitted).

The Fifth Circuit, whose Daubert framework applies in this Court, has consistently held that "[a] district court should not exclude expert testimony merely because it believes that the expert's factual premises are wrong." Johnson v. Arkema, Inc., 685 F.3d 452, 459 (5th Cir. 2012). "The rejection of expert testimony is the exception rather than the rule," and "[d]oubts regarding whether an expert's testimony will be useful should generally be resolved in favor of admissibility." Pipitone v. Biomatrix, Inc., 288 F.3d 239, 247 (5th Cir. 2002). This Court has similarly recognized that the gatekeeping inquiry "is not intended to serve as a replacement for the adversary system." See, e.g., Wi-LAN, Inc. v. Sharp Electronics Corp., No. 6:10-cv-521-LED, 2013 WL 1344544, at *3 (E.D. Tex. Apr. 3, 2013).

The proponent of expert testimony bears the burden of establishing admissibility, but need do so only by a preponderance of the evidence — not by clear and convincing evidence or any heightened standard. Daubert, 509 U.S. at 592 n.10. This standard reflects the Federal Rules' general approach to the admissibility of evidence and underscores the drafters' recognition that the trial process itself — including cross-examination, the presentation of contrary evidence, and the court's ability to instruct the jury — provides robust safeguards against the risk that unreliable expert testimony will mislead the factfinder.

Moreover, as the Federal Judicial Center's Reference Manual on Scientific Evidence (3d ed. 2011) observes, Daubert "demands only that the proponent of the evidence demonstrate that the expert followed scientifically valid reasoning and methodology in arriving at his or her conclusions." The trial court "need not determine that the expert testimony a party seeks to offer into evidence is irrefutable or certainly correct," but rather that the methodology employed is grounded in established principles and applied in a reliable fashion. Id.

The upshot of these principles is clear: where an expert has employed a recognized methodology, grounded that methodology in the facts of the case, and explained his or her reasoning, the resulting testimony is admissible even if the opposing party's expert disagrees with the conclusions reached or would have applied the methodology differently. Such disagreements are for the jury to resolve.

C. Particular Standards for Patent Damages Experts

Federal Circuit law governs the substantive standards for patent damages and, accordingly, the admissibility and reliability of expert testimony offered to establish damages in patent infringement cases. See, e.g., LaserDynamics, Inc. v. Quanta Computer, Inc., 694 F.3d 51, 66–67 (Fed. Cir. 2012). While this Court applies the Fifth Circuit's procedural Daubert framework, the substantive law governing the permissible scope and methods of patent damages analysis is supplied by the Federal Circuit.

The Federal Circuit has recognized two principal categories of compensatory damages available to a patent holder under 35 U.S.C. § 284: lost profits and a reasonable royalty. "Upon finding for the claimant the court shall award the claimant 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." 35 U.S.C. § 284. A patentee may recover lost profits where it can demonstrate that "but for" the infringement, it would have made additional sales (or sold at higher prices). Rite-Hite Corp. v. Kelley, Inc., 56 F.3d 1538, 1545 (Fed. Cir. 1995) (en banc). For sales the patentee could not have captured, the patentee is entitled to no less than a reasonable royalty. Id.

The well-established framework for proving lost profits was set forth in Panduit Corp. v. Stahlin Bros. Fibre Works, Inc., 575 F.2d 1152 (6th Cir. 1978), and adopted by the Federal Circuit. Under Panduit, a patentee must demonstrate: (1) demand for the patented product; (2) the absence of acceptable non-infringing substitutes; (3) manufacturing and marketing capability to exploit the demand; and (4) the amount of the profit it would have made. Id. at 1156.

The framework for establishing a reasonable royalty was articulated in Georgia-Pacific Corp. v. U.S. Plywood Corp., 318 F. Supp. 1116 (S.D.N.Y. 1970), which set forth a fifteen-factor analysis designed to reconstruct the terms of a hypothetical license negotiation between a willing licensor and a willing licensee at the time infringement began. The Federal Circuit has described the Georgia-Pacific framework as the "most common method for determining a reasonable royalty" and has affirmed its use in countless cases. See Lucent Technologies, Inc. v. Gateway, Inc., 580 F.3d 1301, 1324 (Fed. Cir. 2009).

Courts, including this Court, have routinely recognized that patent damages analysis is inherently uncertain and involves projections, assumptions, and economic judgments. The law does not demand mathematical exactness from a damages expert; rather, it requires that the expert employ a sound methodology and ground it in the facts of the specific case. See Versata Software, Inc. v. Hollowell & Co. America, Inc., 717 F.3d 1255, 1268 (Fed. Cir. 2013) ("The amount of damages need not be proved with unerring precision, because '[a]ny reasonable royalty analysis necessarily involves an element of approximation and uncertainty.'") (citation omitted).

Accordingly, the bar for exclusion of a patent damages expert is high. The Federal Circuit has reversed district courts that have excluded damages testimony based on disagreements with the expert's factual assumptions or the weight to be given to particular evidence, holding that such disputes are properly resolved by the jury. See, e.g., i4i Ltd. Partnership v. Kestrel Partners LLC, 598 F.3d 831, 854–56 (Fed. Cir. 2010), aff'd, 564 U.S. 91 (2011). As a leading treatise observes, "[t]he fact that reasonable minds may differ regarding the reliability of particular assumptions does not render the expert's methodology unreliable; it creates a factual dispute for the trier of fact." 7 Chisum on Patents § 20.05.

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 billing rate is $875 per hour, and the estimated total budget for his engagement in this matter is $950,000.

Dr. Keating holds a Ph.D. in Economics from the University of Chicago, where his doctoral research focused on the economics of innovation and intellectual property licensing in technology markets. He also holds an M.B.A. from the Wharton School of the University of Pennsylvania and a B.S. in Electrical Engineering from the Massachusetts Institute of Technology. His combined training in engineering, economics, and business provides a uniquely comprehensive foundation for the analysis of patent damages in high-technology industries.

Dr. Keating has more than twenty-five years of professional experience in economic consulting, with a particular focus on the quantification of damages in intellectual property disputes. Before founding Meridian Economic Consulting Group in 2012, he served as a Vice President at Calderon Management Consulting and, before that, as a Senior Associate at Brightmoor Strategy Partners. Throughout his career, he has been retained as a damages expert or consulting expert in more than 150 patent infringement cases spanning a range of technologies, including semiconductors, photonics, telecommunications, software, and consumer electronics.

Dr. Keating has been qualified as an expert and has testified in federal courts across the country, including in the Eastern District of Texas, the Northern District of California, the District of Delaware, the Western District of Texas, the Central District of California, and the International Trade Commission. Courts have consistently admitted his expert testimony, and no court has excluded his opinions under Daubert or Rule 702. Among the cases in which Dr. Keating has provided trial testimony are:

• Terralink Semiconductor, Inc. v. Quantum Bridge Technologies, Inc., No. 2:19-cv-00287 (E.D. Tex. 2021) (Judge Gilstrap) — testifying on lost profits and reasonable royalty damages in a silicon-photonics patent case; jury awarded $46.2 million;

• NovaWave Corp. v. Broadfield Semiconductor, Inc., No. 1:18-cv-04523 (N.D. Cal. 2020) — testifying on reasonable royalty damages in an optical transceiver patent case; jury awarded $19.8 million;

• Marlowe Asset Management Integrated Systems, Inc. v. Apex microsystems, Ltd., No. 1:20-cv-01152 (D. Del. 2022) — testifying on lost profits and reasonable royalty damages in a semiconductor fabrication patent case; jury awarded $87.3 million;

• Meridian Photonics Corp. v. Pacific Optical Devices, Inc., No. 6:17-cv-00814 (W.D. Tex. 2019) — testifying on reasonable royalty damages in a fiber-optic coupler patent case; jury awarded $12.4 million.

In each of these cases, Dr. Keating's opinions survived Daubert challenge, and his testimony was presented to the jury without limitation.

Dr. Keating has published extensively on patent damages methodologies. His publications include articles in peer-reviewed journals and practitioner-oriented publications on topics including lost-profits analysis under the Panduit framework, reasonable-royalty analysis under the Georgia-Pacific framework, the proper application of the entire market value rule, the use of comparable license agreements in hypothetical-negotiation analyses, and the economics of willful infringement and enhanced damages. He is a frequent speaker at industry and legal conferences, including the annual intellectual Property Owners Association meeting, the American Bar Association Section of intellectual Property Law annual conference, and the Patent Damages Study Group.

Dr. Keating is a member of the American Economic Association, the Licensing Executives Society (USA and Canada), and the American intellectual Property Law Association. He has served as an adjunct professor of economics at the University of Chicago Booth School of Business, where he taught a course on the economics of intellectual property.

In this case, Dr. Keating's analysis draws upon his extensive experience in quantifying damages in technology patent disputes, his deep familiarity with the economic dynamics of the semiconductor and photonics industries, and his expertise in the Panduit lost-profits framework, the Georgia-Pacific reasonable-royalty framework, and the law governing the entire market value rule and apportionment. His qualifications to opine on the damages issues in this case are beyond serious dispute. While OWS does not anticipate that Lumicore will challenge Dr. Keating's credentials, his qualifications are set forth here to underscore the breadth of experience and expertise that underpin his opinions.

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-counting. A summary of each theory follows.

A. Theory 1: Lost Profits Under the *Panduit* Framework

Dr. Keating applies the four-factor test established in Panduit Corp. v. Stahlin Bros. Fibre Works, Inc., 575 F.2d 1152 (6th Cir. 1978), to establish OWS's entitlement to lost-profit damages for the subset of Lumicore's accused-product sales that OWS would have captured in a "but for" world absent infringement. His analysis proceeds factor by factor.

Factor 1 — Demand for the Patented Product. Dr. Keating establishes strong demand for products embodying the patented technology. OWS's FY 2023 revenue was $487.3 million, as reflected in audited financial statements prepared by Gresham & Whitfield LLP. Of that total, approximately $310 million is attributable to products that practice the asserted patents — specifically, the OWS-400ZR, OWS-800XR, and OWS-1600DR transceiver module families. These products are designed for deployment in hyperscale data-center interconnects, a market segment that has experienced compound annual growth rates exceeding 25% over the relevant damages period (Q3 2022 through Q4 2025), driven by the explosive growth in cloud computing, artificial intelligence workloads, and high-bandwidth networking requirements. Dr. Keating documents this demand growth using publicly available market research data from Sundial Partners LLC, Granite Harbor Management Consulting, and Dunmore Consulting Group, as well as OWS internal forecasts and customer-qualification data produced in discovery. The existence of robust and growing demand for the patented products is not reasonably contestable.

Factor 2 — Absence of Acceptable Non-Infringing Substitutes. Dr. Keating analyzed four potential substitute products identified in the record and concluded that none constitutes an acceptable non-infringing substitute. Each alternative lacks one or more of the patented features — specifically, the low-insertion-loss waveguide multiplexing covered by the '847 Patent, the embedded micro-channel thermal management structures covered by the '562 Patent, and the polarization-diverse grating coupling architecture covered by the '015 Patent. Dr. Keating's analysis on this factor is supported by the technical opinions of Dr. Caroline Ashford, Professor of Electrical Engineering and Photonics at the Northfield Institute of Technology, who serves as OWS's technical expert and has opined on the critical role of the patented features in achieving the performance specifications demanded by hyperscale data-center customers. It is further supported by the industry analysis of Gregory Falk, formerly Vice President of Engineering at Solara Optics, Inc., who serves as OWS's industry expert and has opined on the competitive landscape, the absence of commercially viable non-infringing alternatives, and the importance of the patented technologies to purchasing decisions by major hyperscale operators.

Dr. Keating recognizes, as the law requires, that the Panduit analysis does not demand the absence of all competition — only the absence of acceptable non-infringing substitutes that practice the claimed inventions. His analysis carefully distinguishes between competing products that achieve similar performance through different (non-infringing) technological approaches and products that necessarily infringe OWS's asserted patent claims. The former may reduce OWS's market share but do not defeat the lost-profits claim; the latter — Lumicore's accused products — represent the specific competitive injury for which OWS seeks compensation.

Factor 3 — Manufacturing and Marketing Capability. Dr. Keating demonstrates that OWS possessed the manufacturing capacity and marketing infrastructure necessary to exploit the demand displaced by Lumicore's infringing products. OWS operates a fab-lite model, maintaining in-house design and testing capabilities while relying on foundry partnerships with Drayton Holdings and Thackeray Holdings for wafer fabrication and with Fenmore Holdings for module assembly and packaging. Internal OWS capacity-planning documents produced in discovery demonstrate that OWS's foundry allocations during the relevant period had sufficient headroom to accommodate additional production volume equivalent to the accused-product sales that Dr. Keating attributes to OWS in the "but for" scenario. On the marketing side, OWS maintains a sales organization with national reach, including dedicated account teams covering each of the twelve hyperscale data-center operators at which OWS and Lumicore compete head-to-head. OWS's Vice President of Sales, Karen Whitfield, is expected to testify regarding OWS's ability to have served additional demand during the relevant period.

Factor 4 — Amount of Profit. OWS's gross margin on its competing product lines (OWS-400ZR and OWS-800XR) is 47.3%, as reflected in OWS's internal product-line profitability analysis produced in discovery and reviewed by Dr. Keating. This margin figure accounts for direct material costs, foundry fabrication costs, assembly and packaging costs, testing and quality-assurance costs, and applicable allocations of manufacturing overhead. Dr. Keating has verified this margin against OWS's audited financial statements and publicly reported segment financials and is satisfied that it represents a reasonable and conservative measure of the incremental profit OWS would have earned on the displaced sales.

Market-Share Displacement. Having established that the Panduit factors are satisfied, Dr. Keating turns to the calculation of the specific sales volume that OWS would have captured in the "but for" world. Dr. Keating does not assume that OWS would have captured all of Lumicore's accused-product sales. Rather, he conducts a detailed customer-by-customer analysis to determine, for each significant Lumicore customer, whether OWS is a realistic alternative supplier. His analysis considers the following inputs:

• OWS and Lumicore product-revenue data by customer, produced in discovery under the three-tier confidentiality order (Confidential / Highly Confidential — Attorneys' Eyes Only / Highly Confidential — Source Code);

• Customer-qualification and approved-vendor-list ("AVL") data for each of the top 20 hyperscale data-center operators;

• Market share data from publicly available industry reports (Sundial Partners LLC, Granite Harbor Management Consulting) and from OWS internal competitive-intelligence reports;

• OWS's existing commercial relationships with each customer, including the status of design-in programs, qualification testing, and volume-purchasing arrangements.

Based on this analysis, Dr. Keating concludes that OWS and Lumicore compete head-to-head — that is, both companies are approved vendors or active competitors — at 12 of the top 20 hyperscale data-center operators. For those 12 customers, Dr. Keating calculates OWS's expected share of the redirected demand based on OWS's relative competitive position, the number and capability of other non-infringing competitors, and any customer-specific factors (such as dual-sourcing policies or maximum vendor-concentration limits) that would affect the allocation of sales. For the remaining 8 customers — where OWS is not an approved vendor or has no existing commercial relationship — Dr. Keating makes no lost-profits claim, and those sales are instead addressed under the reasonable-royalty theory.

The result of this analysis is a market-share displacement figure of 38.2%. This means that Dr. Keating concludes that, in the "but for" world, OWS would have captured 38.2% of Lumicore's total accused-product sales over the damages period.

Calculation. Applying this displacement figure to the projected accused-product revenue of approximately $714.6 million (from Q3 2022 through Q4 2025, based on Dr. Keating's analysis of Lumicore's historical sales data and reasonable projections through the estimated trial date), and multiplying by OWS's 47.3% gross margin, Dr. Keating calculates lost profits of approximately $128.9 million:

$714.6 million × 38.2% × 47.3% = approximately $128.9 million

B. Theory 2: Reasonable Royalty Under the *Georgia-Pacific* Framework

For the 61.8% of Lumicore's accused-product sales that OWS could not have captured in the "but for" world — because those sales were made to customers where OWS was not an approved vendor or otherwise lacked the ability to compete — Dr. Keating calculates a reasonable royalty. This is consistent with the well-established principle that a patentee is entitled to no less than a reasonable royalty on all infringing sales, even those for which lost profits cannot be demonstrated. Rite-Hite, 56 F.3d at 1545.

Royalty Base. The royalty base for the reasonable-royalty calculation is the portion of Lumicore's accused-product revenue not captured by the lost-profits theory:

$714.6 million − ($714.6 million × 38.2%) = approximately $441.6 million

Hypothetical Negotiation Date. Consistent with Federal Circuit law, Dr. Keating constructs the hypothetical negotiation as of Q2 2022, immediately before the launch of Lumicore's first accused product, the LumiLink 400G-ZR+, in Q3 2022. This date reflects the point at which Lumicore's infringement was about to begin and at which a willing licensor and a willing licensee, both acting reasonably, would have negotiated a license.

Georgia-Pacific Factor Analysis. Dr. Keating conducts a detailed analysis of all fifteen Georgia-Pacific factors, considering the totality of the circumstances as they would have been understood by the parties at the hypothetical negotiation date. His analysis takes into account, among other things, the value of the patented technology, the strength and breadth of OWS's patent portfolio, OWS's history of licensing its patents, the relationship between licensor and licensee as competitors, the profitability of the accused products, the extent of the infringement, the contribution of the patented features to the commercial success of the accused products, and the alternatives available to the hypothetical licensee.

Comparable License Agreements. At the core of Dr. Keating's reasonable-royalty analysis is his reliance on five comparable license agreements that provide market-based evidence of the royalty rate that a willing licensor and willing licensee would have agreed upon:

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 involved fewer patents and a smaller licensee with lower expected sales volume.

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 case.

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 part with the assistance of FairPoint Licensing Group, LLC, OWS's licensing agent (Managing Director Angela Reeves), which conducted pre-suit licensing outreach to Lumicore and maintains comprehensive industry licensing data.

Proposed Royalty Rate. Based on his Georgia-Pacific analysis and his evaluation of the comparable licenses, Dr. Keating proposes a royalty rate of 8.5% of accused-product net sales. This rate falls squarely within the 4.0%–12.5% range observed in comparable silicon-photonics industry transactions, and near the center of the specific range defined by the five comparable licenses (6.5%–10.2%). Dr. Keating explains that the proposed rate is appropriately above the Terralink license rate (which involved fewer patents and a smaller, less competitively significant licensee) and below the Coreline/Prisma cross-license rate (which reflected bilateral value exchange). The 8.5% rate reflects the value of the four asserted patents as applied to Lumicore's specific accused products in the specific market conditions prevailing at the hypothetical negotiation date.

Calculation. Applying the 8.5% royalty rate to the $441.6 million royalty base, Dr. Keating calculates a reasonable royalty of approximately $37.5 million:

$441.6 million × 8.5% = approximately $37.5 million

C. Theory 3: Enhanced Damages for Willful Infringement

In addition to compensatory damages, Dr. Keating provides the economic analysis necessary to support a potential award of enhanced damages for willful infringement under 35 U.S.C. § 284. The Supreme Court's decision in Halo Electronics, Inc. v. Pulse Electronics, Inc., 579 U.S. 93 (2016), confirmed that enhanced damages are available in cases of willful infringement and that the district court enjoys broad discretion in determining the appropriate level of enhancement.

Dr. Keating's enhanced-damages analysis focuses on the post-notice period beginning January 15, 2023 — the date on which FairPoint Licensing Group, LLC, on behalf of OWS, sent its first licensing letter to Lumicore's General Counsel, Raymond Bautista, identifying the '847, '193, and '562 Patents and putting Lumicore on notice that its LumiLink product line was believed to infringe OWS's patent rights. A supplemental letter, sent on May 15, 2023, identified the subsequently issued '015 Patent and expanded the scope of the infringement allegations to include the LumiEdge product line. Copies of both letters are attached as Exhibits 12 and 13, respectively.

Dr. Keating calculates post-notice lost profits from January 15, 2023 through the projected trial date (February 2, 2026), yielding approximately $109.2 million. This figure is derived from the same Panduit methodology and customer-by-customer displacement analysis used for the overall lost-profits calculation, applied to the narrower post-notice time period. Dr. Keating further analyzes the Read factors relevant to willfulness enhancement, including the timing and nature of Lumicore's notice, Lumicore's conduct in response to that notice, and the egregiousness of the infringement.

Dr. Keating presents alternative enhancement scenarios calculated at 1.5×, 2×, and 3× multipliers on various damage bases. He does not advocate for a specific multiplier; rather, he provides the economic framework and calculations necessary for the Court to exercise its discretion under Section 284 and Halo. This approach is appropriate and consistent with the practice of damages experts in patent cases, who routinely present alternative scenarios keyed to the Court's legal determinations on willfulness.

D. Aggregate Damages

Dr. Keating's total damages range is as follows:

• Base damages (no enhancement): $128.9 million (lost profits) + $37.5 million (reasonable royalty) = approximately $166.4 million.

• Maximum damages (with selected willful-infringement enhancement): approximately $210.0 million, reflecting a blended application of the enhancement scenarios to the post-notice damages base.

The $210 million figure pled in OWS's complaint is a blended, rounded demand reflecting OWS's combined view of all three damages theories, not a simple arithmetic sum of the individual theory maxima. It incorporates the base compensatory damages plus a reasonable level of enhancement for willful infringement during the post-notice period, and it is fully supported by Dr. Keating's analysis.

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 reality that in many cases, the patented technology is so integral to the accused product that it is the patented feature — rather than unpatented components — that drives the product's commercial value and customer appeal.

The Federal Circuit has repeatedly endorsed the EMVR as a legitimate damages methodology when its predicate conditions are met. In LaserDynamics, Inc. v. Quanta Computer, Inc., 694 F.3d 51 (Fed. Cir. 2012), the court explained that the EMVR applies "where the patented feature creates the 'basis for customer demand' for the entire machine" or where "the entire market value of the accused product is attributable to the patented feature." Id. at 67. The court further noted that where the patented feature is the basis for customer demand, "the patentee may be entitled to damages based on the value of the entire apparatus." Id. (citing Rite-Hite, 56 F.3d at 1549).

In Rite-Hite Corp. v. Kelley, Inc., 56 F.3d 1538 (Fed. Cir. 1995) (en banc), the Federal Circuit upheld a broad approach to damages recovery where the patented invention drives the market for the product as a whole, including recovery for lost sales of unpatented components sold with the patented product and convoyed sales. The court recognized that patent damages must be "adequate to compensate for the infringement" and that rigid apportionment rules should not artificially constrain recovery where the evidence supports a broader measure. Id. at 1545–49.

The EMVR is not, as Lumicore's anticipated motion may suggest, a disfavored or suspect methodology. Rather, it is a recognized tool in the patent damages toolkit, subject to the same reliability requirements that apply to any damages methodology. The critical question is whether the expert has marshaled sufficient evidence to support the application of the rule to the facts of the particular case.

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 are the basis for customer demand for the accused modules.

The transceiver module is the SSPPU. The accused products are the LumiLink 400G-ZR+ (FY 2023 revenue: $94.8 million), the LumiLink 800G-DR8 (FY 2023 revenue: $128.4 million), and the LumiEdge 1600G-LR (FY 2023 revenue: $41.7 million). Total FY 2023 accused-product revenue is $264.9 million. The transceiver module is the smallest commercially available unit that practices the asserted patents. The patented features — the multi-channel waveguide multiplexer (claimed in the '847 Patent), the coherent optical transceiver architecture (claimed in the '193 Patent), the embedded micro-channel heat sinks (claimed in the '562 Patent), and the polarization-diverse grating coupler (claimed in the '015 Patent) — are not sold separately. They are integral, physically embedded components of the transceiver module. There is no separate market for waveguide multiplexers, micro-channel heat sinks, or grating couplers standing alone. A customer does not purchase a waveguide multiplexer and a heat sink and a grating coupler and then assemble them into a transceiver module; the customer purchases a complete, tested, and qualified transceiver module ready for deployment in a data-center environment.

Because the transceiver module is the SSPPU — the smallest unit sold by Lumicore that practices all of the asserted patent claims — it is by definition the appropriate royalty base. The Federal Circuit has consistently held that where the SSPPU is used as the royalty base, no further apportionment of the royalty base is required, though the royalty rate must reflect the value of the patented features relative to the product as a whole. See Summit 6, LLC v. Quillon Corporation, 802 F.3d 1283, 1296 (Fed. Cir. 2015). Dr. Keating's use of the module-level price as the royalty base is thus straightforward and non-controversial.

The patented features are the basis for customer demand. Even if this Court were to require an EMVR analysis beyond the SSPPU — which it need not do where the SSPPU is the appropriate royalty base — Dr. Keating has marshaled substantial evidence that the patented features drive customer demand for the accused transceiver modules. This evidence includes:

Technical expert testimony. Dr. Caroline Ashford, Professor of Electrical Engineering and Photonics at the Northfield Institute of Technology and OWS's technical expert, has opined that the patented technologies provide the key performance differentiators that hyperscale data-center customers require. Specifically, the low-insertion-loss waveguide multiplexing architecture claimed in the '847 Patent enables higher channel counts with lower optical power loss, directly translating to longer reach and higher data throughput. The embedded micro-channel thermal management structures claimed in the '562 Patent enable sustained high-power operation without performance degradation, a critical requirement in dense data-center environments. And the polarization-diverse grating coupler claimed in the '015 Patent enables efficient fiber-to-chip coupling across both polarization states, reducing insertion loss and improving overall link budget. Dr. Ashford's opinions are based on her extensive technical analysis of the accused products and the asserted patent claims and are set forth in detail in her expert report.

Industry expert testimony. Gregory Falk, formerly Vice President of Engineering at Solara Optics, Inc. and OWS's industry expert, has opined that purchasing decisions for silicon-photonics transceiver modules in the hyperscale data-center market are driven by the specific optical-performance and thermal-management features covered by the asserted patents. Mr. Falk's opinions are based on his decades of experience in the photonics industry, his firsthand knowledge of customer requirements and procurement practices, and his analysis of competitive dynamics in the relevant market segments. He has confirmed that the features claimed in OWS's patents — low insertion loss, effective thermal management, and polarization diversity — are the features that data-center operators prioritize when selecting transceiver suppliers.

Lumicore's own marketing materials. Documents produced by Lumicore in discovery reveal that Lumicore itself has consistently promoted the performance of the accused products' waveguide multiplexing and thermal management — the very technologies claimed in OWS's patents — as key selling points. For example, Lumicore marketing presentations to customers (designated Highly Confidential — AEO) highlight the "industry-leading low-insertion-loss waveguide architecture" and "advanced integrated thermal management" of the LumiLink product line. These materials demonstrate that Lumicore recognizes the patented features as central to the commercial appeal of the accused products.

Deposition testimony of Dr. Sandra Michaud. Dr. Sandra Michaud, Lumicore's Chief Technology Officer, was deposed on November 19, 2024. During her deposition, Dr. Michaud acknowledged the importance of the accused waveguide multiplexer architecture and the embedded micro-channel thermal management structures to the overall product performance and customer appeal of the LumiLink and LumiEdge product lines. Although Dr. Michaud sought to attribute some of the products' commercial success to other features (such as Lumicore's proprietary driver electronics and control firmware), her testimony confirms that the patented features play a central and material role in driving customer demand. See Exhibit 8 (excerpts from Michaud deposition).

This evidence is more than sufficient to support the application of the EMVR — or, more precisely, to justify Dr. Keating's use of the transceiver module as the royalty base. Dr. Keating's analysis is not based on an unsupported assumption that the entire value of the accused products is attributable to the patented features; rather, it is grounded in a detailed evidentiary record demonstrating that the patented features are, in fact, the basis for customer demand.

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 patented optical and thermal features. This argument fails for several reasons.

First, as noted above, the transceiver module is the SSPPU. When the royalty base is the SSPPU, the apportionment inquiry shifts to the royalty rate, not the royalty base. Dr. Keating has accounted for the relative value of the patented features in his royalty-rate analysis, arriving at a rate (8.5%) that reflects the contribution of the patented features to the overall product value. This is precisely the approach endorsed by the Federal Circuit.

Second, Dr. Keating does address apportionment in his expert report. He conducts a value-attribution analysis demonstrating that the patented optical and thermal innovations account for the majority of the accused modules' commercial value and competitive differentiation. His analysis considers the cost structure of the accused products, the relative contribution of patented and unpatented components to the product's performance specifications, and the degree to which the patented features — rather than commodity components such as packaging and standard driver electronics — differentiate the accused products from non-infringing alternatives and justify the premium prices that Lumicore charges for the LumiLink and LumiEdge product lines.

Third, the Federal Circuit has repeatedly held that disputes over the degree of apportionment are questions of fact for the jury, not grounds for exclusion under Daubert. Where an expert has used the SSPPU as the royalty base, has addressed apportionment, and has provided evidence supporting the application of the EMVR, the challenge is one of factual weight, not methodological reliability. The proper remedy for the defendant is to present its own apportionment analysis through its own damages expert and to challenge the plaintiff's analysis through cross-examination — not to seek wholesale exclusion of the plaintiff's expert.

In Commonwealth Scientific & Industrial Research Organisation v. Sterling Reach Holdings, 809 F.3d 1295 (Fed. Cir. 2015), the Federal Circuit upheld a damages award based on the entire accused product where the expert demonstrated that the patented feature was the primary basis for customer demand for the product. The court rejected the defendant's argument that the expert should have apportioned the royalty base to isolate the value of the patented Wi-Fi technology from other product features, holding that the expert's analysis was supported by sufficient evidence and that the defendant's disagreement went to weight, not admissibility. Id. at 1302–03.

Similarly, in Uniloc USA, Inc. v. Kestrel Partners LLC, 632 F.3d 1292 (Fed. Cir. 2011), while the Federal Circuit excluded the use of the "25 percent rule of thumb" as lacking any basis in the facts of the case, the court confirmed that a properly supported EMVR analysis — one grounded in evidence that the patented feature drives customer demand — is permissible. Id. at 1315–18. The Uniloc decision does not stand for the proposition that a damages expert must always apportion the royalty base below the level of the SSPPU; it stands for the proposition that the expert must provide a factual basis for the royalty base and rate selected, rather than relying on arbitrary rules of thumb.

Dr. Keating's analysis is the antithesis of the arbitrary approach condemned in Uniloc. His use of the module-level price as the royalty base is not a rule of thumb; it is a reasoned economic judgment grounded in the fact that the module is the SSPPU and supported by extensive evidence that the patented features drive customer demand for the accused products. Lumicore's apportionment objection, however it is framed, is a dispute about the weight of the evidence — not about the admissibility of Dr. Keating's methodology.

B. Dr. Keating's 38.2% Market-Share Displacement Figure Is Based on Reliable Methodology and Sufficient Data

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 is the product of a rigorous, empirical, customer-by-customer analysis grounded in actual sales data produced in discovery.

Dr. Keating's methodology proceeded as follows. First, he identified the customer base for Lumicore's accused products using Lumicore's customer-by-customer revenue data produced in discovery under the three-tier confidentiality order. This data is designated Highly Confidential — Attorneys' Eyes Only and includes detailed breakdowns of Lumicore's accused-product revenue by customer, by product, and by quarter for the relevant damages period.

Second, Dr. Keating determined, for each significant Lumicore customer, whether OWS is a realistic alternative supplier — that is, whether OWS also sells or could have sold competing products (OWS-400ZR, OWS-800XR, OWS-1600DR) to that customer. To make this determination, Dr. Keating analyzed customer-qualification and approved-vendor-list ("AVL") data, OWS's existing commercial relationships with each customer (including the status of design-in programs, qualification testing, and volume-purchasing agreements), and the competitive dynamics at each account.

Third, Dr. Keating identified the 12 of the top 20 hyperscale data-center operators at which OWS and Lumicore compete head-to-head — meaning both companies are either approved vendors or active competitors for the same business. For each of these 12 customers, Dr. Keating calculated OWS's expected share of the redirected demand, taking into account OWS's relative competitive position, the number and capability of other non-infringing competitors at that account, and any customer-specific factors (such as dual-sourcing policies, vendor-diversification requirements, or maximum vendor-concentration limits) that would have affected the allocation of sales in the "but for" world.

Fourth, for the remaining 8 customers — where OWS is not an approved vendor or has no existing commercial relationship — Dr. Keating made no lost-profits claim. Those sales are instead captured in the reasonable-royalty calculation, which applies to the 61.8% of accused-product revenue that OWS could not have captured absent infringement. This conservative approach ensures that the 38.2% displacement figure reflects only sales that OWS actually would have made, not merely sales that it wished it could have made.

Fifth, Dr. Keating made additional downward adjustments to account for the possibility that some customers, even among those where OWS is an approved vendor, might have selected a third-party non-infringing supplier rather than OWS in the "but for" world. These adjustments reflect Dr. Keating's careful consideration of the competitive alternatives available to each customer and his effort to ensure that the displacement figure is conservative and defensible.

The result of this multi-step, data-intensive analysis is the 38.2% market-share displacement figure. It is not a single assumption; it is the output of a model that incorporates dozens of customer-specific data points and competitive-dynamics assessments, each of which is grounded in the factual record.

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 significant part to Lumicore's entry into the market with infringing products that compete directly with OWS's OWS-400ZR module. The price erosion analysis confirms that Lumicore's infringement not only displaced OWS sales volume but also depressed OWS's pricing power, further establishing the competitive harm caused by the infringement. Dr. Keating's price erosion analysis is set forth in Exhibit 14 and is based on OWS's transaction-level pricing data and publicly available market data.

Industry expert corroboration. Gregory Falk, OWS's industry expert, has independently analyzed the competitive dynamics in the silicon-photonics transceiver market and has corroborated the magnitude of the displacement attributable to Lumicore's accused products. Mr. Falk's analysis considers the structure of the hyperscale data-center transceiver market, the number and capabilities of competing suppliers, and the barriers to entry and customer-switching costs that characterize this market. His conclusions are consistent with Dr. Keating's 38.2% displacement figure. See Exhibit 16 (Falk Declaration).

OWS sales personnel testimony. OWS's Vice President of Sales, Karen Whitfield, and other OWS sales personnel are expected to provide testimony regarding specific instances of customer diversion and lost design-in opportunities caused by Lumicore's accused products. This testimony will include accounts of competitive situations in which OWS lost business to Lumicore at specific hyperscale data-center operators, corroborating the customer-by-customer displacement analysis that underlies Dr. Keating's 38.2% figure. This real-world evidence of actual competitive displacement provides a powerful factual foundation for Dr. Keating's economic analysis.

OWS's market position. OWS is the third-largest U.S. supplier of silicon-photonics transceiver modules for hyperscale data centers, holding 142 U.S. patents and 58 pending applications in the field. Its FY 2023 revenue of $487.3 million and its demonstrated manufacturing capacity (through its foundry partnerships with Drayton Holdings, Thackeray Holdings, and Fenmore Holdings) establish that OWS had the scale and capability to have served the additional demand attributed to it in Dr. Keating's "but for" analysis.

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 competitive-dynamics assessments at particular accounts were incorrect. These are precisely the kinds of disputes that the adversarial process is designed to resolve.

Dr. Keating used a recognized methodology — customer-by-customer market analysis within the Panduit framework — and applied it to actual market data produced in discovery. He explained his reasoning, documented his assumptions, and made conservative adjustments where appropriate. That Lumicore's expert may arrive at a different displacement figure using different assumptions or different weights for particular competitive factors does not render Dr. Keating's analysis unreliable. It creates a factual dispute for the jury.

The Federal Circuit and courts in the Eastern District of Texas have consistently held that methodological disagreements between opposing damages experts do not warrant exclusion. "The fact that another expert may disagree with the methodology or conclusions of a damages expert does not make the testimony inadmissible." Micro Chemical, Inc. v. Lextron, Inc., 317 F.3d 1387, 1392 (Fed. Cir. 2003). As the Fifth Circuit has explained, "[q]uestions relating to the bases and sources of an expert's opinion affect the weight to be assigned that o

CONTINGENCY DRAFT — PRIVILEGED AND CONFIDENTIAL ATTORNEY WORK PRODUCT
UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF TEXAS MARSHALL DIVISION
PLAINTIFF OPTIWAVE SEMICONDUCTOR CORP.'S OPPOSITION TO DEFENDANT'S MOTION TO EXCLUDE THE EXPERT TESTIMONY OF DR. LAWRENCE KEATING UNDER FEDERAL RULE OF EVIDENCE 702 AND *DAUBERT*
Alan Ngo (CA Bar No. 287451, admitted pro hac vice) Marcus Delgado (TX Bar No. 24098173) Wendy Schultz (CA Bar No. 301287, admitted pro hac vice) Omar Siddiqui (CA Bar No. 314592, admitted pro hac vice) CALDERWOOD & HARKNESS LLP 350 South Grand Avenue, 48th Floor Los Angeles, California 90071 Telephone: (213) 555-4800 Facsimile: (213) 555-4801
Email: ango@calderwoodharkness.com
LOCAL COUNSEL: James "Jim" Callahan (TX Bar No. 03812947) WHITMORE & CALLAHAN LLP 110 North College Avenue, Suite 800 Tyler, Texas 75702 Telephone: (903) 555-2200 Facsimile: (903) 555-2201
Email: jcallahan@whitmorecallahan.com
Attorneys for Plaintiff Optiwave Semiconductor Corp.
TABLE OF CONTENTS
TABLE OF AUTHORITIES
Cases
Statutes and Rules
Secondary Authorities
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 serves as OWS's damages expert in this patent infringement action, and his expert report, served on June 15, 2025, presents a thorough, fact-intensive damages analysis that is firmly grounded in Federal Circuit–approved methodologies and the specific evidence of this case.
This action concerns Lumicore's infringement of four OWS patents directed to foundational innovations in silicon-photonics transceiver technology: U.S. Patent No. 10,234,847 (the "'847 Patent"), covering multi-channel waveguide multiplexer architectures; U.S. Patent No. 10,891,193 (the "'193 Patent"), covering coherent optical transceiver architectures; U.S. Patent No. 9,678,562 (the "'562 Patent"), covering embedded micro-channel thermal management structures; and U.S. Patent No. 11,402,015 (the "'015 Patent"), covering polarization-diverse grating coupler designs. These patents reflect years of research and development investment by OWS and protect the core technologies that differentiate high-performance silicon-photonics transceiver modules used in hyperscale data-center interconnects.
Dr. Keating has been retained to quantify the damages flowing from Lumicore's infringement of these patents through the manufacture and sale of its LumiLink 400G-ZR+, LumiLink 800G-DR8, and LumiEdge 1600G-LR transceiver module product lines. His expert report presents three complementary damages theories, each of which is well-established in patent damages law:
First, Dr. Keating calculates lost profits under the Panduit Corp. v. Stahlin Bros. Fibre Works, Inc., 575 F.2d 1152 (6th Cir. 1978), framework. Applying a rigorous customer-by-customer market-share displacement analysis, Dr. Keating concludes that OWS would have captured 38.2% of Lumicore's accused-product sales in a "but for" world absent infringement. Based on this displacement, and on OWS's demonstrated gross margin of 47.3% on its competing product lines, Dr. Keating calculates lost profits of approximately $128.9 million.
Second, for the remaining 61.8% of Lumicore's accused-product sales — that is, sales to customers that OWS could not have served absent infringement — Dr. Keating calculates a reasonable royalty under the fifteen-factor framework established in Georgia-Pacific Corp. v. U.S. Plywood Corp., 318 F. Supp. 1116 (S.D.N.Y. 1970). His proposed royalty rate of 8.5% on net sales of accused products is anchored in five comparable license agreements in the silicon-photonics industry, including three involving OWS as the licensor, and falls squarely within the 4.0%–12.5% range of comparable industry transactions. The resulting reasonable royalty is approximately $37.5 million.
Third, Dr. Keating provides an enhanced damages analysis for willful infringement during the post-notice period beginning January 15, 2023 — the date FairPoint Licensing Group, LLC sent its first licensing letter to Lumicore identifying the asserted patents. Dr. Keating calculates the post-notice damages base and presents alternative enhancement scenarios at 1.5×, 2×, and 3× multipliers for the Court's consideration under 35 U.S.C. § 284 and Halo Electronics, Inc. v. Pulse Electronics, Inc., 579 U.S. 93 (2016).
In total, Dr. Keating's analysis yields a damages range of $166.4 million (combining lost profits and a reasonable royalty, with no enhancement) to $210.0 million (with the application of a willful-infringement enhancement as warranted by the evidence).
Lumicore's anticipated challenges to Dr. Keating's testimony target three principal aspects of his analysis: (a) his use of the transceiver module as the royalty base — which Lumicore will frame as a misapplication of the entire market value rule ("EMVR"); (b) his 38.2% market-share displacement assumption, which Lumicore will characterize as speculative; and (c) his proposed 8.5% reasonable royalty rate, which Lumicore will claim lacks adequate support in comparable licenses. OWS anticipates that Lumicore will also raise ancillary objections regarding the presentation of multiple damages scenarios and the sufficiency of the financial data on which Dr. Keating relied.
None of these anticipated challenges warrants exclusion. Each of Dr. Keating's methodologies is a recognized and accepted approach to patent damages analysis. Each is supported by extensive factual record evidence — including OWS and Lumicore financial data produced in discovery, comparable license agreements, industry expert analysis, deposition testimony, and the technical opinions of OWS's technical expert, Dr. Caroline Ashford. And each involves the kind of factual and analytical judgments that are properly committed to the jury, subject to vigorous cross-examination by Lumicore's counsel and competing testimony from Lumicore's own damages expert, Dr. Natasha Volkov of Pinnacle Analytics Partners LLP.
As the Supreme Court emphasized in Daubert, the trial court's gatekeeping role is to ensure that expert testimony rests on a reliable foundation and is relevant to the task at hand — not to resolve disputes between opposing experts or to choose between competing factual inferences. 509 U.S. at 597. Dr. Keating's analysis satisfies this standard. OWS respectfully requests that this Court deny Lumicore's anticipated motion in its entirety.
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, technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue;
(b) the testimony is based on sufficient facts or data;
(c) the testimony is the product of reliable principles and methods; and
(d) the expert has reliably applied the principles and methods to the facts of the case.
Fed. R. Evid. 702 (as amended effective December 1, 2023).
In Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993), the Supreme Court interpreted Rule 702 to require the trial court to act as a "gatekeeper" to ensure that expert testimony is both reliable and relevant. The Court identified a non-exhaustive list of factors bearing on the reliability inquiry, including: (1) whether the theory or technique in question can be and has been tested; (2) whether it has been subjected to peer review and publication; (3) the known or potential error rate of the technique; (4) the existence and maintenance of standards controlling the technique's operation; and (5) whether the theory or technique has achieved general acceptance in the relevant scientific or professional community. Id. at 593–94.
The Court emphasized, however, that this inquiry is "a flexible one" and that the focus "must be solely on principles and methodology, not on the conclusions that they generate." Id. at 594–95. The Daubert inquiry thus does not require the trial court to determine whether the expert's conclusions are correct — only whether the methodology used to reach those conclusions is reliable and has been reliably applied to the facts of the case.
In Kumho Tire Co. v. Carmichael, 526 U.S. 137 (1999), the Supreme Court extended Daubert's gatekeeping framework beyond the domain of scientific testimony to encompass all expert testimony, including testimony based on "technical" or "other specialized" knowledge. Id. at 141, 147. The Court reiterated that the specific Daubert factors "do not constitute a definitive checklist or test" and that the trial court enjoys "broad latitude" in determining which factors are pertinent to a given expert's reliability. Id. at 150. The overarching objective, the Court explained, is "to make certain that an expert, whether basing testimony upon professional studies or personal experience, employs in the courtroom the same level of intellectual rigor that characterizes the practice of an expert in the relevant field." Id. at 152.
B. The *Daubert* Standard Is Flexible and Favors Admissibility
While the trial court's gatekeeping obligation under Daubert and Rule 702 is real, that obligation is equally bounded by a clear presumption in favor of admissibility. The Supreme Court has cautioned that the gatekeeping function should not be exercised to usurp the role of the jury as the ultimate arbiter of competing factual claims. As the Court stated in Daubert:
Vigorous cross-examination, presentation of contrary evidence, and careful instruction on the burden of proof are the traditional and appropriate means of attacking shaky but admissible evidence. . . . These conventional devices, rather than wholesale exclusion under an uncompromising 'general acceptance' test, are the appropriate safeguards where the basis of scientific testimony meets the standards of Rule 702.
509 U.S. at 596 (citation omitted).
The Fifth Circuit, whose Daubert framework applies in this Court, has consistently held that "[a] district court should not exclude expert testimony merely because it believes that the expert's factual premises are wrong." Johnson v. Arkema, Inc., 685 F.3d 452, 459 (5th Cir. 2012). "The rejection of expert testimony is the exception rather than the rule," and "[d]oubts regarding whether an expert's testimony will be useful should generally be resolved in favor of admissibility." Pipitone v. Biomatrix, Inc., 288 F.3d 239, 247 (5th Cir. 2002). This Court has similarly recognized that the gatekeeping inquiry "is not intended to serve as a replacement for the adversary system." See, e.g., Wi-LAN, Inc. v. Sharp Electronics Corp., No. 6:10-cv-521-LED, 2013 WL 1344544, at *3 (E.D. Tex. Apr. 3, 2013).
The proponent of expert testimony bears the burden of establishing admissibility, but need do so only by a preponderance of the evidence — not by clear and convincing evidence or any heightened standard. Daubert, 509 U.S. at 592 n.10. This standard reflects the Federal Rules' general approach to the admissibility of evidence and underscores the drafters' recognition that the trial process itself — including cross-examination, the presentation of contrary evidence, and the court's ability to instruct the jury — provides robust safeguards against the risk that unreliable expert testimony will mislead the factfinder.
Moreover, as the Federal Judicial Center's Reference Manual on Scientific Evidence (3d ed. 2011) observes, Daubert "demands only that the proponent of the evidence demonstrate that the expert followed scientifically valid reasoning and methodology in arriving at his or her conclusions." The trial court "need not determine that the expert testimony a party seeks to offer into evidence is irrefutable or certainly correct," but rather that the methodology employed is grounded in established principles and applied in a reliable fashion. Id.
The upshot of these principles is clear: where an expert has employed a recognized methodology, grounded that methodology in the facts of the case, and explained his or her reasoning, the resulting testimony is admissible even if the opposing party's expert disagrees with the conclusions reached or would have applied the methodology differently. Such disagreements are for the jury to resolve.
C. Particular Standards for Patent Damages Experts
Federal Circuit law governs the substantive standards for patent damages and, accordingly, the admissibility and reliability of expert testimony offered to establish damages in patent infringement cases. See, e.g., LaserDynamics, Inc. v. Quanta Computer, Inc., 694 F.3d 51, 66–67 (Fed. Cir. 2012). While this Court applies the Fifth Circuit's procedural Daubert framework, the substantive law governing the permissible scope and methods of patent damages analysis is supplied by the Federal Circuit.
The Federal Circuit has recognized two principal categories of compensatory damages available to a patent holder under 35 U.S.C. § 284: lost profits and a reasonable royalty. "Upon finding for the claimant the court shall award the claimant 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." 35 U.S.C. § 284. A patentee may recover lost profits where it can demonstrate that "but for" the infringement, it would have made additional sales (or sold at higher prices). Rite-Hite Corp. v. Kelley, Inc., 56 F.3d 1538, 1545 (Fed. Cir. 1995) (en banc). For sales the patentee could not have captured, the patentee is entitled to no less than a reasonable royalty. Id.
The well-established framework for proving lost profits was set forth in Panduit Corp. v. Stahlin Bros. Fibre Works, Inc., 575 F.2d 1152 (6th Cir. 1978), and adopted by the Federal Circuit. Under Panduit, a patentee must demonstrate: (1) demand for the patented product; (2) the absence of acceptable non-infringing substitutes; (3) manufacturing and marketing capability to exploit the demand; and (4) the amount of the profit it would have made. Id. at 1156.
The framework for establishing a reasonable royalty was articulated in Georgia-Pacific Corp. v. U.S. Plywood Corp., 318 F. Supp. 1116 (S.D.N.Y. 1970), which set forth a fifteen-factor analysis designed to reconstruct the terms of a hypothetical license negotiation between a willing licensor and a willing licensee at the time infringement began. The Federal Circuit has described the Georgia-Pacific framework as the "most common method for determining a reasonable royalty" and has affirmed its use in countless cases. See Lucent Technologies, Inc. v. Gateway, Inc., 580 F.3d 1301, 1324 (Fed. Cir. 2009).
Courts, including this Court, have routinely recognized that patent damages analysis is inherently uncertain and involves projections, assumptions, and economic judgments. The law does not demand mathematical exactness from a damages expert; rather, it requires that the expert employ a sound methodology and ground it in the facts of the specific case. See Versata Software, Inc. v. Hollowell & Co. America, Inc., 717 F.3d 1255, 1268 (Fed. Cir. 2013) ("The amount of damages need not be proved with unerring precision, because '[a]ny reasonable royalty analysis necessarily involves an element of approximation and uncertainty.'") (citation omitted).
Accordingly, the bar for exclusion of a patent damages expert is high. The Federal Circuit has reversed district courts that have excluded damages testimony based on disagreements with the expert's factual assumptions or the weight to be given to particular evidence, holding that such disputes are properly resolved by the jury. See, e.g., i4i Ltd. Partnership v. Kestrel Partners LLC, 598 F.3d 831, 854–56 (Fed. Cir. 2010), aff'd, 564 U.S. 91 (2011). As a leading treatise observes, "[t]he fact that reasonable minds may differ regarding the reliability of particular assumptions does not render the expert's methodology unreliable; it creates a factual dispute for the trier of fact." 7 Chisum on Patents § 20.05.
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 billing rate is $875 per hour, and the estimated total budget for his engagement in this matter is $950,000.
Dr. Keating holds a Ph.D. in Economics from the University of Chicago, where his doctoral research focused on the economics of innovation and intellectual property licensing in technology markets. He also holds an M.B.A. from the Wharton School of the University of Pennsylvania and a B.S. in Electrical Engineering from the Massachusetts Institute of Technology. His combined training in engineering, economics, and business provides a uniquely comprehensive foundation for the analysis of patent damages in high-technology industries.
Dr. Keating has more than twenty-five years of professional experience in economic consulting, with a particular focus on the quantification of damages in intellectual property disputes. Before founding Meridian Economic Consulting Group in 2012, he served as a Vice President at Calderon Management Consulting and, before that, as a Senior Associate at Brightmoor Strategy Partners. Throughout his career, he has been retained as a damages expert or consulting expert in more than 150 patent infringement cases spanning a range of technologies, including semiconductors, photonics, telecommunications, software, and consumer electronics.
Dr. Keating has been qualified as an expert and has testified in federal courts across the country, including in the Eastern District of Texas, the Northern District of California, the District of Delaware, the Western District of Texas, the Central District of California, and the International Trade Commission. Courts have consistently admitted his expert testimony, and no court has excluded his opinions under Daubert or Rule 702. Among the cases in which Dr. Keating has provided trial testimony are:
• Terralink Semiconductor, Inc. v. Quantum Bridge Technologies, Inc., No. 2:19-cv-00287 (E.D. Tex. 2021) (Judge Gilstrap) — testifying on lost profits and reasonable royalty damages in a silicon-photonics patent case; jury awarded $46.2 million;
• NovaWave Corp. v. Broadfield Semiconductor, Inc., No. 1:18-cv-04523 (N.D. Cal. 2020) — testifying on reasonable royalty damages in an optical transceiver patent case; jury awarded $19.8 million;
• Marlowe Asset Management Integrated Systems, Inc. v. Apex microsystems, Ltd., No. 1:20-cv-01152 (D. Del. 2022) — testifying on lost profits and reasonable royalty damages in a semiconductor fabrication patent case; jury awarded $87.3 million;
• Meridian Photonics Corp. v. Pacific Optical Devices, Inc., No. 6:17-cv-00814 (W.D. Tex. 2019) — testifying on reasonable royalty damages in a fiber-optic coupler patent case; jury awarded $12.4 million.
In each of these cases, Dr. Keating's opinions survived Daubert challenge, and his testimony was presented to the jury without limitation.
Dr. Keating has published extensively on patent damages methodologies. His publications include articles in peer-reviewed journals and practitioner-oriented publications on topics including lost-profits analysis under the Panduit framework, reasonable-royalty analysis under the Georgia-Pacific framework, the proper application of the entire market value rule, the use of comparable license agreements in hypothetical-negotiation analyses, and the economics of willful infringement and enhanced damages. He is a frequent speaker at industry and legal conferences, including the annual intellectual Property Owners Association meeting, the American Bar Association Section of intellectual Property Law annual conference, and the Patent Damages Study Group.
Dr. Keating is a member of the American Economic Association, the Licensing Executives Society (USA and Canada), and the American intellectual Property Law Association. He has served as an adjunct professor of economics at the University of Chicago Booth School of Business, where he taught a course on the economics of intellectual property.
In this case, Dr. Keating's analysis draws upon his extensive experience in quantifying damages in technology patent disputes, his deep familiarity with the economic dynamics of the semiconductor and photonics industries, and his expertise in the Panduit lost-profits framework, the Georgia-Pacific reasonable-royalty framework, and the law governing the entire market value rule and apportionment. His qualifications to opine on the damages issues in this case are beyond serious dispute. While OWS does not anticipate that Lumicore will challenge Dr. Keating's credentials, his qualifications are set forth here to underscore the breadth of experience and expertise that underpin his opinions.
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-counting. A summary of each theory follows.
A. Theory 1: Lost Profits Under the *Panduit* Framework
Dr. Keating applies the four-factor test established in Panduit Corp. v. Stahlin Bros. Fibre Works, Inc., 575 F.2d 1152 (6th Cir. 1978), to establish OWS's entitlement to lost-profit damages for the subset of Lumicore's accused-product sales that OWS would have captured in a "but for" world absent infringement. His analysis proceeds factor by factor.
Factor 1 — Demand for the Patented Product. Dr. Keating establishes strong demand for products embodying the patented technology. OWS's FY 2023 revenue was $487.3 million, as reflected in audited financial statements prepared by Gresham & Whitfield LLP. Of that total, approximately $310 million is attributable to products that practice the asserted patents — specifically, the OWS-400ZR, OWS-800XR, and OWS-1600DR transceiver module families. These products are designed for deployment in hyperscale data-center interconnects, a market segment that has experienced compound annual growth rates exceeding 25% over the relevant damages period (Q3 2022 through Q4 2025), driven by the explosive growth in cloud computing, artificial intelligence workloads, and high-bandwidth networking requirements. Dr. Keating documents this demand growth using publicly available market research data from Sundial Partners LLC, Granite Harbor Management Consulting, and Dunmore Consulting Group, as well as OWS internal forecasts and customer-qualification data produced in discovery. The existence of robust and growing demand for the patented products is not reasonably contestable.
Factor 2 — Absence of Acceptable Non-Infringing Substitutes. Dr. Keating analyzed four potential substitute products identified in the record and concluded that none constitutes an acceptable non-infringing substitute. Each alternative lacks one or more of the patented features — specifically, the low-insertion-loss waveguide multiplexing covered by the '847 Patent, the embedded micro-channel thermal management structures covered by the '562 Patent, and the polarization-diverse grating coupling architecture covered by the '015 Patent. Dr. Keating's analysis on this factor is supported by the technical opinions of Dr. Caroline Ashford, Professor of Electrical Engineering and Photonics at the Northfield Institute of Technology, who serves as OWS's technical expert and has opined on the critical role of the patented features in achieving the performance specifications demanded by hyperscale data-center customers. It is further supported by the industry analysis of Gregory Falk, formerly Vice President of Engineering at Solara Optics, Inc., who serves as OWS's industry expert and has opined on the competitive landscape, the absence of commercially viable non-infringing alternatives, and the importance of the patented technologies to purchasing decisions by major hyperscale operators.
Dr. Keating recognizes, as the law requires, that the Panduit analysis does not demand the absence of all competition — only the absence of acceptable non-infringing substitutes that practice the claimed inventions. His analysis carefully distinguishes between competing products that achieve similar performance through different (non-infringing) technological approaches and products that necessarily infringe OWS's asserted patent claims. The former may reduce OWS's market share but do not defeat the lost-profits claim; the latter — Lumicore's accused products — represent the specific competitive injury for which OWS seeks compensation.
Factor 3 — Manufacturing and Marketing Capability. Dr. Keating demonstrates that OWS possessed the manufacturing capacity and marketing infrastructure necessary to exploit the demand displaced by Lumicore's infringing products. OWS operates a fab-lite model, maintaining in-house design and testing capabilities while relying on foundry partnerships with Drayton Holdings and Thackeray Holdings for wafer fabrication and with Fenmore Holdings for module assembly and packaging. Internal OWS capacity-planning documents produced in discovery demonstrate that OWS's foundry allocations during the relevant period had sufficient headroom to accommodate additional production volume equivalent to the accused-product sales that Dr. Keating attributes to OWS in the "but for" scenario. On the marketing side, OWS maintains a sales organization with national reach, including dedicated account teams covering each of the twelve hyperscale data-center operators at which OWS and Lumicore compete head-to-head. OWS's Vice President of Sales, Karen Whitfield, is expected to testify regarding OWS's ability to have served additional demand during the relevant period.
Factor 4 — Amount of Profit. OWS's gross margin on its competing product lines (OWS-400ZR and OWS-800XR) is 47.3%, as reflected in OWS's internal product-line profitability analysis produced in discovery and reviewed by Dr. Keating. This margin figure accounts for direct material costs, foundry fabrication costs, assembly and packaging costs, testing and quality-assurance costs, and applicable allocations of manufacturing overhead. Dr. Keating has verified this margin against OWS's audited financial statements and publicly reported segment financials and is satisfied that it represents a reasonable and conservative measure of the incremental profit OWS would have earned on the displaced sales.
Market-Share Displacement. Having established that the Panduit factors are satisfied, Dr. Keating turns to the calculation of the specific sales volume that OWS would have captured in the "but for" world. Dr. Keating does not assume that OWS would have captured all of Lumicore's accused-product sales. Rather, he conducts a detailed customer-by-customer analysis to determine, for each significant Lumicore customer, whether OWS is a realistic alternative supplier. His analysis considers the following inputs:
• OWS and Lumicore product-revenue data by customer, produced in discovery under the three-tier confidentiality order (Confidential / Highly Confidential — Attorneys' Eyes Only / Highly Confidential — Source Code);
• Customer-qualification and approved-vendor-list ("AVL") data for each of the top 20 hyperscale data-center operators;
• Market share data from publicly available industry reports (Sundial Partners LLC, Granite Harbor Management Consulting) and from OWS internal competitive-intelligence reports;
• OWS's existing commercial relationships with each customer, including the status of design-in programs, qualification testing, and volume-purchasing arrangements.
Based on this analysis, Dr. Keating concludes that OWS and Lumicore compete head-to-head — that is, both companies are approved vendors or active competitors — at 12 of the top 20 hyperscale data-center operators. For those 12 customers, Dr. Keating calculates OWS's expected share of the redirected demand based on OWS's relative competitive position, the number and capability of other non-infringing competitors, and any customer-specific factors (such as dual-sourcing policies or maximum vendor-concentration limits) that would affect the allocation of sales. For the remaining 8 customers — where OWS is not an approved vendor or has no existing commercial relationship — Dr. Keating makes no lost-profits claim, and those sales are instead addressed under the reasonable-royalty theory.
The result of this analysis is a market-share displacement figure of 38.2%. This means that Dr. Keating concludes that, in the "but for" world, OWS would have captured 38.2% of Lumicore's total accused-product sales over the damages period.
Calculation. Applying this displacement figure to the projected accused-product revenue of approximately $714.6 million (from Q3 2022 through Q4 2025, based on Dr. Keating's analysis of Lumicore's historical sales data and reasonable projections through the estimated trial date), and multiplying by OWS's 47.3% gross margin, Dr. Keating calculates lost profits of approximately $128.9 million:
$714.6 million × 38.2% × 47.3% = approximately $128.9 million
B. Theory 2: Reasonable Royalty Under the *Georgia-Pacific* Framework
For the 61.8% of Lumicore's accused-product sales that OWS could not have captured in the "but for" world — because those sales were made to customers where OWS was not an approved vendor or otherwise lacked the ability to compete — Dr. Keating calculates a reasonable royalty. This is consistent with the well-established principle that a patentee is entitled to no less than a reasonable royalty on all infringing sales, even those for which lost profits cannot be demonstrated. Rite-Hite, 56 F.3d at 1545.
Royalty Base. The royalty base for the reasonable-royalty calculation is the portion of Lumicore's accused-product revenue not captured by the lost-profits theory:
$714.6 million − ($714.6 million × 38.2%) = approximately $441.6 million
Hypothetical Negotiation Date. Consistent with Federal Circuit law, Dr. Keating constructs the hypothetical negotiation as of Q2 2022, immediately before the launch of Lumicore's first accused product, the LumiLink 400G-ZR+, in Q3 2022. This date reflects the point at which Lumicore's infringement was about to begin and at which a willing licensor and a willing licensee, both acting reasonably, would have negotiated a license.
Georgia-Pacific Factor Analysis. Dr. Keating conducts a detailed analysis of all fifteen Georgia-Pacific factors, considering the totality of the circumstances as they would have been understood by the parties at the hypothetical negotiation date. His analysis takes into account, among other things, the value of the patented technology, the strength and breadth of OWS's patent portfolio, OWS's history of licensing its patents, the relationship between licensor and licensee as competitors, the profitability of the accused products, the extent of the infringement, the contribution of the patented features to the commercial success of the accused products, and the alternatives available to the hypothetical licensee.
Comparable License Agreements. At the core of Dr. Keating's reasonable-royalty analysis is his reliance on five comparable license agreements that provide market-based evidence of the royalty rate that a willing licensor and willing licensee would have agreed upon:
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 involved fewer patents and a smaller licensee with lower expected sales volume.
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 case.
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 part with the assistance of FairPoint Licensing Group, LLC, OWS's licensing agent (Managing Director Angela Reeves), which conducted pre-suit licensing outreach to Lumicore and maintains comprehensive industry licensing data.
Proposed Royalty Rate. Based on his Georgia-Pacific analysis and his evaluation of the comparable licenses, Dr. Keating proposes a royalty rate of 8.5% of accused-product net sales. This rate falls squarely within the 4.0%–12.5% range observed in comparable silicon-photonics industry transactions, and near the center of the specific range defined by the five comparable licenses (6.5%–10.2%). Dr. Keating explains that the proposed rate is appropriately above the Terralink license rate (which involved fewer patents and a smaller, less competitively significant licensee) and below the Coreline/Prisma cross-license rate (which reflected bilateral value exchange). The 8.5% rate reflects the value of the four asserted patents as applied to Lumicore's specific accused products in the specific market conditions prevailing at the hypothetical negotiation date.
Calculation. Applying the 8.5% royalty rate to the $441.6 million royalty base, Dr. Keating calculates a reasonable royalty of approximately $37.5 million:
$441.6 million × 8.5% = approximately $37.5 million
C. Theory 3: Enhanced Damages for Willful Infringement
In addition to compensatory damages, Dr. Keating provides the economic analysis necessary to support a potential award of enhanced damages for willful infringement under 35 U.S.C. § 284. The Supreme Court's decision in Halo Electronics, Inc. v. Pulse Electronics, Inc., 579 U.S. 93 (2016), confirmed that enhanced damages are available in cases of willful infringement and that the district court enjoys broad discretion in determining the appropriate level of enhancement.
Dr. Keating's enhanced-damages analysis focuses on the post-notice period beginning January 15, 2023 — the date on which FairPoint Licensing Group, LLC, on behalf of OWS, sent its first licensing letter to Lumicore's General Counsel, Raymond Bautista, identifying the '847, '193, and '562 Patents and putting Lumicore on notice that its LumiLink product line was believed to infringe OWS's patent rights. A supplemental letter, sent on May 15, 2023, identified the subsequently issued '015 Patent and expanded the scope of the infringement allegations to include the LumiEdge product line. Copies of both letters are attached as Exhibits 12 and 13, respectively.
Dr. Keating calculates post-notice lost profits from January 15, 2023 through the projected trial date (February 2, 2026), yielding approximately $109.2 million. This figure is derived from the same Panduit methodology and customer-by-customer displacement analysis used for the overall lost-profits calculation, applied to the narrower post-notice time period. Dr. Keating further analyzes the Read factors relevant to willfulness enhancement, including the timing and nature of Lumicore's notice, Lumicore's conduct in response to that notice, and the egregiousness of the infringement.
Dr. Keating presents alternative enhancement scenarios calculated at 1.5×, 2×, and 3× multipliers on various damage bases. He does not advocate for a specific multiplier; rather, he provides the economic framework and calculations necessary for the Court to exercise its discretion under Section 284 and Halo. This approach is appropriate and consistent with the practice of damages experts in patent cases, who routinely present alternative scenarios keyed to the Court's legal determinations on willfulness.
D. Aggregate Damages
Dr. Keating's total damages range is as follows:
• Base damages (no enhancement): $128.9 million (lost profits) + $37.5 million (reasonable royalty) = approximately $166.4 million.
• Maximum damages (with selected willful-infringement enhancement): approximately $210.0 million, reflecting a blended application of the enhancement scenarios to the post-notice damages base.
The $210 million figure pled in OWS's complaint is a blended, rounded demand reflecting OWS's combined view of all three damages theories, not a simple arithmetic sum of the individual theory maxima. It incorporates the base compensatory damages plus a reasonable level of enhancement for willful infringement during the post-notice period, and it is fully supported by Dr. Keating's analysis.
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 reality that in many cases, the patented technology is so integral to the accused product that it is the patented feature — rather than unpatented components — that drives the product's commercial value and customer appeal.
The Federal Circuit has repeatedly endorsed the EMVR as a legitimate damages methodology when its predicate conditions are met. In LaserDynamics, Inc. v. Quanta Computer, Inc., 694 F.3d 51 (Fed. Cir. 2012), the court explained that the EMVR applies "where the patented feature creates the 'basis for customer demand' for the entire machine" or where "the entire market value of the accused product is attributable to the patented feature." Id. at 67. The court further noted that where the patented feature is the basis for customer demand, "the patentee may be entitled to damages based on the value of the entire apparatus." Id. (citing Rite-Hite, 56 F.3d at 1549).
In Rite-Hite Corp. v. Kelley, Inc., 56 F.3d 1538 (Fed. Cir. 1995) (en banc), the Federal Circuit upheld a broad approach to damages recovery where the patented invention drives the market for the product as a whole, including recovery for lost sales of unpatented components sold with the patented product and convoyed sales. The court recognized that patent damages must be "adequate to compensate for the infringement" and that rigid apportionment rules should not artificially constrain recovery where the evidence supports a broader measure. Id. at 1545–49.
The EMVR is not, as Lumicore's anticipated motion may suggest, a disfavored or suspect methodology. Rather, it is a recognized tool in the patent damages toolkit, subject to the same reliability requirements that apply to any damages methodology. The critical question is whether the expert has marshaled sufficient evidence to support the application of the rule to the facts of the particular case.
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 are the basis for customer demand for the accused modules.
The transceiver module is the SSPPU. The accused products are the LumiLink 400G-ZR+ (FY 2023 revenue: $94.8 million), the LumiLink 800G-DR8 (FY 2023 revenue: $128.4 million), and the LumiEdge 1600G-LR (FY 2023 revenue: $41.7 million). Total FY 2023 accused-product revenue is $264.9 million. The transceiver module is the smallest commercially available unit that practices the asserted patents. The patented features — the multi-channel waveguide multiplexer (claimed in the '847 Patent), the coherent optical transceiver architecture (claimed in the '193 Patent), the embedded micro-channel heat sinks (claimed in the '562 Patent), and the polarization-diverse grating coupler (claimed in the '015 Patent) — are not sold separately. They are integral, physically embedded components of the transceiver module. There is no separate market for waveguide multiplexers, micro-channel heat sinks, or grating couplers standing alone. A customer does not purchase a waveguide multiplexer and a heat sink and a grating coupler and then assemble them into a transceiver module; the customer purchases a complete, tested, and qualified transceiver module ready for deployment in a data-center environment.
Because the transceiver module is the SSPPU — the smallest unit sold by Lumicore that practices all of the asserted patent claims — it is by definition the appropriate royalty base. The Federal Circuit has consistently held that where the SSPPU is used as the royalty base, no further apportionment of the royalty base is required, though the royalty rate must reflect the value of the patented features relative to the product as a whole. See Summit 6, LLC v. Quillon Corporation, 802 F.3d 1283, 1296 (Fed. Cir. 2015). Dr. Keating's use of the module-level price as the royalty base is thus straightforward and non-controversial.
The patented features are the basis for customer demand. Even if this Court were to require an EMVR analysis beyond the SSPPU — which it need not do where the SSPPU is the appropriate royalty base — Dr. Keating has marshaled substantial evidence that the patented features drive customer demand for the accused transceiver modules. This evidence includes:
Technical expert testimony. Dr. Caroline Ashford, Professor of Electrical Engineering and Photonics at the Northfield Institute of Technology and OWS's technical expert, has opined that the patented technologies provide the key performance differentiators that hyperscale data-center customers require. Specifically, the low-insertion-loss waveguide multiplexing architecture claimed in the '847 Patent enables higher channel counts with lower optical power loss, directly translating to longer reach and higher data throughput. The embedded micro-channel thermal management structures claimed in the '562 Patent enable sustained high-power operation without performance degradation, a critical requirement in dense data-center environments. And the polarization-diverse grating coupler claimed in the '015 Patent enables efficient fiber-to-chip coupling across both polarization states, reducing insertion loss and improving overall link budget. Dr. Ashford's opinions are based on her extensive technical analysis of the accused products and the asserted patent claims and are set forth in detail in her expert report.
Industry expert testimony. Gregory Falk, formerly Vice President of Engineering at Solara Optics, Inc. and OWS's industry expert, has opined that purchasing decisions for silicon-photonics transceiver modules in the hyperscale data-center market are driven by the specific optical-performance and thermal-management features covered by the asserted patents. Mr. Falk's opinions are based on his decades of experience in the photonics industry, his firsthand knowledge of customer requirements and procurement practices, and his analysis of competitive dynamics in the relevant market segments. He has confirmed that the features claimed in OWS's patents — low insertion loss, effective thermal management, and polarization diversity — are the features that data-center operators prioritize when selecting transceiver suppliers.
Lumicore's own marketing materials. Documents produced by Lumicore in discovery reveal that Lumicore itself has consistently promoted the performance of the accused products' waveguide multiplexing and thermal management — the very technologies claimed in OWS's patents — as key selling points. For example, Lumicore marketing presentations to customers (designated Highly Confidential — AEO) highlight the "industry-leading low-insertion-loss waveguide architecture" and "advanced integrated thermal management" of the LumiLink product line. These materials demonstrate that Lumicore recognizes the patented features as central to the commercial appeal of the accused products.
Deposition testimony of Dr. Sandra Michaud. Dr. Sandra Michaud, Lumicore's Chief Technology Officer, was deposed on November 19, 2024. During her deposition, Dr. Michaud acknowledged the importance of the accused waveguide multiplexer architecture and the embedded micro-channel thermal management structures to the overall product performance and customer appeal of the LumiLink and LumiEdge product lines. Although Dr. Michaud sought to attribute some of the products' commercial success to other features (such as Lumicore's proprietary driver electronics and control firmware), her testimony confirms that the patented features play a central and material role in driving customer demand. See Exhibit 8 (excerpts from Michaud deposition).
This evidence is more than sufficient to support the application of the EMVR — or, more precisely, to justify Dr. Keating's use of the transceiver module as the royalty base. Dr. Keating's analysis is not based on an unsupported assumption that the entire value of the accused products is attributable to the patented features; rather, it is grounded in a detailed evidentiary record demonstrating that the patented features are, in fact, the basis for customer demand.
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 patented optical and thermal features. This argument fails for several reasons.
First, as noted above, the transceiver module is the SSPPU. When the royalty base is the SSPPU, the apportionment inquiry shifts to the royalty rate, not the royalty base. Dr. Keating has accounted for the relative value of the patented features in his royalty-rate analysis, arriving at a rate (8.5%) that reflects the contribution of the patented features to the overall product value. This is precisely the approach endorsed by the Federal Circuit.
Second, Dr. Keating does address apportionment in his expert report. He conducts a value-attribution analysis demonstrating that the patented optical and thermal innovations account for the majority of the accused modules' commercial value and competitive differentiation. His analysis considers the cost structure of the accused products, the relative contribution of patented and unpatented components to the product's performance specifications, and the degree to which the patented features — rather than commodity components such as packaging and standard driver electronics — differentiate the accused products from non-infringing alternatives and justify the premium prices that Lumicore charges for the LumiLink and LumiEdge product lines.
Third, the Federal Circuit has repeatedly held that disputes over the degree of apportionment are questions of fact for the jury, not grounds for exclusion under Daubert. Where an expert has used the SSPPU as the royalty base, has addressed apportionment, and has provided evidence supporting the application of the EMVR, the challenge is one of factual weight, not methodological reliability. The proper remedy for the defendant is to present its own apportionment analysis through its own damages expert and to challenge the plaintiff's analysis through cross-examination — not to seek wholesale exclusion of the plaintiff's expert.
In Commonwealth Scientific & Industrial Research Organisation v. Sterling Reach Holdings, 809 F.3d 1295 (Fed. Cir. 2015), the Federal Circuit upheld a damages award based on the entire accused product where the expert demonstrated that the patented feature was the primary basis for customer demand for the product. The court rejected the defendant's argument that the expert should have apportioned the royalty base to isolate the value of the patented Wi-Fi technology from other product features, holding that the expert's analysis was supported by sufficient evidence and that the defendant's disagreement went to weight, not admissibility. Id. at 1302–03.
Similarly, in Uniloc USA, Inc. v. Kestrel Partners LLC, 632 F.3d 1292 (Fed. Cir. 2011), while the Federal Circuit excluded the use of the "25 percent rule of thumb" as lacking any basis in the facts of the case, the court confirmed that a properly supported EMVR analysis — one grounded in evidence that the patented feature drives customer demand — is permissible. Id. at 1315–18. The Uniloc decision does not stand for the proposition that a damages expert must always apportion the royalty base below the level of the SSPPU; it stands for the proposition that the expert must provide a factual basis for the royalty base and rate selected, rather than relying on arbitrary rules of thumb.
Dr. Keating's analysis is the antithesis of the arbitrary approach condemned in Uniloc. His use of the module-level price as the royalty base is not a rule of thumb; it is a reasoned economic judgment grounded in the fact that the module is the SSPPU and supported by extensive evidence that the patented features drive customer demand for the accused products. Lumicore's apportionment objection, however it is framed, is a dispute about the weight of the evidence — not about the admissibility of Dr. Keating's methodology.
B. Dr. Keating's 38.2% Market-Share Displacement Figure Is Based on Reliable Methodology and Sufficient Data
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 is the product of a rigorous, empirical, customer-by-customer analysis grounded in actual sales data produced in discovery.
Dr. Keating's methodology proceeded as follows. First, he identified the customer base for Lumicore's accused products using Lumicore's customer-by-customer revenue data produced in discovery under the three-tier confidentiality order. This data is designated Highly Confidential — Attorneys' Eyes Only and includes detailed breakdowns of Lumicore's accused-product revenue by customer, by product, and by quarter for the relevant damages period.
Second, Dr. Keating determined, for each significant Lumicore customer, whether OWS is a realistic alternative supplier — that is, whether OWS also sells or could have sold competing products (OWS-400ZR, OWS-800XR, OWS-1600DR) to that customer. To make this determination, Dr. Keating analyzed customer-qualification and approved-vendor-list ("AVL") data, OWS's existing commercial relationships with each customer (including the status of design-in programs, qualification testing, and volume-purchasing agreements), and the competitive dynamics at each account.
Third, Dr. Keating identified the 12 of the top 20 hyperscale data-center operators at which OWS and Lumicore compete head-to-head — meaning both companies are either approved vendors or active competitors for the same business. For each of these 12 customers, Dr. Keating calculated OWS's expected share of the redirected demand, taking into account OWS's relative competitive position, the number and capability of other non-infringing competitors at that account, and any customer-specific factors (such as dual-sourcing policies, vendor-diversification requirements, or maximum vendor-concentration limits) that would have affected the allocation of sales in the "but for" world.
Fourth, for the remaining 8 customers — where OWS is not an approved vendor or has no existing commercial relationship — Dr. Keating made no lost-profits claim. Those sales are instead captured in the reasonable-royalty calculation, which applies to the 61.8% of accused-product revenue that OWS could not have captured absent infringement. This conservative approach ensures that the 38.2% displacement figure reflects only sales that OWS actually would have made, not merely sales that it wished it could have made.
Fifth, Dr. Keating made additional downward adjustments to account for the possibility that some customers, even among those where OWS is an approved vendor, might have selected a third-party non-infringing supplier rather than OWS in the "but for" world. These adjustments reflect Dr. Keating's careful consideration of the competitive alternatives available to each customer and his effort to ensure that the displacement figure is conservative and defensible.
The result of this multi-step, data-intensive analysis is the 38.2% market-share displacement figure. It is not a single assumption; it is the output of a model that incorporates dozens of customer-specific data points and competitive-dynamics assessments, each of which is grounded in the factual record.
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 significant part to Lumicore's entry into the market with infringing products that compete directly with OWS's OWS-400ZR module. The price erosion analysis confirms that Lumicore's infringement not only displaced OWS sales volume but also depressed OWS's pricing power, further establishing the competitive harm caused by the infringement. Dr. Keating's price erosion analysis is set forth in Exhibit 14 and is based on OWS's transaction-level pricing data and publicly available market data.
Industry expert corroboration. Gregory Falk, OWS's industry expert, has independently analyzed the competitive dynamics in the silicon-photonics transceiver market and has corroborated the magnitude of the displacement attributable to Lumicore's accused products. Mr. Falk's analysis considers the structure of the hyperscale data-center transceiver market, the number and capabilities of competing suppliers, and the barriers to entry and customer-switching costs that characterize this market. His conclusions are consistent with Dr. Keating's 38.2% displacement figure. See Exhibit 16 (Falk Declaration).
OWS sales personnel testimony. OWS's Vice President of Sales, Karen Whitfield, and other OWS sales personnel are expected to provide testimony regarding specific instances of customer diversion and lost design-in opportunities caused by Lumicore's accused products. This testimony will include accounts of competitive situations in which OWS lost business to Lumicore at specific hyperscale data-center operators, corroborating the customer-by-customer displacement analysis that underlies Dr. Keating's 38.2% figure. This real-world evidence of actual competitive displacement provides a powerful factual foundation for Dr. Keating's economic analysis.
OWS's market position. OWS is the third-largest U.S. supplier of silicon-photonics transceiver modules for hyperscale data centers, holding 142 U.S. patents and 58 pending applications in the field. Its FY 2023 revenue of $487.3 million and its demonstrated manufacturing capacity (through its foundry partnerships with Drayton Holdings, Thackeray Holdings, and Fenmore Holdings) establish that OWS had the scale and capability to have served the additional demand attributed to it in Dr. Keating's "but for" analysis.
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 competitive-dynamics assessments at particular accounts were incorrect. These are precisely the kinds of disputes that the adversarial process is designed to resolve.
Dr. Keating used a recognized methodology — customer-by-customer market analysis within the Panduit framework — and applied it to actual market data produced in discovery. He explained his reasoning, documented his assumptions, and made conservative adjustments where appropriate. That Lumicore's expert may arrive at a different displacement figure using different assumptions or different weights for particular competitive factors does not render Dr. Keating's analysis unreliable. It creates a factual dispute for the jury.
The Federal Circuit and courts in the Eastern District of Texas have consistently held that methodological disagreements between opposing damages experts do not warrant exclusion. "The fact that another expert may disagree with the methodology or conclusions of a damages expert does not make the testimony inadmissible." Micro Chemical, Inc. v. Lextron, Inc., 317 F.3d 1387, 1392 (Fed. Cir. 2003). As the Fifth Circuit has explained, "[q]uestions relating to the bases and sources of an expert's opinion affect the weight to be assigned that o

CONTINGENCY DRAFT — PRIVILEGED AND CONFIDENTIAL ATTORNEY WORK PRODUCT

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF TEXAS MARSHALL DIVISION

TABLE OF CONTENTS

TABLE OF AUTHORITIES

I. INTRODUCTION

II. LEGAL STANDARD

III. DR. KEATING'S QUALIFICATIONS

IV. OVERVIEW OF DR. KEATING'S DAMAGES OPINIONS

V. ARGUMENT

Record

Parties

Dates

Amounts