virnetx v cisco - motions hearing transcript (july 12, 2012)
TRANSCRIPT
1 THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF TEXAS 2 TYLER DIVISION
3 VIRNETX, INC. ) ) DOCKET NO. 6:10cv417 4 -vs- ) ) Tyler, Texas 5 ) 9:00 a.m. CISCO SYSTEMS, INC., ET AL ) July 12, 2012 6 *************** 7 VIRNETX, INC. ) 8 ) DOCKET NO. 6:11cv18 -vs- ) 9 ) MITEL NETWORKS CORP., ET AL ) 10
11 TRANSCRIPT OF MOTIONS AND MARKMAN HEARING 12 BEFORE THE HONORABLE LEONARD DAVIS, UNITED STATES CHIEF DISTRICT JUDGE 13
14 A P P E A R A N C E S 15
16
17 SEE SIGN-IN SHEETS DOCKETED IN THE MINUTES OF THIS CASE. 18
19
20
21 COURT REPORTER: MS. SHEA SLOAN 211 West Ferguson 22 Tyler, Texas 75702
23
24 Proceedings taken by Machine Stenotype; transcript was produced by a Computer. 25
2
1 P R O C E E D I N G S
2 THE COURT: Please be seated.
3 All right. Ms. Ferguson, if you will call the case,
4 please.
5 THE CLERK: Court calls Cases No. 6:10cv417 and
6 6:11cv18, VirnetX v. Cisco Systems and Mitel Networks
7 Corporation, et al.
8 THE COURT: Announcements.
9 MR. CALDWELL: Good morning, Your Honor, Brad
10 Caldwell from McKool Smith on behalf of the Plaintiff VirnetX.
11 With us today is Mr. Robert Parker, Mr. Chris Bunt. Craig
12 Toliver from my firm, Austin Curry from my firm, and Jason
13 Cassady from my firm.
14 Plaintiff is ready, Your Honor.
15 THE COURT: Defendants.
16 MR. TINDEL: Your Honor, Andy Tindel. I'm here on
17 behalf of plaintiff, Science Applications International
18 Corporation.
19 THE COURT: Thank you, Mr. Tindel. I think the
20 plaintiffs were about to move for default. No one answered.
21 All right.
22 MR. TINDEL: I'm trying, Your Honor.
23 MR. RICHARDSON: Good morning, Your Honor. Michael
24 Richardson from Beck Redden here for the Siemens Defendants.
25 Also with me is Mike Renaud, Mike McNamara, and Alex Fennell.
3
1 THE COURT: All right. Thank you.
2 MR. GREEN: Good morning, Your Honor. Christopher
3 Green of the Fish & Richardson Firm here for Defendant Avaya,
4 Inc. With me today is my partner, Ruffin Cordell, and Mr.
5 Brian Boyd.
6 THE COURT: Okay.
7 MR. JONES: Your Honor, Mike Jones for the Cisco
8 Defendants with Mr. Eric Findlay, Mr. Mike Stadnick, and Mr.
9 Brad Black.
10 MR. WILLIAMS: Good morning, Your Honor. Danny
11 Williams for Apple. With me today I have Scott Woloson with
12 my firm, Terry Morgan of my firm. I have also with me Steve
13 Edwards of the Albritton Law Firm. And we have a client
14 representative Katie Prescott.
15 We are ready to proceed.
16 MR. MAZZINGO: Your Honor, Jason Mazzingo this
17 morning here for the NEC Defendants.
18 THE COURT: Okay. Thank you.
19 All right. Very well. What other client
20 representatives do we have here, other than the one that was
21 just referred to?
22 MR. GREEN: Your Honor, this is Christopher Green.
23 I beg your pardon and my client's pardon. We have on behalf
24 of Avaya, Mr. Joe Curcio in attendance today.
25 THE COURT: Anyone else have any client
4
1 representatives here?
2 All right. We have several matters to cover this
3 morning. Let me start with a couple of observations. A few
4 weeks ago Judge Gilstrap had a quote that I heard that he gave
5 of Oliver Wendell Holmes which says that lawyers spend a great
6 deal of their time shoveling smoke.
7 And that really struck a bell with me when I heard
8 that quote. I had never heard it before. But I think there
9 has been a lot of that going on in this case.
10 I have reviewed all of the materials that are before
11 me today, and we are going to go through them. But I have got
12 to tell y'all I am, as Judge Gilstrap said, I am gagging on
13 your smoke.
14 Y'all are way, way overpapering, overlitigating, not
15 being agreeable, creating issues where there don't need to be
16 issues, on both sides; and you are causing a great deal of
17 expense to your clients that I, frankly, feel is unnecessary.
18 This is a trial court. I want to help you get your
19 case resolved either by settlement or trial. This is not a
20 summary judgment court. That is not what this Court is
21 about.
22 I will grant summary judgments when they are
23 meritorious and when they are truly a legal issue. But -- we
24 will get into it in a minute -- there is an overabundance of
25 people feeling like -- and I want to explore with you why you
5
1 are doing it -- I don't understand it -- filing summary
2 judgments on every possible issue. I don't know whether you
3 are thinking -- surely you are not thinking you are going to
4 get them all granted.
5 Or maybe you are using a shotgun approach. Maybe,
6 you know, younger lawyers in the firm are just -- each one
7 have their issue, and nobody is minding the store as far as
8 what gets brought to this Court. But you are literally
9 overwhelming us with motions.
10 And I have said it before in seminars and I will say
11 it again to you today, if you really want this Court or any
12 other court to look at some of these motions, use some
13 judgment. You know, pick what you really think you have got a
14 chance of getting granted, and don't shotgun but shoot with a
15 rifle. You lose so much credibility, both sides do, when you
16 just -- every conceivable issue gets papered with a motion for
17 summary judgment.
18 So I have got three areas I want to work through
19 with you this morning and see if we can get this case narrowed
20 down and some of the smoke out of the room and get you moved
21 toward getting this case ready for trial.
22 The first area is I want to talk about the letter
23 briefs that have been filed. The second area I want to talk
24 about and work through are all of the discovery and other
25 motions that are pending. And then the third area, as time
6
1 allows, will be the Markman that we will be revisiting.
2 So let me start with the letter briefs. This Court
3 a number of years ago implemented a standing order regarding
4 letter briefs because of the large number of pending patent
5 cases in this Court, to really accomplish three purposes: To
6 increase the efficiency of cases proceeding to trial; to
7 decrease the trial costs for the parties for their clients,
8 and to save time for the Court and the parties; and, finally,
9 to sharpen the Court's focus on the truly dispositive issues
10 and the most important issues in the case.
11 The Court further adopted the letter brief
12 procedures because parties were filing summary judgment
13 motions on nearly every major trial issue, again, wasting both
14 the client's money and the Court's time with non-meritorious
15 motions.
16 The parties in these two cases have proven the old
17 adage that "no good deed goes unpunished," or it could be said
18 that these cases personify the unintended consequences of
19 implementing a policy that was directed at reducing the amount
20 of work for the parties and the Court, while also decreasing
21 the cost of litigation for your clients; and I think we have
22 accomplished exactly the opposite in this case.
23 These (indicating) are the single-spaced letter
24 briefs that I have received in this case. And, for the
25 record, I am holding up two stacks, two to three inches each,
7
1 single-spaced. Many of these are copied on both sides.
2 By my count -- and it is hard to keep track of them
3 because they keep coming in -- I have 52 different motions for
4 summary judgment and motions to strike, among the two cases.
5 In other words, if you assume each letter brief is
6 four pages single-typewritten, I have 208 pages of
7 single-spaced letter briefs that the parties have filed asking
8 leave to file motions for summary judgment.
9 To put that in context, the Local Rules of this
10 district impose a collective 60-page limit on all summary
11 judgment motions, double-spaced. So I think we are going in
12 the wrong direction.
13 I think you have taken what -- and missed the whole
14 point of what we were trying to do here. And, again, you are
15 back to shooting with a shotgun, and most of them are going to
16 get very little attention.
17 The Court, however, has read all of the letter
18 briefs. Some are not even marginally close to being
19 meritorious. Some are in direct contradiction to the
20 positions you took earlier in the case. And some appear
21 worthy of further study and consideration.
22 Now, what to do about that -- well, let me say one
23 other thing first. Additionally, many of the motions across
24 the two cases are repetitive and could have been filed as a
25 single motion across both cases as to all parties. And,
8
1 again, in those instances, you have done a disservice to your
2 clients by wasting their money and to the Court by filing
3 separate motions regarding precisely the same issue, all of
4 which have to be reviewed and sorted out by the Court.
5 I want to say this about these two separate cases:
6 There seems to be some conception that, since the AIA, every
7 case and every party is allowed to proceed on its own, you
8 know, and file as much stuff and get as much stuff as they
9 want, with the Court. That is not the case in this Court.
10 You have requirements that the Court is going to
11 follow the AIA as far as severing cases among defendants, but
12 it doesn't entitle you to not cooperate and coordinate your
13 discovery or motion filing and that type of thing.
14 Let me ask right now, do the Defendants have a joint
15 defense group in either case or among both cases?
16 MR. RENAUD: Your Honor, there is an active joint
17 defense group within the community of Mitel Defendants, and we
18 are fairly active in coordinating. There is a very infrequent
19 contact with the Cisco group, which is a separate community of
20 defendants.
21 MR. STADNICK: Your Honor, Michael Stadnick for the
22 Cisco case. In the Cisco case --
23 THE COURT: I can't hear you. If you would go to
24 the podium, please.
25 MR. STADNICK: Yes, Your Honor. Michael Stadnick
9
1 for Cisco. In the Cisco case there is also a joint defense
2 group amongst the defendants in the Cisco case. As Counsel
3 just mentioned, there has been some informal discussions
4 between the two joint defense groups in the two cases.
5 THE COURT: Well, let me encourage y'all to have
6 more communication between the two defense groups, and see if
7 you can't coordinate some of the activity in these two cases.
8 Okay?
9 MR. STADNICK: Yes, sir. We will certainly do that
10 going forward, Your Honor.
11 THE COURT: Now, what to do about this. Frankly, I
12 am inclined to just deny all of them, or to spend a couple of
13 hours trying to sort through them all. But I think what I am
14 going to do is I am just going to grant them all. So we have
15 accomplished absolutely nothing by the letter brief writing.
16 But you will remember, and I am going to impose and
17 modify and force you to do what you should have done
18 initially, and that is view these things critically, make
19 strategic decisions, get your meritorious points up-front, and
20 forget the other stuff.
21 So what the imposition is going to be with regard to
22 motions for summary judgment, you can file as many different
23 ones in one motion as you wish, as many different issues as
24 you wish. There will be no cross-referencing your letter
25 briefs. So any authority you want the Court to consider needs
10
1 to go in there.
2 Plaintiffs are going to be limited to 40 pages.
3 Defendants are going to be limited to 40 pages collectively
4 and then an additional ten pages per individual defendant if
5 you have different issues. Hopefully, you will not put in
6 three lines as to each motion you want the Court to consider;
7 and you will, as I said, prioritize and get, up front for the
8 Court to consider, issues that will either dispose of
9 something major in the case or issues that will be case
10 dispositive and involve purely legal issues.
11 If it has got fact disputes in it -- and maybe -- I
12 don't know whether you are, you know, just listening to each
13 other and you get so wrapped up that you just think you are
14 going to win on every issue; but get somebody on your side of
15 the case to play devil's advocate and say, really, what is the
16 Judge going to do with this? What is the other side going to
17 say with this? And try not to overburden the Court with so
18 many non-meritorious motions with regard to the summary
19 judgments.
20 With regard to the motions to strike, I am not going
21 to give you a limit on that, but it will follow the general
22 rules on your motions to strike that you filed; but, again, I
23 encourage you to, again, think strategically and not bring to
24 the Court a motion to strike everybody in the case.
25 If you are worried about preserving error, work with
11
1 the other side. I mean, you can enter into a simple
2 stipulation, you know, we wish to preserve error as to your
3 expert on such and such. And see if you can work something
4 out like that without having to bring a motion.
5 Or bring a motion if you want to and the other side,
6 and just clue me in, Judge, we are just doing this to preserve
7 error. We don't really want you to have to spend your time
8 going through it because it is that close of a call.
9 Okay. Any questions on the letter briefs?
10 MR. CALDWELL: No, Your Honor.
11 THE COURT: Okay. Any questions on -- do you need
12 any guidance on summary judgment motions and what you should
13 be pursuing and shouldn't be pursuing?
14 MR. CALDWELL: The only clarification, and I think
15 it is probably implicit in the procedure Your Honor described,
16 but if the plaintiff gets 40 pages for opening and the
17 defendants get 40, plus a module for each defendant as a
18 separate issue, I assume we need corresponding pages for our
19 response?
20 In other words, if they have four different
21 defendants and that results in a total of 80 pages that the
22 defendants were to file, presumably -- and plaintiff responds
23 to the summary judgments, we will get to match up however many
24 pages they used in filing the motions in the first place?
25 THE COURT: I would hope that would not be the case.
12
1 MR. CALDWELL: Me, too.
2 THE COURT: I would encourage defendants to file a
3 joint response where possible, and then very limited briefing
4 individually. Don't rehash -- I have got some motions for
5 summary judgment in here that are -- they are exactly the same
6 thing. The only thing different is the changed parties. I
7 don't know -- I don't see the point in that.
8 But I don't know if that answered your question or
9 not. If you have some specific request with regard to page
10 limits and numbers.
11 MR. CALDWELL: No, Your Honor. I guess I was trying
12 to make things fair. I know that when we filed the summary
13 judgment motions, I believe Your Honor said the defendants
14 could file 40 pages collectively and then an additional 10
15 pages --
16 THE COURT: No, no, that is for their opening briefs
17 on summary judgments.
18 MR. CALDWELL: Precisely, and I'm just wanting to
19 make sure that the plaintiff has to respond -- if the
20 defendants availed themselves of that option and ended up
21 filing 40-plus --
22 THE COURT: I see.
23 MR. CALDWELL: -- I just want to make sure the
24 plaintiff gets, at least, a corresponding number.
25 THE COURT: Yes, you can respond accordingly.
13
1 MR. CALDWELL: Hopefully, it is 10 pages total.
2 THE COURT: Right.
3 MR. CALDWELL: But I just wanted to make sure.
4 THE COURT: All right. Mr. Williams.
5 MR. WILLIAMS: Yes, sir. Clarification on the page
6 numbers also. There are, potentially, motions going both
7 directions, plaintiffs' and defendants' and vice versa. So
8 are these page limits for the total -- so, for example, let's
9 suppose that the plaintiff filed a 20-page opening brief and a
10 five-page reply, let's say we stay within 40 pages each, they
11 would have to have 15 pages to respond to ours. Do you follow
12 what I am saying?
13 THE COURT: No.
14 MR. WILLIAMS: All right. Let me try this one more
15 time. We have motions going, so they will have, let's say, an
16 opening brief against us. We will have a response. And then
17 presumably a reply. Then we would have a motion, say, going
18 in their direction; and they would have a response and we
19 would have a reply.
20 THE COURT: On the same issue?
21 MR. WILLIAMS: On different issues potentially. I'm
22 not sure what the issue will be.
23 THE COURT: All right.
24 MR. WILLIAMS: But let's say worse case they are
25 different issues so that there is -- it is not reasonable to
14
1 say -- to answer in a single round of briefs. So the 40-page
2 limit and the 40-plus-10 on the unique issue applies to the
3 entire round of briefing. Is that --
4 THE COURT: The 40 pages applies to the entire case.
5 MR. WILLIAMS: Got you.
6 THE COURT: It is not per issue. So you need to put
7 in one, 40-page motion for summary judgment, whatever point
8 you are wanting to raise.
9 MR. WILLIAMS: And responding to their motion to us,
10 also counts against the 40 pages; is that correct?
11 THE COURT: No. That would be your normal response.
12 MR. WILLIAMS: Thank you.
13 THE COURT: Okay. Any further questions?
14 MR. CALDWELL: That's fine. In fact, plaintiff is
15 perfectly willing to reach an agreement because I guess I'm
16 afraid they are still going to present far too many issues to
17 the Court. Plaintiff is perfectly fine if you want to put in
18 place a limitation that basically says plaintiff can file one
19 in each case, and the defendants can file one in each case or
20 each defendant can file one in each case, just so we are not
21 here -- we are getting ready preparing for trial --
22 THE COURT: That is what I am saying, 40 pages per
23 case.
24 MR. CALDWELL: Totally understood. I just meant in
25 terms of limiting the number of issues so Your Honor is not
15
1 looking at 10 different four-page motions to make up the 40,
2 which I think is actually going to end up leading people to do
3 more terse writing that perhaps is less thorough, just talking
4 about maybe more independent work for the Court, we are
5 willing to limit it to one summary judgment filed in each
6 case --
7 THE COURT: Let me ask y'all, what do you suggest?
8 I have presented my problem to you. I am open to any
9 suggestions. I don't want to micromanage. I just want y'all
10 to focus and narrow this down. Less is more. I mean, you
11 know, the more y'all are pursuing, the harder it is for the
12 Court to really address anything.
13 MR. RENAUD: Your Honor, if I might, Mike Renaud for
14 Siemens Enterprise. I will speak for myself. But I think the
15 defendants will probably, in light of your guidance, make a
16 coherent effort between both the Mitel Defendants and Cisco
17 Defendants to present a single issue if it is shared in a
18 single context. You don't have to see the same motion four
19 different times from the groups.
20 And I think limiting the single issue per case
21 doesn't I think lend itself to the whole purpose, which is
22 narrow the issues. There are probably a couple of issues that
23 I think you have probably already honed in on that will
24 greatly simplify the case that are, I think, ripe for summary
25 judgment. There are others that are along the road. We got
16
1 the message. We will coordinate it amongst the defendants to
2 have a coherent, narrow group of motions targeted for the
3 message the Court sent. And I think putting any artificial
4 limit on how many we can move on, doesn't benefit the Court in
5 trying to narrow the issues for trial.
6 MR. CALDWELL: I took a shot.
7 THE COURT: All right. Thank you both for your
8 thoughts, and you have your direction on that.
9 Let's turn to the pending discovery motions. We
10 will start with the '417 case. And the first one we will take
11 up is the plaintiffs' motion to compel discovery from Apple,
12 Docket No. 235.
13 MR. CASSADY: Judge, let me see if I can give you a
14 little good news.
15 THE COURT: Good.
16 MR. CASSADY: I think the Court is aware that Aastra
17 in the last number of months signed a running royalty license
18 deal with VirnetX.
19 Last night we reached a running royalty deal with
20 Mitel. So there is no Mitel representative here, I don't
21 think. They have settled out. We put a press release out.
22 That case will be dismissed likely in the next 15 days after
23 payment is made. So I thought I would give the Court some
24 good news --
25 THE COURT: So you are saying the Mitel Defendant in
17
1 the Mitel case has settled?
2 MR. CASSADY: Yes, Your Honor.
3 THE COURT: The other defendants are still there?
4 MR. CASSADY: Yes, Avaya and Siemens are still
5 there, Your Honor.
6 MR. CORDELL: Just for the record, Your Honor, we
7 represented Mitel and did, in fact, reach that settlement.
8 THE COURT: So Siemens and Avaya are still left in
9 the second case.
10 And has anybody settled in the first case?
11 MR. CASSADY: Aastra, Your Honor, A-A-S-T-R-A, has
12 settled in the first case.
13 THE COURT: Anybody else? Okay.
14 MR. CASSADY: We are still working on it, Your
15 Honor.
16 THE COURT: All right. Back to the plaintiffs'
17 motion to compel discovery from Apple. And these are
18 basically -- I guess, the first would be Interrogatory No. 11;
19 is that correct?
20 MR. CALDWELL: Yes, yes, Your Honor.
21 Mr. Martin, do you have my slides for the Apple
22 motion to compel?
23 MR. MARTIN: 235?
24 MR. CALDWELL: Yes, 235.
25 I would like to get started. I was going to show
18
1 you the interrogatory. When the interrogatory is up for the
2 Court to see, we can talk about it separately.
3 Yes, Your Honor, there are several parts to this
4 motion to compel. Discovery in this case against Apple has
5 been an iterative process since the beginning where we
6 constantly find new things that we need, that are relevant,
7 should have been produced, or should have been -- questions
8 that should have been answered, and they haven't been.
9 As of the last Markman Hearing that Your Honor
10 conducted on January 5th -- Your Honor probably won't
11 remember, but one of the first things we did in that Markman
12 Hearing is walk in and say, Your Honor, you don't have to hear
13 a motion to compel against Apple because on the eve of hearing
14 a motion to compel against Apple, they relented and gave us
15 discovery. That was on a related interrogatory, actually to
16 Interrogatory No. 11.
17 What Interrogatory No. 11 seeks is for Apple to tell
18 VirnetX to the extent that it contends it would encounter
19 difficulties complying with an injunction, please describe all
20 those -- such difficulties.
21 And Your Honor knows, our firm has been here in a
22 few cases of similar magnitude; and this is how this line of
23 thinking has evolved.
24 In i4i where Your Honor entered an injunction, the
25 injunction had to have a time frame in which it started. And
19
1 Your Honor was reversed on that by the Federal Circuit. They
2 said, wait a minute, you said the injunction starts and I
3 believe it was one month, and you don't have enough evidence
4 on that. And the Federal Circuit reversed Your Honor and
5 extended the injunction start date by several months. So we
6 are thinking we have got to make sure we get this discovery.
7 Then in the VirnetX v. Microsoft case, we attempt to
8 take that discovery and don't have a lot of luck. And as the
9 case is moving forward, we come to, I believe it was a
10 pretrial conference, and we are asking Your Honor about the
11 opportunities to get further discovery on injunction and
12 injunction difficulties post-trial.
13 And Your Honor told us, and I quote, both parties
14 have had an extended period of time to conduct extensive
15 discovery in this case knowing that injunctive relief would be
16 sought if VirnetX prevailed on liability. That was in an
17 April 20, 2010 order.
18 Here we are with our injunction request --
19 Mr. Martin, would you put up Slide 3?
20 MR. MARTIN: Excuse me?
21 MR. CALDWELL: Slide 3.
22 Our injunction request, again, asking Apple to
23 identify the difficulties it would face if required to comply
24 with an injunction. What happened is Apple wouldn't answer.
25 Then we filed a motion to compel. Concurrent with serving its
20
1 response, Apple provides a little supplement. We file our
2 reply and say, hey, wait there are still big holes in this.
3 They provide a little more supplement and serve their surreply
4 and they say, oh, we fixed it now. But they haven't. Apple
5 still has not completely answered that interrogatory to
6 describe the difficulties it would face if confronting an
7 injunction.
8 Scoot forward to Slide 6.
9 There is more content in Apple's response. I am not
10 meaning to suggest that this is the only thing in Apple's
11 response. But the general flavor of Apple's response is we
12 haven't investigated the time or cost to implement the
13 modification, but we estimated one to three months. That is
14 about all the information we have on the challenges to Apple
15 in implementing -- or complying with an injunction if the
16 Court were to issue one here. And that is not sufficient.
17 Yet I think if you look at the other side of the coin it tells
18 a slightly different story.
19 What is displayed on the screen now -- and the
20 heading of the slide may be cut off -- but what is displayed
21 on the screen now is an excerpt from Apple's technical
22 expert. So let's set the stage for a slightly different
23 context.
24 Obviously, VirnetX seeks damages in this case. And,
25 unsurprisingly, Apple says they shouldn't have to pay any or
21
1 it be very low. One of their bases for making that argument
2 is it is no problem to design around these patents. That
3 won't cost very much.
4 So Apple's technical expert is able to have three or
5 four pages, maybe 10 paragraphs talking about no problem, we
6 can have a system that selects a VPN or encrypted channel
7 where the user manually selects things. And then as to the
8 FaceTime part of the allegations, the FaceTime server is
9 located outside the U.S. Or we could just do relay servers.
10 We can hire a vendor and have all the traffic run through this
11 vendor. So on and so forth. I won't belabor it.
12 The same thing happens when you get to Apple's
13 damages report. Apple's damages expert is able to say I don't
14 think these design-arounds cost a lot. So it is a bit
15 self-serving. When it would limit Apple's damages, they are
16 willing to say, hey, this isn't a problem. We can do it. It
17 would be cheap. No problem. Jury, don't give them much
18 damages because that's the cap on damages. It is an easy
19 design-around.
20 But the flip side of the coin is whether it would be
21 hard or easy or costly to implement and comply with an
22 injunction, and Apple is not willing to answer that. We
23 believe they should.
24 THE COURT: Response.
25 MR. WILLIAMS: Well, first of all, let me say that
22
1 consistently throughout this case we have tried to resolve
2 issues. An iterative process, absolutely. I have not been
3 involved in a patent litigation that did not involve an
4 iterative process. We have tried to get issues off this
5 Court's docket and off the Court's plate even at the last
6 moment.
7 Now, with respect to this interrogatory, the
8 injunction, the way the interrogatory was first served to us
9 was just exactly what he said. Tell us how you would have
10 difficulties dealing with an injunction. That seems to be
11 pretty broad, given the breadth of this case; four patents
12 asserted against Apple, two major products.
13 Now, through some negotiations with them, they sent
14 us a letter and they said how about this narrowed version? So
15 they narrowed it, and we find more specifically what they were
16 referring to in terms of the injunction. That was the impetus
17 for the first supplemental response.
18 Now, later then when we got into the motion
19 practice, they weren't satisfied with that. We continued, by
20 the way, to press our objection on the broad interrogatory.
21 The first supplement was directed to the more specific
22 recitation that they gave us in their letter, their letter of
23 February 17th of this year. They weren't satisfied with that
24 and proceeded with the motion.
25 During the briefing of that motion, some issue in --
23
1 to be quite honest with you it escapes me right now, but it
2 came up in the briefing. We supplemented again in response to
3 that issue.
4 So where we are here right now -- and I guess before
5 I leave this point, let me address the design-around issue.
6 In the supplemental responses, we pointed to our
7 design-around -- response to the design-around interrogatory
8 where we laid out these design-arounds. So the impression
9 that I got in hearing Counsel speak just a moment ago is that
10 they are seeing this for the first time in the expert
11 reports.
12 In fact, I don't know that he intended to convey
13 that impression; but just to make sure there is no
14 misunderstanding, we gave them that design-around information
15 in the supplemental response by reference to the supplemental
16 response on design-around. So none of that comes as a
17 surprise to them. So the design-around is obviously, we said,
18 one way or ways that we specified that we would, in fact,
19 avoid an injunction.
20 So what we are left with right now is we have, in
21 fact, responded to their narrowed versions, if you will, of
22 the interrogatory. What is outstanding and what they want us
23 to do is answer an interrogatory that gives us no bounds in
24 terms of which product would be subject to the injunction,
25 which patents would be subject to the injunction. To the
24
1 extent it is anything and everything, we have told them we
2 will design around it. We gave them that design-around
3 information. I don't see how we can be more specific than
4 that.
5 We have estimated the amount of time it would take.
6 We gave them that. So I'm not sure how much more specific
7 information we can give them to the general, broad
8 interrogatory than we have already given them. We did give
9 them information specific to the more specific versions they
10 submitted to us by letter.
11 THE COURT: Response.
12 MR. CALDWELL: Well, the sequence is a little bit
13 wrong, the additional detail. They told us we don't
14 understand your rog. It is too broad. We met and conferred
15 and provided narrowing, narrowing suggestions to help them and
16 help define it, well before we got into the motion to compel
17 practice. So the suggestion that their amendment was actually
18 in response to we are in the middle of briefing, VirnetX
19 narrowed it, is not true.
20 We tried to narrow it beforehand and clarify. Apple
21 still wouldn't answer. And we only got answers when they were
22 faced with sending -- (microphone pops) sorry -- sending
23 response in to Your Honor and saying this is a moot issue
24 because we have answered now. And happened twice, both at the
25 response and at the surreply.
25
1 But the critical issue is their answer still does
2 not provide any detail on the costs, the expenses, the time it
3 would take, other challenges Apple would face in complying
4 with the injunction. And now they say that they know --
5 (microphone pops) I keep doing that -- now they say they know
6 in more detail exactly what these design-arounds would be.
7 They have got an expert report on it. There is no reason,
8 Apple can't tell us, here are the challenges we would face in
9 complying with that. They still haven't provided that answer.
10 THE COURT: What about your response to his argument
11 that it is not either -- they don't know which accused
12 products, they don't know which patents.
13 MR. CALDWELL: Well, they definitely know which
14 patents. I mean, there are only so many patents asserted
15 against them. They have infringement contentions, expert
16 reports, and they know exactly what the accused products are
17 with the FaceTime application and VPN On Demand. They know
18 what they are, and Apple was confident enough to put out the
19 expert report saying as to the VPN product, here is how we get
20 around that and limit our damages; and as to FaceTime on these
21 patents, here is how we get around it and limit our damages.
22 So I don't buy the suggestion that Apple is somehow
23 unable to figure out what the costs and difficulties of
24 implementing the design-around would be. They were able to do
25 it for the beneficial aspect of limiting damages but not for
26
1 the part that matters to VirnetX of getting an injunction.
2 Your Honor, VirnetX doesn't want to be in the
3 position of we are later at a post-trial hearing seeking an
4 injunction; and we cannot tell you why a certain time frame or
5 certain other limitations on an injunction are appropriate
6 because Apple is going to come forward with declarations or
7 witnesses or arguments or things we haven't got a chance to
8 test during discovery, and say, hey, wait, now there is a
9 verdict against us -- if that were to happen -- we can't
10 comply with an injunction because that is just too costly or
11 it would take too long, it would be too disruptive. They
12 haven't told us all the ways it would be disruptive. We need
13 to know that information so we are not ambushed if seeking an
14 injunction.
15 MR. WILLIAMS: Your Honor, in terms of the broad
16 interrogatory -- let's back up for a second.
17 THE COURT: I realize, Mr. Williams, the
18 interrogatory is broad; but I am sympathetic to the position
19 that VirnetX is talking about if a verdict comes in against
20 you. I have run into this in not just VirnetX but in other
21 cases where during trial, oh, it is no problem; and then you
22 get to an injunction and the sky is falling in.
23 I think that is what they are trying to avoid, and I
24 think that there is some merit to what they say. But I don't
25 want you to have to spend an inordinate amount of time on this
27
1 until we get to that point.
2 MR. WILLIAMS: Well, I think that we gave them,
3 certainly, what we had at the time and I think continues to be
4 our best estimate of the amount of time. I think that was
5 even put that up on the screen, the best estimate of the
6 amount of time it would take.
7 In terms of the cost, whether that is in, I guess,
8 the damages context or some other context, I don't
9 understand. I don't think the cost would change. I wouldn't
10 anticipate the cost would necessarily change for one context
11 versus another. So I am not sure --
12 THE COURT: So you are saying they could rely on the
13 cost that is indicated in your expert reports on the
14 design-around as being the costs that would be involved in an
15 injunction?
16 MR. WILLIAMS: I mean, if that is the estimate we
17 have given for the cost of changing today, then that would be
18 the estimate of changing today, I think. I am not sure what
19 else he is asking for, to be quite honest with you. We gave
20 them the design-arounds that we would use to avoid an
21 injunction. I don't think there is any dispute about that.
22 We gave them the estimate of time. He showed that on the
23 screen. And, apparently, we have given them the estimate of
24 costs to implement that design-around.
25 THE COURT: Okay.
28
1 MR. WILLIAMS: Unless I am mistaken about that.
2 MR. CALDWELL: So is Apple now going to incorporate
3 those aspects of their expert reports into their interrogatory
4 answer? I don't know that they have to go serve us another
5 piece of paper. Obviously there has been enough paper so far.
6 THE COURT: I take it you have just done that; is
7 that correct?
8 MR. WILLIAMS: I'm sorry?
9 THE COURT: I take it you have just done that?
10 MR. WILLIAMS: I believe that everything that I have
11 represented on the record I stand by, you bet.
12 MR. CALDWELL: I understand then what their damages
13 expert is saying is part of Apple's answer. I don't want to
14 be in a situation, obviously, where a fact witness now
15 reverses course and says the experts are wrong. But if that
16 is Apple's position, I can live with that.
17 THE COURT: I am going to -- Mr. Williams, if you
18 will file a brief supplemental answer just confirming what you
19 just said on behalf of Apple; that the cost estimates
20 contained with regard to the design-around by Apple's experts
21 would be what Apple would anticipate its costs would be if an
22 injunction were entered.
23 MR. CALDWELL: Just for clarification, I would also
24 say that the technical feasibility and ability to do it, not
25 even solely the cost, but it all goes into difficulty. It is
29
1 the cost and I would think the technical feasibility and
2 suitability.
3 MR. WILLIAMS: I thought we had already addressed
4 that, Your Honor, but let me just take an example. For
5 example, one of the things he threw out there a while ago is
6 that we would route traffic through some servers, different
7 servers I think was the issue.
8 I think we have indicated why that is technically
9 feasible because, in fact, that is happening today on a number
10 of calls. I am not sure what -- I am not sure where we are
11 deficient in that. I have not heard an allegation as to why
12 we are deficient in that regard.
13 MR. CALDWELL: The point is simply -- I think we are
14 all on the same page and Your Honor asked that Apple file a
15 supplement saying that it references --
16 THE COURT: Thank you, Counsel.
17 Here is what I am going to do: I am going to allow
18 VirnetX to designate -- file a 30(b)(6) and give them a
19 two-hour deposition of a 30(b)(6) witness. And I presume your
20 witness will be answering fairly consistent with what you have
21 represented to the Court today.
22 MR. WILLIAMS: That's fine.
23 THE COURT: What is next?
24 MR. CALDWELL: Thank you, Your Honor.
25 Hopefully this will be quick. The next aspect of
30
1 the motion to compel are requesting answers for some requests
2 for admissions. And, admittedly, these requests for
3 admissions are fairly uncomfortable for Apple to answer.
4 Mr. Martin, can we get back on the screen?
5 MR. WILLIAMS: Counsel, while he is doing that, let
6 me point out that I think some of the slides that were shown
7 earlier were AEO designation. So I don't know what you are
8 going to get into this time, but I ask that we take that into
9 account.
10 MR. CALDWELL: Do you want to seal the courtroom?
11 MR. WILLIAMS: I don't know what you have.
12 MR. CALDWELL: Fair enough, Danny. I intend to show
13 our request for admission not --
14 MR. WILLIAMS: Okay.
15 MR. CALDWELL: -- not your answers. I don't think
16 it is an issue.
17 MR. WILLIAMS: Okay.
18 MR. CALDWELL: What is displayed on the screen here
19 is one of the requests for admissions that Apple is unwilling
20 to answer. As I say, admittedly this is uncomfortable for
21 Apple. Admit that Apple has stolen great ideas from other
22 companies. It is a quote from Steve Jobs.
23 We are not arguing admissibility here today. We are
24 arguing discoverability. Apple thinks that, oh, this is too
25 prejudicial. It is taken out of context. It is not
31
1 applicable.
2 But VirnetX should be able to take discovery --
3 again, it is not an admissibility issue -- but we should be
4 able to take discovery, understanding that Apple will very
5 likely walk into this courtroom and say Steve Jobs is great,
6 he is our hero, the company is built around him, he did things
7 great, our company does things great, we don't even take ideas
8 from other people. And we need to have these arrows in our
9 quiver depending on what arguments Apple makes at trial. So
10 on the basis of discoverability the question is relevant and
11 should be answered.
12 There are other requests for admissions that are
13 similar to that, and I streamline this down to just a couple
14 of example ones that Apple is refusing to answer.
15 Another one is No. 8, Request for Admission No. 8
16 asks Apple to admit that it could pay a license of $250
17 million for VirnetX's patents without any significant
18 disruption or burden to Apple's operation or business.
19 Apple, at least according to Steve Jobs in his book,
20 Apple is flush with cash. Apple compensates executives very,
21 very well. And this amount of money, we do not believe, would
22 be at all disruptive to their business. But, again, this is
23 an issue of discoverability, not admissibility. Apple should
24 answer this. There is no good reason for Apple not to answer
25 this question so VirnetX is equipped should Apple suggest
32
1 otherwise at trial.
2 And another example, request for admission on the
3 screen, is No. 18. Admit that Apple could pay a license for
4 VirnetX's patents equal to the value of the total compensation
5 package it paid to its CEO in one year, without any
6 significant disruption or burden to Apple's operations or
7 business.
8 As I said, Your Honor, these are not comfortable
9 requests for admissions for Apple, but they are relevant and
10 they are discoverable. They are not for any purposes of
11 harassment. VirnetX should have them available should Apple
12 suggest otherwise at trial, but that is what the discovery
13 period is for.
14 THE COURT: Response.
15 MR. CALDWELL: We believe that Apple should
16 answer them.
17 MR. WILLIAMS: Yes, Your Honor. Let me cover the
18 first -- I think there are three. 4 through 6 deal with this
19 Apple steals great ideas. First of all, they didn't ask us to
20 admit that Steve Jobs said that. That is not the admission.
21 The request for admission is that we admit we steal great
22 ideas from companies.
23 And I wonder -- he made reference to the book about
24 Steve Jobs, so maybe he really understands the context for
25 that statement and just hasn't articulated that. If he does
33
1 understand the context of that statement, I would hope he
2 wouldn't press this issue because it seems to me what they
3 want to do is put in front of the jury some alleged statement
4 that was made by Mr. Jobs.
5 For what purpose? What issue does it go to in this
6 case? There is no allegation of willfulness. In fact, they
7 confirmed that recently in response to one of those letter
8 briefs, even though there was a prayer -- a pleading in their
9 complaint. But they have alleged -- they have now conceded
10 they are not alleging willful infringement against Apple. So
11 it is not clear what issue in the case that is even relevant
12 to.
13 But let me explain what the context of that
14 statement was and why it would be misleading, and the position
15 they are trying to put Apple into with this request. The
16 context of that statement was that Xerox PARC had developed a
17 user interface, and Steve Jobs was interested in purchasing
18 that interface. He negotiated what he considered to be a very
19 good deal.
20 And what he said was, in essence, is I got a steal.
21 It would be like me going down and buying a good car and
22 getting a great deal on it and say I got a steal on this car.
23 That was what he said. That is what he said, and that is the
24 context in which he said it. It was not in any kind of
25 context we are going around ripping off anybody's property.
34
1 So that is, first of all, why it would be misleading.
2 What is wrong with this request for admission? Two
3 things. One, it doesn't go to any relevant issue in the case
4 I can conceive of. Two, it is misleading. Three, they are
5 trying to get Apple to either admit it, at which they can then
6 read it to the jury. Again, there is no context. Or deny it
7 and thereby open the door, if you will, to them putting in
8 some video or some excerpt from a book or something like
9 that.
10 I will submit that both of those are improper
11 because it doesn't even go to an issue in the case.
12 THE COURT: All right. Request for admission --
13 motion to compel, Request for Admissions 4 through 6 are
14 denied. That is not to say that if you want to try to impeach
15 with a statement by somebody in the corporation, I will take
16 that up at the time you wish to offer it.
17 Now, it is my understanding that requests 3, 7, 16,
18 17, 19 through 22 have been resolved; is that correct?
19 MR. CALDWELL: I believe you said the right numbers.
20 I think so.
21 THE COURT: 3, 7, 16, 17, 19 through 22.
22 MR. WILLIAMS: Some have been resolved. I'm with
23 Mr. --
24 THE COURT: What about Requests 1 and 2?
25 MR. CALDWELL: 1 and 2 VirnetX just agreed not to
35
1 pursue. I believe -- I want to say it is in our reply brief.
2 THE COURT: That leaves us with 8 through 15 and 18
3 which deal with damages.
4 MR. CALDWELL: Yes, Your Honor.
5 MR. WILLIAMS: Those that deal with the amount that
6 Apple could pay for a license without it impacting their
7 business. We set forth in detail why we cannot admit or deny
8 after further investigation. Could we pay something now?
9 That is not what the question is. The question is could we
10 pay for a license at some point in time?
11 The question will be, of course, what the financial
12 condition of Apple will be at that time. Now, I'm not up here
13 to tell you that I think Apple is going down the tubes and
14 won't be able to afford something. But to admit or deny a
15 specific request like this, based upon not knowing when we
16 will be faced with that or what the conditions would be, I
17 don't believe we can answer that --
18 THE COURT: All right. Requests 8 through 15 and 18
19 are granted, with the proviso that you can make that request
20 based on a current point in time -- that admission based on a
21 current point in time.
22 All right. I think next is source code; is that
23 correct?
24 MR. CALDWELL: Yes, Your Honor, it is source code
25 and then the next one is executable binaries. It is a similar
36
1 situation so we will, hopefully, make this pretty streamlined.
2 As with the requests for admission and the
3 interrogatories, everything with Apple has been shockingly
4 iterative where our expert has to go look at the code and see
5 reference to some other function that invokes part of the
6 code, and then we have to go ask Apple. We have to wait a few
7 weeks. We have to send a guy back to Houston.
8 THE COURT: Are they giving you code that is up and
9 running that you can run?
10 MR. CALDWELL: No, they are giving us code that is
11 source code that we can look at the code. We cannot actually
12 run it, and that running part is part of the executable
13 binaries aspect of it. So, no, Your Honor. It is essentially
14 like looking at text documents. They are not compiled. It is
15 not something that we can actually execute.
16 But as to the source code problem, again, we just
17 asked for it iteratively and got little pieces.
18 Here is what I suggest for the Court at this point
19 because now, as of the date of this hearing, it is a little
20 late in the game for Apple to give us more source code, which
21 is what we were requesting in the motion. And I think what we
22 need is either an order from the Court or representation from
23 Apple that the source code produced by today is all of the
24 source code that bears on any issue in the case; and that
25 anything not produced by now cannot come in or be alluded to
37
1 by Apple for any reason or issue. That is the only fair
2 result.
3 THE COURT: Okay. Mr. Williams.
4 MR. WILLIAMS: Well, let me say, first of all,
5 before I get to his proposal, it is not terribly surprising to
6 me that source code would be an iterative process. We did
7 produce a lot of source code to them initially, which is what
8 they wanted. They have an expert come out. He would go
9 through it apparently, find things he thought he needed, we
10 would produce those. So it was, in fact, an iterative
11 process, which in my mind illustrated that we were trying to
12 keep the discovery going and produce what they needed.
13 Now, the request for binaries came a little bit
14 later and thus spurred some discussion between us as to not
15 understanding what the purpose for binaries was. That is all
16 laid out in the papers, and I am not going to belabor that
17 point.
18 But let me get to this point. The expert in his
19 report makes no indication whatsoever, none whatsoever that he
20 couldn't find something; that he was unable to fully analyze
21 something because something was missing; that he was -- that
22 his analysis was hampered in any way because of something that
23 was missing. In fact, after we produced things from the last
24 supplemental production that we made on the source code, one
25 of their experts came out twice. Another one came out once.
38
1 There was never any further discussion or something else being
2 missing. So as far as I know, we have produced everything
3 they think they need. We produced more than they thought they
4 needed in the first place, but nevertheless we did.
5 Now, as far as his stipulation, we don't have any
6 intention to come in here and refer to code that we didn't
7 give them. I don't think I can ever tell you I want to put in
8 some code that we didn't produce to them. So we are not going
9 to do that. But we are certainly going to attack the analysis
10 of his expert. We were are not going to be using code that we
11 haven't produced to them in this case.
12 THE COURT: Does that satisfy you, Counsel?
13 MR. CALDWELL: I'm not sure he agreed to really what
14 I was stating --
15 THE COURT: Restate your request.
16 MR. CALDWELL: I tried to write it out carefully.
17 And hopefully this is workable, Mr. Williams.
18 And, again executable binaries is a separate issue.
19 This is on the source code portion. The source code produced
20 by this point is all of the source code that bears on any
21 issue in the case, and anything not produced by now cannot
22 come in or be alluded to by Apple for any reason or issue.
23 MR. WILLIAMS: Okay. I hear the last part, but the
24 first part, read the first part.
25 MR. CALDWELL: The source code produced by this
39
1 point is all of the source code that bears on any issue in the
2 case.
3 MR. WILLIAMS: Oh, bears on any issue. As far as I
4 know it is all of the code that bears on any issue, for sure;
5 and we are not going to be coming in here and relying on code
6 that we haven't produced in the case.
7 Is that what you are asking for?
8 MR. CALDWELL: Yes.
9 MR. WILLIAMS: Your Honor, I really don't think
10 there is any issue anymore. I think they just want to know
11 the cards are on the table.
12 THE COURT: They want to know that there is an end.
13 MR. WILLIAMS: That the cards are on the table. And
14 the cards are on the table.
15 MR. CALDWELL: Okay. That is fine. And we are very
16 much interested in this issue because I don't want to put our
17 expert on the stand and have him crossed by saying you didn't
18 look at X, Y, and Z that were never produced. So it is very
19 important to us. We are not just trying to take the Court's
20 time today.
21 MR. WILLIAMS: Let's not get too cute here, but
22 let's do recognize that your --
23 I'm sorry, Your Honor. That the plaintiffs' expert
24 has not complained about something being missing in his
25 report.
40
1 THE COURT: All right.
2 MR. WILLIAMS: He has not even indicated that he is
3 hampered.
4 THE COURT: All right. Restate your thing one more
5 time.
6 And you say I agree or I disagree.
7 MR. CALDWELL: The sources code produced by this
8 point is all of the source code that bears on any issue in the
9 case; and anything not produced by now, cannot come in or be
10 alluded to by Apple for any reason or issue.
11 THE COURT: Agree or disagree?
12 MR. WILLIAMS: I have one slight reservation, and
13 let me put this on the record. Otherwise, I don't have any
14 problem with it.
15 Here is the reservation: If I say that is all of
16 the code that bears on any issue in this case, if something
17 comes up later down -- I know something is going to come up
18 later down the line. They are going to pop up with something
19 and say, aha, here is some other code that bears on an issue
20 in the case, and you have represented to the Court that is
21 it.
22 I am not aware of any other code that bears on any
23 issue in the case. Your Honor, I think that is as far as I
24 can go because as sure as I swear here that that is all of the
25 code, something is going to pop up.
41
1 THE COURT: Well --
2 MR. WILLIAMS: Otherwise, I don't have any problem
3 with that.
4 THE COURT: All right. With that one proviso, but I
5 will say this and be forewarned, Mr. Williams, that the Court
6 would take a very dim view of any attempt at anything that has
7 not been produced by today.
8 MR. WILLIAMS: Absolutely.
9 MR. CALDWELL: And executable binary is very
10 similar, Your Honor. It ought to be quick.
11 Executable binaries are basically the compiled
12 version of the source code, things that you could run. And we
13 can play around with an iPhone and see how it works. But
14 obviously their server is back at Apple, and they have
15 functionality that is very relevant to this case.
16 And Apple has humans that can walk around and play
17 with the servers and test them. Maybe they have run
18 experiments on them. Maybe they have observed certain
19 functionality.
20 And what we have requested was we wanted copies of
21 the executable code that we don't have access to but that
22 Apple does because now there is obviously an imbalance in
23 evidence. What we don't want is Apple to come into court and
24 have a witness and go, well, but I have actually sat at the
25 machine and looked at it and observed it; what they say is
42
1 wrong because I have noticed this phenomenon and we wanted to
2 test them and we don't understand why we can't. There are
3 adequate protections in the protective order.
4 But I think this can be resolved essentially by a
5 similar stipulation because at this point expert reports and
6 rebuttal reports have happened in both cases, and we are
7 pretty far down the road.
8 What I would propose is that the best way to handle
9 this is Apple is precluded from saying or suggesting that they
10 work with the actual FaceTime code or actual FaceTime servers,
11 in that it suggests Apple's position is more credible or more
12 trustworthy because it had the ability to experience or work
13 with something that VirnetX did not.
14 It's just a suggestion that Apple having the witness
15 say, well, I actually get to play with the executable and run
16 it, so I know it better or I can tell you about its
17 functionality.
18 THE COURT: Response.
19 MR. WILLIAMS: Your Honor, I can't agree to that,
20 and let me tell you why, too, because we have produced witness
21 after witness including on the server side about how those
22 things operate. So for me to agree that I can't put a witness
23 on the stand to talk about how the server side operates, seems
24 to me to be out of bounds.
25 THE COURT: What is your objection to producing the
43
1 executable code?
2 MR. WILLIAMS: Our objection was simply, as we
3 spelled out in the papers, that it is merely cumulative. They
4 have the source code. First of all, you understand, I'm sure,
5 they can't read the executable binaries.
6 THE COURT: I know. But they can run it, they can
7 run traces, they can play with it as your experts can play
8 with it.
9 MR. WILLIAMS: Everything our expert has done is
10 laid out in his report, so I don't think there is any
11 reference to server --
12 THE COURT: Okay. The Court is going to -- excuse
13 me -- the Court is going to grant as to production of the
14 executable binaries of the source code.
15 What else?
16 MR. CALDWELL: May I request a very, very, very
17 short time frame for that at this point? Otherwise, if Mr.
18 Williams --
19 THE COURT: Today is Thursday. Can you do that by,
20 say, noon Monday?
21 MR. WILLIAMS: I'm getting a disgruntled look from
22 my client, Your Honor. All I can say is we will get to them
23 absolutely as soon as we can.
24 THE COURT: Let's have it to them by 5:00 p.m. on
25 Tuesday.
44
1 MR. CALDWELL: Your Honor, given that expert reports
2 have already been exchanged, I presume it would be fair if
3 something needs to be supplemented in our expert report --
4 THE COURT: I'm not going to rule on that now. File
5 a motion if you feel that there is something. But try to work
6 it out with them first if you can.
7 All right. Next will be Apple's motion for
8 protective order for halting the deposition of Christophe
9 Allie and the corresponding motion for sanctions by VirnetX;
10 that is, Docket Nos. 250 and 272.
11 MR. WOLOSON: Good morning, Your Honor. Scott
12 Woloson for Apple. I don't want to blow smoke, Your Honor;
13 but as the Court is aware, the underlying goal of the
14 discovery rules is about getting to the truth. This
15 deposition was not about getting to the truth because if it
16 was, they would have given Mr. Allie an opportunity to review
17 a patent that he said he had never seen before.
18 Mr. Allie is a fact witness. He is not a patent
19 attorney. He is not an expert witness. He wasn't even a
20 30(b)(6) witness.
21 So what was the reasonable -- expect Mr. Allie to
22 do. First thing would be to come in and talk about his
23 patent, which he did. We are not objecting he couldn't give
24 opinions about his patent. There wasn't an issue about him
25 giving opinions on his patent.
45
1 It is when they presented the '135 patent to him
2 that the issue came up. He said 14 times before that that he
3 had never seen that patent, he didn't know what was in it, he
4 had no idea if he could even understand it.
5 So they got exactly what they were -- he was
6 entitled -- they got the extent of his personal knowledge.
7 What they are asking for is something more, for him to give an
8 off-the-cuff opinion about a patent that he has no idea what
9 it is about.
10 Now, their argument is, well, we reviewed it. They
11 read one claim out of that patent. Even in his response he
12 said that is vague, but I understand. He is a fact witness.
13 He has no idea that the Court is going to require him to read
14 the spec. The Court is going to tell him to read the spec,
15 read the other claims, read the prosecution history to get an
16 idea of what the scope of that claim is.
17 So that is why we objected because it wasn't about
18 getting to the truth at that point. It was about getting
19 uninformed testimony.
20 It wasn't in bad faith because Apple's Counsel tried
21 to work it out and said, can you just give him an opportunity
22 to review this patent? They wouldn't do it, so that is why we
23 had to seek for protection.
24 THE COURT: Okay.
25 Counsel.
46
1 MR. CALDWELL: May I have the plaintiffs' slides on
2 this, Mr. Martin?
3 I am really bothered by this repeated suggestion in
4 the briefs and in court today that VirnetX's Counsel did not
5 give Mr. Allie an opportunity to review the patent. It is
6 crystal clear in the transcript Mr. Allie never asked to look
7 at the patent. That is one thing that is just absent from
8 Apple's briefing. It is pretty glaringly absent --
9 THE COURT: Let me ask you this: What happened
10 during the 30-minute recess that was taken when you were
11 attempting to call the Hotline, that was on the video, did he
12 review it then?
13 MR. CALDWELL: No, he didn't review it then.
14 THE COURT: Why didn't he review it then, Counsel?
15 MR. WOLOSON: At that point -- I'm not sure. I
16 think at that point they were waiting to see because --
17 Counsel suggested that -- let's move on to another topic. We
18 can come back and address that. So I am sure at that point
19 Counsel wasn't aware if this was going to come back to that or
20 they were going to move on.
21 MR. CALDWELL: Definitely that doesn't make sense.
22 Apple's Counsel was suggesting you guys move on because
23 Apple's whole point was Apple didn't want VirnetX to ask those
24 questions. But the whole point of trying to call the Hotline
25 was because these are the questions we wanted to ask. And for
47
1 Your Honor's information -- I can't remember if it was in the
2 briefs -- but it was Good Friday.
3 THE COURT: I saw that.
4 MR. CALDWELL: I would like to direct Your Honor to
5 a little bit of this. If at any moment you think it is not
6 helpful, please let me know.
7 There is really not a dispute. Mr. Allie actually
8 four-and-a-half years later tried to patent a DNS-triggered
9 VPN, which will probably sound pretty familiar to Your Honor.
10 He straight up said, yes, I tried to patent the idea of using
11 a domain name to determine whether to establish a VPN.
12 Now, there are very few occasions when you can stop
13 a deposition or instruct not to answer. I won't belabor this
14 with the Court, but it is issues like are you annoying,
15 embarrassing, or oppressing the deponent? But the key is
16 those questions are about the manner of questioning. Are you
17 being abusive? You are really down this guy's throat. You
18 are not letting him answer. You are refusing to do something.
19 Not once did Mr. Allie ask to read it. And Counsel
20 was exceedingly, exceedingly polite throughout this
21 deposition, which is why we submitted the DVD to Your Honor.
22 The Counsel taking the deposition is Mr. Curry. He was
23 extraordinarily polite throughout this deposition.
24 Now, we also know scientists, they are smart folks,
25 right, scientists and engineers? When scientists or engineers
48
1 work with complex technology, they are smart enough to know
2 when they don't understand the question. They are smart
3 enough to ask for clarification. They are smart enough to ask
4 for a time to read. He didn't ask any of that.
5 The witness can ask for clarification. The witness
6 never asked for some other time to read. Okay? Here is what
7 really happened. Your Honor is obviously very familiar with
8 the Local Rules and the rules on, "Objection. Form." And
9 there is a reason for all that, of course. You don't want to
10 be interrupted with every single depo that goes on and having
11 to rule on something.
12 The idea is we get the discovery, you worry about
13 admissibility later. That is why we have these rules in
14 place.
15 Well, here is what happened. When Mr. Curry first
16 asks about the VirnetX patent relative to Mr. Allie's own
17 application four-and-a-half years later:
18 So as it turns out Apple isn't the first company to
19 have the idea of determining whether to establish a VPN based
20 on a domain name request, right?
21 Objection. Form. Objection. Counsel, you haven't
22 established that he's ever even seen this document before.
23 You're asking him to interpret it based on 30 seconds of you
24 having read one portion of the entire document to him.
25 If you want him to comment on this document, you
49
1 have to give him a fair opportunity to read it and analyze it.
2 You cannot expect him to form an opinion like that on the fly
3 without knowing more about the document.
4 Now, all of us in this courtroom understand why
5 Apple's Counsel would want to put that on the record to its
6 witness hoping then that the witness picks up on the vibe
7 that, wait a minute, I can't answer this. There is a bunch of
8 stuff I don't know. I can't proceed.
9 But in any event, that is clearly not an,
10 "Objection. Form," despite the two words that it begins with.
11 There (indicating) is the remainder of the quote I read
12 verbatim to Your Honor.
13 Now, when that didn't work, a view pages later -- 18
14 pages later in the deposition, Mr. Curry asked:
15 Okay. I'll read Claim 1 and you let me know if
16 there is anything you don't understand about Claim 1. Okay?
17 I'm going to object -- this is Counsel for Apple --
18 I'm going to object to this line of questioning. If you want
19 to ask him questions about a document that he has never seen
20 before, then he deserves an opportunity to review the document
21 in detail.
22 MR. CURRY: Is that an instruction not to answer?
23 No, it's not an instruction not to answer. It is
24 that this is an inappropriate line of questioning, and you
25 know better.
50
1 That is the second attempt, Mr. Allie, don't answer
2 this stuff. Zip it.
3 Now, can we go to -- there we go.
4 Finally, the final instance -- and this is what led
5 to the Hotline call. This is what led to this motion in front
6 of Your Honor.
7 This is where Apple essentially, although they are
8 claiming it is not an instruction not to answer, it is pretty
9 much the most definitive instruction not to answer you could
10 have because they pack up their toys and leave.
11 Mr. Morgan says: No, you did not review the
12 document. You read him one claim out of a 48-column patent.
13 He has to have an opportunity to look at the entire patent in
14 order to understand what the claims are saying. He also needs
15 to look at the prosecution history. Do you have that for him
16 to look at?
17 So now the suggestion is, okay -- it is a 70-page
18 patent. He is going to go read that thing word for word and
19 you can't ask him a question until does. And, oh, by the way,
20 I don't care how many reexams this has been through, I don't
21 care how much the prosecution history is. Let him sit there
22 for the next 12 hours or maybe 12 days, give him the
23 prosecution record, and then let him read every single one of
24 those. We don't have to answer any questions.
25 But that is this instruction.
51
1 Mr. Curry --
2 There was actually a question pending, if I remember
3 correctly.
4 -- I am not going to let you dictate my questioning,
5 Counsel.
6 Response: And I am going to dictate this
7 questioning because I am going to shut the deposition down.
8 It's inappropriate.
9 If that is your choice, then I request we go on the
10 Hotline.
11 Apple's Counsel: I don't need to go to the Hotline
12 to shut it down and seek a protective order.
13 Mr. Curry: I'm going to go to the Hotline.
14 Response: You can do whatever you want. I have the
15 choice.
16 That is when Apple decided to leave, and Mr. Curry
17 went to go call the Hotline and ran into the Good Friday
18 issue, understandably.
19 Again, it is important to remember the context. A
20 person may instruct a deponent not to answer only when
21 necessary to preserve a privilege, to enforce a limitation
22 order by a court, or to present a motion under 30(d)(3) --
23 which has those standards I showed you before -- about
24 embarrassing, oppressing, annoying. And none of that
25 happened.
52
1 But it is a conduct issue. It is not a
2 I-don't-like-the-answers issue. And it is not an
3 admissibility issue either.
4 So what we have noticed is as Apple is briefing
5 this -- initially the motion for protective order -- truth be
6 told, Apple didn't want to file it. They said they were going
7 to leave and go seek a protective order. We called them and
8 said, hey, when are you going to file this protective order?
9 We want to get resolution on this. We are waiting for you to
10 file because you told us you were going to file one.
11 And when we told Apple, hey, we are going to file a
12 motion for sanctions. Okay? They said, ah, fine, fine. We
13 will go ahead and file our motion for protective order. That
14 is how this got in front of the Court. But as the briefing
15 evolved, you started seeing Apple realizing, wait a minute,
16 this is a conduct issue. So we have got to pitch this as
17 conduct -- VirnetX's conduct was inappropriate.
18 Here is what you see in the briefing. Oppressive
19 behavior, badgered, badgered, badgered, harassed, badgered,
20 unreasonable conduct, oppressive, harassed, badgered. All of
21 these different instances that I have thrown up in my pretty
22 little slide here are unique. We didn't reuse them. And they
23 start about the second or third brief Apple files in this
24 thing when it starts to make it about VirnetX's conduct.
25 I would like to show you -- I don't know if Your
53
1 Honor has had an opportunity to listen --
2 (Deposition excerpt played.)
3 Q. Claim 1 reads: A method of transparently
4 creating a virtual private network, VPN, between a client
5 computer and a target computer. You understand that, right?
6 MR. MORGAN: Objection. Form.
7 A. A method of transparently creating between a
8 client computer and -- it is a little vague, but yes.
9 Q. Step 1 is: Generating from the client computer
10 a domain name service, DNS request, that requests an IP
11 address corresponding to a domain name associated with the
12 target computer.
13 A. Uh-huh.
14 MR. MORGAN: Objection. Form.
15 A. Yes.
16 Q. You understand what that means?
17 MR. MORGAN: Objection. Form.
18 A. It is vague again, but yes.
19 Q. Step 2 is: Determining whether the DNS request
20 transmitted in Step 1 is requesting access to a secure
21 website.
22 MR. MORGAN: Objection. Form.
23 A. Again, it is vague. It can be interpreted in
24 different contexts.
25 Q. But you understand what it means?
54
1 MR. MORGAN: Objection. Form.
2 A. Yes.
3 Q. And then Step 3 is: In response to determining
4 that the DNS request in Step 2 is requesting access to a
5 secure target website, automatically initiating the VPN
6 between the client computer and the target computer.
7 A. Again, it is vague, but....
8 (Deposition excerpt concluded.)
9 MR. CALDWELL: I don't know why it cut off there.
10 Is that the end of the clip?
11 MR. MARTIN: Yes.
12 MR. CALDWELL: I think it is vague, and he says,
13 yes, but it is all there; or something along those lines. I
14 didn't mean to cut it off there. I didn't realize I did.
15 My point is this: VirnetX's conduct was exceedingly
16 polite throughout the deposition. At no time did he ask to
17 bail out or read or anything like that, and he laid the
18 foundation. That is when the deposition ended, Your Honor.
19 Now, Your Honor is well aware Your Honor has
20 discretion to impose sanctions. And there is a rule for
21 sanctions under Rule 30. And, admittedly, I think our
22 briefing was a little bit vague on Rule 30 and Rule 37. They
23 can both provide bases for sanctions. Certainly Rule 30(d)(2)
24 does.
25 The Court can impose appropriate sanctions on
55
1 someone who impedes, delays, or frustrates fair examination of
2 the deponent, which is exactly what happened here.
3 We know that walking out of the deposition that is
4 like that with that sort of very polite conduct and certainly
5 relevant questions, is not the rule in this Court. VirnetX
6 would suggest nor does the Court want it to be the rule in
7 this Court.
8 What you do when something becomes terribly
9 uncomfortable on a fact basis in your deposition is you leave,
10 seek a protective order, add costs to the case, add delay to
11 the case, add an opportunity for Counsel to revisit how they
12 may want to prep their witness, and then you come back later.
13 Now, VirnetX believes that Apple should be
14 sanctioned. The sanctions are sought against the company
15 Apple. And I think each of these things essentially follows
16 from the conduct. It is not something that is meant to be
17 crazy oppressive or anything like that.
18 The first we request is that VirnetX can call Mr.
19 Allie to testify at trial by deposition, but Apple cannot call
20 at trial Mr. Allie or another witness to testify about that
21 patent application that Apple filed.
22 Second, is we seek an order that Apple cannot
23 present counter or rebuttal designations of Mr. Allie's
24 deposition testimony.
25 And I think it is important to understand that
56
1 typically in a deposition, of course, you have things that are
2 good and bad for both parties and you have an opportunity for
3 redirect and then you can test those theories on recross. And
4 at the end of the day you hope to get a thorough, complete
5 transcript. It has got ups and downs for both sides; and you
6 present your testimony and maybe rebuttals.
7 That obviously didn't happen here. We were never
8 allowed to complete the examination. There is not a balanced
9 transcript to start with.
10 Now, the third request that VirnetX seeks -- and
11 these are all on Page 9 of Docket No. 271 -- is an instruction
12 to the jury --
13 THE COURT: Let me ask you on Mr. Allie's
14 deposition, were you -- was VirnetX deposing him? Was there
15 an examination by Apple?
16 MR. CALDWELL: No, Your Honor. They didn't hang
17 around long enough for any sort of redirect or anything like
18 that.
19 THE COURT: All right.
20 MR. CALDWELL: So then the following one -- I won't
21 read it unless Your Honor wants it in the record, Your Honor.
22 We seek a jury instruction informing the jury exactly what
23 happened; that VirnetX asked questions related to his patent
24 application. It was filed four-and-a-half years later. We
25 asked questions about that, and Apple terminated the
57
1 deposition, did not permit Mr. Allie to answer those
2 questions. That is improper.
3 In rendering its verdict on issues of validity,
4 infringement and damages, the jury can consider the actions of
5 Apple's Counsel to be evidence unfavorable to Apple.
6 We think each of these sanctions is appropriately
7 tailored based on the conduct which is -- absolutely is not
8 the rule and cannot be an appropriate way to prosecute cases
9 in this Court.
10 Thank you, Your Honor.
11 MR. WOLOSON: I'd first like to respond to -- there
12 is a disagreement how we got to this point. After the
13 deposition was halted, we went back and asked for a
14 meet-and-confer before we filed a motion. They said, well,
15 you don't need a meet-and-confer. We said, yeah, we do need a
16 meet-and-confer.
17 So we filed -- we had a meet-and-confer. The first
18 thing we did during that meet-and-confer was say we are going
19 to offer to put Mr. Allie back up at your convenience. They
20 said no. The damage is done, no.
21 That right there shows that they got everything they
22 wanted out of him, and now they want to go for these
23 overarching sanctions. So to say that we just now come back
24 and we are now here not offering to put him back up, that is
25 just not true. We offered to put him back up immediately.
58
1 And the other question is, what did they expect.
2 They make it sound like he is -- it was an expert opinion.
3 That he had reviewed this patent before, he knew everything
4 about it. He had never seen it. 14 times before -- it is not
5 in the clip. 14 times before that point he said I have never
6 seen that. I don't know what is in it. I don't know how many
7 more times they have to ask him before it becomes oppressive
8 to say are you going to do it or not.
9 There is no doubt that both Counsel were polite.
10 Our Counsel wasn't arguing with him. It was just
11 fundamentally unfair to expect Mr. Allie who had never seen
12 this patent before, to understand its claim scope. I mean,
13 the one claim --
14 THE COURT: Why had he not seen the patent before?
15 MR. WOLOSON: He is an Apple engineering manager.
16 THE COURT: Did you meet with him prior to the
17 deposition?
18 MR. WOLOSON: We did. We did. But I don't think we
19 expected them to --
20 THE COURT: You did not anticipate that they would
21 ask him to compare the patent that Apple subsequently filed to
22 the previously-filed VirnetX patent?
23 MR. WOLOSON: Not that I am aware of, no, Your
24 Honor.
25 So -- I mean, that is the point. They got
59
1 everything that you would expect him to give. So that just
2 goes to the sanctions are over the top. They are just
3 inappropriate and unjust.
4 As the Court is aware, 7 of the 15 terms that the
5 Court construed are in this one claim. The Court spent more
6 than 30 minutes looking at it. They spent more than a day
7 looking at it. They expect Mr. Allie to say, hey, oh, yeah, I
8 understand it.
9 You saw the deposition testimony. He said it is
10 vague. He is not a patent attorney. He doesn't understand
11 claim scope. He even admitted it is vague.
12 Regarding the sanctions, the first two sanctions go
13 to the evidentiary conclusion. And, generally speaking, those
14 don't apply when a party's actions were substantially
15 justified or harmless. Here we believe they were justified
16 because he wasn't given an opportunity to review the patent.
17 They were harmless because, like we said, they got everything
18 they would expect a fact witness to know about, his personal
19 knowledge. This is a complex document. To expect him to pick
20 it up off the fly, that is just not fair.
21 The third sanction relates to the adverse inference
22 instruction. And in this Circuit you have got to have showing
23 of bad faith and bad conduct. Now, VirnetX has never said bad
24 faith or bad conduct. In the briefing they said calculated
25 gamesmanship.
60
1 But as we explained, this was not gamesmanship.
2 They just simply asked, give him an opportunity to review the
3 document.
4 So based on that, we think the Court should -- the
5 proper, appropriate, and just remedy is to grant Apple's
6 motion for protection --
7 THE COURT: He was an Apple employee, right?
8 MR. WOLOSON: He is an Apple engineering manager,
9 yes.
10 THE COURT: Why during the 30-minute break didn't he
11 take that time to review the patent?
12 MR. WOLOSON: I would -- I don't know why he didn't,
13 but I would say that even that wouldn't be enough for him to
14 understand the patent fully. It is a 60-page patent. There
15 are 48 columns of text, 32 figures. He is not a patent
16 attorney.
17 THE COURT: All right. Response.
18 MR. CALDWELL: Your Honor, I'll be super brief. I
19 think it is apparent that cutting off the deposition was
20 utterly improper. I will also point out as to your
21 question -- which I think is a very good one -- why had he
22 never looked at the patent before? The lawsuit had been
23 pending approximately 19 months, if memory serves, by that
24 point. We had asked virtually all their witnesses about the
25 patents.
61
1 And this is a guy who actually has his own patent
2 application pending that is subsequently filed and would have
3 had a duty of candor to submit our patent to the Patent Office
4 in connection with his own. So I believe your question is
5 actually very insightful and the sanctions are utterly
6 appropriate and narrowly tailored, as this is not the way we
7 can conduct depositions.
8 THE COURT: All right. The Court is going to deny
9 the motion for protective order and grant the motion for
10 sanctions. And I will enter a written order detailing exactly
11 what sanctions will be imposed as a result of the granting of
12 the motion.
13 All right. What is next would be VirnetX's motion
14 to compel, Docket No. 275.
15 MR. CASSADY: Your Honor, there is no Elmo over
16 there, right?
17 THE COURT: That's correct.
18 MR. CASSADY: We will have to share the Elmo.
19 Your Honor, Jason Cassady for the plaintiff, in case
20 you don't remember.
21 VirnetX brings this motion to compel use data and
22 deployment data of Cisco's customers. In the -- situation we
23 are in, just like in most cases, a defendant commonly pleads
24 ignorance on the use of its devices with regards to its
25 customers; and uses that as a reason to argue that either
62
1 there is no direct infringement, indirect infringement, or
2 most commonly it is not worth anything because nobody uses it.
3 You know, in some cases that can be reasonable. A
4 defendant could actually have no knowledge of its customers.
5 But the issue we have here, though, is that Cisco is not just
6 a provider of equipment. They are a provider of service. So
7 they actually go in and they do work for their customers in
8 setting up these complicated systems of routers, phone
9 devices, call centers. They do all this work.
10 In order to do this work, Your Honor, they have to
11 know how they are set up. They have to know what they are
12 doing when they go to these customers, and they set these
13 things up. And the issue we have, Your Honor, here -- and I
14 don't want to belabor the history of discovery because I don't
15 think it is entirely relevant other than to say we repeatedly
16 asked for materials related to how the deployments are done at
17 Cisco's customers and how Cisco's service centers deal with
18 issues related to how these products are implemented and used
19 by its customers. We have repeatedly been stonewalled by that
20 discovery.
21 Now, candidly, Your Honor, I think the issue is that
22 the defendants -- or Cisco in this case -- are not maybe
23 looking in the right places for the discovery. I think that
24 may be what it is. I can show Your Honor a couple of examples
25 of documents that are templates. I will go to the Elmo here
63
1 in just a second and show you. I will describe them just
2 generally to Your Honor.
3 These are templates that are called the
4 infrastructure discovery document or statements of work or
5 solution and user requirements or architecture validation
6 reports. All of these things are highly relevant to how Cisco
7 knows to set up these products at its customers'
8 implementations.
9 And the issue is, Your Honor, we have got evidence
10 that these documents exist; yet these documents are not in the
11 production. If they are in the production, they are for
12 products not even accused in this case.
13 So we just at this point had no other option than to
14 come to this Court and say, Your Honor, we are at the league's
15 end here. We have asked for these documents. They are not
16 coming. We know they exist. Cisco won't tell us they don't
17 exist. They just say we have done the best we can, and we are
18 not getting anywhere on it.
19 And telling to me, Your Honor, one of the letter
20 briefs that were filed in this case is a letter brief asking
21 to dismiss the case because we can't prove who uses what.
22 Now, Your Honor, we can prove those elements with
23 some of the limited documents we have, and we can make
24 inferences. But the reality here is they are filing a letter
25 brief on the ball they hid from us this last six months to a
64
1 year in discovery.
2 And basically it has been this same iterative
3 process of saying where are these documents? They give us an
4 example of that document, but they don't tell us where they
5 all. They say here is one example of it.
6 We go look in the production, and we can't find
7 those documents. So we are stuck in a situation where the
8 motion very clearly -- their responses and our motion -- set
9 out what we are looking for by name, statements of work,
10 industry documents, architecture validation reports. We list
11 it all out.
12 They respond with an example or two of a document
13 but not an identification of the body of production that
14 relate to those things, and that is the issue, Your Honor. We
15 can't find them. We don't think they are there. They give us
16 examples. That is all they will give us. So we are asking
17 for them to either identify them or produce them, one or the
18 other.
19 THE COURT: Response.
20 MR. STADNICK: Your Honor, Michael Stadnick for
21 Cisco. Let me begin by saying we are not withholding
22 documents. We are not refusing to produce documents. I heard
23 Counsel say that we have been playing hide the ball, and it is
24 simply not true.
25 While I do appreciate that there is a potential
65
1 issue of proof that VirnetX is facing with respect to the
2 deployment, configurement, and use of the accused products, it
3 is a proof issue that flows from the merits, Your Honor, and
4 not from an effort to withhold or conceal discovery.
5 In order to explain where we are, I do think it is
6 important to look at the history of this dispute. And if you
7 will indulge me for a minute, I would like to go through it.
8 From the very beginning of this case, Cisco has
9 attempted to do whatever is necessary to give VirnetX the
10 discovery to which it is entitled. At the outset of the
11 discovery period, we reached out to VirnetX and we said to
12 them we would like to work with you to make sure that the
13 discovery procedure we put in place is adequate, is
14 comprehensive.
15 As Your Honor is no doubt aware, the vast majority
16 of Cisco's documents -- like most companies these days,
17 technology being what it is -- are electronic in form. They
18 are billions of them. They are distributed throughout the
19 company, although Cisco is better than some in having more
20 centralized databases, the only way for us as a practical
21 matter to review those documents comprehensively and do the
22 best we can to get VirnetX what it needs, is to use search
23 terms and to query electronic repositories.
24 We knew that. VirnetX knew that. We went to them
25 and said let's come up with a plan. And that is what we did.
66
1 We let VirnetX identify for us over 150 broad search terms.
2 We then took those search terms without alteration and used
3 them to query a variety of different repositories at Cisco,
4 not only our engineering databases and other databases that we
5 believe were most likely to have these sorts of documents,
6 than others, but also the personnel files of over 40
7 individual custodians we believed were most likely to have
8 relevant information.
9 That goes above and beyond what I have seen in
10 patent infringement cases like this. It resulted in millions
11 and millions of documents, which we turned over to VirnetX
12 without question. We didn't stop there. We supplemented, we
13 augmented that production with more targeted collections of
14 specific documents like source code and financial documents
15 and patent licenses and the like.
16 We also went and interviewed the relevant custodians
17 and asked them questions like, where else should we be
18 looking? Do you have any hard copy documents. And we
19 collected those materials, and we produced them to VirnetX.
20 We still didn't stop there.
21 Throughout the discovery period, as is often the
22 case, VirnetX would come to us and say we think this
23 particular category of documents might have slipped through
24 the cracks of your documented collection procedure.
25 Each and every time they did that, we talked to
67
1 them, we understood their concerns, we went back and
2 investigated. Most times, as is I believe the case here, it
3 turned out the documents had already been produced; and we
4 pointed to where those documents could be found in our
5 production.
6 Once or twice we came across a category of documents
7 or a specific document that somehow had slipped through the
8 cracks of the collection procedure and we would go, we would
9 collect it, and we would produce it. That is the way the
10 discovery process went. It went all the way through fact
11 discovery without issues. No motion to compel was addressed
12 to the Court.
13 So why are we here today? On the very last day of
14 fact discovery at 11:00 p.m., as a matter of fact, we got a
15 letter from Counsel for VirnetX which purported to identify a
16 couple dozen categories of use and deployment documents that
17 they had never identified to us before. And we got an
18 ultimatum that we had to confirm that they had all been
19 produced or we would face a motion to compel.
20 Now, we had some skepticism as to whether that was a
21 genuine effort to try to resolve a discovery deficiency, but
22 we engaged them, as we had throughout the discovery process,
23 and we said tell us how you came up with this list. Tell us
24 why you think these documents are missing. They said, no, it
25 is too late for that. Here is what you can do, you can throw
68
1 out what you have done as far as this document production in
2 the case so far. You can go back and have a human being
3 manually eyeball every electronic document in the company and
4 give us a blanket assurance that not a single relevant
5 deployment use and configuration document has escaped
6 production; and if you are not going to do that, we are going
7 to move to compel.
8 Obviously, that is not something that is practical.
9 It is not something we could have done. It is not something
10 we can do today; and it is, frankly, not something that is
11 required by the rules.
12 That doesn't mean we are withholding things. It
13 doesn't mean we are refusing to produce things. In fact, we
14 have with this particular category of documents throughout the
15 discovery process on a couple of occasions gone back and
16 worked with VirnetX to produce deployment, use, and
17 configuration documents.
18 In February of this year they asked us to serve just
19 particular --
20 THE COURT: Okay. You know, I realize y'all have
21 been working well together and wheels have come off this in
22 the eleventh hour. What, if anything, can be done to resolve
23 this? And I understand your argument that, perhaps, they did
24 not negotiate well with you. I understand that argument. I
25 will hear their response in a minute. But what can we do to
69
1 get this resolved? I think they have a legitimate interest in
2 these documents. Can you identify them and get them to them?
3 MR. STADNICK: That is a problem. You look at the
4 list they come up with. It is not a list of documents
5 identified by names that people at Cisco use. We can show
6 them to Cisco witnesses and they say I don't know what these
7 documents are. It appears they created them by going through
8 our production.
9 In some cases they find an example of a particular
10 type of document and say give us more of those. In some cases
11 they see a particular function within Cisco that is performed
12 and say give us documents related to that. And the only way
13 we can go about trying to meet that request is to use search
14 terms on electronic repositories. We have used the best terms
15 we can come up with. We are happy to work with them to try
16 more focused searches. We have proposed that in the last few
17 days and they rejected it. Beyond that I am not sure what we
18 can do.
19 THE COURT: Counsel.
20 MR. CASSADY: Your Honor, we have gotten into the
21 history and I think it is important to this issue. It was an
22 iterative process where we tried to identify new documents
23 that we had evidence that Cisco should have produced, and we
24 couldn't find them. More production would trickle in. We
25 would do more review. We continued to negotiate with one
70
1 another.
2 I'm not here to tell you that Mr. Stadnick has been
3 unethical during the last six months negotiating with us. It
4 has been a process. But the wheels came off when we got near
5 the end of discovery. Six thousand pages or six thousand
6 documents came in about a week before the end of discovery.
7 We looked through there and still didn't find what we were
8 looking for, and that is why the motion had to be filed.
9 Now, to Your Honor's question is how can we get
10 around this? The issue we have, Your Honor, is that it is
11 unfathomable that Cisco does not have documents that say how
12 their customers use these things because they are the ones who
13 install them, so how can they not know how it got installed
14 and how it was set up? It doesn't make any sense.
15 So we have done the best we can to identify
16 specific named documents that their own documents referred to
17 that say their service people have to fill these documents
18 out, and we don't see those documents in their production.
19 So maybe they are in someone's file drawer. Maybe
20 the problem is they are looking in this massive electronic
21 database, and this stuff is sitting in their sales teams'
22 drawers.
23 I don't know. I just know that these documents
24 exist. They are not going to tell you they don't exist, Your
25 Honor, and that is problem. They are not going to say they
71
1 don't exist. They are just going to say we have done this
2 search on this massive electronic database, and we haven't
3 found them.
4 They are obviously somewhere. They obviously exist.
5 And I can go through the ones on the Elmo. They are Exhibit
6 5, 6, and 7 and 8 to the motion. I can walk through them.
7 But, Your Honor, they identify these documents I am talking
8 about which is statement of work, infrastructure discovery
9 documents, solution end-user requirement validation reports,
10 architecture validation reports, and then one extra group that
11 is in the motion that we didn't talk about is the customer
12 portals.
13 Cisco provides these Internet portals to their
14 customers to go on and look at these documents and figure how
15 to set up their materials and how to set up their devices. We
16 didn't get access to that other than they offered to let us
17 have them stand over our shoulder while we reviewed using
18 their passwords to get into this portal.
19 So we don't have access to those portals. They say
20 they produced some documents from those portals. My bet is,
21 Your Honor, there are a number of people out there, and they
22 are not going deep enough into those to find those documents.
23 And considering the issues in the case and what they are
24 saying to this Court is this case should be thrown out based
25 on the lack of these documents, I think it is only fair they
72
1 go find these documents.
2 MR. STADNICK: Your Honor, we have produced
3 thousands of deployment, use, and configuration documents.
4 They have taken third-party discovery from at least ten of our
5 customers trying to ferret out this information. They have
6 deposed 20 of our employees and asked them questions about
7 this deployment, use, and configuration.
8 The fact that that discovery they have gotten
9 doesn't support their infringement theories, isn't evidence of
10 a failure to produce the discovery that does.
11 Again, we have done everything that we can think of
12 to try to find the kinds of documents they suspect exist and
13 the sources where they would exist if they did exist. And we
14 haven't turned them up. We offered as of last night to run
15 further searches with still additional targeted terms chosen
16 by VirnetX again any database we can search electronic to see
17 if more of these things exist, and they rejected that request.
18 I don't know what more we can do.
19 MR. CASSADY: Your Honor, I think that is the
20 problem. They go to their databases, and that is all they
21 have done. They go to these databases and they hope people
22 put them in the databases. Maybe Cisco does that. Maybe they
23 don't. But the reality is their sales force filled these
24 documents out. Where are those documents?
25 THE COURT: All right. What I am going to do is I
73
1 am going to grant the motion in this regard: I'm going to
2 allow VirnetX to take up seven hours of 30(b)(6) depositions
3 regarding these topics.
4 Produce people from your sales group or wherever
5 that would fit that and let them ask questions and see if they
6 can find the documents.
7 All right. Next is 30(b)(6) testimony regarding
8 testing, deployment, and other uses --
9 MR. CASSADY: I think you just ruled on that, Your
10 Honor.
11 THE COURT: Okay.
12 MR. CASSADY: The last part, let me cut you off,
13 Your Honor.
14 THE COURT: All right.
15 MR. CASSADY: You don't have to worry about that
16 one. VirnetX withdraws it. We are not asking for other
17 litigation documents anymore.
18 THE COURT: All right. Is that all of your motion?
19 MR. CASSADY: I think that is all for this motion,
20 Your Honor.
21 THE COURT: All right. Very well. The next motion
22 is defendants' motion to submit invalidity contentions, Docket
23 No. 277.
24 MR. STADNICK: Yes, thank you, Your Honor. I think
25 this is one where we can clear some of the smoke Your Honor
74
1 was alluding to earlier. Since the time we filed the motion
2 under Rule 3-6(b) most of the proposed amendments I believe
3 will be withdrawn.
4 Just to do a little housekeeping, the defendants
5 will draw the proposed amendments as to the Wang, Lindenmann,
6 and SSL 3.0 references in order to conform the contentions to
7 our recently served expert reports and to streamline the
8 case.
9 We will withdraw the proposed amendments as to the
10 Altiga System because the parties are now in agreement that
11 invalidity contentions need not be amended just to disclose
12 additional evidence in support of previously-disclosed
13 theories, and that was the only reason. We had proposed an
14 amendment Altiga System, so we will withdraw that.
15 And we will withdraw the proposed amendment
16 concerning double patenting and non-statutory subject matter
17 because under Rule 3-3 neither of those are invalidity
18 defenses that actually have to be in the invalidity
19 contentions, so we can withdraw that one as well.
20 That leaves us only one issue to resolve, which is
21 our proposed amendments concerning the Schulzrinne
22 presentation. I will turn to that now.
23 The Schulzrinne presentation, Your Honor, is a slide
24 deck that was produced by VirnetX in this case. And it was
25 prepared by Professor Henning Schulzrinne at Columbia
75
1 University to describe the SIP protocol, which is a
2 communications protocol that is useful in setting up network
3 connections.
4 We are proposing to amend our contentions to rely on
5 the presentation as 102(a) art that anticipates various claims
6 of the patents-in-suit. The reason that good cause exists for
7 the amendment at this point in time is that until we took Dr.
8 Schulzrinne's deposition recently, we had no basis to assert
9 that the presentation itself qualified as 102(a) art.
10 It doesn't have any sort of copyright indication on
11 it. It doesn't appear to be the sort of document that would
12 be published or publicly accessible. Most importantly, when
13 VirnetX produced it to us from their files, they labeled it
14 "outside counsel only" under the protective order, leading us
15 to reasonably believe that it wasn't a public document; that
16 it was something that VirnetX obtained under confidential
17 circumstances.
18 Why did we take Dr. Schulzrinne's deposition? It is
19 an interesting issue in the case. It turns out the very day
20 that the VirnetX inventors allegedly came up with the ideas
21 for the patents-in-suit, they paid Dr. Schulzrinne a visit up
22 in Columbia and went and talked to him about the possibility
23 of using SIP to initiate VPNs.
24 He gave them the presentation that we would like to
25 rely on as 102(a) invalidating art. On the train ride home
76
1 they allegedly came up with the inventions of the
2 patent-in-suit.
3 The Schulzrinne presentation concerns many of the
4 concepts that VirnetX claims to have conceived on that train
5 ride. It addresses many of the concepts that VirnetX is
6 accusing in Cisco's accused products, including the use of
7 encryption to secure SIP signaling, the use of a DNS to
8 initiate secure communications, and other aspects that are
9 central to the infringement accusations in this case.
10 Again, good cause exists to amend our contentions
11 concerning the Schulzrinne presentation now because we were
12 unable to identify it as 102(a) art earlier. And once we did
13 identify it at the deposition, we moved immediately to amend
14 our contentions and provide fulsome invalidity disclosures to
15 VirnetX.
16 VirnetX can't claim prejudice obviously because the
17 document came from their own files. VirnetX's inventors, who
18 are also officers of the company, certainly can't claim to be
19 unaware of the Schulzrinne presentation and its relevance to
20 their alleged inventions.
21 And VirnetX has already had access to every witness
22 they might potentially depose on the issue. They took
23 substantial deposition testimony from Dr. Schulzrinne himself,
24 and the only other potentially relevant witnesses are
25 VirnetX's own inventors and officers.
77
1 So what are VirnetX's challenges to the Schulzrinne
2 presentation? First, they argue that we should have served
3 conditional invalidity contentions; that we should have served
4 invalidity contentions on the presentation in case one day
5 down the road we are able to prove that it is 102(a) art. I
6 don't think that is a manageable or practical burden to place
7 upon defendants. Invalidity contentions are voluminous enough
8 as it is without having to forecast what documents might
9 potentially turn out to be prior art in the future.
10 They also suggest that we weren't dilatory in
11 conducting Dr. Schulzrinne's deposition. But that is not
12 borne out by the facts either. The only reason we ultimately
13 turned to Dr. Schulzrinne was because when we deposed
14 VirnetX's own inventors, none of them seem to remember what
15 happened at the meeting of Dr. Schulzrinne. None of them
16 could talk about where the presentation came from or the
17 circumstances that led VirnetX to have it.
18 We conducted -- Dr. Schulzrinne, by the way, is
19 currently a senior -- has a senior position in the Government.
20 He is the chief technical officer for the FCC. There was some
21 work to be done to get his deposition. After we secured a
22 date, it was postponed at VirnetX's request. And then again
23 as soon as we conducted it and got the information, we acted
24 immediately to amend our contentions.
25 So for all those reasons, good cause exists to amend
78
1 the defendants' invalidity contentions concerning the
2 Schulzrinne presentation.
3 MR. CASSADY: Your Honor, with regards to the
4 amendment of the invalidity contentions, I think we will
5 reorient the Court on where we are. Seven months ago now
6 plaintiffs gave the defendants in this case their updated
7 doctrine of equivalents position and filed a motion with the
8 Court to amend our infringement contentions.
9 The Court denied that on the grounds of the motion,
10 but said if we can make an addition under 3-6(a) go ahead, but
11 otherwise I'm going to deny it.
12 Discovery had not taken place at all before that
13 disclosure. The next six to seven months discovery occurs
14 where they have our doctrine of equivalents positions and
15 discovery goes on. We ask their guys questions. They ask our
16 guys questions.
17 Now, how the situation right now is different, Your
18 Honor, is -- and this is where I am being very explicit -- the
19 ball was hidden for a year or two. They allowed all discovery
20 to go on before ever bringing up these references as
21 invalidating art against what they are trying to add it to.
22 So, Your Honor, they disclose it to us a week before
23 our reports are due and come to you and say can we add it
24 because of things that our inventor said in their depositions
25 or things other people said in their depositions.
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1 Now, Your Honor, Mr. Stadnick said he was going to
2 drop a couple of references. Really what he told you was he
3 is going to try and argue to get them in under something else,
4 so, therefore, he doesn't want to talk about them right now in
5 this motion.
6 I think they are all relevant right now except for
7 two of them. Wang, they have dropped entirely, is my
8 understanding. And Lindenmann, they have dropped entirely.
9 Is that true?
10 MR. STADNICK: From our invalidity contentions, that
11 is correct.
12 MR. CASSADY: Okay. So those are gone. But there
13 are still four remaining, not just the Schulzrinne
14 presentation that we just talked about. I think it is very
15 important -- and I will be as brief as I can, Your Honor -- to
16 walk through kind of the history of that.
17 So can you put my slides up, Mr. Martin?
18 MR. CASSADY: Your Honor, let me ask another
19 question of Mr. Stadnick.
20 So double patenting, you are saying you are either
21 dropping it entirely or are you saying you don't need to plead
22 it, and that is why you are not talking about it right now?
23 MR. STADNICK: No, we are saying we are dropping the
24 motion to amend our invalidity contentions, because it doesn't
25 have to be in the invalidity --
80
1 MR. CASSADY: So it is still a part of the case is
2 what they are asking for, Your Honor. So that is why here we
3 are.
4 What I have got up in front of you is the
5 presentation that was just spoken about, Mr. Henning
6 Schulzrinne's presentation.
7 The next three is the SSL reference, the Altiga
8 System, and the double patenting. Okay. I am going to go
9 through these in reverse order because I think it is
10 important.
11 We start the case off, we get invalidity contentions
12 back in July of 2011. We are talking a year ago now. That is
13 the initial invalidity contentions. That is when they were
14 due, and that is what we got.
15 Didn't say a word about double patenting or
16 non-patentable subject matter. Now, the position they are
17 taking is they didn't need to plead that; but, Your Honor,
18 double patenting is saying that one patent is invalid based on
19 the prior patent. So what their argument is, the '211 patent
20 is invalid based on the '504, so the '504 should have been
21 charted as a reference of invalidating the '211.
22 I have never seen it not at least listed as a
23 defense in some way in the invalidity contentions, but they
24 stayed silent on that until a week before reports. And here
25 is why it is important, Your Honor: They show up to
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1 deposition number one in March -- or at least not number one,
2 but the first couple of depositions of our main inventors,
3 third-party Edmund Munger, and they show up with this
4 highlighted chart that highlights the distinctions between the
5 two claims, and they start asking our witness what are the
6 distinctions in the claims.
7 Now, Your Honor, our witness answered based off of
8 his off-the-cuff right then answer. Now, we didn't shut the
9 deposition down. We let him answer the questions. But what
10 has happened is that depo ended, other depos went by, they
11 asked these questions, they hadn't pled double patenting, so
12 we weren't preparing our witness, and they were not getting
13 ready. We weren't reviewing these details about double
14 patenting because it wasn't in the case.
15 So now what they have done is add it and go play
16 this testimony for you and for the jury and say, look, they
17 only have these distinctions here. Our witness wasn't
18 prepared for it because it was not part of the case. That
19 will be the theme you are about to hear through all of these.
20
21 The next is the Altiga System. They give us their
22 contentions in July of 2011 and they say Altiga invalidates
23 these patents because it uses split tunneling. Split
24 tunneling is all over these contentions. Okay.
25 We go to the depositions, we ask questions. So by
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1 the time split tunneling is used, the VPN in the Altiga System
2 is already up. Yes. That kills split tunneling, Your Honor.
3 Split tunneling cannot be invalidating prior art if it is up
4 and running before the determination whether to use it or not
5 is made.
6 So we killed that. That is done. Does split
7 tunneling have anything to do with the initiation of VPN? No.
8 Again, split tunneling is done, out of this case.
9 Then -- so then we go down this road, and now, Your
10 Honor, they are trying to add "packet filtering." That is
11 their new catch phrase. "Packet filtering" is what they are
12 trying to add with this new amendment. Well, we didn't ask
13 questions about packet filtering because packet filtering
14 wasn't part of the invalidity contentions.
15 So we went though all discovery, asked all of the
16 questions we thought were relevant to all of our contentions,
17 and now they are trying to add that.
18 Your Honor, maybe it is not fair, maybe we are not
19 being fair to them about what they could go figure out when
20 they did their invalidity contentions. Altiga is owned by
21 Cisco. All of the witnesses that do Altiga still work at
22 Cisco. We deposed those guys.
23 They said, have you searched for source code for
24 Altiga?
25 I actually started searching for source code.
83
1 When did you start searching?
2 Last night.
3 Last night, Your Honor. That is March 8th. That is
4 a couple of months ago. That is a month before the end of
5 discovery. And that witness is the guy that they said is the
6 guy in Altiga. Didn't even ask him about it a year before. I
7 bet you if they had asked about it a year before he could have
8 said packet filtering was a good idea. Your Honor, we still
9 don't think it is invalidating prior art, but the point is we
10 didn't get to ask about it. We were in that situation again.
11 That is Altiga.
12 Now, SSL 3.0. Same thing, Your Honor. They charted
13 in their contentions against the '135, the '504 and '211; they
14 chart against those three -- with those claims. But they do
15 not chart it against the '759 and '151 patent.
16 Now, Your Honor, it baffles me that they can chart a
17 reference again three patents in a case and then a year later
18 come to us and say we are going to add it against the other
19 two patents in the case. Their reasoning, Your Honor, was our
20 inventors couldn't differentiate SSL 3.0 from the '759 patent
21 and the '151 patent.
22 Your Honor, our inventors were not prepared to talk
23 about that reference with regards to those patents because it
24 wasn't in the case. Again, the same thing. Let's get good
25 answers. Let's go to the Judge and get this added. And that
84
1 way they are not prepared to talk about it when we get there.
2 That is exactly what happened.
3 Then finally the presentation that we did talk about
4 before I got to stand up and make my arguments here is the
5 Henning Schulzrinne presentation. Now, Your Honor, Henning
6 Schulzrinne was the kind of grandfather on some level, at
7 least that is the defendants' position, of the SIP standard.
8 And Your Honor may remember the SIP standard was
9 part of the Microsoft case. You know, it was part of
10 different things. It has been around for a while.
11 And Mr. Henning Schulzrinne's presentation was in
12 our production. We produced it to them on February 22nd,
13 2011. They had months to get ready for the July 1st
14 invalidity contentions. They could have charted it. Telling
15 me, Your Honor, they did chart RFC 2543, which is the standard
16 for SIP. They did chart that. They don't chart this
17 presentation.
18 Your Honor, the issue can't be you don't chart
19 things because you are not sure if it is prior art and then
20 you wait until you get a good answer and then you chart it.
21 That can't be the answer. That is what I am hearing is they
22 are saying we go take depositions, we get the answer we want,
23 and then we come back and we chart it based on the answer they
24 want, rather than giving the contentions in the first place.
25 That is what happened with Mr. Henning's presentation.
85
1 They didn't know whether Mr. Schulzrinne's
2 presentation was prior art. That is their position. Well,
3 Your Honor, they didn't know that two or three other
4 references were prior art, and we went and took the depos and
5 proved that they weren't prior art, but they still put those
6 in their contentions. So the rule can't be that you only put
7 in your invalidity contentions things that you know to be
8 prior art.
9 What you do is you put them in there and you go out
10 to discovery and we all together try to prove whether it is or
11 it isn't. What they did with Mr. Schulzrinne's presentation
12 is they decided to wait. And here is why they waited, Your
13 Honor.
14 Mr. Schulzrinne's presentation is part of, at best,
15 a circumstantial conspiracy theory that the defendants, Cisco
16 and Apple have fell in love with. They want to tell this jury
17 that Mr. Schulzrinne disclosed the invention to us and then we
18 ran off and patented it.
19 Your Honor, the problem is, is that it is all based
20 on circumstantial evidence. The only true evidence, Mr.
21 Schulzrinne's testimony, our inventor's testimony about the
22 events says exactly the opposite. Mr. Schulzrinne has had
23 five years to look at the patents. In his deposition he
24 refused to say we stole his idea. He refused to say we
25 patented his idea.
86
1 The defendants refused to show him the patent itself
2 because I think they knew what he would say, which is this
3 isn't my idea.
4 So, Your Honor, the issue here is they have lost
5 their conspiracy theory, and now they want it as a prior art
6 reference because that conspiracy theory is dead. There is no
7 evidence of that conspiracy theory. Now they want this as
8 prior art evidence to be able to hint at a conspiracy theory
9 and go in front of this jury and show it as 102(a) art when
10 they never disclosed it to us as 102(a) art. They never
11 disclosed that they intended to go after it as that art.
12 And, again, Your Honor, all four of these references
13 we were in a position where our witnesses, our attorneys, our
14 parties in the case were not given the chance to prepare for
15 any of these contentions. They took all of the discovery in
16 the case -- and for both cases, Your Honor -- Mitel and Cisco,
17 and then they disclosed their contentions on this point, and
18 now they just want to add it. That is the problem, Your
19 Honor. And they shouldn't be allowed to add it.
20 MR. STADNICK: Your Honor, I will start by focusing
21 back on the Schulzrinne presentation, which, again, is the one
22 reference that we are currently moving for leave to amend.
23 Counsel admitted that we had disclosed the SIP
24 presentation or the SIP standard 2543 in our invalidity
25 contentions. The reason we did that was because it was
87
1 clearly prior art. If we had an indication that the
2 Schulzrinne presentation was prior art, we probably would have
3 disclosed it in the invalidity contentions as well. We just
4 didn't have that information.
5 The theory we are relying on is that presentation,
6 which is, frankly, quite clearly, a homemade slide deck which
7 doesn't look like anything that would be published to the
8 general public, was marked "outside counsel eyes only" for
9 Counsel for VirnetX -- they haven't addressed that point --
10 and produced to us in a manner -- they gave us no clue
11 whatsoever that it would qualify as a 102(a) printed
12 publication.
13 When we got that information at the deposition we
14 acted quickly to supplement our invalidity contentions.
15 Now, I have heard accusations this is some sort of
16 plan to end run around some conspiracy theory that failed.
17 That is not the case. We heard some of VirnetX's requested
18 argument on a proposed motion for summary judgment on the
19 derivation theory. That is not an issue for us to address
20 today. Obviously, we disagree with that. We believe there is
21 plenty of evidence to demonstrate that VirnetX's inventors
22 derived the subject matter that they claim in the patents,
23 from Dr. Schulzrinne. We can deal with that when the time
24 comes.
25 The issue here is, were we diligent in asserting
88
1 this piece of prior art, this piece of paper as a 102(a) prior
2 art reference? And we were.
3 The other three references that Counsel chose to
4 address, again, were no longer -- we requested leave to amend
5 our contentions. I'm not sure it is an issue here today, but
6 I'm happy to address his comments.
7 On the SSL 3.0 document, as I mentioned before, we
8 are withdrawing our request to proceed with invalidity
9 contentions, and that is to streamline the case, so we don't
10 need to spend any more time talking about that one.
11 On the double patenting theory, you can read Rule
12 3.3 for as long as you want. It doesn't say anything in it
13 about disclosing double patenting or 101 type invalidity
14 theories. It is limited to the identity of prior art that is
15 alleged to anticipate or render obvious.
16 I understand that VirnetX's position now is that
17 double patenting is essentially an anticipation analysis of
18 one patent against the other. That is simply not the case.
19 The patenting by its very nature only takes place where the
20 two patents claim the same priority date. By definition one
21 is not prior to the other. It is a completely different
22 doctrine, and it is not covered by Rule 3.3, so we don't need
23 to discuss it today.
24 Finally, on the Altiga System we did, in fact,
25 disclose in our initial contentions alternative theories above
89
1 and beyond the split tunneling theory that Counsel focused on
2 today. I am happy to show Your Honor. I have our invalidity
3 contentions here. I can give you one example of why that is
4 the case.
5 Again, I'm not sure if this is an issue that is
6 currently in front of us to address; but nevertheless, here
7 is -- here are our invalidity contentions served back in July
8 of last year, by the Court's initial deadline for invalidity
9 contentions, addressing the Altiga System.
10 As you can see if you look right at the bottom, it
11 refers to: Befitting its positioning as a VPN concentrator --
12 that is the Altiga piece of equipment -- the C10 includes a
13 host of configuration options for controlling remote access
14 behavior, including remote user configuration. Security
15 options and network configuration are handled centrally,
16 enabling simultaneous access to both the Internet and your
17 VPN. When you connect to the Internet or your VPN, you
18 receive configuration information from the server.
19 That is referring to the profiling that Counsel was
20 referring to as our newly-disclosed theory. You can see down
21 below there is a completely separate section that talks about
22 split tunneling, but that is not what we are talking about
23 here. How you know -- we are talking about what Counsel is
24 referring to as our alternative theory.
25 If you look at the document that is cited here,
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1 Altiga Concentrates on VPN Security, Page 1, that document
2 itself in describing the Altiga System specifically points out
3 that -- here's the quote we just read from our contentions,
4 and immediately below that it refers to packet-filtering
5 rules, in this sentence here: Much like a firewall,
6 Concentrator's IPSec tunnels are implemented as rules on
7 public and private interfaces, along with other
8 packet-filtering rules.
9 It is that packet-filtering technology that they are
10 claiming we did not discuss in our initial invalidity
11 contentions, and it is right there. Again, we don't believe
12 that is an issue before the Court today. But if and when they
13 do intend to raise it, we will be happy to show that our
14 initial invalidity contentions more than adequately addressed
15 all the theories we are proceeding on with the Altiga prior
16 art. Thank you.
17 THE COURT: Response? Would you like to respond to
18 the "attorney eyes only."
19 MR. CASSADY: The "attorney eyes only" Henning
20 Schulzrinne presentation. Your Honor, we didn't know it was
21 publicly available or not. It was in our production. We put
22 a label on it because we didn't know where it had come from
23 either, at least the attorneys didn't. There was no issue
24 with regards to whether we were saying it wasn't public or
25 not.
91
1 I will tell you, with Altiga, Your Honor, the
2 documents they cited for Altiga they put the AEO contention
3 on too; and that is prior art and they had no problems
4 charting that. So that is AEO and they chart it, but this is
5 AEO and they can't chart it. That doesn't make any sense
6 actually, Your Honor, because the point of the contention is
7 that you are going to put forth everything that you think
8 invalidates this patent. That is the point. You have to go
9 out and prove that up.
10 And, Your Honor, they failed to prove up a number of
11 references, so that shows that they put it up, and we knocked
12 it down. That is the purpose of the contentions. Give us a
13 chance to deal with it. We didn't get that opportunity here,
14 Your Honor.
15 THE COURT: Anything further on this motion?
16 MR. CASSADY: Your Honor, I would be remiss not to
17 tell you, apparently I said we know that Altiga is
18 invalidating prior art. So I got a note from my Counsel
19 saying I said that or misspoke. Obviously, I didn't intend to
20 say that. I meant to say we don't think it is invalidating
21 prior art, but the defendants do.
22 And then, finally, Your Honor, I think the issue
23 that is very important that is kind of the smoke that Your
24 Honor would be referring to, is that what Counsel is saying to
25 you right now, is don't talk about it right now, we are going
92
1 to slip it in under 3-6 as invalidity contentions, and we are
2 going to cause another motion to be filed, Your Honor. I am
3 just trying to deal with it now. It is in front of the Court.
4 There is no reason to belabor this thing down the road and
5 have another motion on it.
6 Your Honor wants us to deal with these issues. Here
7 we are, we have taken your time up with it. Let's deal with
8 it. So these four references that he is telling you they are
9 not going to go down the road with, what he is really telling
10 you is there is going to be a motion to strike their 3-6
11 addition of these claims. So that is why I am talking about
12 them now, Your Honor, because Henning Schulzrinne
13 presentation, whether it is under 3-6 or whether it is under
14 this motion should be dismissed. It should not be added as
15 invalidating prior art.
16 The SSL 3.0 reference, they should be stuck with the
17 contentions they made back in July or the ones they updated in
18 December.
19 The Altiga System, Your Honor, same way. I will
20 live with their contentions back in the day, and in front of
21 you, Your Honor, we will deal with what is or what is not in
22 their contentions when they are presenting a witness in front
23 of this Court; and I think that is a -- you know, it is not in
24 his report or it is not in the contentions, that is the kind
25 of thing Your Honor commonly deals with when we approach the
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1 Bench and talk about it.
2 I am okay if you want to pass that one down the
3 road, but, Your Honor, that issue -- as long as they are not
4 updating under their 3-6 contentions, I can deal with that.
5 And, finally, Your Honor, the double patenting and
6 the non-patentable subject matter. Your Honor, now they are
7 just saying we never disclosed it to you, but we didn't have
8 to.
9 Counsel is not here telling you he disclosed it to
10 us elsewhere. He is just saying we didn't have to disclose it
11 period. The reality is, Your Honor, this theory was not
12 disclosed to us, it was required under the contentions, it was
13 required in responses. They didn't come. They got the
14 answers they wanted, and now they want to use it against us.
15 THE COURT: All right. The Court is going to deny
16 defendants' motion to supplement invalidity contentions,
17 Docket No. 277. I am not going to go beyond that at this
18 time. When there is an appropriate motion in front of me, I
19 will take that up.
20 All right. We are going to take about a 10-minute
21 break, and then we will come back and take the rest of these
22 up.
23 (Recess was taken at this time.)
24 THE COURT: Please be seated.
25 All right. Next on our agenda we will turn to the
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1 second case, Mitel case. And we have the companion, the
2 defendants' motion to compel deposition, Docket No. 224 and
3 VirnetX's motion for protective order, Docket No. 115 dealing
4 with the depositions of the inventors.
5 Who would like to go first on that?
6 MR. BUNT: I would be happy to, Your Honor.
7 THE COURT: All right.
8 MR. BUNT: Your Honor, our motion deals with the
9 depositions of several inventors and/or employees of VirnetX.
10 These individuals were all deposed once in the Microsoft
11 litigation. Beginning around February of this year we began
12 noticing the depositions of these individuals. When we did,
13 we notified the defendants in both cases that we will be
14 presenting the witnesses. We provided ample notice, and we
15 offered to coordinate the dates so that everybody could attend
16 those depositions.
17 The Mitel Defendants never complained about the
18 timing of the depositions. They didn't suggest that a
19 different date would work for them, and they didn't ever say
20 they were unable to attend. The only thing they did say is
21 they were not obliged to participate in any of the
22 depositions, and they could depose the witnesses in the order
23 and at the time of their choosing.
24 Your Honor asked a question earlier today about
25 whether there is a joint defense agreement. I heard there was
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1 one among the Cisco Defendants and I heard there is one among
2 the Mitel Defendants. I didn't hear an answer as to whether
3 there was one between both groups. It certainly would not
4 surprise me if there was a common interest agreement because
5 they did say that there have been informal communications back
6 and forth.
7 Presumably with those communications they have
8 discussed if counsel -- discussed strategy, discussed
9 discovery, how to conduct it. It would certainly come as no
10 surprise that the Cisco Defendants had told the Mitel
11 Defendants what sorts of questions they intended to ask of our
12 witnesses and whether the Mitel Defendants had any
13 information, comments, edits to those questions they might
14 like to see made.
15 It wouldn't come as a surprise because that is
16 typically what happens in these joint defense groups, and it
17 also wouldn't come as a surprise because the two cases involve
18 similar claims, common witnesses, shared evidence. They are
19 proceeding on roughly parallel tracts, and they are both
20 before the same Court.
21 So at the heart of the matter for us, we just don't
22 believe there is any reason the Mitel Defendants should not
23 have participated in the deposition of these individuals when
24 they were taking place. They shouldn't be awarded for taking
25 a wait-and-see approach to discovery that increases costs and
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1 causes duplicative litigation discovery.
2 THE COURT: Counsel.
3 MR. GREEN: Thank you, Your Honor. I want to start
4 by, I guess, just diffusing this notion a little bit that
5 there is complete overlap and there is some obvious
6 coordination between the defendants in the two cases. I can
7 represent to you without reservation that I have not been
8 ghost-writing deposition outlines nor to my knowledge has
9 anyone else in the Mitel action -- it feels odd to call it the
10 Mitel action now that Mitel has settled out. It might just be
11 the 018
12 action -- but our case, I have not been ghost-writing
13 deposition outlines being a guiding hand behind the scenes
14 about what should happen at any deposition in that case.
15 With respect to my colleagues in the Cisco case, I
16 have allowed them the chance to pursue their own discovery,
17 and they made clear, I believe, to us and, I believe, VirnetX
18 that they had -- where they had noticed witnesses for
19 deposition, they believed that they had the ability, and I
20 agreed with them at the time, to pursue their own strategies
21 and ask the questions within the time allotted.
22 Your Honor, if we were going to have a meaningful
23 discussion about coordinating specific deposition dates and
24 somehow reconfiguring the limits of the discovery order to
25 have one witness appear in some consolidated fashion, we had a
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1 perfect opportunity to have that discussion in September of
2 2011 when we negotiated the discovery order in this case.
3 At no time was it expressed to us that VirnetX
4 expected witnesses to be made available one time, one day
5 only, all seven or eight parties from two actions had to come
6 and appear. That was never discussed. If it had been, we
7 could have discussed then whether it was feasible to have one
8 day with a particular witness, whether we could have
9 consecutive days, the order or who we get to go first, and
10 those disputes could have been discussed, if there were
11 disputes at all.
12 What the Mitel Defendants objected to was being told
13 this person will be available for deposition on this date even
14 though you haven't noticed them, even though this is coming at
15 a point in the case where you may or may not be ready, and it
16 is not true that we never said we could just appear or we just
17 decided not to go. We did communicate that we did not -- or
18 we could not be available for all these depositions; that we
19 thought there was discovery yet to be had that would have
20 impacted our ability to take those depositions.
21 I believe this was a frequent topic of discussion in
22 the motions we just heard, whether certain disclosures have
23 been made, things like claim construction, certain contentions
24 have been served, and whether witnesses would be available to
25 be prepared, whether you knew the theories of the case
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1 advanced by the other side with sufficient preparation.
2 The Cisco case, or the 417 action, leads ours by
3 several months. In fact, their fact discovery cutoff was
4 April of this year, as you saw on the slide. Our fact
5 discovery did not cut off until June 28th. If the goal of
6 VirnetX was to say every single witness that we have must be
7 simultaneously deposed on one day in one case, that
8 effectively cuts 10 weeks, or two months plus, off of an
9 already compressed discovery period in the Mitel case. That
10 is completely contrary to the discovery order. And it is
11 contrary to what we expected.
12 We are not trying to manufacture a dispute. We are
13 not trying to gain an unfair advantage. We would like the
14 ability to take depositions of VirnetX's witnesses using the
15 theories of our case, testing the theories of infringement
16 they have against our products, against the theories of
17 validity that they have against the prior art that we have
18 asserted.
19 The patents in the two cases do not completely
20 overlap. They are different patents in the Cisco case that
21 are not in the Mitel case. There are some that overlap, that
22 is true; but there are several others that are not present.
23 And it is not effective or efficient for the Mitel Defendants
24 to go and have a single day of deposition of, say, an inventor
25 compressed because that person is an inventor on several
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1 patents that are not asserted against our clients, and then
2 have us get the residue of the day to share with four or five
3 other defendants from another case and try to fit everything
4 in.
5 We have made very clear in email correspondence --
6 and I will represent again to you today, Your Honor, that I
7 have no desire to waste anybody's time. I simply would like
8 the opportunity to pursue questions of VirnetX witnesses
9 relating to their damages allegations against my client. And
10 my co-Counsel, it seems, would like the same opportunity.
11 What is their basis for injunctive relief against
12 our client? Their theories of notice. Why do they allege
13 that we willfully infringe? What is the theory of
14 infringement against our products? How does that align or
15 juxtapose with their theories of validity against the prior
16 art that I have asserted? That is the basis.
17 There is not an unwillingness to cooperate. We have
18 heard you loud and clear that you would like to see some
19 coordination between the cases. I would suggest that, you
20 know, some responsibility for that can fall on all parties;
21 but it is unfair and it is prejudicial for VirnetX to say now
22 that because you didn't show up to take depositions on a day
23 we dictated, even if you had notice of depositions and
24 contrary to discovery limits we had already negotiated, then
25 you forego the right to that deposition at all. That is what
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1 they are seeking.
2 MR. RENAUD: Your Honor, may I add one short thing?
3 In light of trying to coordinate a lot of what Avaya's Counsel
4 has taken the lead on, I take exception to the accusation that
5 we didn't try to negotiate. In fact, I actively negotiated
6 trying to get a back-to-back date more than seven hours so in
7 case we were not able to get time on the record that one
8 single day.
9 While there was some stops and starts as to that
10 negotiation, it eventually petered out with no agreement to
11 allow us extra time. I do believe Counsel tried to work with
12 us to get a deal. We weren't able to get one. But there was
13 definitely attempts made to get additional time to negotiate a
14 resolution. And to suggest that we said no, and we had no
15 basis other than to say we wouldn't show, is not consistent
16 with the record.
17 MR. BUNT: As to the discovery order and the docket
18 control order which they throw up as an indication that they
19 should have separate hours, there was a discovery order, there
20 was a separate docket control order, we acknowledge that. It
21 allows the parties to take depositions. It does not mitigate
22 the need, however, for the parties to conduct discovery in a
23 timely, cost-effective, efficient manner. And the Federal
24 Rules recognize that.
25 We offered to try to coordinate these depositions.
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1 To my recollection, I don't recall a different date being
2 suggested that would work for everybody. We also offered in
3 an email a couple of extra hours if that would solve the
4 problem. That was not picked up upon by the defendants.
5 The defendants' purpose in all this was to wait and
6 see what happened at the first set of depositions and then a
7 couple of weeks later to notice the depositions again for
8 themselves.
9 They have obviously been coordinating the discovery
10 and strategy of this case between the two. There is no reason
11 why they couldn't have coordinated the depositions here.
12 There is common -- obviously common issues between them. We
13 think the deposition should be prevented.
14 MR. GREEN: Your Honor, if I could add, I would
15 suggest as an indicator or barometer of the reasonableness of
16 this approach is the last part to join this action was SAIC.
17 And SAIC has not imposed this same approach of here is my
18 witness, everyone from each case must appear on this one day
19 and take this one deposition.
20 We have been collegiate with SAIC's Counsel. I'm
21 not suggesting we have not been collegial with VirnetX or they
22 have not been collegial with us. But the approach that
23 VirnetX has taken is it is not workable, it is prejudicial and
24 it is not necessary, as evidenced by the fact that the other
25 party on the other side of the "V" there has not adopted this
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1 stance.
2 And we have made representations to SAIC, that they
3 have accepted, that we will not abuse the extra time we seek
4 with their witnesses to pursue theories, issues, facts of
5 particular interest to the allegations and issues in our
6 case.
7 Again, Your Honor, we have heard you loud and clear
8 on the need to have some coordination and to not be wasteful.
9 That is not our intention at all. It is fair to ask that we
10 have an opportunity to build up our own case. As a closing
11 point, I would redirect the standard for precluding a
12 deposition, as VirnetX seeks, to be extraordinary
13 circumstances. Extraordinary circumstances are not met by
14 stereotypical statements or conclusory statements of burden or
15 expense. I have seen no declarations, no specific evidence of
16 anything that would say VirnetX can't appear for these
17 depositions or their witnesses can't appear.
18 I guess it is reality that VirnetX has these
19 patents, that they pursue them in a technology licensing
20 format. That is part of their business. I am not commenting
21 on whether it is a good business model or isn't. That is
22 VirnetX's business. It is unreasonable for VirnetX to
23 complain that the burden of pursuing that business prevents it
24 from undertaking its obligations that normally go along with
25 litigation, just like it would be unfair for Avaya to say it
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1 is too much of a burden for me to go about my daily business
2 operations.
3 When they have asked for deposition of our guys, we
4 have worked on dates, we have put them up, I haven't denied
5 any depositions at all, as I hope it is evident from the fact
6 there are no motions to compel pending against us. We are
7 only asking for reciprocation. That is it.
8 MR. BUNT: Just very briefly, Your Honor. The
9 extraordinary standard that they reference, the cases that
10 deal with that are all situations where no deposition has been
11 allowed at all. Here depositions were taken once in the
12 Microsoft litigation -- I am not saying they are limited to
13 that. But we offered up depositions in the Cisco case to
14 everybody, and these folks didn't attend.
15 I would also point out one final matter, all of the
16 opening and rebuttal expert reports have been done in both
17 cases. They have all been submitted based on the discovery
18 that has already taken place in this case. There is simply no
19 reason to allow further depositions when these folks could
20 have been taken at the same time as everybody else.
21 THE COURT: All right. You know, I wish that y'all
22 could have agreed. The proper way for this to have been done
23 would be to get an agreeable date, get some additional time
24 for specific defendant discovery and then common discovery
25 among all of the defendants in both cases and spread that out
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1 over a seven-hour plus however many hours we would be looking
2 at. I think both sides have been a bit unreasonable on this.
3 I am willing to give defendants some relief for
4 additional deposition time, but my question is -- well, first
5 of all, I am going to give you some additional time; but I'm
6 not going to allow you go into any area that was gone into in
7 the earlier deposition. In other words, questions that were
8 asked, we are not going to be replowing the same ground as to
9 any of that.
10 If you have questions that are specific to your
11 particular case and your particular issues that were not gone
12 in -- are not part of a more general category that were gone
13 into earlier, I will allow you to go into those. What I need
14 to know is how many hours do you think it would take you to do
15 that? Is two hours enough?
16 MR. GREEN: One moment, Your Honor.
17 (Pause in proceedings.)
18 MR. GREEN: Your Honor, given that there is not
19 perfect overlap in between the --
20 THE COURT: Given what?
21 MR. GREEN: Given that there is not perfect overlap
22 in between the number of claims asserted against Siemens
23 represented by Mr. Renaud, and Avaya, who I represent, and
24 that -- or the technologies, we would ask for something closer
25 to three, maybe three-and-a-half hours for the inventors and,
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1 you know, something like three-and-a-half to four hours for
2 the 30(b)(6) to continue.
3 We have specific 30(b)(6) topics, for example, in
4 the case of Avaya asking about the allegations against
5 specific Avaya products and the basis for the allegations
6 against those products. That might be of interest of Mr.
7 Renaud and his client Siemens, but I can't say that would
8 satisfy the questions he might have. I will let him speak to
9 that.
10 MR. RENAUD: Yeah, Your Honor, we have the same
11 issue here, which is the products are different. In fact,
12 there is not even knowledge as to between competing companies
13 as to whether the products overlap in any meaningful way.
14 VirnetX may, frankly, know more about that than we do.
15 I know some products have different standards.
16 There is an H323 standard. Our products that practice that
17 standard have not been accused. We have a different set of
18 product technologies.
19 So our request would be that we be able to pursue,
20 as Your Honor suggested, the areas that have not already been
21 plowed that are specific to our client and we have 30(b)(6)
22 subject matters that match up against the various accused
23 products and the issues that are specific to Siemens.
24 I do think that partially informs, by the way, Your
25 Honor, the prior art, the extent they are reading on the prior
106
1 art, which as you are going to find out from the letter briefs
2 that we believe they do, we need to be able to explore and say
3 now that we have addressed your infringement allegation, how
4 is that different from the prior art A, B, and C.
5 So while those references may already have been the
6 subject matter of prior deposition, I can suggest to you that
7 depending on how they are conforming them to our products,
8 their infringement reads, that is going to inform the prior
9 art play for each of the clients in a slightly different
10 manner.
11 Obviously, we will coordinate consistent with your
12 instruction to make sure we don't in between ourselves
13 unnecessarily drag the deposition out. We will be judicious
14 of the time, but we would request that there be three to four
15 hours on 30(b)(6) subject matters because they don't wholly
16 overlap --
17 THE COURT: Are you talking about per witness?
18 MR. RENAUD: Well, it depends on how many
19 witnesses --
20 THE COURT: Okay.
21 MR. RENAUD: I think two to three to four hours on a
22 30(b)(6), which is a complement of topics. And then as to the
23 inventors, we would like some time with the inventors. We
24 have gotten a chance to depose none of the inventors.
25 If they are going to put a single designee up for
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1 30(b)(6) and my suggestion is that they probably are not, then
2 we would split that time up as efficiently as we could.
3 How many designees do you guys anticipate, VirnetX?
4 MR. CASSADY: Your Honor, the topics between Cisco
5 and Siemens are identical other than the topics that were
6 produced to us a couple of days advance of discovery. So we
7 are talking about the exact same testimony that the other
8 defendants went into. I'm not sure where he is going except
9 for what he said about comparing claims to the products. The
10 problem is our clients don't have the information of Siemens
11 to be able to identify the specific Siemens articles that
12 apply to the patent claims because ours aren't allowed to see
13 that information, our expert -- they have got that report.
14 So I don't see what they are talking about with
15 regards to Siemens and Avaya's interest in details of the
16 products. That is irrelevant. They can ask Dr. Jones or Mr.
17 Nettles about it --
18 MR. RENAUD: They are clearly not irrelevant, Your
19 Honor, and I take exception to the notion that there is not
20 publicly-available information that VirnetX relied upon in the
21 first instance to file.
22 But I can say this: The topics are clearly not
23 duplicative. The topics relate in part to our own products.
24 And these aren't new topics. These are topics that existed in
25 the very first notice. There were additional notices that
108
1 included additional topics. But to presume if the accused
2 product is what is included in the topic, that that topic is
3 the same for either company is ridiculous.
4 So I would suggest to you this: You heard earlier
5 Mr. Caldwell argue that questions should be able to be asked
6 of fact witnesses who hadn't been prepared for deposition on
7 the patent; and that they should be entitled to pursue that
8 discovery. And I think that the Court ruled that was
9 permissible.
10 To suggest that we don't have a good-faith basis to
11 pursue discovery on the very facts that underline their
12 infringement claims as to our products, I think is a very far
13 stretch. If the witness shows up and says I don't know
14 anything, if they say our lawyers concocted the whole thing
15 and there were no facts that we were aware of that underpinned
16 this case, then we will take that testimony as it comes. But
17 I really think it is a ruse to suggest that the topics
18 overlap.
19 THE COURT: All right. How many 30(b)(6) witnesses
20 do you anticipate?
21 MR. CASSADY: Your Honor, with regards to the Cisco
22 case, I believe we put up three, I believe, 30(b)(6)
23 witnesses. I don't intend for those to be any different,
24 given the topics are exactly the same.
25 THE COURT: How many inventors?
109
1 MR. CASSADY: Well, I think four inventors were
2 deposed in this case. One of them was a third-party that we
3 are not under control of anymore. Mr. "Gif" Munger, you may
4 remember, testified in the Microsoft case. We made that very
5 clear to them that you are not going to get ahold of this guy
6 again. I think he is out on vacation for months and months
7 and months because he has got the benefit of retiring and
8 being done with this.
9 So I put that out there, he has been deposed, they
10 had the opportunity. I think he went for eight hours that
11 day, and we were willing to give them more time. They didn't
12 show up for that one.
13 THE COURT: How much time are y'all requesting for
14 the inventors?
15 MR. RENAUD: What I would suggest for the
16 inventors -- and these are consistent with suggestions,
17 frankly, that Counsel made before this all happened. I would
18 suggest for each inventor we split two hours time, two to
19 three hours time, and then we put them on the same day and go
20 back to back and bang them out.
21 THE COURT: All right. What I am going to do is I
22 am going to allow you six hours total for all of the inventors
23 and three hours total for the 30(b)(6) witnesses.
24 MR. RENAUD: Your Honor, if they present multiple
25 30(b)(6)'s is there some latitude as to that three hours?
110
1 THE COURT: That is assuming they produce three.
2 MR. RENAUD: So three per witness?
3 THE COURT: No; three total. Okay?
4 MR. GREEN: Your Honor, if I may make one other
5 administrative thing on Counsel's last point on the expert
6 reports. We prepared our expert reports despite lacking the
7 discovery we had sought. We would like the ability to
8 supplement those expert reports within some very short time
9 frame of completing these depositions given that we were
10 denied the discovery in the first instance.
11 THE COURT: Well, that you will have to take up by
12 way of meet-and-confer with them and see if you can get an
13 agreement on that. If you can't, then file a motion.
14 MR. GREEN: Thank you, Your Honor.
15 THE COURT: I would say that it would depend upon
16 whether it is based on something that you -- new that you
17 learned; or if it is something that you should have already
18 known, then I would be disinclined to allow it, so you can use
19 that --
20 MR. GREEN: We understand the distinction, Your
21 Honor. Thank you.
22 THE COURT: Okay. Let's see, anything further on
23 that one?
24 MR. BUNT: No, Your Honor. Thank you.
25 MR. RENAUD: Thank you, Your Honor.
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1 THE COURT: You are welcome.
2 So I guess that is granted in part and denied in
3 part.
4 All right. Let's move on now to Siemens' motion to
5 amend answer, Docket No. 142.
6 MR. CASSADY: Is that 1498, Your Honor, Government
7 sales issue?
8 MR. RENAUD: I believe it is.
9 MR. CASSADY: Your Honor, we made an agreement this
10 morning about that one -- actually before the Court told us we
11 should be more amenable, we made that agreement, just let you
12 know that.
13 THE COURT: Good.
14 MR. CASSADY: But it was -- we agreed they would
15 present a witness on the defense for a couple of hours over
16 the phone; and that they would identify to us what documents
17 they are relying on for that defense. They may have to amend
18 their expert report a small paragraph based on that.
19 MR. RENAUD: I think that is consistent.
20 Alex?
21 MS. FENNELL: Yes.
22 THE COURT: And the motion to amend the answer is no
23 longer opposed?
24 MR. CASSADY: No longer opposed.
25 THE COURT: Okay. So that motion is granted as
112
1 unopposed with the proviso that this deposition will take
2 place and documents will take place, and there will be a small
3 amendment to the expert report?
4 MR. RENAUD: Correct.
5 MR. CASSADY: Thank you, Your Honor.
6 THE COURT: Thank you for resolving that one.
7 The next one is defendants' motion to modify the
8 caption, Docket No. 157.
9 MR. GREEN: Your Honor, thank you. On behalf of the
10 defendants on the motion to modify the caption, I will try to
11 make this quick and not belabor the point. We can all read
12 the Federal Rules of Civil Procedure. And when we read Rules
13 10 and Rule 7 we see that they require all parties to the
14 action be listed on the caption; and that the pleadings and
15 other papers filed in the case reflect the parties to the
16 caption.
17 This is a matter of public record. It is fair for
18 the caption to reflect the parties that are providing
19 contentions and assertions and taking positions against one
20 another in the litigation.
21 What I am hearing back from VirnetX is that it does
22 not want SAIC in the caption because it perceives that will be
23 used for some improper purpose. There is frequent reference
24 to an agreement that was made in the Microsoft case concerning
25 the role that SAIC would play. And I would suggest that the
113
1 facts here are not the same.
2 There has been no agreement here in the first
3 instance as to what SAIC would or wouldn't do or what would or
4 wouldn't be said about SAIC; and there is not an ability of
5 VirnetX to impose an agreement by other parties on the
6 defendants in this case.
7 The other point I would bring to bear is that in
8 the -- reading from the motion in limines that were filed, I'm
9 holding a document filed in the Microsoft case on February
10 8th, 2010, Docket No. 310 in that Microsoft litigation, there
11 is a statement that SAIC has not asserted any claims against
12 Microsoft and would not assert any contention or any position
13 regarding any issue in dispute between VirnetX and Microsoft.
14 That has not happened here. We have served requests
15 for admission on SAIC asking specifically for SAIC's position
16 on issues of infringement, and SAIC didn't take no position --
17 or they did not -- refused to take a position. I will try to
18 use better grammar.
19 SAIC took explicit positions denying RFA's which
20 have the effect of expressing a belief that Avaya infringes
21 the patents-in-suit.
22 SAIC has made other statements that are reflected in
23 the briefing concerning the willful infringement. They
24 incorporate by reference, statements made by VirnetX. That is
25 not taking no position. That is not sitting on the sidelines.
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1 VirnetX just can't have it both ways. We can't have
2 a party that is going to be injecting discovery responses or
3 other evidence into the case and then they are somehow
4 shrouded; they can't be referenced to in any paper; they can't
5 be mentioned. This looks like a way to pave a process for
6 that kind of trial tactic, and that is prejudicial, Your
7 Honor. That is the basis for this motion, not just a snipping
8 match over whether a party name is or isn't in the caption.
9 THE COURT: Will any issue be submitted to the jury
10 regarding SAIC?
11 MR. GREEN: There are declaratory judgment
12 counterclaims, for example, of invalidity and
13 unenforceability. And SAIC has acknowledged a case or
14 controversy and denied those claims.
15 THE COURT: Response?
16 MR. CASSADY: Your Honor, I will start by saying I
17 bet you have never had a motion to modify the caption, in
18 front of you before. I won't make you answer, but my bet is
19 you never have. And I apologize -- actually my wife says I
20 never do -- but I apologize for being in front of you on this
21 motion. But we have been here before and there is history on
22 this.
23 The history is Microsoft asked us to add SAIC -- or
24 actually asked to kill the case based on SAIC. Your Honor
25 chose to add them, at least my understanding was, for
115
1 discovery purposes so that all of the parties were given
2 discovery. SAIC couldn't avoid its discovery obligations.
3 I think that is the same thing that has happened
4 here in this case. Your Honor asked very explicitly that the
5 parties come to an agreement about the discovery that SAIC
6 needs to give in this case once they are added.
7 Your Honor, we have not come to any agreement. The
8 defendants have said we want everything. We want everything
9 from them. We want their contentions. We want RFAs, we want
10 rogs, we want discovery, we want depos. They want the world.
11 So, of course, SAIC at that point has no choice but to take a
12 position because they weren't given the ability to not do
13 that.
14 But, Your Honor, they are not the ones asserting
15 claims in this case. VirnetX is. VirnetX is the owner of
16 these patents. They are the ones asserting the claims of
17 these patents.
18 Again, maybe I misread it, but I believe Your Honor
19 was adding SAIC for the very reason you didn't want the
20 discovery to be dismissed because SAIC was just a deponent of
21 a subpoena rather than some kind of party in the case. So
22 they have been doing their obligation.
23 Candidly, Your Honor, they are not going to be a
24 part of a trial in this case, just like they weren't part of a
25 trial in the Microsoft case. Your Honor ruled on that in the
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1 Microsoft case. You ruled they didn't have to be at Counsel's
2 table; and they shouldn't be mentioned as a party who is not
3 making a claim or made a different claim or has different
4 issues.
5 What is trying to happen here, Your Honor, if we go
6 through the process, which we didn't do in the Microsoft case,
7 of adding SAIC to every single header in this case, then we
8 come in front of you, Your Honor, right before trial and you
9 rule for us saying SAIC is presumably -- but if you rule for
10 us that SAIC does not have to come to trial and does not have
11 to make presentations in front of the jury, we are going to
12 spend tens of hundreds of hours removing SAIC from every
13 single header when they didn't belong there in the first
14 place.
15 And what is going to happen, Your Honor, is let's
16 say we miss one, and I mean just one, and it gets in front of
17 that jury, that jury is going to go, look, and say SAIC is
18 here but they are not sitting at counsel table. That is
19 absolutely prejudicial to us because VirnetX is the owner of
20 these patents making the assertions in this case. They are
21 the ones that have the right to go forward here and not SAIC.
22 So what is happening here is they want to have SAIC
23 in the header so that (a) we have to go through that process
24 of removing them and going through the Court and making sure
25 that they don't get referred to that way, but (b) there is no
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1 prejudice to them if it is in there or it is not.
2 If SAIC happens to sit at counsel table and they are
3 not listed in the caption --
4 THE COURT: Has SAIC agreed to be bound by the
5 judgment that is entered in this case?
6 MR. CASSADY: Your Honor, that is my understanding.
7 That is the way they were in the last case and the way they
8 are in this case.
9 Mr. Andy Tindel is here. I assume he is going to
10 say that, too.
11 MR. GREEN: Your Honor, I can say on behalf of the
12 defendants if that offer has been made, I don't have it in
13 front of me. I'm not aware of any such offer.
14 MR. CASSADY: Let me see if I can short-circuit
15 this. If I can get SAIC to say that, Your Honor --
16 Does that deal with this issue, Mr. Green?
17 MR. GREEN: We have the other issue of SAIC taking
18 positions and making statements in discovery, discovery
19 responses that we will try to use in the course of the case.
20 And these statements are things like SAIC incorporates by
21 reference VirnetX's infringement contentions as to each of the
22 defendants. In addition to their direct infringement, the
23 defendants have and continue to indirectly infringe. Nothing
24 about responding to discovery requires that kind of statement
25 unless there is an intention to show some kind of unified
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1 front between SAIC and VirnetX --
2 THE COURT: I think they are saying they don't plan
3 to mention SAIC in front of the jury.
4 MR. GREEN: Your Honor, that may be a statement that
5 is being made now, but it certainly is not reflected in the
6 discovery we have been receiving.
7 THE COURT: Is that what you intend to do?
8 MR. CASSADY: Your Honor, SAIC may have discovery
9 that is out there as a third party that used to own these
10 patents, but that is their relevance to this case and that is
11 what we would go to trial on.
12 MR. GREEN: Your Honor, are we going to go far as
13 saying SAIC will not present witnesses, it won't attempt to
14 elicit any testimony? Is that where we are?
15 MR. CASSADY: If you are going to play the
16 depositions, then obviously --
17 MR. GREEN: I am referring to what SAIC is going to
18 do.
19 MR. CASSADY: SAIC is not going to sit at counsel
20 table. And SAIC will not be presenting a witness except in
21 rebuttal to statements made by the defendants.
22 MR. GREEN: But there we go. SAIC is presenting
23 witnesses, and the kind of statements they will make in
24 rebuttal, I presume, would reflect the information they
25 provided in discovery, and that information reflects taking
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1 specific positions and averments on issues of infringement,
2 enforcement, and validity.
3 I would also feel a little more comfortable if these
4 statements were coming from SAIC's actual Counsel rather than
5 VirnetX's Counsel just as a matter of form, Your Honor.
6 THE COURT: Mr. Tindel.
7 MR. TINDEL: I heard somebody say there is no good
8 deed that goes unpunished. As the Court knows, we tried to --
9 SAIC tried to interject themselves in the case so we could
10 provide discovery and conduct our other obligations, as we did
11 in the Microsoft case. And we even presented an order that
12 governed how SAIC would not take positions, would cooperate
13 fully in discovery, as we have done in the Microsoft case.
14 That was sent in the spring of 2011. And we got no response
15 to that --
16 THE COURT: From who?
17 MR. TINDEL: From anybody, of the defendants.
18 THE COURT: What about from plaintiffs?
19 MR. TINDEL: No, that was a joint order that we
20 proposed to the defendants.
21 THE COURT: Okay. All right.
22 MR. TINDEL: And the response was to file a motion
23 to dismiss, which the Court denied. And the Court in its
24 order said I am not going to impose all of these Microsoft
25 orders that were agreed to on the defendants in either the
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1 Mitel or the Cisco case. But if you guys have any problems
2 with SAIC's discovery obligations, let me know.
3 Well, Your Honor, we have tried, SAIC, to cooperate,
4 to stay out of the way, to not cause any problems. And as far
5 as I know, that is -- that has proceeded at pace. And we have
6 taken the positions because we have been forced to. We tried
7 to get an agreement where we wouldn't have to do that. We
8 never got any cooperation or back-and-forth from any of the
9 defendants on this.
10 And so if we are forced to take a position, we are
11 going to take a position that is in line with VirnetX because
12 we are aligned in the case. It is just that simple.
13 MR. GREEN: I am having trouble reconciling this.
14 The argument leaves with SAIC has no position, and then --
15 THE COURT: I think what he just said is that SAIC
16 has no position unless you force them to take a position,
17 which it sounds like you have. If they are forced to take a
18 position, it is going to be consistent with VirnetX because
19 they may benefit from any recovery that is obtained in the
20 case.
21 MR. GREEN: Your Honor, understood. And fairly to
22 that point and VirnetX benefiting -- or SAIC, rather,
23 benefiting or having interests aligned, that is the issue. If
24 SAIC and VirnetX are aligned in interest and they have taken
25 positions -- I would, respectfully, disagree we have forced
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1 them to do it. We have tried to get some discovery, but it is
2 special treatment to say SAIC --
3 THE COURT: It sounds like to me what you have been
4 doing is generating a lot of unnecessary work in the case,
5 Counsel. And I am going to deny your motion to add them to
6 the caption. I will withhold ruling on how we will try the
7 case or whether they will be included in the case, you know,
8 in front of the jury or not.
9 But, you know, again, to me, the way I view SAIC is
10 that they are a very nominal party. I have endeavored to save
11 them attorneys' fees and save y'all attorneys' fees by trying
12 to get something worked out that they can provide you with the
13 discovery that you need. But I did not really intend for it
14 to be turned into an adversary proceeding between them and the
15 defendants with all of the attendant expenses to both sides.
16 And I don't see where it is going to be helpful to
17 the ultimate issues in this case. I think it will be
18 confusing to the jury if they are put in there, unless you can
19 identify some legitimate reason that they need to be in
20 there.
21 Mr. Tindel, I take it that SAIC is agreeing to be
22 bound by whatever verdict or judgment is entered in this case
23 as it relates to VirnetX; is that correct?
24 MR. TINDEL: That is my understanding, Your Honor.
25 THE COURT: So you have that agreement, so you don't
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1 have to worry about them coming back and suing you again or
2 any other claims or anything of that nature. So I just really
3 don't see where they have much of a role to play in it other
4 than one if you intend to sort of create a role for them,
5 which it sounds to me like you are doing.
6 MR. GREEN: Your Honor, we certainly understand. We
7 don't mean to unnecessarily multiply this. We will pursue the
8 discovery that is reasonable from SAIC --
9 THE COURT: Your motion is denied, and we will take
10 up what everybody brings to me regarding when we get to trial.
11 MR. GREEN: Thank you.
12 THE COURT: I guess we have got one more. This is
13 defendants' emergency motion to compel responses to
14 Interrogatories 1, 2, and 6.
15 MS. FENNELL: Thank you, Your Honor. I am pleased
16 to report that I think we have resolved a number of the issues
17 that were brought to your attention in this motion this
18 morning through the discussions we have had with VirnetX's
19 Counsel.
20 THE COURT: I'm sorry. I'm having a little trouble
21 hearing you.
22 MS. FENNELL: Sure. I said I am pleased to report,
23 I think we have resolved a number of the issues presented in
24 this motion this morning through discussions that we have had
25 with VirnetX's Counsel.
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1 I think what I would suggest, if Mr. Toliver is
2 amenable to it, would be for you to explain on the record what
3 it is you are willing to do to supplement your interrogatory
4 responses, and then we can address the still-outstanding
5 issues.
6 MR. TOLIVER: Sure. Craig Toliver for VirnetX,
7 Your Honor.
8 Just to be clear, we have had a number of
9 conversations about these interrogatory responses. We have
10 been back and forth with the defendants a number of times. I
11 think what we saw after reading the briefing, including the
12 reply brief, is that we seem to have a few quibbles over some
13 issues where I think that the parties were talking past each
14 other.
15 As I understand it from the reply brief of the
16 defendants, they believe Interrogatory No. 6 has been
17 resolved. And I see that in the reply.
18 THE COURT: Is that correct, Counsel?
19 MS. FENNELL: It is correct, so long as VirnetX will
20 supplement its interrogatory response to include the
21 information that is contained in its opposition brief.
22 MR. TOLIVER: We will do that, Your Honor, yes.
23 THE COURT: No. 6 is no longer on the table.
24 What about 1 and 2?
25 MS. FENNELL: So, Craig, I understand from our
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1 discussions this morning that you are willing to supplement
2 those responses in some respects as well. Can you state on
3 the record what it is you are agreeing to provide?
4 MR. TOLIVER: I believe, Counsel, that the issue
5 that we have the dispute over is the Section 112 issue, which
6 I think corresponds to your Interrogatory No. 2.
7 As for Interrogatory No. 1 and 2 there is also the
8 issues relating to conception, reduction to practice, as well
9 as priority date.
10 And based on -- Your Honor, based on the
11 conversations that Counsel had just prior to this hearing, I
12 understand that those issues have been resolved.
13 With respect to the '504 and '211 patents, VirnetX
14 said long ago in the interrogatory responses that, very
15 specifically, April 26th, 2000 is the priority date that we
16 believe those patents are entitled to.
17 After followup questions from defendants, we then
18 clarified that VirnetX in this case is not seeking an earlier
19 conception or reduction to practice or invention date.
20 Therefore, April 26th, 2000 is the priority date. And I
21 believe that was in our interrogatory response.
22 MS. FENNELL: So I think we can withdraw this
23 portion of our motion as pertains to the 504 and 211 patents,
24 so long as VirnetX is willing to supplement its interrogatory
25 response to clearly state that April 26th, 2000 is the date
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1 that it is contending for the conception, reduction to
2 practice, and priority dates of those two patents.
3 Which I think is what you agreed to this morning?
4 MR. TOLIVER: Again, the only issue I have with that
5 is the way I usually think about this, Your Honor, is that a
6 patent has a priority date. And then a patentee may or may
7 not argue for a prior conception or reduction to practice or
8 invention date.
9 And what we have set out is that in this case we are
10 not making such an assertion, so the April 26th, 2000 date,
11 the priority date listed on the face of the '504 and '211
12 patents is the priority date.
13 So when you say the conception or reduction to
14 practice date is that date, I'm not sure that that makes
15 perfect sense in the way we usually --
16 MS. FENNELL: Understood. And I think, Your Honor,
17 and, Mr. Toliver, I think all we are looking for right now is
18 for you to supplement your response to clearly identify the
19 April 26th, 2000 date; and that it applies to all of the
20 asserted claims of those two patents.
21 MR. TOLIVER: And I believe that date has been laid
22 out; but if the question is whether that can be specified as
23 to the asserted claims, to the extent that was unclear, we are
24 happy to do that.
25 MS. FENNELL: Okay. That should address our
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1 concerns.
2 So I think that leaves -- the only two issues that
3 leaves pending from this particular motion are the conception
4 and reduction to practice dates for the '135 patent. I
5 understand from discussions that I had with Mr. Toliver this
6 morning that VirnetX is not able to provide specific dates on
7 a claim-by-claim basis for the conception and reduction to
8 practice in connection with the '135 patent.
9 It is our understanding and our position that absent
10 evidence of an earlier invention date, the invention date that
11 VirnetX would need to rely on for the '135 patent would be the
12 filing date of the patent.
13 The only deposition testimony that VirnetX has cited
14 in support of the conception and reduction to practice of the
15 '135 claims is deposition -- oral deposition testimony from
16 inventors. They haven't provided any further corroborating
17 evidence of the conception and reduction to practice of those
18 claims that would pre-date the filing date of that patent, so
19 it is our position that we are entitled to that evidence.
20 And if they can't provide it they are just going to
21 have to be forced to rely on the filing date of the patent
22 application.
23 MR. TOLIVER: On this particular issue, the
24 inventors, the main inventors have been deposed in the
25 Microsoft case and in the Cisco case at least ten times. And
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1 in those depositions the inventors have provided testimony
2 regarding the September 23rd, 1999 train ride --
3 THE COURT: Thank you, Counsel.
4 I am just sitting here listening to y'all talk back
5 and forth to each other. And it is just beyond me that it has
6 come all the way to a court hearing, and now you are both
7 trying to -- still not understanding what the other one is
8 saying.
9 I'm going to deny the motion as moot. And y'all
10 meet and confer and see if you can work this out. If you
11 can't, bring back what you cannot resolve; and I will then
12 take it up. But I think -- I don't know. It just seems like
13 we are trying to tie things down so tight where it is already
14 established by the facts in evidence and everything else. I
15 don't know. That is my ruling.
16 Anything further?
17 MS. FENNELL: Your Honor, if I may, the Federal
18 Circuit has developed a clear rule requiring corroborating
19 evidence where a party only relies on oral inventor testimony.
20 THE COURT: I'm familiar with that.
21 MS. FENNELL: I would appreciate your guidance on
22 what more we need to do to frame this issue in light of that.
23 THE COURT: You file a motion if you can't resolve
24 it.
25 Anything further?
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1 MS. FENNELL: We have one other outstanding issue in
2 connection with this motion --
3 THE COURT: I have already denied that motion.
4 MS. FENNELL: Okay. In its entirety.
5 THE COURT: All right.
6 Let's turn to the Markman. That is all of the
7 motions, isn't it?
8 MR. TOLIVER: Yes, Your Honor.
9 THE COURT: All right. Let me just note for the
10 record that we have already been through one Markman on these
11 patents in the Microsoft case. We have been through the
12 Markman in the Cisco case, which I believe that was just -- we
13 had the hearing when and when was that opinion handed down?
14 MR. CALDWELL: It was April 25th we got an opinion.
15 I believe the hearing was January 5th.
16 THE COURT: So we have gone through this twice. I
17 have reviewed the briefing, and I don't know whether y'all are
18 just attempting to preserve the same arguments on behalf of
19 your clients. If that is the case, just tell me and we can do
20 that without going through them.
21 I didn't really -- I saw -- I didn't really see any
22 new arguments on the terms that are briefed other than
23 arguments that have already been presented and I have already
24 ruled on. I see one new term to be -- and I am willing to
25 hear argument on that. And I will hear any new arguments that
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1 you have.
2 But if it is an argument that has already been made,
3 there is no point in re-making that argument before me today.
4 So, Counsel, how would you like to proceed?
5 MR. CALDWELL: From VirnetX's perspective, I think
6 you have captured it. All I was going to stand up here and
7 say first is you are correct. Obviously, there was the
8 Microsoft Markman and then there was the Markman in the Cisco
9 case.
10 Another data point, when the case management
11 conference in this case was held, Your Honor specifically
12 invited the defendants in the second case, come on,
13 participate in the first Markman because by the time I invest
14 all that time in getting a ruling it is not going to make
15 sense to go around behind and just do a do-over, and they
16 declined to do that, and that is why we are here today.
17 So from VirnetX's perspective, we totally agree with
18 what you said. Obviously, VirnetX is preserving error on its
19 claim construction opinions, as Your Honor has recognized.
20 And one further data point for Your Honor is that
21 actually in both cases, the Cisco case and in the Mitel case,
22 the parties have done their burden expert reports and their
23 rebuttal expert reports so it is kind of the inverse of the
24 normal order we have. All I intend to do on behalf of VirnetX
25 is if somehow the defendants think they are actually
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1 presenting something new and they want to go back and reargue
2 something, I think we will intend to respond, but we are not
3 going to charge ahead.
4 THE COURT: Counsel?
5 MR. RENAUD: Yes, Your Honor. I appreciate the
6 Court's time, and we plan on addressing only new issues as to
7 construction, either based upon an issue that was previously
8 never discussed; or in the instance of "secure communication
9 link," a slight wrinkle on new information that wasn't subject
10 matter of discussions. We will keep it very brief.
11 I would like to turn the Court's attention to Slide
12 23 of our slide deck.
13 Can you pass those up.
14 (Slide presentations handed out.)
15 THE COURT: All right. Virtual private network, and
16 you are wanting to add the limitation "without additional
17 setup," right?
18 MR. RENAUD: Yes, Your Honor. And I think just -- I
19 will be very brief because I think the briefs cover it in
20 pretty good detail, but I do think it is important for the
21 Court to recognize this is a new argument based upon
22 information that wasn't previously discussed.
23 So if you page through to Slide 23, has "without
24 additional setup" is a short way to refer to the language in
25 question. If you go to Slide 38 of the slide deck that you
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1 have in front of you.
2 So what we have suggested is that VirnetX needs to
3 be bound by what it said to the USPTO. We believe that when
4 you look at -- and it is just going to be a couple of pages of
5 information from the file history, when you look at the
6 relevant pages you are compelled to reach the conclusion that
7 VirnetX has defined a "virtual private network" in a specific
8 way during that prosecution, surrendered an understanding of
9 what the virtual private network could be and couldn't be.
10 And second bullet on Slide 38 is essentially a
11 paraphrase of what they said to the Patent Office. A VPN, as
12 they have told the Patent Office, has to be able to address
13 data to other computers without additional setup.
14 Now, I am mindful of the notion that the Court --
15 If you go to Slide 39.
16 -- that this Court previously understood and
17 accepted the notion that there were three separate bases upon
18 which virtual private network of the prior art, if you will,
19 was distinguished from the Aventail reference. I think
20 VirnetX is going to say we said there is no VPN. I think the
21 reality, as they have said, a VPN is a certain thing and they
22 have also said it doesn't include certain things.
23 So if you look at those three distinctions, Your
24 Honor --
25 Slide 40.
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1 -- Your Honor addressed the third distinction, which
2 has the word "directly" in it. There was a lot of
3 conversation at the last Markman about this. I don't intend
4 to plow that ground again.
5 If you look at the first distinction, it is one of
6 the separate distinctions that Your Honor identified as being
7 a separate, independent way one could distinguish over
8 Aventail. It says, first, Aventail has not -- emphasis on
9 "not" -- been shown to demonstrate that computers connected
10 via the Aventail system are able to communicate with each
11 other as though they were on the same network.
12 Now, the notion there is further unpacked --
13 If you go to the next slide, Slide 41.
14 This is going to be the heart of the argument.
15 Slide 41 actually lays out what is meant by that first
16 distinction, which Your Honor has recognized as an independent
17 distinction.
18 If you actually want to hone in on the first
19 paragraph of that -- of Slide 41 is talking what a VPN isn't.
20 Okay. It says, Aventail -- final sentence of the first
21 paragraph -- does not disclose a VPN where data can be
22 addressed to one or more different computers across networks,
23 regardless of their location of the computer.
24 So they are saying this is what it doesn't say.
25 Now, more importantly it says on the next slide --
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1 I'm sorry, the next paragraph of the same slide, Slide 41. It
2 says -- it goes through the description of what the invention
3 is. And if you look at the final sentence of that -- or a
4 portion of it, it says -- if you look down one, two, three,
5 four lines, it says: ...then A -- "A" is a computer; it is on
6 a network -- ...then A would nevertheless be able to address
7 data to B, X, and Y -- other computers -- without additional
8 setup.
9 Now, that language that you are looking at there,
10 A -- a computer -- would nevertheless be able to address
11 data to -- other computers -- B, X, and Y without additional
12 setup, is the language that I proposed to the Court on
13 slide -- on the first slide we looked at, Slide 23.
14 So what I suggest is -- they have said crystal clear
15 that they said a computer would nevertheless be able to
16 address other computers without additional setup. Now, the
17 interesting question is what is the "without additional setup"
18 that they are talking about. But in more than one place --
19 and you will see it in our briefing -- in more than one place
20 they talk about additional setup would not include the need to
21 set up a new connection.
22 And let me just jump to a couple of slides, and I
23 will wrap it up, to give Your Honor some impression of that.
24 If you go to -- first I will point you to Slide 43 for a
25 moment which juxtaposes the language I just read in the record
134
1 from the file history which compares the -- basically the
2 paraphrase on the bottom to the literal language that is used
3 in the file history.
4 But if you turn your attention to Slide 47, their
5 own expert Dr. Jones has characterized in a recurring theme
6 the notion that a new connection would not be an example of
7 the invention. So he says: Further, every communication
8 requires -- this is the second bullet there -- further, every
9 communication requires a new connection as noted above. As
10 such, one skilled in the art would not consider this to be a
11 network.
12 So the theme you see isn't even limited to Aventail.
13 They continue to say, look, if you need a new connection --
14 And let's turn to Slide 44 for one more shot at
15 showing the same theme.
16 This one says -- and this is a cite -- this is to
17 the 135 reexam. In this situation not only would A be unable
18 to address data to Y without establishing a separate SOCKS
19 connection, but A would be unable to address data to be over a
20 secure connection.
21 So this is the same page of the file history -- I
22 apologize. I am trying to move fast recognizing Your Honor's
23 patience with a third Markman; but this is the third paragraph
24 of the section on Page 41. So they start off in the first
25 paragraph of Page 41 saying this isn't a VPN. The second
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1 paragraph they say what a VPN is claimed in the invention.
2 And in the third paragraph they, again, say what it isn't.
3 So, to me, it is clear they have had to work with
4 Aventail and try to figure out a way to say we aren't that.
5 Your Honor picked up on one of the distinctions of what we are
6 asking for today is for you to consider a second of those
7 separate, independent distinctions that they highlighted in
8 their file history of the '135.
9 Now, I am not going to go through the whole analysis
10 a second time as to the '504 and the '211, but I will point
11 the Court's attention to slide -- the slide that -- beginning
12 on Page 56 in which we go through the same analysis here.
13 Slide 56 has the language which has the "without
14 additional setup." Your Honor, I'm sure, is familiar with
15 that from the briefing. If you go back the same argument we
16 are going to make beginning on Slide 61 and continuing on to
17 62 it says, look, there are three independent grounds for the
18 "secure communication link," upon which they distinguished
19 over Aventail. So it is the same movie all over again.
20 They point to the same three distinctions. Your
21 Honor identified that, frankly, in the Cisco order. I don't
22 want to plow that ground, but I do want to direct Your Honor
23 to the analysis you reached that, look, there are three
24 separate, independent bases and I'm going to give meaning to
25 the "directly" basis.
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1 What we are simply doing today, which is brand new
2 to the case, is we are asking you to consider a second of
3 those three distinctions; namely, "without additional setup"
4 and to give it meaning that I think as required by their clear
5 statements on the record.
6 So the reality is there is a slight wrinkle between
7 the '181 prosecution, which is where the secure communications
8 disavowals happened regarding Aventail, and the VPN arguments
9 in the '135. As Your Honor probably knows, there is a
10 declaration for Mr. Nieh. Mr. Nieh is an expert who was hired
11 by VirnetX who helps them get allowance on various claims,
12 including "secure communications" as the term is used in the
13 '181 patent, and "virtual private network" as the term is used
14 in the '135.
15 Your Honor correctly identified that the argument in
16 the '181 patent was virtually identical to the argument
17 advanced in the '135 with the exception of, frankly, a handful
18 of words that are important enough that Counsel for Avaya is
19 going to spend a very brief amount of time directing the
20 Court's attention to what those words need.
21 But I will just say this: Whatever the analysis
22 ends up being, Your Honor, you recognize the parallel as in
23 between the word "directly" being imposed on "secure
24 communication link" and "VPN" as a result of your thoughtful
25 analysis in the Cisco case. I am suggesting to a parallel
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1 analysis as to "without additional setup" language is
2 advisable here in light of the clear statements by the
3 applicant and the --
4 THE COURT: What do you think the "without
5 additional setup" language, what do you think that adds to the
6 understanding over what is already there, including the
7 "directly" element?
8 MR. RENAUD: Well, "directly" simply says there is
9 no intermediate server, and we went through that in pretty
10 good detail. That is one instance where the Internet can't be
11 the thing that is in the middle. It can be a server or other
12 things. But it doesn't capture the additional connection.
13 So, remember, when Aventail was set up, you are
14 talking about making connection between A on one network and X
15 on the other. It is a direct connection, and it is limited to
16 those two computers. Then if you make a connection between B
17 on the same network as A to Y, that is a separate, independent
18 connection.
19 What Aventail does is it makes separate new
20 connections for each computer that wants to talk to each
21 other. They said, whoa, whoa, whoa, guys, that is not what we
22 do. "Directly" doesn't accomplish that because you could have
23 a direct communication but they could be separate. So they
24 said, no, no, no, guys, this is an easy system. This is not
25 the complex prior art. We have a one-click sophisticated
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1 system, and they say you don't need that new connection.
2 Now, if they don't make that argument, they have got
3 a real problem with Aventail. So they make it, they put
4 everybody on notice that a new connection is not an example.
5 So "without additional setup" is an attempt, very
6 simply, Your Honor, to say you don't get the bargain. You
7 made a bargain and you said no new connections. A can talk to
8 X on one network, can talk to Y. If they are part of a
9 virtual private network, no new connection required. That is
10 pretty darn clear.
11 And their expert Mr. Jones effectively distinguishes
12 over Kiuchi, a prior art reference, on that same basis. So
13 "without additional setup" provides something that directly
14 cannot, which is a new connection is not an instance of a
15 "virtual private network" as claimed in the '135 patent, or a
16 "secure communication link" as claimed in the '504 or the
17 '211. It is crystal clear. It just never was brought to the
18 Court's attention in either the Microsoft Markman or the Cisco
19 Markman. So I tell you this is new ground, Your Honor.
20 THE COURT: Okay. Response.
21 MR. RENAUD: One final point, and I'm going to sit
22 down and pass this off to Counsel to handle "secure
23 communication link." There is a small additional argument
24 that Avaya has that is not part of our argument. Would Your
25 Honor rather do "secure communication link" separate from
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1 "VPN"?
2 THE COURT: Yes.
3 MR. RENAUD: Okay.
4 MR. CALDWELL: So, Your Honor, I would just respond
5 to "secure communication link" when they get there, even
6 though Counsel touched on it a little bit because there are
7 some important issues there.
8 Mr. Martin, would you do me a favor and go to Slide
9 13?
10 Your Honor hit on this certainly. Obviously, we are
11 preserving error on things like the anonymity issue. I'm not
12 going to retread old ground there. But the issue is this
13 whole "without additional setup." You hit that squarely on
14 the head.
15 Now, to be clear, the office action that Counsel is
16 now pointing to was an office action Your Honor specifically
17 looked at and addressed in Your Honor's old opinion. So this
18 isn't any sort of new evidence. It is not something that was
19 changed or changed or been intervening in the meantime. It is
20 the exact same evidence you looked at before.
21 Now, a very interesting thing, I think, is to put
22 this office action in context where Aventail is presented as
23 '102 prior art, the inventors actually argued -- first of all,
24 it is not even prior art. And ultimately the Patent Office
25 agreed. They haven't even shown that Aventail is prior art.
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1 But setting that aside, there were technical
2 distinctions. As you know they say there are three technical
3 distinctions. I have got the technical distinctions -- the
4 first one -- I think you have already seen these slides, but I
5 want to put it in context exactly what we are looking for.
6 Without reading every one of these, this paragraph
7 that is up here is that Aventail has not been shown to
8 disclose the VPN in Claim 1 of the '135 for at least three
9 reasons. First. The first argument is not something about
10 additional setup. The first argument is actually Aventail has
11 not been shown to demonstrate that computers connected in
12 Aventail are able to communicate as though they were in the
13 same network. That is actually the argument.
14 And as far as explaining that first argument, the
15 applicant said: Aventail does not disclose a VPN where data
16 can be addressed to one or more different computers across the
17 network.
18 So this part about being on the same network,
19 actually the argument is whether or not other computers can be
20 addressed. The paragraph that Counsel is relying on is the
21 one that comes after it and says, for example, let's talk
22 about how Aventail works and a shortcoming there. It is not a
23 disclaimer or some sort of a disavowal. The statement that
24 matters is the one that the first argument is, you can't
25 communicate like you are on a private network, and you can't
141
1 address the other computers. It is addressing.
2 Now, Counsel is saying, oh, gee, this wasn't
3 confronted by the Court in the last Markman order. You
4 haven't really dealt with this. But in the proper context
5 with what the Court is being asked to deal with is the issue
6 of whether a VPN allows addressability. Your Honor has dealt
7 with that.
8 And I want to skip ahead -- it is funny, in a
9 different part of their brief the defendants agree with this.
10 Your Honor's construction -- let me go there first. Your
11 Honor's construction, which is at the very bottom, says: A
12 network of computers which privately and directly communicate,
13 et cetera.
14 Your Honor has already established it is a network,
15 it is private, and they directly communicate. So the issue is
16 whether Your Honor has captured this addressability feature.
17 And you have. And the defendants don't dispute it.
18 The defendants' own brief argues, Slide 17 of our
19 Markman presentation, but it is defendants' responsive claim
20 construction brief at Page 8 -- defendants themselves argue,
21 they agree that the "directly" already in your claim
22 construction, that "directly" refers to direct addressability
23 as set forth in your Markman order; and thus they don't rehash
24 all those arguments here.
25 So the actual first argument may be -- there is the
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1 first argument about addressability and being on the same
2 private network. You captured that it is network. You
3 captured that it is direct. You captured that it is direct
4 addressability and the parties agree to that. It is really a
5 second bite of the apple, which I believe should be rejected.
6 MR. RENAUD: Okay. Your Honor, if I might just
7 briefly say a couple of quick things. First, "directly"
8 clearly is related to the third distinction, and that is
9 unavoidable.
10 Second, I think the characterization of the language
11 associated with the A would nevertheless be able to address
12 data to B, X, and Y without additional setup. To say that
13 that is not related to the first distinction, I think -- if
14 that is what Counsel meant to convey, it is clearly related to
15 the first distinction.
16 In the second -- the final sentence of that second
17 paragraph is very informative. This is true because A, B, X,
18 and Y would all be part of the same VPN. So they are telling
19 you what a VPN is in the context of this invention as claimed
20 by the '135. They are telling you in the preceding sentence
21 exactly what "without additional setup" is related to.
22 And if you look at the final paragraph in that trio
23 of paragraphs on Page 41, it says, A -- this is talking about
24 the Aventail reference -- A establishes a SOCKS connection
25 with a SOCKS server for relaying data X and B separately
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1 establishes a SOCKS connection for the SOCKS server for
2 relaying the data to Y.
3 So what they are saying to you is each of them is
4 creating a separate connection in the final sentence of that
5 same paragraph. This is one example of how the cited portions
6 of Aventail fail to disclose a VPN. So every single one of
7 those paragraphs on Slide 41 is consistent with the
8 construction we are offering, and it is all part of the first
9 distinction, and it has nothing to do with the "directly"
10 issue that Counsel for VirnetX has mentioned.
11 So the reality is, is we are talking about the first
12 paragraph and not the third.
13 The final thing I will say before transitioning this
14 back, unless Counsel has a further remark, is that the "secure
15 communication link" definition has the exact same analogous
16 paragraphs.
17 MR. CALDWELL: Okay. I do have another remark. I
18 actually thought we were saving "secure communication link"
19 for later, so I am certainly not conceding something on that,
20 Your Honor.
21 The one thing that Counsel did not confront -- and I
22 think there is no escaping this, VirnetX does not dispute that
23 the third distinction over Aventail has to do with some of the
24 directness in the way computers can interact.
25 The first one is specifically about addressability,
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1 direct addressability. And the parties agree in their briefs
2 you have already captured that in your claim construction that
3 the "direct" means direct addressability. They say it in
4 their brief. We say it. We agree. You have actually
5 captured this precisely.
6 As to -- I think it is interesting that the
7 defendants are trying to put a whole lot of words -- or a
8 whole lot of weight on this one little expression there
9 "without additional setup" when they, first of all, haven't
10 explained really what that would mean in the context of the
11 infringement proof.
12 But more to the point, here is what VirnetX is
13 saying about that. VirnetX is trying to be -- you can see how
14 many people attend when you hold a Markman or a hearing in one
15 of the other cases; and when we were in the other courtroom
16 back in January, it was even worse. People watch this stuff
17 like a hawk.
18 VirnetX is obviously in litigation, and we
19 understand everything they say is going to be very, very
20 carefully scrutinized and Your Honor is going to pore through
21 it and so are a whole bunch of other people. VirnetX is
22 exceedingly careful to describe things precisely.
23 And in the instance of Aventail, VirnetX could have
24 said in Aventail because you have set up this one little
25 socket you could maybe talk to one person, but computer B
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1 could never talk to anybody else. It could never address
2 anything to anyone else. Then we would be here having an
3 argument that VirnetX had lied to the Patent Office about
4 Aventail or something of that nature because you could take
5 Aventail and you could change it. You can build it. You
6 could implement it in some sort of way. You could add some
7 other technology onto Aventail and possibly make Aventail to
8 where it could have this addressability feature in some way
9 that is not disclosed within Aventail.
10 But what the applicants did is describe it
11 precisely. If you are looking in the four corners of
12 Aventail, you can't do this. It was just a precise
13 description. It is not any sort of disavowal on the claim
14 scope because the argument is whether in a VPN you can
15 directly address one or more computers that are in the VPN.
16 That is already captured in Your Honor's --
17 THE COURT: Final word?
18 MR. RENAUD: One sentence, Your Honor. So, one, I
19 think VirnetX has it backwards. They put weight on this.
20 They made the representations. We are all living with them.
21 They put the public on notice accordingly.
22 Two, VirnetX has continued to ignore what exactly
23 was said as to the first distinction. Whether addressability
24 is a factor in multiple distinctions is irrelevant. What they
25 did is they made a distinction. They have to live with it.
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1 The final point is, they said what a VPN is, and
2 they said what a VPN isn't. It is crystal clear. That's all
3 for "VPN," Your Honor.
4 THE COURT: What is next?
5 MR. RENAUD: So I'm going to hand over the "secure
6 communication link."
7 I don't know whether -- Mr. Caldwell, do you want to
8 go first on "secure communication link," or does it matter?
9 MR. CALDWELL: Oh, no, as I represented to the Court
10 we think the Court has worked on this hard enough, and we are
11 trying to just streamline things. So if you guys want to make
12 an argument, I'll respond to something if there is something
13 new.
14 MR. RENAUD: So what I would say, Your Honor, is
15 there are competing proposals from the defendants. Mitel and
16 Siemens provided a proposed definition for "secure
17 communication link." Avaya proposed another. Avaya's
18 proposal includes something besides the "without additional
19 setup." Namely, they are looking to offer, I think, further
20 argument as to why anonymity should be in there based upon new
21 reasoning.
22 I will say this, while Siemens adopts and embraces
23 Avaya's proposal that anonymity should be properly included
24 within "secure communication link," we have made a separate
25 argument as to adding a new limitation, as you are aware,
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1 called "without additional setup."
2 I am going to hand it over to Avaya now to offer
3 additional information regarding "secure communication link"
4 that we haven't discussed yet, Your Honor.
5 MR. CALDWELL: Out of curiosity, are we finished
6 then from the defendants talking about whether "without
7 additional setup" that part should be in "secure communication
8 link"?
9 MR. RENAUD: Correct.
10 MR. CALDWELL: Should I go ahead and hit on that
11 point specifically?
12 THE COURT: On which point?
13 MR. CALDWELL: This "without additional setup" we
14 just talked about with regard to "VPN" and given that the
15 defendants have two competing constructions here, the Mitel
16 and Siemens construction wants to bake the "without additional
17 setup" into "secure communication link" as well, and I have a
18 separate reason why that is improper here.
19 THE COURT: All right. Go ahead.
20 MR. CALDWELL: Now, Mr. Martin, if you would, go to
21 Slide 22.
22 Some of this I will probably rehash after Avaya
23 talks. But, essentially, defendants' arguments on this would
24 capture -- would try and equate a secure communication link to
25 a VPN, those have been rejected. And whether it is by Avaya's
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1 proposed tact of just saying it is the same thing as a VPN or
2 whether it is by the Siemens' method of saying, well, we will
3 just take the words from our VPN construction, either way, the
4 Court has specifically considered this and addressed this and
5 rejected that argument in its Markman order.
6 Now, the '504 and '211 claims they have the words
7 "secure communication link." They do not reference a VPN or a
8 virtual private network link. We know it is not in the
9 claims. It is also not in the file history. And it is not
10 supported by the Cisco Markman opinion. But that is what the
11 defendants really rely on, and this is really important.
12 Here is a paragraph out of your Markman order. And
13 I would like to direct you to what I think is the second --
14 no, it is the first sentence.
15 As the Court is aware, during the prosecution of the
16 application that resulted in the '181, VirnetX distinguished
17 the Aventail reference from "secure communication link"
18 limitation based on arguments that this Court has observed
19 were "nearly identical" to those discussed above regarding
20 Aventail.
21 Now, that is a page out of -- I may have
22 misrepresented that that was your opinion. That was a page
23 out of defendants' brief.
24 So the actual evidence that the defendants are
25 citing for putting this "without additional setup" into their
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1 "secure communication link" construction is Your Honor's claim
2 construction opinion where, in the context in which you were
3 considering an issue, you said some nearly identical arguments
4 were made between "VPN" and "secure communication link."
5 They are not really directing you to the actual
6 arguments that were made in prosecution with regard to the
7 term "secure communication link," and that is real important.
8 Because when we look at the actual file history arguments
9 about "secure communication link" -- remember before when we
10 were talking about the VPN, there was three arguments, one,
11 two, and three.
12 And after argument one there was that "for example"
13 paragraph that the defendants are relying on. That "for
14 example" paragraph, the one that mentions "without additional
15 setup," isn't even in the file history where "secure
16 communication link" was argued.
17 The slide that is being presented to you now,
18 Aventail does not teach the "secure communication link,"
19 reason one, first; and then the next two paragraphs that he
20 relied upon and all his argument about VPN don't even appear
21 in this file history. It jumps to argument two and then
22 argument number three.
23 So because they couldn't point to the actual
24 intrinsic record to find that "without additional setup"
25 stuff, they pointed to you saying the arguments were similar
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1 between the two. That is utterly improper. It is not part of
2 the record on this term.
3 THE COURT: Okay. Thank you.
4 MR. RENAUD: Okay. Why don't I just clarify that
5 because I believe Counsel has not seen the whole record;
6 otherwise, I don't believe he would have made that proffer.
7 So if you look at Slide 64 it specifically cites to
8 the June 7th, 2011 response and request for reconsideration on
9 the '181, which is in part what Your Honor was referring to in
10 his earlier order when he said they were virtually identical.
11 This section actually incorporates the
12 characterizations made in the Nieh Declaration. It actually
13 gives the paragraphs, as Your Honor will see, circled in red,
14 Paragraph 25 and Paragraphs 24 through 27, which are on the
15 very next slide, Slide 65.
16 And Your Honor is going to have an opportunity later
17 to compare that language on Paragraphs 25, 26, and 27 to the
18 language that was included in the file history of the '135.
19 And that language is substantially identical, although there
20 are a couple of important distinctions that I am going to
21 leave for Avaya's Counsel to point out.
22 But I will say to you that I believe Counsel is
23 wrong as a matter of law; that the Nieh Declaration has been
24 incorporated by reference. Paragraphs 25, 26, and 27 have the
25 same language for the purposes of "without additional setup"
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1 as I referred to the '135.
2 I will point Your Honor to Paragraph 26 which has
3 the magic language where they said what the invention was.
4 They said a VPN in accordance with the invention is A computer
5 would nevertheless be able to address data to other computers,
6 B, X, and Y, without additional setup.
7 If you read that entire set of paragraphs in their
8 entirety, you will come away with the conclusion which is
9 inescapable that there is a new connection required that
10 cannot be a VPN as claimed in the '135, and it cannot be a
11 secure communication link as claimed in the '504 and '211.
12 And Page 65 is the Declaration of Nieh, which is literally
13 part of the file history for the '181.
14 So I think Counsel is mistaken as to the
15 characterization of the file history.
16 MR. CALDWELL: So looking at defendants' Markman
17 brief, this is actually the thing that tipped me off to this,
18 to be completely honest with you, I look at their citation
19 that says, oh, the Court observed the arguments for "secure
20 communication link" were nearly identical to VPN. I looked at
21 that. And the citation was to Your Honor's Markman opinion.
22 Then there is a "(;) see also the actual file
23 history." Well, why isn't that your lead citation. And so I
24 go and look at it, and the whole paragraph "without additional
25 setup" isn't even in that argument that was made with regard
152
1 to "secure communication link" during prosecution. That is
2 not even in there.
3 It is true that VirnetX cited the Nieh Declaration
4 in connection with that part of the prosecution and the other
5 part of the prosecution. It didn't make the argument or make
6 some disavowal that would lead to, without additional
7 selection [sic]. All it did was include a technical expert's
8 declaration that had previously been prepared to say here is
9 how Aventail works.
10 Well, it is not the case that his description of how
11 Aventail works. Every aspect of it becomes a limitation. If
12 he describes that the Aventail's computers are always blue, it
13 doesn't then follow that the VirnetX claims can't cover blue
14 computers. That is not the way it works. He cites the
15 declaration of how Aventail works.
16 And then we look at the arguments that were made.
17 The arguments were never made that this "without additional
18 setup" is a reason for patentability for "VPN" or "secure
19 communication link"; and that whole sentence doesn't even
20 appear in the argument and prosecution for "secure
21 communication link." That's all I have.
22 MR. RENAUD: A one-line response. The argument is
23 crystal clear. On Slide 64 it says: First, Aventail has not
24 been shown to demonstrate that computers connected via the
25 Aventail system are able to communicate with each other as
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1 though they are on the same network.
2 That is the new connection concept. That cites
3 directly to Paragraph 25 on the Nieh Declaration. They can't
4 avoid -- that is the basis in part of their argument. They
5 can try, but they can't.
6 Next sentence: Aventail discloses establishing
7 point-to-point SOCKS connections between a client computer and
8 a SOCKS server. Cite again to Paragraph 25 in the Nieh
9 Declaration.
10 And the final sentence, Your Honor: The SOCKS
11 server then relays data received through the intended
12 target -- I guess it is one more sentence. Again, the same
13 paragraph, Paragraph 25 Nieh.
14 And then, finally, Aventail does not disclose a
15 secure communications link where data can be addressed to a
16 target regardless of its location.
17 And in this instance it points to Paragraphs 24
18 through 27. So they went out of the their way to hire an
19 expert to get this allowed, and now they are trying to walk
20 away from it, and the public notice requirement won't allow
21 it.
22 There are additional "secure communication link"
23 arguments that are Avaya's. And unless Mr. Caldwell wants to
24 respond to that, I am going to hand it over to Avaya for their
25 addition to the "secure communication link" argument.
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1 MR. CALDWELL: Counsel just made my argument for me.
2 The point is the argument is the distinction over Aventail was
3 that Aventail the computers don't communicate as though they
4 are in a private network, which Your Honor put in his claim
5 construction; privately and directly.
6 And then the other part is that Aventail didn't
7 allow the addressability. All parties agree that the "direct"
8 already in your construction covers addressability. In other
9 words, the paragraph he points back to the actual arguments
10 distinguishing Aventail, Your Honor has already looked at
11 these and has already put them in the claim construction. So
12 it is already covered.
13 MR. RENAUD: We disagree.
14 THE COURT: Thank you. Let's move on.
15 What does Avaya -- what new do you have to add to
16 the fact that "secure communication link" should be the same
17 as a "VPN."
18 MR. GREEN: Yes, Your Honor.
19 If I may move to Slide 76, please.
20 So, Your Honor, there are three reasons, but I am
21 going to condense them because I was struck by one of the
22 things that Opposing Counsel said; and that statement was that
23 VirnetX is aware that many people, maybe the world, will be
24 watching this litigation activities; and, therefore, VirnetX
25 is exceedingly careful to describe things precisely.
155
1 I would like to take them at their words. And one
2 of the things that VirnetX has told us precisely is that --
3 and told the Patent Office is that a "secure communication
4 link" is a "virtual private network." And that statement was
5 made to get the related '181 patent issued.
6 I would like to also, just so we are not debating
7 whether this evidence I'm about to show you from the
8 Declaration of Dr. Jason Nieh is or is not relevant, I am
9 going to read to you from the statement that VirnetX made as
10 to its purpose for submitting that Nieh Declaration in the
11 '181 patent.
12 And that statement is: The Nieh Declaration is
13 cited herein to characterize the cited references and their
14 deficiencies.
15 This isn't just some throw-away facts or just some
16 interesting things that might be good to know. This is
17 evidence cited to make and support distinctions over the prior
18 art and Aventail specifically.
19 So with that, if we could jump over to Slide 82.
20 What we see on Slide 82 of defendants' Markman
21 presentation, Your Honor, is a juxtaposition of a claim from
22 the '181 patent that was the subject of this Nieh Declaration
23 and the description of Aventail not disclosing a secure
24 communication link because Aventail does not disclose a
25 virtual private network.
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1 So when you look at the top section from the '181
2 patent we see a "secure communication link" highlighted in
3 yellow at the bottom. We see the exact same formulation of
4 the term in the bottom from the '504 patent. If you look at
5 the '211 patent you will see it there as well. The same term
6 in both the '181 patent and the related '504 patent and that
7 is why we are talking about things from the '181 patent.
8 We have already discussed, and I believe it has been
9 decided and resolved, that prosecution history from the '181
10 patent and distinctions made to separate these inventions in
11 this family of patents from the Aventail reference are
12 applicable to the '504, the '211, and the '135 patent that are
13 at issue here.
14 So if I could jump back to Slide 77.
15 Claims in the '181 patent recite a "secure
16 communication link." We have seen that. And we have seen
17 that the Examiner rejected the '181 patent claims on Aventail.
18 We know the three reasons very well now. I would like to
19 focus you on the first reason, the first reason being that no
20 communication between computers as though they were on the
21 same network. What does that mean?
22 What I would like to do then is get to what Dr. Nieh
23 tells us that means.
24 So if we could jump ahead to Slide 80.
25 Aventail also does not teach the claimed "secure
157
1 communication link." What is the evidence that VirnetX gave
2 us to prove that Aventail does not teach the claimed "secure
3 communication link"? It is the Nieh Declaration. And
4 specifically it is Paragraph 25 in this instance and
5 Paragraphs 24 through 27 in the instance at the bottom where
6 VirnetX again says, Aventail does not disclose a secure
7 communication link.
8 So what is the proof? What is the deficiency of
9 Aventail that causes it to lack a secure communication link?
10 If we go to the next slide.
11 We have Dr. Nieh's Declaration. And just for the
12 record I will spell that. That is N-I-E-H. I may be
13 mispronouncing it. I mean no disrespect to him, but that is
14 my best shot.
15 If we look specifically at Paragraph 25. To support
16 that distinction we see that Aventail has not been shown to
17 teach sending an access request message to a secure computer
18 network address using a virtual private network communication
19 link.
20 We see this term invoked again. The method
21 disclosed in the '181 patent -- down on Line 4 -- differs from
22 the virtual private network communication link that is recited
23 in Claims 1, 17, and 33. And that is referring to the claims
24 that are then pending in the application for the '181 patent.
25 And then the kicker is really at the bottom, Your
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1 Honor. If you look at the sentence that begins with
2 "Aventail" right after the discussion of the SOCKS server. It
3 is on the third line from the bottom.
4 Aventail does not disclose a virtual private
5 network. So using the precise language that VirnetX's Counsel
6 has assured us it uses when it is speaking to the Patent
7 Office and thus to the work in prosecuting these patents, the
8 reason that Aventail did not invalidate these '181 patent
9 claims which are drafted in terms of secure communication
10 link, just like the claims in this suit of the '504 and the
11 '211, the reason that distinction between "secure
12 communication link" and Aventail exists is because Aventail
13 does not disclose a virtual private network.
14 That is it. It could not be more clear. So any
15 statement that this declaration is not relevant, these
16 arguments were never made, those should fail just as a matter
17 of law. They are part of the prosecution history. And if
18 this was not intended to persuade the Examiner in the office,
19 then I don't know why they are there.
20 Your Honor, just to follow up and show that we
21 didn't just pull this out; we are not trying to push the
22 claims in some awkward direction.
23 If I could go back to Slide 76, reasons two and
24 three.
25 Your Honor, I certainly don't mean to put the words
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1 in the Court's mouth; but we have already had the discussion
2 in the Cisco case of whether a secure communication link must
3 provide the same advantages of a VPN. And I believe the
4 conclusion we have reached is that they should.
5 And one of those advantages is anonymity, and that
6 is the reason for the distinction between the Avaya claim
7 construction and the proposed claim construction that Mitel
8 and Siemens put out there.
9 We believe that VirnetX has defined "secure
10 communication link" in that way. It conveys these
11 disadvantages where you look at the prior art and you don't
12 see virtual private networks, then you don't have a secure
13 communication link. And we know from the prior construction
14 exercises that anonymity is a feature of a virtual private
15 network.
16 And, finally, Your Honor, I will not rehash the
17 specification in great detail. But if you will look at Slides
18 84 through -- 84 and 85 of the defendants' claim construction
19 presentation, you will see perfectly consistent statements in
20 the specification that a secure communication link is a
21 virtual private network. That is on Slide 84.
22 If you look on Slide 85 you will see reference to
23 "secure communication links" or "virtual private networks."
24 Any time that a communication link is established, the link is
25 a VPN network.
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1 Again, looking at the bottom of 85, the user can
2 optionally select a secure communication link through a proxy
3 computer. Accordingly, the computer can establish a VPN
4 communication link.
5 This is not importation from the specification.
6 This is showing that our interpretation of what VirnetX has
7 clearly stated to the office, it comports with the
8 specification, it matches the claim language, it is a fair and
9 appropriate construction to construe "secure communication
10 link" without these distinctions over Aventail, would be
11 asymmetrical with what was actually happening in the office.
12 Thank you, Your Honor.
13 THE COURT: Thank you.
14 Response?
15 MR. CALDWELL: Yes, Your Honor. The point that I
16 made earlier which I think bears repeating is the Nieh
17 Declaration is a declaration from a technical expert
18 describing how Aventail works. It is not an argument here is
19 why you should allow a given particular claim. The arguments
20 we have seen in the file history are clear. And I believe if
21 there had been a time when VirnetX said a secure communication
22 link is a VPN, Counsel would have showed it to you.
23 Or if the applicants had said VirnetX's secure
24 communication link claims are patentable because a secure
25 communication link is a VPN, they would have shown it to you.
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1 That argument was never made.
2 There is a technical description from an expert who
3 describes how Aventail functions, and that is part of the
4 prosecution record for some of the related patents. That
5 declaration being part of a prosecution record for some of the
6 patents, that declaration was submitted, again, to show for
7 the Examiner here is how Aventail works.
8 There is absolutely no disclaimer. They have shown
9 no clear disavowal. And Your Honor considered these points
10 specifically whether "secure communication link" and "virtual
11 private network" were the same thing, and Your Honor expressly
12 rejected that they were. There are not.
13 There was an older patent in VirnetX's patent, and
14 it is the '759, that specifically describes a "secure
15 communication link" and then further in the claim defines it
16 as in a virtual private network or a virtual private network
17 link.
18 That kind of restriction does not exist in the '504
19 and the '211. It just says a "secure communication link"
20 without describing it as a virtual private network link. And
21 there is no reason to read virtual private network into the
22 broader "secure communication link" as a limitation. Simply
23 no disavowal. No clear disclaimer.
24 I don't want to belabor this because I know Your
25 Honor has already considered it. So on Slide 27 and 28 of
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1 ours -- I'm not going to read it for you. It is part of your
2 Court's Markman Order where you went through and specifically
3 recognized that there are embodiments where the "secure
4 communication link" can be part of a VPN, but they are
5 preferred embodiments, non limiting.
6 And, finally, there is some suggestion that
7 anonymity comes into play here. Aventail was never
8 distinguished on the basis of anonymity in order to get any of
9 these '504 or '211 claims allowed.
10 THE COURT: All right. Thank you.
11 All right. What is our next term? That would be
12 "query"?
13 MR. McNAMARA: My name is Mike McNamara, Your
14 Honor. The next term is -- we have two terms to talk about
15 here "domain name" and "domain name service system." I will
16 try to be as brief as I can.
17 MR. CASSADY: Your Honor, I hate to be rude and
18 interrupt him, but we all agreed that we would leave them on
19 the papers other than "domain name" we said we would talk
20 about. But the "domain name service" we specifically put it
21 and said we would leave it on the papers.
22 MR. McNAMARA: Actually, we didn't -- I'm sorry. We
23 did say that. We did say that. We didn't say that we would
24 leave "domain name service system" on the papers?
25 MR. CASSADY: Yes, we did.
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1 Your Honor, I have the email right here I can show
2 you. I hate to be sticky-tacky --
3 MR. McNAMARA: We will just do "domain name."
4 MR. CASSADY: Fine. Fine.
5 MR. McNAMARA: So for "domain name" essentially the
6 evidence that Your Honor is being asked to consider is the
7 same here as it was in the Cisco case. There is just an
8 additional argument that we would like to make.
9 If you could turn to Slide 90.
10 As you can see from this slide, Your Honor, our
11 claim construction tracks what the Cisco Defendants have
12 proposed except for it adds this sequence of character
13 segments separated by periods and leaves out "corresponding to
14 an IP address."
15 Go to the next slide.
16 The reason that we want to leave out "corresponds to
17 an IP address" is because if you actually substitute that
18 information into the claim language, the claim language
19 becomes repetitive. It doesn't make any sense here to say
20 that "domain name" means a name that corresponds to an IP
21 address because that information is already required by the
22 claim.
23 That construction tells you what the result of
24 having a domain name is, but doesn't tell you what a domain
25 name actually means. And it has the effect of reading
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1 "domain" out of the claim language. It also makes the claim
2 language too broad.
3 The slide that is up now shows Your Honor that the
4 current construction is so broad that it actually encompasses
5 strings of characters that VirnetX explicitly took out of the
6 patent -- in the patent. It said that in the '135 patent that
7 a "domain name" would not be a Mac address or other hardware
8 addresses.
9 But the current construction is so broad as to
10 encompass those things, so that what we propose is that the
11 construction be narrowed slightly to require that a "domain
12 name" is a series of character segments separated by periods,
13 which is supported by the intrinsic record.
14 That is all we have on that.
15 THE COURT: Response?
16 MR. CASSADY: Mr. Martin, can you pull my slides up
17 real fast. The Markman slides. Slide 39, I think, is where
18 it starts. Thank you.
19 Your Honor, I think you have heard this a couple of
20 times today, but with this one I want to be real clear.
21 Microsoft took the same position that it needed to have a
22 hierarchical sequence of words in order to correspond to an IP
23 address. That argument was made by Microsoft and rejected by
24 this Court. I'm not going to go through my slides and show
25 you how you did that, but you rejected it.
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1 Cisco made the same argument with its co-defendants
2 arguing that "domain name," again, was a hierarchical sequence
3 of words and a big kind of plethora of words for describing
4 the word "domain name."
5 Then Your Honor rejected that argument there again
6 and said it is based on dictionary definitions, and it is just
7 based on extrinsic evidence and there has been no disavowal of
8 the term "domain name" to mean just this limitation.
9 Now, Avaya still takes that same position in this
10 case, in this Markman that Microsoft and Cisco and everybody
11 else took. Siemens takes a different position.
12 What is telling, Your Honor, is that all of their
13 positions are that everybody in the art knows what it means
14 and it means this, yet they all can't agree on what it means.
15 So they are sitting there telling you that a definition makes
16 it clear that there is a disavowing here because it is such a
17 clear statement but yet they can't agree together what it
18 means.
19 The examples that they pointed to -- I want to go to
20 that one specifically.
21 If you could turn to Slide 42 for me, Mr. Martin.
22 This is my version of that same quote that they put
23 forward in front of you. The whole argument is that VirnetX
24 did not use limiting language to say what a "domain name" was
25 and was not. And here is the perfect example they showed the
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1 Court.
2 A conventional domain name server provide a lookup
3 function that returns the IP address of a requested computer
4 or host. For example, when a computer user types in the web
5 name, yahoo.com -- now, Your Honor, they didn't say "for
6 example" -- actually let me back up.
7 They didn't say when a computer types in the domain
8 name yahoo.com, and that is all we mean by "domain name" is
9 yahoo.com. It said, for example, when a computer user types
10 in the web name yahoo.com they get an IP address for
11 yahoo.com.
12 And what is happening here is they are trying to
13 take these couple of examples that are used for the
14 conventional DNS in the Internet space to say that means that
15 VirnetX's invention can't cover anything else with regards to
16 "domain name."
17 Your Honor, back in the day I remember having
18 network printers that you would title. You would name them.
19 That would be the domain name of that printer even though it
20 was inside your local network. That is a domain name commonly
21 known by that. I'm not going to say I am a person of ordinary
22 skill in the art, but I understood what that meant back then.
23 And you named it, it had a domain, property, that corresponded
24 to an IP address.
25 Your Honor gave us that definition. VirnetX agrees
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1 with that definition. Two times it passed and we hope the
2 third time is a charm, and we keep it.
3 THE COURT: All right. Thank you.
4 What is next?
5 MR. McNAMARA: I think that is all from us, Your
6 Honor.
7 THE COURT: All right. What about "query," wasn't
8 that a new term?
9 MR. CASSADY: Your Honor, it is a new term. We
10 agreed to leave it on the papers.
11 THE COURT: Is that agreeable?
12 MR. McNAMARA: Yes, it is, sir.
13 THE COURT: Very well. Is there anything else the
14 Court needs to take up with you today?
15 MR. CASSADY: Not from the plaintiffs, Your Honor.
16 THE COURT: Defendants?
17 MR. RENAUD: We rest on what's in the papers, Your
18 Honor.
19 THE COURT: Very well.
20 All right. Y'all see if you can't communicate a
21 little bit better and get this case moved toward conclusion
22 either by settlement or trial.
23 I think we are set in October, right? November?
24 MR. CALDWELL: Yes, November.
25 THE COURT: All right. And so see if you can do
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1 that. Again, please adhere to my admonishments regarding your
2 motions for summary judgment and motions to strike and try to
3 get me something very focused and whatever you think your best
4 shots are.
5 All right. We will be adjourned.
6 (Hearing concluded.)
7
8 C E R T I F I C A T I O N
9
10 I certify that the foregoing is a correct transcript from the
11 record of proceedings in the above-entitled matter.
12
13 /s/ Shea Sloan 14 SHEA SLOAN, CSR, RPR 15 OFFICIAL COURT REPORTER STATE OF TEXAS NO. 3081 16
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