Motion For Permission To Present Evidence That Apple Practices Patent Claims

Case5:12-cv-00630-LHK Document1567 Filed04/03/14 Page1 of 11
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JOSH A. KREVITT (CA SBN 208552) jkrevitt@gibsondunn.com H. MARK LYON (CA SBN 162061) mlyon@gibsondunn.com GIBSON, DUNN & CRUTCHER LLP 1881 Page Mill Road Palo Alto, CA 94304-1211 Telephone: (650) 849-5300 Facsimile: (650) 849-5333 HAROLD J. McELHINNY (CA SBN 66781) hmcelhinny@mofo.com JAMES P. BENNETT (CA SBN 65179) jbennett@mofo.com JACK W. LONDEN (CA SBN 85776) jlonden@mofo.com RACHEL KREVANS (CA SBN 116421) rkrevans@mofo.com RUTH N. BORENSTEIN (CA SBN 133797) rborenstein@mofo.com ERIK J. OLSON (CA SBN 175815) ejolson@mofo.com MORRISON & FOERSTER LLP 425 Market Street San Francisco, California 94105-2482 Telephone: (415) 268-7000 Facsimile: (415) 268-7522 Attorneys for Plaintiff and Counterclaim-Defendant APPLE INC.
WILLIAM F. LEE william.lee@wilmerhale.com WILMER CUTLER PICKERING HALE AND DORR LLP 60 State Street Boston, MA 02109 Telephone: (617) 526-6000 Facsimile: (617) 526-5000 MARK D. SELWYN (SBN 244180) mark.selwyn@wilmerhale.com WILMER CUTLER PICKERING HALE AND DORR LLP 950 Page Mill Road Palo Alto, California 94304 Telephone: (650) 858-6000 Facsimile: (650) 858-6100
UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN JOSE DIVISION
APPLE INC., a California corporation, Plaintiff, v. SAMSUNG ELECTRONICS CO., LTD., a Korean corporation; SAMSUNG ELECTRONICS AMERICA, INC., a New York corporation; and SAMSUNG TELECOMMUNICATIONS AMERICA, LLC, a Delaware limited liability company, Defendants.
Case No.
12-cv-00630-LHK
APPLE INC.S MOTION FOR PERMISSION TO PRESENT EVIDENCE THAT APPLE PRACTICES THE 414, 172, AND 959 PATENTS AND CURATIVE INSTRUCTIONS
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APPLE INC.S MOTION FOR EVIDENCE THAT APPLE PRACTICES ITS PATENTS AND CURATIVE INSTRUCTIONS Case No. 12-cv-00630-LHK
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Dated: April 3, 2014
NOTICE OF MOTION TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD: PLEASE TAKE NOTICE that Plaintiff Apple Inc. (Apple) shall and hereby does move the Court, pursuant to Civil Local Rule 7, for permission to present testimony and evidence demonstrating that Apple practices the asserted patents and curative instructions on the grounds that Defendants Samsung Electronics Co., Ltd.; Samsung Electronics America, Inc.; and Samsung Telecommunications America, LLC (collectively, Samsung) made prejudicial and false statements during opening statements that have unfairly prejudiced Apple. This motion is based on this notice of motion and supporting memorandum, the supporting Declaration of Erik J. Olson, and such other written or oral argument as may be presented at or before the time this motion is taken under submission by the Court. RELIEF REQUESTED Apple seeks an Order permitting Apple to present testimony and evidence demonstrating that Apple has practiced and continues to practice the 414, 172, and 959 patents in order to correct the false impressions created by Samsungs counsel. Apple also requests that the Court recognize Apples continuing objection to any further misleading or false statements by Samsung. And Apple asks the Court to issue curative instructions, both now and with the final jury instructions, to curtail the harm and prejudice caused by Samsungs improper statements to the jury.
/s/ Harold J. McElhinny Harold J. McElhinny
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 I. INTRODUCTION
MEMORANDUM
During opening statements, Samsungs counsel repeatedly made irrelevant, misleading, and even untrue statements that have undoubtedly caused the jury to form impressions that are highly prejudicial to Apple. Over and over again, Samsungs counsel represented that Apple has never practiced the 414, 172, and 959 patentseven though, as Samsung knows, Apple has sold and continues to sell products that use each of Apples asserted patents. The Courts order limiting Apples ability to contend that it practices the 414, 172, and 959 patents at trial does not (and cannot) permit Samsung to affirmatively present false factual statements to the jury; but now that Samsung has done precisely that, Apple should be permitted to respond with testimony and evidence demonstrating that Apple practices those patents. Samsungs counsel also improperly suggested to the jury that it should consider the fact that Apple may seek permanent injunctive reliefwhich is irrelevant to the issues that the jury is being asked to decide and extremely prejudicial to Apple. And finally, Samsungs counsel misrepresented the Federal Circuits preliminary injunction decision in a way that, again, is highly prejudicial to Apple. Samsungs repetition of these misleading and untruthful statements has unfairly prejudiced Apple at the outset of the trial. As set forth below, Apple requests that the Court: (1) permit Apple to present testimony and evidence demonstrating that Apple has practiced and continues to practice the 414, 172, and 959 patents in order to correct the false impressions created by Samsungs counsel; (2) recognize Apples continuing objection to any further misleading or false statements by Samsung; and (3) issue curative instructions, both now and again with the final jury instructions, to curtail the harm and prejudice caused by Samsungs improper statements to the jury. II. ARGUMENT A. Samsungs False Statements Regarding Whether Apple Practices The 414, 172, And 959 Patents Are Highly Prejudicial To Apple And Require Curative Action.
Apple has sold and continues to sell products that include embodiments of all five
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patents that Apple is asserting at trial. In connection with the case narrowing proceedings in this case, however, the Court has ordered that Apple may not tell the jury that it practices the 414, 172, and 959 patents. More specifically, in granting Samsungs Motion in Limine #2, the Court ordered that: Apple may present the invention story of [the 414, 172, and 959] patents, but may not contend that it practices the patents. Apple may not rebut any Samsung contention that Apple products constitute an acceptable non-infringing alternative to the 414, 172, or 959 Patents by contending that Apple practices an unasserted or asserted claim of the 414, 172, or 959 Patents. (Dkt. 1398 at 3 (emphasis added).) Following that order, the parties filed a joint submission on jury instructions, which proposed an instruction that [i]n this case, Apple does not contend that it practices the 414, 172, and 959 patents. (Dkt. 1418 at 1 (emphasis added).) The Courts final preliminary jury instructions accordingly stated that [i]n this case, Apple does not contend that it practices the 414, 172, or 959 patents. (Dkt. 1542 at 22 (emphasis added).) Although Apple has sold in the past and continues to sell products that practice the 414, 172, and 959 patents,1 Apple has complied with the Courts order by not telling the jury during opening statements that it practices those patents. Apple expected that Samsung would also comply with the Courts order during trial and would state, at most, that Apple does not contend that it practices the 414, 172, and 959 patents or that the jury would see no evidence that Apple practices those patents. Samsung, however, has flouted the Courts ruling by making false statements to the jury regarding whether Apple has ever practiced the asserted patents. During opening statements, Samsungs counsel told the jury that: Apple admits, the judge has instructed you, Im sure it went past you because it was so quick, the preliminary instructions and Mr. McElhinny acknowledged it, Apple admits that three of the five patent claims that it is suing on were not in that iPhone and have never been in any iPhone since. Apple doesnt consider it valuable enough to even use.
See Olson Decl., Ex. 2, Cockburn Expert Report 470-473 (172 patent); Olson Decl., Ex. 3, Snoeren Expert Report 360-367, 525-528 (959 and 414 patents).
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(Olson Decl., Ex. 1, 4/1/14 Trial Tr. 353:6-12 (emphases added).) In particular, Samsungs counsel said to the jury that the judge has instructed and Apple admits that Apple has never practiced three of the five asserted claimseven though the Court gave no such instruction and Apple made no such admission. To make matters worse, Samsungs counsel repeatedly told the jury that Apple affirmatively does not practice the 414, 172, and 959 patents and has never used those patents in Apples own products: The way you know that Apple thinks thats a nuisance, because in the iPhone, they dont use that [172] patent, never have. Have never used it. The iPhone does it differently. (Id. at 386:17-19 (emphasis added).) So in other words, the survey participants are told, you either use Apples [414] patent which, again, this is another one, Apple doesnt use this, its not in any iPhone, never has been . (Id. at 391:3-5 (emphasis added).) But, again, this search capability that, you know, they claim to have a [959] patent on, its not something that they have ever used. Its never been done on the iPhone. (Id. at 401:22-24.) iPhone doesnt even use four out of these five features. (Id. at 357:18 (emphasis added).) Even though most of these patent claims are not valuable enough for Apple to use itself, it claims that Android uses them and that this causes customers to buy Samsung phones. And if Samsung didnt have these features, theyd sell more Apple phones even though a customer looking for four of five of these features couldnt find them in an Apple phone, they dont use them. (Id. at 359:6-12 (emphasis added).) So what are the damages that Apple seeks for use of its own particular form of word correction, which it doesnt even use ? (Id. at 386:25-387:2.) Apple itself doesnt even use four of the five. They agree as to three. We have to prove to you the fourth, the slide to unlock. You cant get those features by buying an Apple product. Theyre not in a product. They dont use them. (Id. at 413:22-414:1.)
Samsungs statements to the jury go far beyond what the Court ordered and the parties stipulated tonamely, that Apple would not contend that it practices the 414, 172, and 959 patents. Even worse, the repeated statements made by Samsungs counsel during opening statements are demonstrably false because many of Apples past and current products do, in fact, practice Apples patents. Apple did not, could not, and would not have stipulated that it does not practice the 414, 172, and 959 patents because such a stipulation would have been
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untrue. See Darwish v. Tempglass Grp., Inc., 26 F. Appx 477, 480 (6th Cir. 2002) ([P]arties [cannot] stipulate to patently untrue facts. (second alternation in original; quoting FDIC v. St. Paul Fire & Marine Ins. Co., 942 F.2d 1032, 1038 n.3 (6th Cir. 1991))). Indeed, the Court would have had an obligation to reject such a false proposed jury instruction. See Dillon, Read & Co. v. United States, 875 F.2d 293, 300 (Fed. Cir. 1989) (a trial court has a duty to reject stipulations which are demonstrably false). In just the first day of trial, Samsung has deliberately used the Courts order limiting the scope of what Apple may contend at trial to create the knowingly false impression that Apple does not practiceand has never practicedthe 414, 172, and 959 patents. That false impression, which Samsungs counsel repeated over and over again, has unfairly prejudiced Apple. Accordingly, Apple seeks the following relief to reduce the harm caused by Samsungs repeated prejudicial statements. 1. Apple should be permitted to present testimony and evidence demonstrating that it practices and has previously practiced the 414, 172, and 959 patents.
Apple should be permitted to present evidence that it does, in fact, practice the 414, 172, and 959 patents in order to rebut the false impression created by Samsungs repeated statements to the jury. Although the Court previously excluded such evidence, under the curative admissibility rule, previously excluded evidence may be permitted when the opposing party has opened the door by introducing evidence on the same issue or when it is needed to rebut a false impression that may have resulted from the opposing partys evidence. Henderson v. George Wash. Univ., 449 F.3d 127, 140-141 (D.C. Cir. 2006) (finding abuse of discretion where the trial court did not permit the introduction of previously excluded evidence when the opposing party opportunistically used [the prior exclusion] ruling not only to shield themselves from potentially damaging evidence, but also to use it as a sword to slice through the foundation of much of appellants case); see also United States v. Sine, 493 F.3d 1021, 1037 (9th Cir. 2007) ([T]he opening the door principle allows parties to introduce evidence on the same issue to rebut any false impression that might have resulted from the earlier admission.); United States v. Rosa, 11 F.3d 315, 335 (2d Cir. 1993) (otherwise inadmissible
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evidence can be admitted when it is needed to rebut a false impression that may have resulted from the opposing partys evidence). Apple accordingly requests that the Court permit Apple to introduce testimony and evidence demonstrating that Apple currently practicesand has in the past practicedthe 414, 172, and 959 patents.2 2. Apple requests a continuing objection to any false or misleading statements regarding Apples practice of the 414, 172, and 959 patents.
Apple also requests a continuing objection to any misleading statements regarding Apples practice of the 414, 172, and 959 patents. For the reasons discussed above, Apple objects to any argument, testimony, or evidence from Samsung suggesting that Apple does not actually practiceor has never practicedthe 414, 172, and 959 patents. Apple asks the Court to recognize a continuing objection from Apple to any such argument, testimony, or evidence presented by Samsung for the remainder of the trial. 3. Apple requests a curative instruction.
Finally, the Court should issue a curative instruction to the juryboth now and with the final jury instructions. Samsungs repeated statements suggesting that Apple does not practice the 414, 172, and 959 patents have no doubt already caused the jury to form the false impression that Apple does not practice and has never practiced its own patents. To minimize the unfair prejudice to Apple caused by Samsungs misleading statements, Apple requests that the Court provide the jury with the following curative instruction: Whether a party practices its own patents is not relevant to the issues of infringement and validity that you will be asked to decide in this case. I have previously instructed you that Apple does not contend that it practices the 414, 172, or 959 patents, and that Samsung does not contend that it practices the 449 patent. To the extent Samsung has suggested that Apple does not in fact practice the 414, 172, and 959 patents, those statements are not true. They are stricken from the record and you should disregard them. Samsung apparently agrees that the parties should be permitted to present evidence to rebut the other partys arguments that its products do not practice the asserted patents. In the Joint Amended Pretrial Statement, Samsung identified the following issue: Whether Apple should be allowed to argue that Samsungs products do not practice the 449 patent and, if so, whether Samsung should be allowed to present argument and evidence its products do practice the patent. (Dkt. 1455-1 at 12.)
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B.
Samsungs Reference To The Possibility Of A Permanent Injunction Was Extremely Prejudicial To Apple And Warrants A Curative Instruction.
There is no legitimate reason for Samsung to discuss the possibility of permanent injunctive relief during this trial on liability and damages. Nevertheless, Samsungs counsel made the following remark to the jury during opening statements: Yet Apple is here literally seeking billions of dollars for particular software configurations that are under the hood in the phone that most consumers are not even aware that its there, and they want to take that big number not only to the bank, not only to the bank, but to get an order saying that none of these phones can be sold in the United States anymore. (Olson Decl., Ex. 1, 4/1/14 Trial Tr. 358:19-24 (emphasis added).) The Supreme Court has recognized the well-established principle that a jury is to base its verdict on the evidence before it, without regard to the possible consequences of the verdict. Shannon v. United States, 512 U.S. 573, 576 (1994); see also id. at 579 (Information regarding the consequences of a verdict is therefore irrelevant to the jurys task.). That rule is a reflection of the basic division of labor in our legal system between judge and jury. Id. Equitable remedieslike injunctive reliefare the exclusive province of the court and should not influence the jurys decision on the merits of the case. Consistent with the Supreme Courts guidance, district courtsincluding in several patent caseshave repeatedly precluded the parties from mentioning to the jury the possibility of posttrial permanent injunctive relief. See, e.g., Broadcom Corp. v. Emulex Corp., No. 09-1058, Dkt. 770 at 2 (C.D. Cal. Aug. 10, 2011) (excluding any reference to the jury about the possibility of permanent injunctive relief in a patent case); Ciena Corp. v. Corvis Corp., 352 F. Supp. 2d 526, 529 (D. Del. 2005) (patent defendant precluded from refer[ring] to the injunctive remedy in the presence of the jury); Computer Assoc. Intl, Inc. v. American Fundware, Inc., 831 F. Supp. 1516, 1530 (D. Colo. 1993) (granting motion in limine to exclude reference to claim for injunctive relief in the jurys presence because [the Court] will determine, if necessary, whether to enjoin AFWs distribution of PC-Fund or Fundware based on the jurys conclusions); United States Football League v. National Football League, No. 84-7484, 1986 WL 7012, at *2-3 (S.D.N.Y. June 17, 1986) (barring defendants from referring to the possibility of injunctive relief
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in front of the jury, since such references would needlessly confuse the issues and unfairly prejudice plaintiffs). Samsungs reference in its opening statement to the fact that Apple may seek an order enjoining Samsungs sale of infringing products is contrary to those well-established principles. Permanent injunctive relief is an equitable remedy for the Courtand the Court aloneto decide following the jurys verdict. Samsung is asking the jurors to decide this case based on the consequences of their verdict, not the facts or the law. Samsungs statement risks that the jury will think that Apple is not entitled to damages or, even worse, that it should find no liability to avoid the possibility of an injunction. It is an improper invitation to jury nullification. Apple asks the Court to preclude Samsung from making any further statements regarding the possibility of injunctive relief for the remainder of the trial. Moreover, in an effort to counteract the prejudicial harm that has already occurred, Apple requests that the Court provide the jury with the following curative instruction both now and with the final jury instructions: Both Apple and Samsung have requested a permanent injunction barring sales of products found to infringe the others patents. Should you find that either party infringes the others patents, it is for the Court, and not you, to decide whether to enter an injunction that bars sales of those infringing products in the United States. An injunction does not automatically follow a finding of patent infringement. In fact, the Court previously denied Apples request for a permanent injunction in a prior case after a jury found that Samsung infringed six Apple patents and awarded damages. Your decision in this case, and any damages that you award, should not take into account whether the Court might enter an injunction that bars sales of any infringing product. C. Samsungs Reference To The Federal Circuits Preliminary Injunction Decision Was Highly Prejudicial To Apple And Warrants A Curative Instruction.
During opening statements, Samsungs counsel mischaracterized the Federal Circuits preliminary injunction decision in this case in a way that is highly prejudicial to Apple. In particular, Samsungs counsel stated: What happened is they sued on a different search patent. They sued on the 604 patent, not this one, and they went to court and they got an injunction against our doing this type of search. We didnt think it was right. We didnt agree, but we complied. And so we it wasnt hard to do. I mean, we turned that off.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Samsungs statement that [t]hey sued on the 604 patent, not this one is also false. The original complaint filed on February 8, 2012 asserted infringement of both the 604 patent and the 959 patent. (Dkt. 1.) That false statement prejudicially suggests that the 959 patent was added to the lawsuit as an afterthought by Apple only after the finding on the 604 patent. That is simply not the case.
3
We appealed it, and the court of appeals reversed and said we were right, Apple was wrong, were entitled to do it, and then dropped that patent. (Olson Decl., Ex. 1, 4/1/14 Trial Tr. 402:7-15 (emphasis added).) To begin with, Samsungs statement regarding the Federal Circuits preliminary injunction decision is incorrect. In that decision, the court addressed the issues of irreparable harm and claim construction with respect to the 604 patent and held that Apple did not satisfy the burden necessary for a preliminary injunction. Apple Inc. v. Samsung Elecs. Co., 695 F.3d 1370 (Fed. Cir. 2012). Contrary to Samsungs assertion, the Federal Circuit did not hold that Samsung was entitled to use Apples universal search feature.3 Samsungs statement regarding the preliminary injunction decision is also highly prejudicial to Apple. It unfairly suggests to the jury that an appeals court sided with Samsung and against Apple on an issue that is relevant in the current trial, when in fact the Federal Circuits decision has no relevance to the issues that are before the jury. Samsungs statement also improperly suggests that the appeals court somehow ruled that Samsung is entitled to use Apples patented universal search feature claimed in the 959 patent, even though the 959 patent was not at issue in the appeal. To minimize the prejudice caused by Samsungs improper statement regarding the Federal Circuits preliminary injunction ruling, Apple requests that the Court issue the following curative instruction both now and with the final jury instructions: Any prior rulings by the court of appeals are not relevant to the issues that you are being asked to decide in this case. To the extent Samsung has suggested that the court of appeals ruled that Samsung is entitled to use Apples patented universal search feature, those statements are not true. They are stricken from the record and you should disregard them. The court of appeals has not considered or ruled on whether Samsung infringes the 959 patent. That issue is for you to decide.
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III.
CONCLUSION Samsungs repetition of false and prejudicial statements to the jury during opening
statements has unfairly prejudiced Apple at the outset of trial. Apple respectfully requests that the Court: (1) permit Apple to present testimony and evidence demonstrating that Apple has practiced and continues to practice the 414, 172, and 959 patents in order to correct the false impressions created by Samsungs counsel; (2) recognize Apples continuing objection to any further misleading or false statements by Samsung; and (3) issue curative instructions, both now and again with the final jury instructions, to minimize the harm and prejudice caused by Samsungs improper statements to the jury.
Dated: April 3, 2014
MORRISON & FOERSTER LLP
By: /s/ Harold J. McElhinny Harold J. McElhinny Attorneys for Plaintiff APPLE INC.
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Case5:12-cv-00630-LHK Document1567-1 Filed04/03/14 Page1 of 3
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JOSH A. KREVITT (CA SBN 208552) jkrevitt@gibsondunn.com H. MARK LYON (CA SBN 162061) mlyon@gibsondunn.com GIBSON, DUNN & CRUTCHER LLP 1881 Page Mill Road Palo Alto, California 94304-1211 Telephone: (650) 849-5300 Facsimile: (650) 849-5333 HAROLD J. McELHINNY (CA SBN 66781) hmcelhinny@mofo.com JAMES P. BENNETT (CA SBN 65179) jbennett@mofo.com JACK W. LONDEN (CA SBN 85776) jlonden@mofo.com RACHEL KREVANS (CA SBN 116421) rkrevans@mofo.com RUTH N. BORENSTEIN (CA SBN 133797) rborenstein@mofo.com ERIK J. OLSON (CA SBN 175815) ejolson@mofo.com Morrison & Foerster LLP 425 Market Street San Francisco, California 94105-2482 Telephone: (415) 268-7000 Facsimile: (415) 268-7522
WILLIAM F. LEE (pro hac vice) william.lee@wilmerhale.com WILMER CUTLER PICKERING HALE AND DORR LLP 60 State Street Boston, Massachusetts 02109 Telephone: (617) 526-6000 Facsimile: (617) 526-5000 MARK D. SELWYN (CA SBN 244180) mark.selwyn@wilmerhale.com WILMER CUTLER PICKERING HALE AND DORR LLP 950 Page Mill Road Palo Alto, California 94304 Telephone: (650) 858-6000 Facsimile: (650) 858-6100
Attorneys for Plaintiff and Counterclaim-Defendant Apple Inc. UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN JOSE DIVISION APPLE INC., a California corporation, Plaintiff, vs. SAMSUNG ELECTRONICS CO., LTD., a Korean business entity; SAMSUNG ELECTRONICS AMERICA, INC., a New York corporation; SAMSUNG TELECOMMUNICATIONS AMERICA, LLC, a Delaware limited liability company, Defendants. Case No. 12-cv-00630-LHK DECLARATION OF ERIK J. OLSON IN SUPPORT OF APPLE INC.S MOTION FOR PERMISSION TO PRESENT EVIDENCE THAT APPLE PRACTICES THE 414, 172, AND 959 PATENTS AND CURATIVE INSTRUCTIONS
Declaration of Erik J. Olson Case No. 12-cv-00630-LHK (PSG)
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I, Erik J. Olson, hereby declare as follows: 1. I am a partner with the law firm of Morrison & Foerster LLP, counsel for Apple
Inc. (Apple). I am licensed to practice law in the State of California. I have personal knowledge of the matters stated herein and understand them to be true. I submit this declaration in support of Apple Inc.s Motion for Permission to Present Evidence that Apple Practices the 414, 172, and 959 Patents and Curative Instructions. 2. Attached as Exhibit 1 hereto is a true and correct copy of excerpts of the April 1,
2014 trial transcript in the above-captioned matter. 3. Attached as Exhibit 2 hereto is a true and correct copy of excerpts of the August
12, 2013 Expert Report of Professor Andrew Cockburn in the above-captioned matter. 4. Attached as Exhibit 3 hereto is a true and correct copy of excerpts of the August
12, 2013 Expert Report of Dr. Alex C. Snoeren Concerning U.S. Patent Nos. 6,847,959 and 7,761,414 in the above-captioned matter.
I declare under penalty of perjury that the foregoing is true and correct to the best of my knowledge. Executed this 3rd day of April, 2014, in San Jose, California. Dated: April 3, 2014 /s/ Erik J. Olson Erik J. Olson
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Dated: April 3, 2014
ATTESTATION OF E-FILED SIGNATURE I, Harold J. McElhinny, am the ECF User whose ID and password are being used to file this Declaration. In compliance with Civil L.R. 5-1(i)(3), I hereby attest that Erik J. Olson has concurred in this filing. /s/ Harold J. McElhinny Harold J. McElhinny
Case5:12-cv-00630-LHK Document1567-2 Filed04/03/14 Page2 of 69 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 PROCEEDINGS RECORDED BY MECHANICAL STENOGRAPHY TRANSCRIPT PRODUCED WITH COMPUTER OFFICIAL COURT REPORTERS: LEE-ANNE SHORTRIDGE, CSR, CRR CERTIFICATE NUMBER 9595 IRENE RODRIGUEZ, CSR, CRR CERTIFICATE NUMBER 8074 APPEARANCES ON NEXT PAGE TRANSCRIPT OF PROCEEDINGS BEFORE THE HONORABLE LUCY H. KOH UNITED STATES DISTRICT JUDGE VS. SAMSUNG ELECTRONICS CO., LTD., A KOREAN BUSINESS ENTITY; SAMSUNG ELECTRONICS AMERICA, INC., A NEW YORK CORPORATION; SAMSUNG TELECOMMUNICATIONS AMERICA, LLC, A DELAWARE LIMITED LIABILITY COMPANY, DEFENDANTS. APPLE INC., A CALIFORNIA CORPORATION, PLAINTIFF, ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) C-12-00630 LHK SAN JOSE, CALIFORNIA APRIL 1, 2014 VOLUME 2 PAGES 268-497 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN JOSE DIVISION
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UNITED STATES COURT REPORTERS
Case5:12-cv-00630-LHK Document1567-2 Filed04/03/14 Page3 of 69 DEFENDANTS' OPENING STATEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 WOW. NOON. FIREHOSE. BUT IF WE DO OUR JOB, WE WILL MAKE THAT TECHNOLOGY AND THAT EVIDENCE UNDERSTANDABLE TO YOU.
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IF WE DO OUR JOB, YOU WILL KNOW WHO THE TRUE INVENTORS AND INNOVATORS ARE. IF WE DO OUR JOB, YOU WILL KNOW WHO THE COPIER IS. IF WE DO OUR JOB, YOU WILL KNOW WHO THE INFRINGER IS. AND, LADIES AND GENTLEMEN, IF WE DO OUR JOB AND WE FOCUS YOU ON THE RISK THAT APPLE TOOK TO REVOLUTIONIZE THE WORLD, WE WILL BRING YOU THE EVIDENCE TO DETERMINE WHAT PATENTS AND INNOVATION ARE REALLY WORTH. THANK YOU. THE COURT: OKAY? OKAY. TIME IS NOW 11:46. WE'LL STOP AT
THANK YOU. OKAY. 11:47. OPENING. GO AHEAD, PLEASE.
MR. QUINN: THE COURT: MR. QUINN:
THANK YOU, YOUR HONOR.
(MR. QUINN GAVE HIS OPENING STATEMENT ON BEHALF OF DEFENDANTS.) MR. QUINN: GOOD MORNING, FOLKS. IT'S STILL MORNING.
I CAN WONDER WHY SOME OF YOU MIGHT BE LOOKING A
LITTLE SIDEWAYS AT ME RIGHT NOW AFTER HEARING THAT PRESENTATION OF APPLE'S CASE FROM TWO VERY SKILLED LAWYERS. BUT DURING JURY SELECTION, YOU PROMISED US THAT YOU'D KEEP AN OPEN MIND UNTIL YOU HEARD ALL THE EVIDENCE, AND I'M SURE
Case5:12-cv-00630-LHK Document1567-2 Filed04/03/14 Page4 of 69 DEFENDANTS' OPENING STATEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
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THAT YOU APPRECIATE THAT YOU'VE ONLY HEARD A SMALL PART OF THE STORY AT THIS POINT. SO I'D LIKE TO TALK TO YOU ABOUT SOME IMPORTANT FACTS THAT NEITHER MR. MCELHINNY NOR MR. LEE SPOKE ABOUT IN THEIR STATEMENTS TO YOU. BEFORE I SIT DOWN, I'M GOING TO PROVE TO YOU, DURING THE COURSE OF THIS TRIAL, WE WILL PROVE TO YOU THAT, YES, APPLE IS A GREAT COMPANY, BUT THEY DON'T OWN EVERYTHING. THE ONLY WAY TO SEARCH ON PHONES. TO SYNC. THEY DON'T OWN
THEY DON'T OWN THE ONLY WAY
THEY DON'T OWN THE ONLY WAY TO HAVE AN UNLOCK SCREEN
ON A PHONE. WE WILL PROVE TO YOU THAT THEY VASTLY OVERSTATED THE SCOPES OF THOSE PATENT CLAIMS AND THAT THEY'RE COUNTING ON YOU TO BE CONFUSED AND NOT UNDERSTAND THAT, YES, INDEED, THESE ARE VERY, VERY NARROW SOFTWARE CLAIMS THAT COVER ONE ABILITY, ONE WAY TO DO SOMETHING THAT A LOT OF DIFFERENT COMPANIES DO DIFFERENT WAYS. AND WE WILL PROVE TO YOU -- RIGHT NOW I'M JUST GOING TO BE BLUNT RIGHT NOW. THEIR REQUEST, THEY FINALLY SAID THE WORD, I WAS WONDERING WHETHER THEY
THEY FINALLY -- I WAS WAITING.
WOULD SAY IT TO YOU, THE "B" WORD, BILLIONS. AND THEY PUT THAT NUMBER OUT THERE TO PUT IT IN YOUR HEADS SO THAT THAT'S THE DAMAGES HORIZON THAT YOU'RE THINKING OF. FOLKS, I'LL PROVE TO YOU IN MY OPENING STATEMENT THAT THAT IS A GROSS, GROSS EXAGGERATION AND AN INSULT TO YOUR
Case5:12-cv-00630-LHK Document1567-2 Filed04/03/14 Page5 of 69 DEFENDANTS' OPENING STATEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 INTELLIGENCE.
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AS APPLE TOLD YOU, THE IPHONE WAS INNOVATIVE BACK IN 2007. IT WAS THE INVENTION OF THE YEAR ALL THOSE YEARS AGO BACK IN 2007. BUT THIS CASE IS REALLY NOT ABOUT THAT IPHONE OR ANY IPHONES THAT COME AFTER IT. APPLE ADMITS, THE JUDGE HAS
INSTRUCTED YOU, I'M SURE IT WENT PAST YOU BECAUSE IT WAS SO QUICK, THE PRELIMINARY INSTRUCTIONS AND MR. MCELHINNY ACKNOWLEDGED IT, APPLE ADMITS THAT THREE OF THE FIVE PATENT CLAIMS THAT IT IS SUING ON WERE NOT IN THAT IPHONE AND HAVE NEVER BEEN IN ANY IPHONE SINCE. VALUABLE ENOUGH TO EVEN USE. THERE'S A FOURTH ONE, SLIDE TO UNLOCK THAT IN THEIR LATEST PRODUCTS OPERATING SYSTEM, IOS 7, THEY'VE ABANDONED ALSO. WE'LL PROVE THAT TO YOU AS WELL. THIS CASE REALLY IS NOT -- ALSO IT'S NOT ABOUT SAMSUNG COPYING APPLE. THE FEATURES THAT APPLE ACCUSES IN THIS CASE ARE ALL SOFTWARE FEATURES, SOFTWARE THAT RUNS ON THE SMARTPHONES AND TABLETS OF MANY, MANY COMPANIES IN THE WORLD. APPLE AGREES, APPLE AGREES THAT THAT SOFTWARE AND THOSE FEATURES WERE PUT ON THAT SOFTWARE -- OR THOSE FEATURES WERE PUT IN THAT SOFTWARE THAT'S USED BY MANY DIFFERENT COMPANIES BY ENGINEERS, SOFTWARE ENGINEERS AT ANOTHER COMPANY, NOT BY SAMSUNG. AND I'M NOT POINTING THE FINGER AS THEY'VE SAID. APPLE DOESN'T CONSIDER IT
Case5:12-cv-00630-LHK Document1567-2 Filed04/03/14 Page6 of 69 DEFENDANTS' OPENING STATEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 WE'LL PROVE TO YOU THAT, IN FACT, THE ENGINEERS AT THAT OTHER COMPANY DID INDEPENDENTLY DEVELOP THOSE SOFTWARE FEATURES, AND THEY DID NOT COPY APPLE. LET ME SHOW YOU WHAT I MEAN. THAT'S ACCUSED IN THIS CASE. THIS IS ONE OF THE PHONES IT'S
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IT'S A SAMSUNG PHONE.
CALLED THE SAMSUNG GALAXY NEXUS. EXHIBIT 29K FOR THE RECORD.
YOU CAN SEE THAT IT'S JOINT
THIS CAME OUT IN DECEMBER 2011, A
LITTLE BIT MORE THAN TWO YEARS AGO. SAMSUNG ENGINEERED ALL THE HARDWARE ON THIS PHONE, EVERY BIT OF IT, AND IT OFFERS, THIS PHONE OFFERS CONSUMER, SMARTPHONE USERS, MANY THINGS THAT THE IPHONE DOESN'T JUST IN TERMS NOW OF THE HARDWARE. IT HAS A -- YOU CAN'T SEE IT VERY WELL, BUT IT HAS KIND OF A CURVED SHAPE TO IT. IT FITS VERY WELL IN THE HAND.
IT HAS A 4.65 INCH SCREEN, WHICH IS LARGE -- A THIRD LARGER THAN, YOU KNOW, THE SAMSUNG -- THE IPHONE SCREEN WAS AT THE TIME THIS CAME OUT. IPHONE TO THIS DAY. IT HAS A REALLY, A HIGH DEFINITION, VERY, VERY CLEAR SCREEN, A SUPER AMOLED SCREEN WHICH IS CLEAR. THINGS BETTER IN BRIGHT LIGHT. IT'S GOT A BATTERY IN IT THAT'S SWAPPABLE. EXTRA BATTERY AND SWAP IT OUT WHENEVER YOU WANT. YOU CAN BUY AN YOU DON'T YOU CAN SEE IT'S LARGER THAN ANY SCREEN ON ANY
HAVE TO TAKE YOUR PHONE BACK TO THE STORE TO REPLACE THE BATTERY.
Case5:12-cv-00630-LHK Document1567-2 Filed04/03/14 Page7 of 69 DEFENDANTS' OPENING STATEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 COOL.
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IT HAS SOMETHING CALLED NEAR FIELD COMMUNICATIONS, REALLY WITH A COMPATIBLE PHONE, YOU CAN CLICK THEM TOGETHER AND
TRANSFER FILES, INFORMATION, DATA, PHOTO FILES. IT USES THE VERY HIGH SPEED FOR 4G LTE NETWORK, WHICH WASN'T INTRODUCED ON THE IPHONE UNTIL MUCH TIME LATER. CAME OUT WITH A FASTER NETWORK SPEED. THE TRUTH OF THE MATTER IS, PEOPLE AT SAMSUNG ARE VERY PROUD OF THE HARDWARE THAT THEY DEVELOPED. SMARTPHONES AND HARDWARE IN THE WORLD. AND TECHNOLOGY REVIEWERS NOTICED WHAT SAMSUNG HAS ACHIEVED WITH ITS PHONES. HERE'S ONE UP HERE FROM "LAPTOP MAGAZINE." WHAT IT SAYS. THE BEST HD SCREEN ON THE MARKET. THE YOU CAN SEE THEY BUILT THE BEST THIS
"WIRED MAGAZINE," THE BEST ANDROID PHONE TO DATE. TRUEST REPRESENTATION OF ANDROID.
YOU'RE GOING TO LEARN IN THIS CASE THAT WHAT -- WHY DO PEOPLE BUY PHONES? THEY WANT YOU TO BELIEVE WHAT THEY ARE
TRYING TO SELL YOU IN THIS CASE IS THAT PEOPLE BUY PHONES BECAUSE OF FIVE, YES, SMALL SOFTWARE FEATURES, PARTICULAR WAYS OF ACCOMPLISHING THINGS LIKE SYNCING AND SEARCHING. THAT'S WHAT THEY WANT YOU TO BELIEVE. AND THAT BECAUSE OF THOSE FIVE SOFTWARE FEATURES, PEOPLE BOUGHT A LOT MORE SAMSUNG PHONES, AND INSTEAD, IF SAMSUNG DIDN'T HAVE THEM, PEOPLE WOULD HAVE BOUGHT A LOT MORE IPHONES. BUT YOU'LL LEARN THAT IT IS THESE FEATURES THAT I SHOWED
Case5:12-cv-00630-LHK Document1567-2 Filed04/03/14 Page8 of 69 DEFENDANTS' OPENING STATEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 YOU ON THIS PHONE, HARDWARE FEATURES, AND OTHERS LIKE IT THAT CAUSED CONSUMERS TO BUY THIS PRODUCT, THINGS LIKE A HIGH QUALITY SCREEN, A HIGH QUALITY CAMERA, CONNECTIVITY, BATTERY LIFE, WEIGHT, SHAPE, THINGS LIKE THAT. THESE ARE THE REASONS, NOT THESE PARTICULAR VARIANTS IN BACKGROUND OF SOFTWARE FEATURES THAT YOU CAN'T EVEN SEE, THE THINGS THAT THEY ARE SUING SAMSUNG OVER. NOW, ALL OF THIS HARDWARE IN THE NEXUS WAS CREATED BY SAMSUNG. EVERY BIT OF IT.
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AND THEY'RE SUING OVER THIS. IT DOES NOT ACCUSE -- APPLE DOES NOT ACCUSE ANY OF THAT HARDWARE OF INFRINGING ANY OF ITS RIGHTS, AND MR. MCELHINNY SHOWED YOU A SCREEN OF A NUMBER OF SAMSUNG PRODUCTS. THOSE ARE ACCUSED. THAT YOU SEE THERE. NONE OF THAT HARDWARE. NONE OF
NONE OF THE SHAPES
NONE OF THOSE ARE ACCUSED IN THIS CASE OF
INFRINGING ANY OF THE RIGHTS. YOU MIGHT BE SURPRISED TO LEARN ONE UNDISPUTED FACT. A SINGLE SOFTWARE FEATURE IN THIS NEXUS PHONE, WHICH I'M HOLDING IN MY HAND, WAS CONCEIVED BY SAMSUNG, WAS DEVELOPED BY SAMSUNG, OR WAS CODED BY SAMSUNG. NOT ONE OF THE ACCUSED NOT
FEATURES ON THIS PHONE WHICH BRINGS US ALL HERE TODAY WAS DESIGNED, MUCH LESS COPIED, BY ANYONE AT SAMSUNG. THE ACCUSED FEATURES ON THIS PHONE WERE DEVELOPED INDEPENDENTLY BY SOME OF THE MOST SOPHISTICATED AND CREATIVE MINDS IN THE SMARTPHONE INDUSTRY, THE SOFTWARE ENGINEERS AT
Case5:12-cv-00630-LHK Document1567-2 Filed04/03/14 Page9 of 69 DEFENDANTS' OPENING STATEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 GOOGLE UP THE ROAD IN MOUNTAIN VIEW, WHO CREATED THE ANDROID OPERATING SYSTEM USED BY ALL SMARTPHONE ENGINEERS, MEMBERS OF
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THE JURY, EXCEPT FOR APPLE, USED BY ALL HARDWARE COMPANIES, ALL HANDSET MANUFACTURERS, EXCEPT FOR APPLE. IN THE WAY THAT MOST
P.C. MAKERS USE THE MICROSOFT WINDOWS OPERATING SYSTEM, ALMOST ALL, EVERYBODY BUT APPLE, IN THE SMARTPHONE INDUSTRY USES ANDROID SOFTWARE, NOT JUST SAMSUNG. AND IN THIS TRIAL, YOU WILL HEAR FROM THOSE GOOGLE ENGINEERS. AND MR. MCELHINNY SAID WE'RE GOING TO POINT THE WE'RE NOT GOING TO POINT THE FINGER AT THOSE GOOGLE ENGINEERS, WHO YOU
FINGER AT GOOGLE. GOOGLE.
GOOGLE DIDN'T COPY.
WILL HEAR FROM IN THIS TRIAL, WILL EXPLAIN TO YOU HOW THEY INDEPENDENTLY DEVELOPED THIS SOFTWARE WITHOUT COPYING. THIS CASE IS REALLY NOT ABOUT THESE FIVE MINOR SOFTWARE FEATURES AND PATENT CLAIMS THAT APPLE IS ASSERTING. IT'S NOT
ABOUT THEM CAUSING PEOPLE NOT TO BUY IPHONES AND INSTEAD TO BUY SAMSUNG PHONES. IPHONE DOESN'T EVEN USE FOUR OUT OF THESE FIVE FEATURES. SMARTPHONES INVOLVE HUNDREDS OF DIFFERENT FEATURES, SOME OF THEM BIG, SOME OF THEM SMALL. YOUR COMMON SENSE -- AND SEVERAL EXPERTS WHO WILL COME IN AND TESTIFY AND WILL TELL YOU THAT CONSUMERS DON'T CHOOSE ONE PHONE OVER ANOTHER BECAUSE OF THE PARTICULAR WAY WORD CORRECTION SUGGESTIONS ARE PRESENTED ON THE SCREEN, WHICH IS WHAT THEIR PATENT COVERS. THERE'S A LOT OF DIFFERENT WAYS TO
Case5:12-cv-00630-LHK Document1567-2 Filed04/03/14 Page10 of 69 DEFENDANTS' OPENING STATEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 DO THAT.
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THEY DON'T BUY A PHONE BECAUSE OF THE PARTICULAR WAY THAT THE SOFTWARE SYNCS IN BACKGROUND. DO THAT. OR THE PARTICULAR DESIGN OF THE UNLOCK SCREEN. WHY CONSUMERS BUY PRODUCTS. APPLE'S CLAIMS ARE ALL THAT NARROW. FOLKS. APPLE DOES THIS, TOO, THAT'S NOT THERE'S MORE THAN ONE WAY TO
WE'LL SHOW YOU, WE WILL SHOW YOU APPLE'S REAL WORLD THEY KNOW WHY PEOPLE BUY PHONES. THEY SURVEY THEM. THEY
RESEARCH THAT THEY DO.
GO OUT AND THEY DO RESEARCH.
AND THEIR OWN
REAL WORLD RESEARCH THAT THEY DO FOR BUSINESS EVERY SINGLE, YOU KNOW, EVERY DAY, OR HOWEVER OFTEN THEY DO IT, NOT FOR COURT CASES, NOT FOR HIRED EXPERTS, NOT FOR LAWYERS, BUT WHAT THEY DO IN THEIR BUSINESS SHOWS THAT PEOPLE DON'T BUY -- THEY DON'T EVEN ASK SMARTPHONE PURCHASERS, IPHONE PURCHASERS, DID YOU BUY IT FOR THIS FEATURE OR DID YOU BUY IT FOR THAT FEATURE? KNOW THEY DON'T. THEY
THEY KNOW THAT'S NOT WHAT MATTERS, AND WE'LL
SHOW THAT TO YOU FROM APPLE'S OWN SURVEYS. YET APPLE IS HERE LITERALLY SEEKING BILLIONS OF DOLLARS FOR PARTICULAR SOFTWARE CONFIGURATIONS THAT ARE UNDER THE HOOD IN THE PHONE THAT MOST CONSUMERS ARE NOT EVEN AWARE THAT IT'S THERE, AND THEY WANT TO TAKE THAT BIG NUMBER NOT ONLY TO THE BANK, NOT ONLY TO THE BANK, BUT TO GET AN ORDER SAYING THAT NONE OF THESE PHONES CAN BE SOLD IN THE UNITED STATES ANYMORE. IT'S AN ATTACK ON ANDROID. IT'S AN ATTACK, IT'S AN ATTACK --
Case5:12-cv-00630-LHK Document1567-2 Filed04/03/14 Page11 of 69 DEFENDANTS' OPENING STATEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 ARGUMENT. THE COURT: MR. QUINN: OVERRULED. OVERRULED. IT'S AN ATTACK AN MR. MCELHINNY: OBJECTION, YOUR HONOR. THIS IS
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IT'S THE TRUTH.
ANDROID, AND THAT'S WHAT THIS CASE IS. EVEN THOUGH MOST OF THESE PATENT CLAIMS ARE NOT VALUABLE ENOUGH FOR APPLE TO USE ITSELF, IT CLAIMS THAT ANDROID USES THEM AND THAT THIS CAUSES CUSTOMERS TO BUY SAMSUNG PHONES. AND
IF SAMSUNG DIDN'T HAVE THESE FEATURES, THEY'D SELL MORE APPLE PHONES EVEN THOUGH A CUSTOMER LOOKING FOR FOUR OF FIVE OF THESE FEATURES COULDN'T FIND THEM IN AN APPLE PHONE, THEY DON'T USE THEM. AS TO THREE OF THEM, THAT'S UNDISPUTED. SLIDE TO UNLOCK, WE'LL PROVE THAT TO YOU. THE ONLY WAY THAT APPLE CAN MAKE THIS CLAIM FOR BILLIONS OF DOLLARS IS -- WHICH CONFLICTS WITH ALL THE REAL WORLD EVIDENCE YOU'RE GOING TO SEE -- IS TO COME UP WITH A STUDY WHICH THEY DID SPECIALLY FOR YOU BY THE MAN WHOSE NAME WAS INTRODUCED TO YOU, DR. JOHN HAUSER. AND I'M GOING TO SPEND
SOME TIME TALKING WITH YOU THIS AFTERNOON ABOUT DR. HAUSER AND THE SURVEY, AND I WILL SHOW YOU THAT STUDY. WHAT THIS CASE IS REALLY ABOUT IS APPLE TRYING TO LIMIT CONSUMER CHOICE AND TO GAIN AN UNFAIR ADVANTAGE OVER ITS ONE MAJOR COMPETITOR, GOOGLE'S ANDROID, A COMPETITOR THAT HAS PASSED APPLE IN SOME RESPECTS.
Case5:12-cv-00630-LHK Document1567-2 Filed04/03/14 Page12 of 69 DEFENDANTS' OPENING STATEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 LUNCH. DON'T GET ME WRONG, APPLE IS AN AMAZINGLY INNOVATIVE COMPANY. BUT IN SOME RESPECTS YOU'LL SEE GOOGLE'S ANDROID HAS PASSED APPLE.
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AND IN THIS CASE, APPLE HAS SUED -- THIS IS WHAT'S GOING ON HERE -- THE BIGGEST USER OF GOOGLE'S ANDROID SOFTWARE AND THE MOST SUCCESSFUL MANUFACTURER OF ANDROID PHONES, SAMSUNG, TO TRY TO PREVENT IT FROM SELLING PHONES WITH THAT LEADING ANDROID SOFTWARE AND TO GET THE PROFITS THAT SAMSUNG HAS EARNED SELLING ANDROID PHONES. IT IS TRYING TO GAIN FROM YOU IN THIS COURTROOM WHAT IT HAS LOST IN THE MARKETPLACE. YOUR HONOR, WOULD THIS BE A GOOD PLACE TO BREAK? THE COURT: IT'S 12:01. LET'S GO AHEAD AND BREAK FOR
WE'LL SEE EVERYONE BACK AT 1:00 O'CLOCK.
PLEASE DON'T RESEARCH OR DISCUSS THE CASE. THANK YOU FOR YOUR PATIENCE AND YOUR SERVICE. (JURY OUT AT 12:02 P.M.) THE COURT: THANK YOU. (THE LUNCH RECESS WAS TAKEN FROM 12:02 P.M. TO 12:59 P.M.) THE JURORS HAVE LEFT THE COURTROOM.
Case5:12-cv-00630-LHK Document1567-2 Filed04/03/14 Page13 of 69 DEFENDANTS' OPENING STATEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 AFTERNOON SESSION (JURY OUT AT 12:59 P.M.) THE COURT: WELCOME. TAKE A SEAT, PLEASE. IS THAT RIGHT? I
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UNDERSTAND THERE'S A SEALING ISSUE. AN ISSUE? MR. MCELHINNY: THE COURT: MR. SELWYN:
IS THERE
THERE IS, YOUR HONOR.
OH, OKAY. GOOD AFTERNOON, YOUR HONOR. WITH THE
FIRST WITNESS THIS AFTERNOON -THE COURT: MR. SELWYN: YES. -- MR. SCHILLER, SAMSUNG, WE UNDERSTAND,
EXPECTS TO USE CERTAIN CONFIDENTIAL BUSINESS INFORMATION OF APPLE THAT DISCUSSES FUTURE BUSINESS STRATEGY, CAPACITY INFORMATION, FINANCIAL INFORMATION. OUR SUGGESTION TO SAMSUNG WAS THAT WE HANDLE THOSE DOCUMENTS MUCH THE WAY WE'VE HANDLED SOURCE CODE IN THE PAST, WHICH IS SHOW IT TO THE JURY AND COUNSEL, NOT PUT IT UP ON THE SCREEN, AND HAVE COUNSEL REFER TO LINES OF THE DOCUMENT RATHER THAN READING ALOUD THE DOCUMENTS TO THE PUBLIC. THAT WOULD BE ACCEPTABLE TO APPLE, THAT'S WHAT WE'VE DONE IN THE PAST, AND THEN APPLE WOULD MOVE TO SEAL THE DOCUMENT. WE UNDERSTAND THAT THERE ARE PORTIONS OF CERTAIN DOCUMENTS THAT SAMSUNG WOULD LIKE TO READ ALOUD THAT RELATE TO CONFIDENTIAL BUSINESS INFORMATION OF APPLE'S CONCERNING FUTURE STRATEGY.
Case5:12-cv-00630-LHK Document1567-2 Filed04/03/14 Page14 of 69 DEFENDANTS' OPENING STATEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 IF SAMSUNG INTENDS TO DO THAT, THAT'S AN ISSUE FOR US. THESE ARE DOCUMENTS THAT SAMSUNG HAS NEVER SEEN BEFORE. SAMSUNG IS NOT ENTITLED TO SEE, VERY SENSITIVE INFORMATION ABOUT APPLE'S ROADMAP AND FUTURE PRODUCT STRATEGY. THE COURT: ALL RIGHT.
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SO YOUR REQUEST IS THAT WE,
WHAT, SEAL THE COURTROOM?
I WOULD LIKE TO USE THE PROCEDURE
WE'VE USED IN THE PAST AND I DON'T SEE WHY A PARTICULAR PIECE OF INFORMATION HAS GOT TO BE STATED OUT LOUD. MOVE ALL THESE PEOPLE OUT TO THE HALLWAY. MR. SELWYN: THAT IS OUR STRONG PREFERENCE AS WELL, I DON'T WANT TO
TO DO IT AS WE'VE DONE IN THE PAST, REFERRING THE WITNESS TO PARTICULAR PORTIONS OF THE DOCUMENT, ASKING THE QUESTIONS ABOUT THOSE PORTIONS, BUT NOT READING IT ALOUD AND NOT PUTTING IT UP ON THE SCREEN. MR. PRICE: THE REASON, YOUR HONOR, THE REASON THEY
WANT TO DO THAT IS SO THAT WE CAN'T DO AN EFFECTIVE CROSS-EXAMINATION. THESE DOCUMENTS DON'T HAVE ANYTHING TO DO -THE COURT: MR. PRICE: THE COURT: MR. PRICE: YOU EXHIBIT 411. JUST LET ME SEE THE DOCUMENTS. SURE. PLEASE. I'LL GIVE YOU AN EXAMPLE. I'LL SHOW TO
IT'S AN EXAMPLE.
THEY'RE NOT GOING TO SAY OR
SHOW ANY OF THE NUMBERS IN THE DOCUMENT. MR. SELWYN: YOUR HONOR, 411 IS AN IPHONE REVIEW FROM
Case5:12-cv-00630-LHK Document1567-2 Filed04/03/14 Page15 of 69 DEFENDANTS' OPENING STATEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 DISPUTE? MR. PRICE: PAGES I WOULD USE. THE COURT: MR. PRICE: SAME INFORMATION. THE COURT: WANT TO USE. NO, NO. OKAY. IT'S IN A DOCUMENT LIKE THIS, THE VERY THE SPRING OF LAST YEAR. IF YOU LOOK AT, BEGINNING AT PAGES
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'678 AND -9, THERE'S DISCUSSION ABOUT CARRIER SUBSIDIES, SPECIFIC CARRIER SUBSIDIES. WE GET INTO FROM 13, 14, AND THEN MOST OF THE REMAINDER OF THE DOCUMENT, 21, 22, 18 AND 19, 26 THROUGH 32, 36 THROUGH 39 AS FINANCIAL FORECASTS, DISCUSSIONS ABOUT SELLING -THE COURT: HAVE A JURY WAITING. SO JUST GIVE ME THE PAGE NUMBERS THAT ARE IN DISPUTE, AND I'M GOING TO GIVE YOU A RULING, NOT RIGHT NOW, AND WE'RE GOING TO GO AHEAD WITH THIS OPENING STATEMENT. OKAY. SO WHAT ARE THE NUMBERS IN DISPUTE? I'LL TAKE A OKAY. I'M SORRY TO INTERRUPT YOU. I
LOOK, AND I'LL LET YOU KNOW WHAT MY RULING IS BEFORE MR. SCHILLER TESTIFIES. MR. SELWYN: THE COURT: THANK YOU. WHAT ARE THE PAGE NUMBERS THAT ARE IN
I CAN MAKE IT EASIER BY TELLING YOU THE
I WANT TO SEE THE DOCUMENT YOU I
I WANT TO SEE THE PAGES THAT ARE IN DISPUTE.
DON'T WANT IT'S LIKE THIS KIND OF REPRESENTATION.
Case5:12-cv-00630-LHK Document1567-2 Filed04/03/14 Page16 of 69 DEFENDANTS' OPENING STATEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 DISPUTE? THING. MR. PRICE: THE COURT: MR. PRICE: THE COURT: YES. OKAY. MR. PRICE: THE COURT: MR. PRICE: THE COURT: 413, 413 THEN, YOUR HONOR. 413. YOU MEAN DX 413?
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YES, YOUR HONOR, DX 413. AND ANY PARTICULAR PAGES, OR THE WHOLE
IN PARTICULAR, YOUR HONOR, PAGE 8. ALL RIGHT. WHAT ELSE?
PAGE 14. ALL RIGHT. PAGE 8, I'M NOT GOING TO
ALLOW YOU TO DO THIS OPEN. MR. PRICE: THE COURT: NO.
THESE ARE PROJECTIONS FOR FUTURE. THESE ARE CURRENT, YOUR HONOR. WHEN DOES
WHEN IS YOUR FISCAL YEAR?
APPLE'S FISCAL YEAR BEGIN AND END? MR. SELWYN: THE COURT: MR. SELWYN: THE COURT: OCTOBER IS THE END OF THE FISCAL YEAR. SO IT RUNS FROM NOVEMBER TO OCTOBER? CORRECT. SO ARE YOU IN FISCAL YEAR 2014 OR 2013?
OR WHAT'S YOUR CURRENT FISCAL YEAR RIGHT NOW? MR. SELWYN: THE COURT: MR. PRICE: THE COURT: MR. PRICE: THE COURT: 2014. OKAY. SO YOU WANT PAGE 8. WHAT ELSE?
PAGE 14. OKAY. AND PAGE 46. OKAY. IS THAT IT? IS THERE ANY OTHER
Case5:12-cv-00630-LHK Document1567-2 Filed04/03/14 Page17 of 69 DEFENDANTS' OPENING STATEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. PRICE: MR. SELWYN: ONE MOMENT, YOUR HONOR.
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YOUR HONOR, THE PARTIES JUST -- WE MET
AND CONFERRED FOR A LENGTHY AMOUNT OF TIME ABOUT AN ENTIRELY DIFFERENT DOCUMENT, WHICH IS THE ONE THAT WE HAD BEEN TOLD THAT THEY WERE GOING TO USE. SO THESE THREE PAGES ARE NEW TO US AND HAVEN'T BEEN DISCUSSED SPECIFICALLY BEFORE. MR. PRICE: THE COURT: THEY'RE IN THE OTHER DOCUMENT AS WELL. OKAY. WHAT HAPPENED? I RULED ON THE
OBJECTIONS THAT YOU ALL FILED YESTERDAY DURING LUNCH AND LAST NIGHT. SO WHY AM I GETTING HIT WITH THIS WHEN I HAVE A JURY
WAITING FOR AN OPENING STATEMENT? DID YOU CHANGE YOUR MIND -MR. PRICE: THE COURT: MR. PRICE: DISCUSSED. MR. SELWYN: YOUR HONOR, WE'VE BEEN DISCUSSING THIS NO. -- AS TO WHAT EXHIBIT YOU WANTED TO USE? OH, NO, YOUR HONOR. THESE WERE
FOR THREE DAYS AND TRYING TO GET SPECIFICITY ABOUT WHAT WILL BE OFFERED. THIS IS THE FIRST TIME WE'VE HEARD ABOUT THESE THREE PAGES IN PARTICULAR, AND WE'VE BEEN ASKING TO UNDERSTAND WHAT PAGES WOULD BE USED. WE WERE DISCUSSING BEFORE EXHIBIT 411. RESOLVE THESE THREE PARTICULAR PAGES. WE MAY BE ABLE TO
THIS IS THE FIRST TIME
Case5:12-cv-00630-LHK Document1567-2 Filed04/03/14 Page18 of 69 DEFENDANTS' OPENING STATEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 SEAT. MR. QUINN, IF YOU WOULD PLEASE CONTINUE. MR. QUINN: THE COURT: MR. QUINN: THANK YOU, YOUR HONOR. THE TIME IS NOW 1:07. THANK YOU, YOUR HONOR. WE'RE HEARING ABOUT THESE. THE COURT: ALL RIGHT. WELL, WE'RE GOING FORWARD
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WITH AN OPENING STATEMENT. LONGER.
I'M NOT HAVING THIS JURY WAIT ANY
SO WHY DON'T YOU MEET AND CONFER, AND LET ME KNOW IF YOU STILL HAVE A PROBLEM. THESE THREE DOCUMENTS. MR. SELWYN: THE COURT: MR. PRICE: THE COURT: OTHERWISE I'LL GIVE YOU MY RULING ON OKAY. THANK YOU. BUT I'M GOING TO KEEP THIS BINDER. THANK YOU, YOUR HONOR. AND IN THE FUTURE, I WANT YOUR SEALING
OBJECTIONS IN THE OBJECTIONS THAT YOU'RE FILING, OKAY? SO WHEN YOU IDENTIFY AN EXHIBIT THAT YOU INTEND TO USE, YOU NEED TO IDENTIFY THE PAGE NUMBERS, OKAY? MR. PRICE: THE COURT: I HEAR YOU, YOUR HONOR. ALL RIGHT. THANK YOU.
(JURY IN AT 1:06 P.M.) THE COURT: ALL RIGHT. WELCOME BACK. PLEASE TAKE A
GO AHEAD, PLEASE.
BEFORE LUNCH I SHOWED YOU THIS NEXUS PHONE, WHICH IS ONE OF THE ACCUSED PHONES HERE. AS I TOLD YOU, ALL THE HARDWARE IN
Case5:12-cv-00630-LHK Document1567-2 Filed04/03/14 Page19 of 69 DEFENDANTS' OPENING STATEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 HERE IS MADE BY SAMSUNG. ANDROID. THERE ARE SOME PHONES, SOME SAMSUNG PHONES WHERE THE NONE OF THE SOFTWARE. IT'S PURE
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ANDROID SOFTWARE IS SLIGHTLY MODIFIED BY SAMSUNG WHEN WE GET IT AND PUT IT IN THE PHONE. BUT JUST SO YOU KNOW, APPLE'S POSITION IS THAT THOSE MODIFICATIONS DON'T MAKE ANY DIFFERENCE, THAT THE MONEY IS OWED ANYWAY. SO THIS IS REALLY ABOUT APPLE VERSUS GOOGLE'S ANDROID, AND I WANT TO TALK TO YOU A LITTLE BIT ABOUT THAT COMPETITION. AND
I'M GOING TO -- AND WHAT THE EVIDENCE IS GOING TO SHOW ABOUT THAT COMPETITION AND ABOUT WHAT APPLE HAS CALLED IN ITS OWN INTERNAL E-MAILS THE INNOVATOR'S DILEMMA. NOW, THE INNOVATOR'S DILEMMA IS ACTUALLY A PRETTY WELL UNDERSTOOD CONCEPT IN ACADEMIC RESEARCH AND TECHNOLOGY. THE
INNOVATOR'S DILEMMA OCCURS WHEN, AND THESE ARE APPLE'S WORDS, THEY'RE STEVE JOBS' WORDS, WHEN A MARKET LEADER HANGS ON TO AN OLD PARADIGM FOR TOO LONG. AND WHEN THAT HAPPENS, WHEN A
MARKET LEADER HANGS ON TO AN OLD PARADIGM FOR TOO LONG, IT BECOMES VULNERABLE TO INNOVATION BY OTHERS. APPLE WAS AN INNOVATOR, BUT IN 2011, THERE WAS ANOTHER COMPANY THAT GOT INTO THE SMARTPHONE WORLD, WHICH WAS ALSO VERY INNOVATIVE, AND THAT'S GOOGLE. WE ALL KNOW GOOGLE. INTRODUCING GOOGLE TO YOU. I DON'T NEED TO SPEND MUCH TIME IT STARTED AS A SEARCH COMPANY
Case5:12-cv-00630-LHK Document1567-2 Filed04/03/14 Page20 of 69 DEFENDANTS' OPENING STATEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 HERE, TWO GUYS, STANFORD UNIVERSITY, IN A GARAGE. OF YOU KNOW THE STORY. IT STARTED OUT DOING SEARCH, BUT NOW SO MANY DIFFERENT APPLICATIONS, HUNDREDS OF PEOPLE USE IT EVERY DAY, MAPS, GPS, YOUTUBE, GOOGLE DOC, GOOGLE VOICE, GOOGLE NEWS. LOTS OF
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I THINK MANY
DIFFERENT THINGS WHICH PEOPLE FIND VERY, VERY USEFUL IN THEIR EVERY DAY LIVES. THEY HAVE THE FINEST SOFTWARE ENGINEERS IN THE WORLD. SEEMS ON LINE THEY CAN DO JUST ABOUT ANYTHING. TO COPY PEOPLE. THEY DON'T NEED TO COPY APPLE. IT
THEY DON'T NEED
LET ME TELL YOU ABOUT THE ANDROID STORY AND HOW THE DEVELOPMENT OF THE ANDROID OPERATING SYSTEM HAPPENED AT GOOGLE. BACK IN 2005, TWO YEARS BEFORE THE IPHONE CAME OUT, EIGHT PEOPLE WHO HAD EXPERIENCE DEVELOPING SMARTPHONES GOT TOGETHER, THEY JOINED GOOGLE, AND SET OUT TO SOLVE A PROBLEM IN THE PHONE INDUSTRY. THE PROBLEM WAS THAT HISTORICALLY THE PHONE INDUSTRY HAD BEEN VERY CLOSED. CARRIERS BASICALLY TOLD HANDSET
MANUFACTURERS WHAT PHONES HAD TO DO, WHAT THEY HAD TO LOOK LIKE. AND ALL THE DIFFERENT HANDSET MANUFACTURERS, THE PHONE MAKERS WERE MAKING THEIR OWN HARDWARE AND TRYING TO MAKE THEIR OWN SOFTWARE AT THE SAME TIME, AND IT TURNS OUT THAT THE HANDSET MANUFACTURERS WEREN'T THE BEST IN THE WORLD AT MAKING CUTTING EDGE SOFTWARE.
Case5:12-cv-00630-LHK Document1567-2 Filed04/03/14 Page21 of 69 DEFENDANTS' OPENING STATEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 AWAY.
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AND BY THE TIME THEIR SOFTWARE GOT TO MARKET, OFTEN THEY WERE BEHIND. SO THESE EIGHT PEOPLE WHO JOINED GOOGLE HAD THE IDEA THAT WHAT THE INDUSTRY REALLY NEEDED WAS A SHARED, OPEN PLATFORM THAT EVERYONE COULD USE AND CUSTOMIZE AND USE TO INNOVATE AND IMPROVE. AND THEY THOUGHT IT WOULD BE BEST IF THIS SOFTWARE, THIS PLATFORM, WAS NOT CONTROLLED BY JUST ONE COMPANY. INSTEAD,
THEY WANTED TO GIVE MANUFACTURERS, PHONE MANUFACTURERS, APPLICATION DEVELOPERS, CARRIERS A PLATFORM WHICH THEY COULD ALL USE, ADJUST, INNOVATE WITH, ADAPT TO THEIR OWN USES, DEEPLY BRAND IT, AND TO GIVE THEM THE FREEDOM TO DO WITH THIS COMMON PLATFORM WHAT THEY WANTED TO DO, OR WHAT THEY COULD DO. THE IDEA WAS TO CREATE THIS OPEN SOURCE PLATFORM, ANDROID, AND GIVE IT AWAY. THEY SPENT THREE YEARS BUILDING IT AT GOOGLE AND GAVE IT ANYBODY CAN DOWNLOAD IT IF YOU GO TO SOURCE.ANDROID.COM,
AND PEOPLE IN THE INDUSTRY CAN DOWNLOAD THIS OPEN SOURCE PLATFORM. FROM ABOUT 2005 TO 2008, THIS GROUP WORKED TOGETHER BUILDING ANDROID, WORKING LIKE KIND OF A STARTUP INSIDE A MUCH BIGGER COMPANY. THEY CONTACTED MANUFACTURERS, THEY CONTACTED
CARRIERS TO SEE IF THEY WOULD BE INTERESTED IN THIS OPEN SOURCE PLATFORM, AND IT TURNED OUT THEY WERE. AND SINCE THEN, YOU KNOW, IT CAME TO MARKET. IT'S BEEN
Case5:12-cv-00630-LHK Document1567-2 Filed04/03/14 Page22 of 69 DEFENDANTS' OPENING STATEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 EXTREMELY SUCCESSFUL.
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IN ADDITION TO BEING ON HUNDREDS OF MILLIONS OF PHONES AND TABLETS, ANDROID IS NOW IN THE DASHBOARD OF SOME CARS. YOU KNOW, THE AMAZON KINDLE RUNS ON ANDROID. IT'S --
EVEN GOOGLE
DOESN'T KNOW ALL THE DEVICES IN THE WORLD THAT RUN ON ANDROID. IT'S BEEN A HUGE SUCCESS. AND THAT SUCCESS IS A TESTAMENT TO THE HARD WORK AND THE INGENUITY OF THE ENGINEERS AT GOOGLE AND THE ANDROID MANUFACTURERS. IT IS CLEAR THAT GOOGLE'S VISION WAS RIGHT.
INNOVATION HAPPENS WHEN EVERYONE IS ABLE TO CONTRIBUTE THEIR OWN IDEAS. AND GOOGLE IS A HIGHLY INNOVATIVE COMPANY. THEY'RE
PERFECTLY CAPABLE OF DEVELOPING THEIR OWN SEARCH FEATURE ON A PHONE WITHOUT COPYING APPLE. BUT THE END OF 2010, THE TOP OF GOOGLE'S MANAGEMENT, STEVE JOBS HIMSELF, RECOGNIZED THAT APPLE ITSELF FACED THE INNOVATOR'S DILEMMA AND THAT GOOGLE INNOVATION WAS DISRUPTING THE SMARTPHONE INDUSTRY THAT APPLE HAD DOMINATED SINCE 2007. IN RESPONSE TO THIS, STEVE JOBS DECLARED, IN 2011, THAT APPLE WOULD START A HOLY WAR, A HOLY WAR ON GOOGLE. APPLE KNEW THAT GOOGLE WAS FURTHER ALONG IN SOME IMPORTANT TECHNOLOGY SO -MR. MCELHINNY: TO OBJECT. EXCUSE ME, YOUR HONOR. AGAIN, I HAVE
THERE'S MOTIONS IN LIMINE ON THIS. THERE WAS A MOTION IN LIMINE THAT THAT
THE COURT:
Case5:12-cv-00630-LHK Document1567-2 Filed04/03/14 Page23 of 69 DEFENDANTS' OPENING STATEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 OPENING. MR. QUINN: SO MR. JOBS DRAFTED THIS AGENDA IN WOULD NOT BE PERMITTED, SO THAT'S STRICKEN. MR. QUINN: THE COURT: MR. QUINN: THAT WAS -GO AHEAD, PLEASE.
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THAT'S NOT MY UNDERSTANDING, YOUR HONOR. THIS DOCUMENT. IT'S
THE OBJECTIONS TO THIS WERE OVERRULED. EXHIBIT, DEFENSE EXHIBIT 489. THE COURT:
GO AHEAD, PLEASE, WITH THE REST OF YOUR
OCTOBER 2010 FOR APPLE'S ANNUAL RETREAT OF THE TOP 100 EXECUTIVES AT APPLE WHERE THEY GET TOGETHER AND THEY TALK AMONGST THEMSELVES ABOUT WHAT IS MOST IMPORTANT TO THE COMPANY. WE HAVE STEVE JOBS'S AGENDA. THERE'S NOTHING MORE
AUTHORITATIVE ABOUT WHAT MATTERS TO APPLE. HERE IS THAT AGENDA. IT'S IN DEFENSE EXHIBIT 489, AND YOU
CAN SEE UP AT THE TOP HERE -- I DON'T KNOW IF WE CAN ENLARGE THIS. STEVE JOBS, OCTOBER 2010, IT'S HIS CUT FOR THE AGENDA.
AND THEN IF WE GO FORWARD, GO DOWN BELOW, WHAT DOES HE WRITE? "2011 HOLY WAR WITH GOOGLE." "APPLE IS IN DANGER OF HANGING ON TO THE OLD
BELOW THAT.
PARADIGM TOO LONG (INNOVATOR'S DILEMMA) GOOGLE AND MICROSOFT ARE FURTHER ALONG ON THE TECHNOLOGY. "TIE ALL OUR PRODUCTS TOGETHER SO WE CAN FURTHER LOCK CUSTOMERS INTO OUR ECOSYSTEM." AND THEN IF WE CAN GO FORWARD, COMPARISONS WITH GOOGLE,
Case5:12-cv-00630-LHK Document1567-2 Filed04/03/14 Page24 of 69 DEFENDANTS' OPENING STATEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 SAMSUNG. FORWARD. CATCH UP TO ANDROID WHERE WE ARE BEHIND,
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NOTIFICATIONS, TETHERING, SPEECH. AND THEN NEXT, "STRATEGY: SERVICES. CATCH UP TO GOOGLE CLOUD
ANDROID DEEPLY INTEGRATES GOOGLE CLOUD SERVICES.
WAY AHEAD OF APPLE IN CLOUD SERVICES FOR CONTACTS, CALENDARS, AND MAIL." DON'T HAVE TIME TO GO THROUGH THE COMPLETE DOCUMENT NOW, BUT THIS WILL COME INTO EVIDENCE. A HOLY WAR ON ANDROID. YOU WILL HAVE THIS DOCUMENT.
THAT WAS APPLE'S STRATEGY.
FROM APPLE'S POINT OF VIEW, GOOGLE'S ANDROID WAS TOO SUCCESSFUL. PEOPLE WERE BUYING TOO MANY ANDROID PHONES.
GOOGLE HAD ALWAYS BEEN A CLOUD COMPANY, AND ITS CLOUD TECHNOLOGY, WHICH AMONG OTHER THINGS, ENABLED PEOPLE TO WIRELESSLY SYNC, SYNC THEIR CALENDARS, CONTACTS, AND MAIL AND SAVE THEIR FILES ON A CLOUD SERVER WAS FAR AHEAD OF APPLE'S AND APPLE'S MISSION FOR 2011 WAS TO CATCH UP AND GET AHEAD OF GOOGLE AND ANDROID, AND THIS LAWSUIT IS PART OF THAT STRATEGY. SAMSUNG -- LET ME TURN NOW TO TALK ABOUT SAMSUNG. SAMSUNG, AS MR. MCELHINNY SAYS, HE'S RIGHT, HE'S BEEN A MOBILE PHONE INDUSTRY LEADER SINCE THE EARLY 1990S, LONG BEFORE APPLE LAUNCHED THE IPHONE JUST SEVEN YEARS AGO. THERE HAVE
BEEN MANY FIRSTS THAT SAMSUNG HAS CONTRIBUTED TO THE CELL PHONE WORLD. IF WE COULD LOOK AT SLIDE 14.
Case5:12-cv-00630-LHK Document1567-2 Filed04/03/14 Page25 of 69 DEFENDANTS' OPENING STATEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 YOU CAN SEE SOME OF THEM UP THERE.
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FIRST 3G PHONES, FIRST
3G WINDOWS SMARTPHONE, FIRST CAMERA PHONE, MORE 4G LTE PRODUCTS IN THE YEAR BEFORE APPLE DID, RECOGNITION SOFTWARE, HIGH DEF DISPLAYS. SAMSUNG HAS CONTINUED THAT INNOVATION TO THIS DAY, OFFERED LARGER SCREENS, PHONES THAT WORK WITH STYLUSES, AND PHONES THAT CAN TRANSFER PHOTOS, VIDEOS AND OTHER DOCUMENTS JUST BY CLICKING THE PHONES TOGETHER. THE PATENT OFFICE HAS RECOGNIZED SAMSUNG'S HARD WORK, AND I FIND IT VERY IRONIC THAT APPLE'S COUNSEL WOULD SAY THAT SAMSUNG DOESN'T CARE ABOUT PATENTS. LAST YEAR THE UNITED STATES PATENT AND TRADEMARK OFFICE AWARDED SAMSUNG THE SECOND HIGHEST NUMBER OF PATENTS IN THE WORLD OF ANY COMPANY IN THE WORLD. CARES ABOUT PATENTS. LET ME SHOW YOU ANOTHER PHONE, ANOTHER EXAMPLE OF ONE OF SAMSUNG'S MOST INNOVATIVE PHONES. APPLE IS SUING OVER HERE. THIS IS THE GALAXY NOTE II. RELEASED IN OCTOBER 2012. THIS PHONE HAS -- IT WAS IT'S ANOTHER PHONE THAT NUMBER 1 WAS IBM. SAMSUNG
IT'S ONE OF THE PHONES THAT APPLE
SAYS WE WOULDN'T HAVE SOLD SO MANY OF THEM IF WE DIDN'T HAVE THESE PARTICULAR VERSIONS OF THESE SOFTWARE FEATURES. THIS PHONE HAS JUST A TON OF UNIQUE FEATURES. SOME OF
THEM UP ON THE SCREEN THERE, THE MULTI WINDOW BROWSING, THE VERY HIGH SPEED PROCESSOR, TWO GIGABYTES OF MEMORY.
Case5:12-cv-00630-LHK Document1567-2 Filed04/03/14 Page26 of 69 DEFENDANTS' OPENING STATEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MANY THINGS ON THIS PHONE THAT YOU CAN'T GET ON THE IPHONE. SOME PEOPLE WANT THESE FEATURES.
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IT'S NOT THESE KINDS
OF SMALL FEATURES THAT APPLE IS SUING OVER THAT CAUSED THESE PEOPLE TO BUY THE PHONES. SAMSUNG AND APPLE'S HARDWARE WENT IN VERY DIFFERENT DIRECTIONS IN 2013. YOU CAN SEE A BIG DIFFERENCE IN THEIR
PRODUCTS UP THERE ON THE SCREENS, SOME COMPARISONS OF SOME OF THE MORE RECENT PRODUCTS. WE WILL PROVE TO YOU IN THIS CASE THAT IT'S THESE FEATURES, THE KIND OF FEATURES I'M SHOWING YOU ON THE NEXUS, ON THE GALAXY NOTE, THINGS LIKE LARGE SCREENS, REPLACEABLE BATTERIES, VERY HIGH QUALITY CAMERA AND SPEED, USE OF STYLUSES, THEY ARE THE KINDS OF THINGS THAT DISTINGUISH SAMSUNG PRODUCTS AND CAUSE PEOPLE TO BUY THOSE PHONES. THAT'S THE REASON WHY SAMSUNG IS THE LEADING MANUFACTURER OF ANDROID POWERED PHONES. IT'S WHAT SETS SAMSUNG APART FROM
ALL THE OTHER PHONES THAT USE THIS SAME OPEN SOURCE ANDROID PLATFORM. ANOTHER IMPORTANT REASON THAT SAMSUNG SELLS PHONES IS IT'S BEEN ABLE TO DO SOME VERY SUCCESSFUL ADVERTISING AND DEVELOPMENT OF ITS BRAND. IN 2011 SAMSUNG HIRED A NEW U.S. MARKETING CHIEF, A MAN BY THE NAME OF TODD PENDLETON. AND THEY HIRED HIM FROM NIKE. AND
HE APPROACHED ADVERTISING FOR SAMSUNG IN KIND OF A VERY DIFFERENT WAY. HE STARTED LOOKING AT SOCIAL MEDIA, TWITTER,
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FACEBOOK, WEBSITES, AND TRACKING WHAT PEOPLE WERE SAYING ABOUT SAMSUNG'S PHONES. AND THEN HE USED WHAT HE LEARNED FROM SOCIAL MEDIA TO CREATE ADS, AND THEY SOUNDED REAL TO PEOPLE BECAUSE THEY'RE NOT ADS THAT WERE WRITTEN BY AD EXECUTIVES, BUT ADS, THINGS THAT PEOPLE WERE, REAL PEOPLE WERE SAYING ABOUT THEMSELVES AND ABOUT REAL PHONES. AND AROUND THE TIME THAT SAMSUNG WAS DOING THAT AND CHANGING ITS SHIFT AND ITS APPROACH TO ADVERTISING, THERE WAS AN ARTICLE THAT CAME OUT IN THE "WALL STREET JOURNAL," OCTOBER 5, 2011, ABOUT THE LAUNCH OF THE IPHONE 4S. AND BASICALLY THE GIST OF THE ARTICLE WAS THAT THE IPHONE 4S WAS A REALLY GOOD PHONE, BUT IT WAS MORE, AS THE ARTICLE SAID, MORE FIZZLE THAN POP. AND IN THE MIDDLE OF THIS ARTICLE WAS A BOX, AND THE BOX COMPARED THE IPHONE 4S, APPLE'S NEW PHONE, WITH THE SAMSUNG GALAXY S II. AND IN THIS BOX, IN THE "WALL STREET JOURNAL,"
THE TWO OF THEM WERE COMPARED FEATURE BY FEATURE. AND FROM THAT COMPARISON, THE UPSHOT WAS PRETTY CLEAR THAT ALTHOUGH THE IPHONE 4S WAS A VERY FINE PHONE, THE SAMSUNG PHONE WAS ACTUALLY BETTER. AND TODD PENDLETON, THE NEW HEAD OF MARKETING FOR SAMSUNG, SEIZED ON THIS TO START A NEW ADVERTISING CAMPAIGN, THE NEXT BIG THING IS ALREADY HERE. AND THIS ADVERTISING CAMPAIGN USED THE VOICE OF THE
Case5:12-cv-00630-LHK Document1567-2 Filed04/03/14 Page28 of 69 DEFENDANTS' OPENING STATEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 CONSUMER, PRESENTED IN KIND OF AN AMUSING WAY, AND THIS THEME OF THE NEXT BIG THING IS ALREADY HERE TO CREATE A DISTINCTIVE BRAND PERSONALITY FOR SAMSUNG, AND IT CAUGHT ON, AND IT WAS POWERFUL. AND THAT'S ANOTHER REASON SAMSUNG HAS BEEN VERY
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SUCCESSFUL IN SELLING PHONES. AND SAMSUNG'S BRAND BECAME AS STRONG AS APPLE'S. HERE'S
AN INTERNAL DOCUMENT FROM APPLE SHOWING SOME RESEARCH RESULTS. YOU CAN SEE THIS IS AN APPLE DOCUMENT -- AS MR. MCELHINNY SAID, WE EXCHANGED DOCUMENTS IN DISCOVERY -- AND THIS IS WHAT APPLE -- IT SAYS "SAMSUNG'S BRAND IMPRESSION IS JUST AS STRONG AS APPLE'S IN THE U.S.," AND HERE YOU SEE APPLE HERE AND SAMSUNG HERE. SO THIS NEW, EDGY MARKETING STRATEGY WAS CLEARLY PAYING OFF AND, FRANKLY, IT DROVE APPLE CRAZY. WE WILL SHOW YOU INTERNAL APPLE DOCUMENTS, DOCUMENTS THAT HAVEN'T BEEN MADE PUBLIC BEFORE, DOCUMENTS THAT YOU WILL BE THE FIRST TO SEE THAT SHOW HOW APPLE WAS REALLY CONCERNED ABOUT THE COMPETITION IT WAS GETTING FROM ANDROID AND IN PARTICULAR FROM SAMSUNG. THE "WALL STREET JOURNAL" PUBLISHED AN ARTICLE, THE TITLE OF WHICH WAS "HAS APPLE LOST ITS COOL TO SAMSUNG?" AND APPLE'S HEAD OF WORLDWIDE MARKETING, PHIL SCHILLER, WHO APPLE SAYS WILL BE THE FIRST WITNESS WHO WILL TESTIFY TO, FORWARDED THIS TO HIS ADVERTISING AGENCY SAYING "WE HAVE A LOT OF WORK TO DO TO TURN THIS AROUND."
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MR. SCHILLER BECAME MAYBE OBSESSED IS THE RIGHT WORD WITH SAMSUNG'S CAMPAIGN THAT PORTRAYED SAMSUNG AS THE YOUNGER, HIPPER CHOICE, AND HE WAS FRUSTRATED THAT APPLE SEEMED UNWILLING TO RESPOND. APPLE HAS HAD ONE ADVERTISING COMPANY THAT THEY'VE USED EXCLUSIVELY FOR YEARS. CLIENT. IT'S APPLE. THAT ADVERTISING COMPANY HAS ONLY ONE THAT
THEY MEET EVERY SINGLE WEEK.
MR. SCHILLER WROTE AN E-MAIL TO TIM COOK SAYING I THINK WE'VE GOT TO START LOOKING FOR ANOTHER ADVERTISING AGENCY. JUST NOT GETTING WHAT WE NEED. IT BECAME A SUBJECT OF DISCUSSION AT THE BOARD OF DIRECTOR AT APPLE, WHAT ARE YOU GOING TO DO ABOUT THIS BRANDING PROBLEM? SO THEY INTRODUCED THEIR FIRST BRAND CAMPAIGN SINCE 1997, IT WAS A BRAND CAMPAIGN. IN CALIFORNIA. THE TITLE WAS SOMETHING LIKE DESIGNED WE'RE
THE FIRST TIME APPLE HAD DONE A BRAND CAMPAIGN
SINCE 1997 WHEN IT WAS ON THE VERGE OF BANKRUPTCY. WHY ALL THIS? CONCERN? WHY WAS -- WHAT WAS THE SOURCE OF APPLE'S
CLEARLY SAMSUNG WAS OFFERING CONSUMERS A CHOICE, A
MORE -- A YOUNGER, MORE PLAYFUL TAKE ON SMARTPHONES AND CONSUMERS WERE LISTENING. NOW, I WANT TO TALK TO YOU ABOUT THE INFRINGEMENT AND ISSUES -- INFRINGEMENT ISSUES AND VALIDITY ISSUES RELATED TO EACH OF THE APPLE PATENTS IN THIS CASE. BUT BEFORE I DO THAT, I WANT TO DISCUSS THE DAMAGES, WHICH I'VE TOLD YOU, FRANKLY, ARE ABSURD, MULTI BILLION NUMBER OF
Case5:12-cv-00630-LHK Document1567-2 Filed04/03/14 Page30 of 69 DEFENDANTS' OPENING STATEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 DAMAGES THAT THEY'RE SEEKING IN THIS CASE. I WANT TO TALK ABOUT DAMAGES FIRST BECAUSE I THINK WHEN YOU UNDERSTAND WHAT APPLE IS SEEKING AND HOW THEY WENT ABOUT IT, IT'LL SHED SOME LIGHT ON THE CREDIBILITY OF APPLE'S WHOLE CASE.
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AS I'VE TOLD YOU, THESE PATENTS ARE VERY NARROW SOFTWARE PATENTS THAT COVER -- THAT COVER ONE WAY TO HAVE A FEATURE THAT CAN BE DONE MORE THAN ONE WAY, FEATURES -- THAT IS TO SAY, WHAT A DEVICE CAN DO, SEARCH, SYNC IN BACKGROUND, THE OTHER THINGS. IT'S NOT THE SAME THING AS A PATENTED CLAIM. BE ONE WAY TO ACCOMPLISH THAT FEATURE. AND MANY COMPANIES, SAMSUNG, GOOGLE, OTHER COMPANIES HAVE DIFFERENT WAYS OF ACCOMPLISHING THE SAME THING. WE WILL SHOW YOU THAT APPLE HAS TAKEN WHAT REALLY ARE VERY NARROW FEATURES AND OVERSTATED WHAT THEY DO AND WHAT THEY OWN IN THEIR PATENTS TO CLAIM RIDICULOUS DAMAGES NUMBERS. LET ME BEGIN AT THE END. I'M GOING TO SHOW YOU SOME A CLAIM MAY
NUMBERS, AND YOU'LL SEE THE SOLE SUPPORT, THE ONLY WAY THEY COME UP WITH THESE NUMBERS IS FROM A STUDY DONE BY DR. HAUSER. AND I WANT TO TALK TO YOU ABOUT DR. HAUSER'S STUDY AT LENGTH, BUT LET ME BEGIN AT THE END WITH SOME OF HIS CONCLUSIONS. AND I'VE PUT UP ON THE SCREEN WHAT HE'S CONCLUDED, OR SOME OF HIS CONCLUSIONS. AND HE CONCLUDED BASED ON HIS STUDY THAT PEOPLE WHO WOULD
Case5:12-cv-00630-LHK Document1567-2 Filed04/03/14 Page31 of 69 DEFENDANTS' OPENING STATEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 PURCHASE A $149 PHONE WOULD BE WILLING TO PAY AN ADDITIONAL
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10$2 FOR APPLE'S FORM OF WORD SUGGESTION FOR A CORRECTION; THAT THEY WOULD PAY AN EXTRA $44 FOR AN ABILITY TO SEARCH THE PHONE AND THE INTERNET AT THE SAME TIME IN THE WAY, PARTICULAR WAY THAT APPLE DOES. TO GET JUST THESE FOUR FEATURES HE SAID THAT PEOPLE WOULD BE WILLING TO PAY ALMOST DOUBLE THE PRICE OF THE PHONE, $271 ON TOP OF THE $149 PHONE. YOU CAN TELL THERE'S SOMETHING, SOMETHING FISHY HERE. ANOTHER EXAMPLE OF THEIR OVERREACHING, ANOTHER FORM OF DAMAGES THEY SEEK AS WAS MENTIONED IS A ROYALTY ON THESE PATENTS, AND DR. -- APPLE'S OTHER EXPERT, DR. VELLTURO, TOOK DR. HAUSER'S SURVEY RESULTS AND, YOU KNOW, SORT OF SAID, OKAY, LET'S SUPPOSE THERE WAS A HYPOTHETICAL NEGOTIATION BETWEEN APPLE AND SAMSUNG, WHAT WOULD THEY HAVE AGREED TO AS A ROYALTY? AND HE CONCLUDED THAT SAMSUNG WOULD HAVE AGREED TO PAY $40.10 FOR THE SMARTPHONE PATENTS IN THIS CASE. $40.10 JUST FOR THESE FIVE SMART, SMALL SOFTWARE FEATURES. JUST BY WAY OF COMPARISON, A SMARTPHONE COSTS, YOU KNOW, AT THE HIGH END, SAY $199 TO THE CUSTOMER. FROM THE CARRIERS. THE $40 PER PHONE APPLE IS ASKING FOR THESE 5 SMALL SOFTWARE FEATURES IS 20 PERCENT OF THE PRICE. NOW, THEIR EXPERT, DR. VELLTURO, ACKNOWLEDGES THAT SAMSUNG REALLY WOULDN'T AGREE TO DO THIS BECAUSE IT WOULD TAKE UP MOST YOU HAVE THE SUBSIDIES
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OF THE PROFIT MARGIN ON THE ACCUSED PHONES IN THIS CASE, BUT NO MATTER. APPLE ALSO CLAIMS THAT THERE IS, ON SMARTPHONES, THEY CLAIM TO HAVE 3,500 PATENTS. IF EACH OF THOSE PATENTS WAS
WORTH $8 A PHONE, WHICH IS BASICALLY AN AVERAGE OF THE 5, YOU KNOW, DIVIDED INTO THE 40 THEY'RE SEEKING HERE, THAT MEANS THAT ONE SMARTPHONE, IF YOU WANTED TO MAKE A PHONE TO COMPETE WITH APPLE AND USE THEIR PATENTS, IT WOULD COST $28,000. MORE THAN THE ACTUAL COST OF THE PHONE. SO, YOU KNOW, THESE ARE THE KIND OF RESULTS THAT DR. HAUSER'S STUDY LED TO. AND LET'S SEE NOW HOW HE GETS TO THESE CRAZY NUMBERS, AND LET ME TALK ABOUT THAT STUDY. REMEMBER, DR. HAUSER, THE WAY HE DOES HIS STUDY, HE'S SUPPOSED TO BE DECIDING HOW MUCH PEOPLE CARE ABOUT THESE FEATURES, WOULD THEY CHANGE THEIR PHONE PURCHASE DECISIONS IF THE FEATURES WERE THERE OR IF THEY WEREN'T THERE. THE WHOLE POINT IS TO PROVIDE THE VALUE OF THE PATENT, THE DIFFERENCE BETWEEN WHAT YOU HAVE WITH THE PATENT CLAIM AND WHAT YOU WOULD HAVE WITHOUT THE PATENTED CLAIM. IN OTHER WORDS, IF YOU HAD ANOTHER WAY TO DO IT THAT APPLE DIDN'T OWN, IT'S CALLED A NON-INFRINGING ALTERNATIVE, WHAT'S THE DIFFERENCE BETWEEN THE TWO OF THEM. IF YOU HAVE -- IF THERE ISN'T ANOTHER WAY TO DO IT, THEN THE PATENT MAY BE REALLY, REALLY VALUABLE. 140 TIMES
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BUT IF THERE'S ANOTHER WAY TO ACCOMPLISH THE SAME THING, IT'S VERY SIMILAR AND IT'S PERFECTLY ACCEPTABLE, THE PATENT REALLY MAY NOT HAVE MUCH VALUE AT ALL. SO WHAT DR. HAUSER IS TRYING TO DO IS MEASURE WHAT'S THE VALUE OF WHAT APPLE CLAIMS VERSUS WHAT THE ALTERNATIVE WOULD BE, WHAT APPLE DOESN'T OWN. AND, AGAIN, BEFORE I GO INTO THIS, LET ME EMPHASIZE HOW IMPORTANT DR. HAUSER'S STUDY IS TO APPLE'S CASE. IT IS THE
ONLY EVIDENCE, THE ONLY EVIDENCE APPLE HAS TO SUPPORT ITS CLAIMS THAT CONSUMERS MAKE SMARTPHONE PURCHASE DECISIONS BASED ON THESE FIVE SMALL FEATURES. HIS CONCLUSION IS, AS I'VE TOLD YOU, IF SAMSUNG DIDN'T HAVE THEM, WE'D SELL A LOT FEWER AND APPLE WOULD SELL AN AWFUL LOT MORE. IF HE'S WRONG ABOUT THAT, THEN THEY DON'T HAVE ANY EVIDENCE ON THIS AND THERE AREN'T REALLY ANY DAMAGES. IF IT IS THE CASE THAT -- IF IT'S TRUE THAT PEOPLE REALLY AREN'T MOTIVATED, THAT'S NOT WHY YOU BUY SAMSUNG PHONES, THEN APPLE DOESN'T HAVE ANY DAMAGES. SO WHAT DID DR. HAUSER DO? HE FOUND PEOPLE WHO HAD
PURCHASED SAMSUNG PHONES BEFORE AND ASKED THEM SOME QUESTIONS. NOW, ONE OF THE THINGS HE DIDN'T ASK THEM IS WHY DID YOU BUY YOUR SAMSUNG PHONE? YOU WOULD THINK THAT MIGHT BE
SOMETHING THAT YOU WOULD ASK. INTERESTINGLY, HE SAID IN HIS REPORT THAT HE DIDN'T ASK OR
Case5:12-cv-00630-LHK Document1567-2 Filed04/03/14 Page34 of 69 DEFENDANTS' OPENING STATEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 CARE WHETHER THE SAMSUNG CUSTOMERS WERE EVEN AWARE THAT THESE FIVE FEATURES WERE IN THEIR PHONES. THAT. HE HAS THE SUBJECTS COME IN, AND HE DOESN'T GIVE THEM PHONES. HE GIVES THEM DESCRIPTIONS. BASICALLY THEY LOOK AT THEY SEE IMAGINARY HE WASN'T INTERESTED IN
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MOCK -- THEY LOOK ON THE COMPUTER SCREEN.
PHONES WITH DESCRIPTIONS OF FEATURES AND THEY ARE ASKED TO MAKE A SERIES OF DECISIONS BASED ON THE DESCRIPTIONS OF THE FEATURES ABOUT WOULD YOU BUY THIS PHONE OR WOULD YOU BUY THAT PHONE? IN ADDITION TO THE DESCRIPTION OF THE FEATURE, WHICH IS SUPPOSED TO MATCH APPLE'S PATENTED CLAIMS, WHAT IT OWNS, HE ALSO ASKS -- HE TELLS THEM, IF YOU DIDN'T HAVE THAT, YOU WOULD HAVE TO DO THIS. THIS IS YOUR ALTERNATIVE. IF YOU DIDN'T
IN OTHER WORDS, HERE'S THE APPLE FEATURE. HAVE THAT, YOU WOULD HAVE TO DO THIS.
NOW, YOU KNOW, IF THERE'S A BIG DIFFERENCE BETWEEN THE TWO, YOU'RE GOING TO GET A LOT OF PEOPLE SAYING THIS IS REALLY VALUABLE. BUT THE PEOPLE AREN'T GETTING PHONES. THIS IS ALL JUST
TEXT AND THEY GET TO WATCH A VIDEO AND THEN IN THESE DESCRIPTIONS GETTING THEM ACCURATE IS REALLY, REALLY IMPORTANT TO THE INTEGRITY OF THE SURVEY. SO LET'S START WITH THE -- LET'S SEE WHAT HE DID. TAKE A LITTLE BIT OF TIME TO WALK THROUGH THIS. LET'S
I'M GOING TO
START WITH THE WORD CORRECTION OR WORD SUGGESTION PATENT, WHICH
Case5:12-cv-00630-LHK Document1567-2 Filed04/03/14 Page35 of 69 DEFENDANTS' OPENING STATEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 AS MR. MCELHINNY TOLD YOU IS ONE THAT THE COURT HAS FOUND INFRINGEMENT ON THIS ONE.
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SO I THOUGHT I WOULD TALK ABOUT THAT
ONE FIRST, IT'LL TAKE ME A LITTLE WHILE TO WALK THROUGH THIS, BUT I THINK YOU'LL SEE THAT THE DESCRIPTIONS THAT PEOPLE WERE GIVEN WERE, FRANKLY, DISHONEST. THAT'S THE PUNCH LINE HERE,
AND I WANT TO PROVE THAT TO YOU NOW. THIS PATENT RELATES TO THE KEY WORD SOFTWARE. ON ANDROID
PHONES USERS CAN CHOOSE BETWEEN ANY NUMBER OF DIFFERENT KEYBOARDS. KEYBOARDS ARE CONTAINED IN THE SOFTWARE FROM
DIFFERENT COMPANIES, FROM GOOGLE, FROM SAMSUNG, FROM A COMPANY CALLED NUANCE, WHICH IS ANOTHER COMPANY THAT, YOU KNOW, SUPPLIES THESE KEYBOARDS, AND THEY'RE IN SOME OF THE SAMSUNG PHONES. NUANCE IS A WELL-KNOWN COMPANY. APPLE ALSO BUYS
INTELLECTUAL PROPERTY FROM NUANCE. THE KEYBOARD SOFTWARE ARE CREATED BY SAMSUNG WHICH IS ON MANY OF ITS PHONES APPLE ADMITS DOES NOT INFRINGE. IT'S THE
SWIPE KEYBOARD FROM NUANCE AND THE ANDROID, ONE OF THE ANDROID KEYBOARDS THAT HAVE BEEN FOUND TO INFRINGE. BUT SAMSUNG HAS A KEYBOARD WHICH APPLE ADMITS DOES NOT INFRINGE. SO, IN OTHER WORDS, THAT'S AN ALTERNATIVE. THAT'S
AN ALTERNATIVE TO APPLE'S PATENTED CLAIM. APPLE DOESN'T OWN.
IT'S SOMETHING THAT
THIS -- APPLE'S CLAIM -- LET ME TAKE A LOOK AT IT. THE '172 PATENT.
IT'S
YOU'LL SEE IT'S A VERY, VERY NARROW CLAIM
ABOUT A PARTICULAR WAY OF SUGGESTING WORD CORRECTIONS ON A
Case5:12-cv-00630-LHK Document1567-2 Filed04/03/14 Page36 of 69 DEFENDANTS' OPENING STATEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 SMARTPHONE. WORDS." THE TITLE OF THE PATENT IS NOT "HOW TO SUGGEST
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IT'S "HOW SUGGESTED WORDS ARE PROVIDED AS YOU TYPE," JUST LIKE THE TITLE SAYS. RECOMMENDATIONS. IT'S A METHOD FOR PROVIDING WORD IT'S NOT ABOUT WHAT WORDS TO SUGGEST.
OKAY?
IT'S ABOUT HOW SUGGESTED WORDS ARE PROVIDED AS YOU TYPE. THAT'S THE APPLE PATENT. IN JUNE 2011, BEFORE APPLE'S PATENTED CLAIM ISSUED, SAMSUNG PUT ITS OWN NON-INFRINGING KEYBOARD ON THE SAMSUNG DART PHONE, AND IT'S SINCE BEEN INSTALLED ON MANY SAMSUNG PHONES, SOMETIMES AS THE PRIMARY KEYBOARD, AND SOMETIMES AS AN ALTERNATIVE KEYBOARD WHICH THE USER CAN SELECT. THIS
NON-INFRINGING KEYBOARD WAS INCLUDED AS AN OPTION ON FIVE OF THE PHONES THAT APPLE ACCUSES IN THIS CASE. LET'S TAKE A LOOK AT IT IN SLIDE 63. DART NON-INFRINGING KEYBOARD. IF YOU TYPE ON THIS KEYBOARD, IT AUTOMATICALLY CORRECTS TYPING ERRORS. IT ALWAYS SHOWS THE RECOMMENDED CORRECTIONS IN THIS IS THE SAMSUNG
THIS TEXT AREA UP HERE AS YOU TYPE. IF YOU TYPE, IT WILL JUST CORRECT. CORRECTS. IF YOU WANT TO KEEP ONE OF THE SUGGESTED SPELLINGS, THEY APPEAR HERE IN THIS MESSAGE BAR DOWN HERE, YOU HAVE TO ACTUALLY TOUCH ON IT. SO IF YOU, IF YOU -- IF YOU'RE SENDING AN E-MAIL TO A IT AUTOMATICALLY
Case5:12-cv-00630-LHK Document1567-2 Filed04/03/14 Page37 of 69 DEFENDANTS' OPENING STATEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. MESSAF AND WANT TO KEEP THAT, AND NOT MESSAGE, YOU CAN TOUCH ON THIS AND YOU'LL GET MESSAF UP ABOVE. SO YOU CAN SEE
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UP HERE, AUTO CORRECTION IS NOT SOMETHING YOU NEED APPLE'S PATENTED CLAIM FOR. WATCH, I'M GOING TO SHOW YOU A VIDEO NOW,
AND WATCH WHAT HAPPENS WHEN THE WORD MESSAGE IS MISS TYPED. IF WE COULD PLAY THAT. (A VIDEOTAPE WAS PLAYED IN OPEN COURT OFF THE RECORD.) MR. QUINN: EVERY SINGLE LETTER. IT WAS AUTOMATICALLY CORRECTED AFTER YOU END UP AUTOMATICALLY WITH THE
CORRECTION UP ABOVE, MESSAGE. NOW, LET'S COMPARE THAT TO THE INFRINGING SWIPE KEYBOARD. THIS IS SLIDE 65. ON THE LEFT-HAND SIDE YOU HAVE THAT
NON-INFRINGING SAMSUNG DART KEYBOARD, WHICH WE JUST DISCUSSED. ON THE RIGHT-HAND SIDE YOU HAVE THE NUANCE SWIPE KEYBOARD WHICH HAS BEEN FOUND TO INFRINGE. IT PRACTICES APPLE'S PATENT. WE'RE NOT TALKING
YOU CAN SEE THEY BOTH LOOK SIMILAR. ABOUT BIG DIFFERENCES.
THEY BOTH HAVE A TEXT AREA THAT YOU CAN SEE ABOVE AND A SUGGESTIONS AREA, A SUGGESTIONS BAR BELOW. IF WE COULD GO TO SLIDE 67. YOU CAN SEE THEY BOTH HAVE THIS SUGGESTION BAR. AND ON BOTH OF THEM, IT WILL TYPE, YOU KNOW, MESSAF, THE MISSPELLING ON THE LEFT-HAND SIDE, AND THEN THERE WILL BE SOME SUGGESTIONS AND IF YOU WANT TO TAKE ONE OF THOSE SUGGESTIONS, YOU CAN JUST TAP ON IT. BOTH OF THEM WORK IDENTICALLY, THE
Case5:12-cv-00630-LHK Document1567-2 Filed04/03/14 Page38 of 69 DEFENDANTS' OPENING STATEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 NON-INFRINGING SAMSUNG DART KEYBOARD AND THE KEYBOARD THAT PRACTICES -- THAT INFRINGES APPLE'S PATENT.
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HERE IS THE INFRINGING SWIPE KEYBOARD, THE ONE THAT WAS ON THE RIGHT, IN ACTION. I WANT TO SHOW THAT TO YOU. YOU SEE
THAT AUTOMATICALLY CORRECTS. ON APPLE'S KEYBOARD.
BUT THE WAY IT WORKS IS DIFFERENT
INSTEAD OF CONTINUOUSLY CORRECTING AS
YOU'RE TYPING, IT'S NOT UNTIL YOU FINISH AND HIT WHAT'S CALLED A DELIMITER, EITHER A PERIOD OR A COLON OR A SPACE BAR, THAT IT POPS UP WHAT THE SUGGESTED WORD IS. YOU WOULDN'T KNOW WHAT'S THE SUGGESTED WORD IS
GOING TO POP UP UNLESS YOU LOOK DOWN. DOWN BLOW IN THAT SPACE BAR.
YOU WON'T KNOW WHAT'S GOING TO
COME UP WITHOUT ACTUALLY LOOKING DOWN. AND SOME PEOPLE MIGHT SAY THAT THAT, YOU KNOW, APPLE, THAT PATENT, THAT WAY THAT MAKES YOU HAVE TO LOOK DOWN TO SEE IF WHAT YOU REALLY INTENDED TO TYPE IS DOWN THERE IS NOT AS GOOD, IT'S INCONVENIENT, YOU HAVE TO LOOK DOWN. THE WAY YOU KNOW THAT APPLE THINKS THAT'S A NUISANCE, BECAUSE IN THE IPHONE, THEY DON'T USE THAT PATENT, NEVER HAVE. HAVE NEVER USED IT. THE IPHONE DOES IT DIFFERENTLY.
LET'S TAKE A LOOK AT SLIDE 72. THE IPHONE, THE WORD SUGGESTION IS FLOATED IN A BOAT UP IN THE TEXT AREA SO THAT YOU KNOW BY LOOKING UP THERE, YOU DON'T HAVE TO LOOK DOWN, YOU KNOW WHAT'S GOING TO HAPPEN IF YOU HIT THE SPACE BAR OR THE DELIMITER. SO WHAT ARE THE DAMAGES THAT APPLE SEEKS FOR USE OF ITS
Case5:12-cv-00630-LHK Document1567-2 Filed04/03/14 Page39 of 69 DEFENDANTS' OPENING STATEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 OWN PARTICULAR FORM OF WORD CORRECTION, WHICH IT DOESN'T EVEN USE, AND WHICH SOME PEOPLE MIGHT CONSIDER INFERIOR?
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ACCORDING TO DR. HAUSER'S SURVEY, WHAT SHOULD SAMSUNG PAY? $206.4 MILLION OF THE 2 BILLION-PLUS DOLLARS. OF THE -- DR. HAUSER'S STUDY SAID, THAT CHART WE LOOKED AT BEFORE, SUPPOSEDLY HIS CONCLUSION IS PEOPLE WOULD PAY $102 MORE PER PHONE TO HAVE THIS FEATURE WHERE YOU HAVE TO LOOK DOWN AND MAKE YOUR CHOICE, WHICH APPLE DOESN'T EVEN USE. HOW DID HE ARRIVE AT THAT NUMBER? SURVEY WAS SERIOUSLY FLAWED. WELL, DR. HAUSER'S
REMEMBER, I TOLD YOU, IT'S ALL THEY DON'T GET ANY
ABOUT THE DESCRIPTIONS THEY'RE GIVING. PHONES.
THEY'RE JUST GETTING DESCRIPTIONS.
AND LET ME TELL YOU WHAT THEY WERE TOLD ABOUT THESE WORD SUGGESTION FEATURES, AND THIS IS WHAT THEY WERE TOLD ABOUT APPLE'S PATENTED METHOD. YOU'LL SEE IT UP HERE. THIS IS WHAT
THE SURVEY PARTICIPANTS WERE PRESENTED WITH. TOP AUTOMATIC WORD CORRECTION.
IT SAYS AT THE
NOW, YOU KNOW THAT'S NOT THE TITLE OF THEIR PATENT. JUST LOOKED AT THAT.
WE
IF WE GO BACK TO SLIDE 60, THEIR PATENT
IS "A METHOD, SYSTEM, AND GRAPHICAL USER INTERFACE FOR PROVIDING WORD RECOMMENDATIONS." BUT PARTICIPANTS AREN'T TOLD THAT WHAT THEY'RE BEING PRESENTED HERE, THE DESCRIPTION IS JUST OF A METHOD. THEY'RE
TOLD THAT THE FEATURE IS AUTOMATIC WORD CORRECTION, PERIOD, IN BIG BOLD LETTERS ON A PICTURE, AN ICON UP HERE, TWO PIECES OF
Case5:12-cv-00630-LHK Document1567-2 Filed04/03/14 Page40 of 69 DEFENDANTS' OPENING STATEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 PAPER.
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THE ONE IN THE BACK SAYS X, MISTAKE, BEING REPLACED WITH ANOTHER PIECE OF PAPER, CHECK, CORRECT. NO METHOD. ONLY AUTOMATIC WORD CORRECTION. ONLY WRONG
SPELLING MADE RIGHT. THAT ICON IS THE SYMBOL FOR THIS PATENT CLAIM IN DR. HAUSER'S TEST. THAT ICON TELLS SURVEY PARTICIPANTS THAT
THEIR ONLY CHOICE -- YOU KNOW, THE CHOICE THAT YOU'RE MAKING, YOU'RE TRYING TO VALUE WHAT THE DIFFERENCE IS BETWEEN SAMSUNG, THE APPLE PATENT AND WHAT WOULD OTHERWISE HAVE TO DO, THEY'RE TOLD THE ONLY CHOICE IS BETWEEN WORD CORRECTION AND NO WORD CORRECTION. NOW, CLEARLY THE DIFFERENCE BETWEEN HAVING AUTOMATIC WORD CORRECTION IS VERY DIFFERENT FROM THE VALUE OF HAVING IT BY ONE METHOD RATHER THAN ANOTHER. THE DIFFERENCE BETWEEN YOU EITHER
HAVE IT OR YOU DON'T OR YOU HAVE IT BY ONE METHOD OR YOU HAVE IT BY ANOTHER, THERE'S A BIG DIFFERENCE. THERE IS NO SUBTLETY IN DR. HAUSER'S DESCRIPTION. OF COURSE APPLE HAS NO RIGHT TO A MONOPOLY UNDER ITS PATENT CLAIM TO AUTOMATIC WORD CORRECTION BECAUSE, AS YOU HAVE SEEN FROM SAMSUNG'S NON-INFRINGING DART KEYBOARD, YOU ALREADY KNOW THERE'S AT LEAST ONE NON-INFRINGING ALTERNATIVE THAT DOES PROVIDE AUTOMATIC WORD CORRECTION, AND SOME WOULD SAY IT'S BETTER. YOU DON'T HAVE TO LOOK DOWN. THE CORRECTION, IT
HAPPENS WHILE YOU ARE TYPING IN THE TEXT AREA.
Case5:12-cv-00630-LHK Document1567-2 Filed04/03/14 Page41 of 69 DEFENDANTS' OPENING STATEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 SAMSUNG HAD THAT ON ITS PHONES BEFORE APPLE'S PATENT ISSUED. SAMSUNG DOES NOT -- WELL, APPLE DOES NOT OWN AUTOMATIC WORD CORRECTION. BE PAID FOR IT. APPLE DOESN'T INVENT IT.
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IT HAS NO RIGHT TO
THE ASSERTION THAT APPLE OWNS AUTOMATIC WORD CORRECTION IS UNTRUE, AND THAT UNTRUTH INFECTED DR. HAUSER'S SURVEY. AND, AGAIN, THAT SURVEY IS THE ONLY BASIS IN THIS LAWSUIT THAT'S GOING TO BE PRESENTED TO YOU FOR THOSE VERY, VERY LARGE NUMBERS. THIS STUDY IS THE ONLY EVIDENCE OF CONSUMERS' PREFERENCES AND FEATURE VALUE IN THIS LAWSUIT FOR CELL PHONES, FOR TABLETS, FOR EVERY SINGLE CLAIM, ALL FIVE OF THEM, IT ALL COMES BACK TO DR. HAUSER. THIS WASN'T JUST AN INSTANCE OF A CAREFULLY -- CARELESSLY CHOSEN ICON. MISLEAD YOU. HERE'S THE PART OF THE EXPLANATION THAT WAS GIVEN TO TEST SUBJECTS THAT WAS MEANT TO DESCRIBE WHAT THE ALTERNATIVE WOULD BE, IF YOU DON'T USE APPLE'S PATENTED CLAIM, WHAT'S THE ALTERNATIVE? AND WHAT PEOPLE ARE TOLD, YOU CAN SEE IT HERE, "WITHOUT THIS FEATURE, PRESSING SPACE OR A PERIOD WOULD RETAIN YOUR ORIGINAL TEXT," AND WHAT HE'S TOLD THEM HERE IS IF YOU'RE TRYING TO TYPE BIRTHDAY AND INSTEAD YOU TYPE BIRFDAY WITH AN F, IT WAS DELIBERATELY AND CAREFULLY DESIGNED TO
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IT TELLS THEM "WITHOUT THIS FEATURE, PRESSING SPACE OR A PERIOD WOULD RETAIN YOUR ORIGINAL TEXT, BIRFDAY. IF YOU WANT TO
REPLACE YOUR ORIGINAL TEXT, YOU NEED TO SELECT THE SUGGESTED BIRTHDAY YOURSELF. YOU WOULD HAVE TO GO DOWN AND SELECT IT." APPLE MADE THAT UP. YOU KNOW THAT'S
THAT'S SIMPLY WRONG. WRONG.
YOU'VE SEEN THE DART KEYBOARD.
IT AUTOMATICALLY
CORRECTS IN THE SCREEN. IT'S -- THAT'S HOW APPLE COMES UP WITH THESE NUMBERS THAT THIS IS WORTH $206 MILLION. APPLE MAKES A VERY, VERY SERIOUS DAMAGES CLAIM, BUT THEY DIDN'T GO ABOUT STUDYING DAMAGES IN ALL SERIOUSNESS. IN FACT,
DR. HAUSER'S STUDY, YOU WILL SEE, IS COMPLETELY REMOVED FROM REALITY. LET ME GIVE YOU ANOTHER EXAMPLE OF AN UNTRUTHFUL DESCRIPTION OF ANOTHER ONE OF THESE PATENTED FEATURES THAT THEY GAVE TO SURVEY PARTICIPANTS, WHICH IS THE WHOLE BASIS FOR THEIR CLAIM THAT FOLKS PREFERRED -- YOU KNOW, WOULD BUY FEWER SAMSUNG PHONES AND WOULD BUY MORE APPLE PHONES. AND THIS IS THE BACKGROUND SYNCING CLAIM. DESCRIPTION THAT PEOPLE WERE GIVEN. THIS IS THE
AND AT THE TOP IT
DESCRIBES THE APPLE PATENT, AND THEN IT DESCRIBES WHAT THE ALTERNATIVE, WHERE IF YOU DON'T PRACTICE THE APPLE PATENT, THIS IS WHAT WOULD HAPPEN TO YOU. "WITHOUT THIS FEATURE, YOU WOULD HAVE TO WAIT TO USE THE APP, FOR EXAMPLE, THE CONTACTS APP, WHILE THE DATA FOR THE APP
Case5:12-cv-00630-LHK Document1567-2 Filed04/03/14 Page43 of 69 DEFENDANTS' OPENING STATEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 IS SYNCHRONIZING WITH A REMOTE COMPUTER, AND THAT WAIT MAY BE LONG OR SHORT."
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SO IN OTHER WORDS, THE SURVEY PARTICIPANTS ARE TOLD, "YOU EITHER USE APPLE'S PATENT" WHICH, AGAIN, THIS IS ANOTHER ONE, APPLE DOESN'T USE THIS, IT'S NOT IN ANY IPHONE, NEVER HAS BEEN, THEY'RE TOLD, "YOU EITHER USE APPLE'S PATENT, OR YOUR PHONE WILL FREEZE FOR A PERIOD OF TIME, AND THAT MAY BE A LITTLE PERIOD OF TIME, OR IT MAY BE A LONG PERIOD OF TIME." AND THAT IS ALSO, FRANKLY, NOT TRUE. APPLE DID NOT CREATE THIS IS
THE ONLY WAY TO SYNC DATA WITHOUT THE DEVICE FREEZING.
ANOTHER EXAMPLE OF APPLE EXAGGERATING THE SCOPE OF ITS PATENTED CLAIMS. THAT SYNCING, THAT ABILITY, HAD BEEN DEVELOPED USING DIFFERENT PROCESSES BY OTHER INVENTORS AT LEAST SEVEN YEARS BEFORE APPLE'S PATENT ISSUED. PROCESSES IN A LITTLE BIT. SO WHEN MR. HAUSER ASKED THEM, YOU KNOW, THE PUNCH LINE IS AFTER THEY'RE GIVEN THESE CHOICES, HE ASKED THEM, HOW IMPORTANT IS THAT FEATURE THAT KEEPS YOUR PHONE FROM FREEZING UP? COURSE WHAT DID THEY SAY, THEY SAID THAT WAS IMPORTANT. OF THAT I'LL SHOW YOU THOSE OTHER
WAS BASED ON A MISREPRESENTATION BECAUSE PHONES CAN USE THOSE OTHER PROCESSES THAT APPLE DOESN'T OWN. APPLE DOESN'T OWN
EVERYTHING WHEN IT COMES TO SYNCING OR WORD CORRECTION OR ANY OF THESE OTHER FEATURES. THE DESCRIPTION ON SYNCING IS WRONG IN ANOTHER RESPECT.
Case5:12-cv-00630-LHK Document1567-2 Filed04/03/14 Page44 of 69 DEFENDANTS' OPENING STATEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 ALL THE PARTIES AGREE THAT APPLE'S PATENT REQUIRES THAT YOU HAVE THREE SYNCING COMPONENTS IN THE BACKGROUND.
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AND IT'S NOT
SO -- IN OTHER WORDS, IT'S NOT JUST ABOUT FREEZING AND SYNCING GENERALLY. THIS PATENT IS A VERY SPECIFIC ONE. IT REQUIRES
THREE SYNCING COMPONENTS. DR. HAUSER'S DESCRIPTION TO THE SURVEY PARTICIPANTS DIDN'T MENTION THIS AT ALL, AND, IN FACT, THE ANDROID SOFTWARE PROCESS SAMSUNG USES AND APPLE ACCUSES HERE CONTAINS ONLY TWO COMPONENTS THAT ACTUALLY ARE DOING THE SYNCING. WITHOUT A TRUTHFUL DESCRIPTION OF APPLE'S CLAIMS AND WHAT THE ALTERNATIVES WOULD BE, THE SURVEY, DR. HAUSER'S SURVEY IS WORTHLESS. AS I TOLD YOU, CLEARLY THESE DESCRIPTIONS ARE REALLY IMPORTANT SINCE THAT'S WHAT THE SURVEY PARTICIPANTS ARE BASING ALL THEIR JUDGMENTS ON ABOUT THEIR PREFERENCES AND WHAT'S THIS WORTH. SO YOU MIGHT ASK, WHO WROTE THESE DESCRIPTIONS THAT WERE SO IMPORTANT AND CENTRAL TO THIS SURVEY? IT WAS APPLE'S LAWYERS. AND GUESS WHAT? THEY WEREN'T EXACTLY EVEN-HANDED. IN THE IT WASN'T DR. HAUSER.
LET'S LOOK AT WHAT DR. HAUSER SAID IN HIS REPORT.
FIRST SENTENCE THERE HE ACKNOWLEDGES THAT TO GET RELIABLE RESULTS FROM THE SURVEY, YOU HAVE TO HAVE CLEAR DESCRIPTIONS. THEN HE GOES ON TO ADMIT THAT THEY WERE "PROVIDED TO ME BY COUNSEL."
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AND HE SAID "I HAVE NOT REVIEWED OR INTERPRETED THE PATENT CLAIMS MYSELF AND DO NOT HAVE A PROFESSIONAL OPINION ON THAT MATTER." HE'S WASHING HIS HANDS OF IT. RESPONSIBILITY FOR THIS. SO HE GIVES -- WHAT HAPPENS WITH THESE SURVEY RESULTS? THEY'RE GIVEN TO ANOTHER APPLE EXPERT, DR. VELLTURO, AND LET'S JUST TALK FOR A MOMENT ABOUT DR. VELLTURO. YOU KNOW, UNLIKE MANY EXPERTS YOU'RE GOING TO SEE WHO ARE FACULTY MEMBERS AT UNIVERSITIES, DR. VELLTURO IS NOT A MEMBER OF A FACULTY ANYWHERE. HE BASICALLY TESTIFIES FOR A LIVING. HE'S NOT TAKING ANY
HE'S BASICALLY APPLE'S HOUSE PAID EXPERT WITNESS. HE SAYS HE CANNOT REMEMBER EXACTLY HOW MANY TIMES HE'S BEEN HIRED BY APPLE TO COME INTO COURTROOMS AND TESTIFY AND HE THINKS IT'S MAYBE 10 TO 12 TIMES. BUT HE TOOK DR. HAUSER'S SURVEY RESULTS AND RAN SOME NUMBERS, AND HE SAID THAT SYNCING COMPONENT CLAIM WHERE PEOPLE WERE TOLD YOU EITHER USE THE APPLE, YOU KNOW, PATENT OR, YOU KNOW, YOU'RE GOING TO HAVE TO WAIT AND THE WAIT COULD BE LONG OR SHORT, HE TOOK THE RESULTS OF THE SURVEY AND HE SAID, WELL, THAT SYNCING CLAIM IS WORTH $724.9 MILLION. SO THAT'S WHERE PART OF THAT OVER 2 BILLION THEY'RE SEEKING COMES FROM THAT CLAIM. AND ALL THE STEPS LEADING TO
THAT NUMBER COLLAPSE BECAUSE THEY'RE ALL BASED ON DESCRIPTIONS WHICH ARE COMPLETELY UNFAIR AND INACCURATE.
394
WE HAVE -- WE'VE RETAINED AN EXPERT, DR. DAVID REIBSTEIN, WHO'S A PROFESSOR AT THE WARD SCHOOL OF BUSINESS AT THE UNIVERSITY OF PENNSYLVANIA. HE'S AN EXPERT IN THESE TYPES OF
SURVEY, THEY'RE CALLED CONJOINT SURVEYS, AND HE SAYS IT'S COMPLETELY INAPPROPRIATE TO USE THIS TYPE OF SURVEY, A CONJOINT SURVEY, FOR A COMPLEX PRODUCT WHICH HAS LOTS AND LOTS OF FEATURES, THAT IT'S JUST A -- THEY SHOULDN'T HAVE USED IT IN THE FIRST PLACE. HE HAD A REAL QUESTION: DID THE SURVEY PARTICIPANTS
ACTUALLY UNDERSTAND WHAT THEY WERE BEING TOLD, UNDERSTAND THESE DESCRIPTIONS? SO HE DID HIS OWN STUDY. HE RECRUITED SOME OTHER PEOPLE, HE SHOWED
JUST LIKE DR. HAUSER HAD, WHO HAD SAMSUNG PHONES.
THEM THE SAME VIDEOS, WE HAD THEM, SHOWED THEM THE SAME DESCRIPTIONS, AND, YOU KNOW, HAD THEM TAKE THE SAME TEST. AND AFTERWARDS HE ASKED THEM, DID YOU UNDERSTAND? UNDERSTAND THE DESCRIPTIONS IN THE VIDEOS? DID YOU
THEY ALL SAID, YES.
BUT THEN HE INTERVIEWED THEM AND IT TURNED OUT THEY DIDN'T UNDERSTAND AT ALL. MANY OF THE PARTICIPANTS THOUGHT THAT WHEN IT DESCRIBED WORD CORRECTION, THEY THOUGHT THAT MEANT THE CHOICE WAS BETWEEN APPLE'S PATENT CLAIM AND HAVING TO GO BACK AND COMPLETELY RETYPE THE MISSPELLING. SOME THOUGHT THE CHOICE WAS BETWEEN USING APPLE'S THREE PATENT SYNC CLAIM AND NOT HAVING ANY SYNCING AT ALL AND HAVING
Case5:12-cv-00630-LHK Document1567-2 Filed04/03/14 Page47 of 69 DEFENDANTS' OPENING STATEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 TO GO TO ANOTHER DEVICE AND RE-ENTER THE INFORMATION. SO THERE'S A REAL QUESTION. I THINK IT'LL BE IN YOUR
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MINDS WHEN YOU HEAR THE EVIDENCE AS TO WHETHER PEOPLE REALLY UNDERSTOOD THIS AT ALL. I TOLD YOU BEFORE, APPLE ON ITS OWN DOES SURVEYS AS TO WHY PEOPLE BUY PHONES. IF WE COULD LOOK AT SLIDE 50. THIS IS AN INTERNAL APPLE STUDY, AND IF YOU LOOK AT THE U.S. ON THE LEFT-HAND SIDE, THE WHOLE THEORY OF APPLE'S CASE HERE IS PEOPLE BUY SAMSUNG PHONES BECAUSE OF THESE FIVE FEATURES AND THEY'RE SO IMPORTANT. WHEN IT COMES TO IPHONES, PEOPLE WHO WANT AN IPHONE MODEL OR A SPECIFIC FEATURE, IT'S ONLY 16 PERCENT OF THE PEOPLE WHO BUY PHONES ACCORDING TO APPLE'S OWN DATA. AND THEN IN THEIR DATA, THEIR SURVEY, THEY DRILL DOWN IN THE 16 PERCENT TO SEE WHAT IS THE FEATURE THAT THEY'RE MOST INTERESTED IN. IS IT OUR PHONE WITH WORD CORRECTION? IS IT
SYNCING, OR WHAT IS IT? IF WE CAN LOOK AT SLIDE 51. THOSE 16 PERCENT, AS I'VE BEEN TELLING YOU, THEY'RE INTERESTED IN THINGS LIKE BIG FEATURES, WHAT'S THE WEIGHT, THE DISPLAY, THE THINLESS, IS THERE LTE, WHAT'S THE BATTERY LIFE? APPLE KNOWS THESE ARE THE KINDS OF THINGS THAT DRIVE SALES OF PHONES. ANOTHER EXAMPLE OF AN IMPORTANT PHONE FEATURE IS THE MAPS
Case5:12-cv-00630-LHK Document1567-2 Filed04/03/14 Page48 of 69 DEFENDANTS' OPENING STATEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 APPLICATION.
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IN THE FALL OF 2012, APPLE HAD A BIG PROBLEM WITH THEY USED TO HAVE GOOGLE MAPS AND THEY
ITS MAPS APPLICATION.
DEVELOPED THEIR OWN MAP, APPLE MAPS FEATURE AND THEY PUT IT IN THE PHONE AND IT WAS A DISASTER. CIRCLES TO DEAD ENDS. I MEAN, IT SENT PEOPLE IN
POLICE IN AUSTRALIA WARNED THAT THE
APPLE MAPS FEATURE COULD KILL BECAUSE IT WOULD SEND PEOPLE INTO THE BARREN OUTBACK WHERE THERE WAS NO WATER. THE PR FALLOUT FROM THAT WAS SO BAD THAT APPLE HAD TO APOLOGIZE TO CONSUMERS, AND TIM COOK WROTE A LETTER TO CONSUMERS ASKING FORGIVENESS AND SUGGESTED THAT THEY ALL SOLVE THE PROBLEM BY REINSTALLING GOOGLE MAPS. BUT YET THAT PHONE THAT HAD THAT APPLE MAPS FEATURE, THE IPHONE 5, WAS THE HIGHEST SELLING IPHONE EVER. WHAT DOES THAT SHOW US? APPLICATION CAN SELL. A PHONE WITHOUT A WORKING MAPS
A PHONE WITHOUT THESE FIVE SMALL THESE AREN'T THE THINGS THAT
FEATURES, THAT WOULD SELL, TOO. DRIVE SALES.
I NOW WANT TO TURN TO APPLE'S INFRINGEMENT CLAIMS.
WE
WILL SHOW YOU THAT SAMSUNG DID NOT USE OR INFRINGE FOUR OF THE CLAIMS AND THAT, IN FACT, IN ANY EVENT ALL FIVE ARE INVALID. THEY SHOULDN'T HAVE BEEN ISSUED IN THE FIRST PLACE. OTHER PEOPLE WHO THOUGHT OF THE IDEAS. LET'S BEGIN WITH THE '414, THE BACKGROUND SYNCING. SPOKEN ABOUT THIS SOME ALREADY. AS I SAID, THIS REQUIRES THAT YOU HAVE THREE SEPARATE SYNC WE'VE THERE WERE
Case5:12-cv-00630-LHK Document1567-2 Filed04/03/14 Page49 of 69 DEFENDANTS' OPENING STATEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 COMPONENTS THAT ARE CONFIGURED TO DO SYNC. YOU WILL HEAR IN THIS TRIAL FROM DR. CHASE, OUR EXPERT
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WITNESS, AND A GOOGLE ENGINEER PAUL WESTBROOK, WHO WAS INVOLVED IN DEVELOPING THIS, WHO WILL TELL YOU THAT ANDROID DOES THIS DIFFERENTLY, DOES NOT USE THIS THREE SYNC PROCESS. DONE BEFORE. IT WAS DONE AT WINDOWS MOBILE. IT HAD BEEN
THERE'S A MAN BY
THE NAME OF GARY HALL, WHO YOU WILL HEAR FROM, WHO'S A WINDOWS DEVELOPER WHO CALLED BACKGROUND SYNCING A DESIGN PILLAR OF WINDOWS MOBILE. AND YOU WILL SEE THAT HE -- WINDOWS, MICROSOFT HAD THE ABILITY TO SYNC IN BACKGROUND, AND IT WOULDN'T FREEZE UP. THAT WAS ALL BEFORE APPLE'S PATENT. AND THEY ALSO SYNCED WITH THREE SYNC COMPONENTS IN THE BACKGROUND, JUST LIKE APPLE CLAIMS TO DO. YOU KNOW, THE PATENT AND TRADEMARK OFFICE, YES, THEY ISSUED A PATENT ON THIS. WHEN IT WAS ISSUED. BUT THEY DIDN'T HAVE THIS INFORMATION AND
THEY DIDN'T HAVE THE INFORMATION ABOUT THE
WINDOWS MOBILE IN FRONT OF THEM WHEN THEY ISSUED THIS PATENT. YOU'LL HEAR THAT ANOTHER GREAT COMPANY WHO WAS DEVELOPING BACKGROUND SYNC BEFORE APPLE EVEN FILED FOR ITS PATENT, AND THAT COMPANY WAS USING BACKGROUND SYNC BEFORE APPLE'S PATENT EVEN ISSUED, AND THAT COMPANY IS GOOGLE. IT JUST STARTED
DEVELOPING A SYNCING FEATURE BEFORE THE IPHONE EVER HIT THE MARKET. AS A CLOUD COMPANY, GOOGLE IS WELL AHEAD OF APPLE IN
Case5:12-cv-00630-LHK Document1567-2 Filed04/03/14 Page50 of 69 DEFENDANTS' OPENING STATEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 WIRELESS SYNCING. E-MAIL. REMEMBER, YOU SAW THAT IN THE STEVE JOBS
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HE SAID CATCH UP IN SYNCING.
AND, YOU KNOW, GOOGLE HAD THE ABILITY FROM THE BEGINNING, AS A CLOUD COMPANY, TO SYNC YOUR CONTACTS AND WIRELESS -- YOUR CONTACTS AND YOUR CALENDAR WIRELESSLY IN THE FIRST ANDROID PHONE. THAT'S SOMETHING YOU COULDN'T DO IN THE FIRST IPHONE. HAD TO PLUG IT INTO A COMPUTER TO SYNC UNTIL IOS 5 IN 2011. THE '647 PATENT, THE ANALYZER SERVER PATENT, SOMETIMES CALLED QUICK LINKS OR LINKS TO STRUCTURES, THIS IS THE PATENT THAT, YOU KNOW, YOU CAN -- IT WILL HIGHLIGHT A PHONE NUMBER OR AN E-MAIL ADDRESS AND YOU CAN TAP ON IT AND IT'LL DO -- YOU KNOW, EXECUTE AN ACTION. THIS DOES NOT COVER EVERY WAY OF DOING A CLICKABLE LINK. THE SIMPLE ABILITY TO CLICK ON A PHONE NUMBER AND MAKE A CALL, OR CLICK ON AN E-MAIL ADDRESS AND SEND AN E-MAIL, THAT HAS BEEN AROUND FOR A LONG TIME. APPLE DIDN'T INVENT THIS. THIS ISN'T YOU
SOMETHING THAT APPLE OWNS. GOOGLE DESIGNED THE ANDROID SOFTWARE THAT RUNS ON THE BACKGROUND -- IN THE BACKGROUND DIFFERENTLY FOR ITS ANALYZER SERVER. YOU'LL HEAR THE EVIDENCE THAT GOOGLE -- THAT THE
PATENT THAT APPLE HAS ON THIS PARTICULAR FEATURE REQUIRES SOMETHING CALLED AN ANALYZER SERVER, AND I WON'T GO INTO THE DETAILS ABOUT WHAT THAT'S ABOUT NOW, BUT IF YOU ONLY REMEMBER ONE THING I SAY ABOUT THIS PATENT, IT'S ANALYZER SERVER.
Case5:12-cv-00630-LHK Document1567-2 Filed04/03/14 Page51 of 69 DEFENDANTS' OPENING STATEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 AND THE APPLE PATENT REQUIRES THAT THERE BE AN ANALYZER SERVER TO ACCOMPLISH THIS IN THE SOFTWARE. AND WHEN YOU SEE
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WHAT GOOGLE DOES, WHAT ANDROID DOES, YOU'LL SEE THAT THERE IS NO ANALYZER SERVER. APPLE TRIES TO SAY IT'S SOMETHING ELSE, THEY KNOW THERE NEEDS TO BE AN ANALYZER SERVER. SOMETHING ELSE. SO APPLE TRIES TO SAY IT'S THEY
I THINK THEY CALL IT A SOFTWARE LIBRARY.
SAY, WELL, THAT'S REALLY AN ANALYZER SERVER.
BUT YOU'RE GOING IN FACT,
TO SEE THAT THAT'S SOMETHING VERY, VERY DIFFERENT.
THEIR OWN INVENTOR WILL TELL YOU THAT SOFTWARE LIBRARIES ARE VERY DIFFERENT THAN AN ANALYZER SERVER. YOU'LL ALSO HEAR IN THIS PATENT THAT THERE WAS PRIOR ART, THAT IT HAD BEEN DONE BEFORE. THERE'S SOMETHING CALLED
EMBEDDED BUTTONS THAT HAD BEEN INVENTED AT A VERY FAMOUS INSTITUTION HERE IN PALO ALTO CALLED XEROX PARK, PALO ALTO RESEARCH CENTER IN 1991 WHERE THEY -- THIS SAME TECHNOLOGY EXISTED. IT'S NOT NEW. IT'S NOT A PATENT THAT EVER SHOULD
HAVE BEEN ISSUED. THE '721, THE SLIDE TO UNLOCK, YOU KNOW, YOU WILL SEE THAT SAMSUNG, ANDROID HAVE USED LOTS OF DIFFERENT LOCK INTERFACES, VERY DIFFERENT KINDS OF MECHANISMS. ONE IS CALLED THE PUZZLE DESIGN UNLOCK INTERFACE. I MEAN, THE WAY IT WORKS, THE PIECES START UP IN THE CORNER AND YOU CAN MOVE THIS PIECE, THIS PIECE HERE, YOU CAN MOVE IT ALL AROUND. IT'S NOT LIKE THE SLIDE TO UNLOCK WHERE
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THERE'S A TRACK AND YOU GO FROM THIS POINT TO THIS POINT ALONG THE TRACK. THIS PUZZLE PIECE, YOU CAN MOVE IT WITH YOUR FINGER ALL AROUND. IT UNLOCKS WHEN YOU GO INTO THE HOLE THERE. THIS IS
VERY DIFFERENT.
THIS IS NOT AN EFFORT TO COPY THE IPHONE. THE
IT'S AN EFFORT TO COME UP WITH SOMETHING PLAYFUL, FUN. FOLKS AT SAMSUNG WERE TRYING TO DISTINGUISH THEMSELVES.
ANOTHER UNLOCK SCREEN THAT SAMSUNG USES IS A GALAXY 3 RIPPLE WHICH YOU WILL SEE. UNFORTUNATELY, YOU CAN'T REALLY --
THIS DOESN'T REPRODUCE IN A PHOTOGRAPH, BUT IT'S A REALLY COOL DESIGN WHERE IF YOU PUT YOUR FINGER ON THE SCREEN AND MOVE IT, IT'S LIKE WATER RIPPLES ACROSS THE FACE OF THE SCREEN AND YOU CAN MOVE UP, DOWN, ONE WAY OR ANOTHER, AND IT'S LIKE A LITTLE WAVE OF WATER GOING ACROSS THE STREET. NO SLIDE TO UNLOCK, YOU KNOW, APPLE'S SLIDE TO UNLOCK. THEY DON'T ACCUSE THAT. THIS IS A BEST SELLING, YOU KNOW, THE WE'RE SELLING LOTS OF
GS III, GALAXY 3, BEST SELLING PHONES.
THESE PHONES WITHOUT USING ANY APPLE SLIDE TO UNLOCK FEATURE. AND THEN YOU'RE GOING TO SEE THAT APPLE ITSELF HAS MOVED AWAY FROM THAT ORIGINAL SLIDE TO UNLOCK DESIGN IN THE LATEST IOS 7 SOFTWARE, YOU CAN GO FROM ANYWHERE ON THE LEFT-HAND SIDE OF THE SCREEN TO THE RIGHT-HAND SIDE OF THE SCREEN, ANYWHERE AT ANY POINT. THERE'S MUCH MORE FREEDOM OF MOVEMENT. YOU DON'T
HAVE THAT LITTLE CHANNEL DOWN AT THE BOTTOM. THE WORDS SLIDE TO UNLOCK ARE STILL ON THE PHONE, BUT
Case5:12-cv-00630-LHK Document1567-2 Filed04/03/14 Page53 of 69 DEFENDANTS' OPENING STATEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THEY'RE NOT CLAIMING THEY OWN THE WORDS. YOU CAN SEE THAT
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THEY'VE GONE IN A DIFFERENT DIRECTION ALTOGETHER. IS THIS SOMETHING THAT'S REALLY WORTH MILLIONS AND MILLIONS OF DOLLARS? IS THIS WHY PEOPLE BUY SMARTPHONES?
THOSE ARE SOME OF THE DECISIONS THAT YOU'RE GOING -- THAT YOU WILL HAVE TO DECIDE. WE'LL ALSO SHOW YOU OTHER PRIOR ART. BEEN SLIDE TO UNLOCK MECHANISMS BEFORE. YOU KNOW, THERE HAVE
IT'S BEEN DONE BEFORE.
WHAT THEY CALL UNIVERSAL SEARCH, THIS INVOLVES THE -- THE APPLE PATENT ON UNIVERSAL SEARCH INVOLVES A VERY SPECIFIC WAY OF COMBINING LOCAL SEARCH RESULTS THAT ARE ON THE PHONE FROM, LIKE, YOUR CONTACTS OR YOUR CALENDAR AND THINGS LIKE THAT WITH RESULTS THAT COME FROM THE INTERNET. NOW, I THINK IT'S FAIR TO SAY GOOGLE KNOWS SEARCH. AND
THE ENGINEERS AT GOOGLE DON'T NEED TO TURN TO APPLE, YOU KNOW, WHEN THEY'RE BUILDING THEIR ANDROID SOFTWARE TO FIGURE OUT HOW TO DO SEARCH ON A PHONE. SINCE 1997. THEY'VE BEEN DOING SEARCH AT GOOGLE
THEY'VE BEEN DOING, ON THE DESKTOP, THEY'VE BEEN
DOING LOCAL SEARCH ON THE DESKTOP DEVICE CLEAR BACK TO 2004. THE FUNCTIONS THAT APPLE IS CHALLENGING HERE IN ANDROID ON PHONES, THEY WERE ADDED TO ANDROID AND SAMSUNG PHONES IN 2009. BUT, AGAIN, THIS SEARCH CAPABILITY THAT, YOU KNOW, THEY CLAIM TO HAVE A PATENT ON, IT'S NOT SOMETHING THAT THEY HAVE EVER USED. IT'S NEVER BEEN DONE ON THE IPHONE.
WE ASKED THE INVENTOR IN HIS DEPOSITION, AND HE SAYS HE
Case5:12-cv-00630-LHK Document1567-2 Filed04/03/14 Page54 of 69 DEFENDANTS' OPENING STATEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 DOESN'T KNOW ANYONE WHO'S EVER USED THIS.
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YOU KNOW, YOU HEARD SOMETHING THAT MR. MCELHINNY SAID THAT AFTER WE SUED THEM, THEY REMOVED IT. AFTER WE SUED THEM, THEY REMOVED IT. THEY PUT IT BACK. THAT WAS A COMPLETE DISTORTION, FRANKLY. WHAT HAPPENED IS THEY SUED ON A DIFFERENT SEARCH PATENT. THEY SUED ON THE '604 PATENT, NOT THIS ONE, AND THEY WENT TO COURT AND THEY GOT AN INJUNCTION AGAINST OUR DOING THIS TYPE OF SEARCH. WE DIDN'T THINK IT WAS RIGHT. WE DIDN'T AGREE, BUT WE I MEAN, WE DO YOU REMEMBER THIS? CUSTOMERS COMPLAINED;
COMPLIED.
AND SO WE -- IT WASN'T HARD TO DO.
TURNED THAT OFF. WE APPEALED IT, AND THE COURT OF APPEALS REVERSED AND SAID WE WERE RIGHT, APPLE WAS WRONG, WE'RE ENTITLED TO DO IT, AND THEN DROPPED THAT PATENT. NOW, MR. MCELHINNY LEFT THAT OUT. PART OF THE STORY. NOW, WE DID PUT THAT FEATURE BACK IN THE PHONE, BACK IN ANDROID. GOOGLE DID THAT. SAMSUNG DID THAT, NOT BECAUSE IT'S HE DIDN'T TELL YOU THAT
A WILD, WILDLY POPULAR FEATURE THAT PEOPLE NEED TO SEARCH THE PHONES AND THE INTERNET AT THE SAME TIME. IT TURNS OUT, YOU KNOW, GOOGLE CAN TRACK THIS. THE FOLKS
AT GOOGLE WILL TELL YOU THAT WHEN YOU GET RESULTS FROM BOTH, ON THE INTERNET AND USING THIS PHONE AND THE FEATURE, IT'S SOMETHING LIKE ONE OUT OF 50 TIMES THAT PEOPLE TAP ON SELECT
Case5:12-cv-00630-LHK Document1567-2 Filed04/03/14 Page55 of 69 DEFENDANTS' OPENING STATEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE PHONE RESULT. IT'S JUST NOT THAT BIG A DEAL.
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IT'S ONE OF
MANY, MANY FEATURES AND WE INCLUDE IT AND WE THINK WE'RE ENTITLED TO INCLUDE IT. WE DO IT IN A VERY, VERY DIFFERENT WAY THAN THEIR PATENT REQUIRES. THERE'S SOMETHING CALLED A HEURISTIC, WHICH I NEVER
HEARD OF BEFORE I GOT IN THIS CASE, BUT THERE'S A RULE CALLED A HEURISTIC WHICH MEANS, IT'S AN ENGINEERING OR SOFTWARE TERM WHICH MEANS BASICALLY A RULE OF THUMB OR SOMETHING THAT'S GOOD ENOUGH. IT'LL GIVE YOU AN ANSWER TO THIS, GOOD ENOUGH, KIND OF
RULE OF THUMB, AND THEIR PATENT REQUIRES THAT YOU MUST SEARCH IN TWO PLACES AND YOU MUST USE HEURISTICS TO SEARCH IN TWO PLACES, BOTH LOCALLY AND ON THE INTERNET. AND THEY WILL POINT TO A HEURISTIC ON THE LOCAL SEARCH IN ANDROID, BUT THERE ISN'T ONE ON THE INTERNET BECAUSE GOOGLE USERS, NOT SURPRISINGLY, THE RESULTS ARE GOOGLE'S SUGGESTIONS THAT COME TO THE PHONE AND THAT'S NOT A HEURISTIC AT ALL. YOU'LL SEE THERE REALLY ISN'T INFRINGEMENT THERE. THERE IS PRIOR ART, SOMETHING CALLED WAIS, W-A-I-S, WHERE AN M.I.T. PROFESSOR, DR. MARTIN RINARD, WILL TESTIFY ABOUT HOW THIS HAD BEEN DONE BEFORE. AGAIN, WHEN THIS PATENT ISSUED, THE PATENT OFFICE DID NOT KNOW ABOUT WAYS. FINAL CATEGORY OF DAMAGES I HAVEN'T HAD A CHANCE TO MENTION YET -- I'VE MENTIONED AT VARIOUS POINTS THE LOST PROFITS WHERE THEY SAY THEY WOULD HAVE SOLD MORE PHONES, AND WE SO
Case5:12-cv-00630-LHK Document1567-2 Filed04/03/14 Page56 of 69 DEFENDANTS' OPENING STATEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 WOULD HAVE SOLD LESS BUT FOR THE USE OF THESE FEATURES. MENTIONED THE REASONABLE ROYALTY. I'VE
404
ANOTHER CATEGORY OF DAMAGES THEY'RE SEEKING IS THEY CALL BLACKOUT PERIOD OR OFF THE MARKET DAMAGES. AND BASICALLY THE
THEORY OF THIS IS THEY SAY THEY'RE ENTITLED TO $508 MILLION OF THE 2 BILLION BECAUSE THEY SAY, WELL, SAMSUNG WOULD HAVE TO TAKE UP TO FOUR MONTHS TO FIGURE OUT ANY ALTERNATIVE TO THREE OF THESE PATENTED FEATURES. IT WOULD TAKE US FOUR MONTHS, AND WE COULDN'T
WE WOULD HAVE TO TAKE OUR PHONES OFF THE MARKET.
BE SELLING THESE PHONES FOR FOUR MONTHS, AND WHILE SAMSUNG IS GONE, APPLE WILL SELL A LOT MORE PHONES. HOW THEY GET THE $508 MILLION. WELL, LET ME TELL YOU SOMETHING. IF WE LOOK AT SLIDE 109. THE IDEA THAT WE NEED FOUR MONTHS TO COME UP WITH SOME ALTERNATIVE IF, IN FACT, WE INFRINGE THESE AND THEY WERE INVALID -- THAT THEY WERE VALID IS JUST NONSENSE. YOU HAVE SEEN THAT WE HAVE A WORD SUGGESTION FEATURE, WHICH THEY ADMIT IS NOT INFRINGING. IT'S BEEN ON THE SAMSUNG ALL RIGHT. SO THAT'S
DART PHONE, WHICH IS AVAILABLE AND COULD BE USED AT ANY TIME. WE DON'T NEED FOUR MONTHS TO PUT THAT IN PHONES. WE HAVE OTHER VERSIONS OF LOCK SCREENS, YOU KNOW, THE RIPPLE. YOU SAW THAT, THE ONE THAT'S LIKE THE WATER.
IT WOULD TAKE US, THE TESTIMONY WILL BE, AT MOST FOUR DAYS TO IMPLEMENT AN ALTERNATIVE TO THE ANALYZER SERVER PATENT.
405
SO THERE REALLY IS -- THERE WOULD BE NO BASIS OF ANY AWARD FOR OFF THE MARKET OR BLACKOUT PERIOD DAMAGES. YOU'RE GOING TO HEAR, WITH RESPECT TO REASONABLE ROYALTY, WHICH I TALKED ABOUT A LITTLE BIT EARLIER, REMEMBER THE $40.10 A PHONE THEY'RE ASKING FOR WHICH TRANSLATED, IF YOU COUNT ALL THE PATENTS, TO SOMETHING LIKE A $24,000 PHONE. YOU'LL HEAR FROM DR. CHEVALIER, OUR EXPERT, AND SHE DID AN ANALYSIS ABOUT WHAT IS THE APPROPRIATE METHOD OF FIGURING OUT, IF ANY ROYALTY, REASONABLE ROYALTY, IF ANY ROYALTY WAS OWING HERE, WHAT IT WOULD BE. AND SHE DID A STUDY. YOU'LL HEAR FROM HER, AND SHE
CONCLUDES THAT FOR ALL FIVE OF THESE, 35 CENTS ALL OF THEM ALTOGETHER. SHE LOOKS AT REVIEWS OF SAMSUNG PRODUCTS AND
WEBSITES ON AMAZON AND SHE SAYS THERE'S NO MENTION OF THESE FEATURES. IT'S NOT LIKE PEOPLE ARE WILDLY POPULAR -- EXCITED
ABOUT THEM. SHE COMPARED THE PROFITABILITY OF THE PRODUCTS WITH THE FEATURES AND WITHOUT THE FEATURES AND CONCLUDED THAT, YOU KNOW, AT LEAST THE WORD SUGGESTION IN SLIDE TO LOCK CLAIMS HAVE NO VALUE AT ALL BECAUSE SAMSUNG'S MOST PROFITABLE PHONES, THE S III AND THE GALAXY NOTE, DON'T -- AREN'T EVEN ACCUSED. SHE LOOKS AT WHAT APPLE TOLD THE GOVERNMENT ITS SOFTWARE WAS WORTH. AND WHAT DID APPLE TELL THE GOVERNMENT IT TURNS OUT
WAS COMPLETELY INCONSISTENT. AM I RUNNING OUT OF TIME? THANK YOU.
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SO YOU'RE GOING TO HEAR FROM HER THAT WHAT APPLE TELLS THE GOVERNMENT THE SOFTWARE IS WORTH IS VERY INCONSISTENT. SHE
LOOKS AT APPLE'S OWN PRIOR REPRESENTATIONS TO COURTS ABOUT WHAT ITS SOFTWARE IS WORTH. SHE LOOKED AT, YOU KNOW, WHAT'S THE
MARKETPLACE, WHAT ARE PEOPLE PREPARED TO PAY FOR APPLICATIONS ON SMARTPHONES. THE MOST POPULAR ANDROID APPLICATION IS SOMETHING CALLED SWIFT KEY. PEOPLE PAY 24 CENTS A UNIT FOR THAT.
SO AFTER CONSIDERING ALL THOSE FACTORS, SHE SAYS 35 CENTS A UNIT, AND IF THERE'S A LUMP SUM ROYALTY PAYMENT, IF ONE WERE OWING -- AGAIN, WE DON'T THINK THERE'S ANY INFRINGEMENT, FOR FOUR OF THE FIVE PATENTS, WE DON'T THINK THEY'RE VALID, BUT IF THERE WERE INFRINGEMENT, IF THEY'RE VALID AND IF A ROYALTY WAS OWING, $39.2 MILLION IS WHAT SHE SAYS IS THE MAXIMUM. SO IN THE BRIEF TIME I'VE GOT LEFT, LET ME TALK A LITTLE BIT ABOUT SAMSUNG'S PATENT CLAIMS AGAINST APPLE. AND, FRANKLY,
NORMALLY WE AT SAMSUNG DON'T SUE OVER PATENTS LIKE THESE. COUNSEL, I AGREE WITH MR. LEE ON THAT, WE DON'T ORDINARILY SUE ON PATENTS LIKE THESE. YOU KNOW, IN THE PRE-HOLY WAR DAYS, WHAT WOULD HAPPEN IN THIS INDUSTRY IS THAT COMPANIES WOULD GET TOGETHER AND ENTER INTO CROSS-LICENSE AGREEMENTS FOR THEIR ENTIRE PORTFOLIOS. THEY WOULD WORK OUT A DEAL AND LEARN TO CO-EXIST. THAT'S WHAT USED TO HAPPEN. BUT WE DID GET SUED, AND SO WE THOUGHT IT WAS APPROPRIATE
Case5:12-cv-00630-LHK Document1567-2 Filed04/03/14 Page59 of 69 DEFENDANTS' OPENING STATEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 TO DEFEND OURSELVES. BUT WE UNDERSTAND HOW THIS HAPPENS SOMETIMES.
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PEOPLE END
UP STEPPING ON EACH OTHER TOES WITH SIMILAR SOLUTIONS TO PROBLEMS. I'M SORRY. I'M LOSING MY VOICE.
YOU HAVE ENGINEERS FOR THOSE SAME SCHOOLS, MAYBE STANFORD, BERKELEY, THEY STUDY ENGINEERING. BUSINESS. THEY OWN THE SMARTPHONE
THEY GO TO WORK FOR COMPANIES LIKE GOOGLE AND APPLE. THEY'RE TRYING TO MAKE A PHONE
THEY FACE THE SAME PROBLEM.
EASY TO USE, TRYING TO MAKE IT EFFECTIVE, FAST, ADDRESSING THE SAME PROBLEMS, AND SOMETIMES THEY MAY END UPCOMING UP WITH SIMILAR SOLUTIONS AND END UP STEPPING ON EACH OTHER TOES. SOMETIMES HAPPENS. AND IN THAT SAME WAY, APPLE HAS STEPPED ON SAMSUNG'S TOES BY USING SAMSUNG'S VIDEO TRANSMISSION AND VIDEO ALBUM PATENTS. AND WHEN THAT HAPPENS, AND IT DOES HAPPEN, IT'S NOT A HOLY WAR, OR IT SHOULDN'T BE. IT'S A SIMPLE THAT THE LAW PROVIDES A THAT
REMEDY AND IT'S A SIMPLE ECONOMIC TRANSFER, THAT THERE SHOULD BE A PAYMENT FROM THE COMPANY THAT WAS USING THE TECHNOLOGY THAT DIDN'T HAVE A RIGHT TO, TO THE COMPANY THAT OWNED THE TECHNOLOGY AND DID HAVE A RIGHT TO IT. IT'S NOT ABOUT PUNISHING. WRONG DOER. BUT HERE YOU'LL SEE APPLE IS DOING SOMETHING DIFFERENT. IT'S SEEKING MASSIVE DAMAGES ON THE FICTION THAT THEY'VE LOST IT'S NOT ABOUT PUNISHING THE
Case5:12-cv-00630-LHK Document1567-2 Filed04/03/14 Page60 of 69 DEFENDANTS' OPENING STATEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 SALES BECAUSE OF VERY SMALL FEATURES THAT YOU WILL LEARN HAVE NO IMPACT ON SALES AT ALL. NOW, I'M GOING TO SHOW YOU HOW WE CALCULATE THE ROYALTY
408
THAT IS OWING FOR THEIR INFRINGEMENT OF OUR TWO PATENTS, AND WE WILL DO IT REASONABLY. AND I'LL JUST NOTE, THEY'RE NOT CHALLENGING THE VALIDITY OF EITHER ONE OF THEIR PATENTS. BOTH OF THOSE PATENTS ARE
DEEMED VALID FOR PURPOSES OF ALL YOUR DECISION MAKING. SO FIRST THE FACETIME PATENT FROM THE '239, AND THIS RELATES TO TRANSMITTING COMPRESSED VIDEO FOOTAGE. A PATENT THAT WAS WAY AHEAD OF ITS TIME. LONG BEFORE MOST PEOPLE EVEN HAD MOBILE PHONES, THE INVENTORS OF THIS PATENT FIGURED OUT A WAY TO TRANSMIT VIDEO FROM REMOTE LOCATIONS BY COMPRESSING VIDEO IN REAL TIME SO IT COULD TRANSMIT QUICKLY WITHOUT INTERRUPTION. AND YOU WILL HEAR FROM OUR EXPERT, DR. SCHONFELD, DR. DAN SCHONFELD FROM THE UNIVERSITY OF CHICAGO WHO WILL EXPLAIN TO YOU THAT APPLE HAS, IN FACT, INFRINGED THIS PATENT. THERE ARE TWO KEY TERMS IN THIS PATENT. YOU KNOW, AND THIS IS
THE FIRST IS THAT
IT -- IT SAYS IT INCLUDES A COMPUTER WITH A VIDEO CAPTURE MODULE TO CAPTURE THE COMPRESSED VIDEO IN REAL TIME. APPLE'S
PRODUCTS, AS WELL AS SAMSUNG PRODUCTS, INCLUDE BOTH CAMERAS AND COMPONENTS THAT CAPTURE VIDEO. THE SECOND TERM IS THERE MUST BE A MEANS FOR TRANSMISSION OF THE VIDEO. DR. SCHONFELD WILL SHOW YOU THAT THERE WAS A
Case5:12-cv-00630-LHK Document1567-2 Filed04/03/14 Page61 of 69 DEFENDANTS' OPENING STATEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MEANS FOR -- THAT BOTH THOSE TERMS ARE SATISFIED.
409
THE APPLE FUNCTIONALITIES THAT INFRINGE INCLUDE FACETIME, FACETIME FEATURE INFRINGES VIDEO, THROUGH VIDEO CONFERENCING. BY THE WAY, A FEATURE THAT APPLE HAS PROMOTED VERY, VERY HEAVILY, UNLIKE, YOU KNOW, THE FIVE MINOR SOFTWARE FEATURES THAT THEY'RE SUING SAMSUNG ON. AND IT ALSO INFRINGES BY THE ABILITY ON APPLE -- THE FUNCTIONALITY THAT PERMITS YOU TO TAKE VIDEOS AND TRANSMIT THEM USING E-MAIL AND MESSAGING ON THE IPHONE. NOW, MR. LEE MADE A BIG TO DO ABOUT THE FACT THAT WE BOUGHT THIS PATENT. IT'S TRUE. WE DID BUY THIS PATENT. WE
BOUGHT IT FROM A VERY CREATIVE FAMILY, THE FREEMANS WHO LIVE IN TULSA, OKLAHOMA. IT'S KIND OF AN INTERESTING STORY BEHIND IT. THEY
ORIGINALLY INVENTED THIS IN ORDER TO, YOU KNOW -- THEY LIVE IN AN AREA WHERE THERE'S LOTS OF TORNADOS, AND THEY HAD THE ABILITY TO TRANSFER VIDEO OF TORNADOS TO TV STATIONS AND THINGS LIKE THAT. WHAT'S IMPORTANT TO KNOW IS IT'S NOT IMPORTANT. IT'S NOT
A DEFENSE IN A PATENT CASE THAT A PATENT HAS BEEN PURCHASED. APPLE PURCHASES PATENTS, VOICE RECOGNITION SOFTWARE FROM SIRI. I MEAN, THAT'S ABSOLUTELY IRRELEVANT WHETHER OR NOT THE PATENT WAS PURCHASED. SAMSUNG CHOSE THIS PATH BECAUSE OF HOW IMPORTANT AND INNOVATIVE IT WAS.
Case5:12-cv-00630-LHK Document1567-2 Filed04/03/14 Page62 of 69 DEFENDANTS' OPENING STATEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THEY ALSO TOLD YOU THAT THE PATENT HAS NOW EXPIRED. THAT'S TRUE. THAT ALSO DOESN'T MATTER.
410
WE'RE SEEKING DAMAGES
FOR THE PERIOD WHEN THE PATENT WAS ACTIVE, WHICH IS PERFECTLY APPROPRIATE, PERFECTLY RIGHT. WE'RE ENTITLED TO DO THAT.
THE OTHER PATENT, THE '449, VIDEO ALBUMS PATENT, THIS RELATES TO AN INVENTION THAT THE COMPANY HITACHI CAME UP WITH BACK IN 1997 WHERE THEY CAME UP WITH A REVOLUTIONARY DIGITAL CAMERA THAT WOULD PERMIT YOU TO COMPRESS AND STORE HUNDREDS OF PHOTOGRAPHS AND VIDEOS. IN EARLIER CAMERAS, YOU COULD ONLY STORE LIKE TEN PICTURES AND YOU COULDN'T STORE ANY VIDEOS AT ALL. THIS HITACHI CAMERA
USED CUTTING EDGE TECHNOLOGY TO PERMIT YOU TO STORE SO MANY ON THE CAMERA THAT YOU COULDN'T KEEP TRACK OR FIND OUT WHERE THEY WERE. SO THIS IS KIND OF A NIFTY, IF YOU WANT, EASY TO USE FEATURE THAT HITACHI INVENTED. IT SOLVED THE PROBLEM BY
BUILDING FOLDERS RIGHT INTO THE CAMERA TO MAKE IT EASIER TO MANAGE AND TO LOCATE THE PHOTOS AND THE VIDEOS. YOU'LL SEE THAT ON THE LEFT-HAND SIDE HERE, YOU'LL SEE ONE OF THOSE FIGURES FROM THE PATENT. ALBUMS HERE. YOU'LL SEE THERE'S A LIST OF
IT'S KIND OF AN ENGINEER'S DRAWING, AND PART OF
THE PATENT IS THAT YOU ACTUALLY NUMBER, YOU CAN NUMBER THE ACTUAL NUMBER OF PHOTOGRAPHS THAT ARE THERE. AND THEN ON THE RIGHT-HAND SIDE, YOU'LL SEE THE ALBUMS, YOU KNOW, SAME FUNCTIONALITY ON THE IPHONE.
Case5:12-cv-00630-LHK Document1567-2 Filed04/03/14 Page63 of 69 DEFENDANTS' OPENING STATEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 AND DR. KEN PARULSKI, WHO HAS AN ADVANCED DEGREE FROM
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M.I.T., WIDELY RECOGNIZED PIONEER IN DIGITAL PHOTOGRAPHY, WILL COME HERE AND WALK YOU THROUGH THESE CLAIMS AND SHOW YOU HOW APPLE INFRINGES THIS PATENT. SO BECAUSE THESE TWO PATENTS ARE INFRINGED, SAMSUNG IS ENTITLED TO DAMAGES, AND THOSE DAMAGES, AGAIN, TAKE THE FORM OF A REASONABLE ROYALTY. UNLIKE THE MINOR SOFTWARE PATENTS APPLE HAS SUED ON, THE VIDEO PATENT, THE '239 PATENT INCLUDES VERY IMPORTANT FEATURES THAT RELATE TO THE TRANSMISSION OF VIDEO WHICH APPLE HAS VERY HEAVILY PROMOTED, FACETIME OVER CELLULAR. ALSO E-MAIL, TRANSMISSION OVER E-MAIL, THROUGH TEXT. THIS IS SOMETHING THAT'S BEEN VERY -- THAT IS, IN FACT, SOMETHING VERY IMPORTANT. IT'S SOMETHING THAT IS ADVERTISED,
AND YOU LOOK AT THOSE -- I SHOWED YOU THE IPHONE CONSUMER SURVEY, WHAT FEATURES PEOPLE FOCUS ON. IT. FACETIME WAS ONE OF THEM. I DON'T KNOW IF YOU SAW
THAT'S ONE THAT ACTUALLY DOES
RISE TO THE LEVEL OF SOMETHING PEOPLE TAKE NOTE OF. THE OTHER, THE VIDEO ALBUMS PATENT, IT'S A MORE -- YOU KNOW, IT'S A USEFUL BUT MORE LIMITED FEATURE, BUT IT'S VALUABLE. AND WE HAVE DR. KEARL, JAMES KEARL, WHO'S A TRAINED ECONOMIST AT M.I.T., WHO DETERMINED THAT APPLE WOULD HAVE PAID $6.9 MILLION FOR A LICENSE IN A NEGOTIATION. AND, YOU KNOW, IT'S -- I FOUND MR. LEE'S ARGUMENT
Case5:12-cv-00630-LHK Document1567-2 Filed04/03/14 Page64 of 69 DEFENDANTS' OPENING STATEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 125. SURPRISING, THE FACT THAT, YOU KNOW, WE'RE SUING AND ONLY ASKING FOR $158,000, OR WE'RE ONLY ASKING FOR $6.78 MILLION SOMEHOW MEANS THAT WE DON'T RESPECT PATENTS OR THAT WE DON'T CARE ABOUT PATENTS, THAT THE SUGGESTION SEEMED TO BE THAT IF YOU AREN'T ASKING FOR BILLIONS, YOU'RE NOT TAKING PATENTS SERIOUSLY. YOU WILL SEE -- THE EVIDENCE IN THIS CASE WILL SHOW YOU THAT THEIR BILLION DOLLAR NUMBERS ARE COMPLETELY UNSUPPORTED.
412
THEY ALL TIE BACK TO THAT UNRELIABLE HAUSER SURVEY, AND THEY'RE PUTTING THOSE NUMBERS OUT THERE JUST TO TRY TO GET THEM IN YOUR HEAD. AND WE WILL SHOW YOU HOW PROPERLY TO CALCULATE A ROYALTY ON THESE, YOU KNOW, ON THESE PATENTS WHICH APPLE HAS INFRINGED. DR. KEARL CALCULATED THESE DAMAGES. IF WE LOOK AT SLIDE
HE STARTED WITH SOME REAL WORLD DATA, AND HE HAD SOME
ACTUAL DATA THAT HE COULD RELY ON. THERE WAS A TIME WHEN FACETIME WAS FIRST INTRODUCED WHERE APPLE ACTUALLY SOLD THAT AS AN APP ON THE MAC, AND IT WAS A HUGE SUCCESS . PEOPLE BOUGHT IT. IT COST 99 CENTS.
SO THERE'S A POINT, YOU KNOW, A REAL WORLD DATA POINT THAT DR. KEARL COULD WORK WITH, WHAT WOULD PEOPLE PAY FOR THIS? WHAT IS IT WORTH? AND YOU'LL SEE, HE WILL EXPLAIN TO YOU HOW HE THEN DID MARKET STUDIES COMPARING THAT TO OTHER FEATURES, OVER TEXTING, OVER E-MAIL IN THE VIDEO ALBUMS PATENT AND CAME UP WITH THE
Case5:12-cv-00630-LHK Document1567-2 Filed04/03/14 Page65 of 69 DEFENDANTS' OPENING STATEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 NUMBERS WHICH I SHOWED YOU. NOW, HERE'S THE IRONY: ALTHOUGH THE 6.78 MILLION THAT
413
SAMSUNG IS ASKING FOR FOR THESE TWO PATENTS IS A FRACTION OF WHAT APPLE IS ASKING FOR ON ITS PATENTS, APPLE SAYS THAT 6.78 MILLION IS FAR TOO MUCH. APPLE IS SAYING THAT. IT'S TELLING YOU THAT EVEN
ASSUMING, EVEN ASSUMING IT INFRINGES THE '239 PATENT BY USING FACETIME, A FEATURE THAT APPLE VERY HEAVILY PROMOTED AS A MARQUEE FEATURE, IT SHOULD PAY LESS THAN 6.78 MILLION. AT THE SAME TIME, FOR MUCH MORE MINOR FEATURES, THEY'RE SEEKING BILLIONS. IT'S THAT SIMPLE. THESE TYPES OF FEATURES THEY DON'T MAKE
ONE THING THEY'RE CORRECT ON.
AREN'T WORTH HUNDREDS OF MILLIONS OF DOLLARS. A SIGNIFICANT DIFFERENCE IN SALES. VALUE.
THEY HAVE VERY LIMITED
IN THIS CASE, DR. KEARL DETERMINED THAT THAT WAS $6.78
MILLION. SO JUST TO WRAP UP, YOU'VE HEARD APPLE'S LAWYERS SAY THAT SAMSUNG IS TAKING SALES AWAY FROM APPLE BECAUSE IT HAS THESE FEATURES THAT CUSTOMERS WANT AND THAT IF SAMSUNG DIDN'T HAVE THESE FEATURES, SAMSUNG WOULD SELL FEWER PHONES AND APPLE WOULD SELL MORE. APPLE ITSELF DOESN'T EVEN USE FOUR OF THE FIVE. AGREE AS TO THREE. SLIDE TO UNLOCK. YOU CAN'T GET THOSE FEATURES BY BUYING AN APPLE PRODUCT. THEY
WE HAVE TO PROVE TO YOU THE FOURTH, THE
Case5:12-cv-00630-LHK Document1567-2 Filed04/03/14 Page66 of 69 DEFENDANTS' OPENING STATEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THEY'RE NOT IN A PRODUCT. THEY DON'T USE THEM.
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APPLE WANTS YOU TO BELIEVE THAT THESE CLAIMS ARE WORTH OVER $2 BILLION EVEN THOUGH THEY ARE NOT VALUABLE ENOUGH FOR APPLE TO USE. A VERY MUCH MORE COMMON SENSE EXPLANATION AS TO WHY A PATENT CLAIM IS NOT ADVERTISED OR LICENSED OR USED IS NOT BECAUSE IT'S WORTH VERY MUCH, BUT BECAUSE IT'S WORTH VERY LITTLE. THE CLAIMS, THESE APPLE PATENT CLAIMS ARE ORDINARY WAYS TO DO ORDINARY THINGS THAT HAVE BEEN, CAN BE, AND ARE BEING DONE DIFFERENTLY. ANDROID IS IPHONE'S MAIN COMPETITOR, AND GOOGLE IS AN APPLE OBSESSION. APPLE'S WHOLE FOCUS IS TO BEAT GOOGLE'S
ANDROID, AND THAT IS THE PURPOSE OF THIS LAWSUIT. APPLE HERE IS SINGLING OUT, SINGLING OUT, FROM ALL OF THE ANDROID POWERED HANDSET MANUFACTURERS, IT'S SINGLING OUT THE MOST SUCCESSFUL MANUFACTURER'S PRODUCTS THAT RUN ON ANDROID, SAMSUNG, AND TRYING TO CAPTURE THE PROFITS IT MADE FROM SELLING ANDROID CELL PHONES AND TABLETS. HOW DO YOU KNOW THIS IS TRUE, THIS GALAXY NEXUS PHONE WHICH THEY'RE SUING OVER AND THEY ACCUSE? HARDWARE. NOTHING IN THE THE
THEY DON'T ACCUSE ANYTHING IN THE HARDWARE.
SOFTWARE IS PURE ANDROID. APPLE IS TARGETING NEXUS'S PURE SAMSUNGLESS SOFTWARE. THAT'S WHAT THIS LAWSUIT IS ABOUT.
415
JUST HAVING ANDROID DID NOT GUARANTEE SAMSUNG'S SUCCESS. THERE ARE MANY DIFFERENT MANUFACTURERS THAT MAKE ANDROID PRODUCTS. SAMSUNG'S UNIQUE SUCCESS IN THE ANDROID WORLD WAS
NOT IN THE THINGS THAT WERE THE SAME, BUT THE THINGS THAT WERE DIFFERENT, LIKE THE INNOVATION, QUALITY, SELECTION, BUSINESS STRATEGY, OFFERING A LARGE VARIETY OF DIFFERENT PHONES AT MANY DIFFERENT PRICE POINTS, THE PROMOTION, THE DEVELOPMENT, THE BRAND, ALL OF THE RESULTS OF THE HARD WORK FROM THE PEOPLE AT SAMSUNG. LOTS OF PEOPLE, LOTS OF COMPANIES USE ANDROID, BUT NONE OF THEM ARE SELLING NEARLY AS MANY PHONES AS SAMSUNG. SAMSUNG'S SUCCEEDS WHERE OTHERS HAVEN'T BECAUSE OF SAMSUNG'S HARDWARE. IT IS THE SAMSUNG DIFFERENCE -- IT'S THE SAMSUNG DIFFERENCE MAKING CONTRIBUTIONS THAT SELL PHONES AND MAKE IT FAR AND AWAY THE MOST SUCCESSFUL ANDROID -- THE MOST SUCCESSFUL MANUFACTURER IN THE ANDROID WORLD. APPLE DOES NOT ACCUSE THOSE DIFFERENT MAKING HARDWARE FEATURES OF INFRINGEMENT. APPLE IS NOT ENTITLED TO THE PROFIT
ON THESE PHONES, PHONES WHICH PEOPLE BOUGHT BECAUSE THEY CARE ABOUT BIG SCREENS, STYLUSES, SUPER HD, AMOLED SCREENS, HIGH QUALITY CAMERAS, AND THE OTHER THINGS THAT YOU COULD ONLY GET ON THAT SAMSUNG PHONE. THE MONEY THAT CONSUMERS SPENT SHOULD
BE LEFT WHERE THEY SPENT IT. THANK YOU VERY MUCH.
Case5:12-cv-00630-LHK Document1567-2 Filed04/03/14 Page68 of 69 DEFENDANTS' OPENING STATEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: OKAY. THE TIME IS NOW 2:21.
416
LET'S TAKE A 15 MINUTE BREAK AND WHEN WE COME BACK, APPLE WILL CALL ITS FIRST WITNESS. ALL RIGHT. THE CASE. (JURY OUT AT 2:21 P.M.) THE COURT: OKAY. THE RECORD SHOULD REFLECT THE THANK YOU. PLEASE DON'T RESEARCH OR DISCUSS
JURORS HAVE LEFT THE COURTROOM. MR. SELWYN, HAVE YOU HAD A CHANCE TO -- PLEASE TAKE A SEAT -- HAVE YOU HAD A CHANCE TO TAKE A LOOK AT THOSE THREE PAGES? MR. SELWYN: WE HAVE. WE HAVE NO OBJECTION TO THOSE
THREE PAGES OF EXHIBIT 14 BEING DISPLAYED PUBLICLY. THE COURT: MR. SELWYN: OKAY. AND THAT'S DX 413. WE UNDERSTAND THAT THOSE ARE
DX 413.
THE ONLY THREE PAGES FROM THAT DOCUMENT OR LIKE DOCUMENT THAT THEY INTEND TO USE. THE COURT: ALL RIGHT. OKAY. SO THERE'S NO OBJECTION ANYMORE.
THANK YOU. THANK YOU.
I'M GOING TO RETURN THIS TO YOU.
(RECESS FROM 2:22 P.M. UNTIL 2:37 P.M.) (JURY IN AT 2:37 P.M.) THE COURT: WELCOME BACK. OKAY. EVERYONE PLEASE TAKE YOUR SEATS.
PLEASE TAKE A SEAT. YOU
YOU HAVE JUST RECEIVED A PHOTO OF THE FIRST WITNESS.
Case5:12-cv-00630-LHK Document1567-2 Filed04/03/14 Page69 of 69 DIRECT SCHILLER 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. BY MR. MCELHINNY: Q. MAKE SURE YOU'RE COMFORTABLE. I DON'T WANT TO HAVE YOU
417
WILL GET A PHOTO FOR EVERY WITNESS, AND THERE IS A TAB IN YOUR JURY BINDER THAT SAYS WITNESS PHOTOS. INCLUDE THEM. THAT'S WHERE YOU CAN
YOU'RE FREE TO TAKE NOTES.
THIS IS JUST TO HELP YOU REMEMBER DURING YOUR DELIBERATIONS, WHICH IS BE A NUMBER OF WEEKS FROM NOW, IT JUST ENABLES YOU TO PUT A NAME WITH A FACE AND PERHAPS YOUR NOTES, OR AT LEAST YOUR MEMORIES OF WHAT THAT PERSON SAID. ALL RIGHT. PLEASE CALL YOUR FIRST WITNESS. APPLE CALLS AS ITS FIRST WITNESS,
MR. MCELHINNY:
YOUR HONOR, MR. PHILIP SCHILLER. (PLAINTIFF'S WITNESS, PHILIP WILLIAM SCHILLER, SWORN.) THE WITNESS: THE CLERK: I DO.
WOULD YOU HAVE A SEAT, PLEASE.
AND PULL THE MICROPHONE TOWARDS YOU AND STATE YOUR NAME, PLEASE, AND SPELL IT. THE WITNESS: PHILIP WILLIAM SCHILLER. P-H-I-L-I-P,
W-I-L-L-I-A-M, S-C-H-I-L-L-E-R. THE COURT: AHEAD, PLEASE. DIRECT EXAMINATION ALL RIGHT. THE TIME IS NOW 2:38. GO
AWKWARD. READY? YES.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
JOSH A. KREVITT (CA SBN 208552) jkrevitt@gibsondunn.com H. MARK LYON (CA SBN 162061) mlyon@gibsondunn.com GIBSON, DUNN & CRUTCHER LLP 1881 Page Mill Road Palo Alto, California 94304-1211 Telephone: (650) 849-5300 Facsimile: (650) 849-5333 MICHAEL A. JACOBS (CA SBN 111664) mjacobs@mofo.com RICHARD S.J. HUNG (CA SBN 197425) rhung@mofo.com MORRISON & FOERSTER LLP 425 Market Street San Francisco, California 94105-2482 Telephone: (415) 268-7000 Facsimile: (415) 268-7522
WILLIAM F. LEE (pro hac vice) william.lee@wilmerhale.com WILMER CUTLER PICKERING HALE AND DORR LLP 60 State Street Boston, Massachusetts 02109 Telephone: (617) 526-6000 Facsimile: (617) 526-5000 MARK D. SELWYN (SBN 244180) mark.selwyn@wilmerhale.com WILMER CUTLER PICKERING HALE AND DORR LLP 950 Page Mill Road Palo Alto, California 94304 Telephone: (650) 858-6000 Facsimile: (650) 858-6100
Attorneys for Plaintiff and Counterclaim-Defendant Apple Inc. UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN JOSE DIVISION
APPLE INC., a California corporation, v. Plaintiff,
Civil Action No. 12-CV-00630-LHK (PSG) EXPERT REPORT OF PROFESSOR ANDREW COCKBURN
SAMSUNG ELECTRONICS CO., LTD., a Korean corporation; SAMSUNG ELECTRONICS AMERICA, INC., a New York corporation; and SAMSUNG TELECOMMUNICATIONS AMERICA, LLC, a Delaware limited liability company, Defendants. SAMSUNG ELECTRONICS CO., LTD., a Korean corporation; SAMSUNG ELECTRONICS AMERICA, INC., a New York corporation, and SAMSUNG TELECOMMUNICATIONS AMERICA, LLC, a Delaware limited liability company, Counterclaim-Plaintiffs, v. APPLE INC., a California corporation, Counterclaim-Defendant.
HIGHLY CONFIDENTIAL ATTORNEYS EYES ONLY
Gibson, Dunn & Crutcher LLP
CASE NO. 12-CV-00630-LHK (PSG) COCKBURN E XPERT REPORT
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
Intentionally Omitted
10. 470.
Apple Products Practice Claims Of The 172 Patent My operation of Apples iPhone and iPad products confirm that the iPhone and iPad
practice claims of the 172 Patent. When typing text on an iPhone or iPad, the current character string is displayed. A suggested replacement character string may also be displayed immediately above or below the current character string in certain instances. When a suggested replacement character string is displayed, selecting a delimiterthe spacebar or a punctuation markreplaces the current character string with the suggested replacement character string and appends the selected delimiter to the end of the suggested replacement character string. This behavior satisfies at least Claim 27 of the 172 Patent. 471. For example, a suggested replacement character string is sometimes displayed when
the user inputs a current character string. The following screenshot shows the display of the iPhone Messages application after the user types the current character string messaf. As the screenshot shows, a suggested replacement character stringmessageis displayed immediately above the current character string.
- 149 -
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(Display of iPhone after user types messaf) 472. Upon selection of a delimiter, the current character string is replaced with the
suggested replacement character string and the selected delimiter is appended to the suggested replacement character string. The screenshot on the left below shows the display of the iPhone Messages application after the user types the current character string messaf. The screenshot on the right below shows the display of the iPhone Messages application after the user selects the spacebar. As can be seen from the screenshot on the right, the current character string messaf is replaced with the suggested replacement character string message and the selected delimitera spaceis appended immediately after the suggested replacement character string.
(iPhone screenshots showing the display before and after the user selects a delimiter on the keyboard) 473. Accordingly, it is my opinion that Apples iPhone and iPad products practice claims of
the 172 Patent. C. The 760 Patent 1. 474. General Background The 760 Patent, invented by Scott Forstall, Greg Christie, Scott Herz, Imran
Chaudhri, Michael Matas, Marcel Van Os, and Stephen O. Lemay and entitled Missed call management for a portable multifunction device, issued on September 6, 2011 from an application dated June 27, 2011.
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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
SAMNDCA10123049; SAMNDCA10123122; SAMNDCA630-05935773; SAMNDCA20008688; GOOG-NDCAL630-00065727; GOOG-NDCAL630-0065560; GOOG-NDCAL630-00065490; GOOG-NDCAL630-00065439; GOOG-NDCAL630-00065335; GOOG-NDCAL630-00065267; GOOG-NDCAL630-00065196; GOOG-NDCAL630-00065125; GOOG-NDCAL630-00065054; GOOG-NDCAL630-00064992; GOOG-NDCAL630-00064995. X. 587. Compensation
I am being compensated at a rate of NZ$ 575 per hour for my work on this case. My
compensation is no way conditioned on the outcome of this matter. XI. 588. Conclusion
For the foregoing reasons, it is my opinion that Samsung directly and indirectly
infringes the asserted claims of the 721, 172, and 760 Patents. 589. I reserve the right to supplement or amend this expert report to the extent additional or
new information comes or is brought to my attention. In addition to explaining the opinions stated herein, at trial I may testify about my background, qualifications, and experience relevant to the issues in this action, the technical subject matter of the Asserted Patents, the accused Samsung products, and the Apple products that practice the claimed inventions, as well as the relevant state of the technology at the time of the alleged inventions. I may also prepare demonstrative materials that will aid in my testimony.
Date: August 12, 2013 Dr. Andrew Cockburn
- 193 -
UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN JOSE DIVISION CASE NO. 12-cv-00630-LHK EXPERT REPORT OF DR. ALEX C. SNOEREN CONCERNING U.S. PATENT NOS. 6,847,959 AND 7,761,414
APPLE INC., a California corporation, Plaintiff, v. SAMSUNG ELECTRONICS CO., LTD., a Korean corporation; SAMSUNG ELECTRONICS AMERICA, INC., a New York corporation; and SAMSUNG TELECOMMUNICATIONS AMERICA, LLC, a Delaware limited liability company, Defendants.
HIGHLY CONFIDENTIALOUTSIDE ATTORNEYS EYES ONLYSOURCE CODE GOOGLES HIGHLY CONFIDENTIAL OUTSIDE ATTORNEYS EYES ONLY SOURCE CODE
HIGHLY CONFIDENTIALOUTSIDE ATTORNEYS EYES ONLYSOURCE CODE GOOGLES HIGHLY CONFIDENTIALOUTSIDE ATTORNEYS EYES ONLYSOURCE CODE

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21.
I.
Use by Apple of The 959 Patented Technology 360. I have been asked to evaluate whether Apple practices the 959 Patent with the Siri
personal assistant software. Siri is available in iOS versions 5 and 6 running on the Phone 4S and iPhone 5 and on servers operated by Apple. It is my opinion that Apple practices claim 34 of the 959 Patent in the Siri system used with iOS 5 and 6. This opinion is based on a review of source code and documents relating to Siri, inspection of the devices, and discussions with Apple engineer, Benjamin Phipps. 361. That version of Siri practices a method for displaying information in a computer
system, namely, the iPhone 5 or iPhone 4S operating version 6.1. Siri receives an information identifier from the voice processing system and employs a global heuristic to selectively provide the information identifier to one or more heuristics, which match the information based on the heuristics. Specifically, Siri employs a global heuristic to select the apps or services to send the information identifier. As shown below, Apple indicates that Siri works with a variety of apps and services:
EXPERT REPORT OF DR. ALEX SNOEREN CONCERNING U.S. PATENT NOS. 6,847,959 AND 7,761,414
130
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362.
See, e.g., Apples Siri FAQ from http://www.apple.com/ios/siri/siri-faq/ on August 7,
2013. Apple references its use of a global heuristic when it indicates that Siri is smart enough to figure out which apps to use to answer your questions. 363. Siris global heuristic chooses between the above apps and services. At least two of
those apps are heuristics, as I understand them. One heuristic module is the weather module that searches for weather information that matches the information identifier and also uses location information to heuristically find weather information for the user. For example, if the information identifier is Is it going to rain today?, Siris global heuristic determines that the user is most likely looking for weather information and provides that information identifier to the weather app. The weather app employs a heuristic to determine the weather based on the users current location, rather than the weather of the users home or office or some other location.
131
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364.
Another heuristic module is the Contacts module. If the global heuristic determines
that the information identifier is most likely a name, then it selectively provides the information identifier to the Contacts module. For example, a user presses the Siri button on their phone and initiates the input of a spoken request, such as, who is Dennis Ritchie?
(Screenshot of iPhone Siri Interface from the iPhone 5) 365. Based on the information identifier, the global heuristic would determine that it is
likely a request for information about a person Dennis Ritchie. 366. Upon receipt of the information identifier, the Contacts module employs a heuristic to
search for information based on the information identifier. First, the heuristic determines if there is match on the Siri servers copy of the users contacts. If it is found, then it presents the information in the following format.
132
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(Screenshot from iPhone 5 upon inputting Who is Dennis Ritchie? where Dennis Richies phone number is stored in the iPhone 5 contacts database) 367. If it is not found, the heuristic transmits the search to on-the-phone Contacts module
and asks whether it has any matches. If the on-the-phone Contacts module reports back that it does not have a match, then the Contacts modules heuristic then determines that it should transmit the request to Wolfram|Alpha. If it sends it to Wolfram|Alpha, then it presents any results. In the Dennis Ritchie example, the Wolfram|Alpha result is shown below. If it fails to find any information at that point, the heuristic further provides suggestions of possible names from the Contacts database. Siri then receives at least one candidate and displays a representation of the candidate item of information as shown above.
133
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(Screenshot from iPhone 5 upon inputting Who is Dennis Ritchie? where there is no Dennis Ritchie in the contacts database) X. A. One of Ordinary Skill in The Art 368. I have reviewed the 414 Patent to determine the person of ordinary skill in the art. THE 414 PATENT
Based on my review of that patent, it is my opinion that a person of ordinary skill in the art of the 414 Patent would have a bachelors degree in computer science, computer engineering or electrical engineering, or the equivalent, or at least four years of experience in designing and/or implementing systems that enable user interaction and data management as of January 7, 2007 when the 414 Patent was filed. That person might have either more formal education with less practical experience or more practical experience with less formal education. For present purposes that person is no different whether the invention date is February of 2006 (as I understand that Apple is asserting), or the filing date of the application that resulted in the 414 Patent, January 7, 2007. 369. By January 7, 2007, I had received my Ph.D. and had been teaching undergraduate
students and graduate students for thirteen years. I thus would have qualified as a person of ordinary
134

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9.
I.
Use by Apple of The 414 Patented Technology 525. I have been asked to evaluate whether Apple practices claim 11 of the 414 Patent in
iOS version 6.1. It is my opinion that version 6.1 of iOS practices claim 11 of the 414 Patent. In forming my opinion I relied on the source code Apple made available in the following directory: Source\Additional_Samsung630_Off_21030605\1055-Samsung_Sync_14038700\6.1\ 526. Version 6.1 of iOS provides a number of applications including a Calendar and
Contacts application. Each of those applications provides a user-level non-synchronization processing thread that enables the user to access and edit structured data. The contacts and calendar applications both store information in a SQLite database on the iPhone that enables a user to access and edit contact information in that contact database.
96
The contention to which Samsung is referring is addressed above as the Third Non-infringement Contention.
195
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527.
Version 6.1 of iOS also provides separate synchronization software components for
each applications that provide a separate synchronization processing thread that operates concurrently with the non-synchronization processing thread for contacts and calendars that synchronizes structured data from the SQLite databases on the iPhone with structured data in a remote database. 528. I understand that the Address Book functionality described here has been in iOS since
at least version 4.0 and the Calendar functionality since iOS version 5.0. See Apple Developer: ABSource Reference available at http://developer.apple.com/library/ios/documentation/AddressBook/Reference/ABSourceRef_iPhone OS/ABSourceRef_iPhoneOS.pdf produced at APLNDC630-0001911803; Apple Developer: EKSource Reference available at http://developer.apple.com/library/ios/documentation/EventKit/Reference/EKSourceClassRef/EKSou rceClassRef.pdf produced at APLNDC630-0001911812.
196
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I declare under penalty of perjury that the foregoing is true and correct.
Dated: August 12, 2013 Alex C. Snoeren
197
1 2 3 4 5 6 7 8 9 10 11 12 Plaintiff, 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
[PROPOSED] ORDER Case No. 12-cv-00630-LHK
UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN JOSE DIVISION
APPLE INC., a California corporation,
Case No. 12-cv-00630-LHK vs. SAMSUNG ELECTRONICS CO., LTD., a Korean business entity; SAMSUNG ELECTRONICS AMERICA, INC., a New York corporation; SAMSUNG TELECOMMUNICATIONS AMERICA, LLC, a Delaware limited liability company, Defendants. [PROPOSED] ORDER GRANTING APPLE INC.S MOTION FOR PERMISSION TO PRESENT EVIDENCE THAT APPLE PRACTICES THE 414, 172, and 959 PATENTS AND CURATIVE INSTRUCTIONS
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28
THE COURT, having considered Apple Inc.s Motion for Permission to Present Evidence that Apple Practices the 414, 172 and 959 Patents and Curative Instructions, HEREBY GRANTS Apples motion.
IT IS SO ORDERED.
Dated: _________________, 2014
_____________ Hon. Lucy H. Koh United States Magistrate Judge
[PROPOSED] ORDER Case No. 12-cv-00630-LHK

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/s/ Harold J. McElhinny Harold J. McElhinny

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Declaration of Erik J. Olson Case No. 12-cv-00630-LHK (PSG)

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Declaration of Erik J. Olson Case No. 12-cv-00630-LHK (PSG)

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Declaration of Erik J. Olson Case No. 12-cv-00630-LHK (PSG)

Case5:12-cv-00630-LHK Document1567-2 Filed04/03/14 Page1 of 69

UNITED STATES COURT REPORTERS

THANK YOU. OKAY. 11:47. OPENING. GO AHEAD, PLEASE.

MR. QUINN: THE COURT: MR. QUINN:

THANK YOU, YOUR HONOR.

I CAN WONDER WHY SOME OF YOU MIGHT BE LOOKING A

UNITED STATES COURT REPORTERS

Case5:12-cv-00630-LHK Document1567-2 Filed04/03/14 Page4 of 69 DEFENDANTS' OPENING STATEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

THEY DON'T OWN THE ONLY WAY

THEY DON'T OWN THE ONLY WAY TO HAVE AN UNLOCK SCREEN

THEY FINALLY -- I WAS WAITING.

UNITED STATES COURT REPORTERS

Case5:12-cv-00630-LHK Document1567-2 Filed04/03/14 Page5 of 69 DEFENDANTS' OPENING STATEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 INTELLIGENCE.

UNITED STATES COURT REPORTERS

IT'S A SAMSUNG PHONE.

YOU CAN SEE THAT IT'S JOINT

THIS CAME OUT IN DECEMBER 2011, A

UNITED STATES COURT REPORTERS

Case5:12-cv-00630-LHK Document1567-2 Filed04/03/14 Page7 of 69 DEFENDANTS' OPENING STATEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 COOL.

UNITED STATES COURT REPORTERS

NONE OF THE SHAPES

NONE OF THOSE ARE ACCUSED IN THIS CASE OF

UNITED STATES COURT REPORTERS

FINGER AT GOOGLE. GOOGLE.

GOOGLE DIDN'T COPY.

UNITED STATES COURT REPORTERS

Case5:12-cv-00630-LHK Document1567-2 Filed04/03/14 Page10 of 69 DEFENDANTS' OPENING STATEMENT 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 DO THAT.

RESEARCH THAT THEY DO.

GO OUT AND THEY DO RESEARCH.

AND THEIR OWN

THEY KNOW THAT'S NOT WHAT MATTERS, AND WE'LL

UNITED STATES COURT REPORTERS

IT'S THE TRUTH.

UNITED STATES COURT REPORTERS

WE'LL SEE EVERYONE BACK AT 1:00 O'CLOCK.

UNITED STATES COURT REPORTERS

THERE IS, YOUR HONOR.

OH, OKAY. GOOD AFTERNOON, YOUR HONOR. WITH THE

UNITED STATES COURT REPORTERS

SO YOUR REQUEST IS THAT WE,

WHAT, SEAL THE COURTROOM?