Case: 1:14-cv-02369 Document #: 33 Filed: 01/28/15 Page 1 of 7 PageID #:78 1

1 TRANSCRIBED FROM DIGITAL RECORDING

2 IN THE UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
3 EASTERN DIVISION
4 MARTIN-ELLIOT, LLC and )
MARY JO BASLER, )
5 )
Plaintiffs, )
6 )
vs. ) No. 14 C 2369
7 )
KELLEY DECKER, ) Chicago, Illinois
8 ) August 20, 2014
Defendant. ) 2:27 P.M.
9
TRANSCRIPT OF PROCEEDINGS - Settlement Statement
10 BEFORE THE HONORABLE JEFFREY T. GILBERT, Magistrate Judge
11 APPEARANCES:
12 For the Plaintiffs: EDWARDS WILDMAN PALMER LLP
225 West Wacker Drive
13 Suite 3000
Chicago, Illinois 60606
14 BY: MR. DAVID T. VAN DER LAAN
MR. ANTHONY GERARD HOPP
15
For the Defendant: NIRO, HALLER & NIRO, LTD
16 181 West Madison Street
Suite 4600
17 Chicago, Illinois 60602
BY: MR. RAYMOND P. NIRO
18 MS. OLIVIA T. LUK
19 Also present: Mary Jo Basler
Kelley Decker
20

21 PAMELA S. WARREN, CSR, RPR

Official Court Reporter
22 219 South Dearborn Street
Room 1928
23 Chicago, Illinois 60604
(312) 294-8907
24 NOTE: Please notify of correct speaker identification.
FAILURE TO SPEAK DIRECTLY INTO THE MICROPHONE MAKES PORTIONS
25 UNINTELLIGIBLE.
 Case: 1:14-cv-02369 Document #: 33 Filed: 01/28/15 Page 2 of 7 PageID #:79 2

1 (Proceedings held in open court:)

2 THE CLERK: 14 CV 2369, Martin-Elliot, LLC, et al.
3 versus Decker.
4 THE COURT: Good afternoon. Want to state your
5 appearances for the record?
6 MR. NIRO: Good afternoon, your Honor. Ray Niro and
7 Olivia Luk for the plaintiff -- for the defendant, Ms. Decker.
8 MR. VAN DER LAAN: Good afternoon, your Honor. David
9 Van Der Laan and Tony Hopp on behalf of plaintiffs Mary Jo
10 Basler and Martin-Elliott, LLC.
11 THE COURT: Okay. We've spent the better part of this
12 afternoon, literally the better part -- no, actually, the
13 better part of the day. We started this morning negotiating a
14 settlement of this case. We have an agreement here. And
15 parties are going on the record to memorialize the terms of the
16 settlement.
17 I should say that in the courtroom we also have the
18 parties present, Ms. Decker and Ms. Basler.
19 I'm going to summarize the material terms that the
20 parties have agreed to with each sides's lawyer having the
21 right to either interrupt me or at the end supplement what I'm
22 saying or correct what I'm saying.
23 The material terms of the agreement are as follows:
24 Ms. Decker will keep the patent -- Patent Number '662, that's a
25 subject of this litigation. She agrees that -- to granting
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1 non-exclusive license to Ms. Basler.

2 She agrees not -- Ms. Decker agrees not to license any
3 other -- anybody else except for sub-licensees who are licensed
4 to manufacture the product for sale by Ms. Decker or her
5 designees.
6 Similarly, Ms. Basler agrees not to sub-license
7 anybody else under her non-exclusive license, other than
8 sub-licenses to manufacture the product for her distribution.
9 The parties agree each to pay the other a 2 percent
10 royalty on gross sales, without any cap, and for the life of
11 the patent. I guess, right?
12 MR. VAN DER LAAN: Your Honor, I think that's correct.
13 2 percent royalty on all license products which are all
14 products covered by the patent.
15 THE COURT: Okay.
16 MR. NIRO: Were we stopping that at the life of the
17 patent or was that in perpetuity?
18 THE COURT: I said in perpetuity. I thought they were
19 the same. Are they not the same?
20 MR. VAN DER LAAN: Well, I think it has to end at
21 the -- at the expiration of the patent. You can't extend the
22 royalty past that. It's illegal we believe.
23 MR. NIRO: Well, that's -- I think that's --
24 MR. HOPP: That's probably right.
25 MR. VAN DER LAAN: So I think that the -- the royalty
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1 obligation should end upon expiration of the patent, which is

2 20 years from issuance.
3 MR. NIRO: Right.
4 MR. VAN DER LAAN: Or 20 years from filing --
5 MR. NIRO: Yep.
6 MR. VAN DER LAAN: -- or 17 years from issuance.
7 MR. HOPP: We'll -- we'll take a look at that, your
8 Honor, and see if it is in fact illegal (unintelligible) patent
9 matter. Unless the patent expires, it may be difficult to --
10 THE COURT: Okay.
11 MR. VAN DER LAAN: Yeah, I think the Supreme Court in
12 the Brulotte case --
13 MR. HOPP: So --
14 MR. VAN DER LAAN: -- says you can't --
15 THE COURT: I didn't --
16 MR. VAN DER LAAN: You can't --
17 THE COURT: I didn't need to wade into that actually.
18 MR. VAN DER LAAN: You can't extend beyond. But we
19 can -- we can deal with that.
20 THE COURT: Okay.
21 MR. HOPP: Subject to further modification. For now
22 we'll say for life.
23 THE COURT: Okay.
24 MR. VAN DER LAAN: That's fine.
25 THE COURT: The royal- -- the obligation to pay
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1 royalties does not kick in, however, until Ms. Basler has
2 received $80,000 to reimburse herself for the expenses she's
3 claiming in this litigation. Ms. Decker has received $15,000
4 to -- and then after that the 2 percent royalty kicks in.
5 Ms. Basler has the right to protect the patent by
6 suing infringers if that -- after giving notice to Ms. Decker
7 of an infringement, and then a particular period of time giving
8 Ms. Decker the right to enforce the patent. But if she doesn't
9 enforce the patent, then Ms. Basler has the right to enforce
10 the patent and to -- to give her license effect. And she pays
11 the cost of doing so and reaps any benefits or damages obtained
12 in any lawsuits.
13 Each side will provide the other on an annual basis
14 with the sales data. And each side has the right once a year,
15 if they so -- if they choose to exercise it, to bring an
16 independent auditor in to audit the sales of the other side to
17 see that the royalties are being appropriately paid.
18 The pat- -- Ms. Decker has the right to assign her
19 rights, only with Ms. Basler's consent, except that she has the
20 right to assign her rights under the patent without
21 Ms. Basler's consent at a time five years after the last sale
22 made by Ms. Basler under her license.
23 That right is mutual with Ms. Basler in the sense that
24 Ms. Basler agrees she will not assign her non-exclusive license
25 without Ms. Decker's consent, except that Basler can assign her
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1 rights after -- five years and after of Decker's sale any

2 assignment would be subject to the royalty agreement.
3 These contractual obligations of each party will be
4 binding, not only on them, but on their heirs and the assigns
5 as I just described.
6 The case will be dismissed with prejudice with no
7 attorneys's fees to either side. Each -- each of the parties
8 will execute mutual releases of all claims, whether made or
9 not, relating to anything under the sun except for the
10 obligations of their settlement agreement.
11 I realize that we didn't talk about one thing here,
12 and so I'd like to go off the record for one second.
13 (Discussion off the record.)
14 THE COURT: The final matter was the Martin-Elliott,
15 LLC, which is a plaintiff in the case, along with Ms. Basler.
16 So the parties are going to discuss liquidation of Ms. Decker's
17 interest in that LLC or termination of the LLC in some way
18 after dismissal of the lawsuit.
19 Is there anything you -- I missed or you would like to
20 add?
21 MR. NIRO: I think you have covered everything, your
22 Honor, and this is a -- a settlement that's satisfactory to the
23 defendant.
24 THE COURT: Well, so, we'll just get that on the --
25 Ms. Decker, you agree to this settlement as I've
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1 described?
2 MS. DECKER: I do, your Honor.
3 THE COURT: And, Ms. Basler, you agree to the
4 settlement as I've described?
5 Would you say yes?
6 MR. HOPP: Yes.
7 THE COURT: Just into the microphone.
8 MS. BASLER: Ummm (unintelligible) perpetuity.
9 MR. HOPP: We did say for perpetuity.
10 MS. BASLER: Okay. Yes.
11 THE COURT: Okay. Then let's go off the record.
12 (Which concluded the proceedings.)
13 CERTIFICATE
14 I certify that the foregoing is a correct transcript
15 from the digital recording of proceedings in the above-entitled
16 matter to the best of my ability, given the limitation of using
17 a digital-recording system.
18

19

20 / s/ Pamel a S. War r en August 22, 2014

Official Court Reporter Date
21 United States District Court
Northern District of Illinois
22 Eastern Division
23

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