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THE UNITED STATES DISTRICT COURT IN AND FOR THE DISTRICT OF DELAWARE

HONEYWELL INTERNATIONAL, INC. et al. Plaintiffs,

CIVIL ACTION

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7 APPLE COMPUTER, INC., et al., 8 Defendants. 9 10 11 12 13 BEFORE: 14 15 16 17 18 and 19 20 21 22 23 24 25 Brian P. Gaffigan Registered Merit Reporter
United States District Court - Honorable Mary Pat Thynge

NO. 04-1338

(***)

Wilmington, Delaware Thursday, May 17, 2007 at 11:02 a.m. TELEPHONE CONFERENCE

HONORABLE MARY PAT THYNGE, U.S. MAGISTRATE JUDGE

APPEARANCES:

MORRIS NICHOLS ARSHT & TUNNELL BY: THOMAS C. GRIMM, ESQ.

ROBINS KAPLAN MILLER & CIRESI, L.L.P BY: MATTHEW L. WOODS, ESQ., STACIE E. OBERTS, ESQ. (Minneapolis, Minnesota) and

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firm. THE COURT: All right. Thank you. Who is on the line on behalf of Fuji. MR. ROVNER: Your Honor, this is Phil Rovner from Potter Anderson. And with me on the line is Lawrence Rosenthal from Stroock in New York. THE COURT: All right. Good morning. MR. ROSENTHAL: Good morning, Your Honor. THE COURT: Who is other line on behalf of Hitachi? MR. MOORE: Good morning, Your Honor. It's David Moore from Potter Anderson. With me on the line are Rob Scheinfeld, Neil Sirota and Rob Maier. (Unidentified speaker): Good morning. THE COURT: Good morning. Counsel, before you begin to talk, I would like you to state your names so that we can have a correct transcript. Is everybody still there? (The attorneys respond, "yes.") THE COURT: There are a number of issues that we need to address today but there are a couple of things I also want to ask about as well. Awhile ago, there was a motion to amend or for leave to file a second amended complaint. And from what I can tell, the only opposition that is left in the case is Wintek. Does Honeywell know
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APPEARANCES:

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ROBINS KAPLAN MILLER & CIRESI. L.L.P BY: ANTHONY FROIO. ESQ .· (Boston. Massachusetts) Counsel on behalf of Honeywell International. Inc .· and Honeywell Intellectual Properties. Inc. YOUNG CONAWAY STARGATT & TAYLOR BY: KAREN L. PASCALE. ESQ. and OBLON SPIVAK McCLELLAND MAIER & NEUSTADT. P.C. BY: ANDREW M. OLLIS. ESQ. (Alexandria. Virginia) Counsel for Optrex America. Inc. POTTER ANDERSON & CORROON. LLP BY: DAVID E. MOORE. ESQ. and BAKER BOTTS. L.L.P. BY: ROBERT MAIER. ESQ .. NEIL P. SIROTA. ESQ .· ROBERT C. SCHEINFELD. ESQ. (New York. New York) Counsel for Hitachi. Ltd .. Hitachi Displays. Ltd .. Hitachi Display Devices. Ltd .· Hitachi Electronic Devices (USA). Inc.

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APPEARANCES: (Continued)
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POTTER ANDERSON & CORROON. LLP BY: PHILIP A. ROVNER. ESQ. and STROOCK & STROOCK & LAVAN LLP BY: LAWRENCE ROSENTHAL. ESQ. (New York. New York) Counsel for Fuji Photo Film Co .. Ltd. and Fuji Photo Film U.S.A. Inc.

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PRO C E E DIN G S REPORTER'S NOTE: THE COURT: please? MR. GRIMM: Grimm. Froio. THE COURT: MR. WOODS: THE COURT: behalf of Optrex? MS. PASCALE: This is Karen Pascale. Your Honor. And also on the line is Andy Ollis from the Oblon Spivak All right. Thank you. Who is on the line on Good morning. Your Honor. Good morning. Good morning. Your Honor. Tom And with me are Matt Woods. Stacie Oberts and Tony The following telephone conference was held in chambers. beginning at 11:02 a.m.) Good morning. this is Judge Thynge. Before we begin. who us on the line on behalf of Honeywell.

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whether or not I need to decide this issue or has it been resolved? MR. WOODS: Your Honor, I believe that that refers to the amended complaint with regard to the accounting.' And, obviously, I cannot tell you. And this is Matt Woods. I do not know what Wintek's current position is on that. I can check on that but I do not know. THE COURT: All right. Let's get to the issues that are involved in this matter. And I think the first one that was filed -- let me see. They were all filed about the same time but we might as well get with the Optrex one first because that is the first one I received. Oh, there was one other thing I wanted to bring up with you, and I'm saying this in all of my cases. When we have discovery disputes in which we have the 48 hour and 24 hour submission time, I literally mean 48 and 24 hours. I don't know whether counsel is aware but when a notice is filed with the Court on the e-filing system that we have and it's a notice and it's a sealed document, I can't get access to that document because it's sealed so I have to wait until a copy is actually provided to me. I expect that when you file it with the court or list it on the e-filing of the court, I do expect that that document to also be downstairs in the Clerk's Office immediately. Okay? So that is for future reference.

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1 where no testimony at all was allowed on this subject, 2 2 situation. So Optrex, our particular interest and focus was 3 MR. OLLIS: Good morning, Your Honor. This is 3 to, among other things, simply confirm the statement that 4 Andy Ollis speaking on behalf of Optrex. 4 Mr. Brafman offered in 2005 in the context of a question 5 THE COURT: Okay. And it sounds like yours 5 about what scope of discovery was appropriate. And he 6 dovetails a little bit with Fuji's. 6 indicated that trying to figure out which modules were, had 7 MR. OLLIS: It does, That is I think a subset 7 two baths and I guess with rotation, It was not a simply a 8 of the Fuji motion. 8 fishing expedition. It could be determined without too much THE COURT: Okay. 9 difficulty. 9 10 MR. OLLIS: The Optrex motion is more limited in 10 And so we wanted to confirm that fact and that 11 its focus; specifically, on a statement that was made by 11 statement, number one, And then, number two, ask a few more 12 counsel for Honeywell, David Brafman, at a hearing in 2005 12 questions just to make sure we understood the extent and 13 in which he stated that Honeywell teardown rate on average 13 scope of that statement and link it I assume to all of the 14 was about 50 percent as a result of their investigation to 14 earlier testimony that Mr. Wood had given relating to the 15 teardown process. 15 try to find infringing products. THE COURT: Yes, the hit rate. 16 16 So the Optrex focus on this was fairly limited 17 MR, OLLIS: Right, the hit rate. During two 17 and I think there may have been some question as raised in 18 Honeywell's letter about the exact extent of the scope of 18 different depositions of Honeywell personnel, Optrex 19 inquired about the hit rate in Honeywell's investigation, 19 the discovery that Optrex was liking for, At this point, 20 The first was during the laches deposition in which 20 we are looking principally for testimony relating to 21 Mr. Brafman's statement. So it's a fairly limited inquiry, 21 Honeywell offered David Brafman to testify about various 22 issues relating to laches. At that time, when the issue or 22 THE COURT: Well, why don't you tell me what 23 the question was raised what was the hit rate, Honeywell 23 type of testimony you're looking for. 24 instructed Mr, Brafman not to answer on the basis I think 24 MR, OLLIS: Well, first and foremost, I'd like 25 primarily of attorney work product. 25 confirmation from a witness under oath, and preferably Ir-------------------+----------------------i
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1 During Mr. Brafman's deposition, it was 2 learned that Mr, Wood, Honeywell engineer, was the principal 3 technical person in charge of Honeywell's teardown 4 investigation and, consequently, the defendants noticed 5 Mr. Wood's deposition as well. And so a couple months 6 later, we took the deposition of Ted Wood and there was a 7 substantial amount of testimony provided relating to the 8 teardowns that Honeywell did. 9 THE COURT: Well, what was the type of testimony 10 that was provided? 11 MR, OLLIS: Well, for example, we inquired about 12 the specific module characteristics that Honeywell was 13 looking at to decide which modules should be selected for 14 teardowns. And there was various testimony on a number of 15 the factors along those lines that was offered. In 16 addition, they, Honeywell and Mr. Wood specifically provided 17 a fair amount of testimony about each specific step that was 18 gone through in general, system modules, once they actually 19 were torn down. 20 And then, as I think was referenced, for 21 example, in the Fuji motion, there was a fair amount of 22 information learned in general about the types of 23 information that was recorded about each module but that is 24 at least some of the main points that come to mind. But it 25 was fairly extensive testimony. This wasn't a situation

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Mr. Wood, since he was the one in charge of the investigation, confirming Mr. Brafman's statement that the resulting testimony was about -- excuse me -- the infringement investigation did in fact result in about a 50 percent hit rate, And then, number two, I just want to understand a little bit more about that to make sure we understand the time period that is covered there, confirm that it's the same investigation that Mr. Wood had testified about, but it would probably be less than five minutes of follow-up testimony from the Optrex perspective. THE COURT: All right, Who is going to be -have you completed your arguments? MR. OLLIS: Just very briefly, Your Honor. I think as already set forth in our letter, this issue is related to damages, laches and commercial success. I won't go into that now, As far as some of the positions in the Honeywell letter, arguing that this was simply a general statement, Optrex disagrees. This case is not like the Vecco case where there was a statement that Honeywell pointed to relating to improper accounting entries made by a specific individual. Here, Honeywell specifically and intentionally if you will, named that individual. They identified the actual hit rate. And we think we're entitled to take some discovery on that, They waived that fact and we're entitled

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10 to learn a little bit more about it and confirm it, And unlike the Vecco case, for example, here there was substantial testimony provided by Honeywell employees on this general topic. So this is not a single isolated statement that has to be taken into context of the fact that a lot of discovery has already been provided on this investigation and that there is no good reason to draw the line where Honeywell has drawn it, And with that, we'll I'll leave it for now, THE COURT: All right. Now, regarding Honeywell's position on Optrex's comments. MS, OBERTS: Your Honor, this is Stacie Oberts on behalf of Honeywell, There are a couple of things I would like to comment on which Mr. Ollis referred to. First, he had said that one of the reasons why they need information regarding the hit rate is to confirm the difficulty Honeywell had in determining infringement, That testimony has been put forth. Mr. Wood testified about how he went about tearing down, the factual basis about how he went about tearing down the product, how long it took to do a typical teardown, So I believe those facts have already been confirmed, I don't believe that there is any need for testimony regarding the hit rate to further confirm that, As to testimony confirming Mr. Brafman's 11

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12 didn't go into it in detail but the argument that this is related to laches, commercial success and noninfringing alternatives, As the Court is well aware, the defendants have taken great pains to limit this case to those products that are specifically accused. While they have refused to provide information regarding its own products that would support those positions, they now expect to delve into the privilege nature of Honeywell's work product to support that part of their case, And, frankly, it's unfair that Honeywell would be required to waive privilege while the defendants are not required to produce documents on those same products. THE COURT: All right. Is there anything further that needs to be said on this issue? MS. OBERTS: The only other thing I would say on this issue, they have said this would only take five minutes, I think we would have some concern as to how, whether or not it really would take five minutes of testimony and whether it would extend into a much lengthier deposition, And we just have some concern. As we laid out in our paper, Optrex proceeded with Mr, Wood's deposition over two months after knowing that this was Honeywell's position and never raised it. And so it would be, what they're asking for is to reopen Mr, Wood's deposition on topics that frankly they knew Honeywell's position before 13 they went into it. THE COURT: That's interesting because that is an argument I think Hitachi is making against you in their case, but that is okay, and their position, Okay, Let me hear from Fuji and what Fuji is looking for because I think Fuji is looking for something a lot more, MR, ROSENTHAL: Yes, Your Honor, I guess to be logical, I will deal with -- this is Lawrence Rosenthal -I will deal with what I refer to as second c1awback letter which deals with teardowns in which I cite Mr, Brafman's hit rate statement as one of the waivers which took place, By way of background, one of the documents produced and then clawed back was an e-mail from one of the Honeywell technical troops to Ms. Yeadon who was on her way to Sanyo to negotiate a license describing one of Sanyo's products putting forth the results of teardown, That is the only way I could interpret it. The broader issue is the teardown process itself. It is true that in a general way, Mr, Wood described the process: what he looked for, how he did it, how long it took, how he recorded the information, But as soon as one tries to inquire past the generalities to the specifics -THE COURT: What type of specifics?

statement, that was a statement that was made back in September of 2005. Judge Jordan invited Honeywell to continue doing its teardown to accuse additional products in this litigation. As such, that hit rate, at any point in time, has changed and has evolved, In addition, who is Optrex specifically looking for? For any given defendant, that hit rate may be different, We do not believe that the statement Mr. Brafman made was a waiver, At the time of that statement, the defendants, the customer defendants were trying to argue that while Honeywell was looking for additional products, they argued it was a fishing expedition, and all Mr, Brafman was trying to convey is the fact that we were finding widespread infringement. So it was not a fishing expedition to expect the customer defendants to look across their product line, Now, in response to Mr, Ollis's comments on In Re: Vecco, this case is instructive in this instance, In that case, some general conc1usory statements were made but it didn't disclose any specific information, any specific documents or any specific discussion, Mr, Brafman's comments was similarly, as in In Re: Vecco, basically a conc1usory statement about its work product, so it is not a waiver of a privilege, And I would briefly like to address, Optrex

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14 MR. ROSENTHAL: Specifically, the products examined, the results of the examination, In fact, I think the most telling is, I think it was on page 86 of his transcript, he lists the people who were involved in the initial formulation of the procedure which he describes and he lists three lawyers and two technical people and when an attempt was made to inquire as to who did what and what happened, who specified what, that was cut off by Honeywell, So the test that Honeywell applies for its privilege is, in essence, is their attorney in some way involved in the transaction; and if it is, then everything that that attorney is in any way involved in, whether he did the work or just organized it or whatever, becomes either attorney-client privilege or work product privilege. THE COURT: I think their emphasis is on work product privilege. MR. ROSENTHAL: Right, In this particular case, they seem to be relying on the work product privilege, Your Honor, and I think that is where we have to focus our attention. The Federal Rules of Civil Procedure codify the fact this is a limited privilege, it's not an absolute privilege, The particular work product we contend that the information that we're asking for, which is not what the lawyers concluded but merely what the technical people found

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16 MR. ROSENTHAL: It is because before this complaint was filed, Fuji adopted several structures which either had a rotation of 35 degrees or had only a single lens and we have a very strong interest in understanding what was not accused of infringement during this run up to the lawsuit, That is the reason why we want to go to not only to what was infringed but what was not deemed infringed. Now, as to the stuff that was infringed, it is clear that there is several waivers, aside from the hit rate. Much of this material was given to the various potential licensees, defendants, all of whom are characterized as adversaries. The people they gave this information to were not Honeywell's friends, they were people Honeywell was extracting money from, And, therefore, by following the practice of giving this information to your adversaries, that is a waiver under the law in the Third Ci rcui t. Westinghouse, as Judge Jordan noted, says -first of all, it talks about how giving it to an adversary is perhaps the most important kind of waiver you can have. The other point it makes is there is not much difference between the work product and privilege where fairness, as to the fairness test. And, here, we have classic selective production, They produce it when it serves their purpose,

15 when they examined the product, is technical information 2 which is not work product in this particular case, 3 THE COURT: Well, what type of technical 4 information are you looking for, are you saying you didn't 5 get the technical information from? 6 MR. ROSENTHAL: I'll be specific, Your Honor. 7 THE COURT: Okay, 8 MR, ROSENTHAL: They described that the process 9 of tearing down was to literally open up a product and 10 then take out the module and then break open the module and 11 they recorded the number of lens arrays, They recorded 12 whether or not there was rotation in one or another of 13 the lens arrays, And they recorded that information in a 14 spreadsheet which included the identification of the product 15 and the module. The lawyers had nothing to do with that 16 process, They did not make entries, The spreadsheet merely 17 has the -18 THE COURT: Well, my understanding is, Lawrence, 19 you are not just interested in the ones that infringe, they 20 found infringing or at least you feel they were infringing, 21 you are interested in the ones that you understand -- you 22 want to know all the products that they did the teardowns 23 on, 24 MR, ROSENTHAL: Yes, I do, Your Honor. 25 THE COURT: So tell me why.
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17 They produced in fact when they're not trying to clawback 2 presentations given to Chi Mei and Sanyo. 3 We, Fuji, received a letter with an analysis. 4 What is interesting is that the modules cited in the 5 analysis were not even listed in the charts which they rely 6 upon as saying they made full disclosure of what they did of 7 Fuji's products, They didn't even refer to the prefiling 8 investigation but they certainly gave it to Fuji, And my 9 guess is, and it hasn't been denied, they've given it to 10 almost every or every licensee, potential licensee defendant 11 in an attempt to settle this case. 12 So I think that the waiver is clear. I think 13 the fairness is clear, Let me address the issues of where 14 this would playa role, 15 First of all, obviously, Fuji is interested in 16 knowing whether products such as it sold pre-complaint were 17 in fact not charged with infringement, 18 Second of all, to the extent that products were 19 torn down and not charged with infringement, those products 20 represent a body of products which we believe are no 21 different from the body of products which were accused of 22 infringement from the viewpoint of commercial success of the 23 product, That is where Honeywell is going. They look to 24 the commercial success of the ultimate product; in our case, 25 digital still cameras, We should be able to investigate
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18 whether or not a digital still camera which was not accused of infringement is any more successful or less successful than one accused of infringement, The laches defense. THE COURT: Let me ask you this, Larry. Don't have you out there anyhow the world in which there were different types of cameras and the world in which there are cameras that are being accused of infringement? MR. ROSENTHAL: Well, Your Honor, we don't have the world as to -- well, let me take a step back a little bit about the world. As far as we are concerned, we can't reproduce, which is the general issue of necessity under Rule 26, we can't reproduce the exercise that Honeywell did (A) because we may not, at this date, be able to find the products that they examined; (B), we don't even know what products they examined. THE COURT: Well, you know the products that they accused of infringement; right? MR, ROSENTHAL: But that body of products does us little good because as best as we can determine -THE COURT: Well, let me back up a little bit, You know the body of products that they accuse of infringement; correct? MR. ROSENTHAL: Yes. THE COURT: And your client probably has an idea

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20 devices that were examined by Honeywell. And that is our necessity. We have no way of replicating it, This is not like the golf club case which Mr, Woods cites where it is the defendant who cut open nine or seven golf clubs of its own so that the sea of golf clubs to be examined is finite and the plaintiff is in no worse position than the defendant in figuring out what to cut open and what not to cut open, THE COURT: Why is it relevant to you to know what accused products were examined by Honeywell of the other defendants? MR. ROSENTHAL: Your Honor, again, it's a two-sided coin. On the one side, the products which are accused, if they are all two-sheet products rotated between two and 11 degrees, that is very telling, On the other hand, and that is in juxtaposition if they didn't accuse, So that it's the entire body, Now, that which is accused, I think the waiver case is particularly strong, That is what they used to obtain the licenses that they already have or to attempt to obtain licenses with the defendants who are still in the case, So that's with the waiver, And that is where the fairness also plays, because I think if you read anything out of the Third Circuit cases, it's the rejection entirely of the concept 21 of selective production, Nothing is inadvertent about the production except possibly the one e-mail which was clawed back, Everything else was purposeful. The Chi Mei and Sanyo presentations, the disclosure to adversaries or potential licensees or defendants, That is all purposeful, There is nothing inadvertent, In most of the cases where they deny the remedy are generally the inadvertent cases. Judge Jordan's case in bankruptcy." THE COURT: I have your idea on what your thoughts are concerning this particular topic, Thank you. Honeywell. MS, OBERTS: Thank you, Your Honor, This is Stacie Oberts on behalf of Honeywell, Let me start where Mr, Rosenthal left off, First of all, with regard to what was disclosed to potential licensees, Mr. Rosenthal has not accurately depicted what exactly was disclosed. What was provided to potential licensees was a few snapshots of the products, a couple products that were torn down, It was not as broad as Mr, Rosenthal would like to make out, The other thing that was disclosed to potential licensees were the basic facts that confirmed that infringement such as two baths and what angle of rotation, That same factual information has been provided to each and everyone of the defendants in detailed interrogatory answers.

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19 of the body of products that were out there in different years, the total body of products that were out there in different years, MR, ROSENTHAL: Your Honor, the total body of 5 products which are out there in different years is the 6 camera body, not the module body. THE COURT: That's right, 7 MR, ROSENTHAL: We don't have a clue as to what 8 9 modules were in each of the products and just because, for 10 example, Sony, who was a manufacturer of digital still 11 cameras, was accused of infringement, we don't know which 12 of the Sony products are in fact accused, which have the 13 modules in question. We can't make any comparative analysis 14 of the commercial success issue other than an analysis of 15 our own products, So you are saying to me you do not know which Sony 16 Q, 17 products were accused of infringement by Honeywell? I know of some, I don't know of all, And I also do 18 A, not know which cameras are accused because the accusation in 19 20 Sony's case was module focused. And, therefore, I don't 21 know which camera included which module. We're not in the 22 module business. We don't compete with Sony in the module 23 business, We happen to have assembled LCD modules for use 24 in our cameras and for no other use at all, So we do not 25 have the body of knowledge or the availability of the sea of

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22 THE COURT: Before you go on, Stacie, let me ask you about this summary sheet or analysis sheet that was made by, through Mr. Wood or by Honeywell. What does a sheet in genera1 contai n? MS. OBERTS: Yes, Your Honor. What it is is it's a spreadsheet. What Mr. Wood testified in-depth was when Honeywell began its investigation, the attorneys at Honeywell set forth a series of guidelines and criteria of what information they were looking for, a criteria of what products to select and how to go about doing that teardown process. This was all done at the direction of Honeywell's in-house attorneys. They then brought in Mr. Wood and his technical team who acted solely at the direction of those lawyers. The information that was gathered and how it was gathered represents the thought processes and mental impressions of the in-house attorneys. THE COURT: Tell me what information was gathered and put on the spreadsheet. MS. OBERTS: Essentially, Your Honor, it was what products were torn down. It included certain information. I don't want to give out too much information to waive privilege but, for instance, whether lenticular arrays were found. If lenticular arrays were found, what was the angle of rotation. There was also, because attorneys had specific questions, they would ask Mr. Wood to 23 look at certain things. I don't want to reveal what those specific substances were because I am somewhat concerned I would waive privilege but it was concerns we had going forward to prove infringement, certain information we would ask him to look into. And he would record comments in the spreadsheet, whether or not certain things the attorneys were looking for were in fact present in the products that he was tearing down. It included basically the order, the orientation of the various components of the various modules. It also included certain comments. I'm trying to think of everything. But everything that was recorded was based on certain information that the attorneys themselves asked him to look to. THE COURT: And what did you plan to do with this information after you got it? MS. OBERTS: What happened was as Mr. Wood gathered the information for the attorneys, then the attorneys looked at the information to determine whether or not to accuse a product of infringement, which goes to the heart of the attorney work product doctrine. THE COURT: Well, maybe so, but I'm not 100 percent certain about that. What is the intent? What are you using that information for now? In other words, you decided what you are going to accuse and now you are going

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24 to go after them. Is that information going to be conveyed to anybody else? MS. OBERTS: The information has only been conveyed to the particular defendants regarding those particular products that have been accused. We've put forth detailed interrogatory responses which contain all of the factual information from those teardowns that support our infringement assertions for those modules we accuse. It also clearly includes a number of modules and a number of defendants or a number of corporations who may not even been involved in this lawsuit or haven't been accused of infringement. THE COURT: Okay. I have a general -MS. OBERTS: In addition, Your Honor, just so you are aware, the spreadsheet does include information regarding other Honeywell patents in Honeywell's patent portfolio, so there is information on that spreadsheet that do not relate specifically to this invention and this patented invention. THE COURT: Is there a way that you can modify this spreadsheet so if the Court orders certain information to be produced, it can be produced? MS. OBERTS: It would be difficult, Your Honor. We would have concerns about producing information regarding products that aren't involved in this litigation or 25 corporations or companies that aren't even involved in the litigation. THE COURT: I understand that argument, Stacie. I just asked a question. MS. OBERTS: Okay. THE COURT: If the Court decides that portions of that spreadsheet are to be produced, what would you have to go through to have those portions produced and only those portions? MS. OBERTS: It would be somewhat extensive. We would have to obviously get rid of all of the comments and all of the modules that aren't at issue. Frankly, Your Honor -THE COURT: Well, that depends -MS. OBERTS: -- to the extent that it relates to our infringement allegations, that factual information from a spreadsheet has been conveyed to the defendants in our interrogatory answers. THE COURT: Yes, but this is a document proving that your interrogatory answers are correct. Right? MS. OBERTS: Nobody has questioned whether or not our interrogatory answers are accurate at this point. THE COURT: Well, I think that is exactly what is happening in this motion. That is part of it. Discovery doesn't sit there and say, gee, once we have answered

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26 interrogatories, we're not going to give you the documents that support it, We do have interrogatories, requests for admission and production of documents; right? MS, OBERTS: Right, And this is much broader than that, I read their motion as requesting everything we did in our pre-suit investigation, THE COURT: I understand that, Stacie, MS, OBERTS: We could -THE COURT: I haven't made a ruling yet, I just asked a very simple question about the spreadsheet and also pointing out to you that discovery on certain issues doesn't mean that just because you have answered it in one form of discovery, you wouldn't be obligated to produce it in another form, That's all, MS, OBERTS: And it could be done but it would take a little bit of time to be able to go through, to make sure that the redactions of the additional information are not disclosed. THE COURT: Okay, Now, Lawrence, what additional stuff did you want to say or did you cover all your arguments that Fuji has brought on this issue, on the two things that Fuji has brought? MR, ROSENTHAL: Well, no, I just covered one, Let me just make a quick observation about what Ms, Oberts just indicated,

28 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 produced, The 30(b)(6) witness on laches and licensing has no knowledge, But the first page of perhaps the first document in this series is a memo from a Mr, Clark, a Honeywell employee in charge of a group working on the displays for avionics, principally for Boeing, and that group had I think had 10 principal members and maybe another 16 or 17 support members, The memo goes to everybody plus a lawyer and there is a lawyer on the 16 support people side, And the subject is valuation, How do we know what to charge Hoseidon for the many properties that we're contemplating licensing? It gives a list of the products that are not at issue and it asks specific questions about valuation in paragraph three which Mr, Woods would have us redact, And those questions are not only addressed to the lawyer, they're addressed, some of them are addressed to the entire 26 member group, And even the questions addressed to the lawyer are not seeking legal advice, they're seeking facts, And I don't think that's an attorney-client privilege communication, The second aspect of the letter, in fact, one of the inventors, Mr, McCartney, filled out a questionnaire on valuation as to at least three of his inventions, two of which were produced but not the one directed to the '371 patent, Here, Mr, Woods is offering to trade what is truly

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27 THE COURT: No, I asked you a specific question, 1 Lawrence? MR, ROSENTHAL: An Excel spreadsheet, by its very nature, is easy to manipulate, And I wonder whether I'm going to face the same modules presented by experts in an infringement stage of this case, Right now, we're just in the discovery and validity stage, But let me raise the other -THE COURT: Lawrence? MR, ROSENTHAL: Yes, THE COURT: Lawrence, just hold on for one minute, I'm going to comment about your last comment, please, And that is that was your choice, That's what the defendants wanted, I just point that out to you, Now, I asked you to address, tell me whether you've addressed everything, You said no, Please address the second point, MR, ROSENTHAL: Yes, Your Honor, The second issue involves a narrower question, By way of background, the documents produced indicated that there was an attempt or at least consideration of licensing a bunch of Honeywell patents, including what was then just an invention disclosure of the '371 patent to a company named Hoseidon who was Honeywell's partner in producing LCDs, The trail gets cold very quickly after the few documents that were

29 not a protectab1e communication, an inventor telling a 2 business group what he thinks the patent is worth and who 3 would we sell to, what market it would be sold in, These 4 are all very telling and very important issues, We're 5 supposed to trade to get that document for the paragraph 6 three of the clawed-back document, 7 In any event, I think that this is an easier, 8 narrower question, I think that there was a waiver in the 9 production and it wasn't one that went on unnoticed and that 10 the document was used in the deposition of Mr, Brafman in 11 the presence of Honeywell's outside counsel, And two months 12 later, the attempt is made to claw back the first page of 13 this document, THE COURT: Now, I just want to make sure we're 14 15 clear on the record, you're talking about Exhibit Aattached 16 to your submission, which is docket entry 763? MR, ROSENTHAL: That's correct, Your Honor, 17 18 That document, we were, of course, in agreement with 19 Mr, Woods, We have one copy of that, which I have, 20 THE COURT: I just want to make sure, The 21 document we're talking about is the document attached as 22 Exhibit A, Is it dated August 18th, 1992 and it's at 23 paragraph three of the first page of that document? MR, ROSENTHAL: Exactly, Your Honor, 24 THE COURT: Okay, 25

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30 MR. ROSENTHAL: Mr. Woods is offering to give us the whole document excluding paragraph three. THE COURT: Okay. And this document was produced when? And it was used in Mr. Brafman's deposition on December 21st. And when did they ask for it back? MR. ROSENTHAL: They asked for it back February 14th. THE COURT: Didn't I just decide a similar issue against you where you mistakenly gave a document and because of the timeliness? MR. ROSENTHAL: Not Fuji, Your Honor. THE COURT: Okay. MR. ROSENTHAL: Or at least not this case. THE COURT: Okay. But the protective order requires that you are supposed to I think give notice about it within a certain period of time? MR. ROSENTHAL: Yes, a certain period of time. To be fair, it says after discovery. THE COURT: Okay. MR. ROSENTHAL: I think it's ten days. THE COURT: But this was made an exhibit to Mr. Brafman's deposition and he was questioned on it? MR. ROSENTHAL: Yes, he was, Your Honor. He didn't know very much but he was the only person we had at the moment on this laches issue. 31 THE COURT: Okay. Thank you. Who is going to be making the argument for Honeywell? MR. WOODS: Your Honor, Matt Woods here for Honeywell. THE COURT: All right. MR. WOODS: Okay. I think the focus of Honeywell's position really is with regard to something that Mr. Rosenthal did not mention and that really is the valuation documents that are the result of what appears to be this global effort to value certain intellectual property with respect to Hoseidon. THE COURT: Are these documents the ones that attached to his Exhibit Athat follow that or what? MR. WOODS: Let me take a look, Your Honor, at his Exhibit A. Some them are. But, more particularly, is there is one document that Mr. McCartney, one of the named inventors of the '371 patent, created in response to this effort. And our view, in terms of trying to resolve this, was, a proposal was made to the defendants and we never got a response to that proposal. THE COURT: Why don't you layout what the proposal was, Matt, for the record. MR. WOODS: The proposal is that we would produce the McCartney valuation document. We would ask for

32 a redaction of the paragraph three on Brafman Exhibit 10. 2 THE COURT: Okay. Thank you. 3 MR. WOODS: And then we would ask -- that they 4 could have Brafman Exhibit 10, they could have the McCartney 5 valuation document, and we would simply like there to be an 6 understanding that that would not constitute any broader 7 waiver. For example, if they want to go and talk to 8 Mr. Udseth about legal advice he rendered or perhaps given 9 some of the issues that have been percolating that they 10 somehow think this is somehow a broader waiver relating to 11 things that occurred ten years later. 12 The concern we have, quite frankly, is simply, 13 yes, they want to look at this issue. That's fine. And we 14 offered to produce it to them, but we never got a response. 15 We made that offer before McCartney's deposition, we made it 16 during McCartney's deposition, we made it after McCartney's 17 deposition. And in each case, all the defendants looked at 18 us and said we're still evaluating. 19 So our view is that we can move past this issue 20 very quickly by going forward with that resolution, with 21 that proposal that we've made. 22 THE COURT: Okay. Lawrence, do you wish to have 23 any further response, particularly with the point that was 24 made by Matt at the end about what was offered? 25 MR. ROSENTHAL: Your Honor, it was offered, and
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I wrote a letter refusing it because I didn't agree that I had to give up a right which my client was entitled to see -- not my client, their lawyer was entitled to see paragraph three and to keep it in exchange for an obviously erroneously withheld valuation document having no relationship to privilege or otherwise excused, especially since two others were produced. In fact, if you look at our papers -THE COURT: I am. MR. ROSENTHAL: Samples of the form are attached. Not the form, obviously, unfortunately but if you look at the questions, you look at the information and it's very telling, very factual. THE COURT: What I would like to find out is what exhibit would you like me to look at? MR. ROSENTHAL: Your Honor, if you look at Exhibits Band C. Bare the two McCartney's which are hard to read. THE COURT: Yes. MR. ROSENTHAL: Cis one from Yakimowicz who is a co-inventor writing on still a third patent, not at issue here. I think the categories of subject matter are very telling. THE COURT: At least in Band C. Let me see what Cis. Some of them I can read. The answers are very

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34 difficult to read, Is that the -MR, ROSENTHAL: It's very difficult to read B but Cis more legible, You can read what was written in response to C, THE COURT: It has the number 32 at the top? MR, ROSENTHAL: It has the number 32 at the top, THE COURT: And, Matt, do you have anything else you wish to add? MR, WOODS: Yes, Your Honor. I would in this respect. I think the cases that we cited in the brief, particularly the Whatley case, show that this particular type of issue is an inherently tricky one because it is clear when lawyers get involved in the valuing of intellectual property, there are certain areas and certain times when privilege can be triggered, Now, I'm not going to tell you on behalf of Honeywell that everything that is done here is being done purely from a business standpoint, I think there is a blending, as we recognize and acknowledge in our brief or in our letter brief, The primary issue in my mind is we've never tried -- we've always been willing to produce this document when we understood the issue, The question is simply that we don't want to have it thrown back in our face. To a certain extent, as we learned from the prior motions that Your Honor has been considering, every time

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36 MR, WOODS: Your Honor, with that clarification, we think that is a fine way of proceeding. And with the clarification, Your Honor has just given, that is all we have really been seeking and we're prepared to move forward on that basis. THE COURT: Well, that is the circumstances and that is essentially my ruling on this particular point, Going back to the first Fuji issue, I do think that the breakdown that was done by Honeywell is relevant, I think the notes that were put on the spreadsheet are also relevant but only going to the documents, only going to the products that are alleged to infringe, any defendant in this case, any defendants' products that are alleged to infringe, modules that are alleged to infringe, I am not going to order that you produce the entire spreadsheet, nor include products or analyses that you did of products that are not alleged to infringe, either products or modules that are alleged to infringe, I do think the products, the degree of rotation, the issues that go directly to the orientation of the components and the modules, on factual information as a result of the examinations that were done, are relevant and the defendants should have those, To the extent that basically goes to the facts of infringement, I think they're entitled to have that as part of their evaluation. And 37 again, I'm doing this in part because I don't think this is something that is going to be reproducible in any way, shape or form. I am not going to order that specific questions that attorneys may have asked, may have asked about -- and this is where there is going to be a fine line because I haven't seen these documents to be able to make a complete ruling on this but I'm trying to outline to you the subject matters that I do think are discoverable that I don't think necessarily fall solely into the attorney work product because in part they already have been disclosed in answers to interrogatories, So that is going to be produced, And it may be I might have to look at one of these things to try to give you a better read, I just haven't seen one of these spreadsheets and have no idea what all they contain, I mean I know that it was very difficult for Stacie to explore or explain that to me but I do think that some guidance as to what was disclosed or should have been disclosed in answer to contention interrogatories as to why a particular product infringes, a product that is accused of infringement infringes is the area that would be covered under the spreadsheets and how the breakdown was done and that type of technical information and, as I said, the angle of rotation, the orientation of the components of the modules, that type of thing, So that's the best

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35 Honeywell tries to provide information, it is thrown back in 1 our face as, oh, my gosh, now there is a huge waiver and you 2 are entitled to get into the deepest, darkest secrets of 3 your dealings, Honeywell, between you and your attorneys, 4 THE COURT: Well, you know what, Matt? I might 5 relieve you of that problem because for this particular 6 issue, I'm going to be ordering that the document that was 7 clawed back, which is Exhibit Ato Fuji's attachment, will 8 be produced, However, I don't view that as an overall broad 9 waiver of a whole host of things that could arise from this 10 document to the extent attorney-client privilege would more 11 apply. 12 My view of what this document addresses and 13 certainly the response documents I guess of subsection Band 14 Cof what Fuji has submitted appears to be focused on 15 business aspects, The only question I could suggest is 16 subsection Bof 3, and that is the question that is out 17 there, and to the extent that that question could arguably 18 go, possibly be seeking legal advice, I understand the 19 concern there, The rest of it appears to be to me more so 20 directed to business and certainly Band C, Exhibits Band C21 to Fuji talks about predominantly who could potentially use 22 this, who do you think would be interested, let's talk about 23 some thoughts. Under assumptions and notes, there could be 24 legal advice provided by the attorneys, I don't know, 25

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guidance I can give you on that. 1 On the issue that was brought up by Optrex, I 2 know that the whole argument that everybody has made here is 3 that this 50 percent representation is somehow a waiver for 4 life by Honeywell. I find that some of the arguments that 5 defendants have made today are basically the reverse of the 6 arguments that they made not too long ago on the issue 7 about when Honeywell was asking for certain information on 8 commercial success against the manufacturers as well as the 9 consumers or the end-product users. And I kind of find that 10 some of the defendants arguments are really arguing out of 11 both sides of their mouths. 12 I'm trying to go back to what Optrex was looking 13 for because yours is a more narrower one and I want to get a 14 better understanding of it. You are specifically looking 15 for what? 16 MR. OLLIS: Your Honor, this is Andy Ollis. 17 First of all, I'd like confirmation of the simple statement 18 that Mr. Brafman has made. He stated in court that the 19 teardown rate on average is about a 50 percent hit rate 20 under our belief of infringement across all these products. 21 THE COURT: Well, then you are going to be 22 wanting to know the products that haven't been accused, 23 right? 24 MR. OLLIS: No, we weren't actually -- Optrex 25
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Honeywell was refusing to even allow their witness to confirm the accuracy of this statement on the log itself, which we certainly think we're entitled to confirm that fact at a minimum and, hopefully a little bit further, to link it to earlier testimony. But at a minimum, we think we're entitled to confirm the accuracy of that description, if you will, even if it is considered a general statement or description. THE COURT: Well, I'm trying to figure out, without getting into what other products or modules were evaluated that weren't accused, how were you planning to necessarily do that? MR. OLLIS: Well, I think, number one, Your Honor, I'd like to understand the time frame of the investigation that is covered, which again I think that if one takes a look at a typical privilege log type entry, either the time or the date would certainly be fair game. And then, number two, I would just like to confirm this is describing the same investigation that Mr. Wood had testified to previously. Those are the main points. THE COURT: I'm going to allow those two points. That's fine. MR. OLLIS: Thank you. MS. OBERTS: Your Honor, this is Stacie Oberts. If I may comment. You know, if all Optrex is looking is to 41 confirm the 50 percent rate, we could do this through a potentially either stipulation or a request for admission. I don't see why we need to open up a deposition if all they seek to do is to confirm that hit rate. THE COURT: Well, that is an offer that is being made to them. But if they want to take deposition, that's fine. If you want to do it by a stipulation, that is fine, too. But I'm going to allow them to reopen the deposition for a minimal purpose, and that's not much. MR. OLLIS: Thank you, Your Honor. MS. OBERTS: Your Honor, one other comment I would ask is on the teardown spreadsheet and what you have ruled would be produced. I would just ask if we be given a couple weeks to be able to prepare that just because of the delicate nature of it. We want to make sure that information that is still privileged and doesn't fall within what Your Honor ruled doesn't accidently and inadvertently become disclosed. THE COURT: I understand that Stacie. I wasn't suggesting you have to produce it tomorrow. What time period realistically do you think you can get that done by? MS. OBERTS: We could get it done in two weeks, Your Honor. THE COURT: All right. So you have your two weeks.

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was not necessarily interested in -- we're interested but we're not requesting at this time that Honeywell be forced to identify all of the products that were not accused. THE COURT: Okay. MR. OLLIS: However, they have introduced the final conclusion of their investigation, which is, at the end, there was a 50 percent hit rate. THE COURT: Where did they introduce their final conclusion absent a statement made in court? MR. OLLIS: That is where it was introduced, Your Honor. THE COURT: Okay. That was introduced in a comment to JUdge Jordan, but where is the evidence that it's going to be used in this case for trial? MR. OLLIS: Your Honor, I don't know whether -there is no other evidence I have seen at this point. THE COURT: Okay. MR. OLLIS: But they introduced that fact. And our position is that at least as to that specific fact, they have waived that information. And another way to look at it, Your Honor, at least simply with respect to this fact, is even if you took the most conservative approach and looked at this as a general description of subject matter on a privilege log, for example, and you are saying, well, this is just a general description of what is on the log,

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42 MS. OBERTS: Thank you. THE COURT: Now, there was another issue. There is another issue out there, counsel. And one of the points that was brought up I think by Optrex -- Karen, I think I got a 1etter from you. MS. PASCALE: Yes, Your Honor. THE COURT: -- concerning extending the schedule because I think Honeywell had asked for an extension for six months, did they not, at one time? MR. WOODS: Yes, Your Honor. This is Matt Woods. That is correct. THE COURT: I think we're just going to cut through this and I'm giving a six-month extension for discovery and we'll work with it from there. That's what the Court is ru1ing right now. MR. WOODS: Thank you, Your Honor. THE COURT: So redo the scheduling order and give me the time periods through when the motions for summary judgment and the case dispositive motions would be due. MR. WOODS: We'll work on that, Your Honor. THE COURT: Okay. Thank you. I'm going to take a five minute break, if you don't mind, counsel. You might want to take a five minute break, too, and we'll be right back with this. I should tell you that my cutoff time today

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44 For example, given the time limits, we were able to authenticate the licenses that Hitachi produced but we were not able to explore in any detail the provisions of those licenses, the royalties that were sent back and forth or, more fundamentally, how those amounts were derived or driven. So, that is an example on licensing. With regard to sales and marketing, the sales information that Hitachi produced was fairly detailed. We were able to get a basic rundown of how the sales documents were organized, but then we were not able to take it and explore what periods of time we all have, what they represent and then, more fundamentally, how Hitachi's modules are marketed, priced and distributed. And, again, one of the issues, as Your Honor is well aware of, is the whole issue of indirect sales. So we did not get the opportunity to explore, once those modules are manufactured and how they're accounted for, then let's talk about the distribution channels, how they're priced and how they deal with their customers in terms of marketing. So those are the specific topics which, given the time limits, we were not able to get into. THE COURT: Okay. Did you complete any of three witnesses? MR. WOODS: No. No, we did not. I think we made more progress with the first witness than the latter

43 is probably about quarter to 1:00 Eastern time because I have to go on the bench shortly thereafter. So just a short break, counsel. Be right back. MR. WOODS: Thank you. (Brief recess taken.) THE COURT: Let's get started. The next issue as I understand it is the Hitachi matter, as I put it. MR. WOODS: Yes, Your Honor. THE COURT: All right. Now, my understanding is Honeywell wants to take additional depositions or continue their deposition of three individuals; is that correct? MR. WOODS: That is correct, Your Honor. This is Matt Woods for Honeywell. THE COURT: Okay. Now, Matt, what I need to note from you, because I did read through all the materials and I read through all the exhibits on all this stuff, is specifically what topics are you claiming that were not covered with Hitachi originally with these Hitachi witnesses originally? MR. WOODS: Your Honor, I will give you a general answer and then we'll go into specifics. Generally, these relate to licensing, marketing and sales, basically more on the damages side, the details of the Georgia-Pacific analysis, and so to bring that, to put a finer point on it.

45 two, and that was just in the order that Hitachi presented. If it's a question of trying to talk about what is reasonable here in terms of a time limit to avoid a burden on Hitachi, we certainly would undertake to do that. The problem we've had is that Hitachi's view has been no time. And if we could go in there saying, for example, and again I mean certainly we could get this done in no more than two days, and I would endeavor to try to get it done, candidly, in a single day, but with the foreign translations, that just creates an issue, but certainly no more than two. And I would be happy to engage in a discussion with Mr. Sirota to try to drive that to a smaller amount. THE COURT: All right. And there is something else you are looking for, too, I think. MR. WOODS: Yes, Your Honor. That has to do with the document production and the scope of the accused and the accused modules. And I can address that, if Your Honor wants. THE COURT: Briefly. MR. WOODS: Okay. It relates to the size of Hitachi document production. They produced about 450,000 pages of paper. Within that document production, it was unclear, to a very, very large extent, what modules are reflected within that document production because, as was exemplified in some samples that we were talking with

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46 Hitachi about in the very lengthy meet·and·confer process, very often there would be pages of paper that showed elements of Claim 3 but not the entirety of Claim 3or would not identify them in the context of the modules. And so as a result of that process, this meet·and·confer process, Hitachi has agreed to provide some supplemental identifications, some supplemental correlations. In other words, saying for these modules, XY&Z, these documents relate to them, so sort of like an a Rule 33(d) identification. THE COURT: Is it your understanding, and I wasn't certain about that and I'll ask Hitachi the same question, that it's going to be like a Rule 33(d) identification to say that .. I'm assuming all these document are Bates numbered. MR. WOODS: That's my assumption, too, But when Hitachi did this originally, before the technical depositions in January, they actually produced additional documents before the 450,000 that they initially produced to us. These were new documents to us. What Honeywell is seeking at this point, Your Honor, is we want clarification with this, with Hitachi and with the Court with regard to the modules at issue, Because it is our position that given the condition of Hitachi's original production, we're not in a position to accuse additional modules on that without more 47 Rule 33(d) type identifications, And if Hitachi wants to do that, as it has agreed to do with regard to modules which it says directly comes into the U,S" that is fine with Honeywell, But if Hitachi is not willing to do that with regard to other modules, we can live with that, We just want it to be understood here and now, Your Honor, that those are not part of the case, And so we're not seeking an advisory opinion. We don't need the Court to issue any declaration regarding res judicata. I think perhaps our language in our request was perhaps a bit overzealous, quite candidly. I think what we need to do is have a clear statement that any module, unless Hitachi provides the correlation and identification of the type that it has agreed to do with regard to the USA modules, then any additional modules just simply aren't part of the case. And if it wants to do more, we'll take it all on, If they doesn't want to take it on, we'll leave it for another day and another case. But what we can't do at this point is have no resolution about trying to handle that 450,000 pages of paper which really are not decipherable at this point in time without further input from Hitachi. I think that does it, Your Honor, for that second point, THE COURT: Okay.

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48 All right. What is Hitachi's position? MR, MAIER: Yes, Your Honor, This is Robert Maier. And I'll be fielding this one for Hitachi, THE COURT: All right. MR. MAIER: As to the first issue that Mr. Woods raises regarding the 30(b)(6) deposition, I think Your Honor indicated that you have reviewed the papers and the correspondence, And as a preliminary matter, I think Hitachi feels as though it would be incredibly unfair for that 30(b)(6) deposition to now be reopened. The deposition proceeded in accordance with a schedule that Honeywell insisted upon. Hitachi provided an alternative scheduling solution. THE COURT: Rob, before you go on, and I know this is difficult because of the delay factor with the fact that I'm on a phone, one of the things Honeywell did say in its submission was that they're proposing to take these continued depositions in Tokyo, And does that assist? I mean is that where your people are located? MR. MAIER: It is, Your Honor, and that is somewhat, somewhat more convenient than Osaka was, THE COURT: Yes, 340 miles away. I can see why, MR. MAIER: Yes, that is true. However, I think we also need to consider these depositions would be continued approximately six months after the first session, 49 And so what will happen is these three witnesses, now that they have already been inconvenienced once and taken from their commitments at work and at home for the depositions in Osaka and for preparation of the entirety of notice for all 22 disparate topics, we would be forced to go through that same procedure again in order to prepare for an additional round of depositions. That's precisely, Your Honor, what I think Hitachi was trying to avoid, during the scheduling discussions in October and November and December, was inconveniencing and burdening Hitachi with a second round of essentially the same thing, THE COURT: All right. I understand your arguments on that point, Is there anything else you wish to add on that particular point? MR, MAIER: No, Your Honor. I think that is sufficient on the deposition issue. THE COURT: Okay, Now about the document production issue? MR, MAIER: The document production issue, Your Honor, is one that is somewhat perplexing to us in that Honeywell fought very adamantly early on in this case for Hitachi to produce documents relating to the entirety of potentially relevant modules, the entire universe of potentially relevant modules in this case, Initially, as you will recall, Judge Jordan

United States District Court - Honorable Mary Pat Thynge

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Case 1:04-cv-01338-JJF

Document 1131-2
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limited discovery to only those modules that Honeywell had identified with specificity by module number, There were substantial meet-and-confer efforts between Hitachi and Honeywell and, as a result, Hitachi ultimately and begrudgingly agreed to produce documents relating to essentially all of its relevant modules, THE COURT: I'm sorry, Rob? MR, MAIER: I'm having a difficu