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EXHIBIT 8
Case 2:10-cv-01823-JLR Document 725-8 Filed 07/03/13 Page 1 of 48
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In The Matter Of:
MICROSOFT CORPORATIONv.
MOTOROLA INC., et al.
___________________________________________________
MAXIMILIAN HAEDICKE - Vol. 1
June 14, 2013
___________________________________________________
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1 09:21:5you expect that they would enter into a license and
2 09:21:5dismiss the case?
309:21:5
A Depends if they also agree on the other issues
4 09:21:5which are involved in License Agreement. The license
5 09:22:0fee is one of the important aspects, but there are other
6 09:22:0aspects which also have to be covered, and they will
7 09:22:1only have a full-fledged and valid contract if they
8 09:22:1agreed on all essential elements of the contract, and
9 09:22:1only then will they dismiss the case, or would they
10 09:22:2make -- would they render the case moot.
11 09:22:2Q Let's suppose that the parties do not agree on
12 09:22:2a license fee.
13 09:22:2Does the Orange Book decision say that the
14 09:22:3defendant must use the second alternative option of
15 09:22:3letting the patent holder set the royalty?
16 09:22:3A Please repeat the question.
17 09:22:3Q If the parties do not agree on a license fee --
18 09:22:4A Yes.
19 09:22:4Q -- does the Orange Book decision say that the
20 09:22:4defendant must use the second option of allowing the
21 09:22:4patent holder to set the royalty?
22 09:22:4A They have the option. They do not -- they
23 09:22:5must -- they have the option to do it.
24 09:22:5Q Let's talk about a proceeding in which the
25 09:22:5court -- a court exams the royalty that has been set by
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1 09:23:0a patent holder through the alternative procedure.
2 09:23:0What evidence is considered in a proceeding
309:23:0
like that?
4 09:23:0MS. BERRY: Objection --
5 09:23:0THE WITNESS: This is --
6 09:23:1MS. BERRY: -- lack of foundation.
7 09:23:1THE WITNESS: -- this is speculative because
8 09:23:1I'm not aware of any rate setting procedures which have
9 09:23:1been brought to my attention. I have not taken part in
10 09:23:2any of those, so, of course, I cannot know the details,
11 09:23:2and I can only speculate, but my speculation would be
12 09:23:3that the parties will determine the rate according to
13 09:23:3the -- the standards which are used also when it comes
14 09:23:3to the determination of license fees; for example, when
15 09:23:4it's about damages or in cases like this. So I would
16 09:23:4assume that similar standards would be applied.
17 09:23:5BY MR. LOVE:
18 09:23:5Q And I think we discussed this earlier, so
19 09:23:5correct me if I'm wrong, but the standard used to
20 09:23:5evaluate the rate in that proceeding would be whether
21 09:23:5the rate was within the limits set by antitrust law; is
22 09:24:0that correct?
23 09:24:0A Yes.
24 09:24:0Q What happens if the rate set by the patent
25 09:24:0holder does not meet that standard?
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1 09:24:0A In 315 procedure?
2 09:24:1Q Yes.
309:24:1
A What happens if --
4 09:24:1Q What happens if the court determines that the
5 09:24:1rate set by the patent holder is not within the limits
6 09:24:2of antitrust law; what will the court do?
7 09:24:2A Then a -- a lower rate will be set, which is
8 09:24:3still in the limits. The court will control the offer
9 09:24:3which has been given by the patent holder, if there is
10 09:24:4such an offer, and will determine whether this is within
11 09:24:4the boundaries of antitrust law, and if not, the rate
12 09:24:4will be set according to antitrust law and the other
13 09:24:5important laws which come into play.
14 09:24:5Q Does the license seeker have to pay the rate
15 09:25:0that was set by the patent holder until the court rules?
16 09:25:0A Payment means transfer of funds to the -- to
17 09:25:1the licensor? No. He has to escrow money, as much --
18 09:25:1as much money as he deems appropriate. If he wants to
19 09:25:2be on the absolutely safe side, he may depose estimate
20 09:25:2escrow as much money as the patent holder has demanded,
21 09:25:3but as I said before, of course, if he thinks this is
22 09:25:3too much, he has the option to go below the rate
23 09:25:4demanded by the patent holder and let this rate be
24 09:25:4reviewed, and, of course -- yeah, so.
25 09:25:4Q Do you know how long a proceeding -- a court
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1 09:25:5proceeding under Section 315 to evaluate a patent
2 09:25:5holder's royalty rate takes?
309:25:5
A This is pure speculation because I'm not -- I'm
4 09:26:0not -- these have not taken place, as far as my
5 09:26:0knowledge is concerned. I could only guess.
6 09:26:0Q So have there been any reported German
7 09:26:0decisions that you are aware of that hold that the rate
8 09:26:1set by a patent holder under the alternative Orange Book
9 09:26:1process is acceptable?
10 09:26:1A As there are no reported 315 procedures, I'm
11 09:26:1not aware of that --
12 09:26:1(Telephonic interruption.)
13 09:26:2MR. LOVE: I'll -- I'll ask again just so we
14 09:26:2have a clear question and answer.
15 09:26:3Q As far as you are aware, there are no reported
16 09:26:3German decisions showing this second alternative Orange
17 09:26:3Book procedure?
18 09:26:3A The rate setting, the second -- the rate
19 09:26:3setting --
20 09:26:4Q Yes.
21 09:26:4A -- lawsuit? No, the rate has not been
22 09:26:4reported.
23 09:26:4Q So we believe -- you believe that the standard
24 09:26:4that a court would apply in that proceeding is
25 09:26:5whether -- is -- is to set a royalty within the limits
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1 09:26:5of antitrust law; correct?
2 09:26:5A Yes.
309:26:5
Q But we don't know for sure because there are no
4 09:26:5decisions?
5 09:26:5MS. BERRY: Objection; form.
6 09:27:0THE WITNESS: Purely speculating. I wouldn't
7 09:27:0see any other standards which might be reasonable. I
8 09:27:0wouldn't see any of those standards could come into
9 09:27:1play, so it's not a -- yeah, I do not only believe it,
10 09:27:1there are strong arguments for that.
11 09:27:1BY MR. LOVE:
12 09:27:1Q Suppose that a patent holder rejected an Orange
13 09:27:2Book offer that a license seeker had made and that
14 09:27:2later --
15 09:27:2A Who was?
16 09:27:2Q Sure. Let me start again.
17 09:27:2So we are talking about the first Orange Book,
18 09:27:3not the alternative procedure, but the straightforward
19 09:27:3Orange Book offer.
20 09:27:3A Yes.
21 09:27:3Q So suppose a patent holder rejects an Orange
22 09:27:3Book offer and then a German court finds that the
23 09:27:4royalty offer was so high that that rejection was an
24 09:27:4abuse of antitrust law.
25 09:27:4A Yes.
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1 09:28:5A Yes.
2 09:28:5Q What -- is -- let me ask it a different way.
309:28:5
Is there a reported decision of a German court
4 09:29:0that states that?
5 09:29:0A No.
6 09:29:0Q Has the European Commission made that claim?
7 09:29:0A No.
8 09:29:0Q Has the European Court of Justice made that
9 09:29:0claim?
10 09:29:1A No.
11 09:29:1Q Did you rely on Judge Robart's April 19th, 2013
12 09:29:2findings of fact and conclusions of law --
13 09:29:2A No.
14 09:29:2Q I'll just finish -- let me just finish the
15 09:29:2question.
16 09:29:2A Sorry.
17 09:29:2Q Did you -- that's okay.
18 09:29:2Did you rely on Judge Robart's April 19th
19 09:29:3findings of fact and conclusions of law in forming your
20 09:29:3opinions in this case?
21 09:29:3A No.
22 09:29:3Q Why not?
23 09:29:3A They haven't been produced to -- they haven't
24 09:29:4been given to me. I'm a expert on German law, and
25 09:29:4certainly not an expert on U.S. law, and it's not -- I
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1 09:31:0issues are relevant for my opinion, because it's purely
2 09:31:0German law.
309:31:0
Q Are you familiar with the term "holdup" in the
4 09:31:1context of standard essential patents?
5 09:31:1A Yes.
6 09:31:1Q Do you agree that demanding excessive royalties
7 09:31:1from implementers of a standard is holdup?
8 09:31:2MS. BERRY: Objection; form.
9 09:31:2THE WITNESS: No.
10 09:31:2BY MR. LOVE:
11 09:31:2Q Do you agree that demanding royalties that
12 09:31:2exceed the value of the patented technology is holdup?
13 09:31:3A Maybe we have to come back to the definition of
14 09:31:3holdup. I don't know in which context you use the word
15 09:31:4"holdup" here.
16 09:31:4Q Well, I -- I guess my questions are part of
17 09:31:4understanding what you believe the definition of holdup
18 09:31:4is, so my first question was, "Do you agree that
19 09:31:4demanding excessive royalties from implementers of a
20 09:31:5standard is holdup?" And I believe that you said "No."
21 09:31:5My second question is: Do you agree that
22 09:31:5demanding royalties that exceed the value of patented
23 09:31:5technology is holdup?
24 09:32:0A It's pure -- it's negotiating a contract.
25 09:32:0People offer and people make counter-offers and then
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1 09:43:0royalty, the Mannheim Court does not evaluate it as part
2 09:43:0of the infringement proceeding.
309:43:0
A This is very speculative because these -- these
4 09:43:0things have not -- such a case has not happened, but I
5 09:43:1assume that the same rules would apply; that because the
6 09:43:1test is -- if the objection offer of a license offer
7 09:43:2violates antitrust law and in order to determine whether
8 09:43:3or not there is a violation of antitrust law, you have
9 09:43:3to consider all relevant facts and specifics of the
10 09:43:3case, and all these specifics of the case together will
11 09:43:4bring the court to a evaluation whether or not an offer
12 09:43:4is -- an offer is in accordance with antitrust law.
13 09:43:5Q So Microsoft did make an Orange Book offer in
14 09:43:5Mannheim; correct?
15 09:44:0A That's what I understand.
16 09:44:0Q Did the Mannheim Court find that Microsoft did
17 09:44:0not offer a reasonable rate?
18 09:44:0A The Mannheim Court said that it was not a
19 09:44:1violation of antitrust law if Motorola did not accept
20 09:44:1this offer.
21 09:44:1Q Did the Mannheim Court find that Microsoft did
22 09:44:2not offer a reasonable rate?
23 09:44:2MS. BERRY: Objection; asked and answered.
24 09:44:2THE WITNESS: Reasonable? If you take the word
25 09:44:3"reasonable" and say that -- and as I said before,
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1 09:44:3reasonable and antitrust are identical standards -- then
2 09:44:3the same standards apply, and then you can derive from
309:44:4
the decision that the -- the offer of Microsoft was not
4 09:44:4such that it would be in accordance -- the rejection of
5 09:44:5the offer would be in accordance with antitrust law.
6 09:45:0(Exhibit 1 was marked for identification by the
7 09:45:0Court Reporter.)
8 09:45:0MR. LOVE: So I'm going to hand you what's been
9 09:45:0marked as Exhibit 1. Exhibit 1 bears the Bates stamp
10 09:45:0MOTM_WASH1823_0602118.
11 09:45:1Q If you turn to the second page, you will see
12 09:45:1that this is a translation of the Mannheim Court's
13 09:45:2judgment on May 2nd, 2012?
14 09:45:2A Mm-hmm.
15 09:45:2Q Could you turn to page 43 of the English
16 09:45:2translation of the decision. Bears the Bates stamp
17 09:45:3ending in 161.
18 09:45:3On page 43 the last sentence before Section C
19 09:45:3says, "The taking of evidence on the issue of whether
20 09:45:4the offer is reasonable (in any event) is thus not
21 09:45:4required."
22 09:45:4Do you see that?
23 09:45:4A Yes.
24 09:45:4Q So the Mannheim Court did not evaluate whether
25 09:45:4Microsoft's offer was reasonable; correct?
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1 09:45:5A No. You have to read it differently. The
2 09:45:5taking of evidence is not required. The taking of
309:45:5
evidence. So the idea is to have a swift and clear
4 09:46:0infringement action, and in this infringement -- this
5 09:46:0infringement action should not be overloaded by taking
6 09:46:0evidence in order to determine the reasonableness of the
7 09:46:1offer because then you would not have a swift and clear
8 09:46:1infringement action.
9 09:46:1The idea of the -- of the decision is to say if
10 09:46:2a rate has been set, then it's okay. Otherwise, if
11 09:46:2there's unclearness as to the rate -- we don't want to
12 09:46:2overfreight -- to overload this infringement proceeding
13 09:46:3with the -- with these issues -- then the parties should
14 09:46:3go the other way, should go to a Section 315 proceeding.
15 09:46:4And then in the rate setting proceeding of this -- this
16 09:46:5other alternative, all these issues would -- would be
17 09:46:5able -- would come up. So I read it differently.
18 09:46:5Q Did the Mannheim Court evaluate whether
19 09:46:5Microsoft's offer was RAND?
20 09:47:0A It evaluated whether the rejection of
21 09:47:0Microsoft's offer was a violation of antitrust law, and
22 09:47:1it came to the conclusion that there are serious doubts
23 09:47:1as to whether the -- the offer is -- is high enough
24 09:47:1under all circumstances, so the rejection of this offer
25 09:47:2was no violation of antitrust law, and, accordingly, you
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1 09:47:2might say it was not RAND.
2 09:47:3Q So you believe the Mannheim Court says
309:47:3
Microsoft's offer was not RAND?
4 09:47:3MS. BERRY: Objection; form, misstates
5 09:47:4testimony.
6 09:47:4THE WITNESS: It says by -- the Mannheim Court
7 09:47:4said, Microsoft's offer is not such that the rejection
8 09:47:4of this offer is a violation of antitrust law.
9 09:47:5BY MR. LOVE:
10 09:47:5Q And you believe that standard is the same as
11 09:47:5RAND?
12 09:47:5A I believe that RAND and accordance with
13 09:48:0antitrust law is similar.
14 09:48:0Q So the "R" in RAND stands for reasonable;
15 09:48:0correct?
16 09:48:0A Yes.
17 09:48:0Q The Mannheim Court did not consider any
18 09:48:1evidence as to whether Microsoft's offer was reasonable;
19 09:48:1correct?
20 09:48:1A It made a high-level evaluation of the issues.
21 09:48:2Q But it did not take any evidence on whether
22 09:48:2Microsoft's offer was reasonable; correct?
23 09:48:2A That is correct, as it is not part of the this
24 09:48:2infringement procedure.
25 09:48:3Q Microsoft made an Orange Book offer 2 eurocents
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1 09:48:3per unit, up to 10 million units per year, and
2 09:48:31 eurocent per unit for units beyond 10 million.
309:48:3
Is that your understanding?
4 09:48:4A This is my understanding.
5 09:48:4Q And Motorola rejected that offer; correct?
6 09:48:4A This is how I read the facts.
7 09:48:4Q And the Mannheim Court found that Motorola's
8 09:48:4rejection was acceptable because it was not an obvious
9 09:48:5antitrust violation; correct?
10 09:48:5A Yes.
11 09:48:5Q Did the Mannheim Court apply a version of the
12 09:49:0Orange Book procedure that is more favorable to a patent
13 09:49:0holder than the original Orange Book procedure?
14 09:49:1MS. BERRY: Objection; form.
15 09:49:1THE WITNESS: More favorable to the?
16 09:49:1MR. LOVE: Patent holder.
17 09:49:2THE WITNESS: I think you -- it's very
18 09:49:2difficult to say "yes" or "no" to that because the -- in
19 09:49:2the Orange Book decision, the general -- the general
20 09:49:3guidelines were set up, and then it's the -- the duty of
21 09:49:3the lower courts to further develop it, and it's -- the
22 09:49:3Mannheim Court is fully in the range of what the German
23 09:49:4Supreme Court has said, but, of course, what these --
24 09:49:4this general street, which has been shown by the German
25 09:49:5Federal Supreme Court, has to be defined more clearly
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1 09:58:2BY MR. LOVE:
2 09:58:2Q The Mannheim Court thought Microsoft's offer
309:58:2
was too low; correct?
4 09:58:2A This is how I understand the decision, yes.
5 09:58:3Q Would you agree that Microsoft would have
6 09:58:3needed to make a higher Orange Book offer to avoid an
7 09:58:3injunction under the Orange Book procedure?
8 09:58:3A No. They could have easily taken the other
9 09:58:4road.
10 09:58:4Q If they were going to use the first
11 09:58:4alternative, the first alternative Orange Book
12 09:58:4procedure, and made a new offer to avoid an injunction,
13 09:58:5the offer would have had to be higher than its initial
14 09:58:5offer; correct?
15 09:58:5A Yes.
16 09:58:5Q What number would Microsoft have needed to
17 09:58:5offer to avoid an injunction?
18 09:59:0A I have no opinion on that because all very much
19 09:59:0depends on the specifics of the -- of the case, and I'm
20 09:59:0not aware of all these specifics, and as there is the
21 09:59:1risk, as it is difficult to assess that, this is why we
22 09:59:1have the other procedure, the 315 procedure, so I cannot
23 09:59:1comment on how much money would have been necessary to
24 09:59:2have a RAND rate. I can just say, if there's
25 09:59:2uncertainty as to this, then it's advisable to use the
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1 09:59:2other road, the 315 road.
2 09:59:3Q Did you ask anyone at Motorola what number
309:59:3
Microsoft would have needed to offer to avoid an
4 09:59:3injunction?
5 09:59:3A No. No.
6 09:59:3Q Why not?
7 09:59:3A Because this is calculation. This is -- it's
8 09:59:4outside my expertise. This is economic and -- and
9 09:59:4business, and so it's not -- I'm not able to comment on
10 09:59:4this.
11 09:59:4Q I understood the conclusion of your expert
12 09:59:5report was that Microsoft could have avoided an
13 09:59:5injunction in Germany by following the Orange Book
14 09:59:5procedure; correct?
15 09:59:5A That's correct.
16 10:00:0Q But you don't know what Motorola would have
17 10:00:0done if Microsoft had made a higher offer under the
18 10:00:0first Orange Book procedure?
19 10:00:0A It's pure speculation, but if it's high enough,
20 10:00:0then I assume it would have been accepted. If they
21 10:00:1don't agree, the two parties, then it's advisable to go
22 10:00:1the other way, to use the other road.
23 10:00:1Q Would Microsoft have been able to avoid an
24 10:00:2injunction in Mannheim by offering to accept a license
25 10:00:2at the RAND rate set by Judge Robart of less than half a
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1 10:00:2eurocent?
2 10:00:2MS. BERRY: Objection; form.
310:00:3
THE WITNESS: I'm not -- I'm not -- I have no
4 10:00:3opinion on that as I don't know the details.
5 10:00:3BY MR. LOVE:
6 10:00:3Q Microsoft's Orange Book offer that was rejected
7 10:00:3was 2 eurocents, so if Microsoft had offered half a
8 10:00:4eurocent, would it have been able to avoid an
9 10:00:4injunction?
10 10:00:4A If it's less than what has been given here,
11 10:00:4it's rather unlikely.
12 10:00:5Q Rather unlikely, or no?
13 10:00:5A If it's lower than what has been -- well, the
14 10:00:5court said -- the Mannheim Court said what has been
15 10:00:5offered is so low that the rejection is not -- is not a
16 10:01:0breach of antitrust law as it is conceivable that the
17 10:01:1rate has to be higher.
18 10:01:1So if the rate would have been lower, it is --
19 10:01:2I cannot second-guess what the court would have said,
20 10:01:2but it's -- it's pure logic that if it's lower, I assume
21 10:01:2that also the same standard would have been applied, and
22 10:01:2the same standard would have taught that the rejection
23 10:01:3of such an offer is a violation of European antitrust
24 10:01:3law.
25 10:01:3Q If Microsoft had escrowed a sufficient amount
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1 10:22:5be license fee, the license product, a rendering of
2 10:22:5account, if the -- the -- the patent as been made use of
310:23:0
before, so these are the elements which have been --
4 10:23:0have been decided about by the court. If further issues
5 10:23:1have to be included in such a License Agreement or not
6 10:23:1is pure speculation, I have no opinion on that.
7 10:23:2Q Okay. Let's go back to what happened in
8 10:23:3Mannheim.
9 10:23:3If Microsoft had followed the second
10 10:23:3alternative of the Orange Book procedure, Motorola would
11 10:23:3have set a higher royalty than the 1 to 2 eurocents that
12 10:23:3Microsoft had offered; correct?
13 10:23:4MS. BERRY: Objection; form.
14 10:23:4THE WITNESS: I have no opinion on that.
15 10:23:4BY MR. LOVE:
16 10:23:4Q Why would Motorola have set a lower royalty?
17 10:23:4A I am not aware of -- the business evaluations,
18 10:23:5which are behind such an offer, are not -- have not come
19 10:23:5to my attention. I -- I can only speculate, but, of
20 10:23:5course, we can assume that.
21 10:24:0Q If Microsoft had challenged the rate set by
22 10:24:0Motorola by bringing a separate proceeding later and the
23 10:24:0court set the royalty, the royalty set by the court
24 10:24:1would also be higher than a -- than the 1 to 2 eurocents
25 10:24:1that Microsoft had offered; correct?
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1 10:24:1MS. BERRY: Objection; form.
2 10:24:1THE WITNESS: This is -- this is speculation
310:24:2
because you apply a different standard of -- there of
4 10:24:2assessing the -- the license fee, and as you hear
5 10:24:3evidence and as further circumstances will be looked
6 10:24:3upon and be considered by the court, it -- it's just a
7 10:24:4different way of assessing. It can be that it's higher.
8 10:24:4It can even be -- if the evidence is such that points in
9 10:24:5this direction might even be lower. It's just a new
10 10:24:5story then, and it will be assessed independently, and
11 10:24:5the court will -- will find what is the adequate and --
12 10:25:0and FRAND and entered as conformed license fee. It can
13 10:25:0be higher. It could even be lower. It can be the same.
14 10:25:1I -- I cannot say. This is speculation. But, again,
15 10:25:1the -- the standards, which are used to determine the
16 10:25:1license fee, they are the relevant thing, and they take
17 10:25:2into account the standards. This might lead to one --
18 10:25:2to one result or to the other.
19 10:25:2BY MR. LOVE:
20 10:25:3Q When we talked earlier about the second
21 10:25:3alternative, I thought I understood your position to be
22 10:25:3that the same standard would be used to evaluate and
23 10:25:4determine a correct license fee. It's a license fee
24 10:25:4that is not objectionable --
25 10:25:4A Yes.
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1 10:25:4Q -- under antitrust laws.
2 10:25:4A Yes.
310:25:4
Q So if the court is setting a royalty, it's
4 10:25:5going to set a royalty that is not objectionable under
5 10:25:5antitrust law; correct?
6 10:25:5A Yes.
7 10:25:5Q The Mannheim Court said that Motorola's
8 10:26:0rejection of the 1-to-2-eurocent offer was not
9 10:26:0objectionable under antitrust law; right?
10 10:26:1A Can you repeat, please.
11 10:26:1Q Sure.
12 10:26:1Microsoft offered 1 to 2 eurocents. Motorola
13 10:26:1rejected it, and the Mannheim Court said that rejection
14 10:26:2did not violate antitrust law.
15 10:26:2A Yes, that's correct.
16 10:26:2Q But you said just now that in a later
17 10:26:2proceeding, if a court is setting the rate, it might set
18 10:26:3a rate lower than what Microsoft offered.
19 10:26:3A It's -- it's speculation, and it also is a
20 10:26:3question of the German law of civil procedure and
21 10:26:4evidence. You know, in the -- in the first proceeding
22 10:26:4the courts will also assess what has been written in the
23 10:26:4briefs without taking evidence, and so they will make
24 10:26:5their -- they will form their opinion on what has been
25 10:26:5written and submitted by the parties.
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1 10:26:5In a second -- the second case of the rate
2 10:27:0setting procedure, all evidence, all economic
310:27:0
specialists may or may not be presented to the court,
4 10:27:1and the court will just have a very different basis to
5 10:27:1found its -- its -- for founding its opinion -- for
6 10:27:2forming its opinion, and it's -- it is possible that
7 10:27:2it's higher. It is maybe, well, possible, but it's
8 10:27:2speculation, but as there is another -- different
9 10:27:3standard of how the facts are evaluated, it may even be
10 10:27:3lower, but, again, this is pure speculation.
11 10:27:3The only thing I want to say, this is a
12 10:27:4completely new story where all facts are assessed newly,
13 10:27:4and then the court will -- will find it -- will have its
14 10:27:5decision -- will render its decision on the basis of the
15 10:27:5facts which it has evaluated according to the law of
16 10:27:5civil procedure in this second proceeding.
17 10:28:0Q So the court, in the second proceeding, would
18 10:28:0apply the same standard, but it might reach a different
19 10:28:0result because it considers more evidence; is that
20 10:28:1correct?
21 10:28:1A It's just a different standard of review, a
22 10:28:1different standard of review of the first -- the review
23 10:28:1you have in your first -- in the first -- in the first
24 10:28:2road, that it's the -- the question whether or not it is
25 10:28:2obvious. So the idea is you have a -- you look into the
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1 10:28:3briefs, you evaluate what the parties have said, and you
2 10:28:3form your opinion by not going into -- especially by not
310:28:3
taking evidence, so this is maybe specific to German
4 10:28:4law.
5 10:28:4In the second proceeding, the proceeding will
6 10:28:4be a full-fledged proceeding, and the full-fledged
7 10:28:4proceeding will be more facts; more evidence will be
8 10:28:5assessed. For example, if you take a preliminary
9 10:28:5injunction, you also have a different standard of -- of
10 10:28:5evidence, which is lower than in -- in a full
11 10:29:0proceeding. And so it's just a different way of
12 10:29:0assessing facts and -- and hearing evidence or not
13 10:29:1hearing evidence.
14 10:29:1Q So I want to make sure I understand your
15 10:29:1position on what would have happened under the Orange
16 10:29:2Book. So this will be sort of a long question. I'll
17 10:29:2ask you a couple things, and just stop me if anything
18 10:29:2doesn't make sense.
19 10:29:2Under the Orange Book procedure, as I
20 10:29:2understand it, there are three paths for Microsoft to
21 10:29:3avoid an injunction by agreeing to pay a royalty.
22 10:29:3First, Microsoft could have made an Orange Book
23 10:29:3offer that Motorola accepted; correct?
24 10:29:4Second, Microsoft could have let Motorola set a
25 10:29:4royalty; correct?
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1 10:30:4royalty a court would set?
2 10:30:4A I can only say what the basis for a court
310:30:4
decision would be. But as I don't know all the relevant
4 10:30:5facts and as I didn't hear all the evidence, which would
5 10:30:5come into play, of course I cannot give a -- give you a
6 10:30:5number, certainly not.
7 10:30:5Q So in November of 2012, there was a trial, as
8 10:31:0part of this case, to determine a RAND royalty for
9 10:31:0Motorola's patents.
10 10:31:0Are you aware of that?
11 10:31:0A No.
12 10:31:0MS. BERRY: Objection; form.
13 10:31:0BY MR. LOVE:
14 10:31:1Q So I'll represent to you that at that trial,
15 10:31:1there was expert testimony from technical experts and
16 10:31:1economic experts about the appropriate RAND royalty, but
17 10:31:2you haven't reviewed the transcript of that trial;
18 10:31:2correct?
19 10:31:2A No, I haven't reviewed it.
20 10:31:2Q So you don't know whether the evidence
21 10:31:2presented in the November 2000 trial -- 2012 trial in
22 10:31:3this case was in any way comparable to the evidence that
23 10:31:3would be considered by a German court that was setting a
24 10:31:3royalty?
25 10:31:3A I have no opinion on that.
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1 10:52:3THE WITNESS: Please repeat.
2 10:52:3BY MR. LOVE:
310:52:3
Q If Microsoft's Orange Book offer was higher
4 10:52:4than RAND, Motorola refused to enter a license on RAND
5 10:52:4terms; correct?
6 10:52:4MS. BERRY: Objection to form.
7 10:52:4THE WITNESS: It's speculation. I don't know
8 10:52:4if -- I cannot assess Microsoft's offer.
9 10:52:5BY MR. LOVE:
10 10:52:5Q For the purposes of this case, the RAND royalty
11 10:52:5for all of the patents is less than half a eurocent.
12 10:52:5Microsoft offered 2 eurocents for only two patents. So
13 10:53:0Microsoft's offer was higher than RAND. Let's assume
14 10:53:0that for my question.
15 10:53:0If that's true, Motorola refused to enter a
16 10:53:1license on RAND terms; correct?
17 10:53:1MS. BERRY: Objection; form, incomplete
18 10:53:1hypothetical.
19 10:53:1THE WITNESS: It depends -- it's -- it depends
20 10:53:1on all further -- on the further -- further circumstance
21 10:53:1of the case. I don't know the specifics of the case.
22 10:53:2I'm not able to -- to assess the business evaluations
23 10:53:2behind this, so I can't just not comment on that.
24 10:53:3BY MR. LOVE:
25 10:53:3Q Why are business evaluations relevant to my
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1 10:53:3question?
2 10:53:3A I don't know the background of the offer. I
310:53:3
don't know the specific business interests of -- of
4 10:53:3Motorola and of Microsoft, the strategic ideas, how to
5 10:53:4make use of the technology. I just don't have enough
6 10:53:4background to answer this question.
7 10:53:4Q Is it your position that a standard essential
8 10:53:5patent holder can refuse to enter a license on RAND
9 10:53:5terms because it has other business interests?
10 10:53:5A No, but the -- in order to find what RAND is,
11 10:54:0you have to look into all specifics of the case,
12 10:54:0including the special interests of the parties in
13 10:54:1this -- in this case, and, of course, license fee is a
14 10:54:1very important issue, no -- no doubt about that, but
15 10:54:1there may be other surroundings. There may be other
16 10:54:1interests which may -- may alter the -- the assessment
17 10:54:2of interest.
18 10:54:2Q Let's presume for the purposes of my question
19 10:54:2that everything you just mentioned was already addressed
20 10:54:2in this case in a trial in November 2012 that determined
21 10:54:3the RAND royalty.
22 10:54:3Can you assume that that's correct? For the
23 10:54:3purposes of my next question, can you assume that all
24 10:54:4those business interests that you just mentioned were
25 10:54:4already tried in this case and that the judge has
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1 10:54:4determined that, addressing all of those business
2 10:54:4interests, the RAND royalty is less than half a
310:54:5
eurocent.
4 10:54:5If that's true, then Motorola refused to enter
5 10:54:5a license on RAND terms; correct?
6 10:54:5MS. BERRY: Objection; form, asked and
7 10:55:0answered, outside the scope of his expert report.
8 10:55:0THE WITNESS: We -- I can only apply German
9 10:55:0law, and the findings of Justice Robart are -- are
10 10:55:1certainly not binding for the German court, and the
11 10:55:1German court will make -- will have to make its own
12 10:55:1evaluation, considering all the facts according to
13 10:55:2German law of civil procedure, and so it may be; it may
14 10:55:2not be, but I don't know what will come out, so it's
15 10:55:2just very speculative. I cannot give you a answer to
16 10:55:3that. I have no opinion.
17 10:55:3BY MR. LOVE:
18 10:55:3Q So a RAND royalty determined by a U.S. court
19 10:55:3and a RAND royalty in Germany are two different things;
20 10:55:3is that correct?
21 10:55:3A Not necessarily, but it's -- the German patent
22 10:55:4procedure is completely independent and has its
23 10:55:5different law of civil procedure, and all facts will be
24 10:55:5assessed by the German courts, and, of course, German
25 10:55:5judges will look what the American judges have done, but
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1 10:55:5they are by no means bound by what has been done in
2 10:56:0the U.S. -- in the U.S., so it's completely different
310:56:0
and completely independent from each other.
4 10:56:0Q Is European antitrust law binding on German
5 10:56:1courts?
6 10:56:1A Yes.
7 10:56:1Q Are you aware that under European antitrust
8 10:56:2law, the European Commission has initiated proceedings
9 10:56:2against Motorola based on its assertion of standard
10 10:56:3essential patents against Apple?
11 10:56:3A I'm not familiar with the details, but I
12 10:56:3have --
13 10:56:3Q And the European Commission has also initiated
14 10:56:3proceedings against Samsung for its assertions of
15 10:56:4standard essential patents?
16 10:56:4A Sorry. I'm aware of the Samsung proceedings.
17 10:56:4I have --
18 10:56:5(Exhibit 2 was marked for identification by the
19 10:56:5Court Reporter.)
20 10:56:5MR. LOVE: I'm handing you what's been marked
21 10:56:5as Exhibit 2. This is a European Commission press
22 10:57:0release that's dated December 21st, 2012.
23 10:57:1Q Have you seen this document before?
24 10:57:1A Yes.
25 10:57:1MS. BERRY: Counsel, have you produced this
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1 11:07:0A No, because the Orange Book procedure gives
2 11:07:2a -- the Orange Book procedure makes sure and clarifies
311:07:2
that only a person which is really willing to negotiate,
4 11:07:3which is sincere, is -- can -- can avoid an injunction.
5 11:07:4Only a mere willingness to negotiate is not -- is not
6 11:07:4sufficient.
7 11:07:5Q The European Commission's view in the document
8 11:07:5we just read is a patent holder cannot seek injunctive
9 11:07:5relief against a willing RAND licensee; correct?
10 11:08:0A Yes.
11 11:08:0Q Microsoft made an offer to Motorola; correct?
12 11:08:0A Yes.
13 11:08:0Q The Mannheim Court applied a version of the
14 11:08:1Orange Book procedure where Motorola could reject
15 11:08:1Microsoft's offer --
16 11:08:1A Yes.
17 11:08:1Q -- unless the rejection would be an obvious
18 11:08:1antitrust violation; correct?
19 11:08:2A Yes.
20 11:08:2Q Does that procedure satisfy European law as set
21 11:08:2out by the European Commission's preliminary view?
22 11:08:2MS. BERRY: Objection; form.
23 11:08:2THE WITNESS: The Commission's view that the
24 11:08:4acceptance of binding third-party determination for the
25 11:08:4terms of a FRAND license in the event that bilateral
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1 11:08:4negotiations would come to -- to conclusion is a clear
2 11:08:4indication -- I don't see that the -- that Microsoft has
311:09:0
surrendered to a binding third-party determination
4 11:09:0because it didn't use a second road. It didn't use the
5 11:09:1315 road.
6 11:09:1BY MR. LOVE:
7 11:09:1Q Were you aware that, at least as of September
8 11:09:12011, Microsoft declared that it was willing to enter
9 11:09:1into a license on RAND terms for Motorola's H.264
10 11:09:2patents?
11 11:09:2A I'm familiar with the basics of the -- of this
12 11:09:2lawsuit.
13 11:09:2Q So you understand that Microsoft told the court
14 11:09:3and Motorola that Microsoft was seeking and was ready
15 11:09:3and willing to take a license to Motorola's H.264
16 11:09:3patents on RAND terms?
17 11:09:3A Yes.
18 11:09:3Q And you understand that, in this case,
19 11:09:4Microsoft seeks a judicial determination of a royalty
20 11:09:4rate for Motorola's H.264 patents?
21 11:09:4MS. BERRY: Objection; form.
22 11:09:4THE WITNESS: I don't see there is Microsoft
23 11:09:5seeks a judicial determination, but Microsoft proposed a
24 11:09:5certain license fee which was declined by Motorola, and
25 11:10:0then the court made a review, and Microsoft just did not
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1 11:10:0seek a final evaluation of the license fee which would
2 11:10:1have only happened under the 315 procedure.
311:10:1
(Exhibit 5 was marked for identification by the
4 11:10:1Court Reporter.)
5 11:10:1MR. LOVE: Let's take a look at another
6 11:10:2exhibit. I've marked, as Exhibit 5, Microsoft's
7 11:10:2complaint in this case.
8 11:10:3Q Could you turn to paragraph 9, which you will
9 11:10:3find at the bottom of page 4. Paragraph 9 begins
10 11:10:4"Accordingly, Microsoft seeks," and I'm going to skip
11 11:10:4letter i there, and I'm going to go to the ii, Roman ii,
12 11:10:4"a judicial declaration" -- I apologize. I intend to go
13 11:10:5to Roman iii, "a judicial accounting of what constitutes
14 11:10:5a royalty rate in all respects" -- let me turn the
15 11:10:5page -- "consistent with Motorola's promises for WLAN
16 11:11:0patents identified as 'essential' by Motorola and for
17 11:11:0H.264 patents identified by Motorola."
18 11:11:0Do you see that?
19 11:11:0A Yes.
20 11:11:0Q So Microsoft asked Judge Robart in this case to
21 11:11:1determine a RAND royalty for Motorola's H.264 patents,
22 11:11:1and the trial in November 2012, I will represent to you,
23 11:11:2determined such a royalty rate.
24 11:11:2So Motorola's -- sorry. Microsoft's
25 11:11:2complaint -- as you can see from the date at the top,
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1 11:11:2this was filed in November of 2010. By September 2011,
2 11:11:3Motorola knew Microsoft was willing to enter into a
311:11:3
license on RAND terms that would be determined by the
4 11:11:3U.S. court; correct?
5 11:11:3A Yeah.
6 11:11:3MS. BERRY: Objection; form, outside the scope
7 11:11:4of his expert report.
8 11:11:4BY MR. LOVE:
9 11:11:4Q Motorola continued to pursue an injunction in
10 11:11:4Germany after September 2011; correct?
11 11:11:4A Yes.
12 11:11:4Q So Motorola was abusing its dominant position
13 11:11:5by pursuing an injunction against Microsoft; correct?
14 11:11:5MS. BERRY: Objection; form.
15 11:11:5THE WITNESS: Yes. A preliminary? Please
16 11:12:0repeat.
17 11:12:0BY MR. LOVE:
18 11:12:0Q Motorola was abusing its dominant position by
19 11:12:0pursuing an injunction against Microsoft; correct?
20 11:12:0A Say it again. Motorola?
21 11:12:1Q Motorola was abusing its dominant position, in
22 11:12:1the meaning of European antitrust law, by pursuing an
23 11:12:1injunction against Microsoft; correct?
24 11:12:2MS. BERRY: Objection; form.
25 11:12:2THE WITNESS: I don't agree. I read -- I'm not
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1 11:12:2sure if I read the commission statement in such a way
2 11:12:3that a assessment of authority outside of the European
311:12:4
Union would -- would suffice. I would rather think that
4 11:12:4an assessment only by a administrative agency or a court
5 11:12:5within the European Union, which is also subject to EU
6 11:12:5law, would suffice in order to -- to meet the
7 11:13:0requirements of -- of this -- of this commission
8 11:13:0statement as -- or the -- as the supremacy of European
9 11:13:1law, and I would not -- I would doubt that authorities,
10 11:13:1no matter how respect -- how well respected they are,
11 11:13:2which are beyond the reach of European Union law,
12 11:13:2could -- could meet the preconditions which have been
13 11:13:2set up.
14 11:13:2BY MR. LOVE:
15 11:13:3Q Do you think the court in Seattle is not
16 11:13:3capable of determining a RAND royalty?
17 11:13:3A I just said, with all due respect to the court,
18 11:13:3it's not bound by the European Union law, and I -- I'm
19 11:13:4not sure. I would -- I would have to go further into
20 11:13:4details, of course. I'm not sure whether an authority
21 11:13:4outside the use scope -- outside the reach of European
22 11:13:5Union law would be found to be sufficient under this
23 11:13:5declaration. But, again, this is speculation. I see
24 11:14:0this paper the first time. I'm not able to -- to
25 11:14:0comment in depth.
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1 11:44:4in there.
2 11:44:4Q Did you review any communications between
311:44:5
Microsoft and Motorola concerning whether Motorola would
4 11:44:5agree not to enforce the German injunction?
5 11:45:0A No.
6 11:45:0Q Were you aware that Microsoft asked Motorola to
7 11:45:0agree not to enforce the German injunction and allow the
8 11:45:0proceedings in this case here in Seattle to go forward?
9 11:45:1MS. BERRY: Objection; form.
10 11:45:1THE WITNESS: I have very general knowledge of
11 11:45:1that.
12 11:45:1BY MR. LOVE:
13 11:45:1Q And Motorola refused; correct?
14 11:45:1A I have very general knowledge of that too.
15 11:45:2That's --
16 11:45:2Q Your understanding is that Motorola would not
17 11:45:2agree to -- to stay enforcement of the German
18 11:45:3injunction?
19 11:45:3MS. BERRY: Objection; form.
20 11:45:3THE WITNESS: This has not been produced to me.
21 11:45:3I just know the public available sources, which I read,
22 11:45:4but I have no further detailed knowledge of all these --
23 11:45:4these proceedings.
24 11:45:4BY MR. LOVE:
25 11:45:4Q Did you ask Motorola's counsel or anyone at
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1 11:45:4Motorola whether Motorola planned to enforce the
2 11:45:4Mannheim judgment against Microsoft?
311:45:5
MS. BERRY: Objection; calls for
4 11:45:5attorney-client-privileged information. I instruct the
5 11:45:5witness not to an answer.
6 11:46:0BY MR. LOVE:
7 11:46:0Q Your report suggests that Microsoft could avoid
8 11:46:0an injunction because Motorola might not enforce the
9 11:46:1judgment; correct?
10 11:46:1A Say it again.
11 11:46:1Q Your report suggests that Microsoft might have
12 11:46:1avoided an injunction because Motorola would not enforce
13 11:46:2it; correct?
14 11:46:2A It is possible it would be -- of course, what I
15 11:46:2said is that it's not automatically -- the junction is
16 11:46:3not automatically enforced but that there have to be
17 11:46:3further steps being taken.
18 11:46:3Q Did you ask anyone at Motorola if Motorola
19 11:46:4planned to take those steps?
20 11:46:4MS. BERRY: Objection; calls for
21 11:46:4attorney-client communications. Instruct the witness
22 11:46:4not to answer.
23 11:46:4BY MR. LOVE:
24 11:46:4Q Are you going to follow your counsel's advice?
25 11:46:4A Yes.
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1 11:46:4Q If Judge Robart had denied Microsoft's motion
2 11:46:5for a preliminary injunction here in Seattle, would
311:47:0
Motorola have enforced its German injunction?
4 11:47:0A I don't know.
5 11:47:0MS. BERRY: Objection; form.
6 11:47:0THE WITNESS: That's pure -- I no information
7 11:47:1about that.
8 11:47:1BY MR. LOVE:
9 11:47:1Q Did you ask anyone at Motorola?
10 11:47:1MS. BERRY: Same objections as before.
11 11:47:1Instruct the witness not to answer.
12 11:47:1BY MR. LOVE:
13 11:47:1Q Will you follow your counsel's advice?
14 11:47:1A Yes.
15 11:47:1Q If the Ninth Circuit had reversed
16 11:47:2Judge Robart's preliminary injunction, would Motorola
17 11:47:2have enforced the injunction in Mannheim?
18 11:47:2MS. BERRY: Objection; form, calls for
19 11:47:2speculation, outside the scope of his expert report.
20 11:47:2BY MR. LOVE:
21 11:47:2Q Did you ask anyone at Motorola, if the
22 11:47:3Ninth Circuit had reversed, did they plan to enforce the
23 11:47:3injunction?
24 11:47:3MS. BERRY: Objection; calls for
25 11:47:3attorney-client communications. Instruct the witness
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1 11:47:3not to answer.
2 11:47:3BY MR. LOVE:
311:47:4
Q Will you follow your counsel's advice?
4 11:47:4A Yes.
5 11:47:4Q The European Commission's preliminary view is
6 11:47:4that enforcing injunctions on standard essential patents
7 11:47:4against a willing licensee is an abuse of antitrust law;
8 11:47:5is that correct?
9 11:47:5MS. BERRY: Objection; form.
10 11:47:5THE WITNESS: Please repeat.
11 11:47:5MR. LOVE: Sure.
12 11:47:5Q The European Commission's preliminary view is
13 11:48:0that enforcing injunctions on standard essential patents
14 11:48:0against a willing licensee is an abuse of antitrust law;
15 11:48:0correct?
16 11:48:0A These are the wordings used, yes.
17 11:48:0Q Would you agree that Judge Robart in the
18 11:48:1Ninth Circuit helped Motorola avoid exposing itself to
19 11:48:1additional antitrust liability?
20 11:48:1MS. BERRY: Objection to form, outside the
21 11:48:1scope of his expert report.
22 11:48:2THE WITNESS: I have no sufficient information.
23 11:48:2I have no opinion as it relates to the U.S. trial.
24 11:48:2BY MR. LOVE:
25 11:48:2Q Do you understand that the decision to relocate
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1 11:48:2Microsoft's distribution center in Germany required
2 11:48:3considerable preparation beginning in January of 2012?
311:48:3
MS. BERRY: Objection; form, outside the scope
4 11:48:3of his expert report.
5 11:48:3THE WITNESS: I have no opinion on that.
6 11:48:4BY MR. LOVE:
7 11:48:4Q Are you aware of any of the details surrounding
8 11:48:4Microsoft's decision to relocate its German facility?
9 11:48:4A No.
10 11:48:4Q Did you review any documents associated with
11 11:48:4the move?
12 11:48:4A No.
13 11:48:4Q Did you review the deposition transcripts of
14 11:48:5the Microsoft employees who described that process?
15 11:48:5A No.
16 11:48:5Q Were you aware that Microsoft made its decision
17 11:48:5and had begun implementing the relocation out of Germany
18 11:49:0in March of 2012?
19 11:49:0A No.
20 11:49:0Q If Motorola had enforced the injunction in
21 11:49:1Mannheim, could Microsoft have continued to distribute
22 11:49:1H.264-compliant products in Germany?
23 11:49:1A If they fall under the patent and if there has
24 11:49:2been an injunction, no.
25 11:49:2Q If Motorola had enforced its injunction in
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1 11:50:5If a party seeks an injunction on a standard
2 11:50:5essential patent against a willing licensee, is that
311:50:5
party acting in good faith under German law?
4 11:51:0A Yes.
5 11:51:0Q Are you an expert in the German procedural law
6 11:51:0concerning the recovery of fees and costs?
7 11:51:0A Attorney fees and costs?
8 11:51:1Q Yes.
9 11:51:1A Yes.
10 11:51:1Q Have you published any articles regarding the
11 11:51:1recovery of attorneys' fees and costs?
12 11:51:1A No.
13 11:51:1Q Have you published any articles on the German
14 11:51:1act on the remuneration of lawyers?
15 11:51:2A No.
16 11:51:2Q You reference Section 91 of the ZPO in your
17 11:51:2rebuttal report.
18 11:51:2Is the ZPO the German Code of Civil Procedure?
19 11:51:3A Yes.
20 11:51:3Q Have you ever published any articles on the
21 11:51:3German Code of Civil Procedure?
22 11:51:3A Yes.
23 11:51:3Q And what articles are those?
24 11:51:3A Articles about patent -- patent infringement
25 11:51:4lawsuits in this day of patent infringement lawsuits.
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1 11:51:4Q So in discussing patent infringement lawsuits,
2 11:51:4those articles touch on the aspects of the German Code
311:51:5
of Civil Procedure?
4 11:51:5A Right.
5 11:51:5Q Okay. Exhibit D to your rebuttal report shows
6 11:51:5screen shots from software that's called
7 11:52:0ProzessKostenRechner; is that correct?
8 11:52:0A Yes.
9 11:52:0Q Was I close on the pronunciation?
10 11:52:0A Very good.
11 11:52:0Q This is software that is used to calculate
12 11:52:0statutory attorney fees in Germany; is that correct?
13 11:52:1A Yes.
14 11:52:1Q Have you used the software before?
15 11:52:1A Yes.
16 11:52:1Q So before your work -- prior to the work in
17 11:52:1your case, you have used the software?
18 11:52:1A I tried it once. I never --
19 11:52:2Q When did you try it?
20 11:52:2A Couple of -- before when I was assessing
21 11:52:2attorneys' fees in another case.
22 11:52:3Q Were you serving as an expert witness when you
23 11:52:3did that?
24 11:52:3A No. No, no.
25 11:52:3Q Were you a practicing attorney at that time?
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1 11:52:3A No.
2 11:52:3Q So could you help me understand why you were
311:52:4
using the software previously?
4 11:52:4A Because, privately, I helped people who wanted
5 11:52:4to have an attorney, and I was given the information
6 11:52:4about the costs which they would run into.
7 11:52:5Q But other than that one instance, had you ever
8 11:52:5used the software prior to your work in this case?
9 11:52:5A No.
10 11:52:5Q Is it your opinion that the attorneys' fees
11 11:53:0Germany -- sorry. Start again.
12 11:53:0Is it your opinion that the attorneys' fees in
13 11:53:0Germany that Microsoft is seeking to recover are far in
14 11:53:0excess of what could be recovered under Germany's
15 11:53:1statutory fee scheme?
16 11:53:1A Yes.
17 11:53:1Q And that's because the statute provides a cap
18 11:53:1on how much can be recovered; correct?
19 11:53:2A Yes.
20 11:53:2Q So even if a party wins --
21 11:53:2A Maybe not a cap. I have to correct. Not a
22 11:53:2cap, but a special -- there's a special procedure how
23 11:53:2the costs are assessed as to cap, but the costs are
24 11:53:3calculated.
25 11:53:3Q And the process for calculating the costs in
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1 11:53:3many cases may be lower than the actual fees that a
2 11:53:3party paid; correct?
311:53:3
A It always depends. Cannot give a general
4 11:53:4answer to that.
5 11:53:4Q So even if a party prevails, the prevailing
6 11:53:4party will not necessarily recover all the fees it paid;
7 11:53:5correct?
8 11:53:5MS. BERRY: Objection; form.
9 11:53:5THE WITNESS: It's very much dependent on the
10 11:53:5specifics of the case.
11 11:53:5BY MR. LOVE:
12 11:53:5Q So the total that Microsoft seeks for fees paid
13 11:54:0to the Fresh Fields firm is about 2.119 million.
14 11:54:0Does that sound correct?
15 11:54:0A Yes.
16 11:54:0Q Is that amount typical for a patent case like
17 11:54:1the Mannheim actions?
18 11:54:1MS. BERRY: Objection; form, outside the scope
19 11:54:1of his expert report.
20 11:54:1THE WITNESS: As I'm not an attorney -- can you
21 11:54:1ask the question again.
22 11:54:1MR. LOVE: Sure.
23 11:54:1Q Is -- is that amount -- the 2.119 million, is
24 11:54:2that amount typical for a patent case like the Mannheim
25 11:54:2actions?
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1 11:54:2A I can't say because all cases are different,
2 11:54:3and it -- the costs may be very different. I cannot
311:54:3
give you a clear -- I cannot say a statistical -- if
4 11:54:3it's typical or not. It just depends on the cases.
5 11:54:3Q For -- for what you know about this case, did
6 11:54:4that amount strike you as unusual?
7 11:54:4MS. BERRY: Objection to form.
8 11:54:4THE WITNESS: I have no opinion on this because
9 11:54:4I don't work as an attorney, so I don't see the bills
10 11:54:5all the time.
11 11:54:5BY MR. LOVE:
12 11:54:5Q Well, your report says this amount was far in
13 11:54:5excess of what could be recovered under the scheme.
14 11:54:5A Yes.
15 11:54:5Q And I'm asking whether you think that's typical
16 11:55:0or not?
17 11:55:0MS. BERRY: Objection; form.
18 11:55:0THE WITNESS: I answered the question, that
19 11:55:0it's the -- the scheme sets up a certain rate, and it --
20 11:55:1I don't know what -- what exactly law firms charge when
21 11:55:1they go -- when they charge on hourly basis, so I cannot
22 11:55:2give you any further information on that.
23 11:55:2BY MR. LOVE:
24 11:55:2Q So you're offering expert testimony on the
25 11:55:2recovery of fees and costs --
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1 11:55:2A Yes.
2 11:55:2Q -- in this case; correct?
311:55:3
A Yes.
4 11:55:3Q But you don't know what typical fees are
5 11:55:3actually charged in cases like this?
6 11:55:3A There are no typical fees for typical cases. I
7 11:55:3can only say what the statutory rates are, and then when
8 11:55:4it's about hourly rates -- hourly rates, these -- this
9 11:55:4is very different frequently.
10 11:55:4Q So when you say that Microsoft's fees are far
11 11:55:5in excess of what could be recovered, you don't know if
12 11:55:5that's unusual or not, do you?
13 11:55:5MS. BERRY: Objection to form; asked and
14 11:55:5answered.
15 11:55:5THE WITNESS: I answered already that I know
16 11:56:0the statutory fee, and I know that this is beyond
17 11:56:0this --
18 11:56:0BY MR. LOVE:
19 11:56:0Q Well, why did you say "far in excess"?
20 11:56:0A Because the statutory fee is lower.
21 11:56:0Q So you could have said that the fee is in
22 11:56:1excess of the statutory fee; right?
23 11:56:1A Yes.
24 11:56:1Q What is your basis for saying that it is far in
25 11:56:1excess?
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1 11:56:1A Because it's much more.
2 11:56:1Q But you don't know if that's unusual or not?
311:56:2
MS. BERRY: Objection to form; asked and
4 11:56:2answered.
5 11:56:2THE WITNESS: I answered the question already.
6 11:56:2BY MR. LOVE:
7 11:56:2Q Do you know how much Motorola spent on the
8 11:56:2Mannheim cases?
9 11:56:2A No.
10 11:56:2Q Did you ask?
11 11:56:2A No.
12 11:56:3Q Do you think it would be unusual to spend twice
13 11:56:3as much as Microsoft did?
14 11:56:3MS. BERRY: Objection; form, asked and
15 11:56:3answered.
16 11:56:3THE WITNESS: It's pure -- pure speculation.
17 11:56:3BY MR. LOVE:
18 11:56:3Q Would you be surprised to know that Motorola
19 11:56:4paid more than twice as much as Microsoft?
20 11:56:4MS. BERRY: Objection; form.
21 11:56:4THE WITNESS: It's very speculative.
22 11:56:5BY MR. LOVE:
23 11:56:5Q If I told you that Motorola spent more than
24 11:56:5twice as much on attorneys' fees in the Mannheim cases,
25 11:56:5would you find that surprising?
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1 11:56:5MS. BERRY: Objection; form, outside the scope
2 11:56:5of his expert report.
311:57:0
THE WITNESS: I have no opinion on that.
4 11:57:0BY MR. LOVE:
5 11:57:0Q In your expert report, you go through a
6 11:57:0calculation which determines the statutory fee that
7 11:57:1Microsoft could recover if it prevailed in Mannheim;
8 11:57:1correct?
9 11:57:1A That's correct.
10 11:57:1Q Would that calc- -- and that calculation is
11 11:57:1based on the value of the cases; is that correct?
12 11:57:1A That's correct.
13 11:57:1Q So assuming that Motorola prevails under the
14 11:57:2German scheme, Motorola can recover fees from Microsoft;
15 11:57:2correct?
16 11:57:2A Yes.
17 11:57:2Q Would it be the same amount that you calculated
18 11:57:2in your expert report?
19 11:57:2A Yes.
20 11:57:3Q So it would be the same for either party?
21 11:57:3A Yes.
22 11:57:3Q Do you have an understanding of why the German
23 11:57:4law concerning the recovery of attorneys' fees is
24 11:57:4relevant to the upcoming trial in this case?
25 11:57:5MS. BERRY: Objection; form.
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1 11:57:5THE WITNESS: On a very, very general.
2 11:57:5BY MR. LOVE:
311:57:5
Q What is that understanding?
4 11:57:5A That it is under discussion in this case,
5 11:58:0that --
6 11:58:0Q Did anyone explain to you why it's under
7 11:58:0discussion?
8 11:58:0MS. BERRY: Objection to form, calls for
9 11:58:0attorney-client communications. I instruct the witness
10 11:58:1not to answer to the extent your answer would involve
11 11:58:1the communications with your attorneys.
12 11:58:2THE WITNESS: Then I'm not going to answer.
13 11:58:2BY MR. LOVE:
14 11:58:2Q If Motorola is correct that it's two German
15 11:58:2patents are actually essential to the H.264 standard,
16 11:58:3would you expect that they would prevail in any
17 11:58:3infringement case against an implementer of the
18 11:58:3standard?
19 11:58:4A Always depends on the -- on the circumstances
20 11:58:4of the case. If the person makes unauthorized use, then
21 11:58:5it would prevail. Just depends on the facts, but --
22 11:58:5Q Sure. Let's break that --
23 11:58:5A -- reasoning is very straightforward when you
24 11:58:5you prevail in the patent infringement lawsuit and when
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