Apple Inc. v. Psystar Corporation

Filing 135

Declaration of MEHRNAZ BOROUMAND SMITH IN SUPPORT OF APPLE'S MOTION TO DISMISS OR ENJOIN PROSECUTION OF THE RECENTLY-FILED FLORIDA ACTION AND TO RE-OPEN DISCOVERY FOR LIMITED PURPOSES filed byApple Inc.. (Attachments: # 1 Exhibit 1, # 2 Exhibit 2, # 3 Exhibit 3, # 4 Exhibit 4, # 5 Exhibit 5, # 6 Exhibit 6, # 7 Exhibit 7, # 8 Exhibit 8, # 9 Exhibit 9, # 10 Exhibit 10, # 11 Exhibit 11, # 12 Exhibit 12, # 13 Exhibit 13, # 14 Exhibit 14)(Boroumand Smith, Mehrnaz) (Filed on 9/11/2009)

Pages 1 - 37 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA BEFORE THE HONORABLE WILLIAM H. ALSUP APPLE INC., a California corporation, ) ) ) Plaintiff, ) ) VS. ) ) PSYSTAR CORPORATION, a Florida ) corporation, and DOES 1-10, ) inclusive, ) ) Defendants. ) ___________________________________)

No. C 08-3251 WHA

San Francisco, California Friday September 4, 2009

TRANSCRIPT OF PROCEEDINGS APPEARANCES: For Plaintiff: BY: TOWNSEND AND TOWNSEND AND CREW LLP Two Embarcadero Center - 8th Floor San Francisco, California 94111-3834 JAMES G. GILLILAND, JR., ESQUIRE MEGAN M. CHUNG, ESQUIRE MEHRNAZ BOROUMAND SMITH, ESQUIRE CAMARA & SIBLEY, LLP 2339 University Boulevard Houston, Texas 77005 KIWI ALEJANDRO DANAO CAMARA, ESQUIRE

For Defendant: BY:

Reported By:

CSR Katherine Powell Sullivan, CSR #5812 Official Reporter - U.S. District Court Katherine Powell Sullivan, CSR, RPR,CRR Official Reporter - U.S. District Court [phone]

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Psystar. THE CLERK: SEPTEMBER 4, 2009

PROCEEDINGS 10:05 A.M

Calling civil 08-3251, Apple versus

Counsel, please state your appearance for the record. Would you like everyone to come to the microphone, Your Honor? THE COURT: THE CLERK: Yes. Counsel, please come to the microphone. Good morning, Your Honor.

MR. GILLILAND:

Jim Gilliland and Mehrnaz Smith and Megan Chung for the plaintiff Apple. THE COURT: MR. CAMARA: Good morning. Good morning, Your Honor.

Kiwi Camara for the defendant Psystar Corporation. THE COURT: Everyone have a seat. Have you resolved all

I read most of this material. of your problems?

First, let me ask this -Half of them, Your Honor. What half have you resolved? We have resolved parts two and three of

MR. CAMARA: THE COURT: MR. CAMARA: the briefing.

We have resolved the dispute about Mr. Schiller's testimony concerning whether he had compared Apple products to Katherine Powell Sullivan, CSR, RPR,CRR Official Reporter - U.S. District Court [phone]

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Psystar products. And we've resolved the issue about the missing affidavit and about whether or not that was relied on in one of the expert reports. So the outstanding issues are the testimony of Jacques Vidrine and the document production. MS. CHUNG: It is my understanding, Your Honor, that

Psystar is withdrawing their motions on sections two and three. MR. CAMARA: THE COURT: We are, Your Honor. Well, all right.

Now, I need to -- reading your material here, I want to -- something dawned on me. October. I am conducting a wedding in Not

The wedding is one of my former law clerks. She is already married.

Ms. Chung.

It's a different law clerk

from about five years ago. MR. CAMARA: THE COURT:

And she is marrying Tom --

LaPerle. -- LaPerle.

So in October I will be standing in front of Thomas LaPerle, who I see here is now a witness. MR. CAMARA: Congratulations, Your Honor.

We have no problem. THE COURT: conflict? MR. CAMARA: your presiding. Katherine Powell Sullivan, CSR, RPR,CRR Official Reporter - U.S. District Court [phone] We waive any conflict arising out of All right. So that you waive any

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THE COURT: MS. CHUNG: THE COURT: MS. CHUNG:

How about Apple? We have no issues, Your Honor. What? We waive any conflict. We have no

THE COURT: Okay.

Fine.

That's not an issue then.

So tell me, what is the first issue? Your Honor, the first issue is the Mr. Vidrine is the head of OS X

MR. CAMARA:

testimony of Jacques Vidrine. security.

He was not disclosed either in Apple's initial

disclosures or in any supplementation to any of those disclosures. THE COURT: Wait a minute. Disclosures only require

them to disclose who they are going to rely on. MR. CAMARA: This is true.

He wasn't disclosed in response to any -- in any form, in response to any question about who had conducted investigation into whether Psystar circumvented Apple's technological protection measures. He was not disclosed in response to any -THE COURT: Wait. You are using the word You've got to use the right

"disclosure," and that bothers me. terminology here.

Rule 26(a) says, "The name and, if known, address and telephone number of each individual likely to have discoverable Katherine Powell Sullivan, CSR, RPR,CRR Official Reporter - U.S. District Court [phone]

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information that the disclosing party may use to support its claims or defenses." defenses." "May use to support its claims or

It does not have to disclose witnesses that are

going to help you. Now, if you had propounded an interrogatory and said, "Name each person who has done X, Y, or Z," and Mr. Vidrine fit within that, they would have to tell you that in the answer. But your motion -- I read it. directed at a disclosure violation. Your motion is

You say, "Apple failed to

disclose by agreeing in its initial disclosures or in any supplement to those disclosures." Well, if that's true, then the answer is they can't rely on Vidrine, period, for any purpose. MR. CAMARA: THE COURT: Okay, Your Honor. Are you planning on relying on Vidrine as

a witness on summary judgment and/or at trial, Ms. Chung? If you are, you are out of luck unless you get relief from your default. MS. CHUNG: Your Honor, we have the issue of the And my

notice of pendency in other action in Florida case. response to that will depend on that issue.

Because our position was that we had an outstanding discovery response to Psystar. And we specifically asked them

if they -- and we asked them with meet and confer with the prior counsel for Psystar about R&D development, as well as any Katherine Powell Sullivan, CSR, RPR,CRR Official Reporter - U.S. District Court [phone]

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new products that are coming into the case. THE COURT: pleadings -MS. CHUNG: THE COURT: MS. CHUNG: THE COURT: Yes. Forget that case in Florida for a moment. Okay. If you didn't disclose Vidrine, you are That's just the way it is. Wait a minute. On the present

not going to be allowed to use him.

Now, a substantial justification for using him would be if at the last minute some new issue came out of left field, and they brought it up on the other side such that you were surprised, and now you've got to enlarge the group of witnesses you want to rely on. I would allow you, for that kind of substantial justification, to submit a new supplement to your initial disclosures, even at this late hour, if it really was that scenario. But I'm not going to do it because there's some lawsuit in Florida. MS. CHUNG: THE COURT: That has nothing to do with my lawsuit. I understand, Your Honor. So the normal answer to this problem is But the penalty for not

they didn't have to disclose Vidrine. doing it is they can't use him. MS. CHUNG: THE COURT: We understand.

So that's -- that's --

Katherine Powell Sullivan, CSR, RPR,CRR Official Reporter - U.S. District Court [phone]

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MS. CHUNG: by counsel.

We do believe there was new issues raised

But if you give me one moment, I will -All right.

THE COURT: (Pause) MS. CHUNG:

Your Honor, Apple will not use

Mr. Vidrine either for trial or for purposes of summary judgment. THE COURT: relying on him? MS. CHUNG: THE COURT: No. That's an indirect way. Any of your experts who are going to be

So Vidrine is out of your case totally? MS. CHUNG: THE COURT: MR. CAMARA: THE COURT: request problem? MR. CAMARA: Your Honor, the documents have been Yes. That ends the Rule 26 problem. It does, Your Honor. All right. So now how about the document

produced by Apple as a continuous sequence of digitized files. THE COURT: I read that. But they said that your

predecessors agreed to that. they say. MR. CAMARA:

And you have been even worse,

There is no evidence of the agreement There is no e-mail

either that Apple has produced in writing. that manifests that agreement.

There is no signed document of

Katherine Powell Sullivan, CSR, RPR,CRR Official Reporter - U.S. District Court [phone]

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any kind that manifests that agreement. We have conferred with prior counsel twice today, once before the meet and confer with Apple, and once after. Before the meet and confer, we asked if there was any agreement that the documents be produced other than in the ordinary manner in which they are kept. no such agreement. At the meet and confer, Apple told us they reached an oral agreement with prior counsel that the documents would be produced, clumped by source or custodian of the document, but with no further information about what the source was or the internal organization of the documents from that source. We took that information and again asked former counsel whether there was any such agreement. And I have Former counsel said there was

e-mail from five minutes ago, from former counsel, saying that there was no such agreement. And so the manner in which the documents are produced, it's a continuous stream, which gives us no information about how each of the individuals -- and Apple stores documents by individuals rather than centrally -organized those documents, nothing at all, other than the page by page electronic files themselves. THE COURT: MS. CHUNG: Ms. Chung. Your Honor, we attended that meet and So did Mr. Gilliland,

confer with opposing counsel.

Katherine Powell Sullivan, CSR, RPR,CRR Official Reporter - U.S. District Court [phone]

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Ms. Boroumand Smith. And we did have that agreement that we will not be providing source information, including metadata which contains the folder structure or file path information that Mr. Camara seeks now at this late hour. THE COURT: produced? MS. CHUNG: These documents have been produced by Wait a minute. When were these documents

Psystar since December of 2008, without any of the folder structure, and since January of 2009, from Apple. THE COURT: If this violated something, why didn't

someone raise it before now? MS. CHUNG: That is exactly our point, Your Honor.

We never raised it because we knew that this agreement existed. And Psystar has raised other issues with myself directly to meet and confer about document production, but never raised this issue. THE COURT: If this was a violation of something, why

didn't your prior counsel say something about it? MR. CAMARA: I don't know that, Your Honor. I'm not

aware of what caused many of the decisions that were made by prior counsel. I will say that when we came into the case, we have supplemented all of our productions, with possibly one exception, so that they are organized by document requests. Katherine Powell Sullivan, CSR, RPR,CRR Official Reporter - U.S. District Court [phone]

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So Psystar is now picking one of the two alternatives under the rule. To the extent Apple has a complaint -- and

they haven't raised one yet, but to the extent they do, we will correct the rest of our production to be responsive by document request. The delay may be evidence or not evidence of an agreement, but we think we are entitled to get the documents produced correctly, or to get an appropriate sanction for our time in organizing those documents if there is in fact -THE COURT: Both sides did it. Sounds like both

sides did it this way, so there was an agreement. Isn't that evidence of an agreement, that it was unobjected to for all this time? unobjected to. it this way. MR. CAMARA: It does, Your Honor. But there are It's a course of conduct

That tends to show there was an agreement to do

agreements in writing about a whole variety of other far less important things than this. For example, e-mail service is documented in writing. The fact that things will appear in TIF files appears in writing. We have consulted prior counsel, and they've denied that there is any such agreement. We have no evidence of such an agreement. produced no evidence of such an agreement. Katherine Powell Sullivan, CSR, RPR,CRR Official Reporter - U.S. District Court [phone] Apple has

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And the burden on us of this deviation from the rules and the local order and your supplemental order is massive because of the volume of documents that Apple has produced and the complete lack of structure to those documents. Now, we have offered a variety of concessions. We

agreed not to seek the source information that's required by the supplemental order, who the custodian was and how they searched for the documents. We requested in our briefing that they reproduce all the documents sorted by document request. burdensome. That would be very

We would be willing to accept the folder structure

that shows us how these documents were kept in each individual custodian's hands. So we are doing our best to make this as minimally burdensome for Apple as possible. But a giant array of

documents, one electronic file with a Bates label as its file number per page is -THE COURT: How hard would it be for you to give an

affidavit, Ms. Chung, that would say Bates numbers A through B came from so and so's file; C through D came from somebody else's file? How hard would it be for you to do that? Your Honor, we produced thousands of So at this

MS. CHUNG:

pages and collected from many, many custodians.

time, I cannot tell you how long that would take for us to actually go back and correspond and correlate to this Katherine Powell Sullivan, CSR, RPR,CRR Official Reporter - U.S. District Court [phone]

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information that you're seeking -- or Mr. Camara is seeking. And I would like to correct one representation made by Mr. Camara. He said he's not seeking a concession, the But that is not true.

source information.

He is absolutely seeking the source information because he is seeking the file path and the folder structure for every electronic document Apple has produced. That is a tremendous amount of burden on Apple at this time, when we are in the midst of expert discovery and preparing for summary judgment stages, for us to do this at this time. MR. CAMARA: Your Honor, this is going to impose a There is no question

massive burden on one party or the other. about that.

Either we do our best to reconstruct this and sort it out by going through the documents manually, as we've done in part and haven't finished, or Apple does it. The question, I would think, is it's much easier for Apple to do this than it is for us to do that. MS. CHUNG: But, Your Honor, my point is that it was

Psystar's burden, if they had any objections, to raise it during fact discovery with prior counsel, or even when Mr. Camara joined as the representing counsel for Psystar. And for them to ask now, even after fact discovery deadline, is burdensome. And it's actually besides -- it's

Katherine Powell Sullivan, CSR, RPR,CRR Official Reporter - U.S. District Court [phone]

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beyond the time when they should have asked this information. And he had the opportunity and the chance at every deposition he took to ask questions about the documents, the organization of the documents. And Mr. Camara and his

colleagues did not choose to do so. So Apple should not be burdened, at this time, to do the work for Psystar that they failed to do and they chose not to do. MR. CAMARA: We raised this issue on the tenth day

after the fact discovery, which is the deadline in Your Honor's -THE COURT: it could be raised. I know, but that's literally the last day I went back to check. I agree, Your Honor. This is the kind of thing that

MR. CAMARA: THE COURT:

responsible counsel would have raised on the first time they got documents that didn't comply, so that going forward it could be fixed. And, instead, now you're trying to go back to re-litigate issues that were raised for the first time -- which should have been raised a long time ago. MR. CAMARA: Your Honor, we certainly would have

preferred that these had been raised earlier. When we came in the case we made a strategic decision about what was most important. We decided preparing for those

Katherine Powell Sullivan, CSR, RPR,CRR Official Reporter - U.S. District Court [phone]

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depositions and taking those depositions -- which consumed many of the business days in August, and for which a large part of my team actually moved out to California -- was the priority at that point. We don't think, though, that that strategic

decision excuses Apple's failure to comply with the rules. We're not asking for a special concession because we came into the case late. We're merely asking for the And we're

information that the federal rules entitle us to. not even asking for all -THE COURT: then.

They did entitle you to that way back

But I don't think -- you just can't -Ms. Chung, are you prepared to swear under oath, now,

as to this prior agreement? MS. CHUNG: THE COURT: Yes, Your Honor. Please take the witness stand.

The clerk will swear in Ms. Chung. THE CLERK: Please raise your right hand.

(The oath was administered to Ms. Chung.) MS. CHUNG: THE CLERK: THE COURT: your name? Yes. Please, be seated. Ms. Chung, what's your name? What is

Speak clearly into the microphone. Megan Chung. Is that microphone on? I thought it was. I don't hear her.

MS. CHUNG: THE COURT: THE CLERK:

Katherine Powell Sullivan, CSR, RPR,CRR Official Reporter - U.S. District Court [phone]

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MS. CHUNG: (Pause.) MS. CHUNG: THE COURT:

It's not on.

Megan Chung. Thank you.

What is your connection to this case? MS. CHUNG: I am counsel of record on behalf of

plaintiff and counter-defendant Apple Inc. THE COURT: Describe briefly what the issue is that

you were telling us about before you went under oath. MS. CHUNG: Psystar filed a motion in which it had

stated that Apple -- or it had requested that Apple provide folder structure information and source information for all documents that Apple had produced. But Apple had an agreement, it's my belief, and I participated on the call with Psystar's lead trial counsel, Mr. Robert Yorio and Colby Springer, about an agreement that the parties do not provide source information, including metadata, in September of 2008, with follow-up communications in the fall of 2008. THE COURT: All right. You're saying in

September 2008, you personally were in a conversation with opposing counsel; is that correct? MS. CHUNG: THE COURT: telephone? Katherine Powell Sullivan, CSR, RPR,CRR Official Reporter - U.S. District Court [phone] Yes. And was this in person or on the

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MS. CHUNG: 26(f) conference. THE COURT: MS. CHUNG:

We talked on the telephone to start our

And who else was present? Mr. Gilliland, James Gilliland, and

Mehrnaz Boroumand Smith, of Townsend, Townsend and Crew, representing Apple Inc., participated on the conference call with Mr. Robert Yorio and Mr. Colby Springer representing Psystar Corporation. THE COURT: by each side? All right. Specifically, what was said What was said by

Don't use conclusory language.

each side on this subject? MS. CHUNG: At the time of the 26(f) conference in

September, we discussed specifically our document production and Your Honor's supplemental standing order. Ms. Boroumand Smith raised the issue of the requirements in Judge Alsup's supplemental standing order with respect to the privilege log and document production, and that it would be burdensome for the parties to have to provide such information at the time of the production and of the service of the privilege log. Mr. -- I can't recall specifically if it

was Mr. Yorio or Mr. Springer who agreed. And then it was followed up with specifically conversation about metadata that -- and I believe that issue was raised by, again, Ms. Boroumand Smith, and that we would be also excluding the source information in the form of metadata, Katherine Powell Sullivan, CSR, RPR,CRR Official Reporter - U.S. District Court [phone]

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with the possible -- no.

So that we would be excluding the And Mr. Springer agreed to

source information of the metadata. that.

And then Mr. Gilliland said with the exception of possibility the Web site content, because Psystar may be changing their Web site content and we may need to be able to see the information with respect to the metadata on that Web site content. To which Mr. Springer responded that they

would need to talk to Psystar about Web site information. Following that conversation, I had a conversation with Mr. Springer about Web site information. And then another

conversation, I believe, Ms. Boroumand Smith had with Mr. Springer, where the issue of version control came up for the source code, Psystar source code and the Web site information. And we discovered that Psystar did not maintain

version control for the source code or for the Web site, so the metadata issue with respect to the Web site became moot. THE COURT: MR. CAMARA: All right. Any questions, Mr. Camara?

You mentioned that you reached an

agreement with Mr. Yorio and Mr. Springer about what is required to be produced under Judge Alsup's standing supplemental order in civil cases; is that right? MS. CHUNG: MR. CAMARA: Yes. Did you further discuss the scope of

Apple's obligations under the federal rules, setting aside the Katherine Powell Sullivan, CSR, RPR,CRR Official Reporter - U.S. District Court [phone]

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special supplemental order? MS. CHUNG: We discussed further that we would not be

providing/producing electronic documents in its native format. That, instead, we would be -- the parties -- now, I don't remember if we raised it or if Mr. Yorio raised the issue, but that the counsel on the conference call in September agreed that we would be producing the documents not in its native format but, rather, in PDF and TIF electronic -- searchable electronic format. After that conversation, Psystar counsel -- I can't remember if it was Mr. Springer or now Mr. Grewe who raised the issue of producing a hard copy. MR. CAMARA: And, in fact, that agreement was reduced

to writing about not producing in native format, right? MS. CHUNG: Actually, I cannot recall that. I

don't -- I don't remember seeing that. MR. CAMARA: Okay. So you mentioned one part of the

federal rules you discussed, which is whether you would produce in native format. Did you discuss in any other way Apple's obligations under the federal rules, setting aside, again, the supplemental order? MS. CHUNG: obligations. MR. CAMARA: Your Honor, that's our point. Our point We never discussed about Apple's

Katherine Powell Sullivan, CSR, RPR,CRR Official Reporter - U.S. District Court [phone]

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is that even setting aside -THE COURT: MR. CAMARA: Have you finished your examination? Why did you not reduce the agreement you

entered into about the supplemental order to writing? MS. CHUNG: MR. CAMARA: I'm sorry? You testified that you didn't reduce the

agreement you reached with Mr. Springer and Mr. Yorio in September of 2008, to writing. You didn't reduce it to writing; is that right? MS. CHUNG: I thought either myself or Ms. Boroumand But when

Smith had reduced it to writing to opposing counsel.

we searched, since you filed your motion, we could not find it. MR. CAMARA: And is it customary at Townsend to

reduce agreements with opposing counsel to writing? MS. CHUNG: Normally, when we have good relationship

with opposing counsel, it is not my practice to reduce it in writing. MR. CAMARA: So an agreement like this, about the

form of all of Apple's discovery, you would not have sent a confirming e-mail to opposing counsel? practice? MS. CHUNG: I can't speak for Townsend practice That is not Townsend's

because we don't necessarily have a policy on that. MR. CAMARA: confirming -Katherine Powell Sullivan, CSR, RPR,CRR Official Reporter - U.S. District Court [phone] And it's not your practice to send a

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MS. CHUNG:

My practice is not -- I -- my practice

is, generally, to reduce in writing only if I feel it will become an issue and when all the issues have been met and conferred with opposing counsel and decided. MR. CAMARA: If you had reduced other issues to

writing in this case -- for example, if I told you there were writings that evidence your agreement about not providing native format files, would you then be surprised that you didn't reduce this other agreement to writing? MS. CHUNG: MR. CAMARA: No. You said you only reduce things to

writing when you have an adversarial relationship with opposing counsel; is that right? MS. CHUNG: I do not reduce to writing if I have a

good relationship with opposing counsel. MR. CAMARA: Carr & Ferrell? MS. CHUNG: At the time of the 26 conference and in Do you have a good relationship with

2008, yes, we were able to reach many agreements. MR. CAMARA: Would it surprise you, then, that you

reduced to writing all kinds of agreements with Carr & Ferrell, including agreements about e-mail service, about the production of documents in native format, and about a host of other topics? MS. CHUNG: I don't believe I reduced to writing

Katherine Powell Sullivan, CSR, RPR,CRR Official Reporter - U.S. District Court [phone]

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those topics. MR. CAMARA: Are you aware of whether or not other

members of the Townsend, Townsend and Crew team present here habitually reduced agreements to writing? MS. CHUNG: Well, I don't know about "habitually,"

but I do know that they have reduced to writing some agreements with Carr & Ferrell. MR. CAMARA: agreements to writing? MS. CHUNG: I have seen her reduce -- put in writing Have you seen Ms. Smith reducing

the agreements with Carr & Ferrell, especially this year, in 2009. THE COURT: MR. CAMARA: THE COURT: How much more do you have? That's it, Your Honor. All right. Thank you.

Ms. Chung, you can step down. Here's the answer. agreement or not. I don't know whether there was an I think Ms. Chung is

It's too hard to tell.

acting in good faith in thinking there was an agreement, but maybe the other side didn't know. Here's the main point. to rule on that. This whole -- I'm not going

This should have been raised a long time ago, Now you're raising it way after the fact,

if it was a problem.

and it's too late to reorganize things. I'm sympathetic to your issue, so here's what we're Katherine Powell Sullivan, CSR, RPR,CRR Official Reporter - U.S. District Court [phone]

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going to do.

Write this down.

Each side, by Tuesday at noon,

can send a letter to the other side and identify up to 50 pages, and say, "Tell me where these 50 pages came from." And

then the other side has got to respond by Friday of next week, say, "Here's the file that it came from." For example, you would want to say Mr. Vidrine's desk file hard copy. e-mails. So each of you can pick out the 50 you're most interested in knowing about, and serve it on the other side. And you'll learn where the sources were for those 50. But beyond that, we are not going to go back and redo it for all the other documents in the case, most of which don't matter anyway. And so you pick out the 50 that you care about. That would be adequate. Or Vidrine's computer

50 individual pages. Now, if it happens to be a 30-page document, you can pick out the first page. And then the other 30, presumably, So you can do that.

came from the same source.

But you can't then object on the ground, oh, they've used up 30 pages because it was a 30-page document. That's one page. No.

In a way, this is like 50 different documents

or 50 different pages. You need Bates number. numbers, right? MR. CAMARA: Yes, Your Honor. Each of you used unique Bates

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MS. CHUNG: THE COURT:

Yes. Give them a list of the 50 Bates numbers And the other side has got to respond. Was it a hard copy? Was it a desk

you are interested in.

Say the name of the person. file?

What was the name of the file, if it was a desk file? For example, if the name of the desk file said, "Ways

to suppress competition," then you would say, "Vidrine's file on ways to suppress competition." MS. CHUNG: MR. CAMARA: Yes, Your Honor. Your Honor, might we also ask for a

small award of fees for the bringing of this motion? THE COURT: MR. CAMARA: THE COURT: No. Thank you, Your Honor. Because you are lucky to get this. You are going to have to And

both sides are going to get it. respond, too.

This motion should have been brought a long time ago. The fact that it wasn't does tend to indicate there was an agreement. Then new counsel came in and decided to go a

different way. So I'm not ruling that there was or was not an agreement. I'm just saying for the sake of making this an

easier case for both of you to try and get organized, it would be useful for you to have that information. Okay. So what else do I need to decide today? Katherine Powell Sullivan, CSR, RPR,CRR Official Reporter - U.S. District Court [phone]

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MR. CAMARA:

I believe the plaintiffs have requested We have no other

a status conference about the Florida matter. discovery disputes. THE COURT: All right.

What's the deal on -- what do

you want, Ms. Chung, on the Florida matter? MS. CHUNG: on that matter. THE COURT: MS. CHUNG: All right. Thank you, Your Honor. Good morning, Your Honor. Actually, Mr. Gilliland will be speaking

MR. GILLILAND: THE COURT:

Good morning. First, I want to thank you for

MR. GILLILAND:

carving the time out of your schedule to meet with us today. The reason that Apple asked for this status conference is because of the filing last week of a complaint in the Southern District of Florida, in which Psystar basically mimics the allegations and claims that are pending here and which will be resolved, we believe, at trial in January. So in

the interest of efficiency and not asking the courts to do duplicative labor, we wanted to talk with Your Honor about how to now proceed. Basically, the case filed in Florida, which we have submitted to the Court, asked for declaratory relief that Psystar does not infringe Apple's copyrights by loading its Apple software onto Psystar computers; that Psystar does not Katherine Powell Sullivan, CSR, RPR,CRR Official Reporter - U.S. District Court [phone]

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violate the Digital Millennium Copyright Act by circumventing a technological protection measure. And those issues, as the

Court well knows, are precisely the ones set forth in this lawsuit. Psystar, also in Florida, reasserts the antitrust causes of action that this Court already considered and dismissed in November of 2008. So the question presented, of course, is: they do that? Why did

What's the basis for arguing that there should

be a separate lawsuit in Florida? And Psystar's justification, which we think is groundless, is that the Florida action involves Version 10.6 of Apple's operating system, called a Snow Leopard. And as

represented to the Court in Florida, this lawsuit in California only involves Version 10.5, which is called "Leopard." THE COURT: Is called what? Leopard.

MR. GILLILAND: THE COURT:

Leper -L-e-o-p-a-r-d.

MR. GILLILAND: THE COURT:

Leopard. Leopard.

MR. GILLILAND: THE COURT: is Leopard? MR. GILLILAND:

The other one was Snow Leopard, but this

That's correct.

One has spots and

the other is white or something. Katherine Powell Sullivan, CSR, RPR,CRR Official Reporter - U.S. District Court [phone]

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MR. CAMARA:

They both have spots. But the representation, Your Honor,

MR. GILLILAND:

that this lawsuit only involves Leopard, or Version 10.5, is wrong. That's not what our allegations say. And those are not

the only issues that will be resolved by this Court. If you will indulge me for a moment, I will show you references to our complaint. THE COURT: All right. These are quotes from the amended

MR. GILLILAND: complaint.

Paragraph 15 says that in October, 2008, Psystar announced it was going to sell new products with a new unauthorized version of Mac OS X operating system. limited to Version 10.5 or Version 10.6. That's not

It's Mac OS X.

In Paragraph 24 we allege that Apple never authorized Psystar to install any of Mac OS, Mac operating system. not limited to Version 10. With respect to the copyright infringement actions, we do specifically reference this is Leopard, but we also allege that they have infringed our copyright in Mac OS X and the Mac operating system. And in the Digital Millennium Copyright Act allegations, paragraph 46, we allege that Psystar admits that Mac OS X, again without limitation on the version, normally will not run on non-Apple-labeled computers. But Psystar has Again,

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come up with technology to allow it to run on Psystar computers. In certain respects, Your Honor, it's as though there were an infringement action pending in this court in which a publisher, such as the Rudder Group, alleged infringement of the copyright on the treatise Federal Civil Procedure Before Trial by Judges Schwarzer and Taschima, and then 3,000 miles away the infringer filed an action saying, "We want declaratory relief that we do not infringe the copyright on the 2009 update." Version 10.6, Snow Leopard, is written on top of Version 10.5. Leopard. You can't run Snow Leopard without having

And the copyrights to Mac OS X cover the subsequent

versions, as well. THE COURT: not a motion. I understand the background. But this is

This is just a status conference. Yes. Why did you want

MR. GILLILAND: THE COURT: a status conference? MR. GILLILAND: this issue.

So what is your point?

First of all, to alert the Court to

And, secondly, to request a couple of

possibilities. One is that we reopen discovery for 30 days, so that Apple can get the source code for, apparently, Psystar's new product, and we take a step back. Katherine Powell Sullivan, CSR, RPR,CRR Official Reporter - U.S. District Court [phone]

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This relates to what Ms. Chung said earlier.

On

Friday of last week, seven days ago, Psystar announced that it was selling a computer that runs with Snow Leopard. We have

not seen the source code for that technology, but we believe that it is subsumed within the allegations in our complaint. Consequently, we suggest as follows: That the

parties -- that the Court allow discovery for another 30 days; that Psystar turn over the source code for its new product; that we be allowed to ask Mr. Pedraza what he did; and Apple will make Mr. Vidrine available to testify about any changes in the technological protection measure, so that those issues can be finally resolved at the trial in January. Beyond that, we will, of course, make a motion either in this court to stay the proceedings in Florida, or in the Florida court to transfer them here, or both. But in the short run, in order to make this as efficient as possible, our request is that the Court allow us to take the small amount of discovery specifically related to the newest product, released seven days ago. And, in exchange,

we will offer to make Mr. Vidrine available for anything that relates to the changes as between Leopard and Snow Leopard. THE COURT: MR. CAMARA: Mr. Camara, what do you say? Your Honor, the difference between the

Florida case and this case is that Florida relates to Snow Leopard, this to Leopard. And that changes the evidence that

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is at issue in both cases. The technological protection mechanism that Apple uses in Snow Leopard is different from the mechanism that it uses in Leopard, which means the evidence for the circumvention claims, the DMCA claims and the copyright infringement claims will be different in Florida than here. And the technique that Psystar uses to cause Snow Leopard to run on non-Apple hardware is completely different in Snow Leopard than in Leopard. completely different. And if we look at the manner in which the parties -or more specifically Apple has conducted discovery so far, we see that they have carved out at every occasion Snow Leopard from this case. And here I'm going to describe deposition testimony. I don't know if you want to somehow move to close this to the world, but I'm going to talk about AEO testimony, if you want to do anything. MS. CHUNG: MS. SMITH: Yes. Yes. Apparently, Your Honor, we are going So, again, the evidence is

MR. GILLILAND:

to talk about the specifics of the technological protection measure; and, therefore, we would request the courtroom be disclosed. THE COURT: These people in the audience here, are

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they members of the public, or what? UNIDENTIFIED SPEAKER: Non-reporter. THE COURT: courtroom. Give me a general statement. getting into this? MR. CAMARA: I just want to quote portions of Why would you be Well, I don't like to close the Public San Francisco resident.

deposition transcripts which are designated "Attorneys' Eyes Only." Not for any technical details, but merely to show that

Apple has continually objected to all testimony about Snow Leopard. THE COURT: Well, is that part true, that Apple

objected to testimony on Snow Leopard? MR. GILLILAND: No, Your Honor.

In fact, I have deposition testimony about Snow Leopard that I can hand you. MR. CAMARA: And I can quote deposition objections

from Ms. Smith, if you would like. THE COURT: Well, I can't resolve this part today, no

matter what you quote. So, all right. I understand. I'm not ruling against I want to understand

you or for you on this point, Mr. Camara. your full argument. MR. CAMARA: Sure.

So this case, we think the

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discovery has been fully completed with respect to Leopard, with respect to whether Psystar's business practices throughout its inception until the time it switched from Leopard to Snow Leopard are legal or not. Fact discovery is closed. That discovery as been conducted. We are now in expert discovery. And

we have a schedule that will work for both sides to expeditiously resolve the legality of Psystar's business up until Snow Leopard, by trial in January. We don't want to upset that by going into all new fact discovery about the manner in which Psystar circumvents or does not circumvent Snow Leopard, and about the nature of the technological protection measures that Apple uses in Snow Leopard. If Apple had wanted to raise those claims, it could have done so by expressly supplementing to include Snow Leopard when it came out. It could have done so, again, by -Help me understand. When did Snow

THE COURT:

Leopard 10.6 come out? MR. CAMARA: is -THE COURT: MR. CAMARA: THE COURT: MR. CAMARA: Of this year? Of this year. August 28th. Which is after the close of fact I believe it was August 28th, which

discovery in this case. Katherine Powell Sullivan, CSR, RPR,CRR Official Reporter - U.S. District Court [phone]

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THE COURT:

And when did your company make this

announcement about your product? MR. CAMARA: It was last week. I don't remember

precisely which day last week. THE COURT: announcement say? MR. CAMARA: We announced we are offering for sale And just tell me, what did your

computers running Snow Leopard. THE COURT: MR. CAMARA: Okay. So we would propose to have those issues

be litigated in the Florida court. The Florida court, of course, will be free to give any preclusive effect that is appropriate to the decision of this court in January. So to the extent the issues are the same -- we think they are not the same, but to the extent they are the same, Mr. Gilliland will be able to make preclusion motions in the federal court in Florida. Meanwhile, we will get an expeditious ruling from the jury, and from this Court on summary judgment, about the legal issues involved in Psystar's business from its inception until a week ago, which is what discovery has been about in this case to this point. THE COURT: Mr. Gilliland, what do you now say in

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MR. GILLILAND:

That nothing could possibly be more

inefficient than what Mr. Camara has just proposed. This Court has studied these issues deeply. a trial coming up in January. It involves all the We have

technological protection measures in Leopard. And if there are any modest changes in Snow Leopard, let's just find out what they are right now, and include them in the trial in January. Why in the world would we start all over again with a whole new court 3,000 miles away, when this court and the parties are primed and ready to go? MR. CAMARA: Your Honor, the change -- the new

discovery that would have to be taken is not trivial. For example, Mr. Vidrine, who the Court has already ordered will not be able to testify, is the person who is charged with designing the new technological protection measures for Snow Leopard. If Apple thought Snow Leopard was covered by this case, they should have disclosed Mr. Vidrine. who designed the protection measures. his deposition. THE COURT: Well, I understand that. Possibly -- I'm He is the guy

We would have to take

not saying it would be, but possibly this new development which just occurred would constitute, quote, substantial justification for a revised disclosure, even at this late date, Katherine Powell Sullivan, CSR, RPR,CRR Official Reporter - U.S. District Court [phone]

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and to add Mr. Vidrine. and so forth.

And then he would be made available

Look, here is the answer to this. You've got to bring a motion.

The answer is:

Right now I'm not going to open discovery. trial.

We have a

But if you want to bring a formal motion to -- there's

no way we could have a trial in January if we do what you want to do, because you then are thinking, "Oh, that judge has nothing to do but work on my case." That's not true. I've got 400 cases. And you would

then be taking a month of my time away to work on summary judgment, and so forth, and expect me to get this case ready for trial by January. If you want to give up your trial date in January and say, "Okay, let's litigate the issue of Snow Leopard and 10.6 and the new product by the defendant," the Court would consider that. I can see relevance, of course, to the -- I'd also be concerned, if it is true -- I don't know that it's true that there's been stonewalling by Apple on the issue of Snow Leopard, so that it would be unfair to allow you to enlarge the pleadings. I'm not saying it has been stonewalling, but that's

what you want to show me. And so you can make that submission. And then the

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period and redo the trial schedule. So I'm not ruling yes or no. This is too

complicated, too many nuances for me to give you an answer off the top of my head. I think this has got to be briefed.

In the meantime, if the Court in Florida is going to have to make a ruling on whether to go forward with that case or transfer it, or whatever -- and I will say for the record I'm happy for that case to be transferred here. resisting that. I'm not inviting it, either. I'm not

I'm just saying

it would be a plausible thing for the judge there to say the case ought to be transferred here. Or maybe it will be an MDL, In Re Snow Leopard. Re Snow Leopard litigation. I can just see that now. In

Maybe it

will go to Florida because then I won't have to do any more work on this case. Look, that's the best I can do for you. to have to bring a formal motion. case schedule stands. MR. GILLILAND: Do you mind if we bring that motion You're going

But, in the meantime, the

on less than 35 days notice, Your Honor? THE COURT: I think you should. So your opening

motion, when can you do it? MR. GILLILAND: One week from today, Your Honor --

yes, we can do it Friday of next week. THE COURT: All right. That's going to be the 11th.

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Then I will give one week for the reply, on the 18th.

Then

any -- I'm sorry, for the opposition, is what I meant to say. The reply will be the 21st. That means that you will be working over the weekend. MR. GILLILAND: done that in this case. MR. CAMARA: THE COURT: All right. That won't be the first time we've Right, Mr. Camara?

Not surprised. I am surprised to hear that. 9/24 will be the argument, at 8:00 a.m. Thank you very much, Your Honor.

MR. GILLILAND: THE COURT:

That's about 20 days, instead of 35. Appreciate that.

MR. GILLILAND: MR. CAMARA:

Thank you, Your Honor.

There is one more outstanding issue, which is that motion with supplemental briefing that was done last week, about compelling testimony on damages, I don't know if the Court -THE COURT: MR. CAMARA: That's still pending. What about it?

I don't know if the Court wanted to take

any further argument on that. THE COURT: I don't want any more argument. I

understand that issue.

I think we now have everything we're Don't we? Yes, Your Honor.

supposed to have on that. MR. GILLILAND: MR. CAMARA:

Yes, Your Honor.

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THE COURT: MR. CAMARA:

Okay.

I think we are at the end.

Thank you, Your Honor. Thank you for your time.

MR. GILLILAND: THE COURT:

You are most welcome.

(At 10:52 a.m. the proceedings were adjourned.) --o0o--

CERTIFICATE OF REPORTER I certify that the foregoing is a correct transcript from the record of proceedings in the above-entitled matter.

Friday, September 4, 2009 s/b Katherine Powell Sullivan _________________________________ Katherine Powell Sullivan, CSR #5812, RPR, CRR U.S. Court Reporter

Katherine Powell Sullivan, CSR, RPR,CRR Official Reporter - U.S. District Court [phone]