Apple Inc. v. Psystar Corporation

Filing 178

MOTION to Seal Portions of Apple Inc.'s Motion For Summary Judgment, Portions of Lynde Declaration, Kelly Declaration and Certain Exhibits to Chung Declaration filed by Apple Inc.. (Attachments: # 1 Affidavit J. Jeb B. Oblak, # 2 Proposed Order)(Gilliland, James) (Filed on 10/8/2009)

Pages 1 - 20 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA BEFORE THE HONORABLE WILLIAM H. ALSUP ) ) Plaintiff, ) ) VS. ) NO. C 08-3251 WHA ) PSYSTAR CORPORATION, ) )San Francisco, California Defendant. ) Thursday ) September 24, 2009 ___________________________________) 8:00 a.m. 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, ESQ. MEHRNAZ BOROUMAND SMITH, ESQ. APPLE, INC.,

For Defendant: BY:

Camara and Sibley, LLP 2339 University Boulevard Houston, Texas 77005 KIWI CAMARA, ESQ. KENT RADFORD, ESQ.

Reported By: Debra L. Pas, CSR 11916, CRR, RMR, RPR Reported 11916,
Official Reporter - US District Court Computerized Transcription By Eclipse

Debra L. Pas, CSR, CRR, RMR, RPR Official Reporter - U.S. District Court - San Francisco, California [phone]

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PROCEEDINGS 9:11 a.m.

THE COURT: THE CLERK:

All right.

Let's hear the other case.

Civil 08-3251, Apple versus Psystar.

Counsel, can you please state your appearances for the record? MR. GILLILAND: Good morning, your Honor. Jim

Gilliland Mehrnaz Boroumand Smith from Townsend, Townsend and Crew for plaintiff Apple. MR. CAMARA: Good morning, your Honor. Kiwi Camara

and Kent Radford from Camara and Sibley for Psystar Corporation. THE COURT: Please, go head. MR. GILLILAND: Thank you, your Honor. Mr. Gilliland, this is your motion.

This is Apple's motion to reopen discovery for a short time for a limited purpose and to dismiss or stay the parallel lawsuit that's been filed in Florida by Psystar against Apple. As the Court knows from our status conference on September 4th, this issue has arisen because after the close of discovery in the -THE COURT: Well, wait a minute. Be fair. You

stonewalled the entire time on this Snow Leopard. Debra L. Pas, CSR, CRR, RMR, RPR Official Reporter - U.S. District Court - San Francisco, California [phone]

They asked

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you for the evidence, you refused to give it to them. ruled it out of the case.

You

Then after discovery closed, you chose -- not them, you chose -- to release Snow Leopard. Then they sued.

So you make it sound like something happened after the close of discovery and it's all their fault. fault. It's your

You could have kept that in the case and did not.

That's your big problem. Now, I'm being honest with you. in this case. I know the record

You have -- you, and that other case we had

here, you have taken it upon yourself to decide when you are going to give the other side discovery. You didn't want to give them lost profit information. We had to litigate that like crazy. Finally, You

it took me hours to get through it. won that one.

I got through it.

Though if it turns out it's relevant in some

way, the jury is going to be told that it's adverse to you because you stonewalled on that. Now you have stonewalled on Snow Leopard. Throughout. They wanted the information. You said no. You

ruled it out of the case. Now you want to bring it back into the case because they used it against to bring that lawsuit in Florida. I don't see much equity on your side. I'm feeling right now. That's what

I want to give you a fair chance to

Debra L. Pas, CSR, CRR, RMR, RPR Official Reporter - U.S. District Court - San Francisco, California [phone]

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talk me out of it. MR. GILLILAND: appreciate that. I would ask the Court when you have a moment to take a look at the declaration of Mehrnaz Boroumand Smith and the attachments to it, specifically Exhibits 6, 7, 8, 9, 10 and 11. THE COURT: Just a moment. Whose deposition? It was Thank you, your Honor. I

MR. GILLILAND:

Mehrnaz Boroumand Smith.

submitted in support of Apple's motion. THE COURT: I have so many papers here. Motions to strike. I'm going

to hand it down to you. to dismiss.

I've got motions You find

I have so many pieces of paper here.

it for me in all this material. You lawyers need to learn that you have got to present short, simple, sweet things for the poor judge. Otherwise, how am I supposed to keep all of this straight? (Brief pause.) THE COURT: I read their document request and they I don't see how you can get out of

asked you for this stuff.

the fact that they asked you for it and you -- and you said no. Are you denying that? Mr. Gilliland? Are you denying it,

Please answer my question. I will.

MR. GILLILAND:

Debra L. Pas, CSR, CRR, RMR, RPR Official Reporter - U.S. District Court - San Francisco, California [phone]

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Your Honor, the original document requests defined the term "Mac OS" and we objected to it as overbroad because it included, as so defined, everything that went back to the beginning of the Mac -THE COURT: They asked for Snow Leopard several

And I read the deposition, the Q & A where they said, That's not out yet. We

"You are asking for Snow Leopard. are not giving you that." MR. GILLILAND:

So those are the deposition

excerpts that I have referred to you in the Boroumand Smith declaration, your Honor. And, yes, we objected on the grounds of relevance, but we did not -- but the witnesses went ahead and answered all the questions. And we objected -Not the one I saw. Well, that's why I'm -- there were

THE COURT:

MR. GILLILAND:

six witnesses who were asked about Snow Leopard, your Honor, and every single one of them testified in response, answered the questions that were put to them regarding Snow Leopard. And those are the exhibits I just referred your Honor to. THE COURT: Let me find what it was that they said Here

that I read earlier and see if I somehow -- all right. is one. Let's see.

Someone named -- I don't know whose

deposition this. witness.

I see Boroumand Smith, but that's not the

Debra L. Pas, CSR, CRR, RMR, RPR Official Reporter - U.S. District Court - San Francisco, California [phone]

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There is an objection: "To the extent this calls for information regarding Snow Leopard, that hasn't been released." MR. GILLILAND: Probably, your Honor, you are

looking at the deposition of Simon Patience. And, yes, Miss Smith did say that in the deposition. However, Mr. Patience was then -- then went

ahead and answered the questions. THE COURT: Well, the witness just said Snow

Leopard isn't released yet. MR. GILLILAND: questions, your Honor. but not continued. Indeed, if you look at Psystar's opposition brief to our motion, on page eight they testify that Mr. Patience, Simon Patience -- they write: "Simon Patience testified about this at length in his deposition." And by "this" they are talking about how the technological protection measures in Snow Leopard were changed. So they say that he -- Mr. Patience testified about this at length. this. Debra L. Pas, CSR, CRR, RMR, RPR Official Reporter - U.S. District Court - San Francisco, California [phone] We did not stop any of the discovery on But then there were further

They have quoted to you that portion,

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THE COURT:

Why was the objection made then? Well, that's a different question.

MR. GILLILAND:

I'm sure your Honor might say there is no such thing as a relevance objection in a deposition. But be that as it may,

we -- we objected for the record, but then allowed the discovery to proceed. And as you will see in each of the deposition excerpts of all the other witnesses, they all answer questions regarding Snow Leopard. THE COURT: So you are telling me there was never a

single question that was refused based upon the fact that it hadn't been released yet? MR. GILLILAND: THE COURT: That's correct, your Honor. Now, Mr. Camara? Let me

All right.

just get to the bottom of this. MR. GILLILAND: THE COURT: That's fine, your Honor, of course. You misled me if that's

All right.

Show me a question that was not answered on account of

this objection. MR. CAMARA: I didn't mean to mislead you, your

What I meant to quote, and I think the brief reflects

what I meant, was that they repeatedly objected to Snow Leopard questions on grounds of relevance. THE COURT: Where did the witness refuse -- where Where did they

did they refuse -- first on depositions.

Debra L. Pas, CSR, CRR, RMR, RPR Official Reporter - U.S. District Court - San Francisco, California [phone]

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refuse to allow a witness to answer based upon that objection? MR. CAMARA: They never instructed a witness not to

answer in the depositions. THE COURT: MR. CAMARA: So what's the problem then? Well, throughout their depositions

they maintained that Snow Leopard was not part of this case. We are not contesting that. We don't say that they We agree that

should have answered Snow Leopard questions. Snow Leopard was not part of this case. press them.

That's why we didn't Instead we

That's why we didn't move to compel.

took a different option. different case.

We sued them over Snow Leopard in a

We don't think the objections were improper. think they were correct. THE COURT:

We

Where on documents, where did they

refuse to give you documents on account of Snow Leopard not being a product? MR. CAMARA: Throughout the written discovery, but

if you look in particular at Apple's responses to interrogatory, we asked an interrogatory that referred to a Mac OS -- and this is on pages four and five our response brief. The definition of Mac OS that we used said: "All versions of Mac OS, including without limitation Mac OS X, Mac OS 9 and Mac Debra L. Pas, CSR, CRR, RMR, RPR Official Reporter - U.S. District Court - San Francisco, California [phone]

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OS 8." And Snow Leopard is Mac OS 10.6. included in that definition. phrase "all versions." Apple objected to that definition and refused to answer on the basis of their objection. Apple objected. "Apple objects generally to the definition of Mac OS license agreement because it seeks information regarding all license agreements covering all versions of Apple's operating system that have ever existed, regardless of whether each license agreement as defined is at issue in this action." Then Apple stated how it would construe the request. Apple went on: "Apple will construe each request referring to a Mac OS license agreement as referring to the software license agreement for a Mac OS X Leopard." And, again, we are not saying they did anything wrong. It's okay if the case includes only Leopard. We are So that's

It's also included within the

simply saying that that's how everyone has conducted the litigation in this case and we agree with it. Debra L. Pas, CSR, CRR, RMR, RPR Official Reporter - U.S. District Court - San Francisco, California [phone]

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We think Snow Leopard is not in this case and, therefore, is properly brought in Florida. It's not a motion to compel. It's simply evidence

of how the litigation has been understood by the parties throughout fact discovery. THE COURT: All right. I misunderstood your point,

but I now -- now I get your point. All right. So why isn't is that a correct

statement, that even if you allowed the witnesses to answer and you objected on relevance grounds and construed the case to be limited to OS X Leopard, as opposed to Snow Leopard, and now that it's inconvenient to you, you want to go back and change that? Why is it that you are in that situation? Your Honor, thank you for the

MR. GILLILAND:

What we are suggesting is not only is this inconvenient to Apple, but it's inconvenient to the Federal Court system and to all the parties. We have a lawsuit here that your Honor has devoted an enormous amount of time to. copyright infringement. It involves the question of

It involves the question of a

violation of the Digital Millennium Copyright Act. The license at issue is precisely the same, the wording about restricting the use of Apple's software to Apple's computers in this case as it would be in Florida. Debra L. Pas, CSR, CRR, RMR, RPR Official Reporter - U.S. District Court - San Francisco, California [phone]

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The question of circumventing the technological protection measure is, as Dr. Kelly's declaration discloses, virtually the same in that case and in this one. We can

resolve all of these issues by just another 60 days worth of work here, as opposed to having two separate lawsuits 3,000 miles apart. Psystar has argued that it's important to Psystar to find out if its business is lawful, period. think it's unlawful. that question. We agree. We

We agree that it's important to resolve

It doesn't make sense if we are trying to

resolve it to have two different lawsuits, one of which has just started, as opposed to having a trial in this case in March instead of January and doing whatever additional discovery has to occur in the next 30 days. THE COURT: But your company knew that they had They could have said, We will

this other product coming out.

construe this to include Snow Leopard, too, so that we will get it all wrapped up in one lawsuit." And it wasn't until

after you got sued in Florida that you said, Oh, wait, maybe that was a mistake. That's what's going on here. Well, your Honor, we believe that

MR. GILLILAND:

the allegations of the complaint are broad enough to include Snow Leopard. THE COURT: They were, but you ruled them out in

your -- the way you construed your interrogatories. Debra L. Pas, CSR, CRR, RMR, RPR Official Reporter - U.S. District Court - San Francisco, California [phone]

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MS. EDGECOMBE:

Well, with respect to the

interrogatory, at the time that it was answered the only license that existed relating to Mac OS X was the Leopard license. Now, as you now see, there was discovery about Snow I specifically asked Mr. Pedraza, the CEO of This is his testimony. It's It

Psystar, about Snow Leopard.

Exhibit 14 to the declaration of Miss Boroumand Smith. was taken on Wednesday, August 26th. I said: "QUESTION: Is Psystar attempting to get

its computers to work with Snow Leopard? "ANSWER: What do you think? I mean,

that is a silly question. "QUESTION: "ANSWER: Why is it silly?

I think we would want to

support a newer version of the OS. "QUESTION: My question was silly

because the answer was 'Of course we are?'" "ANSWER: Well, I mean, I can't really

say...and, again, it actually even a little bit frustrates me because I haven't been able to devote time to doing that, but I promise you that I am going to devote my time to do that." Debra L. Pas, CSR, CRR, RMR, RPR Official Reporter - U.S. District Court - San Francisco, California [phone]

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My question: "And do you have an estimate as to when the Psystar computers will be compatible with Snow Leopard." Mr. Pedraza: "ANSWER: As soon as possible."

My question: "QUESTION: And what does that mean? Is

it a matter of days, weeks, months, years?" Mr. Pedraza's answer: "ANSWER: Well, it depends on how I haven't really looked So once I

inspired I feel.

into it as much as I've wanted to.

can, you know, direct my into it, we'll see how long it takes. estimate." That was his testimony on Wednesday, August 26. The very next day they filed this lawsuit in Florida, your Honor. And in that lawsuit in Florida they said here are I will have a better

Psystar's computers ready to sell with Snow Leopard and we need declaratory relief that it's lawful. On Wednesday Mr. Pedraza tells me he's still thinking about it. said under oath. Apple. Debra L. Pas, CSR, CRR, RMR, RPR Official Reporter - U.S. District Court - San Francisco, California [phone] He's still working on it. That's what he

On Thursday they filed a lawsuit against

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THE COURT:

That sounds fishy, that's true.

Why

don't you make a motion down there to have the judge transfer the case? MR. GILLILAND: I can do that, your Honor, but the

issue -- the reason I came to your courtroom first is because of the implication on the trial schedule in January. THE COURT: You know, even if we try the case, we There are going You can have --

still have got to try this part of the case. to be -- you can always have a new product.

by the time we get to that trial, you can have yet another product and say, Oh, let's postpone it again because we want to wrap everything up. product in the offing. To my mind the practical thing to do is push forward, try the case. next product. But the more products that you lay in front of the jury and in front of the Court, the harder it is to understand them. And to understand -- you know, maybe it Then you can bring a new case on the There is always going to be a new

will be so complicated I just won't grasp it. And so I think that you are trying to over complicate the case. We have got a good schedule now. We do have a good --

MR. GILLILAND: THE COURT:

I don't know what the judge down there There is a lot of sense

ought to do on a motion to transfer.

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in what you say to have one judge do it all on account of the overlap and avoid waste. On the other hand, maybe a fresh look at this probable would -- maybe I have got it wrong. I don't know.

Maybe another judge would see it differently and so they -- a second judge might see the problem differently. don't know. MR. GILLILAND: Of course, your Honor, if that were I don't -- I

to occur, then neither Apple nor Psystar would know whether the Psystar business is lawful. That would be the worst

outcome, having a Federal Court in San Francisco say this is lawful and a Federal Court in Florida say it's not lawful. Then neither party would know how to proceed. THE COURT: the circuits. Eventually we would have a conflict in

It would get somewhere. It's the United States --

MR. GILLILAND: THE COURT:

Assuming the circuit courts disagree,

but I -- I -- that's a good argument in favor of one judge doing it all. So I see that point, but I -- I don't think -- you know, put yourself if my position. I don't want to tell the And I do

judge in Florida how to run his calendar.

appreciate the fact that you brought this problem to my attention so that my feelings aren't hurt if you go do that. Honestly, I think the first -- in the first Debra L. Pas, CSR, CRR, RMR, RPR Official Reporter - U.S. District Court - San Francisco, California [phone]

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instance this problem should be laid before the judge there and not some judge -- you know, they all think of us as a little loony out here in California. They'll think I'm

reaching in all the way from San Francisco to Florida to tell them how to run their docket. No, I think I should let them run their own calendar, just like they would probably let me run my own calendar. And they will -- I trust all the judges to do the

right thing on a motion to transfer. Now, the immediate problem is not a transfer. this discovery problem. MR. GILLILAND: Yes, that's right, your Honor. And It's

the -- the reason that we submitted the declaration of Dr. Kelly here is so that the Court can see that the technical issue, which we can't go into in open court, but how Psystar gets around the technological protection measure in Mac OS X, Version 10.6, is not significantly or even materially different. There's a method and you have to use And

it in order to get Mac OS X to run on your computer.

they have done it four different ways, but each of those ways ends up at the same place, which is how you unencrypt these files. Consequently, the evidence is not actually going to

be that much different. THE COURT: I can't tell you how the trial is going But, yes, I can see your argument

to come out, all right?

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that there are similarities in the cases and we have to -and maybe that would make some sense, but... All right. Any more? Thank you for your time, your If we go to

MR. GILLILAND: Honor.

Of course, you can see the dilemma.

Florida and file a motion and succeed and the case is transferred here, then it probably won't get here in time for a trial in January unless we reopen discovery. THE COURT: Then we could have two trials. We could do that.

MR. GILLILAND: THE COURT:

It may be too short somewhat smaller

trials is better than one gigantic trial. MR. GILLILAND: It's -- of course, the decision is

in your discretion, your Honor. My suggestion is that it would be more efficient for everyone concerned, most particularly the Courts, to have one trial in March rather than two separate trials. THE COURT: Possibly. But what bothers me still is

that if you had known this was coming, you should have said to yourself and to your client, We should put this -- make it absolutely clear that Snow Leopard is in the case so we will keep it all in front of that one judge. trial in March. And instead you made a -- because you didn't want them to know. That's probably what it was. Just like you We'll all go to

Debra L. Pas, CSR, CRR, RMR, RPR Official Reporter - U.S. District Court - San Francisco, California [phone]

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didn't want them to know the profit information and you took it upon yourself to restrict the case de facto to things that had been released. strategic making. So this is a problem of your own That part of it is.

Now, this is -- these comments that I'm making here are totally without prejudice to a motion to transfer, and I'm not in any way suggesting it should not be transferred. I see the arguments for a transfer. It's up to the judge

there to do what is right in his opinion, so I -- but I -this is not the immediate issue that's before me. The immediate issue before me is whether this -this schedule that we have got in place and with this record in light of the way that discovery unfolded, in order to allow all that to unfold in Florida. I'm not so sure that's a good idea. All right. I'm going to take it under submission. So for the time being

I will get an order out soon. MR. GILLILAND: MR. CAMARA: THE COURT: MR. CAMARA: Thank you for your time your Honor.

Thank you, your Honor. Yes, sir. What can I do for you?

We filed a motion with respect to the I set it for today thinking

declaration of Jacques Vidrine. it was part of the response. Court prefers. THE COURT:

I can reset it later, if the

What motion?

Debra L. Pas, CSR, CRR, RMR, RPR Official Reporter - U.S. District Court - San Francisco, California [phone]

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MR. CAMARA:

We filed a motion to strike the

declaration of Jacques Vidrine, which was attached to their motion to enjoin the Florida action. At the last hearing your Honor asked them specifically whether Jacques Vidrine would be involved in the case. Your Honor said they might have leave to amend to add

Jacques Vidrine to their initial disclosures if there was some substantial justification because of new evidence. Counsel for Apple paused, conferred with other counsel for Apple and came back and told the Court that Mr. Vidrine was out of their case entirely and then eight days later they filed a motion that relies on the declaration of Jacques Vidrine. sanctions. THE COURT: All right. I will consider that on the So we filed a motion to strike and for

MR. CAMARA:

Your Honor, one other calendaring

Summary judgment briefing is coming up.

I was

wondering if we might increase the page limits given all the many issues that are in this case? MR. GILLILAND: Your Honor, we have no objection to

It's the Court what has to read them all. THE COURT: MR. CAMARA: Page limits are 25 now, right? They are, your Honor.

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THE COURT: MR. CAMARA: THE COURT:

Thirty pages per side. Thank you, your Honor. Fifteen on reply. Well, that's 30

pages for -- who is making a motion? MR. CAMARA: THE COURT: Reply gets 15. MR. CAMARA: Thank you, your Honor. Thanks very much. See you soon. I assume both of us, your Honor. The opening gets 30. Opposition gets

MR. GILLILAND: THE COURT:

All right.

(Whereupon, further proceedings in the above matter were adjourned.)

--oo--

Debra L. Pas, CSR, CRR, RMR, RPR Official Reporter - U.S. District Court - San Francisco, California [phone]

CERTIFICATE OF REPORTER

I, DEBRA L. PAS, Official Reporter for the United States Court, Northern District of California, hereby certify that the foregoing proceedings in C 08-3251 WHA, APPLE, INC. vs PSYSTAR CORPORATION were reported by me, a certified shorthand reporter, and were thereafter transcribed under my direction into typewriting; that the foregoing is a full, complete and true record of said proceedings as bound by me at the time of filing. The validity of the reporter's certification of said transcript may be void upon disassembly and/or removal from the court file.

/s/ Debra L. Pas Debra L. Pas, CSR 11916, CRR, RMR, RPR Thursday, October 8, 2009

Debra L. Pas, CSR, CRR, RMR, RPR Official Reporter - U.S. District Court - San Francisco, California [phone]