Digital Envoy Inc., v. Google Inc.,

Filing 212

Case 5:04-cv-01497-RS

Document 212-4

Filed 07/05/2005

Page 1 of 11

EXHIBIT C

I

I

}

Case 5:04-cv-01497-RS

Document 212-4

Filed 07/05/2005

Page 2 of 11

IN THE UNITED STATES DISTRICT COUR T FOR THE NORTHERN DISTRICT OF CALIFORNI A SAN JOSE DIVISION

DIGITAL ENVOY,

NC ., }

C-04-01497-RS JUNE 22, 200 5 } MOTIO N
}

PLAINTIFF, V. GOOGLE, NC ., } DEFENDANT .
}

PAGES 1-7 8

THE PROCEEDINGS WERE HELD BEFORE THE HONORABLE UNITED STATES DISTRIC T MAGISTRATE JUDGE RICHARD SEEBORG A P P E A R A N C E S:

FOR THE PLAINTIFF : MCGUIRE WOOD S BY : TIMOTHY H . KRATZ 1170 PEACHTREET STREET NE SUITE 210 0 ATLANTA, GEORGIA 3030 9

FOR THE DEFENDANT : WILSON, SONSINI, GOODRICH & ROSAT I BY : DAVID H . KRAMER 650 PAGE MILL ROAD PALO ALTO, CALIFORNIA 9430 4 OFFICIAL COURT REPORTER : IRENE RODRIGUEZ, CSR, CRR CERTIFICATE NUMBER 807 4

U .S . COURT REPORTERS
d5455ece-baf4- 4ca6-89H-25d2Qce3db9 a

I

J

Case 5:04-cv-01497-RS

Document 212-4
Page 2

Filed 07/05/2005

Page 3 of 11
Page 4

1
2

SAN JOSE, CALIFORNIA
PROCEEDINGS

UNE 22, 2205

3

4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21

(WHEREUPON, COURT CONVENED AND THE FOLLOWING PROCEEDINGS WERE HELD :) THE CLERK : CALL IN G NUMBER C-04-81497, DIGITAL ENVOY VERSUS GOOGLE . COUNSEL, COME FORWARD, PLEASE . MR. KRAMER : HELL O . DAVE KRAMER FOR WILSON, SONSINI FOR GOOGLE. MR. KRATZ : TIM KRATZ FOR THE PLAINTIFF . THE COURT: LET ME DO WHAT I DID IN THE PAST CASES AND GIVE YOU MY READ ON THE MOTIONS AND THEN WELL GO FROM THERE . IM GOING TO FIRST ADDRESS THE GOOGLE MOTION TO PRECLUDE . WITH RESPECT TO THE MOTION TO COMPEL, IT DOES APPEAR TO ME THAT THE CONTENTION IN 'T'ERROGATORIES THAT ARE AT ISSUE, THE FOUR OF THEM, IF I COUNTED CORRECTLY, DO NEED TO HAVE A FURTHER RESPONSE. I DONT THINK THAT THE NOTION THAT, WELL, 22 WE NEED TO GET MORE INFORMATION OR THE LIKE IS 23 REALLY AN ANSWER I THINK WE'RE AT A STAGE IN THE 24 LITIGATION WHERE CONTENTION INTERROGATORIES SHOULD 2 5 BE RESPONDED TO AND IF THEY NEED TO BE Page 3 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 SUPPLEMENTED, THAT'S FINE, BUT WE NEED TO HAVE SOME ANSWERS AND THEY NEED TO BE PAGE REFERENCES TO DEPOSITIONS AND BATES NUMBER DOCUMENTS AND THAT DO NOT HAVE . SO I DON'T THINK THERE'S A BASIS FOR A MOTION TO PRECLUDE, BUT I THINK THAT A MOTION, THE MOTION TO COMPEL I'M INCLINED TO GO AHEAD AND GRANT BECAUSE I THINK FURTHER RESPONSES ARE APPROPRIATE . AND I WILL TELL YOU, AND THIS JUST DOESNT APPLY TO THE RESPONSE THAT I RECEIVED FROM DIGITAL ENVOY BECAUSE IT CROPS UP IN OTHER ASPECTS OF THE LATER DIGITAL ENVOY'S MOTION, THE ARGUMENT THAT THE REASON WERE NOT RESPOND ING TO PARTICULAR DISCOVERY IS BECAUSE THE OTHER S IDE HASNT RESPONDED TO OURS IS IN MY VIEW ONE OF THE MOST FEEBLE RESPONSES THAT I READ ON A REGULAR BASIS . IT IS A NONRESPONSE AS FAR AS I'M CONCERNED . IF THERE IS A PROBLEM WITH THE OTHER SIDE'S RESPONSE, YOU BRING A MOTION, I DEAL WITH T. AND THERE ARE VERY FEW INSTANCES AND THERE ARE SOME WHERE THERE IS A LINK, A CRITICAL LINK BETWEEN GETTING INFORMATION FROM THE OTHER SIDE DAMAGES IS A CLASSIC AREA WHERE YOU NEED THAT INFORMATION IN ORDER TO FORMULATE YOUR OWN

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

POSITION, I UNDERSTAND THAT, BUT AS A GENERAL MAJOR REACTION, WHICH HAS BEEN, YOU KNOW, THEY RE NO T DOING WHAT THEY SHOULD DO SO WERE NOT GOING T O ANSWER THESE IS CHILDISH AND DISTRESS ING . SO AND THI S IS NOT DIRECTED TO A PARTICULAR PARTY, ITS JUST THAT IS NOT AN ARGUMEN T THAT WORKS AT LEAST WITH ME. SO WITH RESPECT TO YOUR ARGUMENTS TO ME TODAY, THOSE ARENT GO ING TO FLY, TO GIVE YOU SOM E WARNING . WHY DON'T WE START WITH THAT MOTION AN D THEN RATHER THAN GOING THROUGH MY READ ON DIGITA L MOTION, SO THAT I CAN KEEP SOME PARAMETERS AROUND THIS. SO, MR. KRATZ, AT THE MOMENT YOU'RE TH E PARTY THAT IS NOT PREVAILING SO YOU GET TO GO FIRST. MR. KRATZ : THANK YOU , YOUR HONOR. I D O NOT HAVE A PROBLEM WITH YOUR HONOR'S RUL ING HERE . IT'S OUR DESIRE TO GIVE FULL DISCOVERY, WE HAVE ATTEMPTED TO DO SO . WE HAVE BENT OVE R BACKWARDS IN OUR VIEW TO GIVE THEM INFORMATIO N ITS NEVER GOOD ENOUGH BUT IF YOUR HONOR SUGGEST S THAT PAGE NUMBERS TO DEPOSITIONS AND BATES NUMBERS TO DOCUMENTS SUCH AS WE HAVE SO FAR, WE WIL L Pag e

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17
is

19 20 21
22 23

24
25

ENDEAVOR TO DO THAT BECAUSE I THINK THAT'S APPROPRIATE IN THE NATURE OF ONGOING AND OPEN DISCOVERY . THE COURT : AND I CERTAINLY DONT MEAN B Y MY COMMENTS A MOMENT AGO TO SUGGEST THAT IF FURTHE R MATERIAL IS OBTAINED THAT YOU THINK SUPPORTS YOUR CONTENTIONS, THEN CERTAINLY YOU CAN - YOU'R E OBLIGED UNDER THE DUTY SUPPLEMENT, YOU PROVIDE A SUPPLEMENT AND YOU ALSO SAY, WELL, THIS SUPPORT S WHAT WE HAVE TO SAY, T HI S FIVE PAGES OF DOCUMENT S OR WHAT HAVE YOU . AND 1%4 NOT PRECLUDING THAT . MR. KRATZ : IT IS OUR VIEW, THOUGH, THAT IN LIGHT OF THE 30(13)(6) DEPOSITION, THAT WA S EXTENSIVE, IN LIGHT OF THE SUMMARY JUDGMEN T BRIEFING THAT HAS ALREADY TAKEN PLACE, WE HAVE I N THE NATURE OF PROVIDING IN OTHER WAYS, AND THE DUTY OF SUPPLEMENTATION WITH RESPECT TO INTERROGATORIES , UNLESS IT'S OTHERWISE BEEN MADE AVAILABLE, WE THIN K THAT WE HAD . BUT I THINK IT'S FINE, WE WILL ABSOLUTEL Y SUPPLEMENT WITH PAGE NUMBERS AND DEPOSITIONS, BATE S NUMBERS IN DOCUMENTS, AND THEN SUPPLEMENT AGAI N WHEN WE GET IT BECAUSE I THINK ITS APPROPRIATE TO HAVE FULL DISCLOSURE AND FREE AND FAIR DISCOVERY IN THE MATTER OF .

2 (Pages 2 to 5 )

U .S . COURT REPORTERS
d6455ece-baf4-4ca649fl-26d20ce3db9a

Case 5:04-cv-01497-RS

Document 212-4
Page 6

Filed 07/05/2005

Page 4 of 11
Page 8

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

THE COURT : ALL RIGHT . AND I WILL GIVE YOU A WRITTEN ORDER SO THAT ITS CLEAR EXACTLY WHAT I, WHAT I EXPECT IN TERMS OF THE EXTENT OF WHAT I THINK YOU NEED TO DO IN YOUR FURTHER RESPONSES. MR. KRATZ: THANK YOU. THE COURT : ALL RIGHT . I ASSU ME YOU DON'T HAVE ANYTHING TO SAY . MR. KRAMER : NOTHING, YOUR HONOR. THE COURT : ALL RIGHT . LET ME TALK ABOUT THE DIGITAL ENVOY MOTION. MOTION TO COMPEL INTERROGATORY RESPONSES AND TO SORT OF ADDRESS THESE FIRST OFF IN ANY EVENT AS SORT OF GENERAL CONCEPTS THAT SEEM TO ARISE HERE, THERE ARE A COUPLE OF ISSUES THAT SEEM TO OVERLAP SEVERAL OF THESE REQUESTS . THE FIRST ONE IS THIS DISPUTE WITH WHETHER OR NOT INFORMATION REGARDING ADSENSE RESEARCH NEEDS TO BE PROVIDED AND THE ARGUMENT TH) GOGGLE MAKES THAT THEY HAVE OPERATED UNDER THE UNDERSTANDING OF THAT ADSENSE FOR CONTENT IS ALL THEY NEED TO RESPOND TO . THEN THERE SEEMS TO BE AN ISSUE ABOUT PUTTING THAT ASIDE, WHETHER OR NOT INFORMATION REGARDING THIRD PARTY SITES GENERALLY, AND THIS IS WHERE I WAS NOT ENTIRELY CLEAR, BUT IF I UNDERSTAND Page 7

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

THAT NOTION AND I DON'T KNOW -- I DON'T KNOW TH E BASIS FOR CARVING IT BETWEEN, BE'T'WEEN CONTENT AN D SEARCH IN TERMS OF DISCOVERY RESPONSES, WHETHER O F NOT THERE'S GOING TO BE AN ARGUMENT DOWN THE LIN E THAT THE CASE NEEDS TO BE NARROWED IN S OME FASHI ON. WITH RESPECT TO REQUEST FOR INFORMATION ON THAT MAY, GOOGLE'S INTERACTION WITH ADVERTISER ! FOR PURPOSES OF THIRD PARTY SITE ACTIVITY WHER E DIGITAL ENVOY'S INTELLECTUAL PROPERTY IS NOT BEIN G UTILIZED, I DON'T SEE WHY THAT INFORMATION SHOUL D BE THE SUBJECT OF DISCOVERY IN THIS CASE . IT SEEMS TO ME THAT THAT WOULD BE , THERE'S A REAL BURDEN, BURDEN ISSUE THERE, BUT I JUST -- IT SEEMS TO ME TO BE AS FAR AFIELD AND IT S POTENTIALLY GETTING EVERY PIECE OF PAPER THA T GOGGLE HAS AND10R ELECTRONIC PER MI SSION THAT IT HAS AND I DONT SEE, I THINK THAT S FAR TOO BROAD A NE T TO CAST . SO THAT'S IT ON SOME OF THOSE LARGER ISSUES, THATS KIND OF MY REACTION . SO BOTH OF YOU NO DOUBT MAY WANT TO SPEA K ON THESE ISSUES . I'LL ALSO JUST TELL YOU AND JUM P AHEAD ON SANCTIONS THERE'S NO BASIS TO AWAR D SANCTIONS HERE . THI S IS A VERY HOTLY CONTESTED CASE . THE PARTIES ARE POSITION ING AND DOIN G T HI NGS Page 9

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23

IT CORRECTLY, THE THIRD PARTY INFORMATION REGARDING GOOGLE'S ACTIVITIES WITH RESPECT TO THIRD PARTY SITES WHERE DIGITAL ENVOY'S INTELLECTUAL PROPERTY IS NOT BEING UTILIZED . TO THE EXTENT THAT THAT IS BEIN G REQUESTED, ILL DEAL WITH THAT IN A MOMENT. AND THEN THERE WAS A REQUEST FOR THE SUCCESSOR PROVIDER, I GUESS ITS QUOVA, THE DOCUMENT'S PERTAINING TO THE GOOGLE RELATIONSHIP WITH THAT INTELLECTUAL PROPERTY PROVIDER. AND THEN THERE ARE PROBABLY OTHER ISSUES . WITH RESPECT TO THE QUOTE "CONTRACTOR DOCUMENTS," I DONT SEE WHERE THOSE ARE RELEVANT . I READ THE ARGUMENT FROM DIGITAL ENVOY WHY THEY THINK THAT THEY CAN USE IT I GUESS TO DEVELOP THE HOPE OF SOME SORT OF AD MISSIONS, BUT I DONT SEE THAT'S APPROPRIATE FOR PRODUCTION OR FOR IN'T'ERROGATORY RESPONSE. THE ADSENSE FOR SEARCH MATERIALS, HOWEVER, I DO THINK THAT THOSE SHOULD GO OVER . AND I DON'T UNDERSTAND, AND I'LL HEAR FROM MR KRAMER ON THIS, I DONT UNDERSTAND WHY THAT INFORMATION SHOULD BE PRECLUDED EVEN ASSUMING THAT IN GOOD 24 FAITH IT WAS OPERATING ON SOME NOTION THAT THAT WAS 25 SOMEHOW NOT IN CLUDED IN THE CASE . I DIDNT HAVE

1 2 3 4 5
6

AND PROBABLY LOS ING PATIENCE WITH EACH OTHER AN D UNDERSTAND THAT, BUT THROUGHOUT THIS I DONT SEE EITHER PARTY TAKING POSITIONS THAT ARE FRIVOLOUS O WORTHY OF SANCTION AND SO I'M NOT GO IN G TO SPEND A WHOLE LOT OF TIME TALKING ABOUT THE SANCTIONS
REQUEST.

7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

OKAY . MR. KRATZ, YOU'RE THE MOV ING PART Y SO WHY DON'T YOU GO FIRST ON SOME OF THESE ISSUES . MR. KRATZ : THANK YOU, YOUR HONOR I THINK WHAT I'D LIKE TO DO IS TO ADDRESS THE PRELIMINARY COMMENTS AND THEN GO THROUGH TH E DISCOVERY REQUEST AND BUT I'LL DO IT VERY BRIEFL Y JUST TO LAY IN IF THIS IS WHAT YOU HAVE BEE N THINKIN G ABOUT SO FAR. THE COURT : VERY WELL . GO AHEAD. MR KRATZ : WITH RESPECT TO THE QUOVA AGREEMENT, T HIS IS THE SUCCESSOR PROVIDE R THE COURT : RIGHT. MR . KRATZ: I AGREE THAT CERTAIN CONTRACTS WITH RESPECT TO BETWEEN THE PARTIES AN D THIRD PARTIES ARE NOT RELEVANT . I MEAN, IT I S ACTUALLY OUR CONTENTION THAT CERTAIN OF THES E CONTRACTS ARE NOT RELEVANT. HERE'S WHAT HAS HAPPENED SO FAR IN THI S CASE IN TERMS OF DISCOVERY, AND WE TALK ABOUT WHA

3 (Pages 6 to 9 )

U .S . COURT REPORTERS
d5455ece -baf4-4ca6-89H-26d20ce3db9 a

M G T H W M

T M O M I T S

Case 5:04-cv-01497-RS

Document 212-4
Page 14

Filed 07/05/2005

Page 5 of 11
Page 12

1 WE HAVE ASKED FOR WITH RESPECT TO THEIR THIRD PAR 2 CONTRACTS REGARDING THE ADSENSE PROGRAM. THATS 3 NOT WHO I'M TALKING ABOUT . I'M GOING TO TALK ABOUT 4 THAT IN A MINUTE. 5 HAT I'M TALKING ABOUT IS DISCOVERY 6 PERTAINING TO US PROVIDING OUR TECHNOLOGY TO THIR-p 7 PARTIES AND W HICH IS AN EXAMPLE, THEY'RE US IN G IT, 8 THEY'RE TAKING DISCOVERY, ITS AN EXAMPLE OF US 9 PROVIDING THAT SERVICE TO OTHER PEOPLE . 10 ERE IN THE QUOVA AGREEMENT WERE TALKIN G 11 ABOUT THEM OBTAINING SERVICES FROM THE THIRD PART 12 THAT WERE SIMILAR TO OURS . 13 HE COURT : RIGHT . RIGHT . 14 R. KRATZ: IF YOUR HONOR IS INCLINED NOT 15 TO CONCEDE THAT OR RULE THAT THE QUOVA AGREEMENT 16 WHICH IS AN EXAMPLE OF THEM OBTAIN ING THOSE 17 SERVICES FROM THE THIRD PARTY SUBJECT TO THEIR OWN 18 TERMS AND CONDITIONS AND FACTS AND CIRCUMSTANCES 19 REGARDING THE NEGOTIATION, IF YOUR HONOR IS 20 INCLINED TO BELIEVE THAT THOSE THINGS ARE NOT 21 RELEVANT, THEN SO, TOO, WOULD OUR PROVISION O F 22 SERVICES TO THIRD PARTIES COMPLETELY UNRELATED TO 2 3 THE GOOGLE TRANSACTION ARE ALSO IRRELEVANT, BUT 24 IN STEAD, GOOGLE IS TAKING AN OPPOSITE VIEW AND AS A 25 RESULT FROM THI S, FROM WHAT IS BE ING SET UP AS A Page 11 1 DOUBLE STANDARD, WE DO HAVE A PROBLEM WITH THIS . 2 OGGLE HAS OBTAINED ALL OF OUR CONTRACT S 3 FROM OTHER CUSTOMERS WHICH IS EXTREMELY INVASIVE, 4 ITS WHAT THEY CAME TO COURT PREVIOUSLY REGARDIN G 5 OUR SUBPOENAS ABOUT, SAYING YOURS MESS ING WITH OUR 6 CUSTOMERS, THEY HAVE TAKEN DEPOSITIONS OF TWO O F 7 OUR CUSTOMERS, AND UNDER SO ME THEORY, I UNDERSTAND 8 UNDER SOME THEORY THAT OUR RELATIONSHIPS WITH THES 9 OTHER PURCHASERS OF OUR SERVICES HAVE SOM E 10 RELEVANCE IN THI S CASE, INTERPRETING THE CONTRACT 11 MAYBE, I DON'T KNOW, IN TERMS OF THE DAMAGES, I 12 DON'T KNOW. BUT THERE AT LEAST HAS TO BE A BALANCE 13 WITH RESPECT TO THE QUOVA CONTRACT . 14 HE COURT: WHY DON'T YOU ARTICULATE FO R 15 ME WHAT, PUTTING ASIDE THE DISCOVERY THAT GOOGLE 16 HAS UNDERTAKEN, GO THROUGH FOR ME WHY THE QUOVA 17 CONTRACT IS RELEVANT . 18 R . KRATZ: THE BEST ARGUMENT FOR TH E 19 QUOVA CONTRACT BE IN G RELEVANT IS HERE WE HAVE A 20 SITUATION WHERE, AND IT'S SUBSEQUENT FOR ME TO 21 MEASURE WHICH IS NOT EXCLUDED IN THIS ISSUE, THAT'S 22 A TORT CONCEPT. 23 HE COURT : WELL, ITS GOT TO BE FOR A 24 PURPOSE OTHER THAN, I MEAN, IF YOU'RE USING THE 25 CLASSIC TORT ANALYSIS IT IS EXCLUDED UNLESS .

1 R. KRATZ: UNDER TORT LAW BECAUSE T'HAT S 2 A PUBLIC POLICY REASON TO DO THAT IN ORDER TO 3 PROTECT THE PUBLIC. THI S ISNT THE CASE HERE. S O 4 THAT RULE OF EXCLUSION DOES NOT APPLY TO US . 5 HE COURT : BUT WHY IS IT RELEVANT ? 6 LETS SAY IN A SUBSEQUENT CONTRACT THERE IS A MUCH 7 MORE EXPLICIT PROVISION THAT, OR THERE'S SOME, OR A 8 SIMILAR PROVISION AND SOMEHOW YOU HAVE MATERIALS 9 THAT ITS INTERPRETED IN A FAS HION THAT I S 10 CONSISTENT WITH HOW YOU WANT TO INTERPRET YOUR 11 LICENSE AGREEMENT WITH GOGGLE . 12 GUESS WHAT I'M MISS ING IS THAT IF YOU 13 THINK THAT THAT IS SOMEHOW AN ADMISSION, I DON T 14 SEE IT. I MEAN, I DON'T KNOW WHAT IT GOES TO OTHER 15 THAN TO SAY, WELL, THIS SUBSEQUENT CONTRACT CALLS 16 INTO QUESTION STATEMENTS THEY`RE MAKING NOW HOW 17 THEY INTERPRETED THE LICENSE AGREEMENT, IS THA T 18 WHAT YOU'RE SAYING. 19 R . KRATZ: THERE'S A COUPLE OF THINGS. 20 WERE GOING TO ARGUE THAT IF THEY WANTED WHAT THEY 21 TOOK, THEN THEY PERFECTLY KNEW, THEY PERFECTL Y 22 KNEW, WELL, HOW TO WRITE A CONTRACT THAT WOULD 23 ALLOW THEM TO DO THAT, THATS AN ARGUMENT THAT 24 WERE GOING TO BE MAKING IN THIS CASE . 25 ECONDLY, WERE ARGUING THEY ALREADY Page
3

1 TESTIFIED THAT THAT'S NOT THE CASE . NO, THIS I S 2 ABSOLUTELY SUFFICIENT. I WOULDN T HAVE CHANGED A 3 THING . AND SO WE HAVE A PROBLEM WITH THE VERACIT Y 4 OF THOSE WITNESSES WHO ARE SO TESTIFYING . 5 HEY CAME IN AND ARE ACTUALLY CLAIMIN G 6 THAT THIS WAS AN UNLMTED CONTRACT. WE THINK THAT 7 THE QUOVA CONTRACT IS INSTRUCTIVE AS TO BOTH OF 8 THOSE POINTS AND THAT'S THE SAME THING AS THE 9 REMEDIAL MEASURE. 10 HE COURT: I DON'T SEE HOW THE QUOVA 11 CONTRACT, WHATEVER IT MAY SAY, IS GOIN G TO PROVIDE 12 YOU WITH AN ARGUMENT ON THE WAY YOU JUST 13 CHARACTERIZED IT . I MEAN, I JUST DON'T SEE, AS 14 SUBSEQUENT RELATIONSHIP WITH, YOU KNOW, WITH A 15 THIRD PARTY ALL OF THE MANY THINGS THAT MAY GO INT O 16 HOW THAT PARTICULAR RELATIONSHIP IS STRUCTURED, TO 17 THEN SAY THAT THE LANGUAGE OF THAT SUBSEQUEN T 18 AGREEMENT IS SOMEHOW, IS THEN SOMEHOW CASTS SO M E 19 QUESTION ON THE WITNESS 'S CREDIBILITY ON HOW THEY 2 0 CHARACTERIZE THIS EARLIER CONTRACT, IT JUST REALL Y 21 SEEMS TOME TO BE PRETTY ATTENUATED AND SO MUCH S O 22 THAT I JUST DON 'T SEE HOW THAT ARGU MENT IS GOING TO 23 WORK, BUT I'LL CONSIDER IT . 24 KAY. 25 R. KRATZ: WERE ALSO DEAL ING WITH A

4 (Pages 10 to 13 )

U .S . COURT REPORTERS
d6455ece-baf4-4ca8-89fl-26d20ce 3db9a

M TT M TM T M

11 2 1 2 8 6 5 4 3

T M M T

Case 5:04-cv-01497-RS

Document 212-4
Page 14

Filed 07/05/2005

Page 6 of 11
Page 16

1 DISCLOSURES MADE IT CLEAR, THE INTERROGATORIES MADE 2 IT CLEAR . BACK IN AUGUST IT MADE IT CLEAR THAT 3 WE'RE CLAIMING EVERYTHING. THE COMPLAINT MAKES IT 4 CLEAR, BUT CLEARLY AT THIS POINT I DON'T UNDERSTAND 4 BUT THATS A PROBLEM THAT WE HAVE WITH MUCH OF THE 5 WHAT THE PROBLEM IS . THEY'RE TRYING TO GET AWA Y 5 RESPONSES THAT WE HAVE GOING ON HERE . THEY`RE 6 WITH SOMETHING . 6 HOLDING US TO A STANDARD THAT IS NOT THE STANDARD 7 7 BEFORE THE COURT, AND I THINK THEY'RE DOING IT IN HE COURT: YEAH, BUT I ASSUME THAT THER E 8 MAY BE DIFFERENT ARGUMENTS THAT BETWEEN ADSENSE FOR 8 THIS ONE AND SOME OF THE OTHER THEY RE DOING IT 9 SEARCH AND CONTENT . I MEAN, THEY HAVE OTHER -9 CLEARLY ON THE OTHER ARGUME NTS AS WELL . 10 THEY CAN GO BACK TO THE ARGUMENTS I SAID SOME IN 10 HE COURT: I ASSUME WHEN YOURE TALKIN G 11 ABOUT GENERAL COMMENTS, THE ADSENSE RESEARCH ISS UE 11 SUMMARY JUDGMENT, AND THERE'S A DISTINCTION BETWEEN 12 THE TWO PROGRAMS . IT MIGHT BE EVEN WITH RESPECT TO 12 R. KRATZ : YES, YES. YOUR HONOR, THAT 1 DIFFERENT STANDARD . WERE DEALING WITH DISCOVERY . 2 HE COURT : I UNDERSTAND . 3 R. KRATZ : I KNOW YOU UNDERSTAND THA T 13 IS CLEARLY IN THE CASE AND ITS CERTAINL Y 14 DISCOVERABLE, AS YOUR HONOR POINTS OUT REGARDLESS, 15 BUT WE HAVE IN THE COMPLAINT A SECTION ENTITLED 16 "GOOGLE'S MISUSE OF OUR TECHNOLOGY" AND THAT'S WHEN 17 WE FIRST TALK ABOUT THEIR PROVIDING SEARCH SERVICES 18 AND GEOTARGETING ADS IN THAT CONTEXT AND WE ALSO 19 SAY THEY MOVE INTO PROVIDING CONTENT, ITS 20 CHRONOLOGICAL RENDITION OF THE FACTS. 21 HE COURT: ONE OF THEIR POINTS IS TO SA Y 22 THAT WHEN YOU LOOK AT YOUR AVERMENTS, IF YOU LOO K 2 3 AT THE CHRONOLOGY YOU SET UP IN YOUR AVERMENTS, YO 2 4 CAN TALK ABOUT WHEN YOU HONE IN, YOURE TALKIN G 2 5 ABOUT THE PERIOD OF TIME YOU'RE FOCUSSING ON, THAT
Page 1 5

13 THE LICENSING . 14 R. KRATZ : WITH RESPECT TO THE LICENSING 15 AGREEMENT, WHICH IS WHAT IS APPROPRIATE HERE, 16 THERE'S ONE DIFFERENCE, AND THAT IS, THAT IS THERE 17 IS A PROHIBITION GENERALLY ON USING THE TECHNOLOGY 18 FOR SO METHING OTHER THAN THEIR BUSINESS WHICH IS 19 DEFINED AS INFORMATION SEARCH . AND WE MAKE THAT 20 ARGUMENT IN THERE WITH RESPECT TO THE ADSENSE FOR 21 CONTENT PROGRAM. 22 HE COURT: RIGHT. 23 R. KRATZ : WE DO NOT MAKE THAT ARGUMENT 24 WITH RESPECT TO THE ADSENSE FOR RESEARCH . SO ITS 25 A SUBSET IN TERMS OF WHAT OUR ARGUMENTS ARE AND TH E Page 17 REASON THAT IS WORTH POINTING THAT OUT IS THEY SA Y WE WOULD HAVE DONE DISCOVERY DIFFERENTLY WHICH BAC IN AUGUST THEY ARE TOLD THAT ITS EVERYTHING, AND SECONDLY, THE ARGUMENTS WE'RE MAKING WITH RESPECT TO THE EXTRA CONTRACTUAL ACTIVITY UNDER THE ADSENS E RESEARCH PROGRAM ARE THE SUBSET AND SO TO THE EXTENT THAT THEY ARE TAKING AND HAVE TAKEN EXTENSIVE DISCOVERY WITH RESPECT TO THE PARAGRAPH 3 .1, PARAGRAPH 7, ITS THE SAME, ITS THE SAME DISCOVERY . THE ONE THING THEY HAVE DONE DIFFERENTL Y IS THEY HAVENT PROVIDED ANYTHING WITH RESPECT T O ADSENSE RESEARCH. THE OTHER THING I WANT TO TALK ABOUT AS A PRELIMINARY MATTER IS THE SECOND CONCEPT OF WHE OR NOT WE ARE ASKING FOR INFORMATION REGARDING THEIR INTERACTION WITH THIRD PARTIES WITH DIGITAL ENVOY'S TECHNOLOGY IS NOT BEING USED . THE COURT: RIGHT . MR. KRATZ : I THINK WHAT WE HAVE HERE IS A MISIMPRESSION OF WHAT WE'RE ASKING FOR AS WELL AS A MISIMPRESSION OF WHAT THEY HAVE PRODUCED . AND I THINK THAT THAT MAY BE CRITICAL TO WHAT IS BEING -WHAT IS GOING ON HERE . ITS NOT LIKE THEY HAVE PRODUCED TO US

1 PERIOD OF TIME HAPPENS TO BE CONSISTENT WITH THE 2 ADSENSE FOR CONTENT PROGRAM . THE ADSENSE FOR 3 SEARCH PROGRAM THEY POINT OUT HAVE BEEN IN 4 EXISTENCE FOR SEVERAL YEARS. 5 R . KRATZ : THE DATES WE'RE FOCUSSING ON 6 ARE DIRECTLY THE DATES THAT RUN FROM THE SPAN 7 ADSENSE RESEARCH PROGRAM, THE FIRST TIME THEY BEGAN 7 8 TO PLACE ADVERTISE MENTS ON ANY THIRD PARTY SITES, 9 THE TIMING OF THE COMPLAINT CLEARLY INCLUDES THAT . 9 0 10 HE AVERMENTS MAKE THAT ABSOLUTELY CLEAR 1 11 WE DON'T, FOR ONE, I DON'T KNOW THAT WE HAVE A 12 TIMEFRAME IN THERE, BUT WE HAVE ALWAYS CLAIMED THA 12 3 13 ITS THE ENTIRETY OF THE PROGRAM THAT HAS BECO ME 4 14 KNOWN AS ADSENSE, BACK THEN IT WASN'T, IT WASN'T 5 15 DELINEATED IN THE WAY THAT THEY DELINEATE IT NOW, 16 AND ALSO SO TOO IN THE COMPLAINT WE DONT MAKE THAT 16 7 17 DISTINCTION . WE SAY THAT IT'S WRONGFUL TO PLACE 8 18 THIRD USE OUR TECHNOLOGY FOR THE PLACE ME NT OF 9 19 ADVERTISEMENTS ON THE THIRD PARTY SITE . 0 20 HE COURT : ON EITHER PART OF THE ADSENSE 1 21 PROGRAM . : ABSOLUTELY. THEY LATER 2 22 R. KRATZ 3 23 DIVIDE IT UP, AND WE HAVE THIS ADSENSE FOR SEARCH 4 24 AND CONTENT AND THEY HELP THEMSELVES TO A 25 CHARACTERIZATION OF WHAT OUR CLAIM WAS, MANDATOR 25

R

5 (Pages 14 to 17 )

U .S . COURT REPORTERS
d5456ece-baf4-4ca6 - 69f1 .26d20ce3db9a

Case 5:04-cv-01497-RS

Document 212-4
Page 18

Filed 07/05/2005

Page 7 of 11
Page 2 0

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23

THE RECORD INFORMATION REGARDING THEIR PLACEMENT O F ADVERTISING WHERE THEY HAVE DONE GEOTARGET ING . THEY HAVENT DONE THAT . AND IT'S NOT LIKE THEY HAVE GIVEN US AL L OF THIS INFORMATION THAT IS DIRECTLY RELEVANT TO THE CASE AND WE WANT MORE. IT'S THEY HAVEN'T DONE IT IN THE FIRST PLACE. THEY HAVENT GIVEN US ANYTHING WITH RESPECT TO THE RECORD INFORMATION, THE CONTRACTS, THE CONTACTS REGARDING WHEN THEY'RE GOIN G TO PLACE ADS ON THIRD PARTY SITES AND I T INCLUDES OUR TECHNOLOGY , THEY HAVENT GIVEN US AN Y OF THAT AND ANY FINANCIAL RECORD INFORMATION WIT H RESPECT TO THE MONEY THAT THEY MADE IN THAT PROGRAM. OKAY. AND SO WHAT WERE CLAIMING IS NO T WHAT WE SHOULD GET THEIR CONTACTS WITH YAHOO, AOL , WHOEVER, WHERE WE'RE NOT TALKING ABOUT PLACEMENT O F ADS, TARGETS ADS ON THIRD PARTY SITES, WERE NO T ASK ING FOR THAT . THE COURT: WELL, LET ME PICK ONE. YOUR INTERROGATORY NUMBER 5, ALL WEB SIGNATURES ON WHICH GOOGLE HAS PLACED ADS . MR. KRATZ : YES, SIR . THE TESTIMONY - THE COURT : THERE'S NO LIMITATION IN 24 THERE, WELL, ALL WEB SITES WHICH GOOGLE HAS PLACED 25 ADS WHEREIN THEY'RE UTILIZIN G DIGITAL ENVOY DIGITAL
Page 29
1 TECHNOLOGY.

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21

MR. KRATZ: WHEN AN ADVERTISER SETS UP HERE'S WHAT THEY DO IS FILL OUT A SCREEN INFORMATION . THE FIRST QUESTION THEY ASK, AND GIV E

YOU THE IMPORTANCE OF GEOTARGET ING THE FIRST QUESTION THEY ASK IS WHERE DO YOU WANT THESE ADS T O BE PLACED, TO W HI CH VISITORS, NOT WHETHER YOU WANT TO DO THIRD PARTY PLACEMENT OR JUST GOOGL E PLACEMENT BUT WHAT COUNTRIES, WHERE GEOGRAPHICALLY DO YOU WANT TO DO IT? THEY CAN SELECT SEVERAL BOXES. THE FIRST BOX IS ALL COUNTRIES OR THEY CA N GO IN AND MENU DROP AND SELECT EVERYTHING ELSE . THE COURT: RIGHT. MR. KRATZ : AND THAT S TRUE. THERE ARE ADVERTISERS, ADVERTISERS, NOT WEB SITES BUT ADVERTISERS WHO, WHO, WHO WILL SELECT AL L COUNTRIES, OKAY . AND WE DONT KNOW HOW MANY. WE HAVE ASKED . THEY DON'T TELL US. THEY WONT TELL US . SO WE DONT KNOW. THEY WON'T GIVE US TH E INFORMATION ABOUT THE ONES THAT WERE SELECTED SO W E DON'T KNOW . THAT'S FIRST. BUT SECONDLY, WER E TALKING ABOUT THE WEB SITES ON WHICH THESE ADS ARE 2 2 PLACED . 23 THE WAY IT WORKS IS THAT THE IP ADDRES S 24 IS RETURNED, THE GEOGRAPHY IS SOLVED, THEN WHEN TH E 25 AD IS SELECTED, THEY THEN LOOK AND SEE IF THAT A D
Page 2

2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22

MR . KRATZ : THE DISCOVERY, AND PERHAPS I DIDN'T UNDERSTAND THE PROBLEM WITH THEM GIVING US INFORMATION WITH RESPECT TO WHERE THEY HAVE PRODUCED, WHERE THEY HAVE BEEN US ING OUR TECHNOLOGY. THE ANSWER IS THAT THEY USE IT EVERYWHERE . THE ANSWER IS IF AN IP ADDRESS IS RETURNED WHICH IT IS CODED IN AND THEY PLACE ADS AND IT'S CODED IN AND IT CAN BE DISABLED, IT CAN BE ALLOWED WHERE THEY INSTEAD REPLACE THAT, THEY DO THEIR OWN GEOTARGETING AND THEY SATISFY GEO EQUALS AND THEY SAID IN DOCUMENTS THAT S ONLY GOING TO HAPPEN ONE IN A MILLION TIMES . I WISH THAT INSTEAD THEY GET THE IP ADDRESS . WHEN THEY GET THE IP ADDRESS THEY GEOTARGET. THEY USE IT IN EVERYTHING THEY DO WITH RESPECT TO ADVERTISEMENTS . THE COURT: THAT'S, THAT'S - WELL WELL, I'LL SEE. THAT'S CERTAINLY NOT MY UNDERSTANDING OF WHAT GOGGLE HAS PRESENTED TO ME OVER TIME . I THIN K THEY MADE THE ARGUMENT TO ME MANY TIMES THAT THERE ARE CERTAIN, FOR EXAMPLE, ADVERTISERS THAT HAVE NO CONCERN WHATSOEVER, WHERE 23 THEIR POTENTIAL CUSTOMERS ARE COM ING FROM AND -24 MR. KRATZ: THE ADVERTISING . 25 THE COURT : SO WHY GEOTARGET ING?

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23

WAS RESTRICTED TO GEOGRAPHY OTHER THAN WHAT THE GEOGRAPHIC SOLUTION WAS AND IF THAT HAPPENS, THE N ITS INCLUDED. WHEN THE IP ADDRESS IS BROUGHT I N FROM THE THIRD PARTY WEB SITE, OUR TECHNOLOGY I S USED . AND IT'S USED ALL OF THE TIME . THE COURT : AND EVEN IF, UNDER YOUR THEORY, EVEN UNDER THE EVENT THAT THEI R ADVERTISING, FOR EXAMPLE, REALLY DOESN'T CARE ABOU T THE GEOTARGETING, BY DEFINITION YOU'RE SAYING YOU R TECHNOLOGY IS SO MEHOW EMPLOYED EVEN IN THOSE IN STANCES IS WHAT YOU'RE TELLING ME. MR. KRATZ: IT ABSOLUTELY IS. AND WE WOULD LIKE TO KNOW THE FREQUENCY. WE WOULD LIKE T ( KNOW THE ENABLE MENT, WE WOULD LIKE TO KNOW THE RELATIONSHIP WITH THE THIRD PARTIES OF THE WEB SITES TO DETERMINE HOW THIS, HOW T HIS IS WORKED OUT . WE WOULD LIKE TO KNOW THE FREQUENCY . THE Y WONT EVEN LOOK FOR IT. THE COURT: LET ME FOCUS ON JUST ANOTHER ONE BY WAY OF ASK ING . THE QUESTION NUMBER 14 , DOCUMENTS REGARDING GOOGLE'S ADVERTISERS ON WE B SITES. THERE'S NO LIMITATION ON THAT . EVERY ONE YOU'VE GOT. TELL US EVERY SINGLE ADVERTISER THAT 24 YOU'VE GOT RELATIVE TO THE PROTECTION ON A THIR D 25 PARTY SITE.

6 (Pages 18 to 21 )

U .S . COURT REPORTERS
d6455ece -baf4-4ca6-89fl-26d20ce3db9a

S W I T M

T W I

Case 5:04-cv-01497-RS

Document 212-4
Page 2 2

Filed 07/05/2005

Page 8 of 11
Page 24

1 R. KRATZ : RELATIVE TO THE LOCATION ? 2 HE COURT : WELL, THAT'S MY WORD BUT ITS 3 REGARDING THE IDENTITY OF GOOGLE ADVERTISERS ON 4 THIRD PARTY SITES . 5 R. KRATZ: THAT'S REQUEST 14 . 6 HE COURT : THAT S REQUEST FOR PRODUCTION 7 NUMBER 14. 8 SN'T THAT, ISNT THAT EXTRAORDINARILY 9 OVERBROAD? 10 R. KRATZ : I'VE GOT MY NOTES AND I DONT 11 SEE MYSELF MOVING TO COMPEL ON THAT ONE . 12 HE COURT : WELL, IF YOU'RE NOT MOVING TO 13 COMPEL THEN I WON'T GIVE YOU A RUL ING THAT IT IS 14 OVERBROAD. 15 R KRATZ : I COULD BE WRONG ON THAT IN 16 WHICH CASE ILL SUBMIT IT ON THE BRIEFS BUT THE 17 PROBLEM IS THAT WE HAVE ATTEMPTED IN A VARIETY OF 18 WAYS TO GET THEM TO COVER UP SOME INFORMATION AND 19 THEY HAVE CONTINUALLY, THEY STARTED THIS CASE BY 20 ASKING FOR BIFURCATION AND DISCOVERY AND LET'S DO 21 CONTRACTUAL INFORMATION AND YOUR HONOR SAID, NO, 22 GIVE THEM THE DISCOVERY AND THEY DID . 23 HEY THEN CAME IN AND ASKED FOR OUTSID E 24 ATTORNEYS ONLY SCRUTINIZ IN G AND WE ENDED UP GETTIN 25 SIX PAGES OF INFORMATION AND ALL AS A RESULT OF Page 23 1 TRYING TO GET INFORMATION AND WE ASKED FOR ALL O F 2 THIS STUFF IN AUGUST OF LAST YEAR AND WERE STILL 3 NOT GETTING IT. THE CASE IS DERAILED BECAUSE ONC E 4 WE GET THE INFORMATION WE HAVE EXPERTS THAT NEED TC~ 5 BE REVIEWING THIS INFORMATION AND BOTH LIABILIT Y 6 AND EXPERTS AND WERE UNABLE TO DO THIS . FRIDAY IS 7 THE LAST DAY OF DEPOSITION DISCOVERY, FAC T 8 DISCOVERY, AND WE AGREED BETWEEN COUNSEL THAT W E 9 GOING TO HAVE TO SUB MIT A NEW CASE MANAGEMENT 10 ORDER . 11 HAT THEY HAVE DONE IS EFFECTIVEL Y 12 DELAYED THE CASE AND THEY HAVE NOT GIVEN U S 13 ANYTHING RELEVANT IN THIS CASE AND THEY HAVE GIVEN 14 US SOME DOCUMENT AND INTERPRETATION AND THEY GAVE 15 US DOCUMENTS REGARDING THE ROLE OF ADSENSE FOR 16 CONTENT AND THAT'S WHERE WE GOT THE DOCUMENT THAT 17 SAID WERE GOING TO TELL PEOPLE NOT TO GEOTARGET ON 18 THEIR OWN, BUT WE DID GET A LITTLE . BUT THE Y 19 CONTINUED TO PRODUCE NOTHING WITH RESPECT TO THE 20 DOCUMENTS THAT WERE ABSOLUTELY ENTITLED TO, TO 21 MAKE OUR LIABILITY CASE, TO MAKE OUR DAMAGE CASE . 22 TS ABSURD. 23 O, YOUR HONOR, IF WHAT YOURE SAY IN G IS 24 WITH RESPECT TO THE SECOND POINT IS IF IT S 25 RELATING TO THE ADVERTISERS THAT HAVE, THAT HAVE

1 DESELECTED OR NOT SELECTED A SPECIFIC COUNTRY, BU T 2 YOU KNOW, I THINK WERE ENTITLED TO NUMERICALLY THE 3 FREQUENCY OF THAT, I THINK WERE ENTITLED T O 4 ANALYZE THE INCIDENTS OF THAT, AND IN ORDER TO 5 DEMONSTRATE THE IMPORTANCE OF IT, OR TO GIVE A 6 REASONABLE ESTIMATE OF THE, OF THE ENTIRETY OF OUR 7 DAMAGE CLAIM . 8 MEAN, RIGHT NOW WE HAVE A GROSS NUMBER 9 OF MONEY THEY MADE OFF OF ADSENSE FOR THE CONTENT 10 PROGRAM. ACTUALLY IT'S A NET NUMBER BECAUSE THE Y 11 HAVE GIVEN US THE INFORMATION THAT THEY HAVE SHARED 12 WITH THE THIRD PARTY WEB SITES AND THAT'S WHAT WE 13 GOT, THAT'S ALL WE GOT AND AT THIS POINT THAT'S OUR 14 DAMAGE CLAIM WITH RESPECT TO ADSENSE FOR CONTENT . 15 E NEED TO BE ABLE TO ESTABLISH TH E 16 RELATIVE IMPORTANCE OF GEOTARGETING IN THIS, THE 17 SPECIFIC MONEY THEYRE MAK IN G, WE'RE ENTITLED TO 18 GET ALL OF THAT INFORMATION AND THEY'RE GIV ING US 19 NOTHING . 20 HE PROBLEM IS, AND IF YOU DON'T M IN D 21 I'LL GO THROUGH THIS . THE PROBLEM IS THAT THERE' S 22 FUNDAMENTALLY AN INCORRECT STANDARD FOR DISCOVERY 23 THAT IS BEING ADVANCED BY GOOGLE . THEY HAVE 24 HEIGHTENED OUR BURDEN CLEARLY WELL BEYOND THE RULE. 25 AND THEN THEYRE SAYING, WELL, BUT NOT ONLY THAT, Page 25 YOU HAVE TO ESTABLISH A CERTAIN AMOUNT OF PROOF WHERE BEFORE YOU GET TO SEE OUR, GET TO SEE OUR EVIDENCE AND THAT'S NOT THE LAW. WE HAVE MADE GOOD ALLEGATIONS . THEY EVEN SURVIVED SUMMARY JUDG MENT IN ORDER TO NOW, JUST NOW OBTA IN THE INFORMATION WERE ENTITLED TO DO IT. RIGHT NOW GOOGLE CONTROLS THE FLOW OF INFORMATION THAT IS COMING TO US ABOUT THIS CASE AND THEYRE US ING IT TO THEIR STRATEGIC ADVANTAGE TRYING TO SET US UP, AND, IN FACT, WE EVEN SUBMITTED A DECLARATION BY MR . FREEDMAN THAT POINTED OUT A COUPLE OF THINGS, IN CLUDING SOME THINGS ON THE WEB SITE AND THEYRE TRYING TO ELEVATE OUR STANDARD HERE ON A MOTION TO COMPEL TO WELL, THAT'S NOT ADMI SSIBLE EVIDENCE . SO WERE THE STANDARD TO GET THE DISCOVERY IN THE FIRST PLACE SO WE HAVE TO ESTABLISH, WITH ADMI SSIBLE EVIDENCE, OUR RIGHT TO GET DISCOVERY THAT MIGHT LEAD TO ADMISSIBLE EVIDENCE . I ME AN, IT'S BECO ME PATENTLY ABSURD. THEY ATTEMPTED TO DEFINE OUR CLAIMS AND REMEDIES . THEYRE SAY ING, WELL, YEAH, WHY YOUR UNJUST ENRICH ENT THEORY OF DAMAGES WHICH IS M STATUTE THAT THEYRE PURSUING THEM UNDER, WE DONT NEED TO GIVE YOU ANY INFORMATION BECAUSE WER E

7 (Pages 22 to 25 )

U .S . COURT

REPORTERS
d5456ece-baf4-4ca6-89fl-26d20ce 3db9a

Case 5:04-cv-01497-RS

Document 212-4
Page 26

Filed 07/05/2005

Page 9 of 11
Page 2 8

REALLY NOT BEING ENRICHED BY A PROGRAM IN WHICH IT IS THE FASTEST GROWING PROGRAM THEY VE GOT. THEY MADE TENS OF HUNDREDS OF MILLIONS OF DOLLARS OF ADSENSE AND THEY RE SAYING THEY RE NOT BEING 5 ENRICHED AND THEY RE DEFINING WHAT OUR CLAIMS AND 6 REMEDIES ARE AND THEY RE CLAIMING WHAT WE CONCEDE 7 AND THEY CONTINUE TO DO . 8 THE COURT: PART OF THE OVERLAY ON THIS 9 AND IS THAT, AND I HAVE HAD SOME, AS YOU POINT OUT, 10 SOME DISCOVERY RELATED MOTIONS IN T HI S MATTER, IN 11 ADDITION TO THE SUBSEQUENT MOTIONS, SOME OF YOUR 12 REQUESTS ARE IF YOU JUST READ THEM WITHOUT A LOT OF 13 DISCUSSION, THEY ARE VERY BROAD AND THEY 14 POTENTIALLY, POTENTIALLY ARE TALKING WITH JUST 15 SWEEPING IN EVERYTHING YOUR OPPONENTS HAVE AND WHAT 16 I'M CONCERNED ABOUT IS THAT I DON'T GET, GRANTED 17 ITS DISCOVERY, GRANTED THE STANDARD WE ALL KNOW 18 WELL, WHICH IS EITHER RELEVANT TO THE CLAIMS OR 19 DEFENSES IN THE CASE OR LIKELY TO LEAD FOR GOOD 20 CAUSE SHOW LIKELY TO LEAD TO DISCOVERY OF RELEVANT 21 EVIDENCE . 22 AND, OKAY, WE ALL KNOW THAT AND ITS OKAY 23 TO SAY BUT YOU HAVE TO HAVE SOME LIMITS ON IT AND 24 YOUR REQUESTS ARE VERY EXPANSIVE AS I READ THEM AND 25 IN A GENERAL WAY . AND WHAT I'M NOT HEARING IS A Page 2 7 1 2 3 4 5 6 7 8 9 10
11

1 2 3 4

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

THEY USE IT OFF SITE, ITS ALL RELEVANT . ITS ALL ADMISSIBLE BUT ITS ALL RELEVANT . ITS CLEARLY DISCOVERABLE DOWN THE LINE IN TERMS OF THE S T PROOF WE HAVE . ITS ABSOLUTELY -- EVERYTHING THE Y DO ON ADSENSE IS RELEVANT. THE COURT: YOU KNOW. MR KRATZ: ITS ADMI SSIBLE . THE COURT: EVERY CAR HAS PAINT ON IT. THE PAINT MANUFACTURER CANT THEN SAY IF THEY HAV E A DISPUTE WITH THE MANUFACTURER' CAR COMPANY, WE GE T EVERY PIECE OF INFORMATION ABOUT EVERYTHING THA T HAS GONE INTO BUILDING THAT CAR BECAUSE EVERY CAR YOU HAVE HAS PAINT ON IT SO WE GET TO -- I MEAN , ITS A SIMPLISTIC EXAMPLE BUT NONETHELESS THERE IS THIS NOTION THAT BECAUSE THERE MAY BE AN ELEMENT OF WHAT THEY DO THAT IMPLICATES YOUR TECHNOLOGY W E THEREFORE GET EVERYTHING THAT THEY DO, INFORMATIO N ABOUT ABSOLUTELY EVERYTHING AND THAT CANNOT BE . MR. KRATZ : WELL, YOUR HONOR, WERE TALKING ABOUT THEIR TARGETED ADVERTISING PROGRAM . WERE TALKING ABOUT WHAT THEY SELL IS THEIR ABILIT Y TO TARGET . THE REASON THEYRE ABLE TO SELL IT I S BECAUSE THESE WEB SITES WANT PEOPLE TO CLICK ON THOSE ADVERTISE MENTS. GOGGLE SELLS IT SAYING WE DO TARGETING, GREAT, AND THEREFORE, YOURE GOING T O Page 2 9

REAL EFFORT TO PUT SOME SORT OF PARAMETERS ON IT AND IT'S MORE, WELL, THIS IS DISCOVERY AND WE GET EVERYTHING AND THAT IS NOT RIGHT . AND SO IN SOME OF THESE IN STANCES I DON'T SEE A LOT OF EFFORT BEIN G MADE TO BEYOND JU ST, BEYOND JUST THE ANNOUNCEMENT THAT ITS DISCOVERY AND SO WE SHOULD GET TO SEE A WHOLE LOT OF THINGS . THE IDEA THAT, WELL, WE NEED THI S, AND WE NEED THIS BECAUSE AND WE PERHAPS DON'T NEED THAT. ITS WE NEED EVERYTHING AND THATS WHAT CAUSES ME SOME
CONCERN .

12 MR. KRATZ: WE'LL TALK ABOUT THE SPECIFIC 13 REQUESTS WE MOVE UNDER, BUT I WILL SAY FROM A 14 GENERAL STANDPOINT THE BREADTH OF OUR DISCOVERY 15 A RESULT OF THE SCOPE OF THEIR VIOLATION OF OUR
16 CONTRACT .

1 2 3 4 5 6 7 8 9 10 11 12 13 14
15

GET A LOT OF MONEY FROM US . WHEN YOU SIGN UP FOR THE ADVERTISERS THAT WANT TO GET THEIR ADS TARGETED BY GOOGLE, THEY ANSWER FOUR QUESTIONS . THEY ANSWER FOUR QUESTIONS IS ALL. WHERE DO YOU WANT IT? GEOGRAPHICALL Y TARGETED, WHICH ALSO IMPLICATES OUR TECHNOLOGY A THEN THEY GIVE YOU THE CONNECTIONS OF THOSE ADS SO THEY CAN KEY WORD THEM IN IN ORDER TO TARGET T O SUBJECT MATTER OF . THERE ARE TWO WAYS O F TARGETING . THEY RE GOING TO SAY ITS A COMPLICATE D ALGORITHM AND THINGS LIKE THAT BUT WHAT THEY DO F O ADSENSE RESEARCH THEY TAKE THE SEARCH TERM AND TH E IP ADDRESS . TWO THINGS . ONE OF THEM IS OUR
TECHNOLOGY .

17 18 19
20

21 22 23 24
25

16 THE COURT : BUT THIS GETS BACK TO A 17 FUNDAMENTAL ISSUE IN THE CASE. I WOULD ASSUME THAI 18 19 YOU WOULD AGREE WITH ME IN YOUR ZEALOUS ADVOCA FOR YOUR CLIENT, AND OBVIOUSLY HEAR ABOUT YOUR 20 21 CLIENTS PRODUCT, YOUR CLIENTS PRODUCT IS NOT, IS NOT EVERYTHING THAT YOUR COUNTERPART HAS . ITS 22 ENTIRE WORLD IS NOT GEOTARGETING . 23 24 MR. KRATZ: ITS INTEGRATIN G WITH THEIR 25 TARGET ING TECHNOLOGY . ITS IN THERE . AND SO WHEN

THE COURT: BUT AGAIN , I DON'T WANT TO ARGUE THE MERITS OF THE CASE . I WANT TO GET INTO SOME PARAMETERS ON WHAT YOU'RE ENTITLED TO GET IN THE WAY OF DISCOVERY AND, YOU KNOW, THAT IS, TH E ANSWER TO THAT IS NOT JUST OUR PRODUCT IS VER Y IMPORTANT, OUR TECHNOLOGY OR INTELLECTUAL PROPERT` i IS VERY IMPORTANT IN WHAT THEY DO, THEREFORE , EVERYTHING THEY DO. MR. KRATZ : WE DON'T WANT EVERYTHING THEY
DO.

8 (Pages 26 to 29 )

U .S . COURT REPORTERS
d5455ece-baf4-4ca6-89f1 -26d20ce3db9 a

2

TA T B T M

13 2 1 2 1 8 7 6 5

T T M M

Case 5:04-cv-01497-RS

Document 212-4
Page 3 0

Filed 07/05/2005

Page 10 of 11
Page 3 2

1 HE COURT: WELL, I DON'T TAKE THAT THE 2 BACK AND FORTH BETWEEN COUNSEL IS AN ADMISSION BY 3 THEM THAT THEY AGREE WITH YOUR INTERPRETATION OF 4 THEIR COMPLAINT. 5 R. KRAMER: UNDERSTOOD, YOUR HONOR, BUT 6 I BELIEVE THAT THE BACK AND FORTH REFLECTS OU R 7 UNDERSTANDING THAT ITS NOT IN THE COMPLAINT AND 7 ABOUT THAT . 8 THE POINT HERE IS THAT IT ISNT IN THE COMPLAINT . 8 UT TO MOVE THIS ALONG, WHY DON'T I HEA R HE COURT : WELL, BUT, YOU KNOW, THE 9 ON THE GENERAL CONCEPTS FROM MR. KRAMER AND THEN 9 10 COMPLAINT LANGUAGE THROUGHOUT, YOU MAY, YOU MAY S, 10 I'M NOT PROPOSING TO GO INTERROGATORY B Y 11 INTERROGATORY OR REQUEST BY REQUEST BECAUSE I JUST 11 IMPLICITLY WHEN THEY SAY ADSENSE PROGRAM, THEY MUST 12 BE SAYING ADSENSE FOR CONTENT AND I KNOW YOU HAVE 12 DON'T HAVE ENOUGH TIME, BUT I NEED TO HEAR . LET ME OF THESE POINTS 13 AN ARGUMENT WHICH YOU HAVE ALLUDED TO ABOUT THE 13 HAVE HIM COME UP AND ADDRESS SOME 14 CHRONOLOGY IN HERE ABOUT THE PARTICULAR, YOU KNOW, 14 AND I'LL GIVE YOU ANOTHER CHANCE . 15 ACTS AND WHEN THEY OCCUR, WHICH YOU SAY MUST B E R. KRATZ : AND I DO WANT TO EXPLAIN THAT 15 16 ADSENSE FOR CONTENT, BUT YOU'RE READING THAT INTO 16 WE'RE NOT TALKING ABOUT EVERYTHING THEY DO . 17 T HI S . 17 HE COURT: OKAY . 18 R. KRAMER : I THINK PARAGRAPH 41, YOUR 18 R. KRATZ : ITS NOT IN THE REQUEST . 19 HONOR, COULD NOT BE CLEARER . THAT IS WHERE THEY 19 HE COURT : OKAY . 20 IDENTIFIED THE USE THAT IS BEYOND THE SCOPE OF THE 20 R. KRAMER : AN AWFUL LOT TO CHEW ON, 21 LICENSE . GOGGLE USES DIGITAL ENVOY'S IF TECHNOLOGY 21 YOUR HONOR, GOOD MORNING . 22 AND DATABASES TO PROVIDE GEOGRAPHICALLY TARGETED 22 HE COURT : GOOD MORNING. 23 NONINFORMATION SEARCH RELATED AND THAT'S THE KEY, 23 R. KRAMER: LET ME START WITH THE ISSUE 24 NONINFORMATION SEARCH RELATED ADVERTISEMENTS ON 24 OF ADSENSE FOR SEARCH BECAUSE I THINK THATS A 25 THOSE THIRD PARTY WEB SITES IN GOGGLE AD NETWORKS . 25 DISCRETE ISSUE THAT WE CAN BREAK OFF AND TALK Page 31 Page 3 3

1 HE COURT : THAT'S WHAT I'M TRYING TO GET 2 AT BECAUSE I HAVE SOME TROUBLE WITH THE DEGREE TO 3 WHICH, NO PUN INTENDED, IN TERMS OF TARGETING WHAT 4 THE DISCOVERY REQUEST IS SEEKING AS OPPOSED TO, YOU 5 KNOW, A SWEEP EVERYTHING IN AND ITS DISCOVERY SO 6 WE GET TO LOOK AT IT ALL AND I HAVE SOME CONCERN

SUCH USE, NOT THE USE IN AD BECAUSE THAT IS B Y 1 ABOUT. THE PROBLEM IS THAT ADSENSE FOR SEARCH THEIR OWN INFORMATION SEARCH RELATED, SUCH USE ON 2 ISN'T IN THEIR COMPLAINT . YOU CAN PICK UP THEIR NONINFORMATION SEARCH RELATED ADVERTISEMENTS IS 3 COMPLAINT . ITS PARAGRAPH 38 THROUGH 41 . THEY 4 IDENTIFY THE MISUSE BY GOGGLE OF THEIR TECHNOLOGY 4 BEYOND THE SCOPE OF THE AGREEMENT AND THAT'S THE ONLY PLACE THAT YOU WILL FIND ANYTHING IN THIS 5 AS USE NON, ON NONINFORMATION SEARCH RELATED COMPLAINT THAT IDENTIFIES WHAT USE, WHAT USE THEY 6 ADVERTISEMENTS . ITS THE ADSENSE FOR CONTENT CONTEND IS BEYOND THE SCOPE OF THE AGREEMENT . 7 PROGRAM . SUCH USE IS BEYOND THE SCOPE OF THE IN THAT'S THE ONLY SPOT . 8 AGREEMENT . THATS THE USE THAT THEY IDENTIFY AND WE HAVE OPERATED, WE HAVE OPERATED 9 THIS COMPLAINT IN PARAGRAPH 41 AS BEING BEYOND THE 9 0 FOR A YEAR AND A HALF ON THE BASIS OF THIS, OF T HIS . AND ITS THE ONLY USE THEY 10 SCOPE OF THE LICENSE 11 IDENTIFY IN THE COMPLAINT AS BEING BEYOND THE SCOPE 1 1 UNDERSTANDING THAT THIS IS WHAT IS AT ISSUE AN D 12 THEY CANT JUST BY SAYING TO US, HEY, WE REALL Y 12 OF THE LICENSE . 13 WANT TO SUE ABOUT ADSENSE FOR SEARCH, TOO, AMEND 13 ND SO WE HAVE PROCEEDED FROM THE OUTSE T 14 THEIR COMPLAINT. IF THEY WANT TO MAKE A MOTION TO 14 OF THIS CASE WITH THE UNDERSTANDIN G THAT THE CASE 15 WAS ABOUT ADSENSE FOR CONTENT AND NOT ADSENSE FO 15 AMEND, THEY SHOULD MAKE A MOTION TO AMEND OR THEY 6 SHOULD HAVE MADE A MOTION TO AMEND LONG BEFORE THE 16 SEARCH, 7 WRITTEN DISCOVERY WHEN WE PROPOSED IT . 17 ND WHEN THEY STARTED MAKING NOISES THAT THE COURT : I DONT SEE HOW YOU CAN APPLY 18 ADSENSE FOR SEARCH WAS SUPPOSED TO BE IN THIS CASE, 18 YOUR INTERPRETATION OF A PARTICULAR PARAGRAPH IN 19 WE SAID TO THEM, WELL, AMEND YOUR COMPLAINT. AND 19 0 THE COMPLAINT AND SAY THAT PROVIDES THESE LIMITS ON 20 THEY SAID, OKAY, HERE'S SO ME LANGUAGE THAT WE 1 PROPOSE AND THEY SENT ME A COUPLE OF E-MAILS AND I 21 THIS CASE WHEN NONE OF THE REQUESTS FOR DISCOVERY 22 SAID, WELL, SEND ME A COMPLAINT THAT YOU PROPOSE TO 22 ARE LIMITED IN THAT FASHION WHERE THERE'S NEVER 3 BEEN ANY, ANY DISCUSSION IN COURT THAT I'M AWARE OF 23 FILE SO I CAN SEE WHAT IT IS GO IN G TO LOOK LIKE, 24 AND THAT WAS SEVEN MONTHS AGO . AND THEY DROPPED 2 4 THAT SAYS THAT THIS CASE IS LIMITED TO INDEE D 25 IT. 5 DURING THE SUMMARY JUDGMENT MOTION HEARING . WE HAII

9 (Pages 30 to 33 )

U .S . COURT REPORTER S
d5455ece-baf4-4ca6-89fl-28d20ce 3 db9a

M T M W

Case 5:04-cv-01497-RS

Document 212-4
Page 3 4

Filed 07/05/2005

Page 11 of 11
Page 3 6

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

A LOT OF DISCUSSION ABOUT ASPECTS FOR SEARCH. IT 1 WASN T LIMITED TO ADSENSE FOR CONTENT . AND SO THI 2 NOTION THAT ONE PARTY READS APPLIES ITS READING T 3 THE COMPLAINT AND THEN SAYS ALL DISCOVERY IS 4 LIMITED, THEREFORE, AND SENDS NUMEROUS LETTERS T 5 THE OTHER SIDE SAYIN G THIS IS OUR UNDERSTAND ING, I 6 DON'T SEE WHY THAT, WHY THAT IS AN EFFECTIVE WAY 1 07 TAKE THE POSITION THAT YOU HAVE THEREFORE LIMITS 8 THE CASE IN A CERTA IN WAY. PLUS, YOU KNOW, IT'S, 9 YOU KNOW, ITS SORT OF, SORT OF A SIMPLISTIC 10 COMMENT BUT IT IS DISCOVERY, NOT THE PO IN T AT WHIC FR 1 WE'RE ADJUDICATING THESE COMPLAINTS . SO TO SAY, 12 SORT OF SUA SPONTE, WELL, I'M GO ING TO OPERATE 13 UNDER THIS THEORY AND I'M ONLY GOING TO GIVE 14 MATERIALS THAT PERTAIN TO ADSENSE FOR CONTENT, I 15 DON'T SEE WHERE YOU THINK YOU'RE ENTITLED TO DO 16 THAT . 17 MR . KRAMER: I'LL EXPLAIN WHY AND I THINK 18 IT COMES DOWN TO WHAT THE COMPLAINT SAYS . THE 19 COMPLAIN T ACCOR DING TO THE CALIPER TECHNOLOGIES 20 CASE THAT WE CITED IN OUR PAPERS LIMITS THE SCOPE. 21 IF THEY WANT ADSENSE SEARCH TO BE A TARGET OF THE R 2 CLAIMS, THEN IT NEEDS TO BE IDENTIFIED AS A BASIS 23 FOR THEIR CLAIMS IN THEIR COMPLAINT. 24 THE COURT: THEY SAY IT ALL OF THE TIME. 25 Page 3 5

ELSE IN THIS COMPLAINT THAT SAYS OTHERWISE . BUT, YOUR HONOR, IN TERMS OF SAYING THA T WE SHOULD HAVE DONE SOMETH ING MORE FORMAL TO MEMORIALIZE OUR UNDERSTANDING OF THE COMPLAINT , NOT SURE WHAT YOUR HONOR WOULD HAVE HAD US DO . THEY ASKED FOR DISCOVERY IN AUGUST . WE TOLD THEM, WE TOLD THEM THIS ISNT IN THE CASE. WE SAID IF YOU WANT TO PUT IT IN THE CASE BACK IN JANUARY, G O AHEAD. WEIL TALK ABOUT AN A MENDMENT . THEY DIDN T DO IT. SO WE STOOD BY THE POSITION ITS NOT IN THE CASE AND IT'S NOT BECAUSE ITS NOT IN THE C OMPLAINT . SO IN TERMS OF MEMORIALIZING OUR UNDERSTAND ING, ALL WE CAN DO IS SAY T HIS IS WHERE WE WERE AND UNDERSTOOD AND YOU DIDN T A MEND YOUR COMPLAINT AND THERE'S NOTHING ELSE IN HERE, IN THIS COMPLAINT TO LEAD US TO BELIEVE THAT THERE IS SO M E OTHER CLAIM . THE COURT : I MEAN, FRANKLY, YOUR BES T ARGUMENT IS TO SAY THAT AT THAT JUNCTURE WHEN TH E ISSUE WAS OR THAT ISSUE WAS BROUGHT TO A HEAD THAT KNOWING YOUR POSITION, THAT THE DIGITAL ENVO Y PEOPLE SHOULD HAVE THEN BROUGHT A MOTION TO COMP S EARLIER THAN THEY NOW HAVE. MR KRAMER : OR BROUGHT A MOTION TO A MEND Page 37 ) OR SOUGHT CLARIFICATION . THE COURT: YES, THE MOTION TO AMEND, THOUGH, IS THEIR SAYING WE AGREE WITH YOU, THAT' S HOW YOU INTERPRET THIS COMPLAINT . AND THEY RE NOT OBLIGED TO HEAR FROM YOUR INTERPRETATION . AND WELL HEAR FROM MR . KRATZ WHY HE THINKS THE NUMBER 40 IS NOT IN THE PARAGRAPH YOU SUGGEST . MR. KRAMER : 4T . THE COURT: I THOUGHT YOU READ FROM TH E
LANGUAGE .

1 THEY SAY IT ALL OF THE TIME . YOU HAVE FOCUSSED ON 1 2 ONE PARAGRAPH . YOU HAVE SELECTED THE PARAGRAPH AN ) 2 3 YOU SAID THAT THIS PARAGRAPH PROVIDES CERTA IN 3 4 LIMITS TO THEIR CASE AND INDEED THEY DON'T EVEN USE 4 5 THE TERM ADSENSE IS FOR CONTENT BUT YOU SAY THE 5 6 ONLY MEANIN G HERE CAN BE THE ADSENSE FOR CONTENT 6 7 PROGRAM AND WERE GO ING TO READ IT THAT WAY AND 7 8 PROCEED THAT WAY IN DISCOVERY . 8 9 HY, WHY, IF YOU THOUGHT THAT THIS WAS SO 9 10 CRITICAL, YOU SHOULD HAVE, YOU SHOULD HAVE - I 10 11 NEED TO PUT OFFICIAL LIMITS ON THIS CASE IN SOME 11 12 FASHION AND YOU CANT OPERATE IN DISCOVERY AS IF 12 13 YOUR PREFERRED READ ING IS GOING TO GOVERN THE WAY 13 14 THIS CASE PROCEEDS. 14 15 R KRAMER: LET ME BE CLEAR. ONE, WE 15 16 HAVEN'T LIMITED DISCOVERY TO JUST ADSENSE FOR 16 17 CONTENT. THEY GOT A BUNCH OF DOCUMENTS AND MR . 17 18 KRATZ ADMITTED THAT. 18 19 HE COURT : OKAY. 19 20 R. KRAMER: LET ME SAY AGA IN, THERE'S 20 21 ONLY ONE PARAGRAPH IN THIS COMPLAINT THAT TALKS 21 22 ABOUT WHAT USE IS AT ISSUE . IT IS NONINFORMATION 22 23 SEARCH ADVERTISE MENTS . THEY CONCEDE THAT THATS 23 24 NOT ADSENSE FOR S EARCH. SO IT'S NOT JUST ME THAT 24 25 READS THIS COMPLAINT THIS WAY . THERE'S NO'T'HING 25

MR. KRAMER : I'M LOOKING -- LET ME MAK E SURE I'M LOOK IN G AT THE ANSWER AND COUNTERCLAIMS . I'M NOT LOOK IN G -THE COURT : I'M LOOKING AT THE AMENDE D COMPLAINT OF DIGITAL ENVOY FILED SEPTEMBER 2,'0 4 AND THE FOLLOWING PARAGRAPH IS PART OF THE SERVICE S TO PROVIDE TO ITS CLIENTS GOOGLE USES DIGITAL ENVO Y TO PROVIDE GEOGRAPHICAL TARGETED AND NONINFORMATIO N ON THE THIRD PARTY WEB SITES IN THE GOOGLE NETWORK . MR. KRAMER : PARAGRAPH 40 IN THE AMENDE D COMPLAINT, 41 IN THE ORIGINAL . I'M SORRY. AND THAT'S ONLY POINT WE THOUGHT THERE WAS A N IDENTIFICATION OF THE ISSUE IN T HI S CASE. WE HAV E PROCEEDED AND LIMITED OUR DISCOVERY TO ADSENSE FO R CONTENT IN THIS CASE AND THATS CRITICAL BECAUSE

10 (Pages 34 to 37 )

U .S . COURT

REPORTERS
d5455ece-baf4- 4ca6-89fl -26d20ce3db8 a