"The Apple iPod iTunes Anti-Trust Litigation"

Filing 775

Transcript of Proceedings held on February 7, 2014, before Judge Yvonne Gonzalez Rogers. Court Reporter Diane E. Skillman, Telephone number 510-451-2930, [e-mail], [e-mail]. Per General Order No. 59 and Judicial Conference policy, this transcript may be viewed only at the Clerks Office public terminal or may be purchased through the Court Reporter until the deadline for the Release of Transcript Restriction.After that date it may be obtained through PACER. Any Notice of Intent to Request Redaction, if required, is due no later than 5 business days from date of this filing. Release of Transcript Restriction set for 5/14/2014. (Related documents(s) 772 ) (Skillman, Diane) (Filed on 2/13/2014)

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UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA
THE APPLE IPOD ITUNES
ANTITRUST LITIGATION,

)
)

NO. C-05-0037 YGR

____________________________)

FRIDAY, FEBRUARY 7, 2014
OAKLAND, CALIFORNIA
CASE MANAGEMENT CONFERENCE
PRE-FILING CONFERENCE
BEFORE THE HONORABLE YVONNE GONZALEZ ROGERS, JUDGE
REPORTER'S TRANSCRIPT OF PROCEEDINGS
APPEARANCES:
FOR PLAINTIFF:
BY:

FOR DEFENDANT:
BY:

REPORTED BY:

ROBBINS GELLER RUDMAN & DOWD, LLP
655 WEST BROADWAY, SUITE 1900
SAN DIEGO, CALIFORNIA 92101
BONNY E. SWEENEY, ESQUIRE
CARMEN A. MEDICI, ESQUIRE
JONES DAY
555 CALIFORNIA STREET, 26TH FLOOR
SAN FRANCISCO, CALIFORNIA 94104
ROBERT A. MITTELSTAEDT, ESQUIRE
DAVID C. KIERNAN, ESQUIRE, ESQUIRE

DIANE E. SKILLMAN, CSR 4909, RPR, FCRR
OFFICIAL COURT REPORTER

TRANSCRIPT PRODUCED BY COMPUTER-AIDED TRANSCRIPTION

DIANE E. SKILLMAN, OFFICIAL COURT REPORTER, USDC [phone]

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FRIDAY, FEBRUARY 7, 2014

2

P R O C E E D I N G S
MR. MITTELSTAEDT:

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4

GOOD AFTERNOON, YOUR HONOR.

I'M

BOB MITTELSTAEDT FOR JONES DAY.

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THE COURT:

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MS. SWEENEY:

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3:10 P.M.

GOOD AFTERNOON.
GOOD AFTERNOON, YOUR HONOR.

BONNY

SWEENEY, OF ROBBINS, GELLER, RUDMAN & DOWD FOR THE PLAINTIFFS.

8

THE COURT:

LET US CALL THE CASE.

9

THE CLERK:

CALLING CIVIL ACTION 05-0037 APPLE IPOD

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ITUNES ANTITRUST LITIGATION.

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COUNSEL, PLEASE STATE YOUR APPEARANCES.
MS. SWEENEY:

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13

HOLD ON.

BONNY SWEENEY FROM ROBBINS, GELLER,

RUDMAN & DOWD FOR THE PLAINTIFFS.
MR. MITTELSTAEDT:

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15

FOR APPLE.

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ARE GOING TO JOIN.

17

3:30.

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THOUGH, YOUR HONOR.

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THE COURT:

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MS. SWEENEY:

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THE CLERK:

YES.

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THE COURT:

OKAY.

ROBERT MITTELSTAEDT FOR JONES DAY

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24
25

I HAVE TWO COLLEAGUES AND SOMEONE FROM APPLE WHO
I THINK THEY WERE GOING TO BE HERE BY

THEY SHOULD BE HERE ANY TIME.

I'M FINE PROCEEDING,

DID I SCHEDULE THIS FOR 3:30?
YES, YOUR HONOR.

WELL, I DON'T THINK IT'S GOING TO

TAKE THAT LONG.
THE ORDER TO SHOW CAUSE IS DISCHARGED.

THE REASON I

CALLED YOU IN IS BECAUSE I DO THESE PRE-CONFERENCE --

DIANE E. SKILLMAN, OFFICIAL COURT REPORTER, USDC [phone]

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PRE-SUMMARY JUDGMENT CONFERENCES AND WAS LOOKING AT MY DOCKET

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AND ALL OF A SUDDEN I FIND MYSELF WITH THIS SUMMARY JUDGMENT

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IN A VERY OLD ITUNES CASE, AND I DIDN'T KNOW WHAT IT WAS ALL

4

ABOUT.

5

AND I SAID, HOLD ON, HOW COME I DON'T KNOW ANYTHING ABOUT

6

THIS CASE?

AND THEN REALIZED THAT YOU FOLKS NEVER CAME IN TO

7

TALK TO ME.

AND I UNDERSTAND THAT THAT WAS IN PART BECAUSE I

8

HAVEN'T EVER SEEN THIS CASE AND BECAUSE JUDGE WARE HAD GIVEN

9

YOU A SCHEDULE, AND I GUESS I RUBBER STAMPED SOME STIPULATION

10

THAT YOU HAD FILED ABOUT TIMING.

11

BUT I DO LIKE TO UNDERSTAND WHAT THESE CASES ARE ABOUT AND

12

WHAT THE SUMMARY JUDGMENT IS ABOUT.

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VERY OLD CASE.

14

HEARING WAS SCHEDULED ON A DAY WHEN I WASN'T EVEN IN TOWN.

15

AND LIKE I SAID, IT'S A

I'M TRYING TO FIGURE OUT THE CONTEXT.

AND THE

SO, ANYWAY, THAT IS THE PRIMARY PURPOSE OF BRINGING YOU

16

IN.

I HAVEN'T -- I CAN TELL YOU, I HAVE NOT LOOKED AT THE

17

SUMMARY JUDGMENT AT ALL.

18

TO GET A SENSE OF IT BECAUSE FROM MY PERSPECTIVE, WHEN I

19

HAVE -- WHEN I UNDERSTAND THE BALLPARK, AND WHEN I GO TO THE

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MOTION, IT ALLOWS ME TO REALLY FOCUS IN ON IT MUCH MORE

21

QUICKLY AND EFFICIENTLY, AND HEARING FROM THE PARTIES WHO KNOW

22

THEIR CASE SO MUCH BETTER THAN I DO ASSISTS ME IN THAT MATTER.

23

SO, IN A SENSE, IT'S AS IF YOU GET TO BE THE FIRST ONES TO

I'VE BEEN IN TRIAL.

BUT I DO WANT

24

BRIEF ME ON THE ISSUES RATHER THAN A LAW CLERK WHO IS TRYING

25

TO GRASP IT JUST FROM THE PAPERS.

DIANE E. SKILLMAN, OFFICIAL COURT REPORTER, USDC [phone]

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SO, I WOULD LIKE TO HEAR ABOUT THE HISTORY OF THE CASE,

2

WHAT GOT US HERE, AND REALLY WHAT IS LEFT AND WHAT THE MOTION

3

IS ALL ABOUT.

4

THIS.

5

I'M STILL -- SO THAT'S REALLY THE POINT OF

AND I APPRECIATE YOU COMING IN.
MS. SWEENEY:

SURE.

THANK YOU, YOUR HONOR.

I'LL

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START AND JUST GIVE YOU A LITTLE BACKGROUND ABOUT THE CASE AND

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WHY WE ARE HERE EIGHT YEARS LATER.

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THE COURT:

9

MR. MITTELSTAEDT:

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THE COURT:

ARE THOSE YOUR COLLEAGUES?
YES.

ALL RIGHT.

11

COME ON IN.

12

PERFECT.

I STARTED EARLY.

GET OFF AS SOON AS THIS IS DONE.

13
14

I'VE BEEN ON THE BENCH ALL DAY SO I'M READY TO

GO AHEAD.
MS. SWEENEY:

WE REPRESENT A CERTIFIED CLASS OF IPOD

15

PURCHASERS, BOTH CONSUMER PURCHASERS AND BUSINESSES THAT

16

PURCHASED IPODS DIRECTLY FROM APPLE.

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SERIES OF CASES BEGINNING IN 2005 ALLEGING THAT APPLE HAD

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UNLAWFULLY MONOPOLIZED THE MARKET FOR PORTABLE DIGITAL MEDIA

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PLAYERS, WHICH IS WHAT AN IPOD IS.

20

AND OUR CLIENTS FILED A

UNFORTUNATELY, THE CASE HAS BEEN GOING ON SO LONG THE

21

TECHNOLOGY AND THE INDUSTRY HAS CHANGED CONSIDERABLY.

BUT

22

BACK IN 2005, PLAINTIFFS ALLEGED THAT APPLE HAD CREATED THIS

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TECHNOLOGICAL TIE BETWEEN ITS DEVICE, THE MUSIC PLAYER, THE

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IPOD AND ITS MUSIC STORY.

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PURCHASED FROM THE APPLE ITUNE STORE ON A PORTABLE DEVICE, YOU

SO THAT IF YOU WANTED TO PLAY MUSIC

DIANE E. SKILLMAN, OFFICIAL COURT REPORTER, USDC [phone]

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1

HAD TO PLAY IT ON THE IPOD AND VICE VERSA.

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WAS A TIE BETWEEN THOSE TWO TECHNOLOGIES.

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THINGS ENABLED APPLE TO RAPIDLY GAIN MARKET SHARE IN THE

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MARKET FOR PORTABLE DIGITAL MEDIA PLAYERS.

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IN OTHER WORDS, IT
AND THAT AND OTHER

ALSO, IN THE ORIGINAL 2005 COMPLAINT AND SUCCESSIVE

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AMENDMENTS TO THAT COMPLAINT, PLAINTIFFS ALLEGE THAT APPLE NOT

7

ONLY DEVELOPED THIS TECHNOLOGICAL TIE, BUT ALSO MAINTAINED

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THAT TIE THROUGH ISSUING PERIODIC SOFTWARE UPDATES TO ITS

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PRODUCTS THAT BLOCKED PRODUCTS THAT OTHERWISE WOULD HAVE

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11

ERODED THAT, THAT MONOPOLY.
AND THE SPECIFIC EVENT THAT IS MOST RELEVANT NOW IN THIS

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CASE IS A COMPANY CALLED REAL NETWORKS IN 2004 DEVELOPED A

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PRODUCT CALLED HARMONY.

14

THE COURT:

15

MS. SWEENEY:

AND HARMONY --

AND IS REAL NETWORKS A PLAINTIFF.
REAL NETWORKS IS A COMPETITOR IN THE

16

MUSIC SIDE OF THE BUSINESS.

IN OTHER WORDS, THEY HAVE

17

DIFFERENT KINDS OF MUSIC.

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THEY ALSO SELL PERMANENT DOWNLOADS OF MUSIC, WHICH IS WHAT THE

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ITUNES STORE SELLS.

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THE COURT:

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MS. SWEENEY:

22

THE COURT:

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MS. SWEENEY:

THEY HAVE SUBSCRIPTION SERVICE AND

BUT ARE THEY A PLAINTIFF?
NO, THEY ARE NOT, YOUR HONOR.
OKAY.
SO REAL NETWORKS DEVELOPED THIS PRODUCT

24

THAT ENABLED IPOD USERS TO PURCHASE SONGS DIRECTLY FROM REAL

25

NETWORKS AND PLAY THEM ON THEIR IPOD.

AND THE WAY THAT -- I

DIANE E. SKILLMAN, OFFICIAL COURT REPORTER, USDC [phone]

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1

SHOULD BACK UP A MOMENT.

2

THE TECHNOLOGICAL TIE THAT I REFERRED TO WAS PUT ON BY

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APPLE IN PART IN RESPONSE TO A REQUIREMENT THAT THEY HAD FROM

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THE RECORD LABELS WHO WANTED WHAT'S CALLED DRM, DIGITAL RIGHTS

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MANAGEMENT PROTECTION SO THAT SONGS COULDN'T JUST BE COPIED

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ENDLESSLY AFTER THEY WERE PURCHASED.

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SO WHAT REAL NETWORKS DID WAS, UNLIKE SOME OF THESE

8

HACKERS THAT YOU'VE READ ABOUT, THEY FIGURED OUT A WAY TO DO

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IT THAT PRESERVED THE DRM SO THE RECORD LABELS WERE HAPPY, THE

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CONSUMERS WERE HAPPY BECAUSE THEY COULD BUY ALL THESE MUSIC

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DOWNLOADS, THEY COULD PLAY THEM ON THEIR IPOD.

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LATER WHEN THEIR IPOD BREAKS OR IS STOLEN AND THEY WANT TO GET

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A NEW PLAYER, THEY DON'T HAVE TO BUY ANOTHER IPOD, THEY CAN GO

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BUY A COMPETING PRODUCT FROM RIO, OR CREATIVE, OR WHOEVER.

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THAT'S WHAT HAPPENED IN 2004.

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TWO YEARS

SO

APPLE REACTED SWIFTLY AND SORT OF VIOLENTLY, IN OUR VIEW.

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THEY -- THEY ISSUED A PRESS REPORT -- A PRESS RELEASE

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ATTACKING THIS COMPANY, AND THEN THEY QUICKLY ISSUED SOFTWARE

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UPDATES THAT ESSENTIALLY DISABLED THIS INTEROPERABILITY.

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THAT'S WHAT WE CALL NOW IN OUR COMPLAINT THE 4.7 UPDATE.

AND

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NOW, IN OUR ORIGINAL COMPLAINT, BACK IN 2005, WE DIDN'T

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KNOW IT WAS CALLED 4.7, SO WE DIDN'T CALL IT THAT, BUT THAT

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WAS 4.7 AND THAT WAS IN 2005.

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NOW, MEANWHILE THE CASE IS BEING LITIGATED IN FRONT OF
JUDGE WARE.

AND HE HEARD A NUMBER OF SUMMARY JUDGMENT AND --

DIANE E. SKILLMAN, OFFICIAL COURT REPORTER, USDC [phone]

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1

MOTIONS, AS WELL AS MOTIONS TO DISMISS.

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PLAINTIFFS' TYING CLAIM UNDER SECTION 1 OF THE SHERMAN ACT.

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THIS WAS THE TECHNOLOGICAL TIE CLAIM.

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PLAINTIFFS' STATE LAW CLAIMS, BUT HE PRESERVED PLAINTIFFS'

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SECTION 2 MONOPOLIZATION CLAIM.

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HE DISMISSED

AND HE ALSO DISMISSED

AND IN THE MOST RECENT ORDER THAT HE ISSUED, THIS IS A

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SUMMARY -- PARTIAL SUMMARY JUDGMENT ORDER, PLAINTIFF HAD

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ALLEGED THAT APPLE HAD MAINTAINED ITS MONOPOLY IN THE MARKET

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FOR PORTABLE DIGITAL MEDIA PLAYERS FROM NOT JUST ONE SOFTWARE

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UPDATE, IT'S NOT JUST 4.7, BUT ALSO A SUBSEQUENT ONE.

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SO AFTER APPLE ISSUED 4.7 AND DISABLED HARMONY, HARMONY

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KEPT AT IT.

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IN.

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APPLE SUBSEQUENTLY ISSUED ANOTHER SOFTWARE UPDATE -- I SHOULD

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SAY SOFTWARE AND FIRMWARE.

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THE IPOD -- CALLED 7.0.

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THEY DEVELOPED ANOTHER PRODUCT.

THEY CAME BACK

THEY GOT THE PRODUCTS TO TALK TO EACH OTHER AGAIN.

AND

IT ALSO AFFECTED SOME FIRMWARE ON

SO IN THE LAST SUMMARY JUDGMENT MOTION, JUDGE WARE HELD

18

THAT 4.7 WAS NOT AN ANTICOMPETITIVE ACT BY APPLE.

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REASON HE HELD THAT WAS THAT HE FOUND THAT THEIR -- THE

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PRODUCT ACTUALLY -- THE SOFTWARE UPDATE ACTUALLY HAD SOME

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PRODUCT IMPROVEMENTS.

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REALNETWORKS.

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HAPPENED TO DISAGREE WITH JUDGE WARE'S INTERPRETATION OF THAT

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CASE, BUT THAT'S THE BASIS FOR HIS RULING.

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AND THE

IT WASN'T SIMPLY TO DISABLE

AND HE RELIED ON A CASE CALLED TYCO.

WE

HOWEVER, JUDGE WARE HELD THAT THERE WASN'T EVIDENCE, THERE

DIANE E. SKILLMAN, OFFICIAL COURT REPORTER, USDC [phone]

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WASN'T AN UNDISPUTED MATERIAL FACT AS TO 7.0 AND HE PROCEEDED

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(SIC) PLAINTIFFS' TO PURSUE THAT CLAIM.

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SO, IN OTHER WORDS, JUDGE WARE HAS SIGNIFICANTLY NARROWED

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THE SCOPE OF THE CASE IN TERMS OF THE CLASS PERIOD.

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PERIOD IS NOW FROM 2006 THROUGH 2009.

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WHAT HAPPENED IN 2009.

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THE CLASS

AND I SHOULD TELL YOU

IN 2009, BEGINNING WITH APPLE'S COMPETITORS, AMAZON,

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WAL-MART, ET CETERA, THE RECORD LABELS DECIDED THEY WERE GOING

9

TO GO DRM FREE.

THEY HEARD THE CONSUMERS.

CONSUMERS

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COMPLAINED ABOUT BEING LOCKED INTO ONE PARTICULAR PRODUCT.

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THEY WANTED TO EXPERIMENT WITH DIFFERENT PRODUCTS, USE MUSIC

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FROM ONE SOURCE ON A PRODUCT, ON A DEVICE PURCHASED FROM

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ANOTHER SOURCE.

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SO, THE LABELS GOT RID OF DRM FOR APPLE'S COMPETITORS.

BY

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THE END OF MARCH 2009, THE LABELS GOT RID OF DRM ALSO ON THE

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SONGS THAT IT SOLD TO APPLE.

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DRM FREE.

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BECAUSE THE MUSIC WENT DRM FREE AND THE LOCK IS NO LONGER

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THERE.

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SO, APPLE'S WHOLE LIBRARY NOW IS

THAT'S WHY THE CLASS PERIOD ENDS WHEN IT ENDS

SO THAT'S THE SORT OF STATUS.
HAS BEEN CERTIFIED.

AND LIKE I SAID, THE CLASS

THE CLASS HAS BEEN SENT NOTICE.

WE'RE NOW IN A POSITION WHERE SUMMARY JUDGMENT IS FULLY

23

BRIEFED.

PLAINTIFFS HAVE MOVED TO EXCLUDE PORTIONS OF

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DEFENDANT'S ECONOMIST'S TESTIMONY.

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PLAINTIFFS' PRINCIPAL ECONOMICS EXPERT, AND I THINK THAT'S

APPLE HAS MOVED TO EXCLUDE

DIANE E. SKILLMAN, OFFICIAL COURT REPORTER, USDC [phone]

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1
2

WHERE WE ARE.
IF YOU WANT, I CAN RESPOND TO APPLE'S SUMMARY JUDGMENT OR

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WE CAN HEAR FROM MR. MITTELSTAEDT NOW, OR WHATEVER YOU PREFER,

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YOUR HONOR.

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THE COURT:

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MR. MITTELSTAEDT:

WHY DON'T I HEAR FROM HIM FIRST.
AS YOUR HONOR KNOWS FROM JUST

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LOOKING AT THE FILE AND THE DATE OF THIS CASE, IT DOES GO BACK

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A LONG WAYS.

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I THINK THAT WHAT'S PERTINENT ABOUT WHAT HAPPENED BEFORE

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IS IT SHOWS HOW NARROW THE CASE IS AND WHY WE HAVE NOW MOVED

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FOR SUMMARY JUDGMENT ON THE QUESTION OF WHETHER THEY CAN SHOW

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ANY IMPACT FROM THE ALLEGED EXCLUSIONARY ACT, WHICH NOW IS

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DOWN TO ONE THING, AND IT'S THE UPDATE TO ITUNE 7.0 WHICH WAS

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ISSUED IN SEPTEMBER 2006.

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BEFORE I GET TO THAT, IF I CAN JUST TAKE A COUPLE OF

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MINUTES ON THE QUICK BACKGROUND AND FILL IN A COUPLE OF THE

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GAPS.

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IF WE GO BACK TO THE EARLY 2000'S, PEOPLE WERE BUYING

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MUSIC AT BRICK AND MORTAR STORES IN THE FORM OF CD'S AND

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PEOPLE WERE DOWNLOADING MUSIC ON THE FIRST FORM OF NAPSTER AND

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A COUPLE OF OTHER PEER-TO-PEER NOW ILLEGAL FILE SHARING

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SERVICES.

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STEVE JOBS CAME UP WITH THIS IDEA OF HAVING AN IPOD THAT

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COULD PLAY DIGITAL MUSIC, WHICH WAS A TREMENDOUS ADVANCE

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COMPARED TO THE OLD BOOMBOXES AND THE BIG CD PLAYERS.

DIANE E. SKILLMAN, OFFICIAL COURT REPORTER, USDC [phone]

AND HE

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1

ALSO HAD THIS IDEA OF HAVING A STORE, AN ONLINE STORE WHERE

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YOU COULD BUY DIGITAL MUSIC THAT WOULD COMPETE WITH THE FREE

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ILLEGAL DOWNLOADS THAT PEOPLE WERE PROVIDING.

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AND WHEN HE WENT TO THE RECORD LABELS, AND THEY -- THEY

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WERE FIGHTING PIRACY TOOTH AND NAIL.

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RECORD LABELS AND SAID, I'VE GOT THIS GREAT IDEA; I'M GOING TO

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SELL YOUR MUSIC ONLINE IN DIGITAL FORM.

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PUSHED BACK AND SAID, THAT'S JUST GOING TO ENCOURAGE MORE

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PIRACY.

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AND JOBS GOES TO THE

AND THE RECORD LABELS

SO THE DEAL THEY STRUCK WAS THAT APPLE COULD SELL DIGITAL

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MUSIC ONLINE FROM THE RECORD LABELS, BUT THEY HAD TO PUT A

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DIGITAL RIGHTS MANAGEMENT, SOME PIRACY PROTECTION ON IT.

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AND THEN APPLE SAT DOWN AND SAID, WELL, WHAT KIND OF DRM

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ARE WE GOING TO USE?

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WANTING TO HAVE EVERYTHING WORK TOGETHER EVERYTHING MADE BY

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APPLE, APPLE SAID, WE WANT TO HAVE OUR OWN PROPRIETARY DRM.

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CONSISTENT WITH APPLE'S PROCESS OF

THEY COULD HAVE USED MICROSOFT.

MICROSOFT HAD A DRM THAT

18

SUPPOSEDLY WORKED ON EVERYTHING, BUT THEY DECIDED TO USE THEIR

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OWN.

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IPOD PLAYED A LOT OF MUSIC IN ADDITION TO MUSIC BOUGHT FROM

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APPLE AT THE ITUNES MUSIC STORE, BUT IT ALSO BOUGHT MUSIC FROM

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THE ITUNES MUSIC STORE.

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ITUNES, WHICH WAS THE JUKEBOX, THE DIGITAL JUKEBOX, ITUNES

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MUSIC STORE, AND THEN THE IPOD.

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SO THEY ENDED UP WITH A MUSIC STORE AND AN IPOD.

THE

AND THEY WORKED REALLY WELL TOGETHER.

THEY WORKED GREAT TOGETHER.

THEN THE PLAINTIFFS COME ALONG REPRESENTING SOME

DIANE E. SKILLMAN, OFFICIAL COURT REPORTER, USDC [phone]

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1

CONSUMERS, AND THEY SAY THAT THAT SETUP WAS ILLEGAL BECAUSE

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THE MUSIC ITUNES APPLE WAS SELLING AT THE ITUNES STORE

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WOULDN'T PLAY WITH OTHER PLAYERS THAT USED SOME DIFFERENT DRM.

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SO THEY WERE BASICALLY SAYING, AS WE INTERPRETED IT, EVERYBODY

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SHOULD USE MICROSOFT'S GENERIC DRM SO EVERYTHING WILL BE

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INTEROPERABLE.

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THEY MADE A TYING CLAIM, AND THE ESSENCE OF THE TYING

8

CLAIM WAS THAT APPLE WAS TYING MUSIC TO IPODS.

JUDGE WARE

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DISMISSED THAT CLAIM AND FOUND THAT UNDER THE FOREMOST PRO

10

CASE IN THE NINTH CIRCUIT THERE IS NO DUTY TO MAKE YOUR

11

PRODUCTS INTEROPERABLE.

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MONOPOLIZATION TYING CLAIM OUT OF THE CASE.

13

SO HE THREW THAT -- THEIR BASIC

THEN THEY CAME BACK AND AMENDED, AND THERE WERE A LOT OF

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PROCEDURAL THINGS BACK AND FORTH, BUT FINALLY THEY ENDED UP

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WITH A CLAIM BASED ON WHAT HAPPENED AFTER THEY FILED THE

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COMPLAINT, WHICH WAS ITUNES 7.0 IN SEPTEMBER 2006.

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THAT AND THE EARLIER ITUNES 4.7.

18

THEY HAD

THE EFFECT OF BOTH OF THOSE WAS TO DISABLE MUSIC FROM

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REALNETWORKS THAT USED THIS HARMONY SOFTWARE.

AND WHAT

20

HARMONY DID, WHAT REALNETWORKS DID WITH ITS HARMONY SOFTWARE

21

IS, AS THEY SAID IN THE COMPLAINT, SOMEHOW REALNETWORKS, IN

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THEIR WORDS, DISCERNED THE SOURCE CODE IN APPLE'S DRM AND MADE

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HARMONY SO IT MIMICKED IT.

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YOU KNOW, THAT'S HOW HACKERS DO IT.

25

YOUR OWN DRM, YOU HAVE YOUR OWN MUSIC STORE, DO IT YOURSELF.

AND APPLE DID RESPOND BY SAYING,
IF YOU WANT TO DEVELOP

DIANE E. SKILLMAN, OFFICIAL COURT REPORTER, USDC [phone]

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1
2

DON'T HACK INTO OURS OR DISCERN OUR CODE.
SO, THREE MONTHS LATER AFTER HARMONY WAS INITIALLY

3

LAUNCHED, APPLE UPDATED ITS DRM, AND IT CHANGED THE DRM, AS IT

4

DID FROM TIME TO TIME, TO STAY ONE STEP AHEAD OF THE HACKERS.

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AND WHEN IT CHANGED ITS DRM, THAT MEANT THAT HARMONY WOULD NO

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LONGER WORK BECAUSE THEY WERE MIMICKING THE DRM.

7

SO AT EACH TURN IN THIS CASE, WE WOULD HAVE CASE

8

MANAGEMENT CONFERENCES WITH JUDGE WARE, AND I WOULD TELL HIM

9

MY VIEW WAS THAT THERE WAS NO MERIT TO THIS CASE AND IT OUGHT

10

TO COME TO AN END.

11

JUDGMENT MOTION ON THE TWO UPDATES.

12

HE FINALLY SAID, OKAY, MAKE A SUMMARY

WE DID THAT, AND HE RULED THAT UNDER THE TYCO CASE IN THE

13

NINTH CIRCUIT, THE FIRST 4.7, THE FIRST UPDATE, WAS INDEED A

14

PRODUCT IMPROVEMENT.

15

STOPPED THE HACKERS, AND SO IT WAS LAWFUL.

16

WERE DISPUTED FACTS ON WHETHER THE SECOND ONE WAS A PRODUCT

17

IMPROVEMENT, AND SO THAT CLAIM PROCEEDED.

18

THERE'S NO DISPUTED FACT ABOUT THAT.

IT

BUT HE FOUND THERE

AT THAT POINT WE CAME TO YOUR HONOR'S COURT.

WE WORKED

19

OUT AN EXPERT DISCOVERY SCHEDULE AND THE EXPERT DISCOVERY HAS

20

NOW BEEN COMPLETED.

21

THEIR IMPACT THEORY, THEIR THEORY ON HOW THIS 7.0 UPDATE

22

IMPACTED IPOD PRICES IS VERY CONVOLUTED, BUT IT BASICALLY IS

23

WHAT'S CALLED A LOCK IN.

24

START OF ITUNES MUSIC STORE WHEN CUSTOMERS BOUGHT ITUNES MUSIC

25

THAT WORKED WELL WITH IPODS, IT DIDN'T WORK WITH SOME OTHER

THEIR THEORY WAS THAT FROM THE VERY

DIANE E. SKILLMAN, OFFICIAL COURT REPORTER, USDC [phone]

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PLAYERS, SO CONSUMERS, AS THEY PUT IT, WERE LOCKED IN.

2

THAT MEANS IN ECONOMIC TERMS IS THEIR SWITCHING COSTS WERE

3

GREATER THAN IF THEY WENT TO SOME OTHER DEVICE.

4

ALL

SO, AT THAT POINT THEIR WHOLE CLAIM WAS BASED ON THIS, THE

5

LOCK IN FROM DAY ONE, IN APRIL OF 2003 WHEN THE STORE WAS

6

LAUNCHED FOR '03, '04, '05, '06, PEOPLE WERE LOCKED IN,

7

THEREFORE, THEY WERE MORE LIKELY TO BUY IPODS.

8

THE DEMAND FOR IPODS AND, THEREFORE, THE PRICE OF IPODS WOULD

9

GO UP ALL BECAUSE THEY SAY BECAUSE OF THE ILLEGAL LOCK IN.

THAT INCREASED

10

WHEN JUDGE WARE RULED THAT THE LOCK IN CAUSED BY THE

11

TECHNOLOGICAL TIE WAS COMPLETELY LAWFUL, THEN THEY WERE STUCK

12

WITH THE THEORY WHERE THEY SAID ALL THESE PEOPLE WERE LOCKED

13

IN AND NOW WHAT THEY HAD TO DO WAS SHOW THAT 7.0, INTRODUCED

14

VERY LATE IN THE GAME IN SEPTEMBER OF '06, INCREMENTALLY

15

INCREASED LOCK IN ENOUGH TO RAISE THE PRICE OF IPODS

16

UNLAWFULLY.

17

AND OUR VIEW IS THAT THAT THEORY IS REALLY HARD TO FOLLOW

18

AS A THEORETICAL MATTER BECAUSE IT IS A VERY LIMITED UNIVERSE

19

OF PEOPLE WHO WOULD CONCEIVABLY BE LOCKED IN INCREMENTALLY.

20

AND WHAT WE HAVE SAID IN THE SUMMARY JUDGMENT MOTION, YOUR

21

HONOR, IS THAT THEY HAVE NO REAL WORLD EVIDENCE, NO EVIDENCE

22

THAT ANYBODY WAS LOCKED IN BECAUSE OF 7.0.

23

SOMEBODY WHO DIDN'T WANT TO BUY AN IPOD EVEN THOUGH THEY HAD

24

AN IPOD.

25

THREE YEARS OF PURCHASES.

IT REQUIRES

IT INVOLVES SOMEBODY WHO WASN'T ALREADY LOCKED IN BY
IT INVOLVES SOMEBODY WHO WAS GOING

DIANE E. SKILLMAN, OFFICIAL COURT REPORTER, USDC [phone]

14

1

TO BUY MUSIC FROM REALNETWORKS, AND THEN AFTER 7.0 HAD TO

2

SWITCH TO ITUNES, AND THEN HAD TO BUY SO MUCH MUSIC THAT WHEN

3

IT CAME TO TIME TO DO A REPLACEMENT PURCHASE, THEY WANTED TO

4

BUY SOMETHING ELSE BUT THEY WERE STUCK BUYING AN IPOD.

5

THE NAMED PLAINTIFFS DO NOT FIT THAT DESCRIPTION.

THEY DO

6

NOT CLAIM THAT THEY WANTED TO BUY REALNETWORKS AND THEY WERE

7

LOCKED IN BY, YOU KNOW, HAVING TO SWITCH TO ITUNES BECAUSE OF

8

7.0.

9

SOMEBODY THAT WAS IMPACTED.

10

THE COURT:

11

THAT ISSUE; IS THAT CORRECT?

SO THE NAMED PLAINTIFFS DON'T FIT THE DESCRIPTION OF

THE SUMMARY JUDGMENT DOESN'T DEAL WITH

MR. MITTELSTAEDT:

12

THE SUMMARY JUDGMENT GOES TO THE

13

IMPACT ISSUE.

14

SUPPORT THEIR THEORY OF LOCK IN.

15

AND WHAT WE SAY IS THEY HAVE NO EVIDENCE TO

SO, WHAT WE MEAN BY THAT IS THE PLAINTIFFS DON'T SUPPORT

16

IT.

17

THEY HAVE NO DOCUMENTARY EVIDENCE.

18

THEY HAVE TAKEN NO SURVEY OF CONSUMERS TO SUPPORT IT.

IF THIS WAS SUCH A BIG DEAL, YOU WOULD THINK THERE WOULD

19

BE COMPLAINTS BY CONSUMERS TO APPLE OR TO SOMEBODY ELSE.

20

SUBMITTED A LOT OF COMPLAINTS ABOUT A LOT OF THINGS THAT

21

CONSUMERS SUBMITTED TO APPLE, BUT NONE OF THEM SAY WE'RE

22

LOCKED IN OR LOCKED OUT BECAUSE OF 7.0.

23

THEY

AND SO THEY HAVE, IN OUR VIEW, AND THIS IS WHAT THE

24

SUMMARY JUDGMENT MOTION SETS OUT, NO EVIDENCE THAT ANYBODY WAS

25

LOCKED OUT, LOCKED IN.

AND MORE THAN THAT, WHAT THEY WOULD

DIANE E. SKILLMAN, OFFICIAL COURT REPORTER, USDC [phone]

15

1

HAVE TO SHOW IS THAT SO MANY PEOPLE WERE LOCKED IN, THAT THAT

2

EFFECTED IPOD DEMAND SO MUCH THAT APPLE WOULD TAKE THAT INTO

3

ACCOUNT IN SETTING ITS PRICES.

4

AND WHAT WE HAVE SHOWN IS THAT THERE'S NO EVIDENCE THAT

5

APPLE EVER TOOK THE EFFECTS OF 7.0 INTO ACCOUNT.

6

SAYS, NOW HE'S DONE THIS REGRESSION ANALYSIS AND HE SAYS THERE

7

WOULD BE A RELATIVELY SMALL PRICE IMPACT.

8
9

THEIR EXPERT

BUT APPLE HAS A PRICING STRATEGY WHERE IT PRICES WHAT IT
CALLS AESTHETIC TERMS, 199, 299, SO FORTH.

THEIR EXPERT SAYS

10

WHEN HE DOES HIS REGRESSION, THE PRICE THAT SPITS OUT OF THE

11

REGRESSION IS $184.17.

12

THAT APPLE WOULD NEVER CHARGE $184.17.

AND THE EVIDENCE IS UNCONTROVERTED
THEY WOULD CHARGE 199.

13

SO WHAT THE MOTION DOES IS SET FORTH THE ABSENCE OF

14

EVIDENCE THAT IS NEEDED TO SUPPORT THEIR LOCK-IN THEORY, AND

15

THE REAL WORLD EVIDENCE THAT REFUTES THEIR LOCK-IN THEORY.

16

ONE LAST EXAMPLE IS THEY SAY THAT THERE WOULD BE AN

17

IMMEDIATE ORDER CHARGE ON IPODS AND IT WOULD BE CONSTANT

18

DURING THE THREE YEARS OF THE CLASS PERIOD.

19

BUT THEIR LOCK-IN THEORY WOULD NOT KICK IN IMMEDIATELY.

20

INDEED, THEIR EXPERT HAS ADMITTED THAT THE -- IF THERE WAS ANY

21

IMPACT FROM 7.0, THE INITIAL IMPACT WOULD BE TO REDUCE THE

22

DEMAND FOR IPODS BECAUSE THERE'S ONE LESS SOURCE OF MUSIC TO

23

PLAY ON AN IPOD, SO THERE WOULD BE LESS DEMAND FOR AN IPOD

24

BASED ON THEIR LOCK-IN THEORY INITIALLY.

25

IMMEDIATE ADVERSE IMPACT ON PRICE.

SO THERE WOULD BE NO

AND THEN IF THERE WAS ANY

DIANE E. SKILLMAN, OFFICIAL COURT REPORTER, USDC [phone]

16

1

IMPACT ON PRICE, ACCORDING TO THEIR OWN THEORY, IT WOULD BE

2

GRADUAL AND NOT CONSTANT.

3

REGRESSION THAT SHOWS AN IMMEDIATE AND A CONSTANT EFFECT.

4

BUT YET THEY COME UP WITH A

SO, THERE ARE REALLY TWO PARTS TO OUR MOTION, YOUR HONOR.

5

THE FIRST ONE THEY HAVE NO REAL WORLD EVIDENCE TO SUPPORT

6

THEIR IMPACT THEORY.

7

REGRESSION ANALYSIS DOESN'T SAVE THEM BECAUSE IT, TOO, IS

8

CONTRARY TO ALL THESE REAL WORLD FACTS.

9

FROM A LOT OF MORE TECHNICAL, MORE TECHNICAL PROBLEMS.

10

THE ESSENCE OF THE IMPACT PART OF THE SUMMARY JUDGMENT.

11

AND THE SECOND PART IS THEIR ECONOMIST'S

AND PLUS IT SUFFERS
THAT'S

THE SECOND PART OF THE SUMMARY JUDGMENT GOES TO RELEVANT

12

MARKET.

13

MONOPOLIZED THE MARKET IN WHICH IPODS PLAYED A PART.

14

DEFINE THE MARKET VERY NARROWLY.

15

A MARKET NARROWLY -- DEFINE A MARKET AT ALL FROM THE

16

PLAINTIFFS IS, AGAIN, THEIR EXPERT.

17

JUDGMENT MOTION WE SET FORTH THE WAYS -- THE REASONS THAT THAT

18

EXPERT'S ANALYSIS OF THE MARKET IS INSUFFICIENT.

19

THIS IS A MONOPOLIZATION CASE.

MS. SWEENEY:

21

THE COURT:

22

MS. SWEENEY:

24
25

THEY

THE ONLY EVIDENCE TO DEFINE

AND IN THE SUMMARY

THAT'S THE ESSENCE OF IT, YOUR HONOR.

20

23

THEY ALLEGE WE

ALL RIGHT.

SHALL I RESPOND, YOUR HONOR?
YES, PLEASE.
OKAY.

SO, I WANT TO TAKE ISSUE WITH A COUPLE OF

MR. MITTELSTAEDT'S COMMENTS.
FIRST OF ALL, IN -- HE SAID, AND I THINK HE MISSPOKE, HE

DIANE E. SKILLMAN, OFFICIAL COURT REPORTER, USDC [phone]

17

1

SAID THAT JUDGE WARE THREW OUT THE MONOPOLIZATION CLAIMS.

2

THAT'S NOT TRUE.

3

IN THE CASE SINCE THE GET-GO AND THAT CLAIM IS STILL IN

4

EFFECT.

WE HAVE A MONOPOLIZATION CLAIM.

IT HAS BEEN

5

NOW, GOING TO THE IMPACT ARGUMENT AND THE LOCK-IN THEORY.

6

APPLE HAS SORT OF CREATED THIS FALSE STANDARD THAT IT ASSERTS

7

PLAINTIFFS MUST MEET.

8

A STRAIGHTFORWARD MONOPOLIZATION CASE.

9

AND WHAT APPLE IGNORES IS THAT THIS IS

PLAINTIFFS CLAIM THAT BECAUSE OF ITS CONDUCT IN LOCKING IN

10

ITS USERS AND LOCKING OUT COMPETITORS BY -- BY DISABLING THIS

11

PRODUCT WHICH WOULD HAVE INCREASED THE PRICE ELASTICITY FOR

12

IPODS, APPLE WAS ABLE TO INCREASE THE PRICE OF ITS IPODS.

13

THERE IS NOTHING IN ECONOMIC THEORY, AND WE -- WE CITE TO

14

PROFESSION NOLL, AND HE HAS A VERY LONG DISCUSSION IN HIS

15

EXPERT REPORT ABOUT WHY APPLE'S THEORY DOES NOT MAKE SENSE AS

16

AN ECONOMIC MATTER.

17

AND

OUR EXPERT IS PROFESSOR ROGER NOLL.

18

THE COURT:

19

MS. SWEENEY:

I KNOW WHO HE IS.
OKAY.

SO -- AND THEN, IN ADDITION,

20

APPLE CLAIMS THAT THERE'S NO REAL WORLD EVIDENCE THAT ANYONE

21

CARED ABOUT THIS.

22

CONSUMERS WHO COMPLAIN ABOUT NOT BEING ABLE TO USE MUSIC

23

PURCHASED FROM OTHER SOURCES ON THEIR IPODS.

WE HAVE THOUSANDS OF COMPLAINTS FROM

24

NOW, WE ONLY CITED A CERTAIN NUMBERS OF THEM IN OUR

25

SUMMARY JUDGMENT OPPOSITION IN ORDER NOT TO OVERBURDEN THE

DIANE E. SKILLMAN, OFFICIAL COURT REPORTER, USDC [phone]

18

1

COURT WITH EVERY SINGLE EXAMPLE.

2

WHAT MR. MITTELSTAEDT SAID, OUR PLAINTIFFS TESTIFIED AND WE

3

HAVE THE TESTIMONY ALSO IN OUR OPPOSITION, THAT THEY -- AFTER

4

THEIR FIRST IPOD PURCHASE, THEIR SECOND OR PERHAPS THIRD IPOD

5

PURCHASES WERE BECAUSE THEY HAD ASSEMBLED A LIBRARY OF MUSIC

6

THAT THEY PURCHASED FROM THE ITUNES STORE, AND IT WOULD HAVE

7

BEEN TOO COSTLY TO SWITCH TO ANOTHER PRODUCT.

8
9

AND WHAT'S MORE, CONTRARY TO

SO THAT'S SIMPLY NOT TRUE THAT THERE'S NO REAL WORLD
EVIDENCE.

THERE, A, IS NO ECONOMIC THEORY BEHIND APPLE'S

10

ARGUMENT AND, B, IT'S NOT TRUE THAT THERE'S NO REAL WORLD

11

EVIDENCE TO SUPPORT PLAINTIFFS' LOCK-IN THEORY.

12
13

NOW, PROFESSOR NOLL TOOK ALL OF APPLE'S TRANSACTIONAL DATA
AND CONDUCTED A VERY THOROUGH -THE COURT:

14

CAN YOU EXPLAIN THAT?

I'M TRYING TO

15

UNDERSTAND HOW THEY SAY THAT THEY ARE DAMAGED.

16

DAMAGED BECAUSE -MS. SWEENEY:

17
18

ALL RIGHT.

SO, THEY ARE

YEAH, I CAN EXPLAIN THAT, YOUR HONOR.

SO PROFESSOR NOLL'S ANALYSIS IS A

19

MULTIVARIABLE REGRESSION ANALYSIS, AND IT'S INTENDED TO AND

20

DOES SHOW TWO THINGS.

21

ALSO DEMONSTRATES IMPACT.

22

DAMAGES.

23

HEDONIC, IT'S CALLED A HEDONIC PRICE REGRESSION.

ONE, IT QUANTIFIES THE DAMAGES, BUT
IT DEMONSTRATES THE FACT OF

THIS IS WHAT HE DOES.

HE TAKES -- HE STARTS WITH A

24

SO HE LOOKS AT THE DIFFERENT FACTORS THAT WOULD EFFECT THE

25

PRICE OF AN IPOD, AND THEN HE PLUGS INTO THE EQUATION A NUMBER

DIANE E. SKILLMAN, OFFICIAL COURT REPORTER, USDC [phone]

19

1
2

OF WHAT HE CALLS COMPETITIVE VARIABLES.
SO, FOR EXAMPLE, THE INTRODUCTION OF HARMONY IN 2004.

3

APPLE'S DISABLING OF HARMONY WITH 4.7 AND THEN APPLE'S

4

SUBSEQUENT DISABLING OF HARMONY WITH 7.0, AND THEN HE ALSO

5

LOOKS AT WHAT HAPPENS WHEN THE MUSIC INDUSTRY GOES DRM FREE.

6

AND WHAT PROFESSOR NOLL FINDS IS EXACTLY CONSISTENT WITH

7

HIS ECONOMIC THEORY, AND, THAT IS, WHEN HARMONY WAS

8

INTRODUCED, IPOD PRICES WENT DOWN.

9

IPOD PRICES WENT UP.

10
11

WHEN HARMONY WAS DISABLED,

WHEN THE MUSIC INDUSTRY WENT DRM FREE,

IPOD PRICES WENT DOWN.
SO, IN OTHER WORDS, THERE IS A VERY RECOGNIZABLE AND

12

SIGNIFICANT IMPACT THAT ARISES FROM APPLE'S CONDUCT OF

13

SHUTTING OUT THIS ONE COMPETITOR WHO TRIED TO MAKE AN INROAD

14

INTO APPLE'S MONOPOLIZATION.

15

THE COURT:

16

MS. SWEENEY:

17
18

BUT THE COMPETITOR IS NOT A PARTY.
THAT'S TRUE.

AND HERE'S WHERE WE GET

TO HOW OUR CLIENTS' CONSUMERS AND BUSINESSES WERE IMPACTED.
SO WHAT PROFESSOR NOLL'S REGRESSION ANALYSIS DOES, IT

19

QUANTIFIES THE IMPACT ON THE IPOD PURCHASERS.

THOSE ARE THE

20

ONES WHO WERE INJURED BY APPLE'S CONDUCT.

21

STORES LIKE BEST BUY.

IT INCLUDES CONSUMERS WHO PURCHASED

22

FROM THE APPLE STORE.

AND HE CONCLUDED THAT THEY SUFFERED

23

SIGNIFICANT DAMAGES.

HE ESTIMATED THE AMOUNT OF OVERCHARGE

24

PAID BY THOSE PURCHASERS.

25

$350 MILLION FOR BOTH, WHAT WE CALL THE RESELLER SEGMENT OF

SO THAT INCLUDES

HE ESTIMATED DAMAGES AT LITTLE OVER

DIANE E. SKILLMAN, OFFICIAL COURT REPORTER, USDC [phone]

20

1

THE CLASS AND THE CONSUMER SEGMENT OF THE CLASS, AND THAT'S

2

SINGLE DAMAGES, YOUR HONOR.

3

SO THAT'S HOW WE GET TO IMPACT.

WE RELY ON ECONOMIC

4

THEORY.

IT'S A MONOPOLIZATION CLAIM, AND PROFESSOR NOLL HAS

5

DEMONSTRATED IMPACT THROUGH HIS REGRESSION ANALYSIS.

6

NOW, APPLE'S RESPONSE IS NOT ONLY TO ATTACK PROFESSION

7

NOLL'S THEORY, BUT ALSO TO PICK APART HIS REGRESSION ANALYSIS.

8

AND IT HAS A NUMBER OF CRITICISMS.

9

EXPERTS.

APPLE BRINGS IN ITS OWN

ONE OF THOSE CRITICISMS IS THAT PROFESSION NOLL'S

10

RESULTS SUPPOSEDLY ARE NOT STATISTICALLY SIGNIFICANT.

AND

11

APPLE SAYS THIS IS BECAUSE PROFESSION NOLL SHOULD HAVE

12

CLUSTERED THE ERRORS, CLUSTERED THE STANDARD ERRORS, AND IF HE

13

HAD DONE THAT, THEN HE WOULD FIND THAT THE RESULTS AREN'T

14

SIGNIFICANT SO YOU CAN'T REPLY UPON THEM.

15

WELL, THAT THEORY SIMPLY DOES NOT HOLD UP UNDER THESE

16

FACTUAL CIRCUMSTANCES BECAUSE IT'S -- IT'S A VERY SPECIALIZED

17

ECONOMIC -- ECONOMETRIC ISSUE WHICH APPLIES IN OTHER CASES,

18

FOR EXAMPLE, WHERE YOU DRAW A, WHAT'S CALLED A CLUSTER SAMPLE

19

OF DATA.

20

EVERY APPLE IPOD TRANSACTION FOR THE CLASS PERIOD.

21

MOVED TO EXCLUDE APPLE'S EXPERT'S TESTIMONY ON THE CLUSTERING

22

ANALYSIS.

23

HERE WE HAVE THE ENTIRE UNIVERSE OF DATA.

WE HAVE
SO WE HAVE

AND WE PUT IN ANOTHER DECLARATION BY PROFESSOR NOLL AND WE

24

ALSO PUT IN A DECLARATION BY A PROFESSOR AT MICHIGAN STATE

25

UNIVERSITY, PROFESSOR WOOLDRIDGE WHO IS AN ECONOMETRICIAN WHO

DIANE E. SKILLMAN, OFFICIAL COURT REPORTER, USDC [phone]

21

1

SPECIALIZES IN THIS FAIRLY ESOTERIC AREA OF SAMPLING AND

2

CLUSTER SAMPLING.

3

MOVING TO EXCLUDE THAT OPINION ALTOGETHER.

4

SO WE -- NOT ONLY DO WE DISAGREE, WE ARE

APPLE ALSO CRITICIZES PROFESSOR NOLL FOR OMITTING WHAT

5

THEY CALL SIGNIFICANT VARIABLES IN THE REGRESSION ANALYSIS.

6

NOW, PROFESSOR NOLL RESPONDED TO THAT CRITICISM, AND WE THINK

7

IT'S COMPLETELY UNMERITED.

8

FACTORS THAT AFFECT PRICE, AND THERE ARE A FEW FACTORS THAT

9

APPLE SAYS HE SHOULD HAVE INCLUDED IN HIS ANALYSIS.

HE LOOKED AT ALL THE DIFFERENT

PROFESSOR

10

NOLL LOOKED AT THOSE FACTORS AND CONCLUDED THAT THEY DON'T ADD

11

ANY EXPLANATORY POWER TO THE REGRESSION.

12

AND WHAT'S MORE, THEY -- BECAUSE THEY ARE CORRELATING WITH

13

ONE ANOTHER, THESE INDEPENDENT VARIABLES, THEY LEAD TO A

14

PROBLEM CALLED MULTICOLLINEARITY, WHICH WOULD DESTROY THE

15

EXPLANATORY POWER OF THE ANALYSIS.

16

THEY ALSO CLAIM -- AND THIS IS SORT OF AN ODD CRITICISM

17

THAT APPLE MAKES.

18

EXPERT REPORT ON DAMAGES LAST APRIL.

19

WERE UNDER THE UNDERSTANDING BASED ON TESTIMONY AND A SWORN

20

DECLARATION BY APPLE'S WITNESS THAT ALL IPODS SOLD AFTER

21

SEPTEMBER 6TH, 2006 HAD THIS 7.0 UPDATE.

22

RAN THE REGRESSIONS BACK THEN.

23

APPLE -- ABOUT -- PROFESSOR NOLL PUT IN HIS
AT THAT TIME PLAINTIFFS

AND SO THAT'S HOW HE

WELL, SUBSEQUENT TO PUTTING THAT IN THE REPORT, APPLE

24

PRODUCED A CORRECTED DECLARATION FROM THIS EMPLOYEE.

25

TURNS OUT THAT NOT ALL IPODS HAD 7.0 ON IT.

AND IT

SO, IN OTHER

DIANE E. SKILLMAN, OFFICIAL COURT REPORTER, USDC [phone]

22

1

WORDS, SOME OF THEM WERE NOT UPDATED WITH THE 7.0 SOFTWARE

2

THAT DISABLED HARMONY.

3

NOLL TOOK THIS INTO ACCOUNT AND HE MODIFIED HIS REGRESSIONS.

4

SO IN HIS REBUTTAL REPORT, PROFESSOR

NOW, INTERESTINGLY, APPLE HAS ATTACKED PROFESSOR NOLL FOR

5

MAKING THAT CORRECTION.

AND THEY SAY THAT IF YOU MAKE THIS

6

CORRECTION, YOU ADD IN THESE FACTORS THAT THEY SAY ARE

7

IMPORTANT, AND YOU TREAT ALL THE REGRESSION ANALYSIS AS IF 7.0

8

AFFECTED IPODS THAT WE NOW KNOW WERE NOT AFFECTED, THEN YOU

9

END UP WITHOUT ANY DAMAGES.

IT'S A -- IT'S A VERY SORT OF

10

STRANGE ARGUMENT, BUT CONVENIENTLY GETS APPLE TO ZERO DAMAGES

11

AND, THEREFORE, ZERO IMPACT.

12
13

SO WE OBVIOUSLY CONTEST APPLE'S CRITICISM OF PROFESSOR
NOLL'S IMPACT AND DAMAGES REPORT.

14

THE COURT:

15

MS. SWEENEY:

IS THERE A MOTION, A DAUBERT MOTION?
THERE IS.

YOUR HONOR, WE HAD MOVED TO

16

EXCLUDE, AS I SAID, THE CLUSTERING PORTIONS OF APPLE'S EXPERT

17

OPINIONS AND APPLE HAS MOVED TO EXCLUDE ALL OF PROFESSOR

18

NOLL'S OPINION.
MR. MITTELSTAEDT:

19
20

PART THERE?
THE COURT:

21
22

YOUR HONOR, COULD I FILL IN ONE

HOLD ON.

I'M STILL TRYING TO UNDERSTAND THE CONNECTION BETWEEN THE

23

DAMAGES ANALYSIS, THE CAUSATION, THE NEXUS BETWEEN A PURCHASER

24

AND --

25

MS. SWEENEY:

SURE.

DIANE E. SKILLMAN, OFFICIAL COURT REPORTER, USDC [phone]

23

1

THE COURT:

2

MS. SWEENEY:

3

THE COURT:

4
5
6

-- AND WHAT?
SURE.

YEAH.

WHERE IS THE NEXUS TO WHAT PROFESSOR NOLL

IS OPINING ON?
MS. SWEENEY:

SURE.

MEMBERS OF THE CLASS PURCHASED IPODS THAT WE ALLEGE APPLE

7

CHARGED INFLATED PRICES FOR.

8

DO THAT WAS BECAUSE IT HAD MONOPOLY POWER IN THIS MARKET.

9

THE WAY --

10

THE COURT:

11

MS. SWEENEY:

12

THE COURT:

13

MS. SWEENEY:

AND THE REASON APPLE WAS ABLE TO
AND

BUT -YEAH.
OKAY.

GO AHEAD.

SO, THE LOCK IN OCCURS BECAUSE ONCE AN

14

IPOD USER ASSEMBLES A LIBRARY OF SONGS THAT ARE PURCHASED FROM

15

ITUNES, AND BACK THEN THEY WERE PRETTY MUCH 99 CENTS A SONG,

16

YOU CAN GET TO A FAIRLY SIGNIFICANT SUM OF MONEY PRETTY

17

QUICKLY -- ONCE YOU ACQUIRE A LIBRARY OF ITUNE SONGS YOU

18

PURCHASED FROM APPLE'S ITUNE STORE --

19

THE COURT:

HOW DOES THAT RELATE TO THIS 7.0 UPGRADE

20

THAT DEALT WITH THIS PARTY THAT'S NOT -- THIS ENTITY THAT'S

21

NOT A PARTY?

22

MS. SWEENEY:

WELL, THIS IS -- BECAUSE IT'S A

23

MONOPOLIZATION CASE.

WHAT HARMONY -- WHAT REALNETWORKS DID

24

WAS IT UNDERMINED APPLE'S MONOPOLY.

25

MAINTAIN SUPER COMPETITIVE PRICES AS A RESULT OF HAVING THIS

AND APPLE WAS ABLE TO

DIANE E. SKILLMAN, OFFICIAL COURT REPORTER, USDC [phone]

24

1

MONOPOLY.
THE COURT:

2

WELL, IS THERE AN ANALYSIS -- I'VE BOUGHT

3

PLENTY OF IPODS.

I CAN'T NOW REMEMBER IN 2005, YOU KNOW, WHAT

4

ELSE WAS ON THE MARKET AT THE TIME AND WHETHER -- SOMETIMES

5

WHAT WE DO SEE IS WE SEE AN ANALYSIS OF VARIOUS PRODUCTS IN

6

THE MARKET.

7

OUT WHAT THE MARKET LOOKED LIKE AT THAT JUNCTURE.

I JUST -- I'M STRUGGLING TO THINK BACK AND FIGURE

MS. SWEENEY:

8

WELL, PROFESSOR NOLL HAS ANALYZED THE

9

MARKET IN HIS EXPERT REPORT, YOUR HONOR, AND HE DESCRIBES THE

10

VARIOUS PRODUCTS THAT WERE ON THE MARKET, AND THEIR PROS AND

11

CONS, AND EXPLAINS HOW APPLE WAS ABLE TO ACHIEVE A HUGE MARKET

12

SHARE.

13

MONOPOLY POWER WAS THROUGH THIS LOCK-IN EFFECT CREATED BY ITS

14

TIE --

AND PART OF THE REASON THAT INITIALLY ARRIVED AT ITS

15

THE COURT:

16

MS. SWEENEY:

BUT THAT WAS THROWN OUT OF THE CASE.
THAT'S RIGHT.

BUT WHAT PERSISTED, YOUR

17

HONOR, WHAT WE CHALLENGE AND WHAT JUDGE WARE PERMITTED US TO

18

PURSUE IS THE CLAIM THAT APPLE -- ONCE THERE WERE CHINKS IN

19

THE ARMOR, IN OTHER WORDS, JUDGE WARE HELD IT WAS OKAY FOR

20

APPLE TO ESTABLISH THE MONOPOLY IN THE FIRST INSTANCE, BUT THE

21

LAW SAYS, THE LAW OF MONOPOLIZATION SAYS YOU CAN ACQUIRE A

22

MONOPOLY LEGALLY, BUT YOU CAN TAKE CERTAIN ACTIONS THAT RENDER

23

THE CONTINUED MAINTENANCE OF THAT MONOPOLY ILLEGAL.

24
25

SO THAT'S REALLY WHAT IT IS, IT'S MONOPOLY MAINTENANCE
CLAIM.

IN OTHER WORDS, APPLE TOOK DIRECT CONDUCT TO EXCLUDE

DIANE E. SKILLMAN, OFFICIAL COURT REPORTER, USDC [phone]

25

1

COMPETITORS TO MAINTAIN ITS MONOPOLY, AND THAT'S HOW IT KEPT

2

PRICES ABOVE WHAT THEY WOULD HAVE BEEN IN A COMPETITIVE MARKET

3

IN WHICH APPLE HAD NOT MAINTAINED ITS MONOPOLY.

4

THE COURT:

5

MR. MITTELSTAEDT:

ALL RIGHT.

NOW YOU CAN RESPOND.

THEIR THEORY FROM THE START HAS

6

BEEN, THEIR THEORY OF IMPACT HAS BEEN LOCK IN.

7

HONOR ASKED TO LAY OUT THE THEORY, THE REASON THE RESPONSE WAS

8

AS IT IS IS BECAUSE WHEN YOU LAY OUT THE LOCK-IN THEORY

9

SPECIFICALLY, AND WHEN THEY SAY WHAT THEY WOULD HAVE TO PROVE,

10

IT'S CLEAR THAT THEY HAVEN'T PROVED IT AND THEY CAN'T PROVE IT

11

BECAUSE THERE IS -- IT'S COMPLETELY IMPLAUSIBLE AND COMPLETELY

12

UNPROVEN THAT THERE WOULD BE ANY IMPACT NOT FROM ITUNES STORE

13

IN GENERAL, BUT FROM 7.0.

14

SLOWLY BECAUSE IT IS COMPLICATED TO TRY AND FIGURE OUT THIS

15

CHAIN OF EVENTS THAT WOULD HAVE TO HAPPEN FOR THEIR IMPACT

16

THEORY TO BE RIGHT.

17

AND WHEN YOUR

AND I WILL -- I'LL SAY THIS MORE

FIRST OF ALL, IT WOULD NOT INCLUDE CONSUMERS WHO PREFER

18

IPODS FOR REASONS UNRELATED TO ITUNES MUSIC STORE.

19

LIKE AN IPOD BECAUSE IT'S SLEEK, IT PLAYS A LOT OF MUSIC, IT'S

20

BETTER THAN HUNDREDS OF THE OTHER PLAYERS THAT WERE ON THE

21

MARKET, YOU'RE GOING TO STAY WITH AN IPOD, AND ITUNES 7.0

22

ISN'T GOING TO INCREASE YOUR DEMAND FOR AN IPOD.

23

HAVE TO FIND PEOPLE WHO DIDN'T PREFER IPODS FOR REASONS

24

UNRELATED TO 7.0.

25

SO, IF YOU

SO, THEY

THEN THEY HAVE TO FIND PEOPLE WHO WERE NOT ALREADY, UNDER

DIANE E. SKILLMAN, OFFICIAL COURT REPORTER, USDC [phone]

26

1

THAT THEORY, LOCKED IN BECAUSE THEY HAD BIG ITUNES MUSIC STORE

2

LIBRARIES LONG BEFORE 7.0.

3

OF PEOPLE DON'T HELP THEM IN THIS CASE.

SO THOSE TWO UNIVERSES OR SUBSETS

4

WHAT THEY NEED TO FIND, AND I TRIED TO WRITE THIS AS

5

PRECISELY AS I COULD, FOR THEIR LOCK-IN THEORY TO ARISE FROM

6

7.0, THEY NEED ONLY PEOPLE WHO OWNED IPODS AS OF

7

SEPTEMBER 2006 BUT WANTED TO SWITCH TO A NONIPOD BUT COULDN'T

8

SWITCH BECAUSE INSTEAD OF BUYING -- CONTINUING TO BUY MUSIC

9

FROM REALNETWORKS TO PLAY ON THE IPOD, AFTER 7.0 THEY SWITCHED

10

TO THE ITUNES MUSIC STORE AND, THEREFORE -- OR THEREAFTER

11

BUILT UP A LIBRARY AND THAT LED THEM TO BUY AN IPOD RATHER

12

THAN THEIR PREFERRED NONIPOD.

13
14
15

TO JUST SAY THAT THAT WAY I THINK SHOWS HOW IMPLAUSIBLE IT
IS THAT THERE'S ANYBODY IN THAT GROUP.
THE BASIS FOR OUR SUMMARY JUDGMENT IS IF THERE'S NOBODY IN

16

THAT GROUP, THE IMPACT ARGUMENT -- IMPACT THEORY IS DEAD AT

17

THE START.

18

TO SHOW THAT THE DEMAND IMPACT WAS HIGH ENOUGH, THAT APPLE

19

ACTUALLY TOOK IT INTO ACCOUNT, AND THAT APPLE WAS GOING TO

20

DEPART FROM ITS VERY, VERY FIRM POLICY OF ADHERING TO

21

AESTHETIC PRICING.

IF THERE ARE PEOPLE IN THE GROUP, THEY STILL NEED

22

BUT EVEN ON THAT FIRST STEP, YOUR HONOR, YOU KNOW, WHO'S

23

IN THIS GROUP THAT'S SUPPOSEDLY LOCKED IN, OUR POINT IS, YOU

24

KNOW, THEY SAY THE PLAINTIFFS, BUT WHEN YOU LOOK AT THE

25

DEPOSITION TESTIMONY, IT'S CLEAR THE PURCHASES BY THE

DIANE E. SKILLMAN, OFFICIAL COURT REPORTER, USDC [phone]

27

1

PLAINTIFFS OF IPODS HAD NOTHING TO DO WITH 7.0 OR HARMONY.

2

THEY NEVER SAID THEY WERE GOING TO USE HARMONY.

3

SAID 7.0 SWITCHED THEM BACK TO ITUNES AND THEN MADE THEM BUY

4

AN IPOD AGAINST THEIR WILL.

5

THEY NEVER

SO THE PLAINTIFFS, IF THEY'RE REPRESENTATIVE, YOU KNOW,

6

THAT MEANS THERE AREN'T PEOPLE IN THIS GROUP.

BUT MORE THAN

7

THAT, THEY DON'T POINT TO ANYBODY WHO WAS.

8

IT WAS A BIG GROUP.

9

AND THIS IS IN THE THREE-PAGE LETTER IS THEY SAY WE'RE

THEY DON'T TELL US

THEIR ONLY RESPONSE TO THAT, YOUR HONOR,

10

SUPPOSEDLY ASKING THEM FOR THE EXACT NUMBER OF PEOPLE WHO

11

BECAME LOCKED IN.

12

WE'RE ASKING FOR A SHOWING THAT THERE WAS ANYBODY IN THERE OR

13

A SUFFICIENT NUMBER THAT IT WAS GOING TO EFFECT DEMAND.

14

WE ARE NOT ASKING FOR THE EXACT NUMBER,

AND THEY REFER TO A LOT OF COMPLAINTS.

IN THE RECORD,

15

YOUR HONOR, THERE IS NO COMPLAINT WHERE SOMEBODY SAID 7.0 KEPT

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ME FROM BUYING REALNETWORKS, MADE ME PLAY ITUNES OR BUY ITUNES

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MUSIC AND THAT MADE ME BUY AN IPOD.

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THE COURT:

I THINK THE QUESTION IS, AND I'LL SEE

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WHEN I LOOK AT THE PAPERS, IS THERE -- HAVE YOU CITED TO LAW

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THAT DEALS WITH WHAT IS FUNDAMENTALLY A NEXUS REQUIREMENT?

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THAT'S WHAT I HEAR YOU SAYING IS THERE IS NO NEXUS BETWEEN THE

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DAMAGES CLAIM AND ANY CLASS MEMBER.

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WHAT I HEAR THE OTHER SIDE SAYING IS, WE DON'T NEED A

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NEXUS, ALL WE NEED TO SHOW IS THAT THEY WERE MAINTAINING THEIR

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MONOPOLY.

DIANE E. SKILLMAN, OFFICIAL COURT REPORTER, USDC [phone]

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MS. SWEENEY:

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WELL, I DON'T -- I DON'T THINK I

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WOULD -- I THINK WE HAVE TO SHOW A NEXUS AND I BELIEVE WE HAVE

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SHOWN A NEXUS.

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NEVER, IN ITS MOTION FOR SUMMARY JUDGMENT, PUT IT THAT WAY OR

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CITED ANY CASE LAW IN SUPPORT OF ITS ARGUMENT.

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THESE AD HOMONYM ATTACKS ON THE WHOLE LOCK-IN THEORY THAT

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PERTAIN TO SOME OTHER CASE OUTSIDE THE MONOPOLY SECTION 2

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CONTEXT.

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BUT YOU'RE CORRECT, YOUR HONOR, THAT APPLE

IT'S JUST MADE

ALSO, I JUST WANT TO CORRECT ONE THING MR. MITTELSTAEDT

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SAID.

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COMPLAIN ABOUT 7.0.

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CONSUMER WHO FILED A COMPLAINT KNEW THAT 7.0 WAS THE NAME OF

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APPLE'S SOFTWARE UPDATE, BUT THERE WERE CERTAINLY COMPLAINTS

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AFTER SEPTEMBER 6, 2006.
THE COURT:

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HE SAID THAT NONE OF THE COMPLAINTS THAT WE CITED
WELL, THAT'S TRUE.

I'M SURE THAT NO

YEAH, BUT WHAT WERE THEY COMPLAINING

ABOUT?
MS. SWEENEY:

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THEY WERE COMPLAINING THAT THEY COULD

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NOT USE MUSIC THAT THEY PURCHASED FROM ANOTHER SOURCE,

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INCLUDING REALNETWORKS HARMONY ON THEIR IPOD.

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THE COURT:

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WHAT'S IN THE BOX OR BOXES.
MR. MITTELSTAEDT:

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OKAY.

WELL, I THINK I HAVE A SENSE OF
I DON'T EVEN KNOW HOW MUCH IT IS.
YOUR HONOR, COULD I JUST ADD ONE

THING?
THEY ARE CLAIMING A MONOPOLIZATION OF THE DEVICE MARKET.
AND REALNETWORKS WAS NOT IN THE DEVICE MARKET.

REALNETWORKS

DIANE E. SKILLMAN, OFFICIAL COURT REPORTER, USDC [phone]

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WAS SELLING MUSIC.

SO THEY HAVE, AGAIN, AN ATTENUATED

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ARGUMENT WHICH WE DON'T THINK IS SUPPORTED.
THE COURT:

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THE ONLY POINT THAT I HEAR ABOUT THE ROLE

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OF THAT PARTICULAR COMPANY IS THAT IT IS THE -- IT IS THE

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TRIGGER FOR THE CONDUCT THAT YOU'RE ALLEGING MAINTAINED THE

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MONOPOLY.

THAT'S WHAT I HEAR.

MS. SWEENEY:

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CORRECT, YOUR HONOR.

THEY --

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REALNETWORKS ESTABLISHED THIS PROGRAM THAT WOULD HAVE ALLOWED

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CONSUMERS TO MIGRATE AWAY FROM IPODS AND THEREBY REDUCING

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APPLE'S MONOPOLY POWER AND ITS ABILITY TO PRICE AT SUPER

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COMPETITIVE LEVELS.
MR. MITTELSTAEDT:

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YOUR HONOR, IF I COULD LEAVE YOU

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WITH ONE THOUGHT, WHICH IS, WE TALKED ALL THIS TIME ABOUT

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THEIR LOCK-IN THEORY.

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REPORTS AND SUBMISSIONS, THEIR EXPERT DR. NOLL SAYS, AS IT

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TURNS OUT, LOCK IN IS NOT IMPORTANT FOR NEW PURCHASERS OF

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IPODS.

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IN THE VERY LAST ROUND OF EXPERT

AND THE REASON HE SAID THAT -- AND THEN HE QUICKLY WENT ON

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TO, BUT THEY ARE STILL A LOCK OUT, WHICH IS REALNETWORKS'

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MUSIC PURCHASERS NOT BEING ABLE TO BUY AN IPOD.

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THE REASON HE SAID THAT IS HE RECOGNIZED THE STRENGTH OF

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OUR ARGUMENT THAT LOCK IN DOESN'T GET HIM AN IMMEDIATE IMPACT,

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IT DOESN'T GET HIM A CONSTANT IMPACT, SO IT IS INCONSISTENT

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WITH THE OUTPUT OF HIS REGRESSION AND SHOWS THERE'S A PROBLEM

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WITH HIS REGRESSION.

DIANE E. SKILLMAN, OFFICIAL COURT REPORTER, USDC [phone]

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SO HE SAYS, DESPITE LOCK IN BEING THEIR THEORY, THE THEORY

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THAT GOT HIM CLASS CERTIFIED -- AND ONE THING ON THE CLASS

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BECAUSE MS. SWEENEY MENTIONED THIS.

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STRANGE BECAUSE 70 PERCENT OF THE PURCHASES, DIRECT PURCHASES

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ARE BY RESELLERS LIKE BEST BUY, TARGET, AND OTHERS.

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GOT -- I LOST THIS ARGUMENT BEFORE JUDGE WARE, BUT I JUST WANT

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TO NOTE IT.

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THIS CLASS IS VERY

AND WE'VE

WE HAVE THREE INDIVIDUAL CONSUMERS WHO CLAIM THEY BOUGHT

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MUSIC DIRECTLY FROM APPLE, AND THEY SEEK TO REPRESENT NOT JUST

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CONSUMERS WHO BOUGHT MUSIC FROM APPLE -- IPODS FROM APPLE, BUT

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THEY ALSO SEEK TO REPRESENT THE WAL-MARTS AND THE BEST BUYS OF

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THE WORLD WHO DIRECTLY BUY IPODS FROM APPLE AND THEN RESELL

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THEM.

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SO WE'VE GOT WHAT I THINK IS UNACCEPTABLE, IT IS CERTAINLY

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AN UNUSUAL SITUATION WHERE THE VAST MAJORITY OF THE CLASS ARE,

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IN MY VIEW, DIFFERENT FROM THE NAMED PLAINTIFFS.

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BUT BE THAT AS IT MAY FOR THE TIME BEING, NOW DR. NOLL

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SAYS THE REAL BASIS FOR HIS DAMAGES IS LOCK OUT, THAT

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CONSUMERS WHO HAD THESE BIG REALNETWORKS LIBRARIES HAD TO BUY

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DEVICES OTHER THAN IPODS, THEREBY DECREASING THE DEMAND FOR

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THE IPOD.

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SO BASIC ECONOMIC SAYS IF YOU DECREASE THE DEMAND, IT'S

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GOING TO REDUCE THE PRICE.

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MEANS APPLE WOULD INCREASE THE PRICE.

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BUT THEIR THEORY IS NO LOCK OUT

FINAL POINT, WHEN COUNSEL SAYS THAT IPOD PRICES WENT UP AS

DIANE E. SKILLMAN, OFFICIAL COURT REPORTER, USDC [phone]

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A RESULT OF THIS, IPOD PRICES NEVER WENT UP.

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THAT THEY WOULD HAVE GONE DOWN FASTER.

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IPOD PRICE CHART, WHICH IS IN THE RECORD, IPOD PRICES

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CONTINUALLY WENT DOWN.
MS. SWEENEY:

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THEIR THEORY IS

WHEN YOU LOOK AT THE

YOUR HONOR, YOU'VE BEEN VERY PATIENT.

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I APPRECIATE THAT.

I JUST WOULD WANT TO POINT OUT THAT I

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THINK MR. MITTELSTAEDT LOST THE CLASS ARGUMENT TWICE ON

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WHETHER THE RESELLERS COULD BE INCLUDED IN THE CLASS.

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AN EXTENSIVE SEPARATE BRIEFING ON THE WHOLE QUESTION OF

IT WAS

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WHETHER PLAINTIFFS ADEQUATELY REPRESENTED THOSE PURCHASERS.

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WITH RESPECT TO PROFESSOR NOLL LOCK IN VERSUS LOCK OUT,

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PROFESSOR NOLL HAS BEEN THE EXPERT IN THIS CASE THROUGH CLASS

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CERTIFICATION THROUGH TODAY.

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LIKE SIX REPORTS.

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IN AND LOCK OUT, SO APPLE'S CONTENTION THAT THIS IS A BRAND

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NEW THEORY IS SIMPLY NOT CONSISTENT WITH THE VERY AMPLE

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RECORD.

OVER AND OVER HE HAS TALKED ABOUT BOTH LOCK

THE COURT:

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I THINK HE SUBMITTED SOMETHING

WELL, I WILL LOOK AT IT ALONG WITH MY

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OTHER ANTITRUST CASES.

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ELSE IN THE DISTRICT.

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MDL THAT WAS HERE BEFORE YOU.

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ALL RIGHT.

I APPARENTLY HAVE MORE THAN ANYONE
BUT THAT COULD HAVE BEEN BECAUSE OF THE

WELL, I APPRECIATE IT.

I WILL PROBABLY, THE

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WAY I DO THESE THINGS, HAVING SPENT MOST OF THE DAY ON A

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PATENT TRIAL, SO I'M NOT REALLY FOCUSED ON ANTITRUST RIGHT

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NOW.

I AM GOING TO HAVE A NUMBER OF ANTITRUST MOTIONS THAT

DIANE E. SKILLMAN, OFFICIAL COURT REPORTER, USDC [phone]

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I'M DEALING WITH IN THE CONTEXT OF THE MDL, AND I WILL

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PROBABLY DEAL WITH THIS ONE WHEN I'M DEALING WITH THOSE.

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TEND TO DO THINGS IN CHUNKS.

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I

I HAD A COUPLE OF ANTITRUST ORDERS THAT CAME OUT IN

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DECEMBER, ONE OF THEM WHICH DEALT WITH AN APPLE ISSUE.

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I'M NOT EXACTLY SURE WHEN I WILL GET TO IT, BUT I WILL GET TO

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IT AS SOON AS I CAN.

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SO,

OKAY?
MR. MITTELSTAEDT:

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THE COURT:

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THANK YOU, YOUR HONOR.

IF I NEED ADDITIONAL ARGUMENT YOU'LL HEAR

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FROM ME.

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DID WANT TO HAVE A SENSE BEFORE I STARTED WORKING THROUGH THE

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PAPERS.

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I WILL GET YOU ON THE CALENDAR.

ALL RIGHT.

BUT I DO WANT -- I

THANK YOU VERY MUCH.

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MS. SWEENEY:

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THE CLERK:

THANK YOU, YOUR HONOR.
COUNSEL, COULD I GET CASE CARDS?

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(PROCEEDINGS ADJOURNED AT 4:03 P.M.)

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DIANE E. SKILLMAN, OFFICIAL COURT REPORTER, USDC [phone]

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CERTIFICATE OF REPORTER
I, DIANE E. SKILLMAN, OFFICIAL REPORTER FOR THE

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UNITED STATES COURT, NORTHERN DISTRICT OF CALIFORNIA, HEREBY

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CERTIFY THAT THE FOREGOING IS A CORRECT TRANSCRIPT FROM THE

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RECORD OF PROCEEDINGS IN THE ABOVE-ENTITLED MATTER.

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_____________________________

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DIANE E. SKILLMAN, CSR 4909, RPR, FCRR

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THURSDAY, FEBRUARY 13, 2014

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DIANE E. SKILLMAN, OFFICIAL COURT REPORTER, USDC [phone]