IO Group, Inc. v. Veoh Networks, Inc.

Filing 80

Declaration of Gill Sperlein in Support of Plaintiff's Motion for Summary Judgment on Liability re 78 filed by IO Group, Inc. (Attachments: # 1 Exhibit Papa Declaration Excerpts# 2 Papa Deposition Ex. #3# 3 Papa Deposition Ex. #11# 4 Papa Deposition Ex. #16# 5 Dunning Deposition Excerpts# 6 Shapiro Deposition Excerpts# 7 Shapiro Deposition Ex. #5# 8 Styn Deposition Excerpts# 9 Bilger Deposition Excerpts)(Related document(s) 78 ) (Sperlein, Dennis) (Filed on 7/31/2007) Text modified on 8/7/2007 to conform to document caption post by counsel (bw, COURT STAFF).

IO Group, Inc. v. Veoh Networks, Inc.

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UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN JOSE DIVISION

IO GROUP, INC., a California ) Corporation, ) ) Plaintiff, ) ) vs. )Case No. C-06-3926(HRL) ) VEOH NETWORKS, Inc., a ) California Corporation, ) ) Defendant. ) _____________________________)

HIGHLY CONFIDENTIAL DEPOSITION OF DMITRY SHAPIRO SAN DIEGO, CALIFORNIA MAY 21, 2007

REPORTED BY:

NICOLE R. HARNISH, CSR No. 13101

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 DEPOSITION OF DMITRY SHAPIRO, taken by the Plaintiff, commencing at the hour of 2:00 p.m., on Monday, May 21, 2007, at 530 B Street, Suite 350, San Diego, California, before Nicole R. Harnish, Certified Shorthand Reporter in and for the State of California. IO GROUP, INC., a California ) Corporation, ) ) Plaintiff, ) ) vs. )Case No. C-06-3926(HRL) ) VEOH NETWORKS, Inc., a ) California Corporation, ) ) Defendant. ) _____________________________) UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN JOSE DIVISION

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APPEARANCES:

For the Plaintiff: GILL SPERLEIN GENERAL COUNSEL TITAN MEDIA.COM BY: GILL SPERLEIN, ESQ. 584 Castro Street, Suite 849 San Francisco, California 94114 For the Defendant: WINSTON & STRAWN BY: JENNIFER A. GOLINVEAUX, ESQ. 101 California Street San Francisco, California 94111

Also Present:

Keith Ruoff

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 EXAMINATION: By Mr. Sperlein WITNESS:

INDEX DMITRY SHAPIRO

Page 5

EXHIBITS MARKED FOR IDENTIFICATION 4 5 6 7 8 Document entitled "Press Releases" Document entitled "Terms of Use" Document entitled "Acceptable Use Policy" E-mail correspondence from Joseph Papa to Engineering E-mail correspondence from Francis Costello to Dmitry Shapiro, dated 8/7/2006 E-mail correspondence from Dmitry Shapiro to Francis Costello, dated 6/5/2006 Document entitled "Red Herring, The Business of Technology," dated 8/17/2005 Questions Witness Instructed Not To Answer Page Line 66 25 11 24 29 50 72

9

73

10

75

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 A. BY MR. SPERLEIN: Q.

DMITRY SHAPIRO, having been duly sworn, testified as follows:

EXAMINATION

Good afternoon, Mr. Shapiro.

Have you ever

had your deposition taken before? A. Q. No. No. Hopefully you won't ever have to have No one likes to do it, but I will do

to do it again.

my best to make it as painless as possible for you. Just a couple of ground rules that I always go over with people. I am going to be asking you

questions and you are going to be giving your responses under oath as you just took. Our

conversation is going to be a little bit different from the way that people generally communicate. Because the reporter is trying to record everything we say, she cannot hear any nonaudible responses to my questions. So I ask that instead of

shaking your head yes or no, that you actually verbally say yes or no. Can you do that? Yes, I can.

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releases. A. Q. Not at all. Thank you. Does Veoh have policies in place that discuss how users of the Veoh system are permitted to use the system? A. Q. Yes. And would those policies, in general, be

covered in what is referred to as "the terms of use"? A. Q. use? A. Q. At a high level. Okay. And you are familiar with any Specifically. And you are familiar with Veoh's terms of

changes that have occurred to the terms of use over time? I am not asking you for specific recollections

at this time, but in general. A. No. I actually can't say that I would be I mean, the terms of

familiar with the changes.

use -- you know, I'm the CEO of the company and I spend my time on the road, and that is done at different levels of organization. changed over time. Q. Were you involved in the initial drafting I suspect they've

of the terms of use?

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A.

No.

I was present on a phone call at one

time, although I don't remember specifics of the phone call. But the primary drafting was done

between our attorneys and Dr. Dunning, who you have met. Q. Are users required to agree to Veoh's terms

of use when they register with Veoh? A. Yes. I believe their registration states

that they are agreeing to the terms of use by registering. Q. And is registration required before an

individual could upload a video file to the Veoh network? A. Q. Yes, it is. So I think that is an example of a

transitive property, if I recall from my high school days. If someone places a file on the Veoh system,

then they would have had to agree with Veoh's terms of use in order to do that? A. Q. I think that is fair to say. They have to register. In order to

register, they have to agree to terms of use. A. Q. A. Yes, they do. Thank you. You are right. That is the transitive

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property. Q. Do you know if a user has always agreed to

the terms of use before they could upload a video file to Veoh? A. Q. Yes, I believe so. I am going to give you another exhibit and And

ask the reporter to mark this as Exhibit No. 5.

why don't you take a few minutes to look that over. I don't want you to read every paragraph, but just generally take a look at the document. to read the whole thing, you can. (Plaintiff's Exhibit No. 5 was marked.) THE WITNESS: BY MR. SPERLEIN: Q. For the record, this document is numbered Okay. If you want

with plaintiff's Document Production No. 200029 through 032. And has the title of "Terms of Use."

At the bottom left-hand corner there's a URL. Will you take a look at that URL, Mr. Shapiro? A. Q. Uh-huh. And then on the bottom right hand corner

there is a date of June 13th, 2006; is that correct? A. Q. That's correct. Does this appear to be the terms of use as

they appeared on the Veoh web site as of June 13th,

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2006? A. I wouldn't know if they were incorrect, but

they appear to be correct. Q. Is there any reason to believe that this

isn't an accurate copy of the terms of use as they appeared on the Veoh network? A. Q. No. Okay. If you'll go down to the third

paragraph from the bottom that begins with "you expressly." I am going to read that aloud and ask

that you read it along with me. "You expressly acknowledge and agree that any user material that you make available on the Veoh service may be freely available by Veoh" -- I am going to have to back up and reread that because I didn't get that quite right. I'm going to start at the beginning of the line. "The Veoh service may be made freely available

by Veoh through the Veoh service, including, without limitation, for download by others. And that this

permission is made and granted in consideration of your use of the Veoh service and is nonexclusive, perpetual, royalty free, irrevocable, and transferable." MS. GOLINVEAUX: You made one more minor

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error in the third line. MR. SPERLEIN: Okay. "By other users," rather

MS. GOLINVEAUX: than by others. MR. SPERLEIN: BY MR. SPERLEIN: Q.

Thank you.

"User material that you obtain from the

Veoh service is limited to your personal noncommercial use. And you will not redistribute or

attempt to redistribute such user material outside the Veoh service." Now, with Ms. Golinveaux's corrections and my minor correction, did I read that accurately? A. Q. Yes, you did. Was that an accurate statement of Veoh's

policy as of June 13th, 2006? A. Well, there are lots of things in here,

but, yes, they look overall correct. Q. As you understand this paragraph, does a

user give Veoh the right to take any video file that they submit to the system and then further broadcast -- let me rephrase that. Under this paragraph, is a user granting Veoh permission to further broadcast any video file that they uploaded onto the Veoh system?

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MS. GOLINVEAUX: a legal conclusion. BY MR. SPERLEIN: Q. on this.

I object.

That calls for

The witness is not an attorney.

I am not asking you for your legal opinion I want you to tell me if that was what the

policy was at the time. MS. GOLINVEAUX: for a legal conclusion. BY MR. SPERLEIN: Q. Would you go ahead and answer the question? MS. GOLINVEAUX: the question. And I think you restated Same objection. It calls

Could you reread the question, please? Why don't we strike all

MR. SPERLEIN:

I will start over, rather than rereading.

BY MR. SPERLEIN: Q. For the time being I am going to move on.

And now I want to go and read another paragraph. This is the last paragraph on the page that starts with "Veoh." "Veoh shall have no obligation to However, Veoh and its

monitor any user material.

agents shall have, and do reserve the right, to monitor any user material from time to time for any lawful purpose. Veoh may, without notice to you,

remove or block content of any user material from the Veoh service, including disabling access to such user

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material that you have downloaded through the Veoh service. Veoh reserves the right to terminate your

use of the Veoh service if we determine that you have violated these terms or the acceptable use policy." Did I read that correctly? A. Q. Yes, you did. And was that an accurate statement of

Veoh's policies as of June 13th, 2006? A. Q. It is what is written in the terms of use. Would all users have had to agree to that

term along with the other terms of use in order to register at that moment in time? A. Q. page 30. Yes. Following with the next paragraph on I am just going to read the last sentence

of that paragraph and have you read silently along with me. "You agree to indemnify and hold Veoh

harmless from and against any liability, claims, losses, demands, or damages arising out of or relating to your violation of these terms per the acceptable use policy." Did I read that correctly? A. Q. Yes. And is that a term that a user would have

had to agree to in order to register with the Veoh

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really bad with dates. than a year. Q.

I would say definitely less

Six to nine months ago, perhaps.

And that group is specifically charged with

attempting to gain additional content for the Veoh system; is that correct? MS. GOLINVEAUX: sorry. Object to the form -- I'm

Could you read back the question, please? (Record read.) MS. GOLINVEAUX: Object to the form of the

question.

You can answer subject to the objection,

if you understand the question. THE WITNESS: Yes. The group talks to

primarily kind of brand name content owners and gets them to use Veoh. BY MR. SPERLEIN: Q. shortly. Okay. I'll come back to that group

But prior to the existence of that group,

did Veoh obtain content from other sources? MS. GOLINVEAUX: question. BY MR. SPERLEIN: Q. Let me ask you a specific example, and then Object to the form of the

we can go from there. A. Q. Okay. Did Veoh have a deal with Turner

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Broadcasting or -- if I don't have the name exactly correct, perhaps you can correct me -- but one of the Turner properties to put some of Turner's content on the Veoh system? A. We did do a short-lived promotion, is what

we called it, with Turner that supported a marathon that they were doing. And yes, that promotion had

Turner content that they put on the system. Q. content? A. Q. No. And did Turner pay Veoh to put any of that Did Veoh pay Turner for any of that

content on the system? A. Q. No. So it was a deal where both sides were

considered to have been benefiting from it; is that accurate? A. Q. A. Q. Yes. Otherwise why do it, right? Right. When you were putting the Turner

content -- or when the Turner content was being put onto the Veoh network, did employees or others associated with Turner go to the -- use either the Veoh client or Veoh web site and upload the content

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onto the Veoh system? MS. GOLINVEAUX: question back, please? (Record read.) BY MR. SPERLEIN: Q. Let me form a cleaner question for you. Sorry. Would you read the

Did Turner upload the content or did Veoh upload the content to the system? A. did. I don't know, but one of the two parties

I would suspect it was Turner. Q. A. Why would you suspect that? I mean, that is what we prefer, that Turner

do it. Q. As part of any deal to put content on the

Veoh system, is one of the negotiated terms the question of whether the content provider uploads the content or Veoh uploads the content? A. Q. I don't know. Are there some deals where the content

provider actually gives the files, the video files, to Veoh and Veoh's employees upload the content onto the system? A. Q. Yes, I believe so. Can you give me a few other examples of

deals that were entered into prior to the formation

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Q.

And let me kind of just bring this back to The reason why I am asking these

full circle.

questions under this topic is that I want to know if it is important for Veoh to have a lot of content on its system? MS. GOLINVEAUX: question? MR. SPERLEIN: Yes. Object to the form of the I'm sorry. Is that the

MS. GOLINVEAUX: question. BY MR. SPERLEIN: Q.

I am going to ask you a new question, Does Veoh seek deals with third-party

Mr. Shapiro.

content provider's because it is important for Veoh to have content on veoh.com? MS. GOLINVEAUX: BY MR. SPERLEIN: Q. A. Go ahead and answer. Again, back to my prior answer. Veoh seeks Object to the form.

deals with content providers for a number of reasons, one of them being brand association. content. Absolutely

Along with that, brand association is

important. Q. Thank you. Does Veoh take any measures to ensure that

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of them playing nothing, one of them playing propaganda. I watched until the age of nine maybe an

hour worth of cartoons. So when I moved to the States I grew up on television and always kind of saw it and respected it as being this incredible medium to be able to communicate and influence and motivate people. Right. And as I was running Aronix, the previous company that I founded, I realized that we were now at a time where technology would allow us to create practically, as I call it, infinite amount of spectrum, channels for individuals to use, to be able to broadcast their thoughts to the world very, quite frankly, politically motivated behind the scenes. But I saw it as, and still do see it as, the, you know, democratized medium that allows the average man to be able to communicate with the entire world. Q. A. You see Veoh in that regard? Yes. I see democratization of the video. There are

YouTube is clearly similar in that regard.

hundreds of sites that are allowing these kinds of things now. Q. Veoh was one of the first ones.

And have you referred to Veoh as an

"Internet television network" before?

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A. Q.

Yes. And what is your basis of that statement?

Why do you consider Veoh an "Internet television network"? A. Well, that is just kind of what we call

this capability of being able to broadcast, you know, your own video. station. Q. It is like having your own TV

It is something that consumers understand. When you were in the formative stages of

creating Veoh, did you consider issues of copyright infringement? A. Q. A. Q. Sure. It was something that was on your mind? Of course. And understanding that Veoh has evolved

a lot from what you initially had envisioned, at those early stages did you come up with a solution for dealing with potential copyright issues? MS. GOLINVEAUX: question. THE WITNESS: Well, what I envisioned Object to the form of the

was -- going perhaps to that e-mail that you showed me -- was the press releases that talk about peer to peer, the traditional peer to peer networks are -these days are not centralized, and therefore they

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Q.

And the video file has to first go to Veoh

and it is centralized -- the centralized part of the system and then goes out to the other user that might want that video file; is that correct? A. Well, let me clarify to -- so a content

publisher or content owner uploads the content to Veoh. The content is then posted on Veoh. And the

peer clients connect to Veoh or other peers in the system and get file fragments, as they are called, from those peers. Q. And in addition those users would watch the

Flash version of the video file through the veoh.com web site; is that correct? A. Q. That's correct. You said earlier that you envisioned a

system where Veoh could remove files from its system if they were discovered to be infringing; is that accurate? A. Q. Yes. That's correct.

Did you ever envision a system where video

files would be reviewed in advance of being broadcast to determine if they were infringing on copyright? A. Q. A. Yes. I did envision a system like that.

And how would that system operate? Well, there would be a queue that would,

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you know, hold the file for review and then a series of previewers that would review it. Q. And where would those -- would those

reviewers have potentially been Veoh employees? A. I wasn't sure. I suspected they could have

been Veoh employees or been kind of like about.com, which is what I used to use, which are volunteers distributed throughout the world. know if you know how about.com works. volunteers, not employees. I don't

They are

I am a technologist, not

a media guy still to this day. Q. Did you feel that reviewers were able to

look at a video file before it went through the system, that they could reduce copyright infringement? A. I don't know if I ever thought through it

enough to, you know, be able to answer how I felt about it. reviewers. Q. For the purpose of reducing copyright But I did envision a system that had

infringement; is that correct, or no? A. Well, clearly that would have been one of

the purposes, I suspect, for other purposes. Q. At any time since Veoh went live, did you

personally see a video file that you suspected of

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being copyright infringement and take action to remove that video file from the system? A. Not that I recall. I have flagged files, I flagged files that

but not for copyright purposes.

I saw were violent or, you know, broke our current policy of nudity, but that is done by our, you know, group. Q. what? A. takedown. Q. So to the extent that you have been That does a takedown. That does the actual We've got a person that does that. I'm sorry. Could you clarify? That does

involved in the takedown of any particular video file, it has been in the same way that a community member could flag a video file and bring it to a core groups' attention that perhaps it needed to be -A. Q. Correct. Okay. Thank you.

Was Veoh designed to earn revenue from ad sales? A. We envisioned Veoh to -- yes, to be able to

earn revenue from ad sales. Q. How does that business model operate -- or How did you envision

how -- let me ask you this.

Veoh earning revenue from the ad sales?

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A.

We envisioned people seeing video and our

ability to be able to serve an ad to them while they were launching. Q. A. Q. Did you envision banner ads? Sure. And did you also envision maybe video files

that actually could play subsequent to or prior to a video clip? A. Q. Yes. Do you currently -- does Veoh currently

obtain revenue from advertising on veoh.com? A. We are playing around, as we call it, with

advertising. Q. And are any of those ads video ads yet? MS. GOLINVEAUX: question. THE WITNESS: I don't know. I have seen in Object to the form of the

demo form a -- I don't know if I have ever seen a video ad in the site. So I don't know if I could

answer that question for you, but I have seen a prototype of a video ad. But I believe I saw it on

the test system rather than a production system. BY MR. SPERLEIN: Q. Is there a hope that Veoh could direct ads

that are specific to what a user might be interested

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in based on video files that that user has previously reviewed? MS. GOLINVEAUX: question for me, please? (Record read.) MS. GOLINVEAUX: THE WITNESS: BY MR. SPERLEIN: Q. views? A. Q. A. Not that I know. Is that in development? Again, I don't know if "development" would Does Veoh currently control what ads a user I will object to the form. Could you reread the

Yes.

be -- it is in research. Q. Is there a correlation between how many

users come to veoh.com and how much revenue Veoh is able to earn? MS. GOLINVEAUX: question. THE WITNESS: There will be a correlation Object to the form of the

between how much video a -- yes, how much video a viewer watches and revenue, we believe. Again, don't

have real data on it, but that is the assumption. BY MR. SPERLEIN: Q. Is there a correlation between the quality

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of video content available on veoh.com and the number of people that come to veoh.com? MS. GOLINVEAUX: THE WITNESS: Object to the form.

I have discussed

theoretically with smart people what the word "quality" means. word. So it is somewhat of an ambiguous

But I think to each person a video is -- you

know, whether they like it or not is dependent on many different factors. quantify that. But, you know, if they like it, they watch it. And to me, I guess that means quality. I don't So I don't know how to

know if you are referring to picture quality or storytelling or, you know, writing or the resolution. You know, all of those are -- to me it is an ambiguous question. answer it, but -BY MR. SPERLEIN: Q. If Veoh has more content on its web site, I don't know how to really

is it more likely that some of that content will appeal to any given individual user? MS. GOLINVEAUX: THE WITNESS: BY MR. SPERLEIN: Q. When veoh.com -- strike that. Object to the form.

Yes.

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When Veoh first launched, did Veoh allow adult or sexually explicit material at that time? A. Q. Yes. And did that remain the policy until

approximately June 21st, 2006? A. down. Yes, if that was the day that we took it

I assume it was, but, yes. So what I'm specifically asking is, was

Q.

there any time between the time that Veoh first started operating and sometime after that where adult was not allowed and then began to be permitted prior to -A. Q. A. Q. No. Not that I recall.

It was put in from the beginning until -Yes. Exactly.

Did the sexually explicit video files that

appeared on Veoh prior to Veoh's change in policy attract a certain audience base to veoh.com? MS. GOLINVEAUX: Object to the form of the

THE WITNESS:

I don't know if it attracted

the base itself, but clearly they were viewed. BY MR. SPERLEIN: Q. There were people interested in viewing

sexually explicit material on veoh.com?

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A. Q.

Yes.

There were.

Was there a drawback to Veoh allowing

sexually explicit material to appear on the web site? MS. GOLINVEAUX: THE WITNESS: Object to the form.

You mean a negative aspect of

BY MR. SPERLEIN: Q. A. Q. A. Yes, sir. Yes. And what were those negative aspects? Well, we got overrun by it very quickly.

And we were afraid that the marketplace would perceive us as being an adult provider. Q. A. Q. Where there any other negative aspects? That was the primary aspect. Acknowledging that that was the primary

aspect, were there other negative aspects? A. We were concerned about litigation that

we -- or a law that we did not understand, which was this 2257 that the adult industry is judged by. we were concerned that -MS. GOLINVEAUX: I would just interject And

here to the extent that your testimony would disclose any attorney-client communications of any sort, I would instruct the witness not to answer.

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THE WITNESS: BY MR. SPERLEIN: Q. A.

Okay.

Do you know when -I'm sorry. Let me make one statement. By

far the biggest concern for us was -- by far, underline, bolded, all upper case, was that we were going to get branded as an adult destination. Q. And if that happened, how would that affect

your business? A. company. Well, we were a venture capital backed And venture capital backed companies go for Even though the adult industry is

big, big projects.

a very big industry, we felt that there was something bigger. And that is, you know, getting this

democratized platform for anyone to be able to broadcast. And we thought that we could build a

bigger business. While we didn't necessarily discriminate against -- we always envisioned a network that would allow people to, in a sense, have free speech, we were concerned that it was going to make us be perceived as an adult -Q. Was it your feeling that CBS wouldn't come

and enter a deal with you if your web site was primarily composed, at that time, of adult video?

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MS. GOLINVEAUX:

Object to the form.

And

it assumes facts not in evidence. THE WITNESS: I don't think we specifically

thought that far ahead with, you know, just signing the CBS deal. But, again, we were concerned that the

world would perceive us -- you know, when people wrote stories and talked with Veoh that they would perceive Veoh as a predominately adult site. BY MR. SPERLEIN: Q. The idea being that companies that were

producing material that was not sexually explicit would not want to be broadcast in the same location as material that was sexually explicit; is that accurate? A. Again, probably not. That wasn't our

biggest concern. it.

The companies would not want to do Next to Playboy

I mean, they do do it on cable.

you have got the Disney channel.

We were just more

concerned with the general perception of consumers and press and everybody else. Q. Including your user base, the people that

actually came to view video files? A. Well, yeah. To me, they fall into that

bucket of consumers, yeah. Q. Do you know when Veoh officials first

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A. Q. A.

Not offhand. Would that be measured? I don't know how accurately, but I expect

probably could be given a ballpark. Q. And how about just the raw numbers of

sexually explicit files compared to say nonsexually explicit files, can you -- do you have any idea what that ratio was at the time? A. Q. I don't know. Do you have any idea of the -- just the raw

number of sexually explicit video files that were on the Veoh system at that time? A. I don't recall. I think at one time I

probably knew an approximate number, but I can't recall it. Q. When Veoh changed it's policy, did Veoh at

that time remove sexually explicit files that were currently on the system? A. Q. Yes. Do you know the number of files that were

removed at that time? A. That is the number that I am referring to

that would be a number that I could give you a number if I remembered it. Q. And when Veoh removed them from the system,

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did Veoh actually remove the sexually explicit video files that were residing on registered members' home computers? A. Q. I believe that is true. Did Veoh's traffic drop when Veoh changed

its policy to no longer allow sexually explicit video files on the video system? A. Q. Yes, it did. Do you have a quantitative number that you

could give me as to how much? A. Again, not offhand. At one time I believe

we did measure it. Q. What statistics would one look at to

measure that change in traffic? A. Well, number of videos viewed; Number of, Those are, I

you know, users coming to the site. think, the two primary. Q.

Do you know if the LimeLight usage dropped

significantly at that time? A. I don't know specifically, but the number And because I

of videos viewed, I believe dropped.

think LimeLight was serving at that time -- I don't recall if it was or not, but if it was, clearly LimeLight would have noticed that. Q. I am going to take a few minutes to go

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through this.

It is probably a little early for a

break, but if you want to take advantage of this five minutes or something while I look through documents, you can do that. MS. GOLINVEAUX: (Recess.) MR. SPERLEIN: Okay. Exhibit No. 8. Okay. Let's do that.

(Plaintiff's Exhibit No. 8 was marked.) BY MR. SPERLEIN: Q. Defendant's Document Production No. 00203,

an e-mail from Francis Costello to Dmitry Shapiro, dated August 7th, 2006; is that correct? A. Q. Yes, it is. I am going to read this. It says "Traffic

was down last week by approximately 10 percent, almost all from lower direct links to Video Details.HTML. We should talk about strategies Numbers are flat

to get promotion going in the car. to down still since porn takedown."

Did I read that correctly? A. Q. Yes. Does this acknowledge that even on

August 7th of 2006, veoh.com is still feeling the effects of no longer having sexually explicit video files on the Veoh web site?

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MS. GOLINVEAUX: THE WITNESS:

Object to the form. I think in August of

Yes.

that year our traffic was lower than expected. MR. SPERLEIN: Thank you. BY MR. SPERLEIN: Q. Exhibit No. 9. This is defendant's That is all for that one.

Document Production No. 00218. (Plaintiff's Exhibit No. 9 was marked.) THE WITNESS: BY MR. SPERLEIN: Q. exhibit? A. Q. Yes, I have. Do you recall getting this e-mail You have had an opportunity to review the Okay.

originally from Francis Costello to you and then your brief reply back to Francis Costello? A. here now. MS. GOLINVEAUX: multipage e-mail? Mr. Sperlein, is this a I don't explicitly recall it, but I see it

Is this just the first page of

more than one page that was produced? MR. SPERLEIN: I don't believe so. But

certainly if there is another page, it would obviously be in the same order and you could take a

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look at it. BY MR. SPERLEIN: Q. And does this e-mail -- the portion from

Francis Costello to you, lay out some different strategies for dealing with adult content? A. Q. A. Q. Yes, it does. In a general way? Yes. And the third option as presented says

"Create dedicated porn product under different brand." A. Q. A. to do it. Q. that? A. Because we felt any association, whether we Do you recall why Veoh decided not to do Uh-huh. Did Veoh ever further consider that option? Yeah, we thought about it and decided not

had it on one site or two sites, was all still going to be perceived as Veoh and we would be perceived as an adult company rather than a -Q. Did you discuss any measures that you could

take to distinguish the two different brands from each other so that wouldn't be a risk? A. Well, you have them on different sites and

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call them different things, but people always know who owns what. Q. Okay. At least we believe they do, so -Let me look at also No. 1 that is

listed there. strategy."

It says "current allow but hide

Was this the idea of allowing sexually explicit video files to remain on Veoh, but tagging them in a way that they wouldn't appear on the front page or the most popular page? A. Q. Yes, I believe that is what that refers to. Okay. Do you recall doing an interview Do you

with Red Herring around August 17th of 2005? have any recollection of that? A. I do so many interviews.

I have clearly

interviewed a number of times with Red Herring, so -Q. Let me do this. Take your time to review

it, but eventually I am going to ask you to direct your attention to the top of the third column, the first paragraph. (Plaintiff's Exhibit No. 10 was marked.) THE WITNESS: BY MR. SPERLEIN: Q. Do you recall specifically having said that Okay.

"Veoh would use human filters to filter out illegally miscategorized and improperly formatted content"?

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that I don't have any follow-up questions for you. I know that this timing could have maybe allowed us a little more time with other folks, but -- so give us a few minutes, maybe even a little bit more than usual. I want to make sure, because

this will be the last opportunity I have to ask you questions, and I want to see if I have anything else for you, any clarifications. up. MS. GOLINVEAUX: (Recess.) BY MR. SPERLEIN: Q. Mr. Shapiro, earlier you talked about the Okay. And then we will wrap

way that you envisioned a process for reviewing video files before publication on Veoh network. My question to you now is why did you eventually not come to implement such a procedure? A. Well, again, as we started kind of looking

at the system and how it was going to scale primarily was the concern -- there's no way that we felt that we could build a system that could do that. Q. And what were the -- where were the

limitations on doing the system? A. Well, the ability for our editors to

correctly identify copyrighted content and the

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ability to deal with volume. Q. And focusing in just on the correctly

identifying copyrighted content, did you consider that you might be able to at least reduce some copyright infringement, if not catch all the copyright infringement? A. I don't know if we specifically thought of You know, we are engineers, if you We try to build systems that work -And so we just felt that we

it that way.

deduced a bit.

program adequately. couldn't do it. Q. Okay.

And going back to the idea that you

had a vision for the company that you expressed publicly that in the end may not have come to fruition, specifically around reviewing for copyright infringement, when you approached venture capitalists and sought funding for veoh.com, did you present that same vision to the venture capitalists? MS. GOLINVEAUX: THE WITNESS: Object to the form.

So in the Series A in the

first one, you know, before we launched, I believe that I did. I presented the entire vision. I

believe by the Series B I didn't. when. BY MR. SPERLEIN:

But I can't recall

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A.

Well, when we did change the policy

concerning adult, it was changed as -- well, it's the board. It was a board decision. So I don't know if

I would say "pressure."

I believe I was the one that

volunteered it, because I was concerned about it. And I believe everyone agreed. Q. A. Okay. How many people are on Veoh's board? Let

Today there are, I want to say, five.

me just -- yes, five. was four. Q.

And at that time I believe it

And who were the four people on the board You?

at that time? A.

I, Art Bilger, Michael Eisner, and

Tod Dagres. Q. A. Q. Would you spell his last name? D-a-g-r-e-s. So it was those four people that voted? Did those four people vote to change

Let me back up.

the policy so that adult video files would no longer be allowed on Veoh? A. I don't think it was a vote, but those four

people would have known about and agreed upon changing the policy, sure. Q. Prior to the change in policy where Veoh no

longer allowed sexually explicit video files on the

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Veoh system, did Veoh make a change in policy so that adult files would not appear on the front page, the home page? A. I don't know if you'd say we made a policy;

but yes, we tried to not have those files on the home page. Q. And was that in part to appease concerns of

investors? A. Well, it was to appease concern of -- I It was to And

don't know if it was concern of investors.

try not to embarrass, in a sense, investors.

again, it was a general overall feeling of we did not want somebody to come to veoh.com after reading about it in whatever magazine, saying it is this great new platform for independent producers and the first thing that hits you is adult content. Q. Do you have any recollection as to when

that policy went into effect, when you started making that change? A. It would have all happened in a very short

time frame because, again, all this happened in a series of a month and a half to two months. Q. Was there any decision why you delayed

completely removing sexually explicit video files until the time you did, rather than at that same time

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