Facebook, Inc. v. Studivz, Ltd et al

Filing 168

Declaration of Stephen S. Smith in Support of 167 Memorandum in Opposition to Facebook, Inc.'s Motion to Shorten Time filed byStudivz, Ltd, Holtzbrinck Networks GmbH, Holtzbrinck Ventures GmbH. (Attachments: # 1 Exhibit Exhibit A)(Related document(s) 167 ) (Walker, William) (Filed on 5/29/2009)

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1 2 3 4 IN T H E U N I T E D S T A T E S DISTRICT COURT FOR T H E N O R T H E R N D I S T R I C T O F CALIFORNIA SAN JOSE DIVISION FACEBOOK, I N C., ) ) ) ) ) ) ) ) ) ) CV -08 -3468- JF SAN JOSE , CALIFORNIA MAY 1 , 2009 PAGES 1- 32 5 PLAINTIFF, 6 VS . 7 STUDIVZ, LTD , E T A L, 8 DEFENDANT. 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 FOR THE DEFENDANT : FOR THE PLAINTIFF : A P P E A R A N C E S: TRANSCRIPT O F PROCEEDINGS BEFORE THE HONORABLE JEREMY FOGEL UNITED STATES DISTRICT JUDGE ORRICK HERRINGTON & SUTCLIFFE BY : THOMAS J. GRAY 4 PARK P L A Z A, STE 1600 I R V I N E, CA 92614 GREENBERG GLUSKER BY : STEPHEN S M I T H WILLIAM WALKER 1900 AVENUE OF T H E S T A R S STE 2100 LOS ANGELES , C A 90067 (APPEARANCES CONTINUED O N T H E NEXT PAGE ) OFFICIAL COURT REPORTER : S U M M E R CLANTON, CSR , CERTIFICATE NUMBER 13185 1 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 FOR THE PLAINTIFF : ORRICK HERRINGTON & SUTCLIFFE BY : JULIO AVALOS 1000 MARSH ROAD MENLO PARK, CA 94025 2 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 SAN JOSE , CALIFORNIA MAY 1 , 2009 PROCEEDINGS (WHEREUPON, COURT CONVENED A N D T H E FOLLOWING PROCEEDINGS WERE HELD: ) T H E C O U R T: T H E NEXT A N D F I N A L M A T T E R IS FACEBOOK V E R S U S S TUD IVZ . MR . S M I T H: GOOD MORNING, YOUR H O N O R. S T E V E N S M I T H A N D WIL LIAM W A L K E R ON BEHALF OF DEFENDANTS STUDIVZ, HOLTZBRINCK NETWORKS AND HOLTZBRINCK VENTURES . MR . GRAY : GOOD MORNING , YOUR HONOR . T O M GRAY A N D J U L I O A V A L O S ON BEHALF OF FACEBOOK . T H E C O U R T: GOOD MORNING. WELL, L E T M E A S K STUDIVZ A QUESTION . THERE ARE SEVERAL MOTIONS THAT ARE BUMPING AROUND. THERE A R E JURISDICTIONAL MOTIONS THAT ARE N O T B E F O R E T H E COURT THIS MORNING BECAUSE OF SOME ONGOING DISCOVERY DISPUTES . I THINK IT' S KIND OF A DISCRETIONARY DETERMINATION FOR T H E C O U R T T O MAKE , WHETHER IT WANTS MAKE UP THE FOREIGN NON CONVENIENS MOTION BEFORE THE JURISDICTIONAL ISSUES ARE FULLY PRESENTED. I' M P R E P A R E D T O D O I T, AND I' M P R E P A R E D 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 N O T T O D O I T. PARTIES. I' D LIKE TO G E T F E E D B A C K FROM BOTH I KNOW FACEBOOK HAS BEEN ANXIO U S T O G E T THESE MATTERS HEARD, B U T WHAT 'S YOUR VIEW ? MR . S M I T H: STUDIVZ AND HOLTZBRINCK 'S VIEW IS THEY S H O U L D BE HEARD NOW , S E P A R A T E A N D APART FROM JURISDICTION , FOR REASONS W E BRIEFED BEFORE. BRIEFLY, THE SINOCHEM CASE , WHICH I S THE U. S. SUPREME C O U R T CASE , T A L K S A B O U T CIRCUMSTANCES THAT ARE PRESENT HERE THAT FORM CAN BE CONSIDERED FIRST . T H E C O U R T: I KNOW I HAVE SINOCHEM. IF IT SAYS NOTHING ELSE , I T SAYS I HAVE DISCRETION TO DO IT . I'M TRYING T O DETERMINE WHAT YOUR PREFERENCE IS. MR . S M I T H: MY PREFERENCE TO HAVE T H E FORUM NON CONVENIENS HEARD FIRST . WE DO HAVE AN OUTSTANDING DISCOVERY DISPUTE THAT I S A -- ALTHOUGH WE RESPECTFULLY DISAGREED WITH FACEBOOK 'S ISSUE ON IT, IT 'S A COMPLICATED ISSUE . SO THE FORUM ISSUE S H O U L D B E HEARD FIRST BECAUSE IT' S C L E A N. T H E C O U R T: DISAGREES WITH THAT? MR . GRAY : YES , YOUR HONOR , W E D O. 4 A N D F A C E B O O K, I TAKE IT , 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 YOUR HONOR, I THINK YOU 'VE H I T T H E NAIL ON T H E HEAD WITH RESPECT T O WHAT THIS MOTION TODAY IS A L L A B O U T I N T E R M S O F PREVENTING A N D A V O I D I N G DISCOVERY I N THIS ACTION. T H E C O U R T: MR . GRAY : W H Y I S N' T THAT A GOOD T H I N G? WELL, IT' S N O T A GOOD THING BECAUSE PLAINTIFF H A S RIGHTFULLY BROUGHT U.S . A N D CALIFORNIA- BASED CLAIMS HERE BEFORE THIS COURT FOR INJURY I T SUFFERED HERE . BUT T O ANSWER YOUR QUESTION REGARDING SINOCHEM , I 'M NOT SURE THAT S I N O C H E M DOES GRANT Y O U FULL DISCRETION T O HEAR THE FORUM NON CONVENIENS PORTION OF THEIR MOTION AT THIS TIME. IF Y O U LOOK AT SINOCHEM , PAGE 4 3 3, 549 US 4 3 3, THE COURT SAYS THERE SHOULD BE NO ASSUMPTION OF L A W DECLARING POWER UNLESS T H E C O U R T F I N D S THAT T H E F O R U M N O N CONVENIENS M O T I O N IS SO CLEAR, AS IT D I D I N T H E SINOCHEM CASE, WHERE IT WAS A L L FOREIGN PARTIES DISPUTING E V E N T S THAT OCCURRED IN A FOREIGN LOCALE. T H E C O U R T: SINOCHEM ON I T S F A C T S. YOU ARE DISTINGUISHING THE COURT HAS DISCRETION, A N D LIKE MOST DISCRETION T H E R E A R E LIMITS ON IT , B U T T H E COURT CAN STILL LOOK AT THE FORUM FACTORS A N D D E C I D E IF THEY A R E CLEAR. 5 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 I AGREE THEY HAVE TO BE P R E T T Y S T R O N G AND THE JURISDICTIONAL ISSUES HAVE T O B E STICKY, WHICH THEY ARE HERE, A N D U N D E R T H O S E CIRCUMSTANCES T H E COURT HAS DISCRETION . Y O U A R E SAYING THAT I T H I N K, ULTIMATELY, THAT THE FORUM FACTORS ARE N O T N E A R L Y AS CLEAR IN SINOCHEM . MR . GRAY : THAT'S CORRECT, YOUR HONOR. I THINK, IN THIS INSTANCE, THERE 'S A L O T OF DISPUTE OF FACTUAL I S S U E S. T H E C O U R T: I STARTED WITH COUNSEL, BUT I' M G O I N G T O F O C U S M Y QUESTIONS ON YOU AT THIS POINT . Y O U KNOW , GERMANY I S N'T EXACTLY -- WHO DO I INSULT HERE -- GERMANY I S N' T SOMALIA , I T'S N O T A F A I L E D S T A T E WITH NO LEGAL S Y S T E M A N D NO RECOURSE. IT 'S A VERY SOPHISTICATED LEGAL SYSTEM . AND , I N FACT, THESE VERY PARTIES A R E LITIGATING CLOSELY RELATED CLAIMS IN GERMANY. SO GIVEN THAT, GIVEN THAT THERE ARE S T I C K Y JURISDICTIONAL QUESTIONS, GIVEN THERE 'S NO R E A S O N T O T H I N K THAT A GERMAN COURT W O U L D N'T OR COULDN'T CONSIDER T H E UNIQUE CALIFORNIA CLAIMS FACEBOOK H A S, WHY S H O U L D T H E R E B E LITIGATION GOING ON IN T W O DIFFERENT FORUMS OVER CLOSELY RELATED 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 I S S U E S WHEN A LOT OF T H E C R I T I C A L DEFENSE WITNESSES A R E I N GERMANY , A L O T O F T H E MIS CONDUCT THAT 'S ALLEGED TOOK PLACE I N GERMANY ? IT M A Y N O T BE SINOCHEM, B U T I T STRIKES ME , A T L E A S T SUPERFICIALLY , A S B E I N G P R E T T Y CLOSE THAT THERE ARE A LOT OF CONVENIENCE FACTORS AND JUDICIAL ECONOMY FACTORS THAT ARE I N FAVOR O F GERMANY. I NEED T O UNDERSTAND WHAT CAN 'T FACEBOOK G E T I N GERMANY THAT IT COULD GET IN CALIFORNIA? WHAT' S T H E HARM? MR . GRAY : FIRST OFF , T A K I N G A STEP BACK, OBVIOUSLY, THE DEFENDANTS RELY HEAVILY ON T H E FACT THAT THERE IS ANOTHER CASE IN GERMANY, AS WE POINTED OUT IN O U R B R I E F, THE ADELSON CASE, THE DOLE CASE, THE HAYES CASE, A L L O F T H E S E C A S E S S A Y THAT DUPLICATIVE LITIGATION I S N' T A FACTOR U N D E R FORUM NON CONVENIENS ANALYSIS . T H E C O U R T: WELL, DOLE, IT JUST SO H A P P E NS -- THERE' S S E R E N D I P I T Y, BUT IF Y O U A R E A JUDGE LONG ENOUGH THESE THINGS HAPPEN. I WAS ON T H E P A N E L I N DOLE , A N D THE ANALYSIS IN THAT CASE I S W H E R E I S T H E BRUNT OF THE HARM? W H E R E I S T H E CENTER OF GRAVITY OF THE A N D, Y O U KNOW , I THINK THERE 'S A DESCENT 7 DISPUTE? 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 ARGUMENT THAT THE C E N T E R O F GRAVITY IN THIS CASE I S IN GERMANY. MR . GRAY : THE C E N T E R O F GRAVITY OF T H E HARM TO FACEBOOK, AS A LOCAL ENTITY WITH ITS PRINCIPAL P L A C E O F B U S I N E S S R I G H T U P T H E STREET IN PALO ALTO, CALIFORNIA. Y E S, THEY'V E G O T USERS IN GERMANY THAT THEY UNFAIRLY AND IMPROPERLY GAINED BECAUSE OF THEIR ACTIONS IN GERMANY, BUT T H E B R U N T O F E C O N O M I C INJURIES ARE SUFFERED HERE . A N D W E ALSO HAVE TO LOOK, WHICH THE DEFENDANTS DON 'T LOOK A T MUCH AT A L L, THERE ARE DEFENDANT USERS I N CALIFORNIA AND THROUGHOUT THE UNITED STATES. SO THERE IS HARM TO FACEBOOK' S INTELLECTUAL P R O P E R T Y R I G H T HERE IN CALIFORNIA WITH OVER 11, 000 USERS , A N D PROBABLY TENS O F THOUSANDS, IF N O T H U N D R E D S O F THOUSANDS OF USERS, THROUGHOUT THE UNITED STATES . AGAIN , A T THIS EARLY STAGE OF THIS CASE WITH NO DISCOVERY PROVIDED F O R MANY PARTS OF T H E D E S I G N D E V E L O P M E N T A N D THE ACTIONS TAKEN BY DEFENDANTS IN GERMANY, FACEBOOK IS AT A D I SADVANTAGE O F COMING FORTH -T H E C O U R T: TO G E T BACK TO MY EARLIER 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 QUESTION , WHAT C A N'T Y O U G E T IN GERMANY THAT Y O U C A N G E T IN CALIFORNIA? I REALIZE THAT 'S NOT T H E ONLY QUESTION THE COURT H A S T O LOOK AT , B U T JUST I N TERMS OF CONVENIENCE A N D ECONOMY . IF Y O U HAVE YOUR WAY , W E A R E GOING TO HAVE PARALLEL LITIGATION GOING O N I N TWO DIFFERENT CONTINENTS ABOUT SOME O F THE SAME DISPUTED FACTS A N D INVOLVING A L O T OF THE SAME PEOPLE . W H Y DOES THAT MAKE S E N S E? WHY DO THE EQUITIES FAVOR THAT RATHER THAN HAVING ONE COURT I N A CIVILIZED INDUSTRIAL COUNTRY MAKING A DETERMINATION OF THE PARTIES' R I G H T S. MR . GRAY : BECAUSE THE CLAIMS ARE THESE ARE LARGELY U.S . DIFFERENT HERE , YOUR HONOR . BASED FEDERAL CLAIMS . AGAIN , I T'S DEFENDANT'S BURDEN T O COME FORWARD TO SHOW THAT THESE C L A I M S W O U L D B E DUPLICATIVE , THAT A L L T H E WITNESSES A N D A L L THE EVIDENCE WOULD BE DUPLICATIVE OF WHAT' S G O I N G O N I N GERMANY. A N D THEY C A N'T DO THAT BECAUSE T H E TRADE DRESS CLAIMS HAS DIFFERENT ELEMENTS AND DIFFERENT ISSUES AND WOULD REQUIRE DIFFERENT TESTIMONY FROM DIFFERENT WITNESSES THAT W O U L D B E G O I N G FORWARD ON T H E U N F A I R COMPETITION OF COPYRIGHT C L A I M S. 9 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 THINGS. T H E C O U R T: THOUGH, AREN'T THEY? THEY ARE CLOSELY RELATED, I MEAN, IT 'S A FORM OF U N F A I R COMPETITION -- IT 'S NOT C O M M O N L A W AND U N F A I R COMPETITION , B U T IT' S M I S U S I N G A PARTY 'S PRESENCE IN T H E M A R K E T P L A C E I N A W A Y THAT 'S UNFAIR . THERE 'S A C O M M O N THREAD IN A L L O F T H E S E MR . GRAY : THERE' S CERTAINLY A COMMON T H R E A D I N T H E FACT THAT , Y O U KNOW, IT' S A TRADEMARK RELATED ISSUE AND U N F A I R C O M P E T I T I O N I S TRADEMARK RELATED. B U T THE TRADE DRESS CLAIM HERE HAS AN ELEMENT THAT T H E DESIGN H A S T O B E A N O N-FUNCTIONAL DESIGN. THAT' S N O T AN ELEMENT A T I S S U E I N T H E GERMAN CASE . THAT WILL REQUIRE DIFFERENT TESTIMONY, DIFFERENT EXPERTS, DIFFERENT DOCUMENTS THAT WILL B E HERE , AND FACEBOOK WILL B E IN CONVENIENCED F O R H A V I N G TO BRING ALL THOSE P E O P L E TO GERMANY. SO THAT IS ONE A S P E C T. THE COMPUTER TRESPASS CLAIMS. ISSUE IN T H E G E R M A N CASE. B U T T H E R E'S ALSO T H O S E A R E NOT AT THOSE ARE VERY DISTINCT U. S. BASED CLAIMS , CALIFORNIA -BASED CLAIMS, THAT AGAIN , WILL HAVE DIFFERENT WITNESSES REGARDING THE ACTIONS ON THE PALO ALTO, U.S . B A S E D SERVERS THAT 10 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 FACEBOOK OWNS. ONCE WE CAN G E T DISCOVERY TO SEE H O W MANY P E O P L E - - T H E EXTENT OF T H E I N T E RA C T I O N O N FACEBOOK 'S CALIFORNIA SERVERS , W E C A N GO LOOK A N D S E E EXACTLY WHAT THEY'V E DONE . B U T T H O S E A R E VERY, VERY B R O A D CLAIMS THAT PREDICT T H E EXACT TYPE O F A C T I O N WE HAVE HERE , UNAUTHORIZED U S E OR ACCESS TO A COMPUTER SYSTEM , A N D THAT UNAUTHORIZED U S E WILL REQUIRE , A G A I N, DIFFERENT WITNESSES AND DIFFERENT TESTIMONY, DIFFERENT DOCUMENTS, DIFFERENT EVIDENCE THAT CURRENTLY RESIDES RIGHT HERE IN CALIFORNIA THAT WOULD N O T B E N E E D E D IN THE CURRENT GERMAN -T H E C O U R T: OKAY. H O W FAR O F F A R E WE IN TERMS OF GETTING THE JURISDICTIONAL MOTIONS TEED UP ? I KNOW Y O U'R E I N T H E MIDST OF OBJECTIONS A N D MOTIONS AND SO FORTH . MR . GRAY : I T H I N K W E A R E BEYOND THAT. IT 'S NO SURPRISE THAT DEFENDANTS SWITCHED GEARS AFTER JUDGE LLYOD INDICATED THAT HE W A S R E A D Y T O REQUIRE THEM T O PRODUCE DISCOVERY REGARDING THE D E S I G N A N D DEVELOPMENT DOCUMENTS RELATED TO THEIR ACTIONS HERE I N T H E U.S . O N T H E U.S . SERVERS A N D HOW THEY DESIGN THEIR PRODUCT . AS SOON AS JUDGE LLYOD INDICATED THAT 11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THAT WAS GOING TO H A P P E N, THEY P U L L E D BACK O N T H E I R PERSONAL JURISDICTION M O T I O N AND SAID, L E T'S GO FORWARD WITH T H E FORUM -T H E C O U R T: OBSERVATION . I' M S A Y I N G -- MY QUESTION IS EXTREMELY SIMPLE. H O W LONG WOULD IT TAKE -- IF I D E N I E D THE THAT' S A STRATEGIC FORUM N O N CONVENIENS M O T I O N, HOW LONG WOULD IT TAKE FOR THE JURISDICTION , PERSONAL SUBJECT MATTER JURISDICTION - - I 'M SORRY, PERSONAL JURISDICTION. H O W LONG WOULD IT TAKE FOR THAT MOTION TO BE READY TO BE HEARD ? MR . GRAY : DISCOVERY. OF COURSE , I T DEPENDS ON T H E IF WE C A N G E T DISCOVERY IN 30 DAYS, T H E M O T I O N C A N BE HEARD 35 DAYS A F T E R THAT , YOUR HONOR . T H E C O U R T: WORDS . MR . GRAY : WE DON 'T KNOW BECAUSE THEY' VE SO Y O U D O N' T KNOW , I N O T H E R BEEN DRAGGING THEIR FEET. T H E C O U R T: M O N T H S, AT LEAST. MR . GRAY : CERTAINLY . A C O U P L E OF MONTHS IT WILL BE A C O U P L E OF TO G E T T H E DISCOVERY R E V I E W, THE DISCOVERY, AND WRITE UP T H E SUPPLEMENTAL BRIEFS . B U T I T S H O U L D NOT BE S I X M O N T H S OR A 12 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 YEAR, IT S H O U L D B E RELATIVELY QUICK IF DEFENDANTS COMPLY WITH THE DISCOVERY ISSUES . T H E C O U R T: AND APART FROM THE LEGAL ANALYSIS THAT THERE ARE FREESTANDING U .S. C L A I M S, T H E PRACTICAL IMPACT OF T H E CASE IN GERMANY IS THAT FACEBOOK 'S WITNESSES ON T H E T R A D E D R E S S C L A I M A N D ON T H E C O M P U T E R C L A I M A R E NOT WITNESSES W H O OTHERWISE W O U L D B E C A L L E D IN THE G E R M A N A C T I O N AND THEY WOULD HAVE T O G O T O GERMANY TO PARTICIPATE . MR . GRAY : THE PRIVATE FACTOR. THAT'S T H E INCONVENIENCE ON B U T, OF COURSE , W E T H I N K THIS COURT H A S S U B S T A N T I A L P U B L I C INTEREST IN ADJUDICATING T H E S E CLAIMS FROM A U. S. PLAINTIFF , O F A LOCAL PLAINTIFF , THAT HAS SUFFERED FINANCIAL I N J U R Y HERE LOCAL LY REGARDING U. S. BASED CLAIMS , NOVEL A N D S O M E W H A T U N I Q U E U.S . B A S E D C L A I M S, AS WE POINT O U T I N O U R BRIEF. T H E C O U R T: OVER A P A R T Y THAT IT M A Y O R I MEAN, I D O N' T M A Y N O T HAVE JURISDICTION OVER. KNOW THAT. I MEAN, I SUPPOSE I COULD SPECULATE AS T H E R E'S , I T'S TO H O W THAT 'S GOING TO TURN O U T. OBVIOUSLY, A MESSY FIGHT ABOUT JURISDICTION. N O T A SELF- EVIDENT TYPE OF THING . MR . GRAY : WELL, IT' S A MESSY FIGHT N O W. WE THINK THERE 'S CLEARLY JURISDICTION BASED ON THE 13 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 CONTEXT. T H E C O U R T: HERE. MR . GRAY : THEM HERE. A N D W E'R E ALSO N O T DEALING WITH THE FORUM SELECTION C L A U S E AND TERMS OF U S E. AND DEFENDANTS EXACTLY. THAT' S W H Y WE SUED THAT' S W H Y YOU SUED THEM RAISE SOME RED HERRING ISSUES WITH RESPECT T O WHETHER THERE' S A N ARBITRATION PROVISION AFTER DECEMBER 2006, OR WHETHER BOSTON S H O U L D HAVE BEEN THE FORUM BEFORE JUNE O F 2005 . BUT A S W E SUBMITTED, DURING THE CRUCIAL RELEVANT TIME PERIOD HERE JUNE 2005 THROUGH 2006, THERE WAS A CLICK THROUGH LICENSE - T H E C O U R T: GO THERE , T H O U G H. I DON 'T KNOW THAT Y O U WANT TO THAT 'S AN INTERESTING FORUM SELECTION C L A U S E BECAUSE THEY CONSENT TO JURISDICTION B U T IT CERTAINLY IS N O T A N EXCLUSIVE JURISDICTION. WHEN I S A Y "THEY, " I MEAN WHOEVER, ASSUMING THAT A PARTY I S BOUND B Y THAT , THEY CONSENT TO JURISDICTION , B U T IT' S N O T AN EXCLUSIVE - MR . GRAY : I W O U L D DISAGREE, YOUR H O N O R. I WOULD SAY THAT THAT A R B I T R A T I O N PROVISION SAYS 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THAT ACTIONS WILL BE CONDUCTED HERE IN SANTA CLARA C O U N T Y RELATED TO T H E B R E A C H OF THE AGREEMENT A S WELL AS -T H E C O U R T: DOES IT SAY -- A N D REFRESH ME I D O N' T BELIEVE IT SAYS IF I' M W R O N G A B O U T THIS . THAT THE COURT 'S, FEDERAL AND STATE C O U R T S O R WHATEVER OF SANTA CLARA C O U N T Y, SHALL HAVE EXCLUSIVE AND SOLE EXCLUSIVE JURISDICTION . THINK THERE 'S ANY LANGUAGE LIKE THAT. MR . GRAY : IT CERTAINLY DOES MENTION T H E I D O N' T COURTS O F THIS JURISDICTION. T H E C O U R T: A N D T H E R E'S NO QUESTION ABOUT THAT, B U T I D O N'T R E C A L L S E E I N G THE WORD "EXCLUSIVE" IN THERE . IF IT 'S IN THERE, I MISSED IT . AND T H E NINTH CIRCUIT HAS H A D A LOST CASES ON THIS A N D THEY FOCUS ON T H E P R E S E N C E O R ABSENCE OF THAT. OKAY. WELL , I THINK THIS IS BOTH A LEGAL I APPRECIATE YOUR AND A PRACTICAL INQUIRY . COMMENTS . LET M E GET A RESPONSE FROM THE DEFENDANTS. MR . S M I T H: THERE WERE A N U M B E R OF THINGS I WILL TRY TO BE AS BRIEF SAID THERE, YOUR HONOR. AS POSSIBLE . 15 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 T H E F O R U M. GERMANY. YOUR FIRST QUESTION FOCUSED, THOUGH , O N WHAT TYPE O F R E L I E F FACEBOOK IS UNABLE TO G E T I N GERMANY THAT I T C A N GET HERE. WITH ALL D U E RESPECT , I THINK IF Y O U LOOK AT T H E COMPLAINTS IN GERMANY, A N D T H E R E A R E NOW T W O IN T H E C L O N E A C T I O N, I THINK AN 82 PAGE F I R S T O N E A N D THEN AN AMENDED ONE THAT WAS FILED MORE RECENTLY ABOUT A MONTH OR TWO A G O, EVERY SINGLE FACTUAL ALLEGATION AND EVERY TYPE O F RELIEF THAT I S BEING S O U G H T I N THIS CASE IS BEING SOUGHT THERE . Y E S, THEY A R E CALLED DIFFERENT T H I N G S IN T H E C O U R T: THERE 'S DIFFERENT THEORIES , B U T WHAT THEY ARE LOOKING FOR IS T H E SAME . MR . S M I T H: THAT IS CORRECT. A N D T H E LAW IS QUITE CLEAR , I THINK , I N THERE IS A LOT OF L A W O N THIS ISSUE , B U T Y O U DON 'T HAVE T O HAVE T H E SAME LABEL ON T H E CLAIM ; A N D IN FACT, IT' S EVEN R E A L L Y B E T T E R FOR US THAT WE DON 'T NEED I T HERE . T H E C O U R T: WELL, BASICALLY WHAT COUNSEL IS S A Y I N G, WHEN I T C O M E S DOWN TO IT , I S THAT THERE A R E SOME SETS OF WITNESSES GIVEN THESE C L A I M S THAT AREN' T I N T H E GERMAN CASE WHO WOULD BE INCONVENIENCED ; A N D I T H I N K THAT 'S CERTAINLY 16 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 ENTITLED TO SOME WEIGHT . A N D T H E OTHER THING HE' S S A Y I N G, WHICH I THINK IS PROBABLY T H E MORE COMPELLING POINT, IS THIS IS A L O C A L COMPANY WHICH IS ENTITLED TO E X P E C T THE PROTECTIONS O F A LOCAL FORUM . A N D, CLEARLY, SOME O F T H E RELEVANT FACTS IN THIS CASE A R I S E HERE . HAPPENING I N PALO ALTO. IT' S N O T -- NOTHING I S AND THEY BELIEVE THEY HAVE A GOOD A R G U M E N T O N P E R S O N A L JURISDICTION WHICH THE COURT HASN' T BEEN ABLE TO ADDRESS Y E T. SO AT LEAST UNTIL T H E C O U R T I S ABLE TO ADDRESS THAT, WHY S H O U L D W E S A Y TO A L O C A L P A R T Y THAT HAS A RIGHT TO RELY O N A C C E S S TO THE LOCAL C O U R T S, PARTICULARLY WHERE THERE IS A FORUM SELECTION C L A U S E AND WHETHER IT' S EXCLUSIVE AND BINDING IN EVERY CASE - - W H I C H I S SOMETHING I HAVEN 'T DETERMINED Y E T -- WHY S H O U L D W E S A Y YOU NEED TO GO TO GERMANY BECAUSE THERE 'S A CASE PENDING OVER T H E R E THAT INVOLVES SOME OF THE SAME PARTIES AND C L A I M S? IF WE D O N'T HAVE JURISDICTION OVER YOUR C L I E N T THEN IT 'S EASY, THEN Y O U HAVE T O G O T O GERMANY. B U T IF THERE IS STILL A DETERMINATION TO BE MADE AS TO WHETHER YOUR C L I E N T I S SUBJECT TO JURISDICTION, WHY S H O U L D T H E COURT JUMP T H E GUN A N D 17 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 S A Y, GO AWAY? MR . S M I T H: WELL, LEGALLY, F O R T H E EXACT AND W E CAN DISCUSS WHAT SAME REASONS I N SINOCHEM. T H E F A C T S A R E ON POINT WITH T H E SINOCHEM VERSUS N O T WITH THE L A W O N P O I N T. THAT LAW IS ALSO ON POINT THAT A RESIDENT PLAINTIFF, ALTHOUGH IT IS A F A C T O R THAT I S E N T I T L E D TO W E I G H T A N D WE NEVER CLAIMED T H E CON TRARY, IT IS N O T A D I SPOSITIVE F A C T O R I N A N D OF ITSELF . A N D I N THIS CASE IT' S N O T -- I HATE TO PICK ON LITTLE O L D L A D I E S, B U T I T'S N O T A L I T T L E O L D LADY IN CALIFORNIA, WHOSE HUSBAND -- BECAUSE ONE O F THE CASES INVOLVES THIS - - WHOSE HUSBAND WAS K I L L E D B Y TERRORISTS IN EGYPT A N D H E R ASKING US TO GO TO EGYPT TO SEEK REDRESS. THIS IS A MULTINATIONAL COMPANY BY TWO HUNDRED MILLION, BY THEIR OWN ESTIMATION -T H E C O U R T: GERMANY. MR . S M I T H: WITH A WEB SITE I N GERMANY THE CONTACT LUMBER AND A CORPORATE PRESENCE I N OPERATING A L L OVER T H E WORLD. CASE DISCUSSES THAT PARTICULAR ISSUE DIRECTLY. IN ADDITION , THEY , THEMSELVES , A R E LITIGATING. W E A R E NOT -- WE A R E N O T TRYING TO FORCE THEM INTO SOME FORUM -18 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 T H E C O U R T: MR . S M I T H: THEY' RE THE PLAINTIFF. THAT' S CORRECT . THEY A R E THE PLAINTIFF, YES T H E STUTTGART ACTION WHICH W A S A DECLARATORY R E L I E F A C T I O N STUDIVZ F I L E D, WAS FILED FIRST . THERE ARE T W O C A S E S W E S I G H T BOTH CREATIVE AND LOCKMAN , WHERE THAT EXACT SAME THING HAPPENED. T H E C O U R T D I D NOT HAVE ANY ISSUE WITH THAT. THE COURT ACTUALLY DID RELY UPON THE FACT THAT THERE WAS ANOTHER PIECE OF LITIGATION ALREADY PENDING. SOME C O NTRARY , WITH A L L D U E RESPECT T O I T'S MR . GRAY 'S STATEMENT , B U T IT' S N O T A F A C T O R. A FACTOR IN SINOCHEM , I T'S A FACTOR IN CREATIVE , IT 'S A F A C T O R IN CONTACT L U M B E R, A N D I T'S A FACTOR IN LOCKMAN. IT 'S A F A C T O R IN ALL KINDS OF CASES . IT 'S USUALLY Q U I T E A N IMPORTANT FACTOR F O R T H E R E A S O N YOUR HONOR ALREADY NOTED, WHICH IS , I T DOESN 'T MAKE S E N S E, FROM A JUDICIAL ECONOMY PERSPECTIVE , T O FIGHT OVER THE SAME FACTS SEEKING THE SAME RELIEF I N TWO DIFFERENT PLACES. IN ADDITION , SPECIFICALLY AS TO THE COMPUTER ABUSE A C T, WE' VE NOTED THIS I N O U R BRIEFS A N D I T'S IN T H E PLEADINGS IN GERMANY. SEEKING REDRESS SPECIFICALLY FOR THAT. THEY ARE RIGHT NOW AND THERE IS PENDING A REQUEST F O R A NEUTRAL EXPERT 19 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 S E A R C H O F T H E ENTIRE PREMISES , INSPECTION OF A L L T H E C O M P U T E R SYSTEMS , A L L THE SERVERS, A L L O F T H E S O U R C E CODE , T O G E T INTO WHETHER OR N O T THAT TYPE OF A C C E S S THAT THEY' RE TALKING A B O U T D I D, IN FACT, OCCUR . SO Y E S, THEY D O N' T CALL IT T H E C O M P U T E R ABUSE A C T, BUT W I T H I N T H E CASE, AS A FACTUAL A N D LEGAL M A T T E R U N D E R A DIFFERENT L A B E L, THE EXACT SAME THING IS BEING LAID. T H E C O U R T: CAN I ASK YOU THIS - - THIS M A Y COME O U T O F LEFT FIELD -- B U T I HAVE DISCRETION UNDER 1404 TO STAY A S WELL AS DISMISS, CORRECT? MR . S M I T H: T H E C O U R T: I BELIEVE S O, YOUR H O N O R. I COULD JUST S A Y, WELL, L E T'S JUST STOP T H E BLEEDING IN THIS CASE A N D G O F I G H T GERMANY FOR A WHILE, A N D THEN IF T H I N G S A R E -- IF Y O U C A N' T G E T A C O M P L E T E RESOLUTION BETWEEN THE PARTIES, THEN THIS CASE C A N B E T A K E N O U T OF THE FREEZER AT A L A T E R DATE . THAT' S A N O P T I O N THE COURT H A S, ISN 'T IT? MR . S M I T H: THAT' S CORRECT . AND ALTHOUGH THAT' S A SECONDARY OPTION -T H E C O U R T: THAT' S N O T WHAT Y O U ASKED FOR B U T I T'S SOMETHING T H E COURT CAN DO . MR . S M I T H: RELEVANT TO THAT, YOUR HONOR, 20 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 BECAUSE THIS HEARING GOT MOVED A COUPLE O F WEEKS BECAUSE OF DEFENSE COUNSEL 'S VACATIONS WHICH IS FINE, T H E COMMENCEMENT OF THE TRIAL D I D, IN GERMANY, STARTED JUNE - - T H E R E I S A DATE NOW JUNE 16T H F O R THE RENDITION O F A JUDGMENT . N O W, I D O N' T WANT TO S A Y THAT MEANS THEY WILL RENDER A FINAL JUDGMENT, I DON 'T WANT T O M I SLEAD THE COURT , B U T IT IS A DATE TO E I T H E R D E C I D E, ARE WE GOING TO R E N D E R A FINAL JUDGMENT , A PARTIAL JUDGMENT, OR A R E W E G O I N G T O A S K FOR SOMETHING MORE ? SO THERE IS THAT NEXT DATE O U T T H E R E. AGAIN , I D O N'T -- I THINK THE FORUM ISSUE HERE IS TEED UP, A N D WITH T H E FACTORS WEIGHING SO HEAVILY IN O U R C L I E N T' S F A V O R, IT SHOULD BE DISMISSED T H E C O U R T: B U T I F I WERE TO STAY THIS CASE UNTIL AFTER A JUDGMENT I S RENDERED I N THE G E R M A N C O U R T, THEN A T THAT POINT WE COULD RE CONVENE, WE COULD CONSIDER WHAT T H E PRECLUSIVE E F F E C T, IF ANY , O F THAT JUDGMENT IS A N D W H E R E I T L E A V E S T H E PARTIES, AND THEN THE COURT COULD D E C I D E WHETHER TO GO FORWARD I N THIS CASE OR NOT . THAT' S ANOTHER O P T I O N T H E COURT HAS . MR . S M I T H: THAT IS CORRECT. A N D JUST O N E E F F O R T TO PERSUADE 21 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 YOUR HONOR OF THE FIRST O P T I O N, LET ME MAKE THIS POINT , W H I C H I S: I THINK WE SHOULD STEP BACK HERE F O R A SECOND A N D TALK A B O U T WHAT 'S ACTUALLY BEING SOUGHT. BECAUSE IF WE LOOK A T WHAT 'S GOING ON HERE, FACEBOOK IS T R Y I N G T O RECOVER F O R HARM THAT IS OCCURRING I N GERMANY . IF Y O U LOOK AT THEIR SUPPLEMENTAL R E P L Y THEY FILED, THEY HAVE T H E NUMBER $1 0 0 MILLION I N DAMAGES. THAT 'S A TELLING STATEMENT BECAUSE THERE 'S NO WAY THERE 'S $1 0 0 MILLION IN DAMAGES FOR ACTIVITY THAT OCCURRED IN THE U N I T E D S T A T E S. THAT' S T H E ENTIRE V A LUE OF STUDIVZ. THEY ARE SEEKING AN INJUNCTION T O SHUT DOWN STUDIVZ ALTOGETHER. SO THERE 'S BEEN N O A R G U M E N T THAT WE SHOULD B E ALLOCATING SOMETHING T O THE UNITED STATES ONLY HERE. SO WHAT' S G O I N G T O H A P P E N IN GERMANY - - A N D T H E GERMAN COURT IS WELL AWARE OF THE PENDENCY OF THIS CASE BECAUSE IT W A S DISCUSSED ON THE APRIL 28 TH TRIAL. M A Y B E W E WAIT TO S E E A N D I C A N BRIEF IT A N D G O THROUGH IT , B U T IT' S C L E A R I T'S GOING TO HAVE A PRECLUSIVE E F F E C T. A N D I N T H E CASE - - O N E OF THE CASES SAID WHEN YOU HAVE THE INFRINGEMENT OCCURRING FROM SINGAPORE, THE BEST PLACE TO GO, IF Y O U A R E GOING 22 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 TO SHUT DOWN T H E INFRINGING P A R T Y, IS THE S O U R C E. T H E C O U R T: MR . S M I T H: A R E D O I N G. T H E C O U R T: A L L R I G H T. YEAH. A N D THAT 'S EXACTLY WHAT THEY LET M E GET A REACTION FROM COUNSEL, BECAUSE I D O N' T WANT TO S P R I N G A SURPRISE ON ANYBODY. WHAT WOULD THE E F F E C T B E O N F A C E B O O K I F T H E C O U R T S I M P L Y SAID, ALL RIGHT , STOP T H E CALIFORNIA ACTION IN I T S T R A C K S UNTIL THE G E R M A N COURT RULES A N D THEN WE WILL SEE WHAT' S G O I N G O N? MR . GRAY : WELL, THE DEVIL WOULD BE IN T H E DETAILS THEN, YOUR HONOR. A R E W E S A Y I N G FACEBOOK HAS TO BRING I T S CALIFORNIA AND U. S. BASED CLAIMS IN T H E G E R M A N ACTION? BECAUSE THEN, AGAIN, WE FEEL THAT'S N O T WARRANTED A N D PROPER IN THIS INSTANCE BASED ON THE S T R O N G DEFERENCE THAT S H O U L D BE PROVIDED TO FACEBOOK FOR LITIGATING THESE CLAIMS I N THIS COURTROOM. T H E C O U R T: I' M N O T EVEN SURE THAT' S POSSIBLE IF T H E C O U R T H A S ALREADY CONDUCTED AN EVIDENTIARY PROCEEDING. MR . GRAY : OKAY. L E T M E CLARIFY THAT. 23 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 JUNE -- WITH ALL D U E RESPECT TO COUNSEL, THAT T H E C O U R T: THAT' S A B O U T T H E THIRD TIME I HEARD THAT PHRASE TODAY , I 'M GETTING WORRIED . MR . GRAY : WELL, MAYBE -- BECAUSE H E VASTLY OVERSTATES WHAT' S G O I N G O N I N GERMANY . THERE HAS NOT BEEN A TRIAL . WHAT OCCURRED O N THE TUESDAY WAS ESSENTIALLY A STATUS CONFERENCE. PARTIES CAME I N, THEY DISCUSSED THE CASE, FACEBOOK W A S G I V E N A N O P P O R T U N I T Y T O DISCUSS -- TO BRIEF , ADDITIONALLY, THE CLAIM THAT HE' S TALKING ABOUT WHICH IS A COPYRIGHT INSPECTION CLAIM, IT IS N O T T H E COMPUTER F R A U D TRESPASS C L A I M. SO GOING INTO STUDIVZ A N D THE DEFENDANT'S HEADQUARTERS T O G E T ALL T H E DOCUMENTS AND A C C E S S T O T H E COMPUTERS, IS AN INSPECTION OF THEIR SOURCE CODE CLAIM. I T I S NOT RELATED T O THE COMPUTER FRAUD A N D A B U S E A C T -T H E C O U R T: WITH PARTICULARITY. IS WHAT EMANATES FROM T H E GERMAN COURT IN JUNE LIKELY TO HAVE SOME TYPE OF PRECLUSIVE EFFECT ON T H E C L A I M S THAT F A C E B O O K H A S BROUGHT I N CALIFORNIA? MR . GRAY : IT MAY . 24 L E T M E R EPHRASE M Y Q U E S T I O N 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 BE HERE. ANYWHERE . B U T M Y UNDERSTANDING IS WHAT' S G O I N G T O H A P P E N I N JUNE IS T H E C O U R T I S G O I N G T O S E T THE SCHEDULE F O R T H E SOURCE CODE INSPECTION C L A I M, THE S O U R C E CODE COPYRIGHT C L A I M, WHICH MAY TAKE SIX TO NINE MONTHS TO ADJUDICATE, A N D THEN THERE WILL BE A TRIAL ON T H E M E R I T S -- EVIDENTIARY HEARING O N T H E MERITS AFTER THAT . T H E C O U R T: SO IT WOULD BE CLEANER IF THE COURT SAID YAY OR N A Y WITH T H E R E G A R D TO THE FORUM NON CONVENIENS . MR . GRAY : IT' S CLEANER -- I DON 'T THINK THERE 'S ANY R E A S O N T O D E L A Y U N T I L A F T E R JUNE BECAUSE I D O N' T T H I N K JUNE IS GOING TO BE D I SPOSITIVE . T H E C O U R T: THAT' S M Y QUESTION. SO A STAY R E A L L Y WOULDN 'T GET Y O U YOU 'D RATHER E I T H E R G E T SENT T H E R E A N D A N D/O R N O T GO THERE AT ALL ; A N D OBVIOUSLY , Y O U PREFER THE LATTER . MR . GRAY : RIGHT. I THINK WE DESERVE TO AND I THINK WHAT COUNSEL HAS SAID REGARDING T H E GERMAN CASE IS LARGELY INDICATIVE OF WHAT WE' VE GOT HERE. T H E R E'S A BIG DISPUTE AGAIN, A FACTUAL DISPUTE , T O THE SIMILARITY O F THE GERMAN 25 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 CASE VERSUS T H E CASE HERE. A N D A S T H E S E C A S E S HAVE DISCUSSED, THE R E C O R D O F DEFENSE COUNSEL AND PLAINTIFF'S COUNSEL S A Y I N G WHAT THEIR INTERPRETATION IS OF WHAT' S G O I N G ON IN T H E A L T E R N A T I V E F O R U M R E A L L Y DOESN' T C A R R Y T H E D A Y FOR T H E DEFENDANTS UNDER A FORUM NON CONVENIENS ANALYSIS. THEY NEED T O COME IN A N D SHOW THAT IT IS DUPLICATIVE , A N D ALL WITNESSES A N D ALL TESTIMONY WOULD BE -T H E C O U R T: MAKE. A N D THAT 'S THE CALL I NEED TO THAT'S T H E THAT 'S WHAT S I N O C H E M SAYS . STANDARD . SAME CASE. I MEAN , I T'S G O T T O B E, ESSENTIALLY, T H E A N D Y O U GOT A COUPLE BELLS A N D W H I S T L E S ON IT HERE THAT THEY D O N'T HAVE THERE, B U T I N O R D E R F O R T H E COURT TO TRANSFER AT THIS S T A G E I T W O U L D HAVE TO FIND I T W A S ESSENTIALLY THE SAME CASE, IT W A S ARISING O U T O F T H E SAME DISPUTE , A N D OF COURSE THERE 'S DIFFERENT CLAIMS F O R RELIEF A N D DIFFERENT LEGAL THEORIES AND LEGAL SYSTEMS . MR . GRAY : BUT B E Y O N D THAT , I T'S DEFENDANT'S B U R D E N T O COME FORWARD TO OVERCOME THE SUBSTANTIAL DEFERENCE HERE . AND IF WE LOOK AT THE ADELSON CASE, THE HAYES BICYCLE CASE, THE ALNWICK V. EUROPEAN MICRO , 1 3 7 F. SUPP.2 D 1 1 2, IN WHICH IT 26 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 SPECIFICALLY SAYS T H E AFFIDAVITS OF T H E ATTORNEYS IS INSUFFICIENT T O SHOW T H E D U P L I C A T I V E N A T U R E OF T H E T W O LITIGATIONS, A N D THEREFORE IT SHOULDN'T BE GIVEN A N Y W E I G H T WHATSOEVER WITH RESPECT TO FORUM NON CONVENIENS . EVEN THOUGH IN THESE CASES ADELSON AND HAYES BICYCLE AND DOLE, PLAINTIFFS THEMSELVES F I L E D SUIT IN THE OTHER JURISDICTION. IF I MAY , YOUR HONOR , T H E CREATIVE AND T H E LOCKMAN CASE ARE CLEARLY DISTINGUISHABLE . THE REASON THAT THE ALTERNATIVE FORUMS WERE A T ISSUE I N THOSE CASES IS BECAUSE ALMOST A L L O F T H E OTHER ACTIONS OCCURRED IN THOSE ALTERNATIVE FORUMS . IN T H E C R E A T I V E LABS CASE, T H E PARTIES , ALTHOUGH THEY WERE SUING UNDER THEIR AMERICAN SUBSIDIARIES, THE COURT RECOGNIZED THAT T H E PRIMARY PARTIES WERE T H E SINGAPORE COMPANIE S. THEY WERE FIGHTING OVER THE MANUFACTURE OF SINGAPORE P R O D U C T S MANUFACTURED IN SINGAPORE . THE PRIMARY PARENT COMPANIES WERE BOTH SINGAPORE COMPANIES. T H E INFRINGEMENT WAS OCCURRING I N THE SINGAPORE B U T THEY DECIDED TO COME TO THE U. S. COURT SAID NO IN ADELSON. A N D WHAT T H E C O U R T D I D SAY ON PAGE TEN OF THAT OPINION I S, IT' S N O T A CASE OF P I R A C Y O F 27 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 AMERICAN MADE PRODUCTS INVOLVING AMERICAN COMPANIES. THIS IS A CASE OF AMERICAN MADE PRODUCTS A N D PIRACY, ESSENTIALLY , COPYING -- WHOLESALE COPYING OF THE LOOK AND FEEL -T H E C O U R T: MR . GRAY : DISTINGUISHABLE. BY A GERMAN COMPANY -YES . AND THAT IS T H E C O U R T I N C R E A T I V E SAID , N O, THEY ARE SINGAPORE COMPANIES. T H E C O U R T: MR . GRAY : RIGHT . AND , ADDITIONALLY, IN T H E LOCKMAN CASE T H E MAIN I S S U E I N THAT CASE WAS T H E JAPANESE COPYRIGHT I S S U E. IT F L O W E D THROUGH EVERY CLAIM THAT THE PLAINTIFF W A S TRYING TO BRING . T H E PLAINTIFF HAD A 30- YEAR RELATIONSHIP WITH T H E A S I A N COMPANY THAT IT THEN T U R N E D AROUND A N D SUED. A L L OF THE COPYRIGHT I S S U E S WERE I N J A P A N A N D ASIA A N D T H E PRODUCTS SOLD WERE IN JAPAN A N D ASIA. SO WE A R E LOOKING AT ANOTHER SUIT BECAUSE A L L T H E UNDERLYING ACTIONS WERE THERE, A N D ESSENTIALLY THE HARM FOR THOSE JAPANESE COPYRIGHTS W A S I N J A P A N. T H E C O U R T: MR . GRAY : OKAY. ONE OTHER POINT I' D LIKE TO 28 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 MENTION, YOUR HONOR, IN TERMS OF T H E G E R M A N AND U. S. CASE - T H E C O U R T: MR . GRAY : Y E S. FACEBOOK SHOWED ITS INDICATION CO INCIDENTALLY E N O U G H, TO BE HERE IN THIS F O R U M. WE BOTH FILED SUIT O N T H E SAME D A Y. SO THEY FILED IN GERMANY T H E I R DECLARATORY R E L I E F A C T I O N AND WE FILED HERE, SAME D A Y. WE CLEARLY INDICATED O U R I N T E N T TO BE HERE. AGAIN , COUNSEL IS APPLYING U. S. THOUGHT A N D U .S. PROCEDURES TO THE C L A I M S I N GERMANY . YES WE A R E PLAINTIFF IN COLOGNE, BUT AS WE POINTED OUT IN T H E KATHARINA SCHEJA DECLARATION , I THINK D O C K E T N U M B E R 1 2 6, THAT PROCEDURE IS LARGELY A COUNTERCLAIM T O A DECLARATORY RELIEF ACTION. WE DIDN' T HAVE T H E SAME OPPORTUNITIES TO STAY OR DISMISS T H O S E C L A I M S IN GERMANY. IT 'S A DIFFERENT SYSTEM WITH DIFFERENT PROCEDURES. T H E FACT WE A R E PLAINTIFF IN COLOGNE I S JUST COUNTERCLAIMS T O THE DECLARATORY JUDGMENT ACTION TIMED B Y THESE FOLK . T H E C O U R T: WELL, BEST EFFORTS I N A DECLARATORY JUDGMENT ACTION, ANYWAY . T H E P O I N T I S I T'S LARGELY THE SAME DISPUTE. A N D YOU A R E R E A L L Y ARGUING A B O U T W H E R E I T 29 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 OUGHT TO BE HEARD . MR . GRAY : WELL, WE DISAGREE WITH THAT , WE DON 'T THINK OBVIOUSLY, AS WE' VE TALKED ABOUT . IT 'S LARGELY T H E SAME DISPUTE . BUT F O R T H E I R F I L I N G T H E DECLARATORY RELIEF A C T I O N, WE WOULD NOT BE HERE, FACEBOOK WOULD N O T B E I N GERMANY . T H E C O U R T: I THINK WE' VE HAD A GOOD DISCUSSION, AND I WILL GIVE THE MATTER SOME THOUGHT A N D I 'LL G E T A DECISION O U T SOON . MR . GRAY : MR . S M I T H: POINT . T H E C O U R T: REALLY? Y O U D O N' T T H I N K Y O U' VE HAD HALF THANK YOU , YOUR HONOR . I DID WANT TO RESPOND T O O N E Y O U'V E H A D ENOUGH ORAL ARGUMENT? AN HOUR. THAT 'S ABOUT TEN TIMES MORE THAN MOST P A R T I ES GET . MR . S M I T H: JULY 18T H, 2008. JANUARY 2007. T H E LAWSUIT DOESN 'T START THEY SENT DEMAND LETTERS I N WE ACTUALLY FILED IN COURT IN GERMANY WHICH WAS AN A N T I C IPATED DEFENSE. SO T H E G E R M A N- NESS O F THIS DISPUTE IS IT 'S GENESIS. T H E C O U R T: OKAY. WELL , I 'M ACTUALLY GOING TO GO BACK AND LOOK AT THE FILINGS AND I WILL MAKE MY OWN JUDGMENT OF THAT. 30 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 THANK Y O U. MR . S M I T H: MR . GRAY : THANK Y O U, YOUR H O N O R. I'M SORRY , YOUR HONOR THIS IS R E A L L Y - - A R E WE ON FOR T H E C M C CALENDAR -T H E C O U R T: I' M N O T GOING TO DO THE C M C I WILL GIVE YOU N O T I C E. UNTIL I DECIDE THE CASE . THANK Y O U. (WHEREUPON, T H E PROCEEDINGS I N THIS MATTER WERE CONCLUDED.) 31 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 32 CERTIFICATE OF REPORTER I, T H E UNDERSIGNED O F F I C I A L C O U R T REPORTER OF T H E U N I T E D STATES DISTRICT COURT F O R THE NORTHERN DISTRICT O F CALIFORNIA , 280 SOUTH FIRST S T R E E T, SAN JOSE, CALIFORNIA, DO H E R E B Y CERTIFY: THAT THE FOREGOING TRANSCRIPT , CERTIFICATE INCLUSIVE, CONSTITUTES A TRUE , FULL AND CORRECT TRANSCRIPT O F M Y SHORTHAND NOTES TAKEN AS SUCH OFFICIAL COURT REPORTER OF THE PROCEEDINGS HEREINBEFORE E N T I T L E D A N D REDUCED B Y C O M P U T E R-A I D E D TRANSCRIPTION TO THE BEST OF MY ABILITY. __ ___ ___ ___ ___ ___ ___ ___ ___ SUMMER A . CLANTON , CSR CERTIFICATE NUMBER 13185

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