Apple Inc. v. Samsung Electronics Co. Ltd. et al

Filing 1345

Unredacted Oppositions to Apple's Motions in Limine (Dkt. Nos. 1208, 1209) by Samsung Electronics America, Inc.(a New York corporation), Samsung Electronics Co. Ltd., Samsung Telecommunications America, LLC(a Delaware limited liability company) re 1256 Order on Administrative Motion to File Under Seal, (Attachments: # 1 Exhibit A to the D'Amato Declaration, # 2 Exhibit B to the D'Amato Declaration, # 3 Exhibit C to the D'Amato Declaration, # 4 Exhibit G to the D'Amato Declaration, # 5 Exhibit H to the D'Amato Declaration, # 6 Exhibit I to the D'Amato Declaration, # 7 Exhibit J to the D'Amato Declaration)(Maroulis, Victoria) (Filed on 7/25/2012) Modified text on 7/26/2012 (dhm, COURT STAFF).

D'AMATO DECLARATION
EXHIBIT J
FILED UNDER SEAL

Sheppard, Timothy

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IN THE UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SAN JOSE DIVISION

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APPLE, INC., a California
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corporation,

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Plaintiff,

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-vs-

No. 11-CV-01846-LHK

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SAMSUNG ELECTRONICS CO., LTD.,
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a Korean business entity; et al.,

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Defendants.
/

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VIDEOTAPED DEPOSITION OF TIMOTHY SHEPPARD - 30(b)(6)

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HIGHLY CONFIDENTIAL - ATTORNEYS' EYES ONLY

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SAN FRANCISCO, CALIFORNIA

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WEDNESDAY, FEBRUARY 29, 2012

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Reported by: LOUISE MARIE SOUSOURES, CSR NO. 3575
Certified LiveNote Reporter

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JOB NO: 47031

Apple v. Samsung

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Sheppard, Timothy

P R O C E E D I N G S

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-oOo-

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(Exhibit Nos. 1918 and 1919 were marked.)

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THE VIDEOGRAPHER:

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Good afternoon.

Here

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marks the beginning of the deposition for Tim

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Sheppard, 30(b)(6) in the matter of Apple,

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Incorporated versus Samsung Electronics Company,

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Limited et al., in the United States District Court,

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Northern District of California, San Jose Division,

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case 11-CV-01846-LHK.

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Deposition is being held at 425 Market Street

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in San Francisco, California on February 29th, 2012 at

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approximately 1:26.

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I am Aline Mayer, a legal video specialist

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from TSG Reporting, headquartered at 747 Third Avenue,

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New York, New York, and our court reporter is Louise

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in association with TSG Reporting.

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Counsel, please introduce yourselves and

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state who you represent for the record.
MR. OLSON:

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Eric Olson from Morrison &

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Foerster representing Apple.

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MR. SELWYN:

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on behalf of Apple.
MR. ALDEN:

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Mark Selwyn from WilmerHale also

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Anthony Alden on behalf of Quinn

Emanuel for Samsung and the witness, Tim Sheppard.

Apple v. Samsung

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13:27
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Sheppard, Timothy

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MS. HAN:

Julie Han from Samsung.

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THE VIDEOGRAPHER:

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now please swear in the witness.

The court reporter will

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13:27

--oOo--

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TIMOTHY SHEPPARD,

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having been first duly sworn by the

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Certified Shorthand Reporter to tell

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the truth, the whole truth, and nothing

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but the truth, testified as follows:

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EXAMINATION BY MR. OLSON:

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Q.

Mr. Sheppard, you have been deposed in this

case before, correct?

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A.

Correct.

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Q.

And have your job responsibilities changed in

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a material way since your deposition in January of

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this year?

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A.

No.

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Q.

And is it correct that you are responsible

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for accounting functions at Samsung Technology --

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excuse me, Telecommunications America?

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A.

Yes.

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Q.

And if I refer to that as STA, you would

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understand what I was referring to?

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A.

Yes.

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Q.

Do you have any role in the accounting at

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Apple v. Samsung

Page 7

Sheppard, Timothy

I don't know where profit is earned in the

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whole entire supply chain.

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So if manufacturing is -- supplies are in

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multiple countries, I don't know where their

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individual relative profits lie in the entire supply

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chain.

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So it could be China, could be the U.S., if

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we have supplies in the U.S., making profit that are

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selling to Samsung, there's a lot of people involved

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in manufacturing handsets.

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BY MR. OLSON:

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So in the hypothetical situation in which on

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a consolidated basis from STA all the way up through

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all the subsidiaries, Samsung collectively is making

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20 percent, the plan by means of the APA is to

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transfer between 18 and a half and 19 percent to

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entities outside of the United States?

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Q.

MR. ALDEN:

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Objection, assumes facts not in

evidence, vague and ambiguous.
THE WITNESS:

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Well, firstly, I don't know

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what the actual total consolidated profit is so I

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don't know if it's 20 percent.

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wonderful number to get to, but I don't know what the

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reality is.

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Apple v. Samsung

Sounds like a

In terms of attempting to move profit, I

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Page 125

Sheppard, Timothy

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don't think that's the way it works.

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So the negotiation for the APA is really a

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three-party negotiation between the Korean IRS, the

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U.S. IRS and Samsung to say based on our economic

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activity, they hire economists, we hire economists,

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the Korean government hires economists and says based

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on the activity STA does, this is a fair and

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reasonable amount of profit that reflects the activity

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that STA is doing.

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Based on that, that's how the tax is paid.

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So the tax is paid no matter whether STA's

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having a good or bad year, guaranteed income to the

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U.S. government.

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BY MR. OLSON:

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What I'm trying to understand is the

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guarantee is limited to by virtue of the Berry ratio

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ultimately approximately one to one and a half

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percent; is that correct?

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Q.

A.

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There's no risk from the U.S. government

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Yeah, but it's guaranteed no matter what.

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point of view.
Q.

They're in a good position.

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Any other profits go to other entities and

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would be paid taxes elsewhere outside the United

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States, correct?

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A.

Apple v. Samsung

I don't know if there are profits.

You're

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Sheppard, Timothy

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assuming there are profits.

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I don't know if there are.

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From a U.S. government point of view, the

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negotiation is to say there will be profits paid based

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on the activity no matter what, rather, there will be

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income tax paid no matter what the result of the

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activity is being performed.

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For other tax jurisdictions, they don't have

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that benefit.
profits.

situation to deal with this.

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They may get no tax, may get much more tax.

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They have a much higher risk and reward

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There may be profits, may not be

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Q.

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If there are profits, taxes are all paid on

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those profits somewhere outside the United States?
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Taxes paid on profits in the U.S. guaranteed

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and probably, I don't know for sure, there may be

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taxes paid in other jurisdictions.

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Q.

And the amount paid in the U.S. is

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approximately a one to one and a half percent of

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revenue for STA?

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MR. ALDEN:

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evidence.
THE WITNESS:

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Objection, assumes facts not in

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No, the operating margin is

about one and a half percent and the tax rate is

Apple v. Samsung

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Page 127

Sheppard, Timothy

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consider the deposition closed.

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I have nothing further, though.

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THE VIDEOGRAPHER:

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Here marks the end of

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today's deposition of Tim Sheppard, total number of

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tapes used is three.

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6:14.

We are off the record, it's

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(Whereupon, at 6:14 p.m. the deposition of

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TIMOTHY SHEPPARD was adjourned.)

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TIMOTHY SHEPPARD

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Apple v. Samsung

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