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

Filing 521

Declaration of Mark D. Selwyn in Support of #520 Opposition/Response to Motion filed byApple Inc.(a California corporation). (Attachments: #1 Exhibit A, #2 Exhibit B, #3 Exhibit C, #4 Exhibit D, #5 Exhibit E, #6 Exhibit F, #7 Exhibit G, #8 Exhibit H, #9 Exhibit I, #10 Exhibit J)(Related document(s) #520 ) (Selwyn, Mark) (Filed on 12/20/2011)

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Exhibit E Case 1:09-cv-00791-GMS Document 55 1 IN THE UNITED STATES DISTRICT COURT IN AND FOR THE DISTRICT OF DELAWARE - - - 2 3 NOKIA CORPORATION, 4 5 6 Filed 06/07/10 Page 1 of 23 PageID #: 1821 Plaintiff, v. APPLE INC., 7 Defendant. 8 9 ) ) ) ) ) ) ) ) ) - - APPLE INC., 10 CounterclaimPlaintiff, 11 v. 12 13 NOKIA CORPORATION and NOKIA, INC., 14 CounterclaimDefendants. Civil Action No. 09-791-GMS ) ) ) ) ) ) ) ) ) ) ) ) 15 - - Wilmington, Delaware Thursday, June 3, 2010 10:00 a.m. Teleconference - - - 16 17 18 19 20 21 22 23 24 25 APPEARANCES: JACK B. BLUMENFELD, ESQ. Morris, Nichols, Arsht & Tunnell LLP -andPATRICK J. FLINN, ESQ., and MARK A. McCARTY, ESQ. Alston & Bird (Atlanta, GA) Counsel for Nokia 1 Case 1:09-cv-00791-GMS Document 55 1 Filed 06/07/10 Page 2 of 23 PageID #: 1822 2 APPEARANCES CONTINUED: 2 3 4 5 DAVID E. MOORE, ESQ. Potter Anderson & Corroon LLP -andWILLIAM F. LEE, ESQ., and MICHELLE D. MILLER, ESQ. (Boston, MA) 6 Counsel for Apple 7 - - - 8 9 THE COURT: Good afternoon, counsel 10 (Counsel respond "Good afternoon.") 11 THE COURT: 12 13 Counsel, could we do a roll call for the record, beginning with plaintiff? MR. BLUMENFELD: Your Honor, this is Jack 14 Blumenfeld for the Nokia parties, along with Patrick Flinn 15 and Mark McCarty from Alston & Bird. 16 THE COURT: Good afternoon. 17 MR. FLINN: Good afternoon. 18 MR. MOORE: On behalf of the defendant Apple, 19 Your Honor, it is Dave Moore at Potter Anderson. 20 the line are Bill Lee and Michelle Miller from WilmerHale. 21 THE COURT: 22 MR. LEE: 23 THE COURT: With me on Good afternoon. Good afternoon, Your Honor. Counsel, as you know, I had previous 24 plans to have you come back, I think, but in the press of 25 business and just scheduling challenges, I thought it better Case 1:09-cv-00791-GMS Document 55 Filed 06/07/10 Page 3 of 23 PageID #: 1823 1 to proceed in the manner I am about to, via the vehicle of 2 3 teleconference. 3 I want to do two things today. 4 I am going to announce my decision regarding 5 Nokia's motion docketed at Item 25 to dismiss. 6 to read the ruling into the record. 7 point to memorialize this, but don't hold your breath while 8 that is happening. 9 I am going I will endeavor at some But we are on the record. I will go into some 10 detail, not perhaps as much as I will if I am able to issue 11 a more formal ruling in writing. 12 Then I am going to want to revisit the schedule 13 that has been entered upon in this case, to discuss a fairly 14 discrete issue, that is, the positioning and treatment, or 15 perhaps repositioning and treatment of the contract versus 16 the patent issues in the case. 17 So, counsel, I will now rule on Nokia's motion 18 to dismiss Apple's nonpatent counterclaims (Counts I through 19 VI) for failure to state a claim pursuant to Rule 12(b)(6) 20 of the Federal Rules of Civil Procedure. 21 22 23 For the record, this motion is docketed as DI-25. The Court will deny without comment Nokia's 24 motion with respect to Counts I, II, IV, V, and VI - the 25 breach of contract, promissory estoppel, and declaratory Case 1:09-cv-00791-GMS Document 55 1 Filed 06/07/10 Page 4 of 23 PageID #: 1824 4 relief claims. 2 The Court will also deny Nokia's motion to 3 dismiss Apple's Count III, an antitrust claim for 4 monopolization under Section 2 of the Sherman Act. 5 Given that the overwhelming majority of the 6 parties' briefs were devoted to this monopolization claim, 7 the Court will now take a few moments to state its 8 reasoning. 9 Both parties discuss at some length the Third 10 Circuit's decision in Broadcom v. Qualcomm. 11 provides in clear terms the general framework under which 12 courts should analyze a motion to dismiss a claim brought 13 under Section 2 of the Sherman Act where the claimant is 14 alleging that the defendant engaged in anticompetitive 15 conduct during a standards-setting possess. 16 the Court in Broadcom held that the following elements, if 17 established, are sufficient to state a monopolization claim 18 under Section 2: 19 Broadcom Specifically, (1) in a consensus-oriented private standard- 20 setting environment, (2) a patentholder's 21 intentionally false promise to license essential 22 proprietary technology on FRAND terms, (3) coupled 23 with an SSO's -- standard-setting organization's -- 24 reliance on that promise when including the technology 25 in a standard and (4) the patentholder's subsequent Case 1:09-cv-00791-GMS Document 55 Filed 06/07/10 Page 5 of 23 PageID #: 1825 1 breach of that promise is actionable anticompetitive 2 5 conduct. 3 Apple will ultimately have to establish each of 4 the four elements listed in Broadcom in order to prevail on 5 its monopolization claim. 6 however, the question is not whether Apple has shown enough 7 to prevail on this claim, but, rather, whether its 8 counterclaim complaint sufficiently pleads this claim. 9 At the stage in the proceedings, While the Supreme Court's rulings in Twombly and 10 Iqbal raised the bar for surviving a motion to dismiss 11 somewhat, federal courts still operate under a notice 12 pleading system. 13 plaintiff alleges enough facts to make his or her claim 14 plausible on its face, a motion to dismiss must be denied. 15 Under Twombly and Iqbal, as long as the Put another way, and this is a quote from Iqbal: 16 "A claim has facial plausibility when the pleaded factual 17 content allows the Court to draw the reasonable inference 18 that the defendant is liable for the misconduct alleged." 19 Apple's counterclaim complaint easily passes 20 this test with respect to the monopolization claim. Nokia 21 argues that the allegations in Apple's complaint are 22 "conclusory" and "inconsistent." 23 Numerous paragraphs in the counterclaims plead facts that if 24 proven would support a finding that Nokia violated Section 2 25 of the Sherman Act. The Court does not agree. For instance, Paragraph 53 of the Case 1:09-cv-00791-GMS Document 55 Filed 06/07/10 Page 6 of 23 PageID #: 1826 1 counterclaims state that, "In order to ensure incorporation 2 into the standard and to avoid the SSO's consideration of 3 the cost of standardizing patent technology, Nokia 4 deliberately and deceptively did not disclose during the 5 standard-setting-process IPR [intellectual property 6 rights] that it now claims are essential to the standard. 7 In fact, in many cases, a named inventor on the concealed 8 patent application participated in the relevant working 9 group and championed Nokia's technical proposal. 6 Nokia 10 disclosed its IPR only after the relevant standard was 11 finalized." 12 In other paragraphs, Apple alleges specific 13 disclosures and nondisclosures that Nokia made during the 14 standards-setting possess and the commitments Nokia made to 15 license its technologies on RAND or FRAND terms. 16 Paragraph 71, 72, 83 and 84, among others, Apple alleges 17 that it relied on Nokia's FRAND and RAND commitments. 18 paragraphs in the complaint detail the ways in which Nokia 19 allegedly broke its promise to license its technologies. 20 For instance, Paragraphs 88 and 89 allege that Nokia 21 demanded cross-licensing of a number of Apple patents that 22 Apple alleges were not standards-essential. 23 and 91 allege that Nokia demanded excessive royalties, 24 specifically, royalties that were approximately three times 25 as much as earlier proposed royalties. In Later Paragraphs 90 These are just a few Case 1:09-cv-00791-GMS Document 55 Filed 06/07/10 Page 7 of 23 PageID #: 1827 1 examples of specific factual allegations in the complaint 2 7 that support a plausible claim for monopolization. 3 It is true that it might have been possible for 4 Apple to be even more specific in its complaint. Apple did 5 not, for instance, allege the specific dollar amounts and 6 royalties that Nokia demanded. 7 exact patents to which Nokia demanded licenses and why those 8 patents were not standard-essential. 9 Circuit nor the Supreme Court require such specificity at Apple did not specify the But neither the Third 10 the pleading stage. 11 it seems to me, to be more specific or extensive in 12 specifying the conduct allegedly giving rise to a claim. 13 The mere fact that greater specificity is possible does not, 14 however, render a complaint insufficient. 15 in Apple's counterclaims are sufficient to create a 16 reasonable inference that Nokia engaged in conduct that 17 violated Section 2 of the Sherman Act. 18 required to survive a motion to dismiss. 19 It is always possible for a complaint, The facts alleged That is all that is As to Nokia's allegation that Apple was 20 "inconsistent" in its assertions regarding whether the ten 21 Nokia asserted patents were essential, the Court agrees with 22 Apple that this misapprehends the legitimate practice of 23 alternative meaning. 24 that the asserted patents are essential. 25 asserts in its brief, "Apple is entitled to premise its Nokia's complaint repeatedly asserts As Apple correctly Case 1:09-cv-00791-GMS Document 55 Filed 06/07/10 Page 8 of 23 PageID #: 1828 1 counterclaims on those allegations and to argue, in the 2 alternative, that if the patents are essential, Nokia 3 wrongfully acquired and abused its monopoly power in the 4 markets for the technologies covered by the patents." 5 In short, Apple's counterclaims allege facts 6 sufficient to support a plausible claim for monopolization 7 under Section 2 of the Sherman Act. 8 9 For the reasons stated, the Court will deny Nokia's motion to dismiss. 10 That is the Court's ruling, counsel. 11 That leaves, then, in my view -- and I am 12 willing to discuss this with a somewhat open mind -- the 13 possible need to revisit the ordering of things. 14 discussed this extensively at our first visit, at the 15 scheduling conference. 16 Who wants to go first? 17 MR. LEE: 18 THE COURT: We 19 20 Your Honor, it's Bill Lee. Mr. Lee, I might have known you would jump into the breach right away. MR. LEE: I apologize. I missed the conference 21 at which Mr. Quarles appeared because I was in trial before 22 Judge Bonares (phonetic). 23 I think Mr. Quarles at least reported to me he 24 argued extensively but unsuccessfully to have the contract 25 claims litigated first. Without being redundant, I would 8 Case 1:09-cv-00791-GMS Document 55 Filed 06/07/10 Page 9 of 23 PageID #: 1829 1 say that we still think that is the right way to do it. 2 actually think if there were discovery and a trial on the 3 contract claims, that that actually may be the most likely 4 mechanism to resolve all of the patent claims before Your 5 Honor. 6 Trade Commission. 7 9 Apple in the Western District of Wisconsin. There are now two competing cases of Internet and 8 9 We Nokia started another patent case against I think -- and I know Mr. Flinn may disagree -but I think that if we could litigate the contract claim, 10 which is, there is a contract, there is a license, has there 11 been a breach because the offer is not FRAND, has the best 12 chance of getting the parties to ultimate resolution. 13 The only other point I will make, Your Honor, 14 is that it really would avoid a lot of duplication and a lot 15 of extra effort if we can litigate the contract claims 16 first. 17 need to impose upon, frankly, the Court's resources to 18 decide ten patents, nor will the parties have to litigate 19 ten patents. 20 thousands that might be litigated, which I think no one 21 hopes will happen. 22 that has the prospect of resolving the dispute as to all of 23 them. If it can resolve the case, there will never be the And these ten patents are just ten of The contract claim and the resolution of 24 THE COURT: Thank you, Mr. Lee. 25 Who would care to respond on behalf of Nokia? Case 1:09-cv-00791-GMS Document 55 1 2 MR. FLINN: Filed 06/07/10 Page 10 of 23 PageID #: 1830 Good afternoon, Your Honor. 10 This is Patrick Flinn from Alston & Bird. 3 THE COURT: Good afternoon. 4 MR. FLINN: Good afternoon. 5 It is nice to have Mr. Lee with us. 6 We did miss him the last time we were in Delaware. 7 But let me say that beyond Mr. Lee's presence, 8 nothing really has changed from the schedule that the Court 9 set in our prior meeting. The schedule was set with the 10 assumption that the nonpatent claims would, in fact, be in 11 the case. 12 the case I don't think causes much reason to revisit the 13 schedule. 14 And the fact that they are now confirmed to be in And I do have to respectfully disagree with Mr. 15 Lee's suggestion that somehow litigating ten patents is 16 simpler than litigating the contract FRAND issue, because 17 that is going to require determining the fair, reasonable, 18 and nondiscriminatory rates for not ten patents but for the 19 several hundred patents that are in Nokia's portfolio. 20 The license dispute that gives rise to Apple's 21 breach of contract claim is one that is not limited to the 22 ten patents that are the subject of Nokia's original 23 infringement claims that started this litigation. 24 25 The contract claims broadly and significantly opened the scope of the case from the simple ten patent Case 1:09-cv-00791-GMS Document 55 1 Filed 06/07/10 Page 11 of 23 PageID #: 1831 11 infringement claims that were originally brought. 2 So I don't think that it is going to be any 3 simpler to do the contract case first. 4 much more significant to have to deal with the entire 5 portfolio and structure it that way. 6 It is going to be The only other fact that I think counsel -- 7 another fact that I believe counsel is against changing the 8 schedule that had been previously agreed is that now that 9 the pleadings on the counterclaim have been resolved and we 10 know what is at stake, Nokia will have to look at what 11 nonpatent claims it wants to bring, and their schedule 12 permits amendment, the commonplace amendment of Nokia's 13 pleadings in light of the presence of the nonpatent claims 14 in here. 15 So it is possible -- and it hasn't been 16 confirmed -- but it is possible that there will be nonpatent 17 claims, including contract claims, that Nokia will assert, 18 that will further make it more complicated to adjudicate 19 them first. 20 So I think, in summary, our view is that the 21 circumstances and structure of this case remains unchanged, 22 notwithstanding the Court's ruling, and if anything, the 23 reasons for the Court doing the patent issues first, as of 24 right now the simplest issues if the case, I think, remain 25 the persuasive ones. Case 1:09-cv-00791-GMS Document 55 1 THE COURT: Filed 06/07/10 Page 12 of 23 PageID #: 1832 12 Mr. Flinn -- I know we talked about 2 this at the 16 conference. I will give Mr. Lee a chance to 3 respond -- but could you revisit the point that was made I 4 think in the joint status report, where I think it was -- 5 and I haven't had a chance to review it comprehensively -- 6 there was mention made of a similar case and an approach 7 taken by another District Judge wherein the contract matter 8 was positioned first and it resulted in a relatively prompt 9 resolution of the action. 10 way of settlement or not. I am just not sure if it was by 11 MR. FLINN: That was, I believe, the 12 Samsung/Ericsson case. 13 different factually and procedurally from the situation we 14 are in right now. 15 where we have a lawsuit started simply on the infringement 16 of ten patents and then the defendant wanting to change the 17 subject to talk about what the value of an entire portfolio 18 of several hundred patents is worth and wanting that 19 resolved first. I think it was significantly And it did not involve the situation 20 The fact is that the ten patents are the only 21 patents that Nokia seeks to litigate in this case at this 22 point. 23 else, it will be noncontract claims, and possibly even an 24 explicit breach of contract against Apple. 25 has pled the existence of the contract, we believe that it And to the extent that we are going to add anything Now that Apple Case 1:09-cv-00791-GMS Document 55 Filed 06/07/10 Page 13 of 23 PageID #: 1833 1 has contractual obligations that it has not fulfilled. 2 that again is likely to a much broader, more factually 3 13 But complex case than ours. 4 THE COURT: Thank you. 5 Mr. Lee, could you address in reverse order the 6 assertion just made by Mr. Flinn that if Nokia elects to 7 amend, seeks to amend, and brings in its own claims of 8 breach of contract or failure to follow FRAND, that it will 9 at least potentially significantly complicate matters, and 10 then move on. 11 MR. LEE: Yes. Your Honor, I don't think that 12 is correct. 13 be from them on our breach of contract. 14 two things on that for sure. 15 I am not quite sure what the claim is going to But I can say these One is, Your Honor, if we breach the contract to 16 them and they breach the contract to us, or there is 17 allegations of that, they are all arising from the same set 18 of contacts. 19 that were spurred by Nokia's contact with us in 2007 when 20 the iPhone launched. 21 They are arising from the same interactions The second is, both claims of breach of contract 22 will be resolved by what is an appropriate FRAND rate and 23 whether offered. 24 facts. 25 half-dozen times. So there is going to be a common set of The fact of the matter is the parties only met a It's not going to be quite as expansive, Case 1:09-cv-00791-GMS Document 55 Filed 06/07/10 Page 14 of 23 PageID #: 1834 1 I think, as Mr. Flinn suggests. 2 whether there has been a FRAND offer and what is a FRAND 3 14 rate will resolve both of them. 4 Ultimately, the question of The second is, I think the Eastern District of 5 Texas case is, in fact, quite analogous, and was we think 6 correct, because it recognized that resolving the FRAND 7 issue was likely to resolve the entire worldwide dispute for 8 the entire portfolio. 9 And it did resolve it. The interesting thing, Your Honor, is that -- I 10 can't remember which judge did it in Texas. 11 opinion, he relied in part upon Vice Chancellor Strine. 12 opinion that they relied upon from Vice Chancellor Strine 13 was in the Qualcomm-Nokia case, where Nokia was advocating 14 precisely the position I am advocating now, which is: 15 Resolve the contract issue, and that will resolve the 16 dispute. 17 But in the The The last point, Your Honor, is something has 18 changed beyond the fact I have finished another trial and I 19 am here and Mr. Quarles isn't. 20 Apple in Wisconsin, opening up yet another forum, five more 21 patents, part of the portfolio. 22 indication that we would urge the Court to help us find a 23 way to resolve all of this. 24 iterative patent cases one after another. 25 That is, Nokia has sued And it's the best Otherwise, we are going to have The fact of the matter is, if we litigate the Case 1:09-cv-00791-GMS Document 55 Filed 06/07/10 Page 15 of 23 PageID #: 1835 15 1 ten patents before Your Honor, we have this massive Markman 2 hearing, a 15-day trial, and the issue is resolved and some 3 of the patents are valid and infringed, we are still going 4 to have to decide the contract claim, because they claim 5 that these patents are essential. 6 get a FRAND rate. 7 contract claims. 8 9 We claim, then, that we We are still going to have to resolve the The contract claim is the one claim that has the prospect -- or it's the best claim that has the prospect of 10 taking all of these cases in all of these venues and 11 resolving it once and for all, or at least giving the 12 parties the incentive, a decision has been made, to go off 13 and reach a reasonable resolution. 14 THE COURT: 15 Okay. This is the problem with good lawyers. 16 Well, well argued on both sides. 17 Mr. Flinn, did you have anything else you wanted 18 to add. 19 20 MR. FLINN: Very briefly, Your Honor. I appreciate your patience on this. 21 Mr. Lee mentioned the Wisconsin case, and 22 suggested that it, in fact, implicates FRAND issues. It 23 does not. 24 case aren't subject to a FRAND obligation. 25 been declared essential to any SSO, they are not asserted to The patents that are at issue in the Wisconsin They have not Case 1:09-cv-00791-GMS Document 55 Filed 06/07/10 Page 16 of 23 PageID #: 1836 1 be essential to any SSO. 2 of patents that Apple has sued Nokia for infringing and 3 brought the ITC actions that Apple has brought against 4 16 So they are in the same category Nokia. 5 The other point that I wanted to make that was 6 also made previously in our in-person hearing but is worth 7 revisiting, there are significant problems with adjudicating 8 the FRAND contract claim beyond simply the several hundred 9 U.S. patents that are at stake in this case. We have 10 several hundred foreign patents that are part of the 11 portfolio that Mr. Lee, I think, would like the Court to 12 rule on what the value of those patents is, in terms of a 13 fair, reasonable, and nondiscriminatory rate. 14 The other thing that I think will become clear 15 when we plead, as I expect we will but I can't be sure, our 16 contract claim, we believe that the contract arises once a 17 party starts to use the technology claimed in an essential 18 patent. 19 Thus, we think that it is going to be 20 impossible to adjudicate the FRAND contract issue without 21 knowing which patents Apple actually uses. 22 patents, that is going to be complicated enough, but for 23 several hundred U.S. patents, and I don't even know how we 24 are going to deal with the foreign patents, it becomes 25 nearly nightmarish. And for ten Case 1:09-cv-00791-GMS Document 55 1 2 THE COURT: new matter. 3 4 Filed 06/07/10 Page 17 of 23 PageID #: 1837 17 Mr. Lee, Mr. Flinn has injected some Do you care to react to it? MR. LEE: Yes. I would just say two things, Your Honor. 5 I think that the idea that the contract arises 6 only when you use the technology is not correct. 7 that we are the beneficiary of is the contract they made 8 with the standard-setting organizations. 9 beneficiary to that contract. 10 A contract And we are the One of the cases that the Third Circuit cited in 11 the Broadcom appeal was a case that came out of San Diego, 12 that we actually tried, that involved these issues. 13 it's relevant in two respects according to what Mr. Flinn 14 described. And 15 First, in that case Qualcomm declared the 16 patents essential after the litigation had commenced. 17 the mere fact that they may or may not have made the 18 disclosures now doesn't tell us whether they claim they are 19 essential or not. 20 essentiality years after the standard has been adopted. 21 22 23 So In fact, Nokia has made declarations of So I don't think that tells us much about Wisconsin. The second thing, Your Honor, is a contract 24 arises at the time that they participate in the standard 25 organization. We are at least a third-party beneficiary to Case 1:09-cv-00791-GMS Document 55 Filed 06/07/10 Page 18 of 23 PageID #: 1838 18 1 that, which is in part what came out of the San Diego 2 decision. 3 And I continue to believe that we could have a five-day 4 trial, as Your Honor planned, on the contract claim, and the 5 likelihood is we would never need the second or third trial. On that issue I just disagree with Mr. Flinn. 6 THE COURT: Okay. Let me ask this of both 7 counsel. I would like to give this some further thought, is 8 where I think I am going to end this. 9 if I were of a mind to reorder things, could it be as Would it be as simple 10 simple, counsel, in your view, given how far out the trials 11 are in this matter and the due date for the pretrial 12 conference and the due date for the proposed pretrial order, 13 as simply reordering -- and this is what I have on my 14 mind -- repositioning the patent and contract, flipping 15 them, having them change positions, with the contract matter 16 going first and the patent matter going second? 17 18 MR. LEE: Your Honor, I think from Apple's point of view, the answer is yes. 19 THE COURT: And it wouldn't affect discovery or 20 anything of that nature, the manner in which discovery is 21 proceeding? 22 MR. LEE: 23 THE COURT: I think that's right. We are not talking about -- at this 24 juncture, I think the order reflects that there is not going 25 to be 56 practice. So it wouldn't affect that in any way. Case 1:09-cv-00791-GMS Document 55 1 Filed 06/07/10 Page 19 of 23 PageID #: 1839 19 Right? 2 MR. LEE: Right. 3 THE COURT: Mr. Flinn. 4 MR. FLINN: Well, one of the things, Your Honor, 5 that I think is going to be -- potentially make it hard 6 simply to do the flipping is that it's pretty clear just 7 from this call that Mr. Lee and I are not going to agree on 8 some kind of very basic things about this contract, like 9 what creates it, what the obligations of the contract are, 10 and the like. 11 It's a contract that actually arises out of 12 French law, we believe, because the organization, the 13 standards-setting organization in question for at least the 14 telecom patents is a French entity called ETSE (phonetic). 15 We believe, the French law makes clear that use of the 16 patents is what triggers some contractual obligations. 17 We don't think there is an obligation, if 18 somebody is simply out walking down the street, that they 19 had a license to Nokia's patents. 20 the technology to get a license to the patent and be 21 obligated to pay royalties on it. 22 They have to actually use So we are going to have to sort out that basic 23 legal framework. 24 contested. 25 to turn on that. And I think it's going to be hotly The scope of what comes into the case is going Case 1:09-cv-00791-GMS Document 55 1 Filed 06/07/10 Page 20 of 23 PageID #: 1840 20 If Mr. Lee is right that the only issue is what 2 offer was made and rejected two or three times over the 3 course of the negotiating history, that's one thing. 4 don't think that's the contract that exists. 5 contract is not as simple as that. 6 THE COURT: But we We think the Pardon the interruption, Mr. Flinn. 7 Isn't that going to be the issue whether we try the contract 8 case on May the 21st or the patent case on June the 18th? 9 Those issues are still going to be extant, aren't they? 10 MR. FLINN: They are going to get -- we are 11 going to make more progress on them if we try the patent 12 case first, because at least we are going to know whether or 13 not there is, in fact, an obligation at all, because if we 14 are correct in showing that the patents are essential and if 15 we are correct in showing that they are used, we at least 16 have something concrete in terms of what to value for 17 purposes of what the FRAND contract requires. 18 19 20 THE COURT: Will the patent litigation establish essentiality? MR. FLINN: Absolutely. Absolutely. We are 21 going to read the patents on the standard, and we are going 22 to show that Apple complies with the standard. 23 going to show essentiality. 24 is a fair, reasonable, and nondiscriminatory rate. 25 THE COURT: And that is And then the question is what Mr. Lee. Case 1:09-cv-00791-GMS Document 55 Filed 06/07/10 Page 21 of 23 PageID #: 1841 1 MR. LEE: 2 21 Your Honor, two things. It may establish essentiality for some portion 3 of the ten, but it still leaves the portfolio. 4 neither of us has said, which may be the most important 5 thing to tell Your Honor, is these licenses, when they get 6 granted, even if they are resolving, for instance, the 7 Qualcomm-Nokia fight, are portfolio licenses. 8 going through and saying, well, this patent in Israel is 9 worth this, this patent in Germany is worth this, this 10 11 I think what No one is patent in the U.S. is worth that. There are portfolio licenses that cover the 12 entire portfolio. 13 offer and what is the FRAND rate for that portfolio? 14 is just a matter of expert testimony that Your Honor could 15 hear in a couple of days and would resolve everything. 16 And the question is, what is the FRAND That If we followed Mr. Flinn's procedure to its 17 logical conclusion, we would have a trial on ten patents. 18 Some portion of them might be infringed. 19 move to whether there was a contractual obligation to offer 20 FRAND, whether it was. 21 we could move on to the next portion of the portfolio. We then have to And then, having had that decided, 22 But Nokia and Apple, without violating the NDA, 23 have always discussed this as a portfolio licensing matter. 24 And, in fact, that is what Nokia did with Qualcomm and how 25 they resolved it. And that's what Nokia urged on Magistrate Case 1:09-cv-00791-GMS Document 55 1 Filed 06/07/10 Page 22 of 23 PageID #: 1842 Judge Strine. 2 THE COURT: 3 MR. LEE: 4 22 it wrong. You mean Vice Chancellor Strine? Yes. Vice Chancellor Strine. I got I apologize. 5 I think, to be quite honest, one of the reasons 6 that I think Nokia would like to put the contract claim off 7 is that on certainly the key issues that we have been 8 arguing today, they have said the exact opposite. 9 the positions they are going to take is hard because of what 10 happened in the other case. 11 To take trial. 12 THE COURT: That is why we would have the Does anyone have the cite to the 13 Eastern District of Texas case off the top of your heads? 14 don't remember where I saw it. 15 joint status report. 16 I I was thumbing through the I don't think it's actually there. MR. FLINN: Your Honor, we can track it down and 17 get it to the Court. 18 were a number of lawsuits pending in different fora at the 19 same time. 20 know there was a District Court case, there were ITC cases. 21 We can track down the citation and forward that 22 23 24 25 I will point out that I think there We don't really know why they settled. But we to the Court. THE COURT: Did the judge in that case explain his reasoning for the manner in which he managed that case? MR. FLINN: I don't believe that there is Case 1:09-cv-00791-GMS Document 55 Filed 06/07/10 Page 23 of 23 PageID #: 1843 1 anything significant about the reasoning. 2 23 there is, Judge, we will find it and get it to you. 3 THE COURT: All right. 4 Let me consider this. But whatever Thank you. I don't think my leaving 5 things status quo, moving along as I have already ordered, 6 interferes with progress in any way. 7 Does it, in your view, Mr. Lee? 8 MR. LEE: 9 THE COURT: Mr. Flinn? 10 MR. FLINN: I agree, Your Honor. 11 THE COURT: All right, gentlemen. 12 your time. It does not, Your Honor. And take care. Thanks for 13 (Counsel respond "Thank you.") 14 (Conference concluded at 2:36 p.m.) 15 16 17 18 19 20 21 22 23 24 25 Reporter: Kevin Maurer - -

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