Leader Technologies Inc. v. Facebook Inc.

Filing 672

Official Transcript of Oral Argument held on 03-12-10 before Judge Leonard P. Stark. Court Reporter/Transcriber Heather Triozzi. Transcript may be viewed at the court public terminal or purchased through the Court Reporter/Transcriber before the deadline for Release of Transcript Restriction. After that date it may be obtained through PACER. Redaction Request due 1/3/2011. Redacted Transcript Deadline set for 1/13/2011. Release of Transcript Restriction set for 3/14/2011. (lad)

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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE

LEADER TECHNOLOGIES,
INC.,
Plaintiff,
v.
FACEBOOK, INC., a
Delaware corporation,
Defendant.

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) C.A. No. 08-862-JJF-LPS
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)
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)

Friday, March 12, 2010
3:31 p.m.
Oral Argument

844 King Street
Wilmington, Delaware

BEFORE:

THE HONORABLE LEONARD P. STARK
United States District Court Magistrate

APPEARANCES:

POTTER, ANDERSON & CORROON, LLP
BY: PHILIP A. ROVNER, ESQ.
-andKING & SPAULDING
BY: PAUL ANDRE, ESQ.
BY: JAMES HANNAH, ESQ.

Counsel for Plaintiff
Hawkins Reporting Service
715 North King Street - Wilmington, Delaware 19801
[phone] FAX [phone]

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APPEARANCES CONTINUED:
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BLANK ROME, LLP
BY: STEVEN L. CAPONI, ESQ.

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-and6
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WHITE & CASE
BY: HEIDI L. KEEFE, ESQ.
Counsel for Defendant

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Hawkins Reporting Service
715 North King Street - Wilmington, Delaware 19801
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THE CLERK:

All rise.

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THE COURT:

Good afternoon, everyone.

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THE CLERK:

Be seated.

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THE COURT:

Let's begin by putting

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appearances on the record.

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MR. ROVNER:

Do you mind if I do

it from here?

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THE COURT:

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MR. ROVNER:

That's fine.
Phil Rovner from

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Potter, Anderson.

And with me is Paul Andre and

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James Hannah from King & Spalding.

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THE COURT:

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MR. ROVNER:

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Paul and James in

person this time.

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Welcome.

THE COURT:

Yes, in person.

They've only been a voice before.

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MR. CAPONI:

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Rome for Facebook.

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Steve Caponi of Blank

Keefe from White & Case.

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And with me is Ms. Heidi

THE COURT:

The voice on the other

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MS. KEEFE:

It's nice to meet you.

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THE COURT:

Nice to meet you all

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end.

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as well.

Thank you for being here.

2

So we've got three matters

3

basically in front of us today.

4

we're going to proceed is we'll first deal with

5

the issue of the common interest privilege.

6

And the way

And because the burden is on

7

Leader on that one, I'll hear first and last

8

from Leader.

9

argument on that, we'll move on to the two

10

And then after we're done with

discovery issues.

11

And I'll give each side a chance

12

to address both of them as if we were on the

13

phone, except we'll all get to see each other as

14

we do it.

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17

Okay.

So let's begin on the

common interest issue, please.
MR. ANDRE:

May it please the

18

Court, Paul Andre for Leader Technologies.

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Honor, I think our briefs on this topic have

20

been very thorough.

21

all that we wanted to cover.

22

Your

And I think we've covered

I do want to point out to the

23

Court that Facebook doesn't dispute that the

24

documents in question are, in fact, privileged

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and work product.

2

That's not an issue for the

Court.

3

There's no reasonable dispute that

4

Leader entered into written agreements with the

5

litigation finance companies.

6

argument in Facebook's briefing that appear that

7

there were documents exchanged before the NDAs

8

were signed.

9

There was some

That's not the case.

The date of

10

the document was a little bit different than the

11

actual date of the agreement.

12

But they were sent by email after

13

everything was signed.

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case is shown conclusively that Leader insisted

15

upon a signed NDA before they could make any

16

type of confidential information to these

17

financing companies.

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So the evidence in this

And then the third point we wanted

19

to bring up is that the common legal interest,

20

if there is a common legal interest, is really

21

the only issue for the Court to decide.

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talking about a very small number of documents

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that provided a very small number of companies.

24

We're

And what we're claiming to be

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privileged is even a narrower subject matter of

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the documents we provided to these companies.

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We're seeing about one very limited subject and

4

that is the merit of a potential litigation.

5

The only argument that Facebook

6

has to say that's not a common legal interest is

7

they say there's an arm's length negotiation.

8

Well, in every common interest agreement, you're

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going to have some type of a negotiation.

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is just the nature of a common interest.

That

11

In this particular instance, those

12

documents that related to the commercial aspect

13

of the agreement have been produced.

14

there's no privilege being asserted against

15

those.

16

the ones relating to the merits in the

17

litigation.

And

So we're only asserting the privilege on

18

The fact that an agreement was

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eventually commiserated at the end of the day is

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of no merit.

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THE COURT:

Let's go back to the

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negotiating at arm's length, because there are

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at least three cases, I think, that are cited

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that have specifically said it's that

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negotiation at arm's length that precludes a

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finding that there's a common legal interest

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here.

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5

Why should I not agree with those
cases?

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MR. ANDRE:

7

cases that say otherwise.

8

Well, there are also

fact-specific instances.

9

THE COURT:

It's very

Well, we only found, I

10

think, the Hewlett-Packard case that seemed to

11

go the other way.

12

that?

13

Are there other cases besides

MR. ANDRE:

I believe the case

14

from the Federal Circuit was also an arm's

15

length negotiation as well.

16

on the name.

17

I'm drawing a blank

It was In Re.
But any way, I'll find the case in

18

one second.

19

the agreements are signed.

20

entered into, so a portion, something has

21

already been agreed to by the parties before

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they exchange documents.

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But the fact of the matter is that
There's an agreement

So there is an agreement in place.
And maybe that agreement --

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THE COURT:

Right.

But it's not

an agreement to actually finance.

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It's an agreement to exchange

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documents subject to confidentiality.

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MR. ANDRE:

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That's the agreement.

Correct.

7

There is -- so there is an

8

agreement in place.

That's essential in cases

9

because some of these other cases, there is no

10

such agreement in place that you're talking

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about.

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THE COURT:

Let's talk about

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Net2Phone.

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you called it in opposite in your briefing, and

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you attempted to distinguish it on this lack of

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confidentiality agreement.

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It was a little stunning to me that

It seemed to me that what Judge

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Schwartz was saying was not only is there no --

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not only was the privilege waived because of the

20

lack of confidentiality, but on the prior,

21

logically prior question of:

22

privilege, she was also saying there is no

23

privilege, because there's no common interest

24

when you have a litigation financing company on

Is there a

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one side and, you know, an actual patent holder

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on the other side.

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I guess the questions are:

Help

4

me to better understand, if you have any other

5

way of distinguishing, the Net2Phone decision.

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You know, do I have to reach an

7

opposite conclusion from Judge Schwartz in order

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to rule for you?

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MR. ANDRE:

Well, it is important,

10

too, Judge Schwartz did say there was no

11

confidentiality agreement in place.

12

that is a distinguishing factor.

13

And I think

Because at that point, the parties

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are exchanging without a belief that they have a

15

confidential-nature relationship, that they're

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going to maintain that.

17

instance, both parties had a vigilant belief

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that these documents would maintain the

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confidentiality and privilege.

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THE COURT:

In this particular

All right.

But what

21

she wrote was that the interest shared between

22

IDT, which was the company that I think made a

23

tender offer for the patent holder, and GE,

24

which was the party that was negotiating for a

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loan, they were going to finance the patent, the

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interest was commercial and not legal.

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As the purpose of the

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communications during the negotiations were to

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entice a third party to loan plaintiff money and

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not to further a then shared legal interest.

7

Isn't she saying that they're sure

8

if there were a common interest and privilege,

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she was going to say it was waived because

10

there's no confidentiality agreement?

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seems in the portion I'm reading from, she's

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also saying there is no privilege because there

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is no common interest.

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MR. ANDRE:

But it

In that particular

15

instance where Judge Schwartz has made that

16

decision, I think it is opposite to the public

17

policy.

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interest agreements.

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In this particular instance, common

And I'll just give you an example.

20

If I have cases in the Eastern District of Texas

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where I'm representing defendants against 14, 15

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defendants, we sign a joint defense agreement

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between all of us.

24

We're all common defendants.

When those parties settled the

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case, they no longer have a interest -- common

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interest with us, but we expect the interest to

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be maintained.

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In a similar situation where

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you're looking to do business with another

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company and they're concerned about potential

7

litigation with this common interest issue come

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in play.

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and they say, Listen, we want to know if there's

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any patents out there that we need to be worried

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about, because we don't want to be drawn into a

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lawsuit by your product.

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You're sending a product to a company

And in that particular instance,

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they almost inevitably sign an NDA common

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interest agreement to share certain information,

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opinions of counsel, whoever it may be.

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If Judge Schwartz's idea is that

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the only way you can commis -- effect that

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common interest is actually to do the deal at

20

the end of the day, which she seems to say that,

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if they did consummate the deal, they did

22

provide the loan and that there was common

23

interest, it would shield the negotiations

24

between the parties.

And that's against the

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public policy and what the common interest is

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all about.

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THE COURT:

What about the

4

suggestion that these litigation financing

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companies all have to undertake their own due

6

diligence any way?

7

just on what Leader's analysis is.

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9

They're not going to rely

And so maybe you're overstating
the policy concern.

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MR. ANDRE:

Well, they would have

11

to do their own.

12

want to talk to Leader's counsel about their own

13

analysis and compare notes, then that would be

14

an issue that these parties get into.

15

And to the extent that they

In fact, that is a very common

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thing.

That's the communications we're talking

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about.

We're talking about a company that has

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the exact same common interest in one very

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specific thing that Leader has.

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They're going to finance the
litigation.

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We're going to assert the patent.
THE COURT:

And what about the

23

fact that they don't have the actual interest at

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that moment?

You know, it's at best a potential

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interest.

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MR. ANDRE:

Well, they have the

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interest because that's their entire business.

4

I mean, when you look at the Judge Schwartz

5

case, you get GE, just another company that is

6

going to fund litigation, take some interest

7

into a patent case.

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If you're looking at a company's

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sole business, the funding of litigation, and

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there's lots of these companies out there in

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this world today because a lot of smaller

12

players can't afford litigation.

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way it is.

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It's just the

That company's sole business is

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funding litigation.

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non-disclosure agreement with companies like

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Leader, at that point, they have one very

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limited common interest.

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the litigation.

20

When they enter into the

That is the merit of

Now, the deals of the term sheets

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and that kind of stuff are -- they have opposite

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agreements.

23

more money for the return.

24

The financing company wants to get

Leader would not want them to have

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more money, and that's where their interests

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diverge.

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itself, those interests are identical, because

4

they're in the business of loaning to

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plaintiffs.

But on the actual merit of the case

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The plaintiff has the interest in

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the patent.

They actually want that to go

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forward.

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looking to negate the deal.

That's their entire -- they're not

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So --

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THE COURT:

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the dispute.

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You certainly narrowed

common legal interest.

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I agree with you, the issue is the

Is there a common legal issue

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interest there or is there not?

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issue I see as I see it.

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That's the

And you're only asserting that

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privilege with respect to three different --

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three financing companies that you've had

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communications with; am I correct about that?

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MR. ANDRE:

I believe there's four

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and possibly -- we haven't seen documents from

23

the fifth one, but no more than a handful that

24

we're aware of.

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THE COURT:

Okay.

And the number

of documents, is that clear yet?

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MR. ANDRE:

The Number 6

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documents, you've seen two of them in the in

5

camera inspection.

6

essentially email communication where they are

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talking about the case amongst the lawyers.

8

We provided you -- they're

So the actual number of documents

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are probably less than five as well.

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THE COURT:

And are you asserting

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the privilege with respect to any document that

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you've shared with somebody other than those

13

four or five companies?

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MR. ANDRE:

No, Your Honor.

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THE COURT:

Okay.

16

So the issue is

narrow.

17

Tell me, as best you can, what the

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prejudice is to Leader if you're ordered to

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disclose these documents.

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MR. ANDRE:

Well, we give up our

21

privilege.

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communication is one of the highest and should

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be most protected sanctities.

24

I mean, the attorney-client

THE COURT:

Let's focus on the

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practicality.

2

argument, then you're not going to have to give

3

it up.

4

it up.

If you're wrong, you will have to give

5
6
7

If you're right on the legal

What practical impact is there or
what burden?
MR. ANDRE:

Not much, Your Honor.

8

The fact of the matter is these documents, they

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talk about how great our patent is and how the

10
11

world infringes.
You know, if we do have to give

12

them up, then these are documents that are very

13

favorable to Leader at the end of the day.

14

These are not documents that talk about --

15

Facebook has argued that we made some admissions

16

about prior art, for example.

17

If you look at the actual

18

document, it said that the patent would have

19

been obvious in the 2004, 2003-2004 time period.

20

That was two years after we filed our patent

21

application and when Facebook launched.

22

We published on our White papers

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on our website at that time.

24

would be obvious.

Of course, it

We published our data and

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Facebook was out there.

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So that's the "admission" they

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talk about.

4

documents to Leader other than the fact that

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they were not meant to be in the public realm.

6

They were not to meant to be used in the

7

litigation context.

8

Leader took a great amount of care to protect.

9

There's nothing harmful in these

This was something that

And we think that the care they

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took from the signed NDA, the way they marked

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the documents, the way they protected all their

12

documents of that nature is something that

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should be protected by the Court.

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15

THE COURT:

Okay.

Anything else

you wanted to add?

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MR. ANDRE:

That's all.

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THE COURT:

Okay.

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All right.

Let me hear from

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Facebook on this issue.

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MS. KEEFE:

Fine.

Thank you, Your Honor.

21

Your Honor has actually hit, I think, almost

22

directly on what I was hoping to stand up and

23

say, which is what happened to the Net2Phone

24

case and what Judge Schwartz had to say about

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the common interest.

2

and just answer a couple or address a couple of

3

the points that Mr. Andre raised.

4

But I'd like to back up

He said that this common interest

5

privilege is only being asserted with respect to

6

a very, very small handful of companies and very

7

small handful of documents.

8

part of what's been plaguing us with uncertainty

9

throughout this whole thing is that on their

This is actually

10

privilege log, if Your Honor recalls, when you

11

asked Leader to identify where on the privilege

12

log these documents that Neyer had produced

13

existed, what they indicated were that there

14

were two lines on the privilege log where the

15

listing on the privilege log was document

16

created by Mr. McKibben at the request of

17

counsel.

18

Never indicated that had ever been

19

sent to a third party in any way.

20

scores of these entries that we assume were all

21

of these types of documents now.

22

There are

So I think that that actually may

23

be a larger number.

24

It's just something that's

been unclear to us.

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Also, he's now saying that there

2

are only three to four, maybe five companies

3

with whom these documents were exchanged.

4

We had originally back in November

5

approximately 20 NDAs between Leader and

6

third-party investment companies.

7

assuming there were documents exchanged between

8

those people because they had an NDA.

9

And we're

Earlier this week, Leader also

10

produced an additional 10,000 pages of

11

information which they say comprises 2,300 --

12

not which they say, but which from what we can

13

tell is about 2,300-plus further NDAs, over a

14

hundred of which are after the patent has

15

issued.

16

At least three of which -- because

17

I haven't had a chance to look at all of them,

18

but my people have been trying to scour through

19

them.

20

they had something to do with possible

21

litigation financing or discussions of the

22

strength of the patent enforcement or

23

litigation.

24

At least three of which indicate that

I actually have copies of those

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here if Your Honor wanted to see them.

2

So I'm just not sure what the full

3

scope of this is.

4

for the record and note that there may be more

5

here than we thought.

6

I just wanted to note that

With respect to any of the other

7

arguments that were raised, Your Honor, we think

8

that the Net2Phone case directly addresses these

9

issues extremely well.

10

And it does go to the

notion that this is not a common legal interest.

11

In fact, that point is reiterated

12

by the witnesses whose depositions we took

13

during the deposition of Neyer.

14

said outright that they did not believe that

15

their legal interests would ever align until

16

they signed an agreement to fund the litigation.

Neyer actually

17

THE COURT:

Let's talk --

18

MS. KEEFE:

Go ahead.

19

THE COURT:

And I read that in

20

your brief.

Let's talk about the

21

Hewlett-Packard case in the Northern District of

22

California 1997 versus Bausch & Lomb, which I

23

don't think you address in your brief.

24

seem to be at least one case, if not the only

It did

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case, that found -- it seemed to find a common

2

legal interest in a situation like this.

3

MS. KEEFE:

I think the

4

Hewlett-Packard case, Your Honor, is

5

distinguishable as Judge Schwartz even

6

acknowledged in her order.

7

that case, there was actually a threat of

8

impending legal action against both parties

9

where there could be an aligned legal interest,

In the sense that in

10

something that they had to defend themselves

11

from together.

12

really the legal interest that was being

13

invoked.

14

And that was actually what was

Here, there would be no common

15

legal interest.

16

sue Leader and/or any of its investors, Leader

17

and some kind of insurance company or something

18

like that.

19

Facebook wasn't reaching out to

Rather, this was an arm's length

20

negotiation for a commercial purpose, which is

21

to see if money could be made and invested.

22

THE COURT:

I think historically,

23

the common interest privilege has its roots in

24

the joint defense privilege.

It may have arisen

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originally in a criminal context.

2

I'm not

certain.

3

MS. KEEFE:

Correct.

4

THE COURT:

But it certainly has

5

been expanded to apply to plaintiffs as well.

6

I'm not quite sure what you're suggesting should

7

be the distinction here.

8

Under Leader's view, they and

9

these third parties, had they consummated a

10

deal, would share the same interest in the

11

patent for purposes of litigation.

12

matter, who's to say that Facebook wouldn't have

13

gotten around to finding this patent and sued

14

for declaratory judgment of invalidity, at which

15

point both the litigation financing company and

16

Leader would have had the same interest.

17

MS. KEEFE:

And for that

I think Your Honor

18

made the most important point when he said had

19

they consummated the relationship.

20

relationship is consummated, there is no joint

21

legal interest.

22

Until a

I'm not saying that plaintiffs,

23

co-plaintiffs can't have a joint legal interest

24

in a case.

I'm not saying that co-potential

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D.J. defendants can't have a joint legal

2

interest.

3

What the HP case had, though, were

4

two parties who were facing a common adversary

5

with a possible imminent legal threat.

6

case, until such time as the parties agreed to

7

enter into a financing arrangement, they are not

8

jointly aligned.

9

In this

And, in fact, Northwater -- very

10

interesting part of the deposition that took

11

place with Northwater.

12

Northwater's representative about what kinds of

13

documents he expects to see during cases like --

14

during negotiations like this.

15

that, you know, usually it's the patent.

16

ask a few questions and then we go off and do

17

our own due diligence.

18

At one point we asked

And he said
And we

And he was actually quite

19

surprised to see the level of documentation

20

provided by Leader, because they're off doing --

21

you know, Northwater was used to doing its own

22

investigation.

23
24

So to Mr. Andre's point about
somehow squelching the fact that, you know, this

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can't happen and people won't invest in

2

litigation, I think that's absolutely not true.

3

These investment companies, these litigation

4

investment houses are very familiar with doing

5

their own due diligence with factual scenarios.

6

And they're very accustomed to the

7

fact that the attorney-client privilege is so

8

narrow that if waived by disclosure to a third

9

party, before there is an absolute common legal

10

interest, results in discoverable information.

11

THE COURT:

In the Hewlett-Packard

12

case, the judge there was very concerned about a

13

lot of policy implications.

14

with one about essentially whether these

15

litigation financing companies could continue to

16

survive with the ruling in their favor.

17

And you just dealt

But one thing that was important

18

to the judge there was that there was no

19

evidence of sort of an unfair use by the parties

20

asserting privilege.

21

the privilege as a sword and a shield.

22

They weren't trying to use

Do you have any argument that what

23

Leader's trying to do is in some way unfair

24

here?

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MS. KEEFE:

Your Honor, it feels

2

unfair.

And the reason it feels unfair is, as

3

we've kind of gone through this process of

4

trying to determine what these documents are,

5

how they're protected, why they were logged, how

6

they were logged, we've often heard reference to

7

whether or not these documents were relevant.

8

And the fact that numerous ones of these

9

communications were never even logged because

10

they were deemed not to be admissible or not to

11

be relevant.

12

And it was only through kind of

13

accidentally in some cases finding some things

14

and then pursuing that, and then subpoenaing the

15

third parties that we actually found out what

16

these documents were and where they existed.

17

So to me, it does feel unfair in

18

the sense that also looking at the log, we would

19

have never even known that documents had been

20

disclosed to third parties and that there was a

21

common interest being asserted until Your Honor

22

asked for the next three steps to go forward,

23

and until we were actually here today.

24

And just because I haven't had a

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chance to review all of the additional NDAs that

2

have been produced, I am not sure if there's not

3

even more there.

4

THE COURT:

And what about the

5

separate policy argument that a ruling in your

6

favor would help push patent lawyers even

7

further along the line of being concerned with

8

each other's work and not on what, I think, the

9

California judge referred to as, you know, the

10

actual facts of the patent itself?

11
12

MS. KEEFE:

I'm not a hundred

percent sure I understand Your Honor's question.

13

THE COURT:

It was something to

14

the effect of, you know, why are we all so

15

concerned about what's in the minds of opposing

16

counsel?

17

know, what's in the patent, what's in the

18

prosecution history, that sort of thing?

19

Why aren't we more concerned with, you

MS. KEEFE:

Well, in this

20

particular case, at least one of the reasons

21

that we're incredibly concerned about what's in

22

those documents is because Mr. McKibben himself,

23

the inventor, is the one that authored at least

24

two of -- the only two documents that we've

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actually seen so far, he authored.

2

And according to the witnesses who

3

we have subpoenaed, it was Mr. McKibben, in very

4

large part, who was conducting all of the

5

communications with the third-party financing

6

companies.

7

the outside lawyers.

8
9

There were some communications with

And, in fact, a lot of those, Your
Honor, didn't have documents generated.

A lot

10

of these were exactly, as we talked about last

11

time, where someone said, Okay.

12

room and talk about this.

13

discovery would have to take place via

14

deposition or some other form of thing.

15

Let's sit in a

And then the

So here especially I think that

16

there is a concern about what the inventor of

17

the patent is putting out there as what he

18

believes to be the scope of his case, the scope

19

of his patent and to see, frankly, if others are

20

challenging.

21

One of the other things that we

22

actually haven't addressed yet, but another

23

relevance to all of these documents, one of the

24

issues in this case is whether or not the patent

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is valid.

2

patent was invalid is by showing that there's

3

prior art, and that renders the patent obvious.

4

One of the ways we would prove that a

Leader has the option, which they

5

have not, you know, said they're not going to do

6

of showing the patent to be non-obvious by going

7

to what are called secondary considerations of

8

non-obviousness.

9

acceptance of the patent or industry rejection

10

One of those is industry

of the patent.

11

If, in fact, Leader were out

12

selling the patent to dozens of people, all of

13

whom rejected it, that very well may go to

14

industry rejection of that patent.

15

in a damages analysis, one of the things that

16

you look to is industry acceptance or rejection

17

of the patent and the other negotiations that

18

have happened vis-a-vis that patent.

19
20
21
22
23
24

Similarly,

So those are also two relevance
factors.
THE COURT:

Okay.

Do you have

anything else to add on common interest?
MS. KEEFE:

No, Your Honor.

I

appreciate your time.

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THE COURT:

Thank you.

Mr. Andre.

2

MR. ANDRE:

I'll be very brief,

3

Your Honor.

4

Facebook's argument is the position that until

5

an agreement is consummated, there is no legal

6

common interest.

7

was a deal consummated that was somehow

8

retroactively making their talks previously in

9

line with each other and have a common interest.

10

The one thing that struck me about

It would imply that if there

So every time you would have these

11

discussions or negotiations with parties, unless

12

you were forced to consummate the deal, you'd

13

run the risk of losing your privilege.

14

single time.

15

provide this type of information.

16

Every

So, therefore, you would never

That's the exact thing that we're

17

trying to avoid.

18

of conversations where people can have open

19

discussions when there is a common legal

20

interest, just like there was in the

21

Hewlett-Packard case.

22

We're trying to have the type

Second thing, when we talk about

23

the deposition testimony of Northwater, you saw

24

the emails attached to Mr. McKibben's

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declaration in which Northwater assured them

2

that the privilege would be maintained in

3

deposition.

4

about the privilege.

5

They testified they didn't care
Of course not.

That's because we didn't do the

6

deal with them.

7

in almost every instance, was they wanted to do

8

the deal with Leader.

9

acceptance.

10

The deal with these companies,

Talk about the industry

The deal terms were too onerous

11

for Leader to accept, so therefore, it wasn't

12

like companies were rejecting Leader.

13

the other way around.

14

It was

If we, Leader, had -- was in a

15

position where they had to consummate the deal,

16

the pressure would be taken as to avoid not

17

waiving privilege.

18

Last thing, the NDA that they are

19

talking about.

During the deposition of Mr.

20

McKibben, two days of deposition, they raised

21

issues about prior to filing a patent

22

application.

23

litigation, financing the litigation because

24

this is even before the patent was filed.

That has nothing to do with actual

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They had raised the issue that

2

there may be a public disclosure.

We assured

3

them during deposition that any time

4

Mr. McKibben talked to any potential investor or

5

anybody about this, there was an NDA signed.

6

They asked for those documents.

7

to them.

We provided it

8

So that's --

9

THE COURT:

10

be -- there aren't thousands of other

11

communications that would be an issue?

12

MR. ANDRE:

So there couldn't

The vast majority --

13

there may be one or two that date post the

14

patent, but over 2,000 of them were dated before

15

2002.

So the patent issued in 2006.

16

And then, finally, the last thing

17

I want to point out is just that, even if Your

18

Honor were to say that somehow privilege had

19

been waived with these documents, these

20

documents would never be admissible in a trial

21

any way.

22

evidence.

23
24

They won't lead to any admissible

This is opinion-type information
put on these documents.

This is an inventor

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saying, This is the greatest thing since sliced

2

bread and everybody is infringing.

3

Now, I wish I could get that into

4

evidence, because I'd like to have my inventor

5

take the stand and say such things.

6

obviously, Judge Farnan will not permit that.

7
8

But,

So these documents will not be
admissible in this case.

Thank you, Your Honor.

9

THE COURT:

Okay.

10

MS. KEEFE:

I just wanted to make

11

two just -- no, two corrections to the record.

12

There were -- as of our initial review, there

13

were at least 163 NDAs that postdate the

14

issuance of the patent that include a word like

15

patent litigation or litigation about the

16

patent, something like that.

17

And with respect to us not

18

challenging the privileged status of any of

19

these documents, I can't right now because I

20

don't have enough information to know whether or

21

not I can.

22

I have not yet, but that's only because I don't

23

know enough about the documents to do so.

24

So the document record is clear that

THE COURT:

I understood that from

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your briefing.

Okay.

2

MS. KEEFE:

Thank you, Your Honor.

3

THE COURT:

Let's move on to the

4

discovery issues at this point.

5

one I want to deal with is Leader's efforts to

6

compel some more technical documents from

7

Facebook.

8
9

And the first

So I'll hear from Leader on that
one first.

10

MR. ANDRE:

Thank you, Your Honor.

11

There is a little bit of an update regarding

12

this subject.

13

Mr. Hannah took the deposition the

14

day before yesterday, and during the deposition

15

counsel for Facebook informed him that they

16

would agree to do some -- provide some updates

17

of this information, because they produced 398

18

pages of technical documents during our

19

deposition.

20

learned those topics -- those documents are out

21

of date.

22

In the last few weeks, we've

So there was an agreement that

23

some, not all, but some of the documents would

24

be updated.

We received 15 pages of documents

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yesterday, which I am told -- I have not seen

2

them personally, because I was traveling here

3

yesterday -- I'm told they are somewhat of an

4

update to some of those pages.

5

And they also agreed to provide

6

one revision for each of those documents.

7

have not produced all of the revisions.

8

there has been some movement just in the last

9

two days since we've filed the briefs.

10

They
So

With that being said, I do want to

11

remind the Court of, more or less, the procedure

12

leading up to us filing this letter.

13

parties went back and forth several times trying

14

to get additional documentation.

15

The

And Facebook's position was we're

16

not sure what you're asking for.

17

modules.

18

and to get to the point where there was a

19

production of documents eventually.

20

We identified

Any way it was a lot of back and forth

And in those productions, there

21

was 398 pages of technical documents.

We

22

obviously said, We know there's more, because

23

just by the very nature of the company.

24

told Your Honor, I've been doing this 17 years.

Like I

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I just know it's there, just intuitively.

2

But Facebook made representations

3

after we moved to Court.

4

headway to them.

5

We couldn't make any

They made a representation to Your

6

Honor that they had produced all technical

7

documents.

8

can't -- you know, they said they produced it.

9

I've got to take them for their word.

10

Your Honor said, Mr. Andre, I

And you advised us if we start

11

taking depositions and they started identifying

12

additional documents, we could come back to Your

13

Honor and ask for more.

14

done.

15

Well, that's what we've

We've taken the depositions, and

16

we've identified a lot of documents.

17

not asking for every document in the company

18

like they say.

19

documents.

20

letter brief that specifically identified those

21

documents.

22

Now, we're

We're asking for very specific

There's an Exhibit A attached to our

We have actually talked to

23

Facebook saying, Well, we'll just take documents

24

from witnesses we depose.

We don't want 300

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engineers.

2

We'll just take the dozen or so

3

people that we've deposed.

4

files for these keywords.

5

sufficient for us.

6

You can search their
That would be

And they have bulked at that as

7

well.

8

The major argument here seems to be two

things.

9

One, they think what we've been

10

told by Facebook's counsel that they are

11

relieved of their discovery obligation, based on

12

Your Honor's September 4th, 2009 order.

13

don't think that's a proper reading of the

14

order.

15

We

And the second one is we've given

16

you source code.

17

don't need anything else.

18

If you get source code, you

Source code is a very valuable

19

piece of evidence, and in some cases is

20

essential.

21

We agree with that.
But that's just one piece of

22

evidence.

There's a lot of different types of

23

evidence and not up to one party.

24

one type of evidence.

You only get

You don't get the other

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type of evidence, even though it's relevant.

2

THE COURT:

They say you've hardly

3

even looked at their source code.

4

true?

5

MR. ANDRE:

Is that not

No, that's not true.

6

Our expert looked at it for two full days. And

7

Mr. Hannah, my co-counsel, who is an electrical

8

engineer and understands source code, he's

9

looked at it for four or five days.

10

And I've got a young associate in

11

Southern Silicon Valley, who has an

12

undergraduate in computer science, master in

13

computer science.

14

Hewlett-Packard as a software engineer and two

15

years at Apple Computer.

16

15 days.

17

looking at the source code.

18

He's worked nine years at

He spent about 10 to

All told, we've spent about 20 days

We have been in constant contact

19

with her expert about what we're looking at.

20

We've had a hard time with this source code

21

because they said there were revisions.

22

can't find it.

23
24

We

And they can't show it to us.

So

all told of all the amount of hours we've spent,

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we spent about 150 man-hours looking at this

2

source code.

3

THE COURT:

What about -- they say

4

that they loaded a bunch of other technical

5

documents on that computer where the source code

6

is.

7

Have you looked at those?

8

MR. ANDRE:

9
10

We have.

The most

recent is, I think, they just loaded something
on about a couple weeks ago, I believe.

11

And I don't know if we're going to

12

again next week.

13

we're going over there today.

14

We're going back or actually

Mr. Lee is back over there again

15

for another day.

16

expert coming in, because they -- obviously, we

17

were going to wait until we got a claim

18

construction order, because then we have -- that

19

tees off the expert report.

20

And then we have our technical

And we had the most recent

21

information.

We don't want our experts coming

22

in looking at source code and have it change,

23

because Facebook is continuously updating their

24

code.

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So we wanted to have the most

2

recent code based on the expert report.

3

claim construction came down last week, or this

4

week or recently.

5

THE COURT:

Recently.

6

MR. ANDRE:

Recently.

The

I'm losing

7

track of time.

8

come up for two full days to review next week.

9
10

And our expert is scheduled to

So we've looked at the source
code.

We've looked at it at nauseam.

11

THE COURT:

Facebook says that

12

what you really need is the Wiki, which they've

13

provided.

14

updating the Wiki.

And it sounds like maybe they're

15
16

They've agreed to do that.

I'm

not quite clear.

17

But why do you need more than

18

maybe just additional Wiki information?

19

take a stab at explaining what a Wiki is

20

while --

21

MR. ANDRE:

22

be internal.

23

And

A Wiki is -- it could

internal Wiki.

24

They are talking about the

It's just a way of communicating

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with a group of people.

It's somewhat of --

2

it's a modern day message board, as it were.

3

And people update the Wiki that

4

goes on.

And they actually put some of their

5

technical information in these Wikis.

6

But they also have, like every

7

quarter, every other month, they have these all

8

hands engineering meetings.

9

those where they talk about the functionality of

10

They have notes of

the site.

11

One of the things that strikes me

12

really on the source code and the Wiki is

13

-- is, you know, in about three months from now,

14

I'm going to have the privilege of, you know,

15

presenting this case to a jury.

16

going to read the language that source code is

17

written in.

18

that

And they're not

I can almost guarantee you of

19

that.

We are not going to put that in as an

20

exhibit, either, pursuant to the protective

21

order.

22

THE COURT:

I saw that argument in

23

your letter.

And as you say, you've been

24

litigating patent cases for a while.

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I would have thought that it was

2

really the expert's responsibility to translate

3

computer language into something that's

4

understandable and even impressive to a jury.

5

MR. ANDRE:

6

expert will.

7

And I'm convinced our

do that.

8
9
10

I'm absolutely convinced he will

And they will have an expert get
up and do something, say just the opposite.

So

then it becomes a credibility of the experts.

11

What I think is required of

12

defendants is to produce documents that describe

13

their language in functional terms, in real

14

English, because that's how source code is

15

written.

16
17

Your engineers don't just sit down
and start writing source code.

18

THE COURT:

They --

This is not an

19

argument that came up in all the prior times

20

we've talked about your efforts to obtain source

21

code and technical documents, at least not that

22

I recall.

23
24

MR. ANDRE:

We talked about

getting documents from Facebook.

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THE COURT:

Which I understood to

2

be to help you and your experts understand what

3

the source code was.

4

Now, it seems like you've got

5

another purpose, which is to make your case to

6

the jury.

7
8

MR. ANDRE:

It is.

I mean, it's

both cases.

9

Obviously, it helps our experts if

10

they get the design notes, because from those

11

design notes then engineers write source code

12

based on functional requirements in those design

13

notes.

14

The patent claims are written in

15

functional language as well.

16

back here to say there had been very, very

17

specific documents identified.

18

power points.

19

So we were coming

There have been

There's been roadmaps.
There has been other types of

20

presentations that we've specifically identified

21

by these witnesses.

22

with the closest amount of specificity we

23

possibly can.

24

And we've identified them

The argument that it will be

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prejudicial to us with respect to the jury in

2

presenting our case is something that I think

3

has been in all along.

4

articulated it as forcefully as we should have.

5

But now we're coming down the home

6

stretch here to trial, and we're thinking about

7

how we're going to try this case.

8

get to this point in the case, we can have our

9

experts battle it out and I think we'll do quite

10

well.

Maybe we haven't

And as you

That will be fine.

11

But at the same time, you know,

12

the rules don't require us to do so.

13

get to pick and choose what evidence they

14

present.

15

information.

16

they should do so.

17

They don't

They should be producing all relevant
They've informed the Court and

THE COURT:

And you've rejected, I

18

take it -- they've offered to produce some stuff

19

as you referred to, but you're still asking the

20

Court to order that everything that you list in

21

that exhibit is what you need to have; is that

22

correct?

23
24

MR. ANDRE:

Well, and to be fair,

some of the things in that exhibit are overly

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broad.

They're not specific enough.

2

We don't know what the witness was

3

talking about.

4

specifically identify what he was talking about.

5

We couldn't get him to

There's probably four or five

6

categories of the 28 that are vague, because we

7

asked the witness.

8

type of -- you know, I have this type of

9

presentation.

10
11

He said, Well, there's some

And we tried to explore what he
was talking about.

12

He didn't identify it.

We said, "Go back to your witness.

13

They work for you.

14

about and produce that."

15

Ask them what he was talking

So there are a couple topics

16

there, but we tried to be very, very limiting in

17

that respect.

18

THE COURT:

All right.

19

MR. ANDRE:

And the Wiki is not --

20

we don't have an up to date at this point.

21

at least require that Wiki be updated, and all

22

of it, not just some of it.

23

Thank you, Your Honor.

24

THE COURT:

We

Let me hear from

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Ms. Keefe on this point.

2

MS. KEEFE:

Thanks.
Thank you, Your Honor.

3

I'd just like to first just correct a few

4

things.

5

I think we're all on the same page

6

in terms of what the disputes are.

7

to -- I keep hearing this we've only produced

8

398 pages.

9

With respect

You know, obviously, we have

10

produced quite a lot of technical documents on

11

the stand-alone computer itself.

12

Leader didn't even seem to know were there.

13

In fact, during the deposition

Many of which

14

that took place on Wednesday, Leader finally

15

asked a question that indicated that the schema

16

which showed the database, the database schema

17

had been loaded.

18

there.

19

They didn't realize it was

It's been there since September.

20

And that's a document that they keep asking for

21

a visual representation.

22

schema.

23

where it was.

24

after that, I believe.

It was the database

We showed it to them Wednesday, exactly
And they went and looked at it

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One of my colleagues just called

2

me yesterday when I landed and said that he

3

found it interesting, because Mr. Lee called him

4

to ask him if he could please show him on the

5

stand-alone computer where the unredacted

6

technical documents were.

7

actually hadn't looked at them before.

8
9

Implying that they

We've also kept a running log,
because we have to actually bring the

10

stand-alone computer out and put it in a

11

conference room and then put it back under lock

12

and key.

13

every single time that Leader has actually

14

visited the stand-alone computer.

15

We've actually kept a running log of

Aside from it being accessed

16

during depositions, Leader, as of today, has

17

only accessed the stand-alone computer seven

18

times.

19

documents were produced.

20

Two of those were before the technical

That was when your order said that

21

we had to produce the entirety of the source

22

code.

23

review the source code in order to determine

24

which documents they wanted off of them.

Leader's expert and Leader came over to

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THE COURT:

So what about the

2

representation that they spent 20 days or 150

3

hours?

4

MS. KEEFE:

I honestly don't

5

understand how that could be because under our

6

protective order, they have to ask us, say that

7

they're coming in, so we can set everything up

8

and put it in a room.

9

My memory was that it was about

10

six or seven, something like that.

11

actually asked our paralegal.

12

log of everything.

13

So I

She showed me the

I asked our IT guys to see if

14

their memory confirmed with her memory and the

15

log that she had been drafting.

16

exactly what it was.

17

THE COURT:

And that was

Why don't you

18

articulate for me what it is you've offered to

19

try to settle this dispute?

20

MS. KEEFE:

Absolutely, Your

21

Honor.

Every time that Leader has actually come

22

to us with something specific, if a witness has

23

said, I think I remember a power point about a

24

server presentation, something about speeding

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things up, we have actually gone back to that

2

witness, asked about it.

3

In that particular instance, we

4

actually found the document.

5

written by Microsoft that has nothing to do with

6

this case, but we went ahead and produced it.

7

It was a document

With respect to the categories

8

that are listed on Exhibit A, for the ones that

9

we haven't already produced, which are the

10

specifically identified recent Wiki pages for

11

Falcon, recent Wiki page for Mulligan, anything

12

that they've asked us for specifically, we have

13

said that we will do.

14

We've also offered now the Wiki.

15

Mr. Andre makes it sound like they're constantly

16

updating this Wiki.

17

The Wiki is -- a bulletin board is

18

not a bad way to think of it.

And it gets

19

updated when people feel like it.

20

There may not be updates.

21

are some Wiki pages, and the witnesses

22

testified, that are hopelessly out of date,

23

because Facebook is just out writing codes.

24

There

So we have offered to update the

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internal Wiki pages that they already have.

2

we've offered to go back and give them one

3

revision backwards to show the history.

4

some of those cases, the revision is nothing

5

more than, you know, a calm over period change,

6

because it actually keeps track of that kind of

7

thing.

8
9
10

THE COURT:

And

And in

So one revision

backwards means one snapshot predating the
version that they already have?

11

MS. KEEFE:

Correct.

12

THE COURT:

Okay.

13

MS. KEEFE:

And they can pick a

14

date in time, any time in the time period

15

between the issuance of the patent to now, and

16

we will take whatever the revision is that's

17

closest to that date.

18

With respect to any -- like I

19

said, with respect to anything else that is

20

identified with any reasonable particularity, we

21

absolutely have offered to do it.

22

to the other documents, they're saying it's our

23

burden to go and ask our witnesses, to the

24

extent that a document came up, that the witness

With respect

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had any memory of.

2

I either did ask them during

3

breaks or after the deposition if this was

4

something that they specifically remembered.

5

And it wasn't.

6

I can point Your Honor to one

7

particular example.

8

listing in their exhibits of Exhibit A.

9

23 says all Word documents regarding the

10

You know, they have a
Number

functionality.

11

Well, that was because

12

Mr. Moskovitz was asked -- you know, you gave

13

presentations at the engineering all hands.

14

Do you remember that?

15

that be posted on the Wiki?

16

Yes.

Would

were.

17

Yes, I think they

If they weren't posted on the

18

Wiki, how would you find them?

19

would have to come ask me for a copy off of my

20

computer.

21
22

Question:

Are there any other

types of documents that you created at Facebook?

23
24

You probably

Answer:
Wiki pages.

I authored some of the

You know, I had Microsoft Word

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files from time to time that I would send over,

2

emails, other documents.

3

That's pretty broad.

Just a key

4

note presentation that I delivered at NWUC.

5

don't know.

6
7

I

That probably covers it.
Question:

Anything else you can

remember?

8

Answer:

Not that I recall.

9

They didn't push down and get

10

resistance from Mr. Moskovitz about what those

11

documents might have been.

12

broad-brush categories.

13

Those are just

When I asked Mr. Moskovitz, he

14

said, I just didn't want to say I've never seen

15

one because I probably did at some point have

16

one.

But I couldn't remember.

17

THE COURT:

There's reference to

18

revision history documents in the letters.

19

are those?

20

MS. KEEFE:

What

That's exactly what

21

Your Honor just talked about, going back one

22

level in the Wiki, finding if the Wiki existed

23

in one format and then got updated to what we

24

produced in September.

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2

And then if there has been a
revision since, we will also produce that.

3

THE COURT:

So if you end up

4

producing, say, three snapshots of the Wiki, the

5

one that you've already produced and one

6

predating it, and one postdating it, --

7

MS. KEEFE:

8

THE COURT:

9

Correct.
-- that would, by

definition, give Leader the revision history --

10

MS. KEEFE:

Correct.

11

THE COURT:

-- documents, to the

12

extent they exist?

13

MS. KEEFE:

14

Honor, to the extent that they exist.

15

Absolutely, Your

The other thing that revision

16

history may mean, depending on Your Honor's

17

reading of it in the briefs, we have also

18

produced to Leader on the stand-alone computer

19

something called a subversion database.

20

We talked a little bit about this

21

during one of our past hearings.

The subversion

22

database is a running list of every version

23

revision of the Facebook source code that

24

exists.

And so that's also a revision history

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and that is of the code itself.

2
3

They have that.

And that's on the

stand-alone computer.

4

THE COURT:

Okay.

Anything else?

5

MS. KEEFE:

No, Your Honor.

Just

6

to reiterate that the code is the best source,

7

and every single witness has testified that

8

that's the best source of documents in this

9

case.

10

THE COURT:

11

Mr. Andre, any response on this

12

Okay.

Thank you.

issue?

13

MR. ANDRE:

Your Honor, I'll start

14

with the last point on the subversion database.

15

That was -- we were told it was on the

16

stand-alone computer, but it was produced

17

without the interface.

18

it, so we were not able to get that sub version

19

database.

20

And we couldn't access

I don't know if -- we're told --

21

we're trying to get it again.

We've talked to

22

them, so hopefully we will be able to get that

23

and that will solve the database issue any way,

24

meaning with respect to the source code.

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Your Honor, Ms. Keefe actually

2

points out why we need more than the Wiki.

3

Wiki is not continuously updated.

4

when people feel like it.

5

The

It's updated

Presentations that have been

6

listed on Exhibit A, those actually provide the

7

functional language that is being used at the

8

Facebook website.

9

what this comes down to is, you know, waiting.

10

And at the end of the day,

The burden, it would come to cause

11

Facebook to produce relevant documents.

12

Ms. Keefe's presentation, she's testified

13

there's relevant documents there.

14

burden.

15
16

THE COURT:

19

So it's the

She says if you ask

for a specific one, you'll get it.

17
18

Even in

MR. ANDRE:
asked for.

That's what we've

We put it down in Exhibit A.
It talks about the personal Wiki

20

pages of the relevant Facebook employees and

21

where other people, being the ones that we've

22

deposed, they said no to engineering roadmaps.

23
24

We've got testimony where they
have engineering roadmaps.

We haven't seen a

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single engineering roadmap produced in this

2

case.

3

So the burden here is going to be

4

very light.

We're asking for very -- a very

5

focused set of documents from a few individuals.

6

So the burden on Facebook is next to none.

7

They have been stonewalling us on

8

this document production since discovery began

9

on this case.

And at this point, it's getting

10

to a point where it's going to be prejudicial to

11

us.

12

the weighing is not even close.

And the burden versus the prejudice is --

13

THE COURT:

Okay.

14

MR. ANDRE:

Thank you, Your Honor.

15

THE COURT:

Let's move on now to

16

the final issue, which is Facebook's effort to

17

compel access to the Leader source code.

18

will hear from Facebook on this one.

19

MS. KEEFE:

We

We will be very brief

20

on this one.

The last time we were before Your

21

Honor, we said that we needed access to Leader's

22

product, because they're claiming to be a

23

competitor.

24

fact, they are a competitor, if in fact, they do

So we need to understand if, in

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practice the patent.

2

Your Honor said, Let's go back and

3

look at what happened with you guys and your

4

source code.

5

product itself.

6

I'll give you access to the

And if by using the product, you

7

find that you can't do the analysis without

8

access to the underlying source code, we can

9

revisit it.

10

That's where we are here today.
Mr. Weinstein has used the

11

service.

12

cannot figure out which metadata is being stored

13

by using the front-end facing portions of the

14

website.

15

I used the service.

And we absolutely

Very similar to what Leader's

16

expert found when using our own website.

17

Similarly, just to make sure that there wasn't

18

something that we were missing, that there was

19

something in the product that made it easier, we

20

asked Mr. Fathbruckner, who is one of the

21

engineers who worked on the Leader to Leader

22

product whether or not he could tell us, looking

23

at the screen shots, what metadata was being

24

stored.

And he said, No.

He said, you'd

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probably have to look at the code or something

2

else, because it wasn't within the service

3

itself.

4

So we're here, Your Honor, asking

5

for access to that source code so that we can

6

make the analysis that we asked for before.

7

THE COURT:

So Leader argues that

8

in addition to Mr. Fathbruckner, there were

9

other witnesses you could have asked a whole

10

bunch of technical questions to, and that that

11

would be less burdensome than producing their

12

whole source code.

13
14

Were there other witnesses?

And

if so, why didn't you ask them these questions?

15

MS. KEEFE:

There were no other

16

witnesses that I can think of that I could have

17

asked that question of.

18

ask Mr. Lamb.

19

and so no longer has access to their source

20

code.

21

I may have been able to

Mr. Lamb is no longer an employee

And so I did -- I wasn't -- I

22

wouldn't have been able to ask him, And where

23

would you find it in that, because he doesn't

24

see where it exists today or what it is today.

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2

THE COURT:

And what's

Mr. Fathbruckner's position?

3

MS. KEEFE:

4

their engineers.

5

He's currently one of

company.

6

He's an engineer at the

THE COURT:

What about the

7

argument that they can be your competitor, even

8

if they're not practicing their own patent?

9

MS. KEEFE:

You know, Your Honor,

10

the case law is pretty specific.

11

a competitor, you actually -- in order to be a

12

competitor within the realm of the patent

13

itself, you actually have to be practicing it.

14

In order to be

I'm not sure -- I'm sure there may

15

be a way that someone might be able to show that

16

they are a competitor.

17

exact piece of technology.

18

They don't use this

But you always are head to head

19

with each other on pinches and sales.

20

they could do that.

21

And maybe

But this is certainly an extremely

22

relevant factor.

23

claim in this case.

24

We also have a false marking

And in order to determine whether

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or not their product was properly marked, we

2

would also need to analyze the product.

3

THE COURT:

Okay.

4

MS. KEEFE:

Thank you, Your Honor.

5

THE COURT:

Let me hear from

6

Thank you.

Leader, please.

7

MR. ANDRE:

Your Honor, what is

8

being involved since the day this case began,

9

it's a product-to-product comparison.

10

That's

what they're looking to do here.

11

THE COURT:

But I can prevent that

12

at trial, right, just by letting them see the

13

source code?

14

see the source code of your product.

15

MR. ANDRE:

I mean, the jury's never going to

I agree, Your Honor.

16

And one of the things that we -- that is a

17

little bit surprising about their talk about

18

they want to know how the metadata is stored, it

19

doesn't matter how it's stored, just that it is

20

stored.

21

That's what's relevant here.
They did have other sources.

22

Mr. McKibben, who's the lead inventor, founder

23

of the company, designer of our product, was

24

also our 30(b)6 witness on this specific topic.

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We designated him.

2

this specific topic.

3

He was ready to testify on

We had Leader to Leader up and

4

running on their computer.

5

them for his deposition both days.

6
7

THE COURT:

10

You had the program or

the source code?

8
9

We activated it for

MR. ANDRE:
program running.

We had the actual

He could show on the program

itself.

11

You can actually see the questions

12

that were asked, how the metadata is being

13

updated and things of that nature.

14

that information available to them.

So they had

15

More importantly, and I apologize

16

to Your Honor, but this was inadvertently left

17

off as an exhibit to our letter.

18

in getting this out.

19

We were rushed

We actually gave them a printout

20

on the database file. This is something they put

21

on their stand-alone computer that has

22

everything.

23
24

This is a document that's been
produced to them.

This has the database schema.

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It actually has right here how the metadata is

2

being updated.

3
4

I would kill to get this from
Facebook.

5
6

They won't give it to me.
But we gave it to them.

So they

have everything.

7

They have the database schema on

8

their stand-alone computer.

9

stand-alone computer.

10
11

We talked about the

We can't mark that out.

We can't

mark it as an exhibit in this case.

12

We show it, but we can't print it

13

out and use it.

We can't take it home with us

14

and study it back within our office.

15

So we had given them not only the

16

database schema, all the development emails we

17

had on our server developing the product, which

18

we didn't get a single email from them, from any

19

of their developers as they developed their

20

product.

21

Those emails identified

22

individuals who they had subpoenaed and

23

cancelled the deposition.

24

THE COURT:

I don't know why you

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don't give them the source code if you gave them

2

all that.

3
4

Why -MR. ANDRE:

we should have to.

I don't understand why

That's my point.

5

It's something --

6

THE COURT:

Are you intending to

7

tell the jury, in one fashion or another, that

8

you practice your patent?

9

MR. ANDRE:

Yes.

10

THE COURT:

So then why aren't

11

they allowed to test out and determine for

12

themselves whether you really practice the

13

patent?

14

MR. ANDRE:

It's not a case

15

whether our product is infringing the patent or

16

not.

17

THE COURT:

No, but you're going

18

to make a representation to the jury or attempt

19

to prove a premise to the jury, We practice our

20

patent.

21

or is an embodiment of our patent.

22

Our Leader-to-Leader product practices

They're allowed to defend

23

themselves with respect to that premise, are

24

they not?

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MR. ANDRE:

Well, and we've given

2

them the information to do so, Your Honor.

3

source code, in this particular instance, is

4

something that because our product is not being

5

accused of infringement, as that's what this is

6

turning into.

7

infringing our own patent, and it just keeps

8

going further and further down this road.

9

that's our concern.

10

The

It's turning into is our product

So

You asked if there's a major -- an

11

issue of prejudice to us.

12

is and why we don't produce it is because we

13

produced everything.

14

discovery in this case is getting to be

15

burdensome.

16

The prejudice to us

The inequities of this

So if they get source code, that

17

means we're going to have to set up a system to

18

put our source code on a stand-alone computer,

19

have it set up for them to come to visit the

20

computer how many times they want to come visit.

21

They have deep pockets and they

22

can suck a lot of our resources from us.

23

have every single document they need.

24

They

They have more than -- we've

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provided them more information about our product

2

than they provided about their product.

3

think this is just one of those unduly

4

burdensome requests by Facebook in this

5

particular instance.

So I

6

THE COURT:

Okay.

7

MR. ANDRE:

Thank you, Your Honor.

8

THE COURT:

Thank you.

9

Ms. Keefe,

anything else?

10

MS. KEEFE:

Just to say, Your

11

Honor, I do know that we have the database

12

schema and it's not sufficient.

13

how it's stored, not what causes it to be

14

stored.

That just shows

And the code would help us do that.

15

So thank you, Your Honor.

16

THE COURT:

Okay.

We're going to

17

take a short recess, and I'll come back and give

18

you at least some rulings.

Okay.

19

THE CLERK:

20

(A brief recess was taken.)

21

THE CLERK:

All rise.

THE COURT:

Unless you all have

22
23
24

All rise.

You may be

seated.

dissolved any of these issues in the last few

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minutes -- I take it, no.

2

Okay.

I am prepared to give my

3

rulings on all of the issues that have been

4

argued today.

5

And let me start with the common

6

interest privilege issue.

7

very narrow issue, and that issue is whether the

8

privileged communications, and we're assuming

9

that they're privileged, relating to the merit

10

of the proposed patent infringement enforcement

11

litigation, those communications that Leader

12

shared with three or maybe up to five financing

13

companies, whether those communications retain

14

their privilege, or was any such privilege

15

waived by virtue of being disclosed outside of

16

Leader to these finance companies?

17

As I see it, it is a

Or another way to put it is:

Was

18

there a common legal interest between Leader, on

19

the one hand, and the litigation financing

20

companies, on the other.

21

say that this area of the law is unsettled,

22

somewhat inconsistent and, frankly, difficult to

23

apply.

24

I think it's fair to

Courts have noted those facts

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about the law in this area and I certainly agree

2

with it.

3

and difficult question.

4

And so I think this presents a close

Among other things that courts

5

have had differing views on here are as to how

6

common the supposed common interests have to be.

7

A number of the cases, picking up with the

8

Federal Circuit case, the In Re:

9

say that the nature of the interest must be

10

Regents case

identical, not similar.

11

And among the cases that pick up

12

and quote that language, of course, are Judge

13

Farnan's decision in the Corning case here in

14

this Court, as well as the Cargo decision in the

15

Eastern District of Pennsylvania.

16

And the Cargo decision also in the

17

Third Circuit, I think out of the Eastern

18

District of Pennsylvania.

19

Other cases have stated that the

20

common interest doesn't have to be entirely

21

identical.

22

in the Third Circuit noted, without deciding,

23

that the members of the community of interest

24

must share at least a substantially similar

Most recently the Teleglobe decision

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interest.

2

And the Middle District of

3

Pennsylvania in the case of Andritz Sprout-Bauer

4

versus Beazer East said that the interest of the

5

parties need not be identical and may even be

6

adverse in some interests.

7

courts are somewhat inconsistent as to how

8

common the interests have to be.

9

So clearly the

There is more of an agreement, I

10

think, as to the type of interest.

11

interest must be legal and not solely

12

commercial.

13

That is, the

But whether contemplation of a

14

business arrangement that would have a

15

consequence of giving both parties a common

16

interest in the outcome of anticipated

17

litigation, whether that is a legal and not

18

solely commercial interest has been resolved in

19

conflicting ways.

20

The Net2Phone case, which we

21

talked about, the Corning case and the Katz case

22

all say, no, that that would not be a common

23

legal interest.

24

decision out of the Northern District of

But the Hewlett-Packard

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California says that it would be.

2

So all of that establishes to me,

3

again, that the law is unsettled and

4

inconsistent.

5

difficult area of the law.

6

This is a close question.

It's a

Where I come out is that,

7

fortunately for me, I don't think I have to

8

resolve the whole area of the difficulty in the

9

law here in order to resolve the dispute in

10

front of me.

11

very discretionary decision which turns on the

12

practicalities and a decision, frankly, in which

13

reasonable minds could certainly differ.

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I think what I'm left with is a

And when I weigh the factors, I

15

come out in favor on this one of Facebook.

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is, I find that there's not -- the common

17

interest privilege has not been established.

18

That

The factors that have influenced

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me most on that are:

First, the burden of proof

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on this issue is on Leader as the party

21

asserting privilege.

22

uncertainty, that suggests a ruling in favor of

23

the party that doesn't have the burden, namely

24

Facebook.

And to the extent there is

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Also, I don't find that there is

2

any significant prejudice in this instance to

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Leader.

4

documents are admitted in evidence, but that's

5

not a ruling I need to make today.

6

I can see prejudice potentially if

If it turns out that these

7

documents should not be admitted or are unduly

8

prejudicial in a way that I think means they

9

shouldn't be seen by a jury, then I'll make that

10

ruling at the appropriate time.

11

admissibility ruling today.

12

discovery ruling.

13

This is not an

It's purely a

The weight of the precedent, to

14

the extent there is a trend, it is a trend that

15

moves in favor of Facebook's position here.

16

three recent cases that I mentioned out of the

17

Third Circuit all favor a finding of no common

18

interest here.

19

The

I've considered the competing

20

policy interests, including the need, the

21

important need to create space for business

22

entities to do business for patent financing

23

companies -- for litigation financing companies

24

to do their work and enable relatively small

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patent holders to enforce their rights.

2

Those are all important interests.

3

I don't believe that my ruling today will unduly

4

burden those efforts.

5

As I say, there are other cases

6

out there already that go in this direction.

7

And I am persuaded that, to a certain degree,

8

due diligence is going to be undertaken

9

independently by litigation financing companies

10

on their own.

11

is, there is also, of course, a truth-seeking

12

function to litigation.

13

And as important as the privilege

And the cases recognize that

14

truth-seeking function would be something that

15

would weigh as a policy matter in favor of the

16

position that Facebook has articulated.

17

I think it's also relevant to note

18

that there has been ethical guidance, which I

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think was cited in Facebook's briefing within

20

the last or lasting for at least the past

21

decade, ethical guidance to attorneys within the

22

Third Circuit that indicates that this type of

23

information, if shared with a financing --

24

litigation financing company may turn out to be

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discoverable.

2

the New Jersey Advisory Commission on

3

Professional Ethics Opinion Number 691 out of

4

2001, which states that the attorney must insure

5

that the client fully understands the risks of

6

disclosure of such information, including the

7

possible loss of the attorney-client privilege.

8

Before securing the client's authorization to

9

disclose information, the financial institution

10

may require that in order to assess the risk of

11

the transaction.

12

And specifically we've looked at

Upon securing such authorization,

13

the attorney should still endeavor to limit, to

14

the extent possible, the amount of information

15

provided to the institution.

16

attorney should provide the institution with

17

only that information which would be

18

discoverable by the attorney's adversary.

19

For example, the

And there's a similar guidance

20

given from the Committee on Legal Ethics and

21

Professional Responsibility of the Pennsylvania

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State Bar in their Opinion Number 99-8 in 1999.

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24

So factoring all of that in, I am
ruling for Facebook on this issue.

I find that

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Leader has not established that the documents at

2

issue here are within the scope of the common

3

interest privilege.

4

Leader will produce the documents that it has

5

withheld on the basis of the common interest

6

privilege no later than next Friday, March 19th.

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8

And I am directing that

Let me turn to the other two
issues that brought us here today.

9

First is Leader's request to

10

compel additional technical documentation from

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Facebook.

12

only very limited relief.

13

And on this one, I'm providing Leader

Namely, I am ordering that

14

Facebook produce the additional Wiki data points

15

that were referenced in the argument, and that I

16

believe have already been offered by Facebook.

17

And as I understand it, that would mean that

18

Leader would choose a date prior to the snapshot

19

date for which they had been provided the Wiki

20

already, as well as a date that postdates the

21

date that they were given the Wiki.

22

So that would leave Leader with

23

three sets of the Wiki for which it could track

24

a revision history.

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I find that that is a reasonable

2

offer of technical information to Leader, as has

3

been noted.

4

source code, which they emphasized from the

5

beginning was the most crucial evidence that

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they would need in order to prove infringement.

7

Of course, Leader has access to the

They have asked for technical

8

documents all along to enable them to understand

9

and to enable their expert to understand what is

10

in the source code.

11

such documents that would enable an expert to

12

understand its own source code have been

13

produced.

14

And I am persuaded that

There are additional documents

15

that are loaded onto the computer that contains

16

the source code.

17

don't agree with the argument that Leader is

18

entitled to additional documents now for the

19

purpose of translating computer language and

20

computer science to the jury.

21

And fundamentally, I just

In my mind, that's the task of

22

primarily the expert, but of course, attorneys

23

as well.

24

And I think that I've given

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everything that Leader's expert will need in

2

order to undertake that task.

3

Finally, Facebook moves to compel

4

access to Leader's source code.

5

to grant this request of Facebook's.

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And I'm going

I am convinced that Facebook does

7

need access to Leader's source code in order to

8

evaluate the premise that Leader claims and will

9

claim in front of the jury that Leader itself

10

and the Leader-to-Leader product practices the

11

patent.

12
13

Facebook is not obligated to rely
on that premise.

14

It can challenge that premise.

And I'm persuaded that in order to

15

have fair opportunity to challenge that premise,

16

it needs not just technical documents, but it

17

needs access to the source code for all the same

18

reasons that I was persuaded earlier in the

19

case, that Leader needed access to Facebook's

20

source code.

21

I understand the concern about

22

this case in front of the jury not turning into

23

a product-by-product comparison.

24

one product in the case.

There's only

I believe it's only

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one.

2

There's only Facebook products in

3

the case that are alleged to have infringed.

4

And that's what the trial will primarily be

5

about.

6

But for purposes of analyzing the

7

contention of Leader that they are practicing

8

their own patent, that they're a competitor and

9

perhaps for other reasons as well, it's relevant

10

for Facebook to have a chance to determine for

11

themselves if Leader does practice the patent.

12

And I think that any burden on

13

Leader is fully taken care of the advantage by

14

the protective order, which of course, remains

15

in place and will apply to the same, to access

16

to Leader's source code, that it applies to

17

access to Facebook's source code.

18

So that is my ruling on the issues

19

that are before us today.

20

on the phone, I don't want to have any argument.

21

We've had plenty of argument.

22
23
24

As you heard me say

But I do want to make sure I am
clear in what I have ruled.
MR. ANDRE:

Mr. Andre?

Just the timing, Your

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Honor, --

2

THE COURT:

Right.

3

MR. ANDRE: -- when Facebook should

4

produce its updated Wiki and we should produce

5

the source code available?

6

frame for that?

Do we have a time

7

THE COURT:

8

Do you want to -- well, let me see

9
10

Right.

Sure.

if Ms. Keefe has any suggestions on those
points.

11

MS. KEEFE:

What's today?

12

THE COURT:

Today's Friday.

13

MS. KEEFE:

I said what's today's

14

date?

Friday the 11th?

15

THE COURT:

The 12th.

16

MS. KEEFE:

As soon as you give us

17

the date.

I could assume we could have that

18

done in about a week's time.

19

THE COURT:

Okay.

20

MR. ANDRE:

That would be fine.

21

We'll endeavor to get the date to them on Monday

22

and then the following Monday.

23

as the source code, we'll make that available

24

the same day.

And then as far

It could be the 19th as well

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probably.

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3

MS. KEEFE:

Great.

My question

has nothing to do with what we just did.

4

It is actually more of a

5

scheduling question.

6

it would actually like to bring in front of what

7

would normally be on Judge Farnan's calender.

8

It's a motion to leave to amend our answer to

9

include some facts that were included during

10

Facebook has a motion that

discovery.

11

And we called Judge Farnan's

12

chambers, because there was no hearing date

13

listed on his web page or his calender.

14

when we called to ask what hearing date we

15

should use, they told us to talk to you.

16

And

So what does Your Honor suggest we

17

do in terms of filing motions that would not

18

normally be in front of Your Honor, but normally

19

would have gone in front of Judge Farnan?

20

THE COURT:

Remind me.

I think

21

the case is only referred to me for discovery

22

purposes.

23

MS. KEEFE:

That's correct.

24

THE COURT:

This is not a

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discovery issue.

2

MS. KEEFE:

But Judge Farnan's --

3

THE COURT:

I don't challenge your

4

representation as to what you were told by

5

chambers.

6

can get some further guidance for you --

7
8

What I would say is let me see if I

MS. KEEFE:

I would very much

appreciate that.

9

THE COURT:

-- and get back to

MS. KEEFE:

Thank you very much,

13

THE COURT:

Anything else?

14

MR. ANDRE:

Nothing.

15

MS. KEEFE:

And the only other

10

you.

11
12

Your Honor.

16

thing, Your Honor, is just to make sure that

17

your ruling today regarding no common interest

18

also applies to any NDA that was disclosed just

19

in this last go around, just to make sure that

20

it extends to that.

21

THE COURT:

You know, I can't be

22

sure, as I sit here, because I don't have those

23

facts in front of me.

24

ruling.

But I've given you my

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You know what I think about the

2

issue.

Hopefully that will allow the parties to

3

figure out the implications going forward.

4

MS. KEEFE:

Thank you, Your Honor,

THE COURT:

Thank you all very

8

THE CLERK:

All rise.

9

(Court was recessed at 4:58 p.m.)

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very much.

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7

much.

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State of Delaware )
)
New Castle County )

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CERTIFICATE OF REPORTER

6
7

I, Heather M. Triozzi, Registered

8

Professional Reporter, Certified Shorthand Reporter,

9

and Notary Public, do hereby certify that the

10

foregoing record, Pages 1 to 80 inclusive, is a true

11

and accurate transcript of my stenographic notes

12

taken on March 12, 2010, in the above-captioned

13

matter.

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IN WITNESS WHEREOF, I have hereunto set my

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hand and seal this 19th day of March, 2010, at

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Wilmington.

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19
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Heather M. Triozzi, RPR, CSR
Cert. No. 184-PS

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