Mikhlyn et al v. Bove et al

Filing 93

TRANSCRIPT of Proceedings held on November 2, 2009, before Judge Reyes. Court Transcriber TypeWrite Word Processing Service, Telephone number 718-966-1401. Transcript may be viewed at the court public terminal or purchased through the Court Transcriber before the deadline for Release of Transcript Restriction. After that date it may be obtained through PACER. Redaction Request due 11/23/2009. Redacted Transcript Deadline set for 12/1/2009. Release of Transcript Restriction set for 1/29/2010. (Rocco, Christine)

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Mikhlyn et al v. Bove et al Doc. 93 Case 1:08-cv-03367-ARR -RER Document 93 Filed 11/03/09 Page 1 of 49 1 2 3 4 5 6 7 8 9 10 11 12 APPEARANCES: 13 For the Plaintiffs: 14 15 16 17 18 19 20 21 22 Court Transcriber: 23 24 25 For the Defendants: UNITED STATES DISTRICT COURT EASTERN DISTRICT OF NEW YORK ---------------------------------X : MIKHLYN, et al., : : Plaintiffs, : : v. : : BOVE, et al., : : Defendants. : ---------------------------------X 08-CV-3367 225 Cadman Plaza East Brooklyn, New York November 2, 2009 TRANSCRIPT OF CIVIL CAUSE FOR MOTION HEARING BEFORE THE HONORABLE RAMON E. REYES, JR. UNITED STATES MAGISTRATE JUDGE ERIC WERTHEIM, ESQ. Val Mandel, P.C. 80 Wall Street New York New York 10005 BORIS KOGAN, ESQ. Boris Kogan & Associates 277 Broadway Suite 701 New York, New York 10007 TUVIA ROTBERG, ESQ. Levisohn Berger, LLP 61 Broadway 32nd Floor New York, New York 10006 RUTH ANN HAGER TypeWrite Word Processing Service 211 N. Milton Road Saratoga Springs, New York 12866 Proceedings recorded by electronic sound recording, transcript produced by transcription service Dockets.Justia.com Case 1:08-cv-03367-ARR -RER Document 93 Filed 11/03/09 Page 2 of 49 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (Proceedings began at 10:37 a.m.) COURT CLERK: Civil cause for a motion, docket number 08-CV-03367, Mikhlyn v. Bove. Counsel for plaintiff, please state your name for the record. MR. WERTHEIM: the plaintiffs. MR. KOGAN: Boris Kogan from Boris Kogan & Eric Wertheim, Val Mandel, P.C., for Associates for the defendants. MR. ROTBERG: And Tuvia Rotberg of Levisohn Berger [unintelligible] for the defendants. MR. KOGAN: clerk as well. THE COURT: MR. KOGAN: THE COURT: Good afternoon, gentlemen. Good afternoon. All right. Can someone -- I asked you And I have Joseph Vibbs [Ph.], my law to bring some documents so I could see what it is we're arguing about. Could I see? [Pause in the proceedings.] MR. ROTBERG: There's some extra stuff in here, Your Honor, [inaudible] cover letter from Mr. Kogan providing the simultaneous exchange and the number of the different types of documents that were in the production. THE COURT: [inaudible]? Can I see a copy of what you Case 1:08-cv-03367-ARR -RER Document 93 Filed 11/03/09 Page 3 of 49 3 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 gotcha. finished. MR. ROTBERG: finished product. THE COURT: MR. ROTBERG: I got it. What you see in black and white is the Whatever you see in color is the MR. ROTBERG: These are samples of [inaudible] design images and public-owned images on which they are based and the [inaudible] on files that go with the creation of defined product. THE COURT: Thank you. Okay. I want to deal with the defendant's submissions first just so I understand what it is exactly I'm looking at. The first stapled set of documents it's got a "C" written in the top right-hand corner and a little Post-It that says "Poppy's Lace. finished" -MR. ROTBERG: finished design product. THE COURT: Okay. So page 1, page 2, that's the What you see on the front cover is the These are the public-owned domain image on which it was based. THE COURT: Okay. Okay. I see. I see. Okay. I Now, just so I know these color images they're computer-generated? MR. ROTBERG: THE COURT: MR. ROTBERG: Yes, they are. All right. If I can direct your attention to "E" Case 1:08-cv-03367-ARR -RER Document 93 Filed 11/03/09 Page 4 of 49 4 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 that's associated with this. THE COURT: MR. ROTBERG: Okay. All right. If you go through the pages in "E" that essentially is the process of how it goes about getting the finished design, each one of those are not finished. They're work in progress and it takes a lot of iterations to -- till she got to exactly how she wants it. Just, for example, this collection took one and a half years to put together. Each one of these public domain images were found in different sources that are not -- it's essentially a compilation of public-domain images. And then for each image there is a lengthy process in which she, you know, designs it, she color tweaks it and is finally happy with the finished product. THE COURT: Okay. So just focusing on "E" that first page, I understand that this is part of the creative process to get to the final image. itself -- is this an email or -MR. ROTBERG: Yes, that's instructions to the But what this document digitizers telling them exactly how she wants her -- you know, her -- how she pictures her design looking at specific instructions for them to carry out. THE COURT: them exhibits. All right. Now, Exhibit C, I'll call The finished I don't know that they are that. images and the public domain images this -- were they both Case 1:08-cv-03367-ARR -RER Document 93 Filed 11/03/09 Page 5 of 49 5 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 okay. submitted to the PTO? MR. ROTBERG: THE COURT: Office, yes. MR. ROTBERG: Yes, for each administration they The [inaudible], yes, they were. Yeah. I'm sorry. I'm -- the Copyright showed the previous -- the previous and public domain image. They said what their addition was and they showed the finished image obviously as the deposit copy. THE COURT: Exhibit E, though, those emails that shows the creative process that's not so -MR. ROTBERG: THE COURT: That's not included. Okay. And just looking on page 2 of Is that -- does that relate Exhibit E there's a color image. to the prior email, the September 2, 2005? MR. ROTBERG: THE COURT: MR. ROTBERG: I'm not sure. But -But I think the significance of that If you look image just shows how it's an early stage image. at a final product it looks nothing like that. THE COURT: MR. ROTBERG: THE COURT: MR. ROTBERG: THE COURT: I gotcha. The "final product" being? Being the -- you'll find it exactly. I see it. Right. And borders change, you know, book -Different colors. Case 1:08-cv-03367-ARR -RER Document 93 Filed 11/03/09 Page 6 of 49 6 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. ROTBERG: creative process. THE COURT: Now, all right. All right. Okay. What is "F"? Exactly. So that's really the "C," I don't have a "D." I guess there have been different -- they given to me in diff -- in -- not in sequential order. I assume that's for -- that's for some -- that's a purpose -- it was a purpose behind it, correct. MR. ROTBERG: Yes. "F" is really more of the same. It's discussions with [unintelligible] but over at the very end it shows how Ana took on the finished product and kept it into an icon for your web site. On the last page you see on the instructions that she gives on web site in order to create the image the way she intended it to look. THE COURT: All right. And then "G" is part of a copyright application or no? MR. ROTBERG: collection. "G" is an entirely different What this is going to show is that this collection is actually -- was not taken from the public domain. This is just a brain child of Ana Bove and it just shows the steps taken in order to come out with the finished result. And if you see this began in 2003 -- or 2002 and was not completed until 2004 -THE COURT: Had -- oh, you got back. Okay. I see drafts Little and sketches 2002, 2003. Now, turn to "A." chipmunks and cute cats and stuff. Case 1:08-cv-03367-ARR -RER Document 93 Filed 11/03/09 Page 7 of 49 7 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 existed? MR. ROTBERG: THE COURT: MR. ROTBERG: THE COURT: No. So this is prepared just for me? Exactly. Okay. Do you have a copy of this? MR. ROTBERG: THE COURT: MR. ROTBERG: Okay. To the left -- Preexisting. Preexisting. Right. Those are all And to Russian postcards that Ana collected over the years. the right you'll see how she -- based on those postcards how she interpreted them and kind of created a design off them based on them or inspired by them. So, for instance, the first one to the left, the squirrel with the mushroom you'll see it to the right. You'll see it on the stocking. That's her indicia of pub -- or the preexisting postcard and the same is true for the rest. THE COURT: Now, what was the purpose of her creating this document itself? MR. ROTBERG: for your sake. THE COURT: Oh, so this is not a document that Just to show a side-by-side comparison MR. WERTHEIM: I don't -- it seems to us that at least if I'm clear at least some of this is not -- was not part of the original production. For example -- I don't know. Don't tell us but one of these, for example, has a comment Case 1:08-cv-03367-ARR -RER Document 93 Filed 11/03/09 Page 8 of 49 8 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 being. apparently from Ana that says, "The design was accomplished without preexisting works and is 100 percent author work performed prior to 2004." THE COURT: Okay. Mikhlyns keep using it up to the time MR. WERTHEIM: You know -THE COURT: But -It's "G," Exhibit G, second page. It It I MR. WERTHEIM: don't think we got that but they can tell me otherwise. sounds like this was produced -- I'm not entirely sure. looks like some of this was just produced for today and it's not the stuff in the production we're arguing about. THE COURT: Well, I'm not -- I mean, I'm not the trier of fact, so really no need to make arguments -substantive arguments to me. But what we looked at so far, "C," I assume is part of the production. MR. WERTHEIM: Your Honor, to my knowledge all of The words that were typed these are part of the production. up on the top of "G" may not have been part of the production. I don't think that they were intended for that. show authorship. of -THE COURT: Don't -- I just want to -- don't argue. I just want to find out what it is They don't Those words in and of themselves on top Nobody argue, all right? I'm looking at, so as far as you understand everything was Case 1:08-cv-03367-ARR -RER Document 93 Filed 11/03/09 Page 9 of 49 9 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 me. part of the production or only some? MR. WERTHEIM: THE COURT: With the exception of -- What was read. -- what Mister -- and what MR. WERTHEIM: Mr. Rotberg said was prepared for Your Honor. THE COURT: Okay. At the top of Exhibit -- MR. WERTHEIM: THE COURT: G. MR. WERTHEIM: THE COURT: A. -- A. MR. WERTHEIM: THE COURT: That page was signed with -- Gotcha, gotcha. -- side by side comparisons. MR. WERTHEIM: THE COURT: I've looked at "F." And it's the -- all right, so we've -I've looked at "E." These are more emails and digitized images. MR. WERTHEIM: Ana's brainchild. THE COURT: Her -- yeah. And it was produced for "D" -"G" is -- "G" works are entirely "B" is more of the preexisting and final images. I don't read Russian, but it looks like the same. same -- "H," similar. "I" similar. Okay. Got the And what is "J"? Is that taken from the web site or -MR. ROTBERG: Yeah. "J" I believe was also created Not 100 for the purposes of today. Don't quote me on that. Case 1:08-cv-03367-ARR -RER Document 93 Filed 11/03/09 Page 10 of 49 10 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 percent sure on that. But as I understand it, "J" goes to show that the web site was created in 2002 and these are different examples of banners and icons that are still on the web site. created it. THE COURT: All right. Okay. Let's table that for All that remained all in 2002 when Ana first a moment and let me look at what the plaintiffs have submitted. First I have what looks like an email chain and then some more emails and then looks like a copyright report. I don't know what you call it, what the term-of-art is. And then some embroidery pass -- patterns and pictures and more of the same. letters. Certificates of registration, eBay printouts, All right. MR. WERTHEIM: THE COURT: They are additional -- Um-hum. There are some copyright assignments. MR. WERTHEIM: THE COURT: Yeah. And an reported partnership agreement MR. WERTHEIM: between Polina and Ana, one page. THE COURT: What does this have to do with the -- I mean, the reason why I'm here is just -- well, why I'm here is to figure out what, if anything, should be attorney's eyes only. MR. WERTHEIM: THE COURT: Right. So you'll explain to me what the Case 1:08-cv-03367-ARR -RER Document 93 Filed 11/03/09 Page 11 of 49 11 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 relevance of the assignments is. MR. WERTHEIM: The relevance is they were among the many types of documents that were designated as attorney's eyes only by the defendants. They produced 52 CD-ROMs, copies of 137 copyright registrations and said everything is attorney's eyes only including assignments, things from the web site. I think there's even an email from our web site in You know, I don't know why that is. It's there to customers. just all kinds of categories that don't even fit into the rationale that was raised originally when this first came up two conferences ago. I don't understand why assignments. Just textual documents or an agreement or for that matter the copyright registrations, many of which they just printed off the web at the last minute on the September 16th deadline, the production deadline. eyes only as well. that is. THE COURT: Is it the defendant's contention that They've been designated as attorney's I don't know what the justification for all of the 52 CD-ROMs should be attorney's eyes only? MR. ROTBERG: THE COURT: Yes, Your Honor. Why? I mean, if there are documents that their clients signed or looked at, I mean, what is the basis? I can understand that going through 52 CD-ROMs page by page could be and probably is a burdensome with a small "b" process but -- Case 1:08-cv-03367-ARR -RER Document 93 Filed 11/03/09 Page 12 of 49 12 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. WERTHEIM: understand that. that. They've produced over 100. I Believe me, Your Honor. I do understand The reality, though, is that while there may be some documents that their clients have they actually claim that they have all of it. They claim that their clients -- they're claiming in one of the letters to Your Honor in "B" letter that was the subject of this issue the claim is that we've submitted the same things. So if they have everything that we've given them then why bother the Court with this issue? If they have it all, the clients can look at their own version of the same documents and let us keep these as attorney's eyes only. We believe that they don't have them. THE COURT: Well, but what's the -- that makes no sense either because if they have it then it can't -- you can't -MR. WERTHEIM: claim is false. THE COURT: All right. Then fine. Then fine. They don't have it, Your Honor. That MR. WERTHEIM: the intermediary steps. domain design. THE COURT: It's not true. They don't have all They don't have the original public But that's a different issue. The intermediary steps I'm with you on that. That -- you know, that can be attorney's eyes only because it disposes -- it discloses the creative process that wasn't produced to the Case 1:08-cv-03367-ARR -RER Document 93 Filed 11/03/09 Page 13 of 49 13 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Copyright Office. It's, you know, something that she -- or they had in confidence with their consultants who helped them digitize and that I could see. But to produce 52 CD-ROMs and say it's all attorney's eyes only I think that's overreaching. Is there, you know, how do we resolve it other than going through page by page in figuring what was -- what is part of the creative process that was not previously disclosed? MR. WERTHEIM: Your Honor, if I might -- well, first I think here might be a of all, I want to clarify something. misunderstanding. scope of this. Maybe there is, maybe there isn't about the I'm not sure. I want to be clear on this. Maybe I have a misunderstanding. THE COURT: It's probably on my part. This is not about designs of recent MR. WERTHEIM: vintage or things that are in process where I'm trying to let my client peek under the rug to see what Ana is doing. I think there may have been a suggestion of that in some of the prior letters of discussions. This is -- at least for We're really only focused purposes of attorney's eyes only. on that body of completed out there on the web site, out on our web site designs that were created starting in 2002, let's say, and were created and put out in the world no later than spring of 2008. rupture. Two springs ago when the parties had their This is not trying to take a sneak peek at stuff Case 1:08-cv-03367-ARR -RER Document 93 Filed 11/03/09 Page 14 of 49 14 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 that isn't out there yet. Okay. That's number one. All the designs themselves, the final designs, the exact designs that are on each party's web site both parties have other designs because I know Ana has been creating other stuff and our client has been creating other stuff and I don't begrudge creating new artwork or anything like that. I'm not sure if you had that as an impression that there's something sensitive or in process. THE COURT: No, but even images or artwork that was created and that's the subject matter of the lawsuit there is a creative process. MR. WERTHEIM: Right. Let me mention -- let me talk To the extent -- for about the creative process. Okay. purposes of competitive unfair advantage, let's say, okay, this is a nonissue here because we have all of the final things which are a combination in most instances of some preexisting work and additions that were either done by the Chinese or at Ana's suggestion or in some cases by other family members. Is anything worth copying from them? Okay. It's a My clients [inaudible] -- we have it. Now, I'm telling you what my problem is. serious practical problem and I think it's one they have, too. Okay. Have a massive amount of information to go through It's a copyright dispute. How were these about this process. things made? Was any particular item they're referring to Case 1:08-cv-03367-ARR -RER Document 93 Filed 11/03/09 Page 15 of 49 15 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 copyrightable? Does it reflect a contribution that gives you authorship or co-authorship (a) I don't even have the very expensive software to look at many of the things that they produce. They're in the same boat because your order was I The clients think a two-way street until this was resolved. have the special software and a lot of these are in certain format that you need just to look at them. So either I'm going to have to go plant myself in my client's office and occupy one of their computers for days on end at lawyer time looking at this and they're going to have to do the same thing or else I'm going to get their help. The second thing is they know what these emails mean in the sense of being involved in the process. They understand what the instructions mean to the digitizer or we don't do this business. I need them to help me explain this great mass of doc -- you know, documentation that's on many disks to understand how this stuff got created. Okay. Also you refer to Ana's communication with what you term "consultants." That outside contract from China was We hired them. We hired by our company, ABC All Consulting. paid them and in fact recently they signed all their copyrights and whatever they did in connection with these designs to us. Okay. So, you know, there's a real question of who can claim what in terms of rights here. The second thing is, you know, turning from the law Case 1:08-cv-03367-ARR -RER Document 93 Filed 11/03/09 Page 16 of 49 16 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 of trade secrets which we discussed at length in our letters, you know, among other things a big point in the case law is efforts at secrecy. Well, there was no secrecy here. We have -- I did not say we had all this stuff, as Mr. Kogan said. We have all the final designs. That's what their part of the lawsuit is about. They're on our web site. The final designs are identical. They're on web site. People out in the world can copy them if they want to. As far as the other things like emails with the Chinese digitizers who hired and paid and the original public domain artwork we have some of it, not all of it. a lot of it. I can't give you the percentage. We have There's an overlap. I'm not sure why we don't have all of it. It may be fortuitous, but the point is a very important thing in the case law is effort at secrecy. Well, they were living in our house, doing this stuff in our house and we had access to most of this and we had most of it. As far as the Chinese digitizers no effort was made to bind them to secrecy to these emails that were sent. I could get it from them possibly. There has to be an effort at secrecy to claim a trade secret. THE COURT: These were I think relatively moderate, maybe proper characterization is moderately sophisticated businesspeople. You know, their efforts at keeping things secret, you know, hiring a computer company to do computer work for you without, you know, signing an iron clad Case 1:08-cv-03367-ARR -RER Document 93 Filed 11/03/09 Page 17 of 49 17 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 confidentiality agreement, I can understand that. I mean, then living in someone else's house that -- who is part of the business, you know, I can understand that, too. going to keep it secret. They were all You know, the -- what I'm struggling with is if there -- even with old designs if there is an indication of the creative process that was not disclosed to your clients previously you could say, okay, I have the finished image, I have the original image and then I have a series of emails that take you to step one, step two, step three, step four, step five. Boom, you got your final product that your clients didn't know about to reveal that now could very well be revealing if not, you know, trade secret something akin to that. MR. WERTHEIM: Your Honor, I don't -- I really don't What am I understand how it's a trade secret, I must say. going to do -- what is my client going to do with an email from 2000 -- we have, by the way -- I'm not in a position to say most of them. on them. We had many of these because we were copied I produced them to We were working a business deal. the other side. them. Okay. It's not 100 percent identical but I produced We were party to these We had them. communications. You know, there's been this reference to the creative process -- the creative process but that's not the issue for trade secret purposes. The real question is if we take an email to a Chinese contractor from 2005 that said, you Case 1:08-cv-03367-ARR -RER Document 93 Filed 11/03/09 Page 18 of 49 18 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 reasons. know, make the black line a little less thick or this blackand-white pen-and-ink drawing of a flower make this one purple is that really a trade secret? with that in 2009? What is my client going to do I mean, the ultimate file product that was My client has it. We're put on the market, I have that. selling it on our web site. If they want to say, you know, that's really good, let's derive something from that, just do it. THE COURT: Then why do you need it? What is the val -- MR. WERTHEIM: THE COURT: Why do you need this information? You're both making arguments that, you know, you're fighting to fight. MR. WERTHEIM: No, that's not true. I'm very -- it's entirely practical on our side and nothing to do with competition. I want my clients to help me understand how these things came to exist for purposes of the copyright issues. Who did what? THE COURT: What was really the creative process? But you can -How much did the people in China do? MR. WERTHEIM: THE COURT: How can you not do that? Because -- MR. WERTHEIM: THE COURT: Yourself because a lot of this -There's two reasons. There's two MR. WERTHEIM: There's 50-plus disks. It's going to take God knows Case 1:08-cv-03367-ARR -RER Document 93 Filed 11/03/09 Page 19 of 49 19 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 how many attorneys hours for both sides to do that without the assistance of their clients. I don't have this very expensive Why can't I have software that I need to look at this stuff. their help? I mean -- THE COURT: their Exhibit E? Can you show me -- you have their "E" -- MR. WERTHEIM: THE COURT: the company. MR. WERTHEIM: THE COURT: I'm sure I do. Yes. That looks like an email from Ana to Um-hum. Right. Can you show me The digitizing company. any examples of where your clients were copied on one of these? MR. WERTHEIM: I've produced -- well, they obviously didn't bring to court the ones that my clients were in on but we produced at least dozens if not hundreds of them. have them. to. Okay. I I could submit them under cover letter if you want Obviously they've cherry picked I mean, I don't recognize -- We produced a ton of it. and produced very lengthy ones. THE COURT: Well, there's -- you know, in the -It's also no -- there's no -- MR. WERTHEIM: THE COURT: -- attorney/client --- banner part also to show you who MR. WERTHEIM: got the emails. THE COURT: Yeah. Case 1:08-cv-03367-ARR -RER Document 93 Filed 11/03/09 Page 20 of 49 20 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 here. MR. WERTHEIM: don't know. THE COURT: In the attorney/client email there's You disclose confidential You may well have had this one. I subject matter weight, right? communications on issue "X" to a nonparty. MR. WERTHEIM: THE COURT: Right. You waive issue "X." Sure. It's done. MR. WERTHEIM: THE COURT: That's it. Sure. MR. WERTHEIM: THE COURT: And the same argument could be made If along the way Ana sent to the digitizing company and to plaintiffs these types of things and a dozen, two dozen, hundreds, whatever it is, why are we fighting about this? MR. WERTHEIM: THE COURT: I don't know. Cat's out of the bag. I don't know. There was no -- not MR. WERTHEIM: one single iota, crumb of secrecy at the time either vis-avis -- again, the Chinese, our people, we were family. were working together. THE COURT: different issue. Had a ton of this stuff. It -- that's different issue. That's a We I said previously I think, you know, they They had -They were trying to -- they were operating a business. it was a, you know, it was a closed group of people. were dealing with one outside comp -- they were trying to keep Case 1:08-cv-03367-ARR -RER Document 93 Filed 11/03/09 Page 21 of 49 21 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 it under wraps but now they're trying to shield some of the information from the very same people who had it previously. MR. WERTHEIM: THE COURT: of a practical issue. And still have much of it. So it's not necessarily -- it was more Why now should we say, okay, you saw it at one point but now you can't see it anymore? (Voices simultaneous.) MR. ROTBERG: they never saw it. process. That's the truth. The truth is that They were not part of the creative They received some of the emails and whatever emails It's not like they had They have every single they received they didn't erase. access and the access disappeared. email that they ever had, nobody ever reached into their computers and modified their passwords like they did to my client but they actually had everything they ever had. The entire hard drive is intact and Mr. Wertheim doesn't need my assistance in order to understand. His own client's creative process, nonexistence but he doesn't need my client's assistance, doesn't need my client's documents. He can sit down with his own client, with his own client's hard drive, with his own client's software, and understand whatever his client did and continue to lack the understanding about how the process really worked and what actually happened from the moment that the doc -- that the public domain designs were located, assembled, and then modified with the creative Case 1:08-cv-03367-ARR -RER Document 93 Filed 11/03/09 Page 22 of 49 22 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 process in order to make this final product. He has the final product that we concede, that he has the public -- the final result whatever is on their web site, whatever is on our web site -THE COURT: mean, then -MR. ROTBERG: Whatever emails he has, he has but But if he has all the emails, too, I those emails that he has he doesn't need to look at my copy of the email in order for him to understand something if indeed that is what he is claiming. He believes that he needs to look at my 52 disks in order to understand his client's creative process. and absurd. That claim is in and of itself inconsistent He doesn't need to look at my client's process in order to understand his client's process. MR. WERTHEIM: That's totally -(Voices simultaneous.) MR. ROTBERG: MR. WERTHEIM: MR. ROTBERG: going back here. In any event -I don't understand. That has been a -- Your Honor, we're That's not even what I'm asking. It's been ruled in the previous time that the creative process, those domain -- those images that are part of the creative process are not going to be revealed to the clients. That's the only reason that we have them. My -- MR. WERTHEIM: Yeah, but you designated all the 52 Case 1:08-cv-03367-ARR -RER Document 93 Filed 11/03/09 Page 23 of 49 23 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 CD-ROMs as attorney's yes only. faith basis to do that. MR. ROTBERG: simple question. That seems to me not a good- I mean, if -Your Honor, the question was simply a Your Honor asked whether -- I've asked that everything should be categorized as attorney's eyes only. MR. WERTHEIM: MR. ROTBERG: And I said no. Until for -- everything that -- all of my client's proof of ownership and all of their client's proof of ownership of the designs. That's what I've asked it should be categorized as attorney's eyes only. THE COURT: Here's what we're going to do. If you want to maintain the attorney's eyes only designation to any of the documents you're going to have to go through and separately identify each page from the 52 CD-ROMs that have only things similar to the first page of Exhibit E which shows the creative process. If any of those documents turn out to have been previously produced to a copy -- you know, cc's, whatever to the plaintiffs then whatever protection they have will evaporate. (Voices simultaneous.) MR. KOGAN: the response. MR. ROTBERG: Yeah, I just had a technical response Although all the finished Mr. Rotberg would like to add part of to what Mr. Wertheim said before. images are on the web site anybody has access to them. Case 1:08-cv-03367-ARR -RER Document 93 Filed 11/03/09 Page 24 of 49 24 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 do. There's nobody who buys an image. Someone who buys an image off the web site gets a CD-ROM of the image, they can't take that disk and manipulate the image in any way. It's fixed. It's blocked. It's done. That is not the same for all these Those digital files can be Just images that are work in process. manipulated and can be used to create other images. taking an example, looking at "F" for example. THE COURT: MR. ROTBERG: Okay. The second page where the great If the pattern image that is in process digital file. plaintiffs got ahold of that file they can take that image and manipulate it in any way they want. MR. WERTHEIM: a member of the public. working on the web site. You know -MR. ROTBERG: Your Honor, and again, if they have it It's specious and [inaudible] -Here's what you're going to We have the digital files. We're not We're not just somebody -- a customer We have the same thing you have. why do they need it from us? THE COURT: All right. If you want to main -- you can't just make blanket That's not how it works. Okay. If you attorney's eyes only. have particular documents that you want to maintain as attorney's eyes only you have to separately identify them document by document. If it's a -- if it's a series of emails If it's a along the lines of Exhibit E, first page, so be it. Case 1:08-cv-03367-ARR -RER Document 93 Filed 11/03/09 Page 25 of 49 25 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 work in process digital image along the lines of what you've discussed in "F" so be it. You have to identify it document Everything by document and we're going to take it from there. else is not. MR. ROTBERG: Your Honor, alternatively one possibility is for us to produce a print image which would not be -- perhaps I'd have to check with my client if that would be -- if that would provide them the protection that they seek. THE COURT: Well, but you've already -- you've already -- they're already on the CD-ROMs, right? MR. ROTBERG: I already have them on the CD-ROM but On the CD-ROM is an original That they that's not in the print image. file that was being manipulated with that software. definitely don't have. They can represent -- counsel can represent whatever he wishes, but I'm advised by my client that the reality is that they don't have them. they're fighting so hard to get them. claim that we don't need them in 2009. them because that's the business. That's why And the rep -- and the Of course they need That is what they're able -- if they are able to get those images that are -- the software will be able to produce new designs off of those designs. They don't have them now and they want to get their hands on them so that they can produce additional designs. THE COURT: So if -- but if they have the -- Case 1:08-cv-03367-ARR -RER Document 93 Filed 11/03/09 Page 26 of 49 26 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 them. everything you've produced along these lines is on 52 CD-ROMs. Is that's correct? MR. KOGAN: THE COURT: MR. KOGAN: THE COURT: MR. KOGAN: That's right. All right. At least in hard copy. Hum? I'd be happy to get hard copies. I didn't ask for disks. These works in progress images do MR. WERTHEIM: THE COURT: Okay. they have a particular -MR. WERTHEIM: THE COURT: Extension? Extension. I think that there are a variety of MR. WERTHEIM: It's more than one type. THE COURT: Okay. Digital. Why don't you find the full MR. WERTHEIM: THE COURT: You know. extent of those and then iden -- and say, look, anything with a file extension dot 123 dot ABC -- whatever the work in progress images are -- those are attorney's eyes only. If the emails -- emails you've got to break out because you can't just say anything with an email extension because it may be an email that doesn't disclose the creative process. You can then take the extensions for the images and print them out. MR. WERTHEIM: If I can get that, I'm fine with Case 1:08-cv-03367-ARR -RER Document 93 Filed 11/03/09 Page 27 of 49 27 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 that. If that's the issue now because, you know, it's been -THE COURT: No, I think it's two separate things. It's -- the only thing that I'm saying is attorney's eyes only is any documents that lay out the creative process along the lines of the email that we looked at, number one. Number two, any work in progress image because I take seriously the concern that those can be manipulated, not that your clients would do that but we're trying to protect people's work product. So they tell you here are all the emails. them out one by one. They list Here Those were attorney's eyes only. are the file extensions for the works in progress. can print out and then show your client. Those you What she's saying is not a problem as long as they don't have the file itself. MR. ROTBERG: I have to check with my client if it's possible to simply scan these and then use them in the same way. I have to check that, Your Honor. I'm coming up with an idea that might simplify things but I do have to check, though, with my client. THE COURT: MR. ROTBERG: I don't want to -Yeah. All right. -- rely on something that's inaccurate in the event my client clarifies. MR. WERTHEIM: Couple of things, Your Honor, before First of all, can we we leave for which hopefully is soon. further ask given that we're still in sort of flux about the Case 1:08-cv-03367-ARR -RER Document 93 Filed 11/03/09 Page 28 of 49 28 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 violation. THE COURT: Do they have a license? I don't think they can take -- it's a scope of any of the attorney's eyes only protection to have them convert the files that are in that specialized format so we can look at them, the ones that are in specialized format for specialized software that only our clients have, can they be converted to some -- or printed out -- either converted or printed out so we can see them because I can't look at them. They're some kind of special form that's connected with this software that they use. THE COURT: It's very expensive. Why can't your clients install the software on your computer? MR. WERTHEIM: Because I think that'd be a copyright MR. WERTHEIM: very expensive software. THE COURT: Do they have a license? They can't just make a copy of it and MR. WERTHEIM: send it to us. THE COURT: and send it to them. No, I'm not saying they can make a copy They can take the software -- a box with I assume they the software in it, walk over to your office. have a license since they bought it. MR. WERTHEIM: Their one version of it, yeah. I don't know what you mean by a "box." our computer? Go ahead and put it on I don't know if they're allowed to do that. Case 1:08-cv-03367-ARR -RER Document 93 Filed 11/03/09 Page 29 of 49 29 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 so -MR. ROTBERG: I think they're isolated to -- you minute. know. MR. WERTHEIM: sure that there's a way. On a laptop or whatever it is I'm This is a logistical problem that THE COURT: Maybe you can put it on -- you know, like you get iTunes you can put it on up to five computers. MR. WERTHEIM: THE COURT: Your Honor, it could be -I mean, I don't That's your license. everybody faces with original -- if I didn't have the software that used .pdfs it's my problem. I have to get that and I'm sure that their client can provide a version of the software to them, install it on a computer and uninstall it as soon as the review process is complete and the case is over. uninstall the software. THE COURT: Look into it. I'm not so sure of it. If it's a problem you'll They can MR. WERTHEIM: THE COURT: let me know. MR. KOGAN: THE COURT: Look into it. Couple of clarifications, Your Honor. Could they -- understand this for a How many of these work-in-progress images are we Any idea? Hundreds. At all -- all throughout the 52 CD-ROMs talking about? MR. ROTBERG: THE COURT: Case 1:08-cv-03367-ARR -RER Document 93 Filed 11/03/09 Page 30 of 49 30 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 know, by category among specific CDs. THE COURT: All right. The other thing I was You go to your Here thinking is maybe a controlled printout. clients with the particular CD-ROMs that are identified. are the works-in-progress files. You say, show me how to print off one of these works in progress; they say, here's how you do it. way. These clicks. You say, okay, now go along your Pop the CD-ROMs in, open the software package, print I mean -- them off, then you have them. MR. ROTBERG: I will look into the possibility of us -- of my client printing that -- printing those images. THE COURT: MR. KOGAN: All right. I guess it would be helpful if you -- if I mean -- there are specific ones that you want. THE COURT: MR. KOGAN: copyright besides. They want it all. We've been sued on 200-plus sets of I mean, I'm not -- there's no ones we I mean, my clients are being sued for I favor more than others. copyright violations with very massive volume of designs. don't know how I'm supposed to spot check it. THE COURT: MR. ROTBERG: The short answer is they want it all. So, Your Honor, what about the They're -- there was a claim -- two -- I have two questions. briefing that we submit was submitted five page -- up to five pages of a [inaudible] with regard to designs that we Case 1:08-cv-03367-ARR -RER Document 93 Filed 11/03/09 Page 31 of 49 31 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 from them. THE COURT: MR. KOGAN: They're not pack -I think in "E." Actually -- well, yeah, wanted -- the deposit images. ruled on at this point. THE COURT: Well, what are deposit images? Is there That was not discussed and some -- I wanted to see what a deposit image is. MR. KOGAN: I believe it's -- yeah, we have some you know, that one sheet that we submitted to the side-by-side representation. MR. ROTBERG: The front of Exhibit A? Hold on. The squirrel with the mushroom. THE COURT: MR. ROTBERG: Um-hum. All those things to the left, all the postcards would be considered deposit images and the same thing with -- for Exhibit C. Each one of the black-and-white images would be considered a deposit image. THE COURT: That's an image that you deposit with the Copyright Office when you seek a registration? MR. ROTBERG: THE COURT: Correct. Okay. Your Honor, as far as the deposit and MR. WERTHEIM: the final design submitted to the Copyright Office I mean the law in this is black and white. We've been sued. And even if we weren't sued we're entitled to this. Not only are we Case 1:08-cv-03367-ARR -RER Document 93 Filed 11/03/09 Page 32 of 49 32 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 eyes only. entitled to this as a matter of being part of the public there's actually a special provision in the copyright -actual litigant in a copyright case where we'll actually get a copy of the deposit. You know, I think this -- you know, we've been dealing with this delicate issue of interim illustrations and that's fine. action. We'll follow your case of There's just no good-faith basis in addition to the fact that -THE COURT: Well, I think --- we don't have the designs. For MR. WERTHEIM: designating the original public domain work -THE COURT: I thought I did deal with it. I mean, I said the only thing that's attorney's eyes only is the interim -MR. WERTHEIM: THE COURT: Okay. -- crea -- you know, the emails that we're talking about that show, you know, enlarge this, put a purple border here, do this, do that. MR. WERTHEIM: THE COURT: Okay. That's all on -- ruling as attorney's Everything else is not. MR. WERTHEIM: MR. ROTBERG: Okay. Your Honor, if it's not going to be attorney's eyes only I ask that the images that we -- we have submitted to the Court with the assumption that it would be Case 1:08-cv-03367-ARR -RER Document 93 Filed 11/03/09 Page 33 of 49 33 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 attorney's eyes only digital files and those digital files are not something that they had and not something that they have now and we want to replace those with print copies. If we're going to give them some -- we don't have to give them that which we have a digital file in digital format. There is value to that and we don't want to give them -- at the minimum if the Court is going to rule right now that they are not going to be attorney's eyes only it would not be right for them to have the digital file, which is from our client's computer, which they can go ahead and manipulate and work with both for the digital designs for the deposit images which we've given them digital files. So we'd like those to remain -- the digital files to remain attorney's eyes only and if they don't want to look at them, fine. We'll replace them There's with print copies if that is acceptable to the Court. no reason for them to require the -- a file that a computer can manipulate. There is just no basis for that claim that they need to have that in order to defend their case. THE COURT: Why do you need the digital files? I never asked for the digital file. MR. WERTHEIM: I don't know -- I don't need the digital files. THE COURT: Fine. So -I [inaudible] -- MR. WERTHEIM: THE COURT: I don't. The ruling is we will replace -- the digital files will remain attorney's eyes only the -- Case 1:08-cv-03367-ARR -RER Document 93 Filed 11/03/09 Page 34 of 49 34 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 are -MR. KOGAN: That's everything that we have in the stuff. MR. WERTHEIM: THE COURT: Both ways. -- both ways and you both have to produce hard copies to each other of the deposit images. MR. WERTHEIM: We don't have any copyrights so we We didn't file for copyright don't have deposit images. registrations. THE COURT: Then why were you asking both ways? Because we produced twice as many MR. WERTHEIM: disks with digital -THE COURT: Well, I was --- images. I don't want digital MR. WERTHEIM: If that argument is valid -UNKNOWN SPEAKER: THE COURT: [Inaudible] asking -The assertion was for No, no, not. digital versions of deposit images, right, to remain attorney's eyes only. MR. WERTHEIM: THE COURT: MR. KOGAN: Okay. Not -And the final -- the final product in the event that his clients don't have the final product in the digital format that we're providing I don't want to give them that which exists only on my client's -THE COURT: All right. Deposited images -- those Case 1:08-cv-03367-ARR -RER Document 93 Filed 11/03/09 Page 35 of 49 35 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 have. deposits. Copyright Office. THE COURT: separate titles. Two separate -- okay, but those are two Is It's a deposit image and a final image. that what it's called? MR. KOGAN: THE COURT: Yeah. All right. The digital versions of You will produce those will remain attorney's eyes only. paper copies of them. You don't have those. I have -- no, I don't have copyright MR. WERTHEIM: I do have -- we have produced digital files but I If they want printouts of just want the same protection. things -THE COURT: Digital files of what? Of designs. I don't know what they MR. WERTHEIM: I don't know if they have digital files of every design We produced twice as many disks as they did. Any problem with that? They -- the that we produce. THE COURT: argument is they've created their own works that are not -they have not sought copyright protection for and they've given you the digital files of those. what you're saying? MR. WERTHEIM: you're proposing. All I'm saying is I want to do what Is that it? Is that I will print out the designs we've produced on the disks and you can show your client the printouts, not the disks, not the digital versions as you refer to them so -- Case 1:08-cv-03367-ARR -RER Document 93 Filed 11/03/09 Page 36 of 49 36 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. ROTBERG: I'm not sure that they're claiming -- we're only talking here about the -THE COURT: We're talking about protecting people's creative process and to guard against someone -- what another party has created and then manipulating it digitally into something else and then hawking it on the street. Okay. Whether it's copyright protected or not is not a concern of mine. MR. WERTHEIM: Your Honor, one first step I think may be appropriate perhaps is to return to the documents exchanged digitally without leaving a copy and replacing it with paper production only and at which point only those documents which are in part of the creative process, whether it be emails or work in progress, those documents are separate new production which will be given as attorney's eyes only and we each can choose what we believe is work in progress or -THE COURT: You can do it however you want. The particulars are not my concern. My concern is the overLet's arching principles that you're going to apply. reiterate them one more time. Deposit images, final images, non-copyrightable images of creative works or non-copyrighted, I should say, because it's -- they're probably copyrightable but they haven't gone through that step yet. attorney's eyes only. Those were Emails or other documents that show the Case 1:08-cv-03367-ARR -RER Document 93 Filed 11/03/09 Page 37 of 49 37 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 creative process from getting from public image -- public domain image to a final copyrightable image or not those emails or other documents are attorney's eyes only. Everything else is fair game, non-attorney's eyes only. However, if you want to work out the details whether it's -you each send back the CD-ROMs that you received and way to receive a paper shipment in -- and other CD-ROMs with the attorney's eyes only documents or you just want to send each other a printout of the attorney's eyes only documents -- no, a printout of the images so you then can show those to your clients you can do that. MR. WERTHEIM: Is it clear? Couple things. All right. You know, one of the things I mentioned in our letter is, oh, you know, this is a massive production both ways. And although here and there's exhibits here they put the -- you know, the original underlying preexisting work alongside the final design in connection with their copyrights or copyright applications, we didn't get it that way. There's like a separate area or a separate subfolder on the disk that says "preexisting work" and then somewhere else there's the registrations and then maybe somewhere else there's the designs. This is a lot of stuff and I think we ought to get it together because I don't want to have to spend 100 hours figuring out what image goes with which application. THE COURT: Well, the rules are clear. You produce Case 1:08-cv-03367-ARR -RER Document 93 Filed 11/03/09 Page 38 of 49 38 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 general. documents either in an easily understandable format or as they were kept in the regular course of business. I don't know. Apparently you're saying it's not an easily understandable format although you may disagree. You may say, yeah. They've got a file with the preexisting artwork. with the copyrighted images. They've got a file They've got a file with this that's produced in categories and they can easily match it up or you can say that's the way Ana did it. MR. ROTBERG: I don't know. I would suggest just creating one document that -- that there's a guide where everything can be found easily on the disks. THE COURT: I think you -MR. WERTHEIM: THE COURT: I'm okay with that. Well, I don't think that's the problem. You can -He provides -- if he provides a road MR. WERTHEIM: map that says, you know, this file in the disk that says preexisting work if file number nine goes with final image number 12 on another disk and the -THE COURT: Is that what you're proposing? -- copyright, I'll do that. It's MR. WERTHEIM: okay with me. THE COURT: Or are you proposing a more general -I was thinking something more MR. WERTHEIM: Case 1:08-cv-03367-ARR -RER Document 93 Filed 11/03/09 Page 39 of 49 39 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 THE COURT: Yeah. That's what I -- yeah. MR. WERTHEIM: THE COURT: [Inaudible] helpful. He's going to say that you will produce 52 CD-ROMs with however many files within which individual -excuse me, however many folders which -- within which individual files were kept. documents in it. Folder X has whatever type of Folder Y has whatever documents in it. I already have that. MR. WERTHEIM: THE COURT: He's -- yeah, he's not talking about, okay, file three should be linked with file 65 should be linked with file 637. MR. WERTHEIM: THE COURT: It's like a 5,000-piece puzzle -- I understand that and --- that's been thrown on the floor. MR. WERTHEIM: THE COURT: I understand that and when -- you know, when the -- they have the Duke conference in May to consider revising the civil -- Federal Rules of Civil Procedure maybe they should take up the issue of how people produce documents but the Federal Rules currently say you produce them one or two ways as they're kept in the ordinary course of business or you put them in a subject-by-subject category and something that's easily understood. MR. ROTBERG: THE COURT: They -- We're facing the same difficulties -I don't know how they were kept. I don't have the I don't know how they were produced. Case 1:08-cv-03367-ARR -RER Document 93 Filed 11/03/09 Page 40 of 49 40 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 information in front of me and I think, you know, unless you can reach an agreement that says you're all going to reshuffle your documents and put them in easily digestible format you're sort of stuck for the time being with how it's been produced. MR. WERTHEIM: Well, I mean, since they've filed and received copyrights they must have put this stuff together as part of their application. THE COURT: It had to be together. Well, that -Over the course of their business. MR. WERTHEIM: THE COURT: You could print out a file from one folder, print out a file from another folder, print out a file from the third folder, stable it together, mail it to the Copyright Office. Doesn't mean that it's all maintained in I -- you need to -- you one file, one folder on the computer. maybe need to take a deposition of Ana or whoever the custodian of records is to figure out how she kept this stuff. I can't order them to, you know, go back and produce it a certain way. I really don't believe I have that authority. Couple more things. MR. WERTHEIM: Well, this is a turn in a different direction, Your Honor, but maybe you can avoid another one of our conferences. THE COURT: I doubt it. That for several weeks. We've been MR. WERTHEIM: trying to schedule a deposition. You know, you had said the Case 1:08-cv-03367-ARR -RER Document 93 Filed 11/03/09 Page 41 of 49 41 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 last time very firmly that deposition season begins October 1st and ends at the end of December and although we haven't been exactly butting heads -THE COURT: Have any depositions been held? Nothing has been held. We've been MR. WERTHEIM: trying to get them scheduled. We had -- I had said -- I mean, we had served our deposition notices of the two party defendants long before they did, but nonetheless we wrote to them like two or three weeks ago and I said, look, despite us having done that I'm willing to go, you know, on and off. We'll do take your first witness, one of the two girls, then you'll take one of ours, then another girl, then, you know, the other individual plaintiff party. other deposition notices. I mean, the one -- the one logistical problem is Polina who's in Israel, a party defendant. In our first We also served a couple communication about this -- I don't know two or three weeks ago early on in the scheduled deposition season -- I said, look, we're going to go to Israel unless you want to work something out about bringing her here. Okay. We got a Okay. communication that said, we want to bring her here. Fine. Bring her here but then more recently they said, well, there can only be one day. THE COURT: Okay. Here's what we're going to do. You're going to submit a iron-clad deposition schedule by the Case 1:08-cv-03367-ARR -RER Document 93 Filed 11/03/09 Page 42 of 49 42 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 end of this week. If you don't, we're going to hold all the depositions in the courtroom -- excuse me, the jury room on dates that I select. MR. WERTHEIM: THE COURT: Okay. A joint schedule. I'm going to forego the Joint schedule. issue of the sanction that I promised you for the party who loses because I think actually you both won and lost a little bit, so the -- a draw, so to speak. Anything else? MR. ROTBERG: Your Honor, I just want to say that we But it's still out there. have not -- like counsel said, we have not been butting heads with regards to the depositions. There were a couple of issues where we were still trying to work out differences and we have been trying to accommodate each other in our respective clients in that matter. I am still perturbed by a certain gaps in the document disclosure and while counsel has tried to explain in the letter why the accountant never had any single document at all ever, the accountant only saw some QuickBooks apparently reports and that's how the account -their accountant prepares tax returns. So therefore, their accountant has no documents to give me other than the tax returns. And some other things. I did not come prepared to argue this issue. THE COURT: MR. ROTBERG: Take -- take his deposition. Yeah. I would like to do that, Your Case 1:08-cv-03367-ARR -RER Document 93 Filed 11/03/09 Page 43 of 49 43 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Office. MR. ROTBERG: have a lot of concerns. Many six figures issues. I'm -- I Honor. THE COURT: And then if he gives you that answer I don't think that's Got to have -- you've send it to the U.S. Attorney's Office. gap if they still do according to gap. got to have documents, right? MR. ROTBERG: So -- And I -- there are other -- I'm not prepared to discuss this today but, Your Honor, I do have some serious gaps in discovery and I have some documents that counsel has pointed out to me that he is missing and I've been able to assemble some of those. I will have a set of documents -- a couple inches of documents over to counsel by the end of this week. I have yet to see any tax returns for I can't imagine that they the individuals from before 2008. never submitted tax returns where incomes -THE COURT: It's another one for the U.S. Attorney's I am sure that if we continue to cooperate in the way that we have with regard to the depositions I believe that we could work this out. trying to ambush counsel. I'm not I have a list in my office that is I don't want to get into it much more than I brought up. right now because I'm not prepared to discuss all the various issues. THE COURT: Okay. Case 1:08-cv-03367-ARR -RER Document 93 Filed 11/03/09 Page 44 of 49 44 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 look. MR. ROTBERG: And I think that if we continued the spirit of cooperation we might be able to work it out. THE COURT: Don't let it fester. If you can work it out, fantastic; if you can't, don't leave it to the last minute because I could see this impacting depositions so -MR. WERTHEIM: Can I ask for something to help the atmosphere a little bit, Your Honor, in terms of how this goes between us? You know, first of all, just in terms of how we deal with other if you might -- well, first of all, I'm going to note my objection as I do at every conference to this violation of Rule 37 where we come in here and things come out of the blue that I haven't heard about for a long time. MR. KOGAN: [Inaudible] depositions up, Your Honor. It's a scheduling matter. Come on, come on. Look, MR. WERTHEIM: THE COURT: Oh, come on. We're here, you know. MR. KOGAN: If someone is on -- is pointing out Rule 37 I think that counsel [inaudible] -MR. WERTHEIM: No, let me -- just in terms of the atmosphere between us, Your Honor, if you might maybe this is just advisory. I don't know. For months and months when we would try to communicate, writing, telephone strangely all we hear from is counsel's paralegal Yossi [Ph.] sitting there, the bearded gentleman. We don't get communications from We only write to him. lawyers from the last month. Case 1:08-cv-03367-ARR -RER Document 93 Filed 11/03/09 Page 45 of 49 45 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Regardless of the issue it's the strangest thing and it is not helping the resolution of discovery issues for us to get the silent treatment from lawyers. were supposed to talk. even write. You said a long time ago we Not only do they not talk they don't I don't know if this is intended as an insult or they're not getting paid or what the problem is but it's not helping the resolution of discovery that a paralegal appears to be managing their lawsuit for the last two or three months. It's not helping. We're supposed to communicate with each We do it; they don't do other, as you said a long time ago. it. MR. ROTBERG: THE COURT: MR. KOGAN: THE COURT: Rule 37, Your Honor? Give me one second. It's not a motion. I need to look at something. We currently have a final pretrial conference of December 22nd, correct? MR. WERTHEIM: THE COURT: Um-hum. And that's the only other conference we Discovery closes, I would assume, All right. Here's have currently scheduled. either that day or shortly before then. what you do. If you feel -- you both cooperate. Don't -- no offense, but don't filter conversations through paralegals. They might be the world's best paralegals but they have no authority to make a decision. Case 1:08-cv-03367-ARR -RER Document 93 Filed 11/03/09 Page 46 of 49 46 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. ROTBERG: clerk, not a paralegal. THE COURT: MR. ROTBERG: so I just -THE COURT: MR. ROTBERG: THE COURT: All right. -- wanted to say that -Well, if he's not admitted in this Okay. He's admitted in other jurisdictions Mr. Eschaus [Ph.] is actually a law district -- jurisdiction you can't bind your client. MR. ROTBERG: THE COURT: MR. ROTBERG: THE COURT: MR. ROTBERG: THE COURT: MR. ROTBERG: THE COURT: conversation. MR. WERTHEIM: It's a little bit difficult to talk I understand and know the -I'm sorry. -- [inaudible] and did not -No offense intended. He did not sign any stipulation -But --- any way appear -- and -Talk to -- decisionmakers make the to counsel when the microphone is off and Your Honor is out of the room when personal insults are drawn across and I believe other members of the court staff overheard how counsel was just -- I was appalled by this kind of conduct but if we have to address it, then -THE COURT: Look -- Case 1:08-cv-03367-ARR -RER Document 93 Filed 11/03/09 Page 47 of 49 47 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. WERTHEIM: -- we have to address it. Then, Your Honor, I have never -- I -- in my -- in the last 14 years that I have been an attorney I have never had someone behave in this kind of fashion towards me and I'm appalled. have -THE COURT: Please, please. -- to speak to someone who will throw I do not MR. WERTHEIM: personal insults at me when this is -- we're supposed to act as gentlemen and treat each other with courtesy and the kind of dishonesty and the kind of personal verbal attacks that have been headed here -THE COURT: If --- are just inappropriate and I will When Your Honor was out last time MR. WERTHEIM: not keep quiet about this. and between -- in between the times we were on the record in front of everybody here and I think where a dozen or so observers out here -THE COURT: I don't -- look, I -This is just -- MR. WERTHEIM: THE COURT: I don't want to hear any more about the I will say this. inability to deal with each other civilly. I am not extending discovery. MR. WERTHEIM: THE COURT: Okay. Okay. If -- I suggest you both keep a record If at the end of every phone call, every letter, everything. Case 1:08-cv-03367-ARR -RER Document 93 Filed 11/03/09 Page 48 of 49 48 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 of the day discovery is not complete and you can prove to me that it's the other side's fault, I will recommend to Judge Sifton -- Sifton, right? MR. WERTHEIM: THE COURT: Yes. That judgment be entered for violation I'll do that and then you've of the Court's discovery orders. got to cooperate. So create your record and if you can satisfy me that the other side is dragging its heels, whatever, then they'll have a problem. so get it done. (Proceedings concluded at 3:43 p.m.) ****** You've got work to do Case 1:08-cv-03367-ARR -RER Document 93 Filed 11/03/09 Page 49 of 49 49 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Dated: November 2, 2009 Ruth Ann Hager I certify that the foregoing is a court transcript from an electronic sound recording of the proceedings in the above-entitled matter.

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