ESN LLC v. Cisco Systems, Inc. et al

Filing 43

TRANSCRIPT of Proceedings held on 8-25-08, Motion Hearing, 33 pages before Judge David Folsom. Court Reporter/Transcriber: Libby Crawford, CSR,Telephone number: 903.794.4067 Ext. 237. NOTICE RE REDACTION OF TRANSCRIPTS: The parties have seven (7) business days to file with the Court a Notice of Intent to Request Redaction of this transcript. If no such Notice is filed, the transcript will be made remotely electronically available to the public without redaction after 90 calendar days. The policy is located on our website at www.txed.uscourts.gov 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 9/30/2008. Redacted Transcript Deadline set for 10/10/2008. Release of Transcript Restriction set for 12/8/2008. (aec, )

ESN LLC v. Cisco Systems, Inc. et al

Doc. 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 APPEARANCES: FOR PLAINTIFF ESN, L.L.C.: ESN, L.L.C. V.

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF TEXAS TEXARKANA DIVISION . . . . DOCKET NO. 5:08CV20 TEXARKANA, TEXAS AUGUST 26, 2008 10:55 A.M.

CISCO SYSTEMS, INC., ET AL

DEFENDANT'S MOTION TO STAY BEFORE THE HONORABLE DAVID FOLSOM, UNITED STATES DISTRICT JUDGE.

MR. PETER J. MCANDREWS MCANDREWS HELD & MALLOY 500 W. MADISON STREET SUITE 3400 CHICAGO, IL. 60661 MR. THOMAS JOHN WARD, JR. WARD & SMITH LAW FIRM P.O. BOX 1231 LONGVIEW, TX. 75606-1231

FOR DEFENDANT CISCO SYSTEMS, INC.:

MS. VICTORIA F. MAROULIS QUINN EMANUEL URQUHART OLIVER & HEDGES - REDWOOD 555 TWIN DOLPHIN DR. SUITE 560 REDWOOD SHORES, CA. 94065 MR. IVAN WANG MCKOOL SMITH - DALLAS 300 CRESCENT COURT SUITE 1500 DALLAS, TX. 75201

Dockets.Justia.com

-21 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 RECORDED BY STENOMASK VERBATIM REPORTING, TRANSCRIPT PRODUCED BY CAT SYSTEM. COURT REPORTER: MS. LIBBY CRAWFORD, CSR OFFICIAL COURT REPORTER 500 STATE LINE AVENUE TEXARKANA, TX. 75501 903/794-4067

-31 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 INDEX THE COURT.................................................. DEFENDANT'S MOTION BY MS. MAROULIS......................... 4 4

PLAINTIFF'S RESPONSE BY MR. MCANDREWS...................... 10 DEFENDANT'S REPLY BY MS. MAROULIS.......................... 21 THE COURT.................................................. 24 REPORTER'S CERTIFICATION................................... 25

-41 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 CISCO. (OPEN COURT) THE COURT: PLEASE BE SEATED. GOOD MORNING. WE ARE PROCEEDINGS TEXARKANA, TEXAS AUGUST 26, 2008

HERE ON A MOTION TO STAY PENDING REEXAMINATION. EACH SIDE FIFTEEN MINUTES.

I HAVE GIVEN

ARE YOU READY TO GO FORWARD?

MR. WANG: YES, YOUR HONOR. THE COURT: YOU MAY RESERVE SOME TIME. PLAINTIFFS READY TO GO FORWARD, OR PLAINTIFF? MR. MCANDREWS: YES, SIR. THE COURT: VERY WELL, YOU MAY PRESENT YOUR MOTION, AND RESERVE SOME REPLY TIME IF YOU WISH. MR. WANG: IVAN WANG, MCKOOL SMITH ON BEHALF OF WITH ME TODAY ARE VICTORIA MAROULIS WITH QUINN EMANUEL ARE

ALSO ON BEHALF OF CISCO, AND MARTA BECKWITH, DIRECTOR OF IP LITIGATION AT CISCO. VICTORIA WILL BE MAKING THE ARGUMENT. I TRUST

THE COURT: WE ARE STARTING A LITTLE EARLY. EVERYONE IS HERE THAT WE NEED. MS. MAROULIS: YES, YOUR HONOR. MORNING, YOUR HONOR. THANK YOU.

GOOD

I AM VICTORIA MAROULIS WITH QUINN THIS IS OUR

EMANUEL ON BEHALF OF CISCO AND CISCO-LINKSYS. MOTION TO STAY.

THE MOTION TO STAY SHOULD BE GRANTED BECAUSE

REGARDLESS OF THE OUTCOME OF THE INTER PARTES REEXAMINATION CURRENTLY PENDING BEFORE THE PTO, THE CASE WILL BE GREATLY

-51 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: MORE TRADITIONAL TODAY. MS. MAROULIS: THAT'S CORRECT. THERE ARE SOME CASES TAKE? MS. MAROULIS: YOUR HONOR, I HAVE NO WAY TO EXACTLY ASCERTAIN HOW LONG THE PTO WILL TAKE. THE STATISTICS THE PTO SIMPLIFIED. AT BEST, IT WILL BECOME MOOT IF THE PATENT IS

INVALIDATED, OR IT WILL SIMPLIFY THE ISSUES BY REMOVING THE LARGE CHUNK OF CISCO'S INVALIDITY DEFENSE AND AID ­THE COURT: HOW LONG DO WE EXPECT THIS PROCESS WOULD

ISSUED IN MARCH OF THIS YEAR SUGGEST THAT THE MEDIAN TIME IS ABOUT 29 MONTHS FOR A REEXAM TO GO THROUGH. FASTER. BUT IT COULD BE SO FAR WE

IT COULD BE A LITTLE BIT LONGER AS WELL.

ARE ENCOURAGED BY HOW FAST THE PROCEEDINGS HAVE BEEN GOING THROUGH. WE FILED THE REEXAM IN FEBRUARY. THE INITIAL

DETERMINATION WAS MADE IN APRIL TO PROCEED, AND IN JUNE THE OFFICE ACTION ISSUED REJECTING ALL CLAIMS THAT WE MOVED ON, ON MULTIPLE GROUNDS. THE COURT: MR. WARD WAS HERE YESTERDAY AWAITING A JURY VERDICT, AND WE HAD A MOTION TO STAY FILED BY THE PLAINTIFF, OPPOSED BY THE DEFENDANT. EVERYTHING, BUT YESTERDAY WAS A FIRST. MS. MAROULIS: YES, YOUR HONOR, THERE ARE SOME CASES I THOUGHT I HAD SEEN

IN WHICH THE PLAINTIFF SEEKS THE STAY, BUT MORE TRADITIONALLY, IT'S THE PARTY WHO SOUGHT THE REEXAMINATION.

-61 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 STAY. THE COURT: RIGHT. MS. MAROULIS: IN THIS COURT AND IN OTHER COURTS IN

THIS DISTRICT THERE IS BASICALLY A THREE-PART ANALYSIS THE COURT GOES THROUGH TO DETERMINE WHETHER THE STAY IS APPROPRIATE. FIRST, WHETHER THE STAGE OF THE LITIGATION IN OTHER WORDS, IS IT SECOND,

FAVORS THE IMPOSITION OF THE STAY.

EARLY ENOUGH IN THE CASE THAT THE STAY MAKES SENSE? WHETHER THE STAY WOULD SIMPLIFY THE CASE UPON PTO'S DETERMINATION.

AND FINALLY, WHETHER THERE IS UNDUE PREJUDICE

TO THE NONMOVING PARTY, IN THIS CASE, PLAINTIFF ESN. THE FIRST FACTOR CLEARLY FAVORS GRANTING THE MOTION TO THIS CASE IS IN THE VERY EARLY STAGES. WE JUST HAD A

STATUS CONFERENCE BEFORE YOUR HONOR IN APRIL AND THE TRIAL IS SCHEDULED ALMOST TWO YEARS FROM NOW IN APRIL 2010. THE CLAIM

CONSTRUCTION HEARING STARTS IN JUNE OF NEXT YEAR, 2009, AND CRUCIALLY THE PARTIES HAVE NOT YET STARTED THE CLAIM CONSTRUCTION PROCESS UNDER THE LOCAL RULES. AND A NUMBER OF

COURTS NOTED THAT THE STAY IS PARTICULARLY APPROPRIATE WHERE THE PARTIES HAVE NOT YET COMMENCED CLAIM CONSTRUCTION. WE HAVE COMMENCED CERTAIN DISCOVERY BUT NO DEPOSITIONS HAVE TAKEN PLACE, AND THERE HAS BEEN MINIMAL PROCEEDINGS IN THIS CASE SINCE IT WAS FILED IN JANUARY. THE SECOND FACTOR IS WHETHER THE STAY WOULD SIMPLIFY THE CASE, AND THIS IS THE CRUX OF OUR MOTION, WHICH IS WE BELIEVE THAT THE PATENT IS INVALID AND THAT THE PTO WOULD AGREE WITH

-71 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 US AND FINALLY REJECT THE CLAIMS. IF WE ARE CORRECT AND IF

THAT'S THE CASE, THIS COURT AND THE JURY IN THIS COURT AND THE PARTIES WOULD NOT NEED TO SPEND THE RESOURCES INTERPRETING THE CLAIMS AND PROCEEDING WITH A COSTLY PATENT LITIGATION THROUGH TRIAL AND POST-TRIAL PROCEEDINGS. THERE ARE SOME STATISTICS SUGGESTING THAT INTER PARTES REEXAMS RESULT IN 76 PERCENT OF REJECTION. THAT'S THE

STATISTICS THAT ESN ATTACHED TO THE PLEADINGS AS EXHIBIT R. BUT MORE IMPORTANTLY, WE BELIEVE THAT THE INITIAL OFFICE ACTION SHOWS THAT THE PATENT OFFICE SEES THIS PATENT AS A CANDIDATE FOR CANCELING THE CLAIMS. BUT IT'S NOT ­- IT WOULDN'T JUST SIMPLIFY THE CASE IF THE PATENT IS COMPLETELY CANCELED. THE REEXAMINATION PROCEEDING

ALSO PROVIDES THE COURT WITH GUIDANCE ON CLAIM CONSTRUCTION BECAUSE IT'S BASICALLY THE CONTINUATION OF PROSECUTION. EVEN IF THE CLAIMS ARE NOT CANCELED, THERE WILL BE MORE GUIDANCE FROM THE PTO IN THE PARTIES' STATEMENTS ON THE VARIOUS ESTOPPEL ISSUES AND CLAIM TERMS. ALSO IMPORTANT IS THAT THE CLAIMS TEND TO CHANGE THROUGHOUT THE REEXAMINATION. AND TO QUOTE JUDGE CRAVEN IN AND

THE ECHOSTAR DECISION, IT WOULD BE EGREGIOUS WASTE OF THE COURT'S TIME TO HAVE TO CONSTRUE THE CLAIMS ONLY TO LEARN SEVERAL MONTHS LATER THAT THE CLAIMS HAVE CHANGED AS A RESULT OF AMENDMENT OR SOME OTHER PROCEEDINGS UNDER THE REEXAM PROCESSES.

-81 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 FINALLY, IF WE ARE WRONG AND IF PTO DOES NOT AGREE WITH US AND DOES NOT CANCEL THE CLAIMS BUT IN FACT ISSUE THEM AS THEY ARE NOW, THE CASE WILL BE GREATLY SIMPLIFIED AS WELL BECAUSE CISCO AT THAT POINT WILL BE ESTOPPED FROM RELYING ON ANY PRINTED PUBLICATION THAT WAS OR COULD HAVE BEEN PRESENTED TO THE PATENT OFFICE. AND IN THEIR PAPERS ESN SEEMS TO

SUGGEST A DICHOTOMY BETWEEN THIRTEEN PRINTED PUBLICATIONS THAT WE PRESENTED TO THE PTO AND THE PRODUCTS. WHAT THEY DON'T

SEEM TO REALIZE IS THAT WE WILL BE BARRED FROM ANY PRINTED PUBLICATION WHETHER WE SHOW THEM TO THE PTO OR NOT. FOR EXAMPLE, IF UPON THE CONCLUSION OF THE PTO PROCEEDINGS WE WERE TO FIND AN ARTICLE THAT WORD FOR WORD HAD THE SAME CONTENT AS THE PATENT AT ISSUE HERE, YOUR HONOR, WE COULD NOT PRESENT IT TO THE COURT BECAUSE WE ARE BOUND NOT ONLY BY WHAT WE PRESENTED TO THE PTO BUT WHAT WE COULD HAVE PRESENTED TO THE PTO. SO ONCE AGAIN, THAT FACTOR ALSO WEIGHS

IN FAVOR OF STAYING THIS ACTION. FINALLY, WE NEED TO LOOK AT WHETHER THE STAY WOULD PREJUDICE ESN OR UNDULY PREJUDICE ESN. AND A NUMBER OF COURTS

HAVE CONSIDERED THE SITUATION WHERE AS HERE ESN'S MAIN BUSINESS IS THE ENFORCEMENT OF THE PATENT. IN OTHER WORDS,

THEY ARE NOT A COMPETITOR IN THE MARKETPLACE WHO OTHERWISE COULD BE LOSING THE MARKET SHARE, LOSING CUSTOMERS, AND SEEING ITS PRICES DECREASE. IN THIS CASE, AS IN OTHERS, THE COURTS

HAVE CONSIDERED ESN IS AN ENTITY THAT CAN BE COMPENSATED VIA

-91 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MONETARY DAMAGES IF THE CASE IS STAYED AND IF THERE IS A DELAY AND IF ULTIMATELY THE PTO CONFIRMS THE PATENT. FOR THAT

REASON A NUMBER OF COURTS HAVE DECIDED THAT DELAY ITSELF IS NOT ENOUGH OF A PREJUDICE, ESPECIALLY IN INSTANCES WHERE THE PLAINTIFF IS A NON-PRACTICING ENTITY. I WOULD LIKE TO HAVE THE COURT'S ATTENTION FOCUSED ON A COUPLE OF CASES WE CITED IN OUR PAPERS, SPECIFICALLY ALZA V. WYETH AND KRAFT V. PROCTOR & GAMBLE. BOTH OF THOSE CASES

INVOLVED INTER PARTES REEXAM PROCEEDINGS AND IN BOTH OF THEM THERE WERE COMPETITORS ON EACH SIDE, WHICH MEANS THAT THE COURT DECIDED THERE WAS NO PREJUDICE EVEN WHEN THERE WAS A COMPETITIVE ENTITY ON THE OTHER END. BY CONTRAST, IF THE STAY IS NOT ENTERED, CISCO WOULD BE SEVERELY PREJUDICED BECAUSE WE WOULD HAVE TO LITIGATE THIS CASE TO A CONCLUSION AND IT COULD BE AN ENORMOUS WASTE OF THE COURT AND PARTIES' RESOURCES. BEST WAY TO PROCEED HERE. IN CONCLUSION, I WOULD LIKE TO SAY THAT ESN CANNOT REALLY POINT TO ANY CASE THAT IS SQUARELY ON POINT WITHOUT FACTS WHERE THE STAY HAS BEEN DENIED. AND BY ­AND THE STAY SEEMS TO BE THE

THE COURT: I WAS READING THROUGH THE PAPERS AND PLAINTIFF'S CITE TO MR. CHANDLER'S TESTIMONY BEFORE CONGRESS ABOUT THE UNFAIRNESS OF THESE LONG DELAYS WHEN CISCO IS INVOLVED IN THE REEXAM PROCESS. WHAT IS YOUR REPLY TO THAT?

MS. MAROULIS: YOUR HONOR, MR. CHANDLER'S TESTIMONY

- 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 WAS TAKEN A BIT OUT OF CONTEXT BECAUSE IN FACT BEFORE CONGRESS HE IS PROPOSING THE POST-GRANT PROCEEDINGS AND HE IS SAYING THAT IT'S A GOOD THING TO HAVE THESE PROCEEDINGS IN THE PTO. HE IS MERELY SAYING THAT, YES, AS A PATENT HOLDER YOU DON'T WANT THIS DELAY, BUT YOU HAVE TO BALANCE THAT AGAINST OTHER FACTORS. THE COURT: I TRY TO LOOK AT THESE ALL ON THE MERITS OF EACH INDIVIDUAL CASE. I HAVE YET TO SEE MR. BAXTER UP HERE

IN A CASE THAT MCKOOL SMITH IS ON THE PLAINTIFF'S SIDE THAT DIDN'T OPPOSE THESE, BUT I WILL TRY TO LOOK AT IT INDIVIDUALLY. MS. MAROULIS: WE APPRECIATE THAT, YOUR HONOR. AN INDIVIDUAL CASE BY CASE ANALYSIS. IT'S

AND TURNING BACK TO OUR

CASE, THIS IS A CASE WHERE WE HAVE INTER PARTES PROCEEDING AND ESTOPPEL THAT GOES WITH IT. WE HAVE A CASE WITH A SINGLE

DEFENDANT WHICH SETS THIS CASE APART FROM CASES LIKE MP3 WHERE JUDGE WARD DECLINED THE STAY BECAUSE THERE WERE MULTIPLE DEFENDANTS, NOT ALL OF WHOM WERE BOUND BY THE ESTOPPEL. THE

CASE IS IN EARLY STAGES, WOULD HAVE A NONCOMPETITOR ENTITY ON THE OTHER SIDE. AND ALL OF THE FACTORS THAT I JUST WENT

THROUGH FAVOR THE STAY. YOUR HONOR, I'D LIKE TO RESERVE MY REMAINING TIME FOR THE REBUTTAL. THE COURT: RESPONSE. MR. MCANDREWS: THANK YOU, YOUR HONOR. MY NAME IS

- 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 PETER MCANDREWS. I REPRESENT THE PLAINTIFF, ESN. WITH ME I

HAVE JOHNNY WARD AND BRIAN HOLLANDER, THE CLIENT REPRESENTATIVE. I HAVE A BRIEF POWERPOINT PRESENTATION, BEAR WITH ME HERE, TO HIGHLIGHT SOME OF THE POINTS OF OUR ARGUMENTS. OBVIOUSLY OPPOSES CISCO'S MOTION FOR A STAY. ESN

AS THIS COURT

HAS POINTED OUT, CISCO'S MOTIVE TO UNDULY DELAY THIS CASE IS HIGHLY RELEVANT TO THE CIRCUMSTANCES OF THE CASE. THE COURT

MUST BE AWARE THAT THE REEXAMINATION CANNOT BE USED AS A TACTICAL TOOL, AND WE BELIEVE THAT THE HISTORY OF THIS CASE SHOWS THAT THAT IS EXACTLY WHAT CISCO IS USING THE REEXAMINATION FOR. AS YOU POINTED OUT, YOUR HONOR, CISCO HAS RECOGNIZED THAT IT UNDERSTANDS THE IMPACT OF THE ACTIONS. IT UNDERSTANDS THAT

BY SEEKING A REEXAMINATION THEY CAN UNDULY DELAY THE CASE. MARK CHANDLER, THE VICE PRESIDENT GENERAL COUNSEL OF CISCO, IN TESTIFYING BEFORE CONGRESS STATED THAT THE PRINCIPLE THAT JUSTICE DELAYED IS JUSTICE DENIED, AND IT APPLIES WITH EQUAL FORCE TO THE PATENT PROCESS. WE BELIEVE THAT MR. CHANDLER WAS SPEAKING IN TERMS OF THE PREJUDICE THAT THEY MAY SUFFER AND HE WANTED TO BALANCE THAT, OF COURSE. AS MS. MAROULIS POINTED OUT, THAT THEY NEED TO BALANCE THAT AGAINST THE VALUE THAT CAN APPLY TO THE INTER PARTES REEXAMINATION PROCESS. HOWEVER, AT THE TIME WHEN HE

WAS SPEAKING, THEY WERE NOT SPEAKING IN THE CONTEXT OF THE

- 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 REEXAMINATION PROCESS AS IT EXISTS TODAY. AND IT IS BROKEN.

THE REEXAMINATION PROCESS IS NOT WORKING THE WAY CONGRESS INTENDED. IT IS TAKING MUCH LONGER.

THIS IS A BRIEF TIMELINE OF CISCO'S DILATORY CONDUCT THAT LED UP TO THIS LAWSUIT. CISCO WOULD HAVE YOU BELIEVE THAT

THIS LAWSUIT BEGAN ON JANUARY 31ST, OR THAT THE DISPUTE BEGAN ON JANUARY 31ST AND THEY SUGGEST THAT THIS CASE IS YOUNG. HOWEVER, IF YOU LOOK AT THE OCTOBER 16TH, 2007 DATE WHEN WE ORIGINALLY FILED OUR COMPLAINT, THIS CASE IS NEARLY A YEAR OLD. HOWEVER, ALL THE WAY BACK TO AUGUST 2006, ESN APPROACHED

CISCO TO DISCUSS LICENSING OR POSSIBLE PURCHASE OF THE `519 PATENT, OR THE APPLICATION THAT WAS PENDING AT THE TIME. THROUGHOUT THE PERIOD BETWEEN AUGUST AND MARCH OF 2007 ESN CONTINUED TO ATTEMPT TO ENGAGE CISCO IN NEGOTIATIONS. IN

MARCH 2007, ESN RECEIVED AN ORIGINAL NOTICE OF ALLOWABILITY OF THE CLAIMS OF THE `519 PATENT AND INFORMED CISCO OF THAT FACT. AND IT WAS ONLY AFTER THAT TIME THAT CISCO PLACED US IN TOUCH WITH BAKER AND BOTTS FOR THE STATED PURPOSE OF GETTING DOWN TO BUSINESS AND TALKING ABOUT THE MERITS OF OUR CLAIM AGAINST CISCO. ON MAY 26 BAKER AND BOTTS SENT A LETTER IDENTIFYING PRIOR ART TO US THAT SHOULD HAVE BEEN CITED TO THE PTO. IT WAS A

THINLY VEILED ATTEMPT TO SET UP AN INEQUITABLE CONDUCT DEFENSE. WE RECOGNIZED THAT, AND SO IN RESPONSE TO THAT WE

TURNED AROUND AND CITED THAT PRIOR ART TO THE PATENT OFFICE.

- 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 ON JUNE 8 WE INFORMED CISCO OF THAT FACT, THAT THE PRIOR ART HAD BEEN CITED. HOWEVER, BECAUSE A NOTICE OF ALLOWABILITY HAD

ALREADY BEEN RECEIVED, WE HAD TO FILE WHAT'S CALLED A REQUEST FOR CONTINUED EXAMINATION AND THAT DELAYED THE ISSUANCE OF THE PATENT FOR AT LEAST FOUR, FIVE, POSSIBLY AS LONG AS SIX MONTHS. WHAT'S IMPORTANT ABOUT THIS PERIOD OF TIME IS THAT AFTER JUNE 8TH WHEN WE NOTIFIED CISCO THAT WE HAD CITED THE PRIOR ART THAT THEY INFORMED US OUGHT TO BE CITED TO THE PATENT OFFICE, THEY WENT ESSENTIALLY RADIO SILENT ON US. THEY DID NOT

PROVIDE ANY ADDITIONAL PRIOR ART DURING THE TIME THAT THE PATENT WAS PENDING BETWEEN JUNE AND OCTOBER OF 2007. IF THEY

HAD PROVIDED IT TO US THEN WE COULD HAVE PROVIDED IT TO THE PATENT OFFICE THE FIRST TIME AROUND, AND IF AS THEY BELIEVE THE PRIOR ART WOULD INVALIDATE THE CLAIMS, WE DON'T BELIEVE THAT IT WOULD; HOWEVER, THE PATENT OFFICE WOULD HAVE HAD AN OPPORTUNITY TO INVESTIGATE THAT THE FIRST TIME AROUND WITHOUT HAVING TO GO THROUGH A REEXAMINATION PROCESS. SO DURING THIS TIME AFTER WE SENT THEM A LETTER, THE LETTER BY THE WAY ALSO IDENTIFIED IN CLAIM CHART FORM HOW THEY INFRINGED, CISCO DID NOT RESPOND IN ANY WAY. SO ON OCTOBER THEY

16TH, WHEN THE PATENT ISSUED WE FILED SUIT IN TEXAS.

FILED A CORRESPONDING SUIT IN THE DISTRICT OF CONNECTICUT. AND ULTIMATELY THE PARTIES AGREED TO DISMISS THOSE SUITS. HOWEVER, CISCO HAD REPRESENTED TO US THAT THEY WANTED TO WORK

- 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 IN EARNEST TO SETTLE THE DISPUTE. IN FACT, THAT'S WHAT THEIR AND THE

LEAD COUNSEL TOLD THE DISTRICT COURT IN CONNECTICUT.

QUOTE IS THEY WANTED TO WORK IN EARNEST TO SETTLE THE DISPUTE OVER A 90-DAY STAND DOWN PERIOD. DISMISS OUR CASE HERE. DURING THAT 90-DAY STAND DOWN PERIOD, HOWEVER, CISCO REFUSED TO DISCLOSE ANY FINANCIAL INFORMATION TO US. THEY SO WE AGREED VOLUNTARILY TO

CONTINUED TO REFUSE TO IDENTIFY A NON-INFRINGEMENT DEFENSE. AND THEY ONLY PROVIDED TWO ITEMS OF PRIOR ART TO US AS AN ALLEGED INVALIDITY CASE. WHAT'S SIGNIFICANT ABOUT THAT IS

THAT LESS THAN A WEEK AFTER WE REFILED THE SUIT ON JANUARY 31ST, THEY FILED A 400-SOME-ODD PAGE REQUEST FOR INTER PARTES REEXAMINATION THAT NAMED 13 ITEMS OF PRIOR ART. YOUR HONOR, I SUGGEST THAT THEY SANDBAGGED US. WANTED TO WAIT. THEY

THEY KNEW THAT THEY WERE GOING TO USE THE

INTER PARTES REEXAMINATION AS A TOOL TO DELAY THE CASE. WHAT'S SIGNIFICANT ABOUT THIS IS THAT THERE WAS A 14-MONTH PERIOD AFTER WE NOTIFIED THEM ABOUT THE PENDING PATENT APPLICATION THAT THEY COULD HAVE PROVIDED PRIOR ART TO US. COULD HAVE BEEN SUBMITTED TO THE PATENT OFFICE. IT

IT COULD HAVE

BEEN FULLY CONSIDERED BEFORE THE PATENT ISSUED THE FIRST TIME. MS. MAROULIS MENTIONED THAT THE -- THAT INTER PARTES REEXAMINATIONS ARE TAKING SOMEWHERE ON THE ORDER OF 28 MONTHS. HOWEVER, A RECENT STUDY PUBLISHED IN APRIL OF THIS YEAR SHOWS THAT THAT NUMBER IS HIGHLY MISLEADING. THE 28-MONTH PERIOD

- 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 APPLIES ONLY TO INTER PARTES REEXAMINATIONS WHERE EITHER THE PATENTEE DID NOT PARTICIPATE AT ALL IN THE PROCESS, AND THERE ARE 10 OF THOSE OUT OF 16 TOTAL REEXAMINATIONS THAT HAVE BEEN COMPLETED OUT OF THE NEARLY 400 THAT HAVE BEEN FILED TO DATE. SO THERE ARE ONLY 16 THAT HAVE BEEN COMPLETED. OF THOSE 16,

10 OF THEM ARE A SITUATION WHERE THE PATENTEE DID NOT PARTICIPATE AT ALL. RIGHTS. SO THEY ESSENTIALLY DEFAULTED ON THEIR

THE OTHER SIX REPRESENT A SITUATION WHERE THE

PATENTEE PARTICIPATED INITIALLY BUT DID NOT PARTICIPATE IN ANY APPEALS PROCESS INTERNAL TO THE PATENT OFFICE. THEY GET THE 28-MONTH FIGURE. THE ACTUAL FIGURES ARE MUCH LONGER THAN THAT. IN FACT, THE THAT'S WHERE

NO INTER PARTES REEXAMINATION HAS BEEN COMPLETED TO DATE. NUMBERS IN THE INSTITUTE FOR PROGRESS REPORT SHOW THAT THE AVERAGE PENDENCY IS 78.4 MONTHS. WAS IN APRIL. 82 MONTHS. HOWEVER, YOUR HONOR, THAT

BY NOW, FOUR MONTHS LATER, THAT NUMBER IS UP TO

THERE IS STILL TO DATE, AND WE UPDATED OUR

RESEARCH JUST LAST WEEK, TO DATE THERE HAS STILL NOT BEEN A SINGLE INTER PARTES REEXAMINATION THAT HAS BEEN COMPLETED THROUGH THE APPEALS WHERE THE PATENTEE DECIDES TO PARTICIPATE IN ALL STAGES OF THE PROCESS. THE INSTITUTE FOR PROGRESS REPORT PUTS THE CONFIDENCE INTERVAL AT 95 PERCENT ON THE INTER PARTES REEXAMINATION TAKING BETWEEN FIVE AND EIGHT YEARS. IT APPEARS THAT MAYBE

EVEN THAT NEEDS TO BE UPDATED THOUGH BECAUSE THERE STILL HAS

- 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 NOT BEEN A SINGLE INTER PARTES REEXAMINATION COMPLETED. YOUR HONOR, I PUT THIS DETAILED INFORMATION UP ON THE SCREEN HERE. THIS IS A DIRECT CUT AND PASTE OUT OF THE THERE IS A LOT OF INFORMATION THEY

INSTITUTE FOR PROGRESS REPORT. HERE.

THE POINT IS THAT THIS REPORT IS HIGHLY DETAILED. THEY WENT

WENT THROUGH REEXAMINATION BY REEXAMINATION.

THROUGH ALL OF THE FILES AND PULLED TOGETHER THIS INFORMATION. SO IT'S A HIGHLY DETAILED REPORT. ACCURATE. THE OTHER SIGNIFICANT POINT THAT CAN BE SEEN ON THIS SLIDE IS THAT WE BELIEVE CISCO MAY HAVE UNINTENTIONALLY MISINTERPRETED THE DATA SHOWN HERE TO SUGGEST THAT OUR INTER PARTES REEXAMINATION, UNLIKE ALL OTHERS, WILL BE COMPLETED IN ONE QUARTER OF THE TIME. THEY SUGGESTED THAT THE AVERAGE TIME WE BELIEVE IT TO BE

TO A FIRST OFFICE ACTION IN A TYPICAL INTER PARTES REEXAMINATION IS SOMEWHERE ON THE ORDER OF 16 TO 18 MONTHS. THEY MISINTERPRETED THESE SLIDES. WHAT HAPPENS AT 16 TO 18 MONTHS IS NOT THE FIRST OFFICE ACTION. IT'S THE ACP. AND THE ACP IS AN ACTION CLOSING

PROSECUTION.

IN OTHER WORDS, IT'S THE SECOND OFFICE ACTION.

AND THEY SUGGESTED BECAUSE THE FIRST OFFICE ACTION IS AT 18 MONTHS AND OURS TOOK ROUGHLY FOUR AND SEVERAL WEEKS, FOUR MONTHS, JUST OVER FOUR MONTHS, THEY SUGGESTED THAT OURS WOULD BE COMPLETED IN ONE QUARTER OF THE TIME. BUT IF YOU ACCURATELY READ THESE STATISTICS, THE AVERAGE TIME TO A FIRST OFFICE

- 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 ACTION IS EXACTLY 4.1 MONTHS. OURS TOOK 4.2 MONTHS. SO IF

YOU USE CISCO'S LOGIC, OURS WILL ACTUALLY TAKE LONGER THAN THE TYPICAL. NOW THE PREJUDICE THAT WOULD RESULT IS SHOWN ON THIS SLIDE HERE. UNDER THE CURRENT SCHEDULE WHICH HAS BEEN SET, WE

ARE SCHEDULED TO HAVE A MARKMAN HEARING IN JUNE OF NEXT YEAR AND WE WILL GET TO TRIAL IN APRIL OF 2010. UNDER CISCO'S WE WOULD DELAY

DESIRED SCHEDULE, WE WOULD STOP THE CASE NOW.

FOR SIX AND A HALF YEARS, SOMETIME INTO THE LATTER HALF OF 2014. WE WOULD PICK UP THE ­- WE WOULD RESUME THE PRETRIAL

SCHEDULE AND WE WOULD LIKELY NOT GET TO TRIAL UNTIL AT LEAST THE LATTER HALF OF 2016 OR LATER. SUBSEQUENT TO THAT, THERE WE ARE INTO 2018,

WOULD BE AN APPEAL TO THE FEDERAL CIRCUIT.

POSSIBLY 2019 BEFORE WE HAVE A RESOLUTION OF THE DISPUTE BETWEEN THE PARTIES. THE PREJUDICE TO OUR PLAINTIFF IF ­- THE PREJUDICE TO OUR CLIENT IF THAT WERE TO TAKE PLACE IS THAT MORE THAN HALF OF THE LIFE OF THE PATENT WILL BE GONE BEFORE THERE IS ANY RESOLUTION OF THE RIGHTS. HE WOULD NOT HAVE THE ABILITY TO GO

OUT AND ATTEMPT TO LICENSE OTHER PARTIES DURING THAT PENDENCY. THERE WOULD BE WITNESSES LOST. FADE. THERE WILL BE MEMORIES THAT THE TECHNOLOGY

THERE WILL BE DOCUMENTS THAT ARE LOST.

MAY MOVE ON BY THAT TIME.

THE TECHNOLOGY COULD BE UNIMPORTANT THERE ARE A LARGE

IN THE LATTER HALF OF THE NEXT DECADE.

NUMBER OF CIRCUMSTANCES WHY OUR CLIENT WOULD SUFFER UNDUE

- 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 PREJUDICE IF WE HAD TO WAIT UNTIL THE LATTER HALF OF THE NEXT DECADE. NOW, MS. MAROULIS SUGGESTED THAT THERE IS LIKELY TO BE A NARROWING OF THE ISSUES. HOWEVER, THEY HAVE PRESENTED TO THE THERE ARE

PATENT OFFICE ONLY THIRTEEN ITEMS OF PRIOR ART.

OVER A HUNDRED ADDITIONAL ITEMS OF PRIOR ART THAT THEY HAVE IDENTIFIED IN THEIR RULE 3-3 INVALIDITY CONTENTIONS. SHE I

SUGGESTED THAT ­- I DON'T KNOW IF THIS WAS INTENTIONAL.

THINK IT WAS UNLIKELY THAT SHE WAS GOING TO SUGGEST THAT THOSE HUNDRED, THOSE HUNDRED PRODUCTS ARE PUBLICATIONS. NOT PUBLICATIONS, YOUR HONOR. THEY ARE

THEY ARE NOT THE TYPE OF PRIOR THERE WILL BE

ART THAT CAN BE PRESENTED TO THE PATENT OFFICE.

NO ESTOPPEL EFFECT WITH RESPECT TO A PRODUCT THAT THEY CAN PROVE WAS ON SALE ACCORDING TO 102(B), 35 U.S.C. 102(B), OR IF THERE WAS A PRIOR INVENTION DEFENSE ACCORDING TO 102(G). IS NOT ­- I DON'T BELIEVE SHE IS SUGGESTING THAT THERE IS GOING TO BE AN ESTOPPEL EFFECT. SO THE ADDITIONAL HUNDRED PRIOR ART REFERENCES WHICH ARE GENERALLY PRODUCTS FOR WHICH THEY ARE NOT, TO MY UNDERSTANDING, RELYING ON A PRINTED PUBLICATION THAT DESCRIBES THAT PRODUCT, INSTEAD, THEY WILL RELY ON POSSIBLY INTERNAL SPECIFICATIONS OF THESE COMPANIES THAT MADE THE PRODUCTS. THERE ARE A HUGE NUMBER OF ADDITIONAL PRIOR ART ISSUES THAT THEY ARE RESERVING IF WE SHOULD GET BACK TO TRIAL. SHE ALSO SUGGESTS THAT BECAUSE ALL OF THE CLAIMS HAD BEEN SHE

- 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 REJECTED TO DATE THAT IT IS LIKELY THAT THEY WILL CONTINUE TO BE THAT WAY. HOWEVER, YOUR HONOR, THE REPORT FOR PROGRESS

STUDY SHOWED THAT IT IS NEARLY ALWAYS THE CASE THAT THE FIRST OFFICE ACTION WILL REJECT ALL OF THE CLAIMS. IN OTHER WORDS,

THE PATENT OFFICE IS SAYING IF WHAT THE REQUEST OF THE DEFENDANT, THE REQUESTOR OF THE INTER PARTES REEXAMINATION, IF WHAT THEY SAY IS TRUE, THEN THIS IS THE REJECTION. IT ­- THAT'S ONLY THE FIRST VOLLEY. IT TREATS

SO THERE HAS BEEN A

REJECTION MADE THAT ADOPTED, LITERALLY ADOPTED VERBATIM THE REQUESTOR'S POSITION. THERE IS ONLY ONE INSTANCE WHERE WE CAN

EVEN IDENTIFY WHERE THE EXAMINER PIECED TOGETHER TWO PORTIONS OF AN ARGUMENT THAT THEY MADE. BUT EVEN IN THAT CASE THE

EXAMINER LITERALLY CUT AND PASTED THE REQUESTOR'S ARGUMENT ONTO THE PAGE. SO THERE HAS BEEN VERY LITTLE INDEPENDENT ANALYSIS BY THE PATENT OFFICE AT THIS STAGE. THEY ARE JUST SAYING IF WHAT YOU WE HAVE RESPONDED AND WE WE

SAY IS TRUE, HERE IS THE REJECTION.

HAVE POINTED OUT THAT THE PRIOR ART DOES NOT INVALIDATE.

ARE CONFIDENT THAT THE CLAIMS WILL REMAIN AS THEY ARE AND THAT THEY WILL ISSUE, REISSUE WHEN THEY DO. WHAT I SHOULD POINT OUT ABOUT THE SCHEDULE HERE THOUGH, YOUR HONOR, CISCO'S DESIRED SCHEDULE, ASSUMING THE CASE IS NOT STAYED AS WE BELIEVE IT SHOULD NOT BE, WE WILL GET TO TRIAL IN 2010. IT WILL BECOME A FINAL NONAPPEALABLE DECISION SOMETIME AT THE

IN MID-2011 IF WE GET THROUGH THE FEDERAL CIRCUIT.

- 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 STAGE THAT OUR CASE BECOMES FINAL AND NONAPPEALABLE, IF THE DEFENDANT HAS NOT CARRIED ITS BURDEN TO SHOW THAT THE CLAIMS ARE INVALID, THE PATENT OFFICE MUST SUSPEND ITS PROCEEDINGS AND CAN NO LONGER MAINTAIN THE INTER PARTES REEXAMINATION. THERE WILL NOT BE PARALLEL TRACKS. RESOURCES. THE SONY V. DUDAS CASE THAT WE CITE IN OUR BRIEF SAYS THAT IT'S LIKE A HORSE RACE. THE DEFENDANTS CAN CHOOSE TO THERE WILL NOT BE WASTED SO

RIDE TWO HORSES IN PARALLEL, BUT WHEN ONE OF THEM REACHES THE FINISH LINE THE OTHER HORSE MUST STOP. 35 U.S.C. 117(B)

INDICATES THAT IF WE GET TO A FINAL DECISION FIRST, THE PATENT OFFICE MUST SUSPEND ITS PROCEEDINGS. YOUR HONOR, IF THE STAY IS GRANTED, WE BELIEVE THAT IT WOULD BE CONTRARY TO RULE 1 THAT ENTITLES US TO A JUST, SPEEDY, AND INEXPENSIVE DETERMINATION OF THIS MATTER. FINAL POINT, YOUR HONOR. MS. MAROULIS POINTED OUT THAT AND A

BECAUSE OUR CLIENT IS AN INDIVIDUAL INVENTOR WHO DOES NOT PRACTICE THE PATENT, DOES NOT MAKE A PRODUCT, THAT HE IS NOT ENTITLED TO AN INJUNCTION AND SO THERE CAN BE NO IRREPARABLE HARM. THAT IS NOT TRUE. THE EBAY CASE HAS SAID THAT

INDIVIDUAL INVENTORS, ESPECIALLY ALONG WITH THE UNIVERSITIES, MAY BE ENTITLED TO AN INJUNCTION. IRREPARABLE HARM. THEY ARE ENTITLED TO PROVE

THEY ARE ENTITLED TO SEEK AN INJUNCTION.

IF WE WERE NOT ALLOWED TO SEEK AN ­THE COURT: I AM TOLD YOUR TIME IS CONCLUDED IF YOU

- 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 REMAINS? THE CLERK: SIX MINUTES. THE COURT: SIX MINUTES. MS. MAROULIS: THANK YOU, YOUR HONOR. LET ME BEGIN WILL WRAP UP YOUR COMMENTS. MR. MCANDREWS: THANK YOU, YOUR HONOR. THE COURT: VERY WELL. REPLY? HOW MUCH TIME

WITH OBJECTING TO THE USE OF CONFIDENTIAL SETTLEMENT INFORMATION IN THE COUNSEL'S SLIDES AND POINT OUT THAT IT IS HIGHLY INAPPROPRIATE TO RELY ON CONFIDENTIAL SETTLEMENT DATA TO MAKE A POINT IN THESE PROCEEDINGS. THAT SAID, CISCO CATEGORICALLY REJECTS AN INSINUATION THAT WE HAD ANY DILATORY MOTIVE IN FILING THE REEXAM GENERALLY OR FILING IT AT ANY TIME THAT WAS ASSERTED. IN FACT, SOME OF

THE COURTS WHO GRANTED STAYS IN THE CASES FOUND THAT REEXAM NATURALLY OR CLOSELY FOLLOWS REEXAMINATION, OR THE REEXAMINATION FOLLOWS THE SETTLEMENT NEGOTIATIONS THAT FALL APART. THAT SAID, ALTHOUGH THERE IS A NOTION THAT BAD FAITH SHOULD BE CONSIDERED, WE DON'T BELIEVE THAT ESN HAS ESTABLISHED AND SHOWN ANY BAD FAITH ON BEHALF OF CISCO IN BRINGING EITHER REEXAM OR THE STAY PROCEEDINGS. SECONDLY, LET ME ADDRESS THE ISSUE OF PURPORTED DELAY. THE INSTITUTE FOR PROGRESS STATISTICS ARE JUST ONE WAY OF LOOKING AT THE STATISTICS. YOUR HONOR, WE WENT WITH THE PTO

- 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 STATISTICS THAT PTO ITSELF PUT ON ITS WEBSITES IN MARCH OF THIS YEAR. BUT REGARDLESS WHO INTERPRETS THEM, THE OUR REEXAM CAN GO TWO IT CAN BE A LOT SHORTER

ASSUMPTIONS ARE HIGHLY SPECULATIVE. YEARS OR IT CAN GO A YEAR AND A HALF.

THAN ESN SUGGESTS OR IT POSSIBLY COULD BE A SLIGHTLY LONGER THAN THE AVERAGE AND MEDIAN TIME. HOWEVER, IN THE FACE OF THESE STATISTICS AND THE FACE OF THE INSTITUTE'S STUDY, THERE ARE THE COURTS AROUND THE COUNTRY THAT ARE ROUTINELY GRANTING STAY IN THE INTER PARTES PROCEEDING. IN OUR PAPERS WE CITED THE TOMCO CASE OUT OF

GEORGIA AND THE PROCTOR & GAMBLE CASE OUT OF THE NORTHERN DISTRICT OF CALIFORNIA WHERE SIMILAR ARGUMENTS WERE MADE. THE COURT: WELL, IT'S NOT MY PRACTICE TO ROUTINELY GRANT THEM, AS YOU HAVE EARLIER SAID. CASE BY CASE BASIS. I LOOK AT THEM ON A

IF I ROUTINELY GRANTED THEM, I WOULDN'T I'D STAY ALL OF THEM, WHICH IS

HAVE A DOCKET IN THIS AREA.

SOMETIMES INVITING. BUT MY RESPONSIBILITY IS TO MOVE THESE CASES ALONG AND GRANT A STAY IF APPROPRIATE, AND DENY IT IF INAPPROPRIATE. MS. MAROULIS: ABSOLUTELY RIGHT, YOUR HONOR. A LOT

OF THE CASES WHERE STAY IS SOUGHT, HOWEVER, ARE EX PARTE REEXAM CASES. WE HAVE BEEN TRYING TO FOCUS BOTH IN OUR PAPERS

AND MY ARGUMENT ON THE INTER PARTES WHICH WE BELIEVE IS VERY DIFFERENT FROM THE EX PARTE IN THE WAY THAT IT BINDS THE REQUESTOR AND POSES ESTOPPEL ON THEM. AND AS I SAID IN MY

- 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 EARLIER ARGUMENTS, WE WILL BE ESTOPPED FROM ASSERTING ANY PRINTED PUBLICATION WHETHER IT HAS BEEN OR HAS NOT BEEN SHOWN TO THE PATENT OFFICE. I SHOULD ALSO POINT OUT THAT COUNSEL SAID THEY ARE CONFIDENT IN THEIR PATENT EMERGING FROM THE REEXAM. IF THE

PATENT OFFICE AGREES WITH THEM AND ISSUES ALL CLAIMS ON THE FIRST OFFICE ACTION, IT MIGHT BE A VERY SHORT REEXAM PROCEEDING. BUT THE POINT IS THAT IT IS VERY IMPOSSIBLE TO WE WOULD DO

PREDICT PRECISELY HOW MANY MONTHS IT WOULD TAKE.

OUR BEST TO EXPEDITE IT, AND AS YOUR HONOR POINTED IN SOME DECISIONS, BECAUSE THE PATENT IS IN LITIGATION THE PTO WOULD TREAT IT WITH A SPECIAL DISPATCH AND MAKE AN EFFORT TO PROCESS IT EXPEDITIOUSLY AS WELL. SIMILARLY, IN DISCUSSING THE ESN'S PREJUDICE, WE POINTED OUT THAT DELAY ALONE IS NOT ENOUGH TO ESTABLISH PREJUDICE. IN

THE INSTANCES WHERE THE COURTS LOOKED OUT WHETHER THERE WAS A PREJUDICE TO THE PARTY THERE WAS SPECIFIC SHOWINGS THAT CERTAIN WITNESSES WOULD BE UNAVAILABLE. FOR EXAMPLE, IN THE ANASCAPE CASE THE COURT FOUND SPECIFICALLY THAT ONE OF THE PARTIES WAS NOT ABLE TO LINE UP THE WITNESSES ON ONE OF THE ISSUES BECAUSE OF HOW OLD THE PATENTS WERE. IN THIS CASE NO SHOWING OF PREJUDICE HAS BEEN

MADE, AND THE ONLY SHOWING OF PREJUDICE OR THE ONLY ILLUSION OF PREJUDICE WAS LINKED TO THE DELAY ARGUMENT WHICH WE ALREADY DISCUSSED.

- 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 HAVE. THE COURT: I DON'T HAVE ANY ADDITIONAL QUESTIONS. HAVE HAD MORE THAN A FEW OF THESE. I APPRECIATE EVERYONE'S I FINALLY, LET ME ADDRESS THE POINT REGARDING THE FACT THAT WE ALSO ASSERTED SOME OF THE PRODUCTS. THAT IS CORRECT. WE

HAVE SOME OF THE PRODUCT BASED PRIOR ART THAT WE ARE RELYING ON. HOWEVER, YOUR HONOR, BECAUSE THE PTO'S DETERMINATION

WOULD ONLY ADDRESS ALL THE PRINTED PUBLICATIONS, EVEN THOUGH WE ARE ASSERTING PRODUCTS THAT WILL GREATLY SIMPLIFY THE CASE. AND BECAUSE WE CANNOT SHOW THE PRODUCTS TO THE PTO, THERE IS NO CHOICE FOR US BUT TO ASSERT THEM HERE IN THE CASE. NONETHELESS, BECAUSE THE PTO WILL TAKE AWAY THE LARGE CHUNK OF THE DEFENSE, THIS IS SOMETHING THAT WILL GREATLY SIMPLIFY THE CASE BEFORE THE COURT AND THE JURY. AND OTHER

COURTS WILL HAVE CONSIDERED THIS ISSUE, HAVE LOOKED AT THE OTHER INVALIDITY DEFENSES IN THE CASE AND HAVE DECIDED THAT DESPITE THE PRESENCE OF SUCH OTHER DEFENSES, SUCH AS INEQUITABLE CONDUCT OR ANTITRUST DEFENSES, IT WAS STILL APPROPRIATE TO STAY THE CASE BECAUSE THE KEY TO PATENT INFRINGEMENT CASES IS VALIDITY OF THE PATENT. RESOLVED, THAT STREAMLINES THE CASE. I WOULD LIKE TO ANSWER ANY QUESTIONS YOUR HONOR MIGHT AND ONCE THAT'S

COMMENTS, AND I'LL TAKE IT UNDER ADVISEMENT AND TRY TO HAVE A RULING WITHIN THE NEXT 30 DAYS. MS. MAROULIS: THANK YOU, YOUR HONOR.

- 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 DATE: SEPTEMBER 7, 2008 /S/LIBBY CRAWFORD LIBBY CRAWFORD, CSR OFFICIAL COURT REPORTER REPORTER'S CERTIFICATION I CERTIFY THAT THE FOREGOING IS A CORRECT TRANSCRIPT FROM THE RECORD OF PROCEEDINGS IN THE ABOVE-ENTITLED MATTER. THE COURT: WE WILL BE IN RECESS. (ADJOURNED AT 11:24 A.M.)