I/P Engine, Inc. v. AOL, Inc. et al
Filing
315
Memorandum in Support re 314 MOTION in Limine to Exclude Inadmissible Evidence filed by I/P Engine, Inc.. (Attachments: # 1 Exhibit 1, # 2 Exhibit 2, # 3 Exhibit 3, # 4 Exhibit 4, # 5 Exhibit 5, # 6 Proposed Order)(Sherwood, Jeffrey)
Exhibit 4
Page 1
1
Volume I
Pages 1 - 157
2
Exhibits 1 - 20
3
UNITED STATES DISTRICT COURT
4
EASTERN DISTRICT OF VIRGINIA
5
NORFOLK DIVISION
6
********************
7
I/P ENGINE, INC.,
8
9
10
*
Plaintiff,
*
Civil Action No.
Vs.
*
2:11-cv-512
AOL, INC., et al.,
*
11
Defendants.
*
12
********************
13
14
AUDIO/VISUAL DEPOSITION of LYCOS, INC.,
15
by and through its designee MARK BLAIS
16
Tuesday, July 31, 2012 at 9:00 a.m.
17
Goulston & Storrs
18
50 Rowes Wharf, 7th Floor
19
Boston, Massachusetts
20
21
------ Jacqueline P. Shields, RPR, CSR ------
22
23
24
Job No. CS409539
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A.
I do not know.
2
Q.
When did Lycos first consider selling the
3
'420 and '664 patents?
4
A.
We first considered selling our patent
5
portfolio as a whole in 2009, and so there was never
6
any specific discussion about the '420 patent or
7
that other patent in suit, but it would have been
8
included within the portfolio, so, therefore,
9
indirectly it would have been included within the
10
sale.
11
portfolio.
12
It was just a straight sale of the whole
Q.
And when Lycos first considered selling its
13
patent portfolio, was that a situation where Lycos
14
was contacted by someone who was interested in
15
selling the patents?
16
MS. ALBERT:
Objection.
Vague.
17
Q.
Or purchasing.
Sorry.
18
A.
We were contacted by a number of parties
19
about buying specific patents, or the whole
20
portfolio or brokering licenses for the portfolio
21
over time.
22
23
Q.
Was Lycos ever contacted by a license about
-- strike that.
24
Was Lycos ever contacted about selling the
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2
'420 and '664 patents?
A.
3
Not specifically.
MS. ALBERT:
Objection.
Vague.
4
Q.
What patent was Lycos contacted about?
5
A.
I believe we were contacted at one point
6
about the '799 patent, and we may have been
7
contacted on another specific patent, that I just
8
don't remember right now, but we never engaged in
9
any talks to sell an individual patent.
The only
10
talks we engaged in came in 2009 as related to the
11
entire portfolio.
12
13
Q.
And who did Lycos engage in discussions
with in 2009 regarding sale of the entire portfolio?
14
A.
Altitude Capital Partners.
15
Q.
When you say "the entire portfolio," how
16
17
many patents are you referring to?
A.
At the time I believe we had around 28
18
patents.
As well as patent applications that were
19
pending.
That was a guess.
20
Q.
Just generally, what fields were those
21
patents in?
22
A.
Variety of fields.
Search, advertising,
23
online advertising, obviously.
Some patents I would
24
need to mention here to explain to you exactly what
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they do, I don't really know.
2
do with back-end load balancing of networks.
3
I think they all come within that general
4
sphere.
5
sure.
6
Some patents had to
There might be a couple outliers, I'm not
Oh, and the game patent.
Q.
Did Lycos ever conduct in the 2009 time
7
frame an evaluation of the value of its portfolio as
8
a whole?
9
A.
No, it did not.
10
Q.
Is Lycos aware of anyone else who did?
11
A.
No.
12
Q.
When did Altitude Capital first contact
13
14
Lycos?
A.
I believe we were contacted in late 2008
15
maybe.
16
interested, but then 2009 hit and we had an adverse
17
ruling in the ongoing patent litigation that we then
18
wanted to get rid of.
19
become profitable.
20
to cut costs.
21
And then -- I don't think we were initially
We had basically a demand to
So we were looking at all ways
Maintaining patents is an expense.
Every
22
single year both with outside law firm and for the
23
maintenance fees.
24
So as part of that I was told to go ahead
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and have discussions about selling the patents, if I
2
wanted.
3
at the time from Korea wasn't very experienced with
4
patents and didn't have a lot of appreciation for
5
them.
6
They really weren't -- our parent company
So it just wanted to reduce costs
7
basically, and expense.
8
me perhaps contact Altitude again.
9
10
11
12
13
So I think that's what made
I'm just trying to remember what happened
after that point.
Q.
Just stepping back, who is Altitude or what
is Altitude Capital?
A.
It's a company based out of New York that
14
they do invest in intellectual property portfolios,
15
and I assume try to monetize those portfolios
16
through licensing or however they do it.
17
18
Q.
Was there a particular person that you were
in contact with at Altitude Capital?
19
A.
Yes.
20
Q.
Who was that?
21
A.
Howard -- no, sorry.
22
23
24
Warren Hurwitz,
H-U-R-W-I-T-Z.
Q.
What was the result of your contacting
Altitude Capital again?
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2
A.
letter of intent to purchase that portfolio.
3
4
At a certain point we entered an LOI,
Q.
When you say the patent portfolio, you mean
the entire portfolio?
5
A.
6
advice.
7
Q.
8
9
The entire portfolio.
Against my better
Do you recall what the terms of the LOI
were?
A.
Generally.
They changed because we, at
10
first we entered an LOI subject to, I believe,
11
90 days of due diligence.
12
we were going to sell them the patent portfolio in
13
whole for around 4 or 4 and a half million.
14
Q.
We, I believe, initially
Do you know who conducted -- well, first,
15
do you know if any due diligence occurred subject to
16
that letter of intent?
17
A.
Yes.
18
Q.
Do you know who conducted the due
19
20
21
22
23
24
diligence?
A.
Altitude itself did.
They had an in-house
counsel.
Q.
Do you know if they had any outside counsel
involved?
A.
They did.
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Q.
Who was that?
2
A.
It was Dickstein Shapiro.
3
Q.
At the time that it occurred was Dickstein
4
Shapiro still representing Lycos?
5
A.
They had not started to represent Lycos
6
yet.
7
Dickstein at that time.
8
9
I did not have any direct communications with
Q.
Does Lycos have any knowledge as to the
results of that due diligence?
10
A.
Only what I was told by Warren.
11
Q.
And that is?
12
A.
And that is -- well, one of the issues was
13
with the patents in suit at the time, we wanted out
14
of litigation, and so we either needed them to step
15
in after the fact.
16
them, we no longer have standing to prosecute the
17
litigation, and we didn't want to remain in it in
18
name or any capacity.
19
litigation, so we could do the deal.
20
them outright, it came to a point where they also
21
didn't like the jurisdiction.
22
liked the patents differently or not, they are
23
pretty careful of not sharing that type of
24
information with me.
If we sold them and assigned
Or we had to finish up the
And to sell
I don't know if they
It came to a point where they
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didn't want to step into the litigation, so I had
2
more pressure on me to just reach settlement to get
3
done with it.
4
because the final settlement with Blockbuster took
5
so long, we reached an agreement and they changed,
6
we thought they changed the agreement, so we had to
7
file a motion about it.
8
9
And that dragged on for quite a bit
It took a while.
And Warren also came back, and a couple of
patents that we liked, we thought there were more
10
value, they pushed back on, they thought they found
11
some weaknesses in some other patent, namely the
12
game patent.
13
prior art on that game patent.
14
specifically, but they also made some comments about
15
the patents in that suit, but I don't remember what
16
their comments were.
17
thing was a way to push down the price of the LOI,
18
which they ended up doing, and we entered a second
19
LOI.
20
21
Q.
They were worried about some of the
And I don't remember
But it was a way, the whole
When did -- do you know when Lycos entered
that second LOI?
22
A.
Sometime in 2009.
23
Q.
Do you recall what the terms of that second
24
LOI were?
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A.
They were -- I'm trying to remember what
2
the payment was going to be.
3
down to about 1.25 million perhaps, and I believe
4
one of the conditions was that we attempted to have
5
this summary judgment vacated in that litigation,
6
and that may -- I can't remember if there was one
7
price if we got it vacated, and one price if we
8
didn't.
9
remember.
That seems to ring a bell, but I don't
10
11
MS. O'BRIEN:
Shall we go ahead and take a
break to change the tape?
12
13
It got dropped way
VIDEOGRAPHER:
This will be the end of tape
3, going off record, the time is 2:05.
14
(Recess was taken at 2:05 p.m.)
15
(Reconvened at 2:09 p.m.)
16
VIDEOGRAPHER:
We are back on record,
17
beginning of tape 4, the time is 2:09, you may
18
continue.
19
20
21
Q.
Do you recall how long the second letter of
intent with Altitude was in effect?
A.
I believe there was only supposed to be an
22
additional 30-day due diligence period, however,
23
again, things were really contingent upon our
24
settling with all matters with Blockbuster in the
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litigation.
2
complete a sale, and that kept on lingering.
3
was around that time frame that Dickstein took over
4
as counsel for us directly.
5
been, you know, June, July 2009.
6
Q.
As long as that was pending we couldn't
And it
Again, that would have
So Lycos's negotiations with Altitude
7
Capital continued after the settlement agreement
8
with ChoiceStream and Blockbuster?
9
A.
No.
10
Q.
Do you know why not?
11
A.
Because by that time it was already spring
12
of 2010 and our parent company had just entered a
13
letter of intent with Ybrant to sell Lycos, so that
14
would have been a transaction out of the ordinary
15
course, which would have prohibited doing that at
16
that point.
17
Second, if we were going to have a new
18
parent, that parent may have a very different
19
opinion of the patent portfolio and the price.
20
was not legal advice, I could disclose I had advised
21
from a business standpoint the company to not accept
22
1.25 million for the entire portfolio, because I
23
thought it was absurd.
24
frenzy, they were just doing, they were just doing
It
But in their cost- cutting
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anything.
So when it got to that point, our hands
2
were tied.
And I think Ybrant wanted to look at
3
this after the fact if they were buying our company.
4
They wanted to buy it in place.
5
negotiations at that time.
6
Q.
So we stopped all
Did Lycos ever begin negotiations regarding
7
the sale of its patents after it entered -- after
8
its acquisition by Ybrant?
9
MS. ALBERT:
Okay.
Vague.
10
A.
Say that one more time.
11
Q.
It's a terrible question.
12
A.
I didn't say that.
13
Q.
That's fair.
Sorry.
Let's try again.
I will, I will own that.
Did
14
Lycos and Altitude Capital ever have any other
15
negotiations regarding the sale of patents after the
16
spring of 2010?
17
A.
18
After the -MS. ALBERT:
Objection.
Vague.
19
A.
After the fall of 2010, yes.
20
Q.
And when was that?
21
A.
That would have been sometime late spring
22
or summer 2011.
23
Q.
What patents were involved in that
24
negotiation?
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A.
Well, I was contacted by another -- at that
2
time we were not, we did not -- let me step back.
3
We had received an offer from a third party, another
4
party related to the patents in suit here.
5
Q.
And who is that third party?
6
A.
Stayko Staykov.
7
And that is S-T-A-Y-K-O
S-T-A-Y-K-O-V.
8
Q.
Who is Stayko Staykov?
9
A.
He's from that Borat movie, I think.
No,
10
he owns an intellectual property investment type of
11
company.
12
if I remember correctly.
13
And he's invested in intellectual portfolio s
14
before, and he contacted me.
I believe it was called Eidos, E-I-D-O-S,
And a smaller company.
15
Q.
And when did he contact you?
16
A.
Sometimes in the spring of 2011.
17
18
And he
came up and met with me.
Q.
When you said the patent at issue in this
19
case, which patents specifically did he indicate
20
that he was interested in?
21
A.
The '664 patent and the '420 patent.
22
Q.
Any others?
23
A.
Well, I mean, I think the discussion
24
necessarily included the whole patent family.
So if
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I remember correctly, he -- I don't know if he
2
actually cited those two specifically, but he wanted
3
the family of patents.
4
Q.
When did you first meet with him?
5
A.
Spring of 2011, I believe.
6
Q.
Did he make an offer to purchase the patent
7
of families at the time?
8
that time?
9
A.
The family of patents at
After our meeting he did some brief due
10
diligence and sent me some information about
11
himself, and then made an offer.
12
Q.
And what was that offer?
13
A.
It's hard for me to remember right now, but
14
it was in the 1 million range.
15
point we're only talking about this one patent
16
family, not the whole portfolio.
17
18
19
20
21
22
Q.
And, again, at this
Did he say why he was interested in this
patent family?
A.
I think he just said so that he could
monetize it in some fashion.
Q.
Did he tell you how he identified this
patent family?
23
A.
I know that Dickstein had him contact me.
24
Q.
How did you respond to the offer from Mr.
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Staykov?
2
A.
I told him it was too low.
3
Q.
Did you provide a counter offer?
4
A.
It took a while for me to get any response
5
from Israel, which is where our parent company's
6
kind of business is operated.
7
parent company is operated.
8
located in Indiana, but the business operations of
9
Ybrant is in Israel.
10
It's not where our
Our parent company is
It took me a while to get a
response back.
11
In the meantime I spoke with our CEO, who
12
told me to see if I could get other parties
13
involved, and that's when I reached out to Altitude
14
again and said, hey, you know, the previous LOI's
15
have no effect anymore, but I wanted to give you a
16
courtesy call, give you a heads-up that we're in
17
discussion to sell this one patent family, not our
18
portfolio anymore, and that we have an offer on the
19
table.
And if you want to throw in your hat, let me
20
know.
So they were a little perturbed by that whole
21
thing, but it's business.
22
put me in contact with another company, which was
23
Hudson Bay Capital, and Alex Burger.
24
Q.
And then Dickstein also
Is Dickstein representing Lycos at the
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2
3
4
5
6
time?
A.
No.
Dickstein made the introductions, but
they were not involved in the discussions.
Q.
After you reached out to Altitude Capital
did they respond?
A.
In the meantime I met with Alex Burger's
7
company, then was Hudson Bay Capital, he came up and
8
met with me with one of his colleagues to discuss
9
this family of patents.
He then went back and did
10
some very quick due diligence over a span of days,
11
and then made an offer, and I had not heard back
12
from Altitude yet, I conveyed the highest offer we
13
had to Altitude, and eventually Altitude came back
14
and made an offer.
15
Staykov made more of an offer, and the three parties
16
basically negotiated off themselves until we finally
17
agreed at 3.2 million with Hudson Bay.
I conveyed all this to Staykov.
18
I believe, I believe Altitude had gone up
19
to 3 million, and I believe Staykov had gone up to
20
2.5 million before he dropped out.
21
last offer was more of take it or leave it at 3.2,
22
and I wanted to get it done.
23
accepting that, although we threw a couple of
24
additional patents into the mix for the extra
And Hudson's
And we ended up
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200,000.
2
3
Q.
So then the 3.2 is, the 3.2 million was the
highest offer that you received?
4
A.
Yes, to date.
Yeah, and Altitude basically
5
made his 3 million the final offer, so I never went
6
back to Altitude with the 3.2.
7
Q.
So just stepping back, that first meeting
8
you had with Alex Burger of Hudson Bay, you said one
9
of his colleagues was there.
10
Do you know who that
was?
11
A.
I don't remember.
12
Q.
Do you know what was discussed during that
13
initial meeting?
14
A.
It was very background type of stuff.
15
told me about them, the background, the company.
16
told them about Lycos.
17
They
possibility of selling these potential patents.
18
19
Q.
I
And we just discussed the
Did they discuss any of their plans to
monetize the patents?
20
A.
They did not.
And, again, they never
21
specified any specific patents within the family per
22
se.
23
24
It was all discussion on the family as a whole.
Q.
So then your discussions with Hudson Bay,
did they ever specify an amount for specific
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patents?
2
A.
No.
3
Q.
Do you know if Hudson Bay ever did an
4
evaluation of the value of the specific patents?
5
MS. ALBERT:
Objection.
Vague.
6
A.
I have no idea.
7
Q.
Similarly, do you know if Altitude Capital
8
ever did any evaluations of the value of the patents
9
in the '799 family?
10
11
MS. ALBERT:
A.
Same objection.
I don't know if it did a valuation.
12
it conducted due diligence.
13
I know
diligence.
14
Q.
Extensive due
Were there any factors that influenced
15
Lycos's decision to sell the '799 patent family to
16
Hudson Bay other than the 3.2 million purchase
17
price?
18
19
MS. ALBERT:
A.
No.
Objection.
Vague.
It was just all based on the highest
20
price we could get.
21
good amount of cash.
22
23
24
Q.
And the size of Lycos, it was a
About how long did the negotiations with
Hudson Bay last?
A.
It was short.
It all happened very
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quickly.
Within the span of an -- I was going back
2
and forth with people for a couple weeks, and it was
3
done.
It was very fast.
4
MS. O'BRIEN:
I will hand you what I will
5
mark as Exhibit 17, and I'll just note for the
6
record this, when it was produced, was marked
7
confidential, outside counsel only.
8
hates me today.
9
10
And this is a document that was produced
last night by I/P Engine.
11
12
13
Printer just
(Exhibit No. 17, marked; Letter dated May
16, 2011.)
Q.
And obviously take your time to look at the
14
document, I will just first ask if you recognize the
15
document.
16
A.
Yes, I recognize it.
17
Q.
What is it?
18
A.
This would be the letter of intent that
19
Lycos entered with Hudson Bay.
20
earlier in 2011 than I had remembered.
21
was June or July, but that's close enough.
22
23
24
Q.
It's a little
I thought it
I want to just look at the first page, the
section "form of acquisition."
A.
Yes.
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2
Q.
About maybe a third of the way down the
sentence that begins "The purchase agreement."
3
A.
Yes.
4
Q.
It refers to a royalty-free, worldwide
5
license back to the patents.
Do you see that?
6
A.
Yes.
7
Q.
Do you know if Lycos placed any value on
8
the license back of the patents in this agreement?
9
A.
Monetary value?
10
Q.
Right.
11
A.
No.
It was more just cross our T's, dot
12
our I's and be protected going forward so nobody
13
could sue us on patents we sold, or I'd look like an
14
idiot.
15
Q.
Do you know if at the time Lycos was
16
practicing any of the patents in Schedule A of this
17
agreement?
18
MS. ALBERT:
Objection.
No foundation.
19
A.
I really don't know.
20
Q.
And just looking at the section No. 2,
21
purchase price, do you see that on the bottom of the
22
first page?
23
A.
Yes.
24
Q.
It refers to "Purchasers shall pay to the
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seller $3,100,000 in exchange for the patent"; do
2
you see that?
3
A.
Yes.
4
Q.
Was that $3.1 million an amount that was
5
6
proposed by Hudson Bay or by Lycos?
A.
Hudson Bay, because at that point Lycos
7
wasn't throwing any numbers out there.
To be honest
8
with you, I was being honest with all parties saying
9
I have a third-party offer, I can't tell you who it
10
is, but this is the offer.
11
beat it.
12
and until we get to the 3 million, and that's when
13
Altitude said this is our final offer.
14
think Altitude didn't believe me that we had all
15
these other offers.
16
word and Hudson Bay offered 3.1, that was the
17
highest, Eidos dropped out, I had heard final offer
18
from Altitude, accepted this offer and didn't go
19
back to Altitude, and Altitude was mad at that.
20
I said don't say final offer if you don't mean it.
21
Q.
22
23
If you want to beat it,
And they kept on increasing the amount,
Okay.
I don't
And so I took them at their
And
I think we can put that one aside.
MS. O'BRIEN:
Mark as Exhibit 18 document
produced IPE 0022792 through 796.
24
(Exhibit No. 18, marked; Letter dated June
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2
3
15, 2011.)
Q.
Obviously take your time to look at it, my
first question is do you recognize this document?
4
A.
Yes.
5
Q.
What is it?
6
A.
This is an amendment to the letter of
7
8
9
10
intent that we just looked at.
Q.
Do you know what the purpose of this
amendment was?
A.
I think we extended the time by which we
11
could close, and we added an additional patent to
12
the sale, and increased the purchase price to
13
3.2 million.
14
all of a sudden when we were negotiating final
15
agreement, they requested this additional patent
16
that we had never discussed with anybody
17
specifically.
18
but they said it was a mistake not to include it in
19
the original, and I said, well, we already
20
negotiated the purchase price, you're going to have
21
to give something for it.
22
the time was fine with just getting an extra
23
100,000.
24
had expected, so we just threw another 100,000 in
I believe that was the purpose.
So
So it wasn't anything on our radar,
And our parent company at
They had -- 3.1 was already more than they
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there for good faith.
2
3
Q.
Did Hudson Bay ever explain why they wanted
to add this additional patent?
4
A.
No.
I was mistakenly leaving it out.
5
should have been included.
6
though.
7
Q.
It
I don't know why that is
And just looking at the first page of the
8
agreement, it refers to Hudson Bay Master Fund, and
9
then also to Smart Search Labs Incorporated.
10
A.
Yes.
11
Q.
Do you know why Smart Search Labs
12
Incorporated was added to the agreement between
13
Hudson Bay and Lycos?
14
A.
I was told that the ultimate, that the
15
contractual parties would ultimately be Smart Search
16
Labs.
That was my only understanding.
17
Q.
And who told you that?
18
A.
I believe it was Alex Burger.
19
Q.
And he didn't explain why?
20
A.
No.
21
Q.
Did the change in the parties have any
22
impact on your decision to enter into the agreement
23
with Hudson Bay and Smart Search?
24
MS. ALBERT:
Objection.
Vague.
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A.
I know I had discussions with them, because
2
in my opinion it caused some potential risk, greater
3
risk to Lycos, because I didn't know anything about
4
Smart Search.
5
didn't know anything about them.
6
little bit of concern about it.
7
how we got around that.
8
gave me in terms of payment and whatnot.
9
I didn't know how they were funded, I
So I did have a
I just don't recall
What type of assurances he
I mean, as this deal -- there wasn't that
10
much risk because it was just the one.
11
deal where we were going to be paid out over time or
12
something like that, it would have been one thing,
13
but we were being paid immediately.
14
our money and transferred the patents effectively
15
the transaction is over.
16
still, I didn't know anything about this company,
17
didn't know whether it was adequately funded, didn't
18
really know anything about it.
19
discussions with him about that, because it did
20
raise concerns, but apparently I got over whatever I
21
had.
22
Q.
23
24
If it was a
And once we got
The risk was small, but
I know I had
I think you can put that one aside too.
MS. O'BRIEN:
Mark as Exhibit 19 document
produced Lycos 000001.
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2
3
(Exhibit No. 19, marked; Patent Purchase and
License Agreement dated June 22, 2011.)
Q.
And, again, please take your time to look
4
at it and the first question is just do you
5
recognize that document?
6
A.
Yes.
7
Q.
What is it?
8
A.
Patent purchase and license agreement that
9
we entered, Lycos entered with Smart Search Labs to
10
sell the patent family that we've been discussing,
11
along with the two additional patents.
12
13
Q.
Do you recall which were the two additional
patents?
14
A.
Not without looking at the agreement.
15
Q.
And I think the schedule of patents is
16
17
listed on Lycos 22, if that helps.
A.
It would be the final two patents.
18
Estimating the usefulness of an item in a collection
19
of information, patent 6640218 and serving content
20
to a client, patent No. 7228493.
21
Q.
And did either Hudson Bay or Smart Search
22
ever explain why it was interested in the '218
23
patent?
24
A.
It did not.
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2
Q.
Do you have any understanding of the fields
that the '218 patent is in?
3
MS. ALBERT:
Objection.
Vague.
4
A.
I don't.
5
Q.
If you turn to page 9 of the agreement,
6
which is Bates No. Lycos 12.
7
A.
Yes.
8
Q.
There's a section 5.05, patent litigation,
9
do you see that?
10
A.
Yes.
11
Q.
Has Smart Search made any payments to Lycos
12
in connection with this case?
13
A.
In connection with this case, no.
14
Q.
Have you had any involvement in this case
15
other than responding to the subpoena as being here
16
today?
17
A.
No, I have not.
18
Q.
During the negotiations did Lycos assume
19
that the patents it was selling were valid?
20
21
MS. ALBERT:
Objection.
Vague, asks for
legal conclusion.
22
A.
Yes, we assumed they were valid.
23
Q.
Do you know if Smart Search and Hudson Bay
24
assumed that the patents were valid?
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MS. ALBERT:
Objection.
Speculation.
2
A.
I hope so.
3
Q.
Did anyone raise any concerns about the
4
validity of the patents during the negotiations?
5
A.
No.
6
Q.
And similarly, did anybody raise any
7
concerns about the enforceability of the patent
8
during negotiations?
9
MS. ALBERT:
Objection.
10
A.
No.
11
Q.
We were discussing that the final amount of
12
the sale of the patents was 3.2 million.
13
A.
Yes.
14
Q.
Is there any reason that Lycos wouldn't
15
have agreed to sell the patents in this agreement to
16
Google for $3.2 million?
17
18
19
20
MS. ALBERT:
A.
Objection.
Speculation, vague.
No reason we wouldn't have sold to whoever
would have given us the most.
Q.
Similarly, do you have reason to believe
21
that Lycos wouldn't have licensed the patent in this
22
agreement for $3.2 million?
23
24
MS. ALBERT:
A.
Objection.
Vague, speculation.
No, I have no -- can you repeat the
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question?
Sorry.
2
MS. O'BRIEN:
3
for me, I don't know if I can.
4
(Read back.)
5
6
7
A.
No.
Would you mind rereading it
I have no reason to believe one way or
the other.
Q.
Do you have any reason to believe that
8
Lycos wouldn't have licensed the patents in this
9
agreement for $3.2 million in 2004?
10
11
MS. ALBERT:
A.
Objection.
I have no reason.
Speculation.
What we would have done
12
in 2004, I mean, like I said, a lot of this was
13
internally driven.
14
different company back then, larger in all respects,
15
much bigger parent company, and just the overall
16
business forces would have been different.
17
largely driven by our lack of profitability at the
18
time, our need for some cash, things like that.
19
Circumstances being completely different, I have no
20
idea what we would have done back then.
21
22
Q.
We would have been a much
This was
And just to confirm, was Lycos profitable
in 2004?
23
A.
No.
24
Q.
Was Lycos profitable in 2005?
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A.
No.
2
Q.
If we can take a quick break, I think I'm
3
finished, I will check my notes.
4
VIDEOGRAPHER:
5
Going off record, the time is
2:41.
6
(Recess was taken at 2:41 p.m.)
7
(Reconvened at 2:45 p.m.)
8
(Exhibit No. 20, marked; Subpoena.)
9
VIDEOGRAPHER:
10
We are back on the record.
The time is 2:45, you may continue.
11
Q.
I've handed you what's been marked
12
Exhibit 20, which is notice of subpoena for Lycos,
13
Inc.
Do you recognize this document?
14
A.
Yes.
15
Q.
Did Lycos collect documents in response to
16
this subpoena?
17
A.
Yes.
18
Q.
What did Lycos do to collect documents in
19
20
response to this subpoena?
A.
Reviewed all the categories, and I searched
21
my own emails, and I searched our former CEO's
22
emails.
23
have real communications surrounding the sale of the
24
patents.
He and I would have been the only two to
Also, yeah, or related to my discussions
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with Altitude, things like that in the past, and
2
certain things were, you know, specific like, you
3
know, the WiseWire merger, I had to get those
4
documents from Iron Mountain, because those
5
documents are long gone, but we still had them
6
somewhere, so I had to order those, produce, look
7
through.
8
some point a lot of documents that were ours
9
relating to all the patents that they had looked at
McDermott, Will and Emery had sent back at
10
in our portfolio, so I had like seven boxes of
11
documents, and I went through all those documents
12
and pulled those related to any of the patents
13
requested in here, unless it was like the complaint
14
or something.
15
documents, such as the Ken Lang consulting
16
agreement, and the purchase agreement, and I already
17
knew of the license agreements we had entered, so I
18
went into our system and pulled those.
19
think there was anything else for me to do because,
20
as I said, I was the only one still at the company
21
that would have any documents responsive, other than
22
the ones that were specifically mentioned, and I
23
knew where they were.
24
Q.
And, again, looked up other specific
I don't
You can put that one aside.
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In 2004 would Lycos have known what other
2
contributions would be necessary to commercialize
3
the inventions claimed in the '420 patent?
4
MS. ALBERT:
5
A.
Vague, no
foundation.
6
Objection.
I don't know what Lycos would have known
7
about that in 2004, nor do I know if it even
8
considered it.
9
10
11
Since I've been in the company, there's
never been a discussion about that patent.
Q.
Similarly, was there ever any discussion
12
about commercializing the '664 patent since you were
13
at Lycos?
14
MS. ALBERT:
Same objection.
15
A.
No.
16
Q.
Did Lycos at any time believe that Google
17
had successfully commercialized the '420 patent?
18
19
MS. ALBERT:
A.
Objection.
Vague.
We never did any analysis of anything
20
Google was doing in relation to these patents in
21
suit or that family.
22
MS. O'BRIEN:
23
MS. ALBERT:
24
I have nothing further.
I just have a couple of, if I
can, follow-ups.
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2
CROSS-EXAMINATION
BY MS. ALBERT:
3
Q.
Earlier you had testified that you believed
4
Altitude had done extensive due diligence on the
5
family of patents that they were bidding on; do you
6
recall that?
7
A.
Yes.
8
Q.
What is that, what is your testimony based
9
10
on?
How do you know that?
A.
It's based on the volume of requests that I
11
received from them for due diligence, and the amount
12
of documents I personally produced relating to the
13
chain of title of the patents, past assignments.
14
was a lot of documents were hard to find because I
15
had to go back to Iron Mountain and get a lot.
16
had to piece together certain chains of title
17
through various mergers and whatnot.
18
time consuming.
19
It
I
So that was
I produced all of our patent files related
20
to all of those, all the patents in our portfolio,
21
and I know they also spent a number of days with
22
McDermott, Will & Emery themselves discussing their
23
analyses to the extent -- well, obviously McDermott
24
had to be careful in terms of what it discussed,
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because we were not yet represented, but there was
2
some due diligence that they did with McDermott.
3
They contacted McDermott with my approval.
4
was just based on the amount of the overall
5
documents that were delivered.
6
weren't leaving much unturned.
7
8
Q.
So it
It seemed like they
Did they provide any documents to you
relating to their due diligence?
9
A.
In terms of requests or?
10
Q.
Results.
11
A.
No.
12
Q.
No?
13
A.
No.
14
Q.
Did they discuss with you any results
15
relating to their due diligence?
16
A.
Yes.
17
Q.
What did they discuss?
18
A.
When Alex came back to me to push back on
19
the original LOI, he gave me a list of criticisms or
20
concerns that had been raised during due diligence.
21
He seemed like he wasn't interested anymore in
22
monetizing the game patent, and originally that was
23
one of the patents that they thought could be
24
lucrative within our portfolio.
After due diligence
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they weren't really sure of that.
2
much interest in it.
3
There was not
They also didn't have interest in,
4
especially after the summary judgment ruling, of
5
getting involved in that litigation.
6
mention, however, that they had interest in two of
7
the other patents within the family of patents, but
8
he did not or would not disclose to me which patents
9
those were, and that was a negotiation tactic, and I
10
He did
didn't ask.
11
So basically he just, he basically tried to
12
make it out to be these two patents were the only
13
ones they were really interested in, and they were
14
only doing us a favor by taking the rest.
15
Q.
But he didn't specify which ones?
16
A.
No.
17
Q.
You had stated that it was Alex, did you
18
mean Warren Hurwitz?
19
A.
Yes, Warren.
20
Q.
All right.
21
No, it was Warren.
Just one more.
If you pull out
-- well, let me step back.
22
You had testified earlier, and I'm
23
paraphrasing, I'm not trying to put words in your
24
mouth, so if I'm, you know, if I flub it up, let me
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know, that you weren't sure whether the Overture/
2
Lycos settlement agreement covered the patents in
3
suit in this case, the '420 and '664; do you recall
4
that?
5
think the question is from.
6
We can take a look at it, it's Exhibit 15, I
A.
I don't believe that the Overture licensure
7
agreement had anything to do with these patents.
8
don't think it's in this agreement.
9
Q.
I
I just want to clarify, because I believe
10
in the line of questioning, if you look at page six
11
of the agreement, the cross license agreement
12
section, paragraph 11.1, I believe the questions
13
were, do you know whether the '420 patent would be
14
included in this cross license, and I believe your
15
testimony was you do not know.
16
A.
Well, no patent is specifically included.
17
It depends on whether the patent covers the criteria
18
in here, which is in the field of art covered by the
19
claim of the licensed patents made by the terms of
20
this license by licensee.
21
Q.
And by licensee they're referring to Lycos?
22
A.
Yes.
23
Q.
Would that first sentence there mean that
24
it had to be an invention created by Lycos during
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the term of the patent -- strike that.
2
Does that first sentence mean that the
3
invention, that Overture would have a license to --
4
would have to be made by Lycos during the term of
5
this agreement?
6
MS. O'BRIEN:
7
8
A.
Objection.
Vague.
I'm just going to take a second to read
this.
9
Q.
That's fine.
10
A.
Yes, it would have to be within the field
11
of art covered by the terms of this license
12
agreement.
13
14
15
16
17
Q.
And do you know or do you have a
recollection when the '420 patent was filed?
A.
It was before this license agreement, so it
would not come within this.
Q.
And the same question regarding the '664
18
patent, do you have a recollection of when that
19
patent was filed?
20
21
22
A.
So
it would not be included in this section.
Q.
23
24
Also before this agreement was entered.
Okay.
I think that's all I have.
MS. O'BRIEN:
I think I have just one
follow-up.
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2
REDIRECT EXAMINATION
BY MS. O'BRIEN:
3
Q.
Did Hudson Bay provide you with any of the
4
results of its due diligence?
5
MS. ALBERT:
6
A.
Objection.
No foundation.
No, it did not.
7
MS. O'BRIEN:
8
MS. ALBERT:
9
VIDEOGRAPHER:
10
deposition.
11
That's it.
No further questions.
This concludes the
2:56.
12
13
Going off the record, the time will be
(Whereupon the deposition concluded at 2:56
p.m.)
14
15
16
17
18
19
20
21
22
23
24
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