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)

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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 Veritext Corporate Services 800-567-8658 973-410-4040 Page 122 1 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 Veritext Corporate Services 800-567-8658 973-410-4040 Page 123 1 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 Veritext Corporate Services 800-567-8658 973-410-4040 Page 124 1 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 Veritext Corporate Services 800-567-8658 973-410-4040 Page 125 1 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? Veritext Corporate Services 800-567-8658 973-410-4040 Page 126 1 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. Veritext Corporate Services 800-567-8658 973-410-4040 Page 127 1 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 Veritext Corporate Services 800-567-8658 973-410-4040 Page 128 1 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? Veritext Corporate Services 800-567-8658 973-410-4040 Page 129 1 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 Veritext Corporate Services 800-567-8658 973-410-4040 Page 130 1 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 Veritext Corporate Services 800-567-8658 973-410-4040 Page 131 1 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? Veritext Corporate Services 800-567-8658 973-410-4040 Page 132 1 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 Veritext Corporate Services 800-567-8658 973-410-4040 Page 133 1 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. Veritext Corporate Services 800-567-8658 973-410-4040 Page 134 1 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 Veritext Corporate Services 800-567-8658 973-410-4040 Page 135 1 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 Veritext Corporate Services 800-567-8658 973-410-4040 Page 136 1 200,000. 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 Veritext Corporate Services 800-567-8658 973-410-4040 Page 137 1 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 Veritext Corporate Services 800-567-8658 973-410-4040 Page 138 1 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. Veritext Corporate Services 800-567-8658 973-410-4040 Page 139 1 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 Veritext Corporate Services 800-567-8658 973-410-4040 Page 140 1 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 Veritext Corporate Services 800-567-8658 973-410-4040 Page 141 1 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 Veritext Corporate Services 800-567-8658 973-410-4040 Page 142 1 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. Veritext Corporate Services 800-567-8658 973-410-4040 Page 143 1 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. Veritext Corporate Services 800-567-8658 973-410-4040 Page 144 1 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. Veritext Corporate Services 800-567-8658 973-410-4040 Page 145 1 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? Veritext Corporate Services 800-567-8658 973-410-4040 Page 146 1 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 Veritext Corporate Services 800-567-8658 973-410-4040 Page 147 1 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? Veritext Corporate Services 800-567-8658 973-410-4040 Page 148 1 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 Veritext Corporate Services 800-567-8658 973-410-4040 Page 149 1 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. Veritext Corporate Services 800-567-8658 973-410-4040 Page 150 1 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. Veritext Corporate Services 800-567-8658 973-410-4040 Page 151 1 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, Veritext Corporate Services 800-567-8658 973-410-4040 Page 152 1 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 Veritext Corporate Services 800-567-8658 973-410-4040 Page 153 1 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 Veritext Corporate Services 800-567-8658 973-410-4040 Page 154 1 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 Veritext Corporate Services 800-567-8658 973-410-4040 Page 155 1 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. Veritext Corporate Services 800-567-8658 973-410-4040 Page 156 1 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 Veritext Corporate Services 800-567-8658 973-410-4040

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