I/P Engine, Inc. v. AOL, Inc. et al

Filing 749

Brief in Support to 748 MOTION to Exclude And Preclude Plaintiff From Recalling Mr. Kosak As A Rebuttal Witness filed by AOL Inc., Gannett Company, Inc., Google Inc., IAC Search & Media, Inc., Target Corporation. (Noona, Stephen)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF VIRGINIA
NORFOLK DIVISION
I/P ENGINE, INC.
Plaintiff,
v.

Civil Action No. 2:11-cv-512

AOL, INC., et al.,
Defendants.

BRIEF IN SUPPORT OF DEFENDANTS' MOTION TO PRECLUDE PLAINTIFF
FROM RECALLING MR. KOSAK AS A “REBUTTAL” WITNESS

I.

INTRODUCTION
Mr. Kosak testified on October 17, 2012. He then was permanently excused. Mr. Kosak

has been sitting in the courtroom every day of trial and has been communicating extensively in
open court with Plaintiff’s counsel and its other witnesses. On October 27, Plaintiff notified
Defendants that it intended to re-call Mr. Kosak to the stand. During a meet and confer the next
day, Plaintiff’s counsel said they would recall Mr. Kosak to “rebut” Dr. Ugone’s testimony
regarding Lycos’s business difficulties and financial conditions.
To allow Mr. Kosak to testify again would be a violation of this Court’s explicit order
that all witnesses other than corporate representatives and expert witnesses be sequestered and
excluded from the courtroom. This Court’s order is consistent with Fourth Circuit law. This is
not the first time Plaintiff’s counsel have violated the Court’s order against communicating with
witnesses before they intend to permanently dismiss them; the Court has already warned
Plaintiff’s counsel about this with regard to their communications with Dr. Frieder. Further, the

topics on which Mr. Kosak intends to testify are beyond the scope this Court’s order that rebuttal
testimony is limited to invalidity. Finally, the issues that Mr. Kosak intends to rebut were, as
Plaintiff has conceded, all within Mr. Ugone’s expert report and should have been—and in some
cases already were—raised during Mr. Kosak’s direct examination. Plaintiff will have ample
opportunity to cross-examine Dr. Ugone. Any infirmity with the factual bases of his testimony
can be dealt with that way rather than recalling a witness who can only violate this Court’s order
by testifying. For all of these reasons, Defendants ask that the Court prohibit Plaintiff from recalling Mr. Kosak as a rebuttal witness.
II.

FACTUAL BACKGROUND
A.

Mr. Kosak Was Sequestered, Testified, and Was Permanently Excused.

On October 16, in accordance with Federal Rule of Evidence 615, the Court ordered the
exclusion and sequestration of all witnesses other than corporate representatives and experts:
“Are there any persons who will be testifying as witnesses in the courtroom? Otherwise, if they
are, you need to be excused, all witnesses, except for court representatives and experts.” (Trial
Tr. at 97:20-23.)1
The following day, Plaintiff called Mr. Kosak to the stand, where he testified for an hour
and nine minutes. Plaintiff declined to conduct any re-direct examination. When there were no
more questions for Mr. Kosak, the Court asked whether Mr. Kosak could be permanently
excused and, absent objection from either party, excused him: “Alright. You may be
permanently excused here.” (Trial Tr. at 355:25-256:1.)
Over the subsequent week and a half, Mr. Kosak was regularly present at trial, including
during fact-witness testimony, expert testimony, and hearings regarding motions, including those

1

Mr. Perlman is Plaintiff’s corporate representative.

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related to damages. During that time, Mr. Kosak freely communicated in open court with Mr.
Perlman, Mr. Lang, and Plaintiff’s counsel.
On October 26, the Court heard Plaintiff’s objections to Dr. Ugone’s demonstratives,
including slides discussing Lycos’s business difficulties. For example, Plaintiff’s counsel made
the following objection:
[DDX] 15.7, third bullet point talks about Lycos' business difficulties. This is
simply based upon some news article that the witness read on the Internet. I think
under Rule 703, there is no showing or will there be that that is the type of
information that the experts reasonably rely upon in forming opinions. And that is
an objection I have a couple of places in here, and I can give the Court the cite.
(Trial Tr. at 1543:25-1544:6.) The Court asked whether there were cites in the record to Lycos’s
business difficulties, and Plaintiff admitted that Dr. Ugone “clearly has a footnote citing to some
news story read on the Internet. That is in his report.” (Id. at 1544:10-12.)
In response, Defendants’ counsel, explained that Dr. Ugone “researched Lycos's business
and the history of his business over time” and that if Plaintiff disagreed with his conclusions its
counsel could cross-examine him on those topics. (Id. at 1544:13-1545:1.) The Court agreed:
“Objection overruled. You can cross-examine on it. Next.” (Id. at 1545:2-3.)
B.

Plaintiff Notified Defendants That It Intended to Re-Call Mr. Kosak Despite
His Presence in the Courtroom After Being Excused by the Court.

On Saturday, October 27, Plaintiff notified Defendants by email that it intended to re-call
Mr. Kosak to the stand. Defendants immediately responded requesting an explanation, given
that Mr. Kosak had already been permanently dismissed and had been sitting in the courtroom
throughout the entire trial. On Sunday, October 28, the parties’ counsel met and conferred on
this issue. Plaintiff’s counsel said they intended to re-call Mr. Kosak to rebut Dr. Ugone’s
statements regarding Lycos’s business difficulties during the date of the hypothetical negotiation,
Lycos’s ability to assist Google with the implementation of the patented technology, and Lycos’s
sale in 2004. Plaintiff’s counsel admitted that Mr. Kosak had been sitting in the courtroom.
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Still, Plaintiff’s counsel claimed that Plaintiff was justified in recalling Mr. Kosak because they
did not expect to call Mr. Kosak until they heard Dr. Ugone’s testimony, even though there is no
dispute the very subjects of testimony Plaintiff points to were within his expert report and had
been highlighted during opening statements.
III.

ARGUMENT
A.

Legal Standards

Federal Rule of Evidence 615 states that, at a party’s request or order of the Court,
witnesses must be excluded from the courtroom “so that they cannot hear other witnesses’
testimony.” Fed. R. Evid. 615. The rule provides exceptions for parties and designated party
representatives. Id. The party seeking to avoid sequestration bears the burden of proving that a
Rule 615 exception applies. See United States v. Jackson, 60 F.3d 128, 135 (2nd Cir. 1995),
cert. denied, 516 U.S. 980 (1995).
The Fourth Circuit has addressed the importance of sequestration, holding that “[t]he rule
is designed to discourage and expose fabrication, inaccuracy, and collusion” and that the “merit
of such a rule has been recognized since at least biblical times.” Opus 3 Ltd. V. Heritage Park,
Inc., 91 F.3d 625, 628 (4th Cir. 1996). “It is now well recognized that sequestering witnesses is
(next to cross-examination) one of the greatest engines that the skill of man has ever invented for
the detection of liars in a court of justice.” Id. (internal citations omitted).
The sequestration rule applies to rebuttal witnesses. “The purpose of the rule is to
prevent witnesses from ‘tailoring’ their testimony to that of earlier witnesses and to aid in
detecting testimony that is less than candid.” United States v. Ell, 718 F.2d 291 (9th Cir. 1983)
(citing Geders v. United States, 425 U.S. 80, 87, 1334 (1976)). “These concerns are just as valid
for a rebuttal witness who has already testified in the case-in-chief as they are for a primary
witness. A witness may wish to tailor rebuttal testimony to conform to that of other witnesses as

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well as to cover up inconsistencies in earlier testimony that have been revealed by the other
witnesses.” Id., see also 6 J. Wigmore, Evidence § 1840 (Chadbourn rev. 1976) (“[The time for
sequestration] continues for each witness after he has left the stand, because it is frequently
necessary to recall a witness in consequence of a later witness' testimony.”).
In addition, sequestration problems aside, it is inappropriate for a party to recall a witness
to testify about evidence that could have been elicited on direct examination. United States v.
Ford, 88. F.3d 1350, 1362 (4th Cir. 1996).
During the October 28 meet and confer, Plaintiff’s counsel cited a number of cases to
support its recalling of Mr. Kosak. Those cases are wholly inapposite. The cases Plaintiff relies
upon stand for the proposition that rebuttal witnesses may be called under certain circumstances.
Defendants do not dispute that rebuttal witnesses are sometimes proper. Plaintiff’s cases do not,
however, in any way touch on whether calling Mr. Kosak as a rebuttal witness when he was not
sequestered would be proper under the circumstances of this case.
In DMI, Inc. v. Deere & Co., 802 F.2d 421 (Fed Cir 1986), the court held that excluding
two rebuttal witnesses not named in the pre-trial order was not an abuse of discretion. Id. at 428.
In support of its holding, the court merely noted that DMI recalled two of its witnesses for
rebuttal but did not elaborate. Id. It did not address the issue of sequestration. Similarly, United
States v. Collins, 272 F. App'x 219 (4th Cir 2007), does not address whether a party can recall a
witness who was not sequestered. In Collins, the court reiterated a generic definition of rebuttal
evidence and explained that allowing the Government to introduce two rebuttal witnesses was
proper after the Government learned new information at trial as a result of the defendant's
testimony. Id. at 223. Accordingly, Collins is not helpful to Plaintiff. Likewise, United States v.
Reddicks, 237 F. App'x 826 (4th Cir 2007), is readily distinguishable. As with DMI and Collins,
Reddicks does not deal with recalling unsequestered rebuttal witnesses. The court in Reddicks

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held that a question on redirect that directly rebutted a question raised by the defendant on crossexamination was proper. Id. at 830-31. Reddicks, therefore, has no relevance to the present case.
The one case Plaintiff cited for its proposition that it is proper to recall Mr. Kosak even
though he was not sequestered is United States v. Flowers, 235 F. App’x 965, (4th Cir. 2007).
Flowers presents a starkly different factual situation from that here. Flowers held that “the
Government's in-court representative may offer rebuttal testimony despite having heard the other
witnesses.”2 Id. at 967. The in-court representative falls within the exception for party
representatives recognized by Fed. R. Evid. 615(2). Mr. Kosak is not a party representative.
Thus, he does not fall under the exception to Fed. R. Evid. 615 (2) or the Flowers holding.
B.

Mr. Kosak’s proposed rebuttal is improper because it is beyond the scope of
this Court’s order limiting rebuttal testimony to invalidity.

In addition to violating the law regarding sequestration, re-calling Mr. Kosak will violate
this Court’s order. During the pre-trial conference, the Court informed the parties that the scope
of Plaintiff’s rebuttal witness testimony would be limited to invalidity. Mr. Kosak’s testimony
has nothing to do with invalidity. Plaintiff intends to call Mr. Kosak to testify to Lycos’s
financial, business, and technical capabilities, all of which go to damages and not to invalidity.
Therefore, Mr. Kosak’s proposed testimony violates this Court’s order regarding the scope of
permitted rebuttal testimony.
C.

Recalling Mr. Kosak is improper because he has been sitting in the
courtroom throughout trial.

Mr. Kosak has been sitting in the courtroom throughout every day of trial and has been
communicating extensively in open court with Plaintiff and its other witnesses. To allow him to
testify again would be an outright violation of Fourth Circuit law and this Court’s explicit order

2

Furthermore, Flowers reviewed the district court’s decision to allow the in-court
representative to testify for “plain error” because, unlike here, the defendant had not objected at

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that all witnesses apart from corporate representatives be sequestered and excluded from the
courtroom. See Opus 3 Ltd., 91 F.3d at 628 (“The rule is designed to discourage and expose
fabrication, inaccuracy, and collusion.”). As described below, Defendants disagree that the
topics of Mr. Kosak’s proposed testimony are appropriate for rebuttal but, even if they were, his
ongoing presence in the courtroom renders him unfit to be a rebuttal witness. Mr. Kosak’s
proposed testimony regarding Lycos will inevitably be biased given that he has heard both
experts talk about the facts underlying and general importance to this case of Lycos’s financial
difficulties. Mr. Kosak also has heard argument on Defendants’ Motion for Judgment as a
Matter of Law regarding damages, which gives him obvious insight into the key issues regarding
Lycos’s business situation and how they impact Plaintiff’s damages case. Finally, Mr. Kosak
(who has financial interest in the outcome of this matter (Trial Tr. at 347:25-348:1)), has been
sitting with and communicating with Mr. Perlman, Mr. Lang, and Plaintiff’s counsel on a daily
basis in open court. Accordingly, the risk of him tailoring his testimony to respond to
Defendants’ evidence and bolster Plaintiff’s case is particularly high. These are precisely the
dangers that witness sequestration is designed to prevent.
D.

Mr. Kosak’s proposed rebuttal is improper because Plaintiff was on notice of
the issues prior to Mr. Kosak’s direct examination.

Plaintiff has conceded that all topics regarding which Mr. Kosak intends to testify were
included in Dr. Ugone’s expert report. The sale of Lycos, Inc. for $95 million was even raised in
Defendants’ opening statement. (Trial Tr. at 144:7-14 “You're also going to hear evidence, in
addition to the sale of these patents, Lycos itself sold a couple of different times, and you can see
here on the chart, December of 2004, Lycos has sold for $95 million. That includes --that is not
just for these patents. That is for all the patents they own, all the web sites they had, their

trial to the failure to exclude the witness. Flowers, 235 F. App’x at 965.

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buildings, their employees, their customer connections, all of those kinds of things. That was in
2004.”)
The issues regarding Lycos’s sale and it ongoing business difficulties also were not a
surprise to Plaintiff. In fact, Plaintiff itself addressed these issues during Mr. Kosak’s direct
examination:
Q. Okay. That overseas owner, right, of Lycos?
A. Right.
Q. Sold what to the Koreans?
...
Q. Sure. Do you have an understanding as to what the Korean company, Daum, I
think you said, purchased as it related to your job?
A. Sure. In relationship to my job, I was the VP of technology for the global side
of the company with -- my boss was in Madrid. When Daum purchased Lycos,
they purchased just the U.S. portion. In fact, to be specific, they purchased the
English-speaking U.S. portion of the company. They didn't purchase the other 35
or 40 Lycoses around the world.
Q. So the Korean company bought, I'm sorry, just the U.S. operation?
A. Correct.
(Trial Tr. at 328:20-329:14.) Furthermore, Mr. Kosak himself admitted that after Daum
purchased Lycos, Lycos had a lack of strategy and direction. (Id. at 330:2-3 “At that point in
time there wasn't a clear strategy for what Daum wanted Lycos to do.”; id. at 330:24-331:1
“After the acquisition, it was fairly clear that there wasn't a direction that Daum had in mind for
Lycos.”) Plaintiff not only had the opportunity to ask its witnesses about Lycos’s business, it did
so.
E.

There was no surprise.

Plaintiff asserts that it is nonetheless entitled to re-call Mr. Kosak on these issues because
it was “surprised” that Dr. Ugone testified about them because, according to Plaintiff, these
issues had been raised only in the context of Dr. Ugone’s proxy/yardstick analysis. This is
simply not the case. Dr. Ugone explicitly raised issues about Lycos’s the business difficulty in
his discussion of the Georgia-Pacific factors. (See D.N. 468-4, Ugone Expert Report ¶ 74 (citing

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factors 8 and 15 and App’x A).) The discussion of these issues in his report is not tied to the
proxy/yardstick analysis.
Further, Plaintiff’s inability to predict which parts of his report Dr. Ugone would testify
about is not an excuse for failing to question its witness on those issues during direct. Plaintiff
has long been on notice of the contents of Dr. Ugone’s report. And Plaintiff’s failure in
prediction certainly is not grounds for re-calling a witness who has been excused and sitting in
the courtroom each day. To the extent Plaintiff believes Dr. Ugone’s testimony about the
business difficulties of Lycos is not supported by the evidence he relied on, the proper avenue to
address this is cross examination, not the recalling of a non-sequestered witness to testify beyond
the scope of allowable rebuttal.
IV.

CONCLUSION
For the foregoing reasons, Defendants respectfully requests that the Court not permit

Plaintiff to re-call Mr. Kosak as a rebuttal witness.

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DATED: October 30, 2012

/s/ Stephen E. Noona
Stephen E. Noona
Virginia State Bar No. 25367
KAUFMAN & CANOLES, P.C.
150 West Main Street, Suite 2100
Norfolk, VA 23510
Telephone: [phone]
Facsimile: [phone]
[e-mail]
David Bilsker
David A. Perlson
QUINN EMANUEL URQUHART &
SULLIVAN, LLP
50 California Street, 22nd Floor
San Francisco, California 94111
Telephone: [phone]
Facsimile: [phone]
[e-mail]
[e-mail]
Counsel for Google Inc., Target Corporation,
IAC Search & Media, Inc., and
Gannett Co., Inc.

By: /s/ Stephen E. Noona
Stephen E. Noona
Virginia State Bar No. 25367
KAUFMAN & CANOLES, P.C.
150 W. Main Street, Suite 2100
Norfolk, VA 23510
Telephone: [phone]
Facsimile: [phone]
Robert L. Burns
FINNEGAN, HENDERSON, FARABOW, GARRETT &
DUNNER, LLP
Two Freedom Square
11955 Freedom Drive
Reston, VA 20190
Telephone: [phone]
Facsimile: [phone]
Cortney S. Alexander
FINNEGAN, HENDERSON, FARABOW, GARRETT &
DUNNER, LLP

01980.51928/5031830.4

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3500 SunTrust Plaza
303 Peachtree Street, NE
Atlanta, GA 94111
Telephone: [phone]
Facsimile: [phone]
Counsel for Defendant AOL, Inc.

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CERTIFICATE OF SERVICE
I hereby certify that on October 30, 2012, I will electronically file the foregoing with the
Clerk of Court using the CM/ECF system, which will send a notification of such filing (NEF) to
the following:
Jeffrey K. Sherwood
Kenneth W. Brothers
DICKSTEIN SHAPIRO LLP
1825 Eye Street NW
Washington, DC 20006
Telephone: [phone]
Facsimile: [phone]
[e-mail]
[e-mail]
Donald C. Schultz
W. Ryan Snow
Steven Stancliff
CRENSHAW, WARE & MARTIN, P.L.C.
150 West Main Street, Suite 1500
Norfolk, VA 23510
Telephone: [phone]
Facsimile: [phone]
[e-mail]
[e-mail]
[e-mail]
Counsel for Plaintiff, I/P Engine, Inc.

/s/ Stephen E. Noona
Stephen E. Noona
Virginia State Bar No. 25367
KAUFMAN & CANOLES, P.C.
150 West Main Street, Suite 2100
Norfolk, VA 23510
Telephone: [phone]
Facsimile: [phone]
[e-mail]
12015885v1

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