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

Filing 942

Declaration re 938 Memorandum in Opposition, by AOL Inc., Gannett Company, Inc., Google Inc., IAC Search & Media, Inc., Target Corporation. (Attachments: # 1 Exhibit 1, # 2 Exhibit 2 (Public Version), # 3 Exhibit 3 (Public Version), # 4 Exhibit 4 (Public Version), # 5 Exhibit 5 (Public Version), # 6 Exhibit 6 (Public Version), # 7 Exhibit 7 (Public Version), # 8 Exhibit 8 (Public Version), # 9 Exhibit 9 (Public Version), # 10 Exhibit 10 (Public Version), # 11 Exhibit 11 (Public Version), # 12 Exhibit 12 (Public Version), # 13 Exhibit 13 (Public Version), # 14 Exhibit 14 (Public Version), # 15 Exhibit 15 (Public Version), # 16 Exhibit 16 (Public Version), # 17 Exhibit 17 (Public Version), # 18 Exhibit 18 (Public Version), # 19 Exhibit 19 (Public Version), # 20 Exhibit 20 (Public Version), # 21 Exhibit 21 (Public Version), # 22 Exhibit 22, # 23 Exhibit 23, # 24 Exhibit 24, # 25 Exhibit 25, # 26 Exhibit 26, # 27 Exhibit 27, # 28 Exhibit 28, # 29 Exhibit 29, # 30 Exhibit 30)(Noona, Stephen)

EXHIBIT 22

Confidential - Outside Attorneys' Eyes Only
Page 1
IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF VIRGINIA
NORFOLK DIVISION
L/P ENGINE, INC.,
Plaintiff,
VS.
AOL, INC., et al,
Defendants.

)
)
)
)
) CIVIL ACTION NO.
) 2:11-CV-512
)
)
)

**********************************************
ORAL/VIDEO DEPOSITION OF
STEPHEN L. BECKER, Ph.D.
SEPTEMBER 8, 2012
**********************************************
CONFIDENTIAL - OUTSIDE ATTORNEYS' EYES ONLY
ORAL DEPOSITION OF STEPHEN L. BECKER, Ph.D.,
produced as a witness at the instance of the Defendants,
was duly sworn, was taken in the above-styled and
numbered cause on the SEPTEMBER 8, 2012, from 8:24 a.m.
to 5:54 p.m., before Chris Carpenter, CSR, in and for
the State of Texas, reported by machine shorthand, at
the offices of ANDREWS & KURTH, 111 Congress Avenue,
Suite 1700, Austin, Texas 78701, pursuant to the Federal
Rules of Civil Procedure and the provisions stated on
the record or attached hereto.
Job No. CS416513

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Confidential - Outside Attorneys' Eyes Only
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as a business model as a way to select and place ads,
but it's not -- I'd have to get a technical person to
examine the claims that tell me just how broad that
would be.
Q. Do you understand that Google orders ads based
on bids?
A. I understand that that is one of the factors
that goes into the selection and placement of ads.
Q. Do you know whether Google practices the '361
patent?
A. No, I can't say that they do. They -- I know
that they -- at the time that they took their license,
they, at least in their public disclosures, were stating
that they didn't.
Q. Do you think that Interchange was a global
technology leader in 2004?
A. No.
Q. Do you think that eXact was a global technology
leader in 2005?
A. No.
Q. Do you think that Marchex was a global
technology leader in 2005?
A. I wouldn't characterize them as that.
Q. Was Google -- you -- you would agree, though,
that by 2004, Google was a global technology leader?

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stacking issue that would cause the royalty rate to be
affected.
Q. Why?
A. This is not like a cell phone, is the classic
example of a product that has a royalty stacking issue,
where you've got, you know, components made by -- you
know, individual components within a Smartphone that may
be coming from a hundred different suppliers and three
or four, if not more, different industry-promulgated
standards, that in -- in and of themselves contain
hundreds, if not more than hundreds, of patents on the
standard. And you just -- you know, Google's AdWords
product really doesn't fit any of the indicia of a
royalty stacking problem product.
Q. Well, it is a very complicated system that has
many different components, is it not?
MS. ALBERT: Objection, vague.
A. Yes. Absolutely. But that's not what -that's not what drives -- that's not what drives the
royalty stacking problem.
Q. (By Mr. Perlson) Are you aware of any evidence,
in Google's own licensing activity, that would suggest
that Google would have agreed to a running royalty in
the hypothetical negotiation with Lycos?
A. There's -- you know, their licensing witness, I

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A. With respect to the search business, yes.
Q. Do you understand what royalty stacking is?
A. Yes.
Q. What is it?
A. It's the problem that some industries face
where you have, in some cases, hundreds, if not
thousands, of individual pieces of intellectual property
owned by different companies that are needed to make a
particular product and -- or at least would be used to
make a particular product. And the royalty stacking
problem is one where if each individual package of
intellectual property charges a particular royalty rate,
when that is applied across -- you know, if you had to
pay that to hundreds of different IP holders, when you
stack up all those royalty payments, it gets to be a
substantial number and can start to impact the viability
of the product in the marketplace in terms of effecting
demand and price. It drives the price of the product up
and starts to affect demand for the product.
Q. Have you taken into account royalty stacking in
forming your opinion of a reasonable royalty?
A. Certainly aware of the issue, as I just
described. It's something that I'm well familiar with.
And it -- this circumstance and this particular product,
I don't think has a royalty stacking problem or a

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recall, testified that they, you know, treat each -look at each circumstance on a -- on a case-by-case
basis and would look at the -- you know, the merits of a
particular circumstance. So in that respect, there's -there's no absolute policy at Google against doing it,
you know, against running royalties.
Even if there, I think that you can't just
decree that you're never going to pay a running royalty
and have that then be reasonable in all licensing
circumstances, or everybody would just decree "I have a
written policy to not pay anybody for their intellectual
property." I don't think Google has taken that
position.
It's -- the license agreements that it
produced in this case are ones that are either
settlements or are lump sums, or, you know, outright
purchases of patents. But there's -- I've seen no
evidence that there would be a prohibition against a
running royalty.
Q. Well, that's not -- that's not really what I
asked. I asked if you're aware of any evidence, in any
of Google's licensing activity, that demonstrates that
Google would, in fact, have agreed to a running royalty
in the hypothetical negotiation with Lycos?
MS. ALBERT: Objection.

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A. Yes, the testimony that they would treat each
circumstance on a case-by-case basis and that they don't
have an absolute policy against it. They, obviously,
have a preference for lump sums. But to the extent that
their statements about their licensing policies and
their -- the way they approach licensing is evidence of
their licensing practice, then I have evidence of that.
Q. Any other evidence?
A. No. I think I've covered it in -- in the
answers I've given you.
Q. And but you do agree that Google has expressed
a preference for a lump sum format for licenses?
A. Yes.
MR. PERLSON: We have to take a break.
THE VIDEOGRAPHER: We're off record at
1:51 p.m.
(Recess.)
THE VIDEOGRAPHER: We are back on record
at 2:01 p.m.
Q. (By Mr. Perlson) In -- what percentage of your
time would you say that you spend doing expert work in
litigation?
A. If you include, you know, matters that clearly
are likely headed that way -Q. Yes.

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A. Patent case related to networking, computer
networking products.
Q. In that case, did you opine that there would be
a lump-sum royalty or a reasonable royalty -- or a
running royalty?
A. I have quantification of both of those in my
report.
Q. When is the last time that you offered an
opinion of a -- that a hypothetical negotiation would
have resulted in a lump-sum form of agreement?
A. Well, the one that we just talked about, you
know, part of my opinion is that -- I have an opinion
that the most likely outcome of the negotiation in that
particular case was a lump sum, but provide also that if
one looked at it as a running royalty, I've got an
analysis that looks at what I think a reasonable running
royalty would be.
Q. And in the work that you've have done for, on
behalf of plaintiffs in patent litigation, what
percentage of the time would you approximate that your
opinion has been that a running royalty would be the
result of a hypothetical negotiation?
A. I -- I can't tell you precisely. I'd say it
would be very -- a very high percentage and not unlike
the very high percentage of times on the defense

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A. -- and that is in anticipation of a role that I
might play in that regard, I would say it's 90 percent.
Q. And what percentage of the time would you say
you are doing work on behalf of plaintiffs versus
defendants?
A. In patent-related matters or just in general?
Q. Well, let's start with patent matters.
A. Generally, about fifty-fifty. You know, as
cases ebb and flow, I can't say that the last -- last
month's bills would be 50 percent plaintiff and 50
percent defense. Probably in the last six months, it
would tilt more heavily towards defense side, but then,
you know, there would be six-month periods or annual
periods where it was a little more than 50 percent on
the plaintiff's side.
Q. Was the -- what defendants -- what's the most
recent case in which you represented a defendant? I'm
sorry, let me ask that again.
What's the most recent case in which you
provided expert testimony on behalf of a defendant in a
patent case?
A. Including, say, deposition testimony?
Q. Sure.
A. Probably Cisco.
Q. What sort of case is that?

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side. There's really only a few circumstances,
regardless of whether of I've been on the plaintiff's
side or the defense side, where I've opined to a lumpsum payment.
Q. For the purposes of your opinion of a
reasonable royalty, did you assume there were no
commercially viable alternatives to the patent-in-suit?
A. As described in my report, what I've assumed is
that there are no commercially viable alternatives that
would produce the benefits that practicing this
invention allows Google to receive.
Q. And what's the basis of that assumption?
A. I'm relying on Dr. Frieder for the technical
opinion that there are no alternatives. I think that I
put that in the context of the evidence that I've seen
in -- in the record of evidence that Google has produced
that supports that. I haven't seen any evidence of -in Google's documents of alternatives that have been, in
fact, considered or that from my understanding of what
is accused of infringing, would qualify as acceptable
alternatives.
Q. When did you speak with Dr. Frieder?
A. I -- I don't know the date. I had several
conversations with him. I was in Washington, D.C. for
several days on one of my trips to Washington, and

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