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`UNITED STATES DISTRICT COURT
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`NORTHERN DISTRICT OF CALIFORNIA
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`Before The Honorable William H. Alsup, Judge
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`)
`FINJAN, INC.,
` )
` Plaintiff, )
` )
` VS. ) NO. C 17-cv-5659 WHA
` )
`JUNIPER NETWORKS, INC.,
`)
` )
` Defendant.
`)
` )
`
` San Francisco, California
` Thursday, May 2, 2019
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`
`TRANSCRIPT OF PROCEEDINGS
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`APPEARANCES:
`
`For Plaintiff:
` KRAMER, LEVIN, NAFTALIS & FRANKEL LLP
` 990 Marsh Road
` Menlo Park, California 94025
` BY: JAMES R. HANNAH, ATTORNEY AT LAW
` PAUL J. ANDRE, ATTORNEY AT LAW
` KRISTOPHER KASTENS, ATTORNEY AT LAW
`
`
`For Defendant:
` IRELL & MANELLA LLP
` 1800 Avenue of the Stars - Suite 900
` Los Angeles, California 90067
` BY: JOSHUA POPIK GLUCOFT, ATTORNEY AT LAW
` KEVIN X. WANG, ATTORNEY AT LAW
` JONATHAN S. KAGAN, ATTORNEY AT LAW
` REBECCA CARSON, ATTORNEY AT LAW
`
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`Reported By: Marla F. Knox, RPR, CRR
` Official Reporter
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`
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`Thursday - May 2, 2019
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` 10:25 a.m.
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`P R O C E E D I N G S
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`---000---
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`THE CLERK: Calling civil action 17-5659, Finjan,
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`Inc., versus Juniper Networks, Inc.
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`Counsel, please step forward and state your appearances
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`for the record.
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`MR. ANDRE: Good morning, Your Honor, Paul Andre,
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`James Hannah and Kristopher Kastens for Finjan.
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`THE COURT: Good morning. Thank you.
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`MS. CARSON: Good morning, Your Honor. Rebecca Carson
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`at Irell & Manella on behalf of Juniper Networks. And with me
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`is Jonathan Kagan, Joshua Glucoft and Kevin Wong.
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`THE COURT: Welcome back.
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`Okay. We have several motions. Here are the issues that
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`I'm interested in. I think first on the 780 patent, the issue
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`of notice and on the other patent, 154, the issue of content
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`processor.
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`Let's take first the 780. Why don't you summarize your
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`position. I think I understand -- it is my Andre who needs to
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`do the most speaking on this one, but I want -- you kind of tee
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`it up for us, and then we will go to Mr. Andre and then come
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`back to you on notice and constructive notice.
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`MS. CARSON: Sure, Your Honor. So the undisputed
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`facts in this case show that prior to filing the lawsuit,
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`Finjan did not identify the 780 patent as a patent that it was
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`accusing either side for or Juniper of infringing.
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`The initial complaint in this case did not include the ATP
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`Appliance product, and Finjan did not make a specific
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`allegation that that product infringed the 780 patent until it
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`served its infringement contingence in March of 2018 which was
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`after the expiration of the 780 patent. Therefore, there was
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`no actual notice pertaining to the ATP Appliance product prior
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`to expiration.
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`We have also set forth in our brief that there are
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`undisputed facts showing that Finjan licensed the 780 patent to
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`a number of licensees, some of which had had infringement
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`verdicts under the 780 patent that had been tried to a jury and
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`the jury had found that those Defendants had infringed the 780
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`patents; and the licenses that were entered into after those
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`verdicts did not include a marking provision. There is no
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`evidence that those licensees marked their products during the
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`relevant time period. And, therefore, Finjan has not
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`established either constructive notice or actual notice which
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`is a precursor to its claim because as we now know, they
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`haven't opposed on the SRX or the Sky ATP. So as of now the
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`780 is only being asserted -- claim 9 is only being asserted
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`against the ATP Appliance product.
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`THE COURT: Okay. Stand right there. Let's hear from
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`the other side.
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`MR. ANDRE: Paul Andre for Finjan, Your Honor.
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`Actual notice was given to Cyphort on February 9, 2015.
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`Finjan sent Cyphort a letter to opening licensing negotiation.
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`March 23rd --
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`THE COURT: Wait. Did that letter call out the 780
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`patent?
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`MR. ANDRE: It didn't call out any patents. It was a
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`letter introducing --
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`THE COURT: I'm just going to tell you right now.
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`Life is too short. That is not going to fly. Give me one
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`where the 780 was called out.
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`MR. ANDRE: So on March 23, 2016, Finjan gave Cyphort
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`a presentation that listed the 780 patent.
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`THE COURT: It called out the 780?
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`MR. ANDRE: It called out several patents, but 780 was
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`one of them.
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`THE COURT: Is that true?
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`MS. CARSON: Your Honor, it refers to the 780 patent
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`but only in a chart that shows the patents that Finjan has
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`asserted against other defendants. It was not in a chart that
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`charted against the ATP Appliance.
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`THE COURT: There is some case law that says you got
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`to take that extra step. So what do you say to that point?
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`MR. ANDRE: Well, we listed out other patents that
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`were relevant to Cyphort; and then we gave them the analysis of
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`the ATP Appliance. We didn't break it down by patent by patent
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`by patent. We did give them that notice of the 780 patent --
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`THE COURT: You know, why -- it would have been easy.
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`Why do you lawyers and patent owners do this to the poor judges
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`of America? This is such an easy thing to fix. You send a
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`letter up front that calls out the 780. I know why you don't
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`want to do it. It is because that will trigger -- if you are
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`specific enough, it triggers a declaratory relief case. So
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`there is a tactical thing going on here.
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`To me it is crazy for you to stay vague like the -- like
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`you do and not put something in writing and then say Oh, but we
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`put him on notice.
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`All right. You are going to lose on that point unless you
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`can show me you did a claim chart that showed the 780 was
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`violated.
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`MR. ANDRE: Your Honor, we entered into a license
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`agreement with these guys until we got to the very signature.
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`It listed the 780 patent and these products.
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`THE COURT: Wait, wait.
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`MR. ANDRE: This is a --
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`THE COURT: You entered into a license agreement?
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`MR. ANDRE: I'm sorry. We didn't sign it. We had a
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`license agreement drafted up. The parties were working
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`cooperatively. Cyphort and Finjan were acting as friends
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`trying to do a deal together. They were not adversarial. They
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`were not worried about litigation. They had a standstill
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`agreement in place. Standstill agreement meaning we are not
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`going to sue each other. We are going to try to work this out
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`and avoid court.
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`So they had these negotiations. They had open
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`discussions. They talked about the patents and what the reads
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`would be, et cetera. They had web ex sessions. They gave
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`Cyphort notice of their entire portfolio because that's what
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`Cyphort wanted the license to. They could have given them 20
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`claim charts. It probably would have made it easier for me
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`sitting here today. We are trying to encourage people to avoid
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`being in court.
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`So Cyphort and Finjan entered into negotiations. They had
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`a standstill agreement. They discussed the patents. They
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`discussed the accused product here. They actually drafted a
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`license agreement, and Finjan was on the verge -- they
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`thought -- of signing it. And then suddenly Cyphort said, We
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`can't sign it because now Juniper wants to buy us.
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`THE COURT: Hang on a minute. Is it true that there
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`was a draft license agreement that called out the 780?
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`MS. CARSON: It did not call out the 780 patent,
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`Your Honor. It just generally referred to the patent
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`portfolio. They did send Cyphort various communications that
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`did identify specific patents, but it didn't identify the 780.
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`They even charted other patents. So those patents --
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`THE COURT: I'm sorry. Was the 780 ever called out on
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`anything?
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`MS. CARSON: The only mention of the 780 patent was
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`the PowerPoint presentation saying that Finjan had asserted
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`that patent against Bluecoat and various other defendants.
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`THE COURT: Mr. Andre, you told me a minute ago there
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`was a license agreement that called out the 780. Maybe I
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`misunderstood you.
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`MR. ANDRE: The license agreement was for all Finjan's
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`patents they discuss including the 780 and all -- the entire
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`Finjan portfolio --
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`THE COURT: Does it call out the 780?
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`MR. ANDRE: Does it call it out on a chart? No. Does
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`it call it out specifically? Yes, it calls out all of Finjan's
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`patents.
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`THE COURT: Well, let me see. Show it to me.
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`MS. CARSON: I have a copy of it, Your Honor.
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`THE COURT: Hand it up to me. This is crazy. It has
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`got dashes in it and -- like it is written in some kind of
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`code.
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`MS. CARSON: You will see that patent rights are
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`discussed on the second page at the top -- I think it is
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`supposed to be definitions box.
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`THE COURT: Why does it have every N has got a dash in
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`it?
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`MS. CARSON: I can't explain that, Your Honor. It is
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`a document that they produced and created.
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`THE COURT: Where does it say 780 in here?
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`MS. CARSON: It does not.
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`THE COURT: It just can't be because Mr. Andre would
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`not misrepresent something to me, and he said the words 780
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`were in here.
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`Mr. Andre, here, I'm handing you what she handed me. Show
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`me where the letters 780 are.
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`MR. ANDRE: It won't be in that term sheet,
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`Your Honor. That term sheet was corrupted, as you can see. We
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`have -- this is the actual -- may I hand this up, Your Honor?
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`THE COURT: Show, Counsel, first.
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`MS. CARSON: Which exhibit is that?
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`MR. ANDRE: Exhibit No. 11.
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`THE COURT: All right. I'm looking at Finjan 193045.
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`It is called Finjan draft 3/29, 2017, confidential patent
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`license agreement. All right. So where is the 780 called out
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`here?
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`MR. ANDRE: Your Honor, under patents rights it is
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`called out; and this is the PowerPoint presentation that
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`identified the patents. It is Exhibit 6.
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`THE COURT: Wait, I'm sorry. 1.7, is that what you
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`are talking about?
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`MR. ANDRE: We are talking about all of Finjan's
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`patents.
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`THE COURT: It refers to an Exhibit C. Do we have
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`that? Including but not limited to all of the patents
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`identified in Exhibit C.
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`MR. ANDRE: It was discussed, Your Honor. I don't
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`know if it was ever attached to this draft or not. That is the
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`only page we have of that contract. It was inclusive of all
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`Finjan's patents. And so the parties discussed it. They
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`disclosed it. This is the actual presentation that Finjan
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`gave. It lists all the patents that Finjan had in its
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`portfolio and all the IPRs that were denied.
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`So I guess, the question comes down, Your Honor -- we have
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`a draft license agreement. We have contemplated the entire
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`portfolio license. We talked about the entire portfolio. Is
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`that sufficient notice to provide somebody --
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`THE COURT: Well, is there a decision in the history
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`of the universe that ever says that alone is enough to
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`constitute constructive notice or actual notice?
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`MR. ANDRE: Actual notice. Your Honor, I think there
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`are several decisions along that lines.
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`THE COURT: Okay. Give me your best one you have.
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`MR. ANDRE: Can I have a minute, Your Honor?
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`THE COURT: Yeah.
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`(Pause in proceedings)
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`MS. CARSON: Your Honor, while he is looking for the
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`case --
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`THE COURT: He is not going to be able to hear. Give
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`him a moment --
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`MS. CARSON: Sure.
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`THE COURT: -- to look for the decision.
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`(Pause in proceedings)
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`MR. ANDRE: So there is a case, Novo Nordisk -- that
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`is a drug company -- versus Becton Dickinson.
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`THE COURT: Yep.
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`MR. ANDRE: It basically talks about the notice
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`requirement has been met and may be satisfied, quote, in the
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`context of the overall dealings between the parties.
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`So in the context of the overall dealings between the
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`parties, here with Cyphort we were within -- with all candor,
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`we thought we had a done deal. We thought we had license, and
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`we were ready for signatures to license our entire portfolio.
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`The parties had made peace. And then Juniper came in and said,
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`We don't want you to buy the license. We are going to buy you.
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`Don't take the license.
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`So the overall context between the parties here, they
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`negotiated in good faith. They discussed the entire portfolio.
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`They got to the point of drafting a license agreement agreeing
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`to most of the material terms. All that was left to do was to
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`execute, and they didn't. So I think under the context --
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`THE COURT: Well, maybe I -- what do you say? What is
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`your response to that?
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`MS. CARSON: Your Honor, the fact that Cyphort was
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`willing to enter into a portfolio license does not constitute
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`actual notice from Finjan that Cyphort was supposedly
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`infringing a particular patent. Finjan did allege that Cyphort
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`infringed particular patents and gave Cyphort claim charts for
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`those patents. The 780 was not included in that.
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`And under federal circuit law, in particular the Amsted
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`case, which is 24 F.3d 178, actual notice requires the
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`affirmative communication of a specific charge of infringement
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`by a specific accused product or device. Finjan's attempt to
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`rely on the fact that Cyphort was willing to license the entire
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`portfolio when it had come to Cyphort with allegations
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`pertaining to specific patents that didn't encompass the 780
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`patent is simply not sufficient under the law to meet the
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`actual notice requirement.
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`THE COURT: Your decision that so states this is which
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`one again?
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`MS. CARSON: The case is Amsted Industries versus
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`Buckeye Steel. It is a federal circuit case, and it is cited
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`on --
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`too?
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`THE COURT: Is Novo versus BD, is that federal circuit
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`MR. ANDRE: It was affirmed by the federal circuit
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`too. That's correct.
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`THE COURT: What you were citing to, was that language
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`from the Court of Appeals or from the district court?
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`MR. ANDRE: It looks like it is from the district
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`court I'm guessing the way it is cited here. We can pull it up
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`real quick. We have a copy of it. It looks like it was from
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`the district court. It may have just been --
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`THE COURT: You see, when somebody takes a portfolio
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`license, it is not only good for the products you have now but
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`for the products in the future. It goes on, right? So for all
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`we know, you take a portfolio license for your present products
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`as well as your products that will come along in the future.
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`You don't have to worry about Finjan anymore. But that does
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`not translate to this particular product infringes the 780.
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`That's the hang up I have with your argument.
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`MR. ANDRE: Your Honor --
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`THE COURT: And it is so easy to fix that in advance
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`with a letter, and you just don't want to do it for tactical
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`reasons. That's the hang up that I have with that, and then
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`you put me and district judges like me to pain and suffering
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`all over America because for tactical reasons you don't want to
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`be specific in writing.
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`MR. ANDRE: Your Honor, and let me just address that
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`because I know you brought that up before, it is a tactical
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`decision. Back in 2016 before there was a standstill
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`agreement, Finjan provided this presentation about Cyphort's
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`products; and there it is. From yourself, this is what they
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`believe was infringing. This would have been more than
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`enough --
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`THE COURT: But it didn't call out the 780.
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`MR. ANDRE: It did. It called out all Finjan's
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`patents in this presentation. These are the patents we are
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`asserting in litigation.
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`THE COURT: No, litigation against other people and
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`other products; but you did have some claim charts against
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`the -- is it Cyphort -- Cyphort products, but you didn't have
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`one against 780.
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`MS. CARSON: In fact, Your Honor, the precise
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`presentation that they are pointing to does, in fact, include
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`claim charts for other patents. It does not include a claim
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`chart for the 780 patent.
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`THE COURT: Mr. Andre, I will give you the last word
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`on this one; and then we are going to move to another issue.
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`MR. ANDRE: Your Honor, I will direct your attention
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`to page 33 of our opposition brief. We cite a line of case law
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`there that talks about what is sufficient notice when parties
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`are in license negotiations, which they were, which is a
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`distinct animal. This is not just a notice letter where you
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`send someone a letter and put them on notice. This was
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`licensing negotiations.
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`And several courts and other court in Southern District of
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`New York -- Eastman Kodak case -- the court considers the
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`context of the license and negotiations between the parties to
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`determine that the Defendant has been given notice of
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`infringement. There is a case in Massachusetts, the same
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`thing. In each one of those instances summary judgment was
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`denied. So I will just direct the Court's attention to page
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`33, that line of cases.
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`THE COURT: Thank you. Now, we go to the 154 patent,
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`and the issue I'm concerned about is whether or not the term
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`"content processor" requires that there be modified content.
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`So let's hear first from Plaintiff, and then we will hear
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`from the Defendant; and then I will give you rebuttal as well.
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`MR. HANNAH: Sure. I think the best evidence to point
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`specifically to that issue is raised in our reply and the fact
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`and in the prosecution history the term "modified" was actually
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`removed from the claims. I think that's the --
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`THE COURT: Say that again.
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`MR. HANNAH: The term that they are trying to impose
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`into the claims was actually removed during prosecution
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`history. I think that is pretty clear evidence that these
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`claims are not meant to be restricted to modified content.
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`THE COURT: That was removed from claim 1?
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`MR. HANNAH: No. It was removed from a dependent
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`claim which I think is even stronger evidence. What happened
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`was there was the -- if I could back up and I can give you a
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`little bit of history, Your Honor -- the 154 is a continuation
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`of a previous application, United States Patent 77-57-289. In
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`the 289 patent there was granted claims, and those granted
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`claims referred to modified content. In the modified -- when
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`that patent issued, the continuation was filed called the
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`broadening continuation because there was no prior art out
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`there that was even close to the admission that is disclosed in
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`the 154 or the 289 patent.
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`During prosecution what happened was there was a term that
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`was left in there which was modified content. That was
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`explicitly removed from the claims during prosecution of the
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`154.
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`THE COURT: But that was claim 3.
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`MR. HANNAH: Exactly. It was a dependent claim on
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`dependent claim 1. It was actually claim 2, and I have it
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`right here, Your Honor.
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`THE COURT: Or claim 2. But it is a dependent claim.
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`So what the -- go ahead.
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`MR. HANNAH: No. What I'm trying to show is that the
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`fact that it was in a dependent claim is even further evidence
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`that modifiers were removed entirely from the entire claim set
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`during prosecution of the 154 --
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`THE COURT: Hold that thought. What do you say to
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`that point that if it was modified, they would have left the
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`word "modified" in there?
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`MS. CARSON: Well, Your Honor, the word "modified" was
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`in a dependent claim; and it was removed because there was no
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`antecedent basis because claim 1 didn't specifically refer to
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`modified content.
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`THE COURT: If it is all supposed to be modified, then
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`why wouldn't they have just left it in claim 2?
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`MS. CARSON: Because there is no antecedent basis for
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`that particular claim. So they removed the word "modified" so
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`it referred to the content. The PTAB addressed this precise
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`issue about whether claim 1 was referring to the processing of
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`modified content. The PTAB found in the IPR that it was
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`implicit in the claim that the type of content that was being
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`processed in claim 1 was modified content; and we submitted as
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`Exhibit P to our brief that excerpt from the PTAB but the PTAB
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`specifically found as to claim 1, quote, because the recited
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`first function is the substituted function whose input is
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`verified, the claimed content in the context of the surrounding
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`claim language must refer to the modified content received at
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`the client computer.
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`THE COURT: Hold that thought for a second. Now, that
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`was the IPR talking, right?
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`MS. CARSON: Correct, Your Honor.
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`THE COURT: Did it go to the federal circuit?
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`MS. CARSON: It did.
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`THE COURT: What did the federal circuit do?
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`MS. CARSON: The federal circuit didn't expressly
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`address the construction of content because neither party
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`opposed -- neither party raised that with the federal circuit.
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`THE COURT: So what do you say on IPR? The federal
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`circuit left it alone.
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`MR. HANNAH: That statement was made in reference to
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`the specific art that was being discussed.
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`THE COURT: The specific what?
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`MR. HANNAH: The art, the prior art that was being
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`discussed. It was characterizing the art and comparing it to
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`the 154 patent saying that -- how it couldn't even apply. The
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`reason that content was not ever construed because their
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`expert, Dr. Rubin, said it didn't need construction. When he
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`was asked during deposition for the IPR, he said content meant
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`code. That's it. Now he comes, flip-flops on his construction
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`and says it requires modified content. Never had had that
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`opinion ever before and now only does it now for this case
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`because his lawyers asked him to.
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`THE COURT: Well, okay. I don't like that scenario.
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`You get me going on that one. But you are dodging the -- it
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`sounds like what the IPR did -- and I want to stick with the
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`IPR for a minute -- the IPR tried to save the patent from
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`invalidity by reading into it modified. Is that what happened?
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`MS. CARSON: Correct, Your Honor. The PTAB construed
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`the term content, and they construed content to require that it
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`be modified content.
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`THE COURT: Was that in order to save it from some
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`prior art?
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`MS. CARSON: So it was one of the terms they found was
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`necessary in order to address it, and the patent was upheld as
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`valid.
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`THE COURT: Well, but that's what I'm saying. Was the
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`word "modified" used to distinguish the claim from some item of
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`prior art?
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`MS. CARSON: I can't recall the specifics, but it was
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`one of the two terms that the PTAB construed; and they
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`construed it -- not in their initial institution decision.
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`They construed it in their final written decision as one of the
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`terms that was in dispute, and they actually rejected both the
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`patentees construction as well as the Petitioner's construction
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`and did their own thorough analysis of --
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`THE COURT: All right. Did the PTAB do that -- my
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`question is -- in order to save it from invalidity in light of
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`some other prior art?
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`MR. KAGAN: No, Your Honor.
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`THE COURT: It sounds like that's what happened.
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`MR. HANNAH: The issue that the PTAB held its hat on
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`was that it was a call tool for first function. So there is
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`actually -- and I handled both of these trials that went for
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`the IPRs. There was a series of prior art that was being
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`asserted against us, and one of the pieces of prior art did not
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`have a call to a first function. What it did was it actually
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`have -- it didn't have a call at all, and they had modified
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`some other type of data in order to have something else be
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`invoked instead of the actual function. So the board said that
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`there was not a call to a first function in that instance.
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`Then in the second one they said that the call wasn't
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`actually in -- the call that was to the function didn't have
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`the right input that was going to be subsequently evoked. So
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`both of them hinged on this call to a first function versus the
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`input, not the modified -- not the modified content.
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`THE COURT: Is that right?
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`MS. CARSON: My understanding, Your Honor, is that the
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`PTAB did construe content to require that it be modified; but
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`that the prior art that was being considered did actually
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`process modified content. So it was not the reason the patent
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`was upheld, but it was a thorough discussion by the PTAB
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`interpretating the claim and recognizing that in order for the
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`claim to make sense, the content that is being processed by the
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`content processor must be the modified content.
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`THE COURT: What did the PTAB say in response to the
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`point that claim 2 had at one point used the word "modified"
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`but the word "modified" was taken out? Did the PTAB address
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`that point?
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`MS. CARSON: I don't believe the PTAB specifically
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`addressed that issue.
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`THE COURT: What do you say now about that point?
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`MS. CARSON: So I think the point remains the same.
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`The reason that it was taken out was because there was a
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`rejection based on the fact that there was no antecedent basis.
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`So because claim 1 referred to it as just B content, if claim 2
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`couldn't refer to it as B modified content because there was no
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`antecedent basis. So they took out "modified" so that it
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`complied with those rules.
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`However, that doesn't change the fact that within the
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`context of claim 1 -- as the PTAB found -- if you consider it
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`in context, it wouldn't make sense if you weren't talking about
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`modified content because the whole point of the claim is that
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`you substitute the original function. And then when the
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`substitute function is invoked, it gets sent to the security
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`computer. The security computer checks the input to make sure
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`it is safe and then sends back an indication as to whether you
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`can execute the original function.
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`So the whole context and whole point of the patent and the
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`invention wouldn't make sense unless the claim was talking
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`about modified content, and that's exactly what the PTAB found
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`when they addressed this issue. They found that the patent
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`sort of talks about three different types of content: The
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`original content, the modified content and dynamically
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`generated malicious content. And they analyzed that in depth
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`and found that in context of the patent under the broadest
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`reasonable interpretation of the claim -- because that was the
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`standard that was being applied. This is even broader than
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`what we are considering here -- they found that the content
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`must be limited to modified content.
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`MR. HANNAH: Your Honor, if I may address --
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`THE COURT: Please go ahead.
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`MR. HANNAH: Your Honor, there is nothing that would
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`have prevented the Applicant from adding "modified" to
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`independent claim 1 rather than taking it out of dependent
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`claim 2. So the fact that there wasn't antecedent basis and
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`the fact that "modified" was removed is even stronger evidence
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`from the fact that there is no antecedent basis and they
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`removed it.
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`What she describes with the substitute function and
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`original function, she is describing -- and I'm going to say
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`the patent again -- the 77-57-289 to a tee.
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`When you look at claim 1 of the 289 patent, that talks
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`about substitute functions, original functions, modified
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`content which is an embodiment in the 154. The 154 also has
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`the embodiments that are set forth in the claims of the 154 --
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`THE COURT: Could the antecedent problem have been
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`solved by -- instead of taking "modified" out of number 2,
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`inserting modified in number 1? Would that have eliminated
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`that glitch?
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`MS. CARSON: Possibly, yes.
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`THE COURT: So the fact that they didn't do that is
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`some indication that Finjan is right. All right. I give each
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`side a couple more minutes on -- then I have to bring it all to
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`a close. So what else do you want to say on the 154?
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`MR. HANNAH: Well, Your Honor, I can walk through
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`the -- our MSJ on infringement for the 154. I think that our
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`brief, you know, sets forth all of the different scenarios -- I
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`mean, the different contingents that we have there.
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`Would it be helpful for me to roll through this very
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`quickly?
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`THE COURT: No. No -- I just have to say, you have
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`sat out there. You see what I'm up against. We have one
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`hearing after another. Facebook and how tokens work and then
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`how the False Claims Act works and landlord/tenant and unsigned
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`contracts and then -- it's a lot.
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`You give me some high level. I'm still able to absorb
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`high level, but I'm really -- I think you have both addressed
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`in some detail the points that I'm most concerned about. So I
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`feel like I have gotten what I want to get out of the hearing,
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`but I don't want to cut you off. If there is some high level
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`point, that would be worth hearing; but a low level detailed
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`point, no. It's not going to do me much good at this point.
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`MR. HANNAH: The only silver lining I saw was that at
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`least the Facebook case and this one both deal with hackers.
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