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`UNITED STATES DISTRICT COURT
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`NORTHERN DISTRICT OF CALIFORNIA
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`Before The Honorable Virginia K. DeMarchi, Magistrate Judge
`
`)
`FINJAN, INC.,
` )
` Plaintiff, )
` )
` VS. ) NO. C 17-04467 BLF (VKD)
` )
`SONICWALL, INC.,
`)
` )
` Defendant.
`)
` )
`
` San Jose, California
` Tuesday, August 18, 2020
`
`
`
`TRANSCRIPT OF PROCEEDINGS BY ZOOM WEBINAR
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`
`
`
`APPEARANCES BY ZOOM WEBINAR:
`
`For Plaintiff:
` KRAMER, LEVIN, NAFTALIS & FRANKEL LLP
` 990 Marsh Road
` Menlo Park, California 94025
` BY: PAUL J. ANDRE, ATTORNEY AT LAW
`
`
`For Defendant:
` DUANE MORRIS LLP
` 1075 Peachtree Street - Suite 200
` Atlanta, Georgia 30309
` BY: ROBIN L. MCGRATH, ATTORNEY AT LAW
` ALICE E. SNEDEKER, ATTORNEY AT LAW
`
`
`
`
`Reported By: Jo Ann Bryce, CSR No. 3321, RMR, CRR, FCRR
` Official Reporter
`
`
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`Case 5:17-cv-04467-BLF Document 410-1 Filed 03/11/21 Page 3 of 43
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` 2
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`Tuesday - August 18, 2020
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` 11:02 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 the matter of Finjan versus
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`SonicWall, Case Number 17-cv-4467.
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`THE COURT: May I have appearances, please, starting
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`with plaintiff.
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`MR. ANDRE: For plaintiff Finjan, Paul Andre.
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`THE COURT: Okay. Good morning.
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`And for defendant?
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`MS. McGRATH: Good morning, Your Honor. This is Robin
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`McGrath on behalf of SonicWall.
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`MS. SNEDEKER: Alice Snedeker on behalf of SonicWall.
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`THE COURT: Okay. Good morning to you both.
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`Ms. McGrath, your audio is a little bit quiet so I don't
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`know if you can maybe get a little bit closer to the microphone
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`when you speak. That would be helpful.
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`MS. McGRATH: I will do my best.
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`THE COURT: Okay. Thank you.
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`So we are here on two disputes. The first is at
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`Docket 276, and that's a dispute concerning certain of Finjan's
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`requests for admissions and SonicWall's responses to those
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`requests; and second is Document Number 277 concerning
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`SonicWall's identification of its patent portfolio and
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`supplemental initial disclosures served on the last day of
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`discovery.
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`So both of these are styled as sanctions motions and, as
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`you may know, my standing order does not permit the use of a
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`discovery letter brief for sanctions motions. It's supposed to
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`be a regularly noticed motion.
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`This rule is principally for the parties' benefit because
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`often sanctions motions cannot be fairly briefed and dealt with
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`in the abbreviated expedited procedure that I use for discovery
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`disputes. There's not an opportunity for declarations or any
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`of those things.
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`But it appears you-all have agreed to handle these
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`disputes in the discovery letter way, and I am happy to go
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`along with that in this situation in the sense that I think
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`that at least the expedited procedure for discovery disputes
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`can be used to resolve the initial question, which is: Has
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`there been a discovery violation?
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`And so that's how I intend to proceed with this hearing,
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`is just using what you've done so far to address that initial
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`question. And then we can talk about if there's more -- if
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`there's something further that needs to be done, what the most
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`appropriate format is for that because, as I said, I'd like to
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`make sure that it's fair to all parties, and that's the reason
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`that I have that provision in my standing order for sanctions
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`matters.
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`Okay. So I'd like to start with the second matter first,
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`Docket Number 277, which is the dispute about the supplemental
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`initial disclosures, and I'd like to start with a few questions
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`for Finjan.
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`So, first of all, Rule 26(a), as you know, permits a party
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`to describe its documents or to produce them, and those are
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`documents that a party may use in support of the claim or
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`defense. So I understand that the documents that comprise
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`SonicWall's patent portfolio have been produced -- were
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`produced at some point to Finjan, and so I want to understand,
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`first of all, why that production is not sufficient to satisfy
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`Rule 26(a).
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`MR. ANDRE: Well, they were produced along with
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`150,000 other documents, and the reason it doesn't satisfy the
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`rule is because they didn't identify them as any relevance. We
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`asked in an interrogatory response to identify all their bases
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`for their affirmative defenses. They didn't identify those
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`documents. They had to list their prior art. In their
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`election of prior art, they didn't identify any of those
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`documents.
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`And so those documents were produced. As in a lot of
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`these patent cases, Your Honor is quite aware, many times
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`there's a lot of irrelevant documents produced. So we just
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`assumed they were documents they produced and they were not
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`relevant to anything in the case.
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`And then on the very last day of discovery, they seem to
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`put this, you know, placeholder in saying it is relevant to
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`their claims and defenses in their initial disclosures,
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`supplemental initial disclosures.
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`So our concern is: What is the relevance of these
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`documents? We asked the questions through interrogatories,
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`through their selection of prior art not listed, so they kind
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`of sandbagged us here at the last minute.
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`If they were -- if it was sufficient to just produce the
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`documents, why did they supplement on the last day of discovery
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`their initial disclosure? That tells me something is, you
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`know, not quite right here.
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`And, to be candid, we had meet and confers. We said, "Why
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`is this relevant? You know, just tell us why it's relevant."
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`And we probably wouldn't be here today, but they couldn't even
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`tell us why it's relevant.
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`So this seems like a classic sandbag that we are trying to
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`avoid having to do motions in limine in on down the road. If
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`they were relevant to their claims or defenses, they should
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`have told us because we asked about it.
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`THE COURT: Well, so let me ask about this a little
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`bit more. How many patents are there?
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`MR. ANDRE: I don't know the exact number, Your Honor.
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`I'm sorry.
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`THE COURT: Just a guesstimate. Are we talking about
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`50? Are we talking about 200? How many patents are there?
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`MR. ANDRE: I'm guessing less than 100, Your Honor.
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`THE COURT: Okay. And when were they produced? It
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`sounds like, and I will ask the SonicWall folks this question,
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`but it sounds like they were produced maybe not all at once but
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`in some stages.
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`MR. ANDRE: I don't have the breakdown when they were
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`produced, but they had a rolling production of documents and
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`all of them were produced in the relevant time period of
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`discovery. So, you know, they didn't wait to produce them
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`until the last minute.
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`THE COURT: I see. Okay.
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`All right. Now, you mentioned that Finjan served an
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`interrogatory asking for identification of documents relevant
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`to affirmative defenses or asked something about affirmative
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`defenses, but I read SonicWall's portion of the discovery
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`letter and they state that these patents are not relevant to
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`any affirmative defense that they plan to put forward, and they
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`also say that they're not relying on the patents for prior art.
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`So that should give you at least some comfort. They're not
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`using them for that purpose at all.
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`So I'm wondering, are there any other discovery requests,
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`either a document request or an interrogatory, for which you
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`believe these patents should have been either produced or
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`identified or something, something responsive to a discovery
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`request that you served or Finjan served?
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`MR. ANDRE: I think the interrogatory is the most
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`relevant. There were seven affirmative defenses asserted in
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`this case, and presumably that is their defenses to this case.
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`Maybe noninfringement is the only affirmative defense -- or the
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`only defense they didn't assert as an affirmative defense.
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`Patents, as Your Honor is aware, is not a defense to
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`noninfringement. You know, patents don't describe the actual
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`product necessarily.
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`So we asked about all their affirmative defenses. We
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`think that is encompassing of all their claims or defenses that
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`are required by Rule 26, and that's how they identified it in
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`their initial disclosure, these are documents relevant to their
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`claims and defenses.
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`They had no claims. They didn't assert counterclaims in
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`this case, just affirmative defenses. So the only defense
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`that, you know, they pled were invalidity and various other
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`patent exhaustion, licensing, and things of that nature, the
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`seven affirmative defenses that are identified in the
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`interrogatory response and they didn't identify these patents
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`as relevant to those defenses.
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`THE COURT: I think the confusion here might be is
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`that there's a difference between defenses and affirmative
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`defenses on which a party may have the burden of proof.
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`So what I understood, and I can ask SonicWall to confirm
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`this, but what I understood from their papers was they were
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`saying, sure, these might relate to a defense but not an
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`affirmative defense so would not be responsive to your
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`interrogatory. In fact, SonicWall suggests it may -- and this
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`is my reading, perhaps they are more cagey than this --
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`SonicWall suggests it may use its patent portfolio as part of a
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`defense of damages case to say, look, Finjan's damages expert
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`needs to take into account all of the IP that goes into the
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`accused products, some of which is ours, maybe some of which is
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`licensed in -- I don't know, but as part of an apportionment
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`argument that they may feel they need to make if your damages
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`expert doesn't take into account those kinds of things. So
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`that would be a defense to your damages case but not an
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`affirmative defense.
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`So what I'm really trying to get at, is there some other
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`discovery request that Finjan served for which documents -- a
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`patent portfolio being used for the purpose that I just
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`described would have needed to be identified in some way?
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`MR. ANDRE: Your Honor, I don't know of any possible
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`defense that a patent infringement defendant could use their
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`patents as a defense -- or as any kind of defense, whether it
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`be damages or anything, other than prior art or trying to show
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`the state of the art at the time, and that would be under our
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`interrogatories. So I don't have anything additional to the
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`affirmative defenses that they asserted.
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`And probably more problematic is: Why did they wait till
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`the last day?
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`THE COURT: I'm going to get to that --
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`MR. ANDRE: Yeah.
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`THE COURT: -- because I do think that's an important
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`question, and I do intend to pose it to SonicWall as well.
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`But let me just explore a little bit further about what
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`happened. So at some point the SonicWall patents were
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`produced, maybe over time, but you noticed them in the file or
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`in the production. Did Finjan inquire about these patents at
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`any point, either lawyer to lawyer or inquire of a witness?
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`MR. ANDRE: Not that I'm aware of, Your Honor. We
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`view them as irrelevant unless it's being used for prior art or
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`for some other defense. We didn't see it being used that way
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`so we assumed, like, as Your Honor is aware in these patent
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`infringement cases, if we get anywhere from, you know, 200,000
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`documents to sometimes over millions of documents, the vast
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`majority of the documents are not going to be relevant to the
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`case. I mean, that's just the nature of patent litigation,
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`unfortunately.
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`But we saw the patents. We assumed they were going to be
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`used as some type of invalidity defense, to be candid with you,
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`because that's what they're normally there for. We thought it
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`was -- you know, they threw too many at us, but that's not
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`unusual either; you know, kind of bury the documents. When
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`they made their prior art selection, none of those were
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`selected. So we didn't think they were relevant to the case
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`and we didn't pursue them any further than what was required
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`just as we didn't pursue a lot of other irrelevant documents
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`they produced.
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`THE COURT: Okay. Now, you made a remark at the
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`outset that kind of caught my attention because one of the
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`notes I made in preparing for this hearing was that in some
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`respects, Finjan's portion of the discovery letter reads like a
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`motion in limine, and I actually think that in some respect
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`your beef with SonicWall is really more well-suited to a
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`motion in limine if you have one.
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`So, you know, the question of whether these patents or
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`some subset of them may be admissible or may be relied upon by
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`a damages expert, for example, is really more of a question for
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`Judge Freeman than me as a discovery matter. You see, it seems
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`like your issue might be the use that SonicWall may intend to
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`make of these patents.
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`And certainly if in the face of your discovery response to
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`the interrogatory asking for affirmative defenses SonicWall
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`attempted to use these patents in support of an affirmative
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`defense, you would, of course, be within your rights to say,
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`"Oh, but wait a minute. That was not disclosed to us in
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`discovery and that should be excluded."
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`I don't know how Judge Freeman would rule on that kind of
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`issue, but it seems like the kind of argument that you might
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`make to your trial judge or your motion hearing judge as
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`opposed to the discovery magistrate.
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`I don't know whether listing the patent portfolio in
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`supplemental initial disclosures on the last day would be
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`something that would cure any problem of a failure to disclose
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`in response to a discovery request like the one I described
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`but, again, that seems like that would be an issue for whoever
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`is deciding the uses that can be made of those documents. So
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`why isn't this better suited to a motion in limine?
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`MR. ANDRE: And, Your Honor, I've tried several cases
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`in front of Judge Freeman, and I've had instances where this
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`was in -- this is a disclosure issue in discovery. We think it
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`was unduly late without, you know, any cause and it was
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`prejudicial. And I've had Judge Freeman once before kind of
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`reprimand me saying I should have taken that up with the
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`discovery judge.
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`THE COURT: So you're between a rock and a hard place
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`is what you're saying. Okay.
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`MR. ANDRE: I appreciate it is -- if this is -- this
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`motion to strike this particular disclosure under the Rule 26
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`is denied, I would imagine if they try to use these patents, it
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`will be a motion in limine in front of Judge Freeman.
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`I think listing it in the initial disclosure on the last
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`day was just that, it was trying to cure -- to the extent -- I
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`can't imagine how they're going to use these patents, to be
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`candid. I don't think they know either because they couldn't
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`tell us what the relevance is here. But if that's the case,
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`then we can take it up in front of Judge Freeman and I think,
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`you know, that she would be very receptive to this type of late
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`disclosure after the close of discovery essentially, so...
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`THE COURT: Well, let's assume that it's as you -- as
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`I posited based on the remarks in the discovery letter brief,
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`that this is -- that the -- which, frankly, is what I would
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`have assumed, that a party discloses its own patent portfolio
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`because it wants to use that in connection with damages. So
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`that would be my expectation, is that's why they're there. So
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`let's hypothesize that that's why they're there and that's how
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`SonicWall intends to use that information.
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`They've produced the documents to you in advance of the
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`discovery deadline. They didn't identify it in their
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`supplemental initial disclosures because it's not an
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`affirmative -- it's not something that has to be identified
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`because they can simply produce them under Rule 26(a). They
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`don't have to categorize them. It's not an affirmative defense
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`so they haven't failed to identify them in response to an
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`interrogatory. It's not prior art so they haven't failed to
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`identify them in response to that interrogatory.
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`So what exactly is the discovery violation that would be
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`problematic if we assume that SonicWall intends to use these
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`documents in the way I described?
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`MR. ANDRE: Well, I'm -- Your Honor, I'm sorry, I'm
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`looking away from the camera here, but I am looking at the --
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`THE COURT: You're looking for your interrogatories
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`and document requests.
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`MR. ANDRE: Yes. I'm looking at the interrogatories
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`now and just seeing what the -- if we actually did ask the
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`interrogatory on damages because, once again, I've never seen
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`another person's patents be used in a defense for their damages
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`case because I don't think that's relevant, and that
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`obviously --
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`THE COURT: It happens all the time in apportionment.
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`All the time, believe me.
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`MR. ANDRE: Okay. I'll trust you on that one. I've
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`never -- I've not personally --
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`THE COURT: Okay.
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`MR. ANDRE: I've not personally seen it.
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`Anyway, I'm looking at the various interrogatories and
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`there are interrogatories on damages. I don't think those
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`patents were not identified on that.
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`THE COURT: What does the interrogatory say?
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`MR. ANDRE: Let me find it here real quick.
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`(Pause in proceedings.)
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`MR. ANDRE: So Interrogatory Number 19 says (reading):
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`"Assuming Finjan is entitled to award of damages of
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`no less than reasonable royalties, state in detail the
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`Case 5:17-cv-04467-BLF Document 410-1 Filed 03/11/21 Page 15 of 43
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`monetary amount of damages Finjan is entitled for
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`SonicWall's infringement and the complete legal and
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`factual basis for your damages calculation including, but
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`not limited to, the royalty base" -- "the royalty rate,
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`and any apportionment or offset."
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`THE COURT: Wait a minute. Say that again. It's a
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`request from Finjan to SonicWall?
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`MR. ANDRE: It's an interrogatory.
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`THE COURT: Yeah. But it's an interrogatory from
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`Finjan to SonicWall asking about whose damages?
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`MR. ANDRE: If Finjan is entitled to an award of
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`damages. If Finjan gets the damages --
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`THE COURT: Yeah.
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`MR. ANDRE: -- then what is -- what's SonicWall's
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`complete and legal factual basis for their damages calculation.
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`THE COURT: Okay. So their rebuttal damages
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`calculation --
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`MR. ANDRE: Yes.
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`THE COURT: -- to which they responded: See my expert
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`report and this is an improper interrogatory because it asks
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`for this, like, detailed massive narrative; right? Or
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`something like that.
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`MR. ANDRE: Something like that.
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`THE COURT: Okay. All right.
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`MR. ANDRE: Anyway.
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`Case 5:17-cv-04467-BLF Document 410-1 Filed 03/11/21 Page 16 of 43
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`THE COURT: So not totally compelling on that point
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`that would have necessarily required them to identify their
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`patent portfolio in response to that interrogatory.
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`Okay. So let me just say, I did read all of the cases
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`that you cited, and the difficulty with the cases that you're
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`relying on is that those are all about late-disclosed
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`witnesses. And I will acknowledge that the rule treats
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`witnesses differently than documents. The rule requires you to
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`identify your witnesses and the subject matter of their
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`information.
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`And in these cases that you rely on, there was a late
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`disclosure and a finding, at least in some respects, that there
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`hadn't been a sufficient disclosure in other forms of
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`discovery -- interrogatory response or document production or
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`deposition testimony -- and that it was prejudicial to have
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`identified witnesses so late.
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`But I'm not aware -- and I looked briefly -- I'm not aware
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`of any cases where they have your fact pattern where it's a
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`late identification of documents where the documents have
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`already been produced, in a way that's not alleged to be too
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`late, where it wasn't required that they even be identified in
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`the first place.
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`So I'm not aware of any authority that is really like what
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`you're trying to argue here. So my inclination is to find that
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`you haven't actually made out a violation of Rule 26(a) with
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`Case 5:17-cv-04467-BLF Document 410-1 Filed 03/11/21 Page 17 of 43
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`respect to the documents identified, you know, based on my
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`understanding of the thesis here.
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`But, again, you've answered all of my questions. So now
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`I'd like to give you an opportunity to argue anything you think
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`that bears on this matter that we haven't touched on.
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`MR. ANDRE: No, Your Honor. I think you've got the
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`gist of what we're going for here. There's no justification
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`for waiting for the last day. They can't identify any
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`justification, and there is prejudice to the extent they're
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`going to use these in a way that was not disclosed in a timely
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`manner.
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`You know, our papers state that and we think the
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`principles that even if it's witnesses or documents, that they
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`should apply because patent cases are unique, that they -- you
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`know, there are massive amounts of documents produced in these
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`cases; and to try to go through and figure out what one is
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`going to use the documents -- how they're going to use the
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`documents is a -- it's prejudicial to us.
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`Because if we would have seen the initial disclosures and
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`they sent the patent portfolio, we would have issued discovery
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`requests talking about "How are you going to use the patent
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`portfolio?" You know, we'd ask for witnesses. They just
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`produced the documents.
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`And, you know, once again, it would be, I think, a little
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`bit of a crapshoot to try to figure out every irrelevant
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`Case 5:17-cv-04467-BLF Document 410-1 Filed 03/11/21 Page 18 of 43
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`document that's produced by a defendant or even a plaintiff in
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`the case, how they're going to use it and anticipate how
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`they're going to use it if they don't give proper disclosures.
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`So the fact they waited till the last day of discovery is, I
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`think, our best argument.
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`THE COURT: I mean, I agree that it's hard to figure
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`out what to do with all of the documents if you don't know, but
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`I'm struggling to find a rule that compels them to tell you.
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`If you haven't served an interrogatory, you haven't asked the
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`question. I don't see anything in Rule 26 that compels them to
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`affirmatively tell you with respect to documents. So that's
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`the difficulty I'm having.
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`MR. ANDRE: Well, and the problem I'm having,
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`Your Honor, is really it's just the timing of why they
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`supplement initial disclosures on the last day of discovery to
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`add it on.
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`THE COURT: Well, let's find out.
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`MR. ANDRE: Okay.
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`THE COURT: Thank you very much.
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`All right. So who's going to be arguing on behalf of
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`SonicWall?
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`MS. McGRATH: That would be me, Your Honor. Robin
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`McGrath.
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`THE COURT: Okay. And, again, you're a little bit
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`quiet. Just I don't know if this is a problem that you've had
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`Case 5:17-cv-04467-BLF Document 410-1 Filed 03/11/21 Page 19 of 43
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`on any other Zoom matters, but one thing that I've discovered
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`is that if you look at the caret next to the mute button and
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`you make sure that your microphone and speaker are "same as
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`system," that might be helpful.
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`MS. McGRATH: I just moved it. Is that better?
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`THE COURT: That's a little better. It may just be
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`because you're closer so let's go with it. I just want to make
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`sure that our court reporter can actually hear you and
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`transcribe it.
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`MS. McGRATH: Thank you, Your Honor.
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`THE COURT: Okay. So how about that? Why did
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`SonicWall do this supplemental initial disclosure on the last
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`day of the discovery period?
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`MS. McGRATH: And if I'm completely honest with you,
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`Your Honor, since this issue has arisen, I have been asking
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`myself that sort of on a daily basis because, as Your Honor is
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`aware, we could not have identified it but because we produced
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`the patents themselves in a timely manner, we could have used
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`them to support our claims and/or defenses regardless anyway
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`without having identified it. So it seems like our doing so
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`caused a problem where none prior to that existed.
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`That said, I will tell you that the thinking behind doing
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`it is what I'm guessing would be the same thinking that Finjan
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`went through when they supplemented a number of their
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`interrogatories by citing over 170 additional documents on the
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`Case 5:17-cv-04467-BLF Document 410-1 Filed 03/11/21 Page 20 of 43
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`last day of discovery, which is you go through at the end of
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`discovery and you look at everything that has been written and
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`everything that's been disclosed and you sort of belt and
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`suspenders it. And you just make sure that every I is dotted
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`and T is closed -- is crossed while you're within the discovery
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`period, which is why I assume that they too supplemented on the
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`last day by identifying documents for the first time in
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`response to the interrogatories.
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`It would not have dawned on us to question -- as long as
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`those documents had been produced earlier, to question their
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`ability to do so. Now I'm wondering if, you know, what's good
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`for the goose isn't good for the gander; but --
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`THE COURT: No. No. You're done with motions; right?
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`It's past August 7th. This is my last one; right?
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`MS. McGRATH: Well, good. I'm glad to hear that
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`because we had no intention of doing that.
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`THE COURT: Okay.
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`MS. McGRATH: But this idea, and I think Your Honor
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`hit it right on the head, about how, you know, had we never
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`supplemented on the last day, any document that we have
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`produced during the course of discovery in a timely manner,
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`absent a specific request in an interrogatory for how we plan
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`to use the document, we had the right and ability to use that
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`document in connection with a claim or defense. And so I see
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`that Finjan is in no worse or different position than they were
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`Case 5:17-cv-04467-BLF Document 410-1 Filed 03/11/21 Page 21 of 43
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`had we not supplemented on the last day.
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`And I will also note that this idea that they raised in
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`their letter brief about, you know, the ability to ask
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`questions, not only were the patents produced but many of the
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`exhibits that they questioned our technical witnesses on in
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`depth, in detail, on the accused products identified the
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`patents that applied to those accused products and they went
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`into detail about these documents with our witnesses and never
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`asked a single question about whether these products were
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`patented, what the patents applied to. You know, they had the
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`information and didn't ask anything in any deposition or in any
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`interrogatory, and some of those depositions were of the named
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`inventors.
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`So I'm not exactly sure, other than us spelling out on the
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`last day of discovery that we actually do -- we may use the
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`portfolio in connection with a claim or defense, I don't see
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`that they are in any worse or different a portion than had we
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`not done that.
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`THE COURT: Okay. And was the only addition -- or the
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`only supplementation to the initial disclosures that was made
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`on July 31st by SonicWall the addition of the reference to the
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`patent portfolio, or were there other things supplemented as
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`well? Maybe you don't know.
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`MS. McGRATH: I don't believe that was the only one.
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`I believe that there were others. I can think of at least one
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`other, and I'm seeing Ms. Snedeker nod her head so I am getting
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`the distinct impression that we had others as well.
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`THE COURT: And how many patents are there in the
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`portfolio?
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`MS. McGRATH: I believe there are north of 200 and I'm
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`guessing we produced the entirety of the portfolio, but I can't
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`guarantee that we produced every single one.
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`THE COURT: Okay. And you just mentioned now that in
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`discovery there were documents also produced and also used in
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`deposition that described which patents were associated with
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`which accused products? Did I understand you correctly?
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`MS. McGRATH: Yes. Not on a, you know, one-to-one
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`basis but many of our documents that will have a description of
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`a product and then would have sort of like a notice marking at
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`the bottom and identify what patents relate to that product,
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`and there were other documents that refer to our 200-plus
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`patent portfolio. So they had plenty of notice about the
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`existence and their possible application to the accused
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`products.
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`THE COURT: Okay. All right. Thank you.
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`I will give you an opportunity to add anything else to
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`your presentation that you feel bears on this dispute.
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`MS. McGRATH: All right. I really think that the main
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`points were we produced the documents, they had the ability to
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`ask, never bothered to ask with respect to exhibits that they
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`did use; and, you know, the notice on the last day was a sort
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`of no harm, no foul given that they had everything and sort of
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`did the same thing with their own interrogatories.
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`THE COURT: All right. Thank you.
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`Mr. Andre, if there's anything you'd like to respond to,
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`I'll give you a brief opportunity to do that.
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`MR. ANDRE: No, Your Honor. I think Ms. McGrath kind
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`of signaled how they're going to try to use these patents in
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`her argument there, that their products are covered by their
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`own patents so, therefore, they can't infringe our patents, and
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`I think that's -- that's not your issue.
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`THE COURT: I doubt if she's going to do that.
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`MR. ANDRE: I know it's not your issue.