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`EXHIBIT 3
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`EXHIBIT 3
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`UNITED STATES DISTRICT COURT
`FOR THE DISTRICT OF DELAWARE
`
`CA NO. 13-2058,
`13-2061,13-2062,
`13-2063,13-2064,
`13-2065,13-2066,
`13-2067, 13-2068,
`13-2069-RGA
`August 6, 2014
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`2:08 o'clock p.m.
`
`: : : : : : : : : :
`
`DRAGON INTELLECTUAL PROPERTY
`LLC,
`
`Plaintiff,
`
`v.
`
`APPLE INC., et al.,
`
`Defendants,
`.............................
`
`TRANSCRIPT OF DISCOVERY DISPUTE
`BEFORE THE HONORABLE RICHARD G. ANDREWS
`UNITED STATES DISTRICT JUDGE
`
`APPEARANCES:
`
`For Plaintiff:
`
`BAYARD, P.A.
`BY: STEPHEN B. BRAUERMAN, ESQ
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`-and-
`FREITAS ANGELL & WEINBERG
`BY: JASON S. ANGELL, ESQ
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`MORRIS, NICHOLS, ARSHT & TUNNELL
`BY: JACK B. BLUMENFELD, ESQ
`-and-
`WINSTON & STRAWN
`BY: ALEXANDRA MCTAGUE, ESQ
`For Defendants Cox, Comcast, Charter,
`Time Warner & Verizon
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`MORRIS, NICHOLS, ARSHT & TUNNELL
`BY: JACK B. BLUMENFELD, ESQ
`-and-
`BAKER BOTTS LLP
`BY: KEVIN CADWELL, ESQ
`For Defendant AT&T
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`RICHARDS, LAYTON & FINGER
`BY: KELLY E. FARNAN, ESQ.
`-and-
`WINSTON & STRAWN
`BY: ALEXANDRA MCTAGUE, ESQ
`For Defendant Time Warner Cable
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`For Defendants:
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`ASHBY & GEDDES
`BY: STEVEN J. BALICK, ESQ
`-and-
`AKIN GUMP STRAUSS HAUER & FELD
`BY: JOHN WITTENZELLNER, ESQ
`For Defendant DirectTV
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`MORRIS, NICHOLS, ARSHT & TUNNELL
`BY: ETHAN M. TOWNSEND, ESQ
`For Dish Network
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`POTTER, ANDERSON & CORROON
`BY: PHILIP A. ROVNER, ESQ
`For Defendant Sirius XM
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`POTTER, ANDERSON & CORROON
`BY: RICHARD L. HORWITZ, ESQ
`For Defendant Apple
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`Court Reporter:
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`LEONARD A. DIBBS
`Official Court Reporter
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`P R O C E E D I N G S.
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`(The proceedings occurred at 2:08 o'clock p.m. as
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`follows:)
`
`THE COURT: Good afternoon. Please be seated.
`These are Protective Order disputes relating to Dragon
`Intellectual Property, LLC vs. Apple, No. 13-2058 plus about
`nine more cases.
`I guess we ought to have on the record who's here.
`Mr. Brauerman.
`MR. BRAUERMAN: Good afternoon, your Honor.
`Steve Brauerman from Bayard. I'm joined by my
`co-counsel Jason Angell from Freitas Angell & Weinberg.
`With your Honor's permission, Mr. Angell will address
`the issues.
`THE COURT: Good afternoon.
`MR. ANGELL: Good afternoon.
`THE COURT: I'm interested in the defendants, most of
`whom I recognize, just identify themselves and who they
`represent.
`MR. ROVNER: Your Honor, Philip Rovner from Potter
`Anderson on behalf of Sirius XM.
`MR. TOWNSEND: Ethan Townsend from Morris Nichols on
`behalf of Dish.
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`MR. CADWELL: Kevin Cadwell of Baker Botts on behalf of
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`AT&T.
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`MR. BALICK: Steven Balick for Direct TV, your Honor,
`and I'm joined by John Witttenzeller from Akin Gump.
`MS. FARNAN: Kelly Farnan on behalf of Time Warner
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`Cable.
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`MR. HORWITZ: Rich Horwitz on behalf of Apple.
`MS. McTAGUE: Alexandra McTague from Winston & Strawn
`on behalf of Cox, Comcast, Charter, Verizon and Time Warner
`Cable.
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`MR. BLUMENFELD: Jack Blumenfeld from Morris Nichols on
`behalf of those five companies plus AT&T.
`THE COURT: All right.
`So, I read the two letters that were submitted, and I
`have to say, maybe it's because it came in second, but Dragon's
`letter seemed pretty reasonable.
`So I at least start off being inclined to do everything
`every that is in Mr. Brauerman's letter, but maybe there's
`something else I should be considering.
`Who's speaking on behalf of the plaintiffs?
`MR. BLUMENFELD: Your Honor, we're splitting things up,
`but I think we've eliminated, at least for today, a couple
`issues.
`
`THE COURT: All right.
`MR. BLUMENFELD: One having to do with the expert
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`territorial --
`THE COURT: I saw Dragon saying they thought that could
`be resolved.
`MR. BLUMENFELD: Right. And we also -- Mr. Angell and
`I discussed the redacted expert reports.
`THE COURT: Okay.
`MR. BLUMENFELD: And subject to your Honor's approval,
`what we would like to do, is see whether we can resolve those
`two issues in the next week or two, and if we can't -- I think
`we'll be able to -- but if we can't, just send your Honor a
`letter no more argument, just a letter on those two small
`issues.
`
`THE COURT: All right. That's good.
`MR. BLUMENFELD: Other than that, I think Mr. Horwitz
`is going to do the prosecution bar, and Ms. McTague is going to
`do the attorney's eyes only issue. I think those are probably
`the only two issues that are left, unless I'm missing something.
`THE COURT: Well, the last thing that is in Mr.
`Brauerman's letter where he says, I will accept your proposed
`language in the proposed or the proposed Protective Order, I
`guess that resolve that issue, correct?
`MR. BLUMENFELD: Yes.
`THE COURT: All right.
`Not bad. Three done in six minutes.
`Mr. Horwitz.
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`MR. HORWITZ: Thank you, your Honor. I think it's
`important to note that what we have agreement on to start out.
`We have agreement that there should be a prosecution
`bar. We have agreement that that prosecution bar should include
`an acquisition bar, and that that's something that is disputed.
`THE COURT: I'm sorry. That's not a term that I
`actually recognize.
`What do you mean "acquisition bar"?
`MR. HORWITZ: An acquisition bar is that -- subject to
`the same kind of strict constraints. People can't -- people
`can't work on acquiring patents that relate to the same
`technology.
`And your Honor will note that in both of our proposals,
`there's language that includes the acquisition bar concept, and
`that's in -- in 60 for both parties.
`THE COURT: That's in dispute, right?
`MR. HORWITZ: No, that's not in dispute.
`THE COURT: Okay.
`MR. HORWITZ: But it's important, your Honor, because
`that goes to the financial information that they want to exempt
`out of coverage for the bar.
`And after we got their letter last night, your Honor, I
`was -- I was told by one of the other defendants that -- here's
`a perfect example -- there's an 8K that was filed earlier this
`year where Dragon purchased 40 patents, and a couple of patent
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`applications for a couple million dollars, so they are actively
`in the market for more IP to sue people on.
`And it's -- it's important for the defendants to not
`have the people who know whether it's a technical information,
`or the financial information, about which products, you know,
`how we're doing, and where we're going, and -- and what we
`project. The kind of information that would be confidential,
`that would be financial information.
`They shouldn't have that in their hands if those same
`people are going to be working on potential acquisitions. It's
`the same -- it's the same issue.
`And here's the not hypothetical, because they're
`already out in the market doing it. They've done it this year.
`That's that issue.
`THE COURT: And the point there is, because there is
`this dispute about whether non-technical information should be
`covered or not, because it couldn't effect re-exams, I think,
`and, so, what you're saying is that it -- you may or may not be
`conceding the point there -- but you're saying your main point
`is it effects acquisition, because if they knew that Apple was
`making a lot of money from iPhones, they might try to get
`patents so they could sue iPhones?
`MR. HORWITZ: Exactly, or other things that --
`projections about what is going to happen with certain products
`in the future.
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`That's -- that's precisely the point, your Honor.
`I mean --
`THE COURT: And --
`MR. HORWITZ: -- what else would somebody who is going
`to be acquiring patents be -- be more interested in than -- than
`they're acquiring those patents to -- to sue people? What are
`the financial projections and -- and financial records that
`covers the exact products that they're trying to buy patents to
`sue about?
`THE COURT: Okay. I understand your point.
`MR. HORWITZ: That's the first point.
`The second point, your Honor, is what I'll call the
`receive/review --
`THE COURT: Right.
`MR. HORWITZ: -- point, and this one really is about
`the leasing.
`You know, in all of the cases that talk about
`prosecution bars, it's important not just because somebody is
`going to do something, but inadvertent use, and there is really
`know way to police it if it's -- if it's waiting in the second
`step in the process.
`They present a hypothetical situation where we could,
`in fact, put them in a bad position by sending something to the
`wrong person, then they received it, oh, no, now they can't be
`involved in any prosecution activities, and there is a very
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`simple answer to that.
`In many cases, where there are these large groups,
`counsel for various parties provide the other counsel with a
`group e-mail address, Dragonip@freitus whatever. That takes
`care of it. That's where we send things.
`So they have control over who gets things. Those
`people would never receive them. And that gives us the
`protection that we want that nothing slips through.
`So that's as simple as that on that point.
`THE COURT: Okay. I understand your point.
`MR. HORWITZ: Your Honor, the third point is, the scope
`of the prosecution bar, where they want to have a carve-out for
`-- although their language is broader in the actual Protective
`Order, they say the IPR carve-out, and they say things that
`don't have to do with claim amendments, but in all of those PTO
`processes that are listed, re-exam, IPR, reissue, the same
`danger is there.
`Even in an IPR, they have the right to amend their
`
`claims.
`
`THE COURT: Well, I mean that was one of the things
`that I was wondering about when reading it was, it seemed to be
`-- I wasn't sure maybe how exactly that would work in practice.
`In other words, if they said, okay, we promise that we
`will not seek any amendments on these patents that are in this
`suit, would that resolve the issue?
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`MR. HORWITZ: I need to confer with the -- with the
`group to see if that would solve it for people. I'm not sure
`that they're willing to do that.
`THE COURT: Well, no, and I kind of imagine -- I didn't
`really read them as saying -- that was the reason why I said I
`was wondering how it worked in practice, because I didn't
`actually read them the same that we promised we won't seek
`amendments -- and, so, that's the reason why I could understand,
`as a theoretical matter, okay, well, if they're not seeking
`amendments then it doesn't really matter, but how -- when are
`they going to determine whether they're seeking amendments or
`not?
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`And, so, I just thought that -- so that was what I was
`wondering about.
`MR. HORWITZ: I think that's a critical point, unless
`-- unless they're willing to commit to that right now, I think
`that we should be where these prosecution bars typically are,
`which is all of the various areas; reissues, inter partes, ex
`partes, all those are part of the -- of the prosecution bar.
`And I know that they attached and cited a few orders
`where some kind of a limitation was included. My understanding
`is --
`
`THE COURT: Right. You know, I don't even pay
`attention to that, because -- just because something is said in
`the order, you never know how you got -- it's just like sausage,
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`you don't know how you got there.
`MR. HORWITZ: I just looked and the docket sheets and
`there was no dispute in the two Delaware cases, so --
`THE COURT: Yes, and whenever I see orders citing even
`my own, I don't pay them any attention, in this context,
`otherwise --
`MR. HORWITZ: Understood.
`And I think, frankly, that's why you don't see so many
`cited in these -- in these disputes, because you could find one
`thing in an order that you are advocating for and another thing
`--
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`THE COURT: Oh, yes, I'm sure I've signed Protective
`Orders that have diametrically opposite positions just because
`of what the parts were interested in.
`MR. HORWITZ: So that's all I have up front until
`plaintiffs responds.
`THE COURT: Okay. All right.
`So let me just --
`MR. HORWITZ: Your Honor, one other thing.
`THE COURT: Wait. Hold on a second, Mr. Horwitz.
`MR. HORWITZ: Okay.
`THE COURT: I want to make sure that I have the three
`issues, because I did understand, as you were saying them, but
`then I tend to forget.
`The first one is the question of financial information,
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`the second one is received versus reviewed, and the third one is
`the scope, meaning re-exam proceedings, right?
`MR. HORWITZ: Yes.
`THE COURT: And what's the additional point that you
`wanted to make?
`MR. HORWITZ: The last point, your Honor, is that we
`just discovered today, because it appeared on one of these
`services, that an IPR actually was filed.
`THE COURT: Yes, I meant to ask you whether this was
`hypothetical at this point or not.
`So, and, when somebody files an IPR, is it known who
`filed the IPR?
`MR. HORWITZ: Yes, it's a -- it's an entity that's not
`a party in this case. I have it here. Unified Patents, Inc.,
`is the name of it.
`THE COURT: That sounds like -- is that the re-exam
`equivalent of an RPX or something?
`MR. HORWITZ: I think it's broadly you could -- you
`could say that it might be in the same --
`THE COURT: So probably all of you filed this, you just
`don't know it.
`MR. HORWITZ: I think that's an overstatement.
`THE COURT: Okay. All right.
`Okay. All right.
`So Mr. Angell.
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`MR. ANGELL: Thank you, your Honor.
`So taking the three issues in order, the case law that
`both the defendants and that we cited makes clear that it's
`important to identify what information is subject to the
`prosecution bar.
`The point that Mr. Horwitz made about the financial
`information, and it being relevant to acquisition, I'm a little
`bit at a disadvantage, because we didn't hear this at all in our
`-- in our meet-and-confer discussions.
`But my initial impression about -- and we did raise the
`financial information and --
`THE COURT: Well, no, and I -- I didn't see it in what
`was written to me either, but that's part of the reason why we
`have these things as sometimes the three pages, or sometimes the
`focus is not exactly -- it sharpens things to talk about them,
`so, go ahead.
`MR. ANGELL: Sure.
`So we have been talking throughout our discussions with
`the defendants about a prosecution bar, and all of the
`discussion had focused on prosecution activity.
`But Mr. Horwitz is now talking about some financial and
`acquisition issues, so we're happy to talk about those, because
`we do want to address their legitimate concerns.
`Our point with the prosecution bar, in the first
`instance, is that we need to carve out information that's going
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`to be subject to the prosecution bar. And the reason that we
`suggested the financial information was out was because we
`didn't think that that would have anything to do with
`prosecution.
`I don't understand Mr. Horwitz to be saying that it
`does. I think he believes that that is information that might
`be relevant down the road to patent acquisition.
`THE COURT: Yes, or apparently down the road tomorrow.
`Well, or whenever you actually get such information, but, yes.
`So you're right, because or I mean, when I was reading
`it, I was thinking about it in terms of prosecution activity,
`which is, as I said when I started, I thought you made a pretty
`cogent point on that topic, so now we're talking about -- and
`since Mr. Horwitz didn't mention the financial in connection
`with that, I'm assuming maybe he, at least concedes some cogency
`to your point there.
`But, so, now, we have this point and what do you think
`about that?
`MR. ANGELL: So I haven't had a lot of time to think
`about it at all of about five minutes, but my initial impression
`is, if that's a serious concern for them, then we could set
`something up that is similar to like what we proposed for the
`technical information, which is, that there would be certain
`information that specifically identified as financial
`information, or financial bar, or whatever Mr. Horwitz thinks is
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`appropriate, and then that information could be designated as
`such by the defendants.
`They could select which information they believe should
`be subject to that bar, and then we would know, okay, this
`information is subject to this bar that Mr. Horwitz is
`discussing. And, so, anyone who receives that would not be able
`to do the activities that Mr. Horwitz expressed his concern
`about.
`
`So what we're suggesting is that --
`THE COURT: I'd say that sounds to me like there's an
`agreement here.
`MR. HORWITZ: Your Honor, the -- the only disagreement,
`from the defendants' perspective, relates to creating all of
`these separate buckets with separate designations, which it's
`not an issue for them, because they don't have many documents.
`But for the defendants around this table, to have to go
`back and, you know, as of now, things are confidential
`information and they're highly confidential information.
`THE COURT: But you still have to have somebody
`classify these three categories, right?
`I mean right now, with attorney's eyes only, highly
`confidential, and confidential, somebody has to decide which is
`which, right?
`MR. HORWITZ: Right, and -- and some of that work is
`already underway, I think, and this is -- this was a concern
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`that was expressed. I'm not involved in the document production
`machine of this -- of this case, and some of the defendants
`expressed the concern that it was adding an extra administrative
`layer and a lot more expense --
`THE COURT: Well --
`MR. HORWITZ: -- for not a real benefit.
`THE COURT: -- you know, it seems to me like it's your
`burden here, and, you know, I think I'm supposed to sort of
`narrowly tailor these things, so that I don't unnecessarily
`impinge on the activities of Dragon or its counsel.
`And, so, it strikes me that, in fact -- when I say, "in
`fact," that may be overstating it -- but it strikes me that the
`sort of financial information that you are talking about, that's
`going to come from a limited set of custodians. And while there
`may be some extra stamping involved, or something else, it
`strikes me as actually -- I find it hard to believe that it's a
`big cost.
`
`Is there something wrong with that thinking?
`MR. HORWITZ: I know -- I know there were others in
`various e-mails exchanges and things -- and I'm not sure they're
`even in the room -- who -- who raised this as a practical
`concern in addition to the substantive concern.
`I -- I can't speak to it myself. I don't know if
`anybody else in the room has any information to add on it.
`THE COURT: All right.
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`I'm inclined to say that I think Mr. Angell has -- this
`is a reasonable proposal, because I think financial information
`-- it's not as though it's just interspersed through a million
`different documents. It's going to come from a -- I think it's
`going to be easier to come up with something administratively to
`take care of this.
`And, in fact, I mean at least the sense I get from
`discovery disputes in other cases, it's usually the amount of
`financial information that is produced is pretty small anyhow.
`I mean they're not interested in getting, you know, every
`invoice in the history of Apple.
`They want to know what are your projections for this
`piece of equipment, or that piece of equipment, and it's a few
`documents.
`I'm going to rule in Dragon's favor on that.
`So what about received and reviewed? What's wrong with
`the very -- you know, whoever speaks last, seems the most
`reasonable? What's wrong with what Mr. Horwitz suggested about?
`They send it to one -- that you work out what
`apparently what usually happens.
`MR. ANGELL: I think that's a fine suggestion.
`If I understand it correctly, what he's suggesting is
`that we set up a e-mail address, if I understand you correctly,
`that would -- to which they could send discovery materials, and
`that there would be a certain number of recipients on that
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`e-mail alias, and in that way, the information could be
`protected.
`If that's the proposal, I think that sounds good. I
`was going to propose that myself, so I think --
`THE COURT: It seems like you could have one more
`meet-and-confer.
`All right.
`I think that's resolved. What about scope?
`MR. ANGELL: So, scope.
`Mr. Horwitz is correct that your our letter focused on
`IPR activity, because I think that that's the most likely
`activity in these -- in the post-grant world. That's the most
`likely one --
`THE COURT: Well --
`MR. ANGELL: -- so we did focus our comments on that.
`THE COURT: -- right. So, you know, as goes IPR, so
`will go the rest, so --
`MR. ANGELL: Yes, absolutely, and I'm happy to address
`
`the rest.
`
`THE COURT: So, what about this issue when amendment
`which you mentioned in your letter? I take it you're not
`agreeing -- well, are you agreeing not to seek an amendment --
`any kinds of amendments to these claims?
`MR. ANGELL: So Mr. Horwitz's comments about the IPR
`being filed today, that's news to me.
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`We are not in control of whether a request for an IPR
`gets filed, which is apparently what happened today, so the PTO
`receives the request, and then decides whether or not to
`institute the proceedings.
`THE COURT: Right. I mean when you get to the question
`of amendments, that's months, if not years down the road, but at
`least months, and, so, you know, that's not a decision that you
`have to -- so it may never come to pass, but it might.
`MR. ANGELL: Correct, it might. And we're not in a
`position today to say that we're not going to seek amendment
`when we don't know what the arguments are that would be
`presented.
`THE COURT: Well, so, how, as a practical matter, given
`what you said, which, you know, is a reasonable thing to say,
`how do you imagine this theoretical thing that you described in
`your letter actually working?
`MR. ANGELL: So I think it fits hand in glove with Mr.
`Horwitz's proposal for the e-mail alias.
`So, what we propose, we propose a scheme by which
`people who are going to be involved in amendment activity, would
`not view information that is subject to the -- the prosecution
`bar. So, anyone who views prosecution bar material, would not
`participate in amendment activity.
`However, there is whole another category of activity
`that goes in the IPR --
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`THE COURT: Sure, just the litigation on the merits?
`MR. ANGELL: Exactly. And, so, there is no reason that
`protected information has any relevance to that, to that part of
`the IPR, to just responding to invalidity arguments, which is
`the same process that occurs in District Court cases.
`THE COURT: So, let's say you're part of the team
`that's not doing amendment activity, how -- and, so, you get
`into IPR proceedings, and for some reason or other, there is a
`problem with some of your claims, how do you -- how does it get
`handed off to the amendment activity people, or are they -- I
`guess actually the amendment activity, because they're not
`involved with you, or the way that it would happen is, they
`wouldn't get some of the stuff you had, because you're
`litigating it on the merits, and, so it would be maybe hard for
`them to be too actively involved, because they wouldn't be
`getting this stuff and you can't -- you know, creating this
`division within your firm, or your group, or whatever, just
`explain to me how that would work, so we don't have this
`inadvertent disclosure.
`MR. ANGELL: The way that you described it, your Honor,
`is exactly what we have in mind.
`So people who are going to be litigating the invalidity
`issues, the garden variety invalidity issues, would not be
`barred from doing that, because they had access to confidential
`information.
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`For people who are involved in claim amendment
`activity, they would not be able to have access to highly
`confidential material, or stated differently, if anyone has
`access to highly confidential information, they would not be
`able to participate in claim amendment activity.
`We did -- I'm cognizant of your Honor's comments about
`the weight your Honor puts on stipulated orders -- we did submit
`some examples of how this is worked in practice, and it's
`obviously a correct point that many of these orders are
`stipulated, and we think that's an important point, because this
`distinction between claim amendment activity and non-claim
`amendment activity is something that the parties have been able
`to work it out in many cases.
`And, so, what results is an order like the ones that we
`sent, so this is actually the --
`THE COURT: These are the two from outside the
`
`district?
`
`MR. ANGELL: Yes, those are the two from outside the
`district. And, I believe, your Honor's order also contains
`these distinctions.
`THE COURT: I don't actually read them.
`MR. ANGELL: But the point is that the parties agreed
`to this, and this is the first time that we've not been able to
`reach agreement with the other parties, and we haven't -- it
`hasn't been explained to us that why what we're suggesting is
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`not appropriate.
`THE COURT: All right.
`Mr. Horwitz, do you have any response?
`MR. HORWITZ: Yes, I do, your Honor.
`It's not simple as just the claim amendment point, and
`there are probably, for every two or four that have that
`language, there are probably twenty that we could find that
`don't.
`
`But, also, in just what counsel was referring as the
`garden variety, run-of-the-mill kind of IPR where you are
`dealing with invalidity issues, you still need to deal with
`claim construction issues.
`And people always want the other side's documents
`before they go through that process in District Court, and
`that's why they want to have them for any IPR as well, because
`knowing confidential information about our products can also
`frame the way they argue claim constructions that will apply in
`an IPR. The same danger is there.
`And one other practical point, your Honor.
`I don't know how many lawyers are -- are in their firm
`now, but my understanding is, it's a very small firm, and I
`think the -- the risk of inadvertent discussions -- again, I'm
`not suggesting anybody is going to do anything wrong -- but in a
`small, close environment with -- I don't know -- five or six
`lawyers, and maybe there are more at this point, that's --
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`that's just a practical certain on top of the substantive
`concern.
`
`THE COURT: Mr. Angell?
`MR. ANGELL: To Mr. Horwitz's first point.
`The confidential information that gets exchanged in
`litigation every day is -- under Mr. Horwitz's model is --
`that's the process in District Court. Information is produced
`and the parties argue about invalidity, and claim construction,
`and all of the issues that are attendant to a District Court
`action.
`
`So we're just suggesting that for a portion of the IPR,
`that is similar to a District Court action in substance, that
`there be no restriction on the activity of the lawyers.
`We do recognize the -- the need and concern about the
`prosecution related activity, and we acknowledge that, and we're
`-- we're agreeing to go with that.
`So, it's -- there's no restriction in a District Court
`case from anyone who receives highly confidential information
`from participating in claim construction, or invalidity
`disputes. There is no restrictions at all and we don't think
`there should be in an IPR.
`THE COURT: Yes. The only difference is, when you'r