`
`1
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`UNITED STATES DISTRICT COURT
`EASTERN DISTRICT OF MICHIGAN
`SOUTHERN DIVISION
`EVERLIGHT ELECTRONICS CO.,
`LTD, and EMCORE CORPORATION,
`Plaintiffs,
`
`No. 12-cv-11758
`
`v
`
`NICHIA CORPORATION, and
`NICHIA AMERICA CORPORATION,
`Defendants.
`_________________________/
`
`JURY TRIAL - VOLUME X of XII
`PROCEEDINGS BEFORE THE HONORABLE GERSHWIN A. DRAIN
`UNITED STATES DISTRICT JUDGE
`Theodore Levin United States Courthouse
`231 West Lafayette Boulevard
`Detroit, Michigan
`Monday, April 20, 2015
`
`APPEARANCES:
`
`For the Plaintiffs:
`
`MR. A. MICHAEL PALIZZI
`MR. MICHAEL C. SIMONI
`Miller, Canfield, Paddock and
`Stone, PLC
`150 W. Jefferson Avenue, Suite 2500
`Detroit, Michigan
`48226
`(313) 486-7645
`MR. RAYMOND N. NIMROD
`MR. MATTHEW A. TRAUPMAN
`MS. ANASTASIA M. FERNANDS
`Quinn Emanuel Urquhart & Sullivan,
`LLP
`51 Madison Avenue, 29th Floor
`New York, New York 10010
`(212) 849-7412
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`Case 4:12-cv-11758-GAD-MKM ECF No. 534, PageID.44213 Filed 05/22/15 Page 2 of 110
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`2
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`APPEARANCES:
`For the Defendants:
`
`MR. STEVEN J. RIZZI
`MR. RAMY E. HANNA
`MR. RYAN SCHMID
`Foley and Lardner, LLP
`90 Park Avenue, 37th Floor
`New York, New York 10016
`(212) 682-7474
`MS. LISA S. MANKOFSKY
`Foley & Lardner, LLP
`3000 K Street N. W,
`Washington, DC
`20007
`(202) 672-5300
`MR. JOHN R. TRENTACOSTA
`Foley & Lardner
`500 Woodward Avenue
`Detroit, Michigan
`(313) 234-2800
`
`48226
`
`Suite 600
`
`Reported by:
`
`Merilyn J. Jones, RPR, CSR
`Official Federal Court Reporter
`merilyn_jones@mied.uscourts.gov
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`Case 4:12-cv-11758-GAD-MKM ECF No. 534, PageID.44214 Filed 05/22/15 Page 3 of 110
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`3
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`TABLE OF CONTENTS
`
`WITNESSES:
`None
`
`PLAINTIFF
`
`DEFENDANT
`WITNESSES:
`JOHN JAROSZ
`Direct examination by Ms. Mankofsky (cont.)
`Cross-examination by Ms. Fernands
`Redirect examination by Ms. Mankofsky
`BERND KAMMERER
`Cross-examination by Mr. Hanna
`Cross-examination by Mr. Palizzi
`Recross-examination by Mr. Hanna
`
`Identified
`
`OTHER MATERIAL IN TRANSCRIPT:
`Jury Instructions
`EXHIBITS:
`DX D121
`DX D834 through 838
`DX D684 through 693
`DX D83
`DX D799
`DX D1095
`DX D617
`DX D111
`DX Exhibit sheet with multiple exhibits not
`Placed on the record
`DX D372
`
`PAGE
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`Case 4:12-cv-11758-GAD-MKM ECF No. 534, PageID.44215 Filed 05/22/15 Page 4 of 110
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`4
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`Detroit, Michigan
`Monday, April 20, 2015 - 8:28 a.m.
`THE CLERK:
`All rise.
`The United States District
`Court for the Eastern District of Michigan is now in session,
`Honorable Gershwin A. Drain presiding.
`Calling Civil Action Everlight Electronics Company
`verus Nichia Corporation, Number 12-11758.
`You may be seated.
`Please put your appearance on the record.
`MR. NIMROD:
`Good morning, your Honor.
`THE COURT:
`Good morning.
`MR. NIMROD:
`Ray Nimrod from Quinn Emanuel on
`behalf of Everlight.
`With me is Matt Traupman and Anastasia
`Fernands from my firm; Mike Palizzi and Mike Simoni from Miller
`Canfield; and our corporate representative Bernd Kammerer is
`with us today.
`Thank you.
`All right.
`Okay.
`THE COURT:
`Good morning, your Honor.
`Steven
`MR. RIZZI:
`Rizzi of Foley & Lardner on behalf of Nichia.
`With me is Ramy
`Hanna, Lisa Mankofsky, Ryan Schmid and Debra Lange, also of
`Foley & Lardner, and our corporate representative, Dr. Dan
`Doxsee.
`
`THE COURT:
`with the testimony?
`MR. RIZZI:
`
`All right.
`
`Are we ready to continue
`
`I believe so, your Honor.
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`Case 4:12-cv-11758-GAD-MKM ECF No. 534, PageID.44216 Filed 05/22/15 Page 5 of 110
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`5
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`And there's a few instruction
`Okay.
`THE COURT:
`issues that need to be resolved, the claim chart has got to
`eventually be resolved, and I think both sides want to put some
`exhibits on the record.
`We can all do that after -- how much
`more evidence and testimony do you have, Mr. Rizzi?
`Or I
`should say, Ms. Mankofsky first.
`MR. RIZZI:
`Probably only about a half an hour,
`
`your Honor.
`
`Okay.
`
`And let's see, Mr. Nimrod,
`
`I think that's it.
`Okay.
`Good enough.
`
`Good enough.
`
`THE COURT:
`what about --
`I think we have probably about a half
`MR. NIMROD:
`an hour of cross for those witnesses and that would be it.
`THE COURT:
`Okay.
`So maybe about an hour's worth
`of testimony?
`MR. NIMROD:
`THE COURT:
`Then we will continue.
`Let's bring the jury in.
`MS. MANKOFSKY:
`Do you want Mr. Jarosz to go back
`to the witness stand?
`You can, yes.
`THE COURT:
`All rise for the jury.
`THE CLERK:
`(At 8:31 a.m. jury present)
`THE COURT:
`All right.
`You can be seated.
`All right.
`Good morning, ladies and gentlemen.
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`Case 4:12-cv-11758-GAD-MKM ECF No. 534, PageID.44217 Filed 05/22/15 Page 6 of 110
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`6
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`Good morning.
`JURORS:
`I hope all
`THE COURT:
`I think we're ready to go.
`The Tigers
`of you had a good weekend.
`The weather was great.
`did well.
`They have the best record in Major League Baseball
`right now.
`Some of you may or may not be interested or
`concerned about that, but I'm a little bit of a fan.
`Let's continue.
`And so, Ms. Mankofsky, you may
`continue with your examination.
`MS. MANKOFSKY:
`Thank you, very much.
`Good morning.
`JURORS:
`Good morning.
`MS. MANKOFSKY:
`Good morning to you, your Honor.
`Good morning, Mr. Jarosz.
`THE WITNESS:
`Good morning.
`J O H N
`J A R O S Z,
`called by the Defendant at 8:32 a.m., previously sworn by the
`Clerk, testified as follows:
`DIRECT EXAMINATION (Continued)
`BY MS. MANKOFSKY:
`Q.
`So just to remind us where we were on Friday when we
`broke, I think we've learned that you're an economist?
`A.
`I am.
`Q.
`And you mentioned that you have formed some opinions on
`the commercial success, and would you remind us what those are?
`A.
`The products that use the patents here in suit have been
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`Case 4:12-cv-11758-GAD-MKM ECF No. 534, PageID.44218 Filed 05/22/15 Page 7 of 110
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`7
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`a marketplace success, and an important reason for that
`marketplace success has been the patents.
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`And again, do these Nichia white LEDs include the
`Q.
`controlled particle size distribution?
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`Case 4:12-cv-11758-GAD-MKM ECF No. 534, PageID.44219 Filed 05/22/15 Page 8 of 110
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`8
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`Yes, that's my understanding.
`A.
`And could you remind us why the period starts at 1998?
`Q.
`That was the first full year of shipment and sales
`A.
`activity.
`Q.
`And 2012, why was that chosen?
`A.
`That's the last year for which I had a complete set of
`data.
`I had some data for 2013, but they didn't run all the
`way through the year, so I decided just to report the years
`that are full years for this slide.
`Q.
`Okay.
`Are you familiar with the phrase, compound annual
`growth rate?
`A.
`Yes, I am.
`Q.
`What is that?
`A.
`In essence, it's a way to measure activity from one period
`to the next.
`When we're talking about compound annual, we're
`talking about what's the rate from one year to the next year
`over a period of years.
`Q.
`Is that sometimes referred to as growth rate?
`A.
`Yes, it is.
`Q.
`Okay.
`That's what I'll use for here.
`Have you calculated the growth rate for the sales
`of Nichia's white LEDs that are made from the InGaN LED and
`YAG-based phosphor and have the controlled particle size
`distribution?
`A.
`Yes, I have.
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`Case 4:12-cv-11758-GAD-MKM ECF No. 534, PageID.44220 Filed 05/22/15 Page 9 of 110
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`9
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`And what did you find for U.S. sales?
`Q.
`For the U.S. activity, the growth rate per year was about
`A.
`36 percent.
`Q.
`And what was the growth rate for worldwide sales?
`A.
`Per year, it was about 42 percent from 1998 onward.
`Q.
`And how would you characterize the size of those growth
`rates?
`Those are quite healthy growth
`A.
`They're substantial.
`rates.
`Very few products grow at that kind of rate.
`To give you an example, the inflation rate grows
`roughly -- it's even less than three percent a year here in the
`United States.
`The growth of these sales have been ten times
`the growth.
`So it's quite substantial.
`Q.
`And what do those sales numbers indicate?
`A.
`They indicate that the products that incorporate these
`patents have been very successful in the marketplace.
`Q.
`Let's turn now to licenses.
`And in this case there's
`been testimony about licenses from six companies:
`Citizen
`Electronics, OSRAM, Toyoda Gosei, Philips, Cree, and Seoul
`Semiconductor.
`Are you aware of those?
`A.
`Yes.
`Those are among the parties that have entered a
`license with Nichia.
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`Case 4:12-cv-11758-GAD-MKM ECF No. 534, PageID.44223 Filed 05/22/15 Page 12 of 110
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`12
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`Q.
`Let's move on to another topic.
`slide four?
`
`And would you bring up
`
`What is this?
`This is a summary of some of the representations that
`A.
`Nichia has made about its patented technology.
`I have a couple
`samples from two different sources.
`Q.
`The one on the top, what is that?
`A.
`That is an advertisement that Nichia put in a publication
`called LEDs Magazine.
`It published this advertisement in March
`of 2007.
`I believe that's been designated as D799.
`And in
`that advertisement --
`Q.
`Before you go on, so let's take a look at D799.
`Is this the magazine that that ad was found in?
`That's the first page of that magazine.
`Yes.
`A.
`Now let's go back to the slide.
`And so this text
`Okay.
`Q.
`was taken from the ad that's in the LEDs Magazine?
`A.
`Exactly.
`Q.
`And what was it that you found relevant?
`A.
`Well, there were several things, but included was the
`sentence that reads:
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`Case 4:12-cv-11758-GAD-MKM ECF No. 534, PageID.44224 Filed 05/22/15 Page 13 of 110
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`13
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`"Nichia produces the highest efficacy white and
`warm white LEDs which are fabricating using Nichia's
`two key technologies, blue LEDs and phosphors."
`Okay.
`And why was this relevant to your opinion?
`Q.
`Because it says that Nichia is acknowledging the
`A.
`importance of its patents and it is advertising it to the
`world, saying, these make a difference.
`I want to bring your
`attention to these things as Nichia -- is what Nichia is
`saying.
`Q.
`The particular technology that uses the blue LED and the
`YAG phosphor?
`A.
`Exactly.
`Q.
`Now let's look at the press release that's at the bottom,
`and where did this come from?
`A.
`That came from a document that's been designated as D1095.
`It's a press release from Nichia as of February of 2002.
`Q.
`Would you bring that up, please?
`Is this that document?
`This is the first page of that document, yes.
`A.
`Okay.
`And is that the second page?
`Q.
`Yes, it is.
`A.
`Okay. And let's go back to the slide to see the language
`Q.
`that you highlighted.
`What did you find relevant in the press release?
`It reads:
`
`A.
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`Case 4:12-cv-11758-GAD-MKM ECF No. 534, PageID.44225 Filed 05/22/15 Page 14 of 110
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`"Increased brightness of Nichia's white LEDs was
`achieved by improvements to both Nichia's InGaN dye and
`Nichia's proprietary phosphor coating."
`And why was that relevant to your opinion?
`Q.
`Again, Nichia is talking about the significance of the
`A.
`patents that are here at issue and is telling the world these
`things do and should matter in your decision making about
`buying white LEDs.
`Q.
`You referenced a little bit earlier in your testimony
`today some testimony that Dr. Doxsee had given.
`Are you aware
`of the testimony that's been given in this case?
`A.
`Yes, I am.
`Q.
`How?
`A.
`I've read the transcript from each day's proceedings.
`Q.
`And are you aware of testimony that's relevant to whether
`there's any relationship between the high sales of the white
`LEDs that are made of the InGaN LED chip and the YAG phosphor
`and that have the controlled particle size distribution?
`A.
`I am.
`Sometimes we use the term, "causal nexus", we've
`talked about a little bit, and I'm sure we'll talk about it in
`a moment, what are the things that are important to consumers;
`why did they buy these products?
`Q.
`Okay.
`Let's -- have you pulled together some testimony
`you found relevant?
`A.
`Yes, I did.
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`Case 4:12-cv-11758-GAD-MKM ECF No. 534, PageID.44226 Filed 05/22/15 Page 15 of 110
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`15
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`What does this show?
`Let's look at slide five.
`Q.
`This is examples of some of the testimony that's been
`A.
`given here at the trial about the importance of the patents to
`the purchase of Nichia's white LEDs.
`Q.
`So let's start with some testimony from Dr. Craford from
`Philips.
`What did you find relevant?
`A.
`He was asked:
`"And why does Philips use the combination of the
`blue LED and the YAG phosphor in its -- in the majority
`of its white LEDs?"
`And he answered:
`It is
`"It is the best way we found to do that.
`high efficiency, it's reliable, and it gives good
`customer value.
`It's cost-effective."
`And was there testimony from Dr. Doxsee from Nichia that
`Q.
`you found relevant?
`A.
`Yes.
`
`He was asked:
`"And what do you think caused the increase in
`sales from 1998 to 2012, for example?"
`And he answered:
`"Again, I just think the value of the invention,
`and additionally, the improvements of the technology
`and reduction in prices that occurred as years went by
`after that introduction of the first white LED."
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`Case 4:12-cv-11758-GAD-MKM ECF No. 534, PageID.44227 Filed 05/22/15 Page 16 of 110
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`16
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`And was there testimony from Mr. Onikiri of Citizen
`Okay.
`Q.
`Electronics which was read into the record from his deposition?
`A.
`Yes, there was.
`Q.
`And what did you find relevant?
`A.
`He was asked:
`"And why did you want to use Nichia's technology
`for making white LEDs?"
`And he answered:
`"At the time there were very few companies that
`had commercialized white light LEDs, and among those,
`Nichia's products were exceptional.
`So they were
`manufacturing superior products."
`He was then asked:
`"Would you please describe some of the ways in
`which Nichia's products were exceptional?
`And he answered:
`"First of all, they had high efficiency, so they
`were bright.
`Their performance was also stable and
`they were reliable.
`And then something I later learned
`in negotiations is that their price was quite
`reasonable."
`What conclusions have you drawn from the evidence that
`Q.
`you've seen?
`A.
`The products that have used these patents, the Nichia
`products in particular, have been very successful in the
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`17
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`marketplace and companies have wanted to license that
`technology because of the products' success.
`Secondly, an important reason for the success of
`these products has been the patents.
`They have been important
`in the purchase decision.
`Q.
`And do you have an opinion as to a causal relationship
`between sales and the success?
`A.
`It appears that there is a causal nexus that what these
`patents are about is quite important in the marketplace.
`Q.
`And what do you understand to be the advantages of the
`inventions of the '925 and '960 patents?
`A.
`There are many, but among them are the fact that the
`patents are efficient; they result in good white light; they're
`stable; they're reliable, so they last for a long time; and
`they have been very favorable in terms of costs have lowered
`and prices have become very attractive to users in the
`marketplace.
`Q.
`Thank you, Mr. Jarosz.
`MS. MANKOFSKY:
`
`Those are my questions.
`
`I pass
`
`the witness.
`
`Honor.
`
`You may cross-examine.
`All right.
`THE COURT:
`MS. FERNANDS:
`Good morning.
`Good morning, your
`
`Good morning.
`THE COURT:
`Good morning, Mr. Jarosz.
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`Case 4:12-cv-11758-GAD-MKM ECF No. 534, PageID.44229 Filed 05/22/15 Page 18 of 110
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`Good morning.
`THE WITNESS:
`CROSS-EXAMINATION
`
`I'm one of Everlight's counsel in
`
`BY MS. FERNANDS:
`Q.
`I'm Anastasia Fernands.
`this case.
`A.
`Pleasure to meet you.
`Q.
`Nice to meet you.
`A.
`I think a pleasure, I don't know what the questions will
`be.
`Well, I hope it is.
`Q.
`I do, too.
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`Case 4:12-cv-11758-GAD-MKM ECF No. 534, PageID.44230 Filed 05/22/15 Page 19 of 110
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`Case 4:12-cv-11758-GAD-MKM ECF No. 534, PageID.44231 Filed 05/22/15 Page 20 of 110
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`Case 4:12-cv-11758-GAD-MKM ECF No. 534, PageID.44232 Filed 05/22/15 Page 21 of 110
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`Case 4:12-cv-11758-GAD-MKM ECF No. 534, PageID.44233 Filed 05/22/15 Page 22 of 110
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`Case 4:12-cv-11758-GAD-MKM ECF No. 534, PageID.44234 Filed 05/22/15 Page 23 of 110
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`Case 4:12-cv-11758-GAD-MKM ECF No. 534, PageID.44235 Filed 05/22/15 Page 24 of 110
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`Q.
`You can take that down.
`So you also spent a little time earlier this
`morning talking about the sales volume and dollar value of
`sales of white LEDs and you testified that it's your
`understanding there has to be a causal nexus between any
`commercial success and the patents-in-suit, is that right?
`A.
`I believe the law provides that for there to be a finding
`of commercial success there needs to be proof of a causal nexus
`
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`Case 4:12-cv-11758-GAD-MKM ECF No. 534, PageID.44236 Filed 05/22/15 Page 25 of 110
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`between the patents and the products that embody those patents.
`Q.
`You would agree there have been developments and
`improvements in white LEDs since 1997, right?
`A.
`Yes.
`Q.
`And you would agree that those later research and
`development efforts could have contributed to the success of
`white LEDs in the marketplace, correct?
`A.
`Oh, yes.
`Q.
`And in forming your opinions you did not do any separate
`analysis to determine if the later developments after 1997
`contributed to that success, correct, any quantitative
`analysis?
`A.
`Not a quantitative analysis, but sure, I'm aware that
`later improvements did add to the success.
`There were at least
`three things that added to the success.
`One is the more wide-scale adoption of the
`technology by consumers.
`We saw the value of LEDs
`and have increasingly seen the value.
`There were improvements
`in the product, and associated with those improvements were
`lower costs, and therefore, lower prices to all of us, either
`in direct prices, what's in a monitor, or direct prices in an
`LED bulb, which I first bought over the weekend.
`Q.
`And those later developments certainly have contributed to
`the sales of LEDs that you were describing earlier?
`A.
`Yes, that's right.
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`Case 4:12-cv-11758-GAD-MKM ECF No. 534, PageID.44237 Filed 05/22/15 Page 26 of 110
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`26
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`Now, the Nichia white LEDs you were discussing earlier,
`Q.
`those all contain InGaN LED chips, is that right?
`A.
`Yes, as I understand it.
`Q.
`Those are blue LED chips?
`A.
`As I understand, yes.
`Though I'm not a technology expert,
`that's my economist's understanding.
`Q.
`And you understand that Nichia also had patents relating
`to their blue LED chips, right?
`A.
`Yes.
`I don't know that it licensed out those patents, but
`it did have patents.
`Q.
`And there is no question that the technology related to
`those blue LED chips has contributed to the success of white
`LEDs?
`A.
`Yes, because I think you need a blue chip plus a YAG-based
`phosphor to make white light.
`Q.
`So the blue chips have contributed to the success of white
`LEDs?
`A.
`Yes.
`Q.
`And you did not do any quantitative analysis of the value
`contributed by the blue LED technology versus the phosphor
`technology to the white LED, correct?
`A.
`I haven't done a separate quantitative analysis, but if
`you just had a blue chip and nothing else, that doesn't produce
`white light.
`
`MS. FERNANDS:
`
`May I have just a moment?
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`Case 4:12-cv-11758-GAD-MKM ECF No. 534, PageID.44238 Filed 05/22/15 Page 27 of 110
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`Okay.
`THE COURT:
`No further questions.
`MS. FERNANDS:
`All right.
`Any redirect?
`THE COURT:
`MS. MANKOFSKY:
`Very short.
`THE COURT:
`All right.
`REDIRECT EXAMINATION
`
`BY MS. MANKOFSKY:
`Q.
`Would you put back up Exhibit D121 that Ms. Fernands used
`with Mr. Jarosz, and go to the second page, which is the actual
`press release.
`And would you highlight the third paragraph,
`starting with San Francisco.
`It's the first one, so it's the
`cooperation paragraph.
`This cooperation, the third paragraph,
`please?
`
`Could you read what that says, Mr. Jarosz?
`I assume out loud?
`Yes.
`A.
`Yes, please.
`Q.
`"This cooperation also offers the opportunity to open a
`A.
`dialogue between Nichia and Lumileds on the establishment of
`industry standards that will help promote the adoption of
`high-power LEDs in the general lighting market."
`Q.
`Is it your understanding that the cooperation between
`Philips and Nichia was on the establishment of industry
`standards?
`A.
`That would help foster the industry standards, yes.
`
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`Case 4:12-cv-11758-GAD-MKM ECF No. 534, PageID.44239 Filed 05/22/15 Page 28 of 110
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`Q.
`Okay.
`Thank you.
`No further questions.
`MS. MANKOFSKY:
`THE COURT:
`All right.
`Mr. Jarosz, you may step
`
`down, sir.
`(At 8:59 a.m. witness excused)
`MS. FERNANDS:
`Can we move into evidence D121?
`THE COURT:
`Any objection?
`And we have some to
`MS. MANKOFSKY:
`No, we don't.
`read into the record, as well.
`Would you like us to do that
`now?
`
`If it relates directly to this
`THE COURT:
`particular witness, you can do it now.
`MS. MANKOFSKY:
`It does.
`THE COURT:
`Okay.
`MS. MANKOFSKY:
`It's D834 through 838, D684 to
`693, D833, D799, and D1095.
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`And it's a short list.
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`Case 4:12-cv-11758-GAD-MKM ECF No. 534, PageID.44240 Filed 05/22/15 Page 29 of 110
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`Mr. Hanna will be
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`No objection.
`MS. FERNANDS:
`THE COURT:
`Those will be received.
`(Whereupon Plaintiff's Exhibit D121 received into
`evidence)
`(Whereupon Defendant's Exhibit D834 through 838, D684
`to 693, D833, D799 and D1095 received into evidence)
`THE COURT:
`All right.
`Are you ready to call your
`next witness?
`Yes, your Honor.
`MR. RIZZI:
`calling our next witness.
`MR. HANNA:
`Nichia calls Mr. Kammerer, your Honor.
`THE COURT:
`All right.
`Sir, you're still under
`oath, keep that in mind.
`You can just take the witness chair and continue
`to speak up so we can all hear you.
`THE WITNESS:
`Yes.
`MR. HANNA:
`Good morning.
`THE WITNESS:
`Good morning.
`Good morning, ladies and gentlemen.
`Good morning, your Honor.
`THE COURT:
`Good morning.
`B E R N D
`K A M M E R E R,
`called by the Defendant at 9:01 a.m., previously sworn by the
`Clerk, testified as follows:
`CROSS EXAMINATION
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`Case 4:12-cv-11758-GAD-MKM ECF No. 534, PageID.44241 Filed 05/22/15