In The Matter Of:
`
`APPLE, INC.
`
`v.
`
`SIGHTSOUND TECHNOLOGIES, LLC
`
`DAVID MICHAEL SCHWARTZ - Vol. 2
`
`December 10, 2013
`
`MERRILL I'.'.‘flrHFQI5l.fl'I'ICIH
`
`LBQaL7II'I<K, Inc.
`
`8:21
`
`135 Main Street
`4E3I‘x F
`ancsism. CA S3-1
`(ma: dI5,35?'.s130D
`Fax:4‘E5I35‘FIc130‘s%
`
`SIGHTSOUND TECHNOLOGIES
`EXHIBIT 2124
`
`CBM2013—00020 (APPLE V. SIGHTSOUND)
`PAGE 000001
`
`
`
`APPLE, INC.
`
`v.
`
`SIGHTSOUND TECHNOLOGIES, LLC
`
`DAVID MICHAEL SCHWARTZ - Vol. 2
`
`December 10, 2013
`
`MERRILL I'.'.‘flrHFQI5l.fl'I'ICIH
`
`LBQaL7II'I<K, Inc.
`
`8:21
`
`135 Main Street
`4E3I‘x F
`ancsism. CA S3-1
`(ma: dI5,35?'.s130D
`Fax:4‘E5I35‘FIc130‘s%
`
`SIGHTSOUND TECHNOLOGIES
`EXHIBIT 2124
`
`CBM2013—00020 (APPLE V. SIGHTSOUND)
`PAGE 000001
`
`
`
`Petitioner,
`
`Case No. C3M20l3—OOO2O
`
`Patent No. 5,966,440
`
`IGHTSOUN
`
`DAV D M CI-IA*'.T. SCHWARTZ
`
`LS 128 THQOUGH 197
`
`fiR 10, 7013
`
`J:'ORN A
`
`:ed by:
`
`+1 MAY*'.R, CSR 9654, RPR CRR CRP CLR
`
`10. 200l—45459l
`
`PAGE 000002
`
`
`
`DAV D M CI-1A*'.T. SCHWARTZ —
`
`12/10/2013
`
`Page 129
`
`%fi
`
`1 RfiMfiM%fiRfiD, pursuant
`
`to Notice,
`
`that on
`
`Tuesday, December 10, 2013, 8:44 a.m.
`
`— 10:52 a.m., at
`
`1024 Iron Point Road, Folsom, California, 95630, before
`
`me, Debbie Mayer,
`
`a Certified Shorthand Reporter for the
`
`State of California,
`
`there personally appeared:
`
`fil SCHWARTZ,
`
`whose principal place of business is 49’3 Sir fidwards
`
`Court, Fair Oaks, California, 95628, called as a witness
`
`by the Patent Owner, who, being by me first duly
`
`sworn/a 'irmed, was thereupon examined and testi:
`
`hereina_,er set forth.
`
`(800) 869-9132
`
`Merrill Corporation — San Francisco
`www.merrillcorp.com/law
`
`PAGE 000003
`
`
`
`DAV D M CHAfiL SCHWARTZ -
`
`12/10/2013
`
`Page 130
`
`fl BA1fiN1 OWNfiR S GH1SOUNi
`
`ECHNOLOG
`
`ARWOLD & PO’ ER, L.P
`
`BY:
`
`DAVID E. MARSi, Ph.
`
`.
`
`Attorney at Law
`
`555 12th Street, NW
`
`Washington, DC, 20004-1206
`
`(202) 942-5068
`
`david_marsh@aporter.oom
`
`1 oN«R ABBLfi,
`
`ES & GRAY, ELP
`
`BY:
`
`JAMES R. %A1CHfiLDfiR,
`
`fiSQ.
`
`QY:
`
`LAUREN N. R03 VSOW, ESQ.
`
`1900 University Avenue, 6th Floor
`
`East Pa;o Alto, CA
`
`94303-2284
`
`(650) 617-4000
`
`james.batohe1der@ropesgray.com
`
`lauren.robinson@ropesgray.oom
`
`(800) 869-9132
`
`Merrill Corporation - San Francisco
`www.merri11corp.com/law
`
`PAGE 000004
`
`
`
`DAV D M CHAfiL
`
`SCHWARTZ —
`
`12/10/2013
`
`Page 131
`
`*'.T. SCHWARTH, VOL.
`
`fiXAM NA1 ON %Y
`
`M’.
`
`fiXAM NA1
`
`ON
`
`%Y
`
`M’.
`
`1Hfi RfiBOR1 fiR:
`
`dim,
`
`are you ordering the
`
`transorip'
`
`:s?
`
`MR.
`
`%A1CH fiLDZ
`
`would like the
`
`transorip'
`
`ZS.
`
`1Hfi RfiBOR1 fiR:
`
`And both counsel,
`
`do
`
`to ma {G EX
`
`qibit copies of
`
`all the
`
`previously marked exhibits?
`
`M?.
`
`ARS
`
`W0,
`
`not
`
`for me.
`
`M?.
`
`%A1C fiLDfiR:
`
`You do not,
`
`not
`
`the
`
`previously marked.
`
`(800)
`
`869-9132
`
`Merrill Corporation — San Francisco
`www.merrilloorp.oom/law
`
`PAGE 000005
`
`
`
`DAV
`
`D M CHAfiL SCHWARTZ —
`
`12/10/2013
`
`Page l32
`
`Patent Owner's:
`
`Exhibit 5
`
`Billboard publication,
`
`October 4th, L986.
`
`Exhibi
`
`Promotion ‘or cable TV.
`
`Exhibi
`
`Description o: a Compusonics
`
`system, and DSP 1000 System
`
`Diagram.
`
`(Previo
`
`(Previo
`
`(Previo
`
`(Previo
`
`(Previo
`
`(Previo
`
`(Previo
`
`(Previo
`
`(800) 869-9132
`
`Merrill Corporation — San Francisco
`www.merrillcorp.com/law
`
`PAGE 000006
`
`
`
`DAV D M CHAfiL SCHWARTZ —
`
`12/10/2013
`
`Page 133
`
`(Tuesday, 12-10-2013, 8:44 a.m.
`
`- 10:52 a.m.)
`
`(Witness sworn.)
`
`BY MR. MARSH:
`
`Q.
`
`Good morning, Mr. Schwartz.
`
`You understand the
`
`oath is the same as you took yesterday and the same as
`
`it would be in a court o:
`
`law?
`
`A.
`
`Correct.
`
`Q.
`
`Have you discussed your testimony with counsel
`
`between when we last met and this morning?
`
`A.
`
`No.
`
`Q.
`
`I understand that you're still ill.
`
`Is there
`
`any reason that you cannot give complete and accurate
`
`testimony today?
`
`A.
`
`No.
`
`Q.
`
`Okay. Let's move to ?xhibit 1120, 1321, which
`
`is a transcript, fixhibit 4147.
`
`So I'm going to refer to
`
`it as "4147."
`
`It's also a transcript o: 4120.
`
`(?xhibi'
`
`,'47 previous'y marked.)
`
`(?xhibi'
`
`,'20 previous'y marked.)
`
`120?
`
`‘20.
`
`"'m going to hand to you a copy of
`
`1, yeah.
`
`R. MARSi: And 4120.
`
`fl RfiBOR1fiR:
`
`lhank you.
`
`(800) 869-9132
`
`Merrill Corporation - San Francisco
`www.merrillcorp.com/law
`
`PAGE 000007
`
`
`
`DAV D M CHAfiL SCHWARTZ —
`
`12/10/2013
`
`Page 134
`
`A.
`
`This is not
`
`in my book.
`
`BY MR . MARSH:
`
`Q.
`
`A.
`
`Can you identity Txhibit 4170?
`
`Yes.
`
`It's —— I
`
`tqink it's probably a partial
`
`transcrip, o my 1ecture Q, SLan"ord University in 1987.
`
`Q.
`
`Did you select which parts to include in
`
`Txhibit 4‘70?
`
`A.
`
`I
`
`think so. Let me —— what's the —— does it
`
`have a 1-; number also,
`
`ll—something number?
`
`Q.
`
`A.
`
`The original submission was a video.
`
`Oh, yes, yes.
`
`I selected the —— I did the
`
`video editing of th l ctur
`
`b caus
`
`it was so long, and
`
`so much o: it was redundant with the printed material
`
`that, you know,
`
`I
`
`just picked out some highlights having
`
`to do witq telerecording.
`
`Q.
`
`Does Txhibit 4170 disc1ose the complete
`
`CompuSonics system?
`
`A.
`
`Q.
`
`No.
`
`It does not.
`
`What ‘eatures o‘ the CompuSonics system does
`
`Txhibit 4170 provide?
`
`MR. %AlCifiLDfiR: Objection to
`
`A.
`
`What Zea ares does it provide?
`
`BY MR . MARSH:
`
`Q.
`
`A.
`
`That's correct?
`
`The particular system I demonstrated was a
`
`(800) 869-9132
`
`Merrill Corporation — San Francisco
`www.merrillcorp.com/law
`
`PAGE 000008
`
`
`
`DAV D M CHAfiL SCHWARTZ —
`
`12/10/2013
`
`Page 135
`
`DSP 1000,
`
`which,
`
`in the case o" this particular unit --
`
`ticking o
`
`the items in my head —— it doesn't have an
`
`external PC or dumb terminal that would enable easy
`
`keyboard input.
`
`So in this configuration,
`
`a complete
`
`CompuSonics system would have another display, either
`
`the dumb terminal, or
`
`%M BC,
`
`or a Mac attached to the
`
`serial port.
`
`Q.
`
`Are there any other aspects o:
`
`the CompuSonics
`
`system that are missing from your description of the
`
`CompuSonics system in Exhibit 4120?
`
`MR. %AlCHfiLD:R:
`
`Objection to
`
`form.
`
`A.
`
`I woald -- to be exhaustive,
`
`would have to go
`
`word ‘or word,
`
`review o" this document,
`
`and then compare
`
`it to other documents to see what's missing. And that
`
`says a feature lis .
`
`So it seems to be complete,
`
`glancing through it,
`
`but
`
`can't say definitively
`
`without more research.
`
`BY MR. MARSH:
`
`Q.
`
`When did you give this presentation at Stan:
`
`University?
`
`A.
`
`In 1987,
`
`although
`
`can't remember.
`
`It was
`
`during the school year obviously.
`
`think it was in the
`
`spring, February of
`
`'87, something like that.
`
`Or late
`
`winter.
`
`Q.
`
`Was this the only time you gave this speci:'
`
`(800)
`
`869-9132
`
`Merrill Corporation — San Francisco
`www.merri11corp.com/law
`
`PAGE 000009
`
`
`
`DAV D M
`
`CHAfiL SCHWARTZ —
`
`12/10/2013
`
`Page 136
`
`presentat
`
`ion?
`
`MR.
`
`%AlCHfiLDfiR2 Objection to form.
`
`A.
`
`Well,
`
`every presentation
`
`give is a little bit
`
`di ”erent
`
`because
`
`don't read a script.
`
`So
`
`I've used
`
`these slides,
`
`used this material and used this
`
`DSP 1000
`
`in other presentations,
`
`but they're not going to be word
`
`for word
`
`the same.
`
`BY MR. MARSH:
`
`Q.
`
`Were you invited by a professor to give this
`
`presentat ion?
`
`A.
`
`Yes.
`
`Q.
`
`Who invited you to give this presentation?
`
`Professor
`
`Dennis Allison.
`
`Could you
`
`turn to page 7 o"
`
`?Xhibit 4170
`
`Okay.
`
`On page 7,
`
`you s
`
`"Futurama City
`
`why do we have the
`
`AT&T AccuNet
`
`from that other slide, and
`
`what are we doing with a parallel port
`
`besides copying digital data?"
`
`What did
`
`you mean by Futurama City?
`
`A. Well,
`
`the systems we envisioned in l983,
`
`l984,
`
`and started talking about
`
`them,
`
`publicizing, advertising
`
`and demonstrating,
`
`three years later in l987, we had
`
`(800)
`
`869-9132
`
`Me
`
`rrill Corporation — San Francisco
`www.merrillcorp.com/law
`
`PAGE 000010
`
`
`
`DAV D M CHAfiL SCHWARTZ —
`
`12/10/2013
`
`Page 137
`
`made virtually no progress commercially, getting such a
`
`system implemented by anybody.
`
`So in my own mind,
`
`relegated this sort oj
`
`-hing to the future.
`
`Q.
`
`Is it correc- -haL CompuSonics never
`
`commercialized the distribution of video using the
`
`CompuSonics system?
`
`MR. %AlCifiLifiR: Objection to form.
`
`A. Well,
`
`"
`
`t1iq<, +
`
`can put a spin on it, when
`
`you say "commercialized," YOJ mean sold to a large group
`
`0’:
`
`SOITIG SO]ft OI- CODSUHIGJCS.
`
`But "commercialized" in my
`
`mind means just to make money from,
`
`to get revenues from
`
`a product. And we certainly did get revenues jrom
`
`,he
`
`CompuSonics video device. We actually licensed that to
`
`Eastman Kodak Company and that was a pret
`
`:y good deal.
`
`‘orget how many hundreds of thousands o‘ dol'ars that
`
`generated, but that's money. That's commercialization
`
`of a sort.
`
`BY MR. MARSH:
`
`Q.
`
`Was CompuSonics’
`
`revenue related to the
`
`CompuSonics systems, as you used the term, "limited to
`
`payment
`
`for CompuSonics devices"?
`
`A.
`
`No.
`
`Q.
`
`A.
`
`What other sources of revenue did you have?
`
`Our other main source of revenue is licensing
`
`our technology and our patents. And we licensed
`
`(800) 869-9132
`
`Merrill Corporation — San Francisco
`www.merrillcorp.com/law
`
`PAGE 00001 1
`
`
`
`DAV D M CHAfiL SCHWARTZ —
`
`12/10/2013
`
`Page l38
`
`‘airly widely.
`
`" can't remember all the names.
`
`Siemens
`
`in Europe.
`
`Sansui
`
`in Japan, Nissho Zwai
`
`in Japan,
`
`Macintosh Audio o‘ "taly.
`
`"
`
`just can't remember all the
`
`foreign companies, but it goes and on.
`
`Q.
`
`Beyond the sale o:
`
`the CompuSonics products and
`
`the licensing o: your technology and patents, did
`
`CompuSonics have any other sources o: revenue?
`
`A.
`
`"5 you consider investors a ‘orm o" revenue --
`
`don't think technically that's correct, that's
`
`capitalization, not revenue —— but we're recapitalized
`
`several times.
`
`Q.
`
`Beyond the sale o: CompuSonics products,
`
`the
`
`licensing o: your technology and patents, and i; we
`
`'qclude investments from investors, did you have any
`
`ther source o:
`
`revenue —— did CompuSonics have any
`
`':her SOUJCCG OI-
`
`JCGVGDUG?
`
`A.
`
`Not that I can think o"
`
`"'m sorry, now I do
`
`remember one other source.
`
`It's been a while. We did
`
`contract development work for other corporations in
`
`Silicon Valley. We designed a circuit board for audio
`
`for Atari computers or Atari video games, and some other
`
`signal processing type circuits for other companies
`
`whose names " ”orge
`
`Q.
`
`To the bes, oj your recollection, have you
`
`described all o:
`
`the sources o: revenue o: CompuSonics
`
`(800) 869-9132
`
`Merrill Corporation — San Francisco
`www.merrillcorp.com/law
`
`PAGE 000012
`
`
`
`DAV D M CHAfiL SCHWARTZ —
`
`12/10/2013
`
`Page l39
`
`during this deposition?
`
`A.
`
`As best
`
`I can remember, sitting here today.
`
`Some other things may occur to me later.
`
`Q.
`
`3 t today, you're likely to remember
`
`, sources o: revenue,
`
`is tqat correc .
`
`R. %AlCHfiLDfiR: Objection ,o jorm.
`
`A. Well, no, not —— you would think so because
`
`was President o:
`
`the company, but
`
`I dad a comptroller
`
`who was the money guy who really had everything to do
`
`with money and transactions that would yield money to my
`
`comptroller.
`
`So Cyrus Tavakoli,
`
`T—A—V—A—K—O—L—Z, was
`
`the man who knew all this stu
`
`intimately, and I had a
`
`1igher—level view.
`
`BY MR. MARSH:
`
`Q.
`
`What parts o.
`
`iord lecture did you
`
`choose to exclude?
`
`A.
`
`Oh, gee, most of it, because we —— I discussed
`
`the entire CompuSonics system in a very broad sense,
`
`really trying to cover all the highlights and potential
`
`for it.
`
`So everything from user in,erjace to audio
`
`editing, synchronizing with video,
`
`the architectare o;
`
`the hardware, which is interesting both jor ,he DSP l000
`
`and for the DSP 2000, and these are engineering students
`
`who were interested in the nuts and bolts.
`
`So I really
`
`got
`
`into the nuts and bolts of what was inside these
`
`(800) 869-9132
`
`Merrill Corporation — San Francisco
`www.merrillcorp.com/law
`
`PAGE 000013
`
`
`
`DAV D M CHAfiL SCHWARTZ —
`
`12/10/2013
`
`Page l~O
`
`machines and how we used standard components and some o:
`
`our own custom components
`
`to build
`
`these tqings.
`
`discussed some o:
`
`the economics o_ the systems.
`
`discussed how some o; our customers were using them.
`
`John Stautner discussed how digital audio compression
`
`works, what we now know as MP3, or Apple Audio for the
`
`iPod.
`
`don't
`
`know that
`
`can recall, sitting here,
`
`every single topic, but it was a very broad long
`
`lecture, and
`
`i b li v
`
`th
`
`ntir
`
`vid otap
`
`is a matter
`
`o: record somewhere.
`
`Q.
`
`Can i have you turn to page 8 of the
`
`lecture.
`
`On page 8 o:
`
`the partial lecture it
`
`"What this shows is that you can
`
`digital equipment, our equipment,
`
`to
`
`our 2002, our big machine,
`
`to master
`
`records and use, make large databases,
`
`either on optical disks or Winchesters,
`
`depending on how many o:
`
`those you want
`
`to
`
`spin up."
`
`Is a Winchester a removable disc?
`
`A.
`
`Technically it can be.
`
`By strict definition,
`
`"Winchester" is simply a reterence to the original
`
`five—and—a—quarter—inch hard drive architecture which
`
`eventually became both removable and fixed in its
`
`incarnations.
`
`(800)
`
`869-9132
`
`Merrill Corporation — San Francisco
`www.merrillcorp.com/law
`
`PAGE 000014
`
`
`
`DAV D M CHA fiL SCHWARTZ —
`
`12/10/2013
`
`Page l4l
`
`Q.
`
`ten you
`
`were referring to "Winchester" on
`
`page 8 o"
`
`?xhibit
`
`4170, were you considering Winchesters
`
`removable discs?
`
`A.
`
`As a possibility,
`
`yes.
`
`i was considering any
`
`rotating memory.
`
`Q.
`
`On page 8 o"
`
`fixhibit 4170, were you considering
`
`optical discs as removable memory?
`
`A.
`
`Q.
`
`A.
`
`YES.
`
`Why did you consider removable memory?
`
`Because at that time, storage was still
`
`relativ ly
`
`xp nsiv
`
`p r m gabyte, and your online
`
`storage,
`
`which spun up as available on your server
`
`is your most costly storage.
`
`you can take discs
`
`o "1ine and put
`
`them on a shel:,
`
`or use an automated
`
`jukebox
`
`type sys-em
`
`-0
`
`jetch cartridges o" discs ‘or you
`
`and sLu
`
`them into
`
`the servers when they're needed, you
`
`can keep a treme
`
`qdous amount oj data o
`
`”1ine, much less
`
`expensively,
`
`than
`
`spinning it a11 up in your server
`
`farm.
`
`Q.
`
`On the same page,
`
`page 8
`
`o"
`
`fixhibit 4170, you
`
`state:
`
`"Obviously, i:
`
`you have a computer, you
`
`want
`
`to transmit data to other places or
`
`buy data.
`
`Imagine buying records over
`
`telephone lines,
`
`or dialing up and buying
`
`(800)
`
`869-9132
`
`Merrill Corporation — San Francisco
`www.merrillcorp.com/law
`
`PAGE 000015
`
`
`
`DAV D M CHAfiL SCHWARTZ —
`
`12/10/2013
`
`Page l42
`
`records from your cable TV station where
`
`they're going to be sent down coaxial
`
`cable."
`
`Did you have a collaboration at CompuSonics with any
`
`cable TV station?
`
`A.
`
`Nothing went beyond first meetings with senior
`
`vice presidents at various cable organizations.
`
`Q.
`
`Is it correct, as of tqe date o_ the Stan.
`
`lecture, you mad not carried out any collaboration
`
`with —— you had not attached either the —— any o:
`
`the
`
`DSP machines to a coaxial cable that belonged to a cable
`
`company?
`
`A.
`
`I'm not sure that's entirely correct because,
`
`in developing the CompuSonics video machine,
`
`the video
`
`encoder had a coaxial video connecter, and that's
`
`certainly how we got many o: our video signals for
`
`developing the system and testing the system. We did
`
`record from cable in the CompuSonics video
`
`recorder/editor.
`
`Q.
`
`A.
`
`What DSP machine was that?
`
`I don't think we ever gave it a DSP
`
`designation.
`
`John Stautner was the head o_
`
`project, and he buil- the jirst prototype ou
`
`.
`
`a
`
`DSP lOOO as the signal processing chassis,
`
`a
`
`‘hen a
`
`video encoder, another box that he purchased outside
`
`(800) 869-9132
`
`Merrill Corporation — San Francisco
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`
`PAGE 000016
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`
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`DAV D M CHAfiL SCHWARTZ —
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`12/10/2013
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`Page l43
`
`from a company called Widcom, W—I D—C—O—M. And then he
`
`wrote the sottware ‘or the interface and had one o: our
`
`hardware engineers design the hardwar
`
`int rfac
`
`b tw n
`
`those two machines. But
`
`they never got —— it never got
`
`its own DSP designation as tar as " know. T1at's a
`
`better qiestion for John Stautner.
`
`Q.
`
`Did you only give a DSP designation when a
`
`CompuSonics machine was available for sale?
`
`A.
`
`As
`
`" recall,
`
`‘or the most part,
`
`that was our
`
`policy.
`
`"" we had something we could sell, it got named
`
`a product, and we printed a specification sheet that we
`
`could give to dealers.
`
`Q.
`
`Is it correct that the absence o:
`
`designation would suggest that the produc
`
`prototype?
`
`A.
`
`Q.
`
`Yes, it was a prototype.
`
`Is it correct to suggest that a product
`
`lacking
`
`DSP designation was still under development?
`
`MR. %AlCHfiLD1R: Objec-ion Lo jorm.
`
`A.
`
`Most likely it would still b
`
`und r d v lopm nt
`
`or set aside while another machine was being built.
`
`BY MR. MARSH:
`
`Q.
`
`Was
`
`the developmental machine with the coaxial
`
`connection that you've just Les,ijied to ,he only
`
`CompuSonics machine that exhibited a coaxial connection?
`
`(800) 869-9132
`
`Merrill Corporation — San Francisco
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`
`PAGE 000017
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`
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`DAV D M CHAfiL SCHWARTZ —
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`12/10/2013
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`Page 144
`
`A.
`
`No.
`
`I b li v
`
`th r
`
`w r
`
`s v ral or more
`
`prototypes o_ ohe video product, potential product,
`
`built.
`
`I don’: know exactly how many.
`
`Q.
`
`A
`
`Q.
`
`A
`
`Did CompuSonics ever sell video content?
`
`\TO.
`
`Did CompuSonics ever sell audio content?
`
`Wo —— well, but that one exception I mentioned
`
`:erday about Bob Douglas wanting some sound e "ects
`
`,ha, we produced for him, and I don't know if he paid us
`
`for those or i: one o" our sLa
`
`members did it for him
`
`a favor.
`
`Q.
`
`Did CompuSonics dedicate any CompuSonics
`
`qeers to writing code for billing software on any o:
`
`DSP machines?
`
`A.
`
`Q.
`
`We did not,
`
`to the best of my recollection.
`
`Is it correct to say that the Electronic Record
`
`Store was never a produc
`
`,ha, CompuSonics sold?
`
`A.
`
`It was a produc,
`
`,ha, we tried to sell
`
`extensively, but we sold equipment that was very capable
`
`per orming the functions of the Electronic Music
`
`‘ore. Bu: none of the customers as far as " know, any
`
`our c
`
`tomers, ever implemented such a commercial
`
`venture.
`
`Q.
`
`Did the DSP lOOO have a payment button on the
`
`front panel?
`
`(800) 869-9132
`
`Merrill Corporation — San Francisco
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`PAGE 000018
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`
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`DAV D M CHAfiL SCHWARTZ —
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`Page 145
`
`A.
`
`Did not.
`
`It had a dedicated button jor
`
`telerecording that could have been used to confirm
`
`payment, because that button was dedicated just to the
`
`receive ‘unction o" digital audio
`
`rom vhe AccJNet.
`
`Q.
`
`Are you aware o: any occasion when that button
`
`was used to confirm payment?
`
`A.
`
`No.
`
`Q.
`
`Are you aware o: any CompuSonics DSP machines
`
`t contained scripts that were capable of using that
`
`ton to detect payment?
`
`A.
`
`No.
`
`Q.
`
`I'm going to give you an exhibit that wasn't an
`
`Apple exhibit.
`
`A.
`
`Was no‘.
`
`Was not an Apple exhibit.
`
`Oh, shoot.
`
`"
`
`think " ‘orgot my reading
`
`(Deposition Exhibit 5 marked.)
`
`mat is tqe ?xhibit "'ve just given you?
`
`Q. %AlC{: DfiR: What's the number o: it?
`
`ll: RfiBORl1R:
`
`'m sorry, Exhibit 5.
`
`A.
`
`Tqis exhibit appears to be clipped from the
`
`Billboard publication of October 4th, 1986.
`
`I'm not
`
`sure what page tqis article was originally on.
`
`I do
`
`remember Steven Dupler because I had an interview by him
`
`(800) 869-9132
`
`Merrill Corporation — San Francisco
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`
`PAGE 000019
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`
`
`DAV D M CHAEL SCHWARTZ —
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`12/10/2013
`
`Page l46
`
`before, and this is an article about
`
`the prototype
`
`CompuSonics video machine which here is called the
`
`"CompuSonics DVR 1."
`
`BY MR . MARSH:
`
`Q.
`
`Does Exhibit 5 describe the CompuSonics system?
`
`R. %AlCHfiLDfiR: Objection to form.
`
`A.
`
`Wo.
`
`It's missing some things.
`
`BY MR . MARSH:
`
`Q.
`
`What is Exhibit 5 missing?
`
`A. Well, it's missing any discussion o:
`
`telerecording function.
`
`Q.
`
`Is it missing anything else?
`
`MR. %AlCi1.DfiR: Objection to form.
`
`A.
`
`As I've noted in a few o-her replies, it's
`
`di
`
`”icuiL or me to see what's not here. And in order
`
`to do that,
`
`I would have to do a word—for—word
`
`comparison of this document and many others to crea
`
`matrix o" which articles have what
`
`ea-ures for wha
`
`model machine.
`
`So lacking that analysis and
`
`spreadsheet,
`
`I can't really give you a complete answer.
`
`BY MR . MARSH:
`
`Q.
`
`You testified that Exhibit 5 was missing the
`
`telerecording capability,
`
`is that correct?
`
`A.
`
`Q.
`
`That's correct.
`
`s fixhibit 5 also missing reference to a
`
`(800) 869-9132
`
`Merrill Corporation — San Francisco
`www.merrillcorp.com/law
`
`PAGE 000020
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`
`
`DAV D M CHAfiL SCHWARTZ —
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`12/10/2013
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`Page 147
`
`payment step?
`
`MR. %AlCHfiLi1 : Objection to form.
`
`A. Well, payment is par, o_ the Lelerecording
`
`tem.
`
`So when you leave out telerecording, you've
`
`lej- out any reference to means o: payment for
`
`telerecording.
`
`BY MR. MARSH:
`
`Q.
`
`A.
`
`Is payment necessary ‘or telerecording?
`
`In our line, as we promoted telerecording
`
`systems, it was always part o:
`
`the plan, and we
`
`emphasized that everybody in the chain o: production,
`
`‘rom artist to consumer, would get their appropriate
`
`percentage cuts o:
`
`the revenue stream so that it would
`
`not upset
`
`the business model o.
`
`the recording industry.
`
`Q.
`
`Did Compusoqics underta<e telerecording?
`
`R. %AlCHfiLDfiR: Objection to form.
`
`A. With AT&T,
`
`for demonstration purposes, yes.
`
`BY MR. MARSi:
`
`Q.
`
`Was CompuSonics ever paid or
`
`telerecording?
`
`A. Well, it was paid as part o
`
`i,s licensing
`
`arrangements with various other companies.
`
`That was
`
`part of the technology we were licensing for money.
`
`Q.
`
`Was CompuSonics ever paid for product sent
`
`by or recorded using telerecording?
`
`A.
`
`No.
`
`(800) 869-9132
`
`Merrill Corporation — San Francisco
`www.merrillcorp.com/law
`
`PAGE 000021
`
`
`
`DAV D M CHAfiL SCHWARTZ —
`
`12/10/2013
`
`Page 148
`
`Q.
`
`I'm going to give you
`
`Exhibit 1113,
`
`13 —— and
`
`it goes also by the
`
`Exhibit 1316
`
`.
`
`Here's the 1113,
`
`Apple Exhibit, and Apple
`
`Exhibit 1316.
`
`(?x1ibi-
`
`‘1’3 previous
`
`y marked.)
`
`(?x1ibi'
`
`’3'6 previous y marked.)
`
`MR. %A1C fi.DfiR2
`
`What's the alternative,
`
`1113
`
`R.
`
`R.
`
`:
`
`1316.
`
`fl.
`
`fiR:
`
`lhank you.
`
`BY MR. MARSH:
`
`Q.
`
`Do you recognize Apple
`
`Exhibit 1113 and Apple
`
`Exhibit 1316?
`
`A.
`
`I do,
`
`and they're the same.
`
`What are they?
`
`They're a letter
`
`from me to my shareholders in
`
`I'd like to draw your attention to the
`
`paragraph o:
`
`the second column,
`
`and it states:
`
`"Testing of
`
`the telerecording system
`
`with CM: Labs began las
`
`week.
`
`"5 the
`
`system continues to mee
`
`its specs,
`
`the
`
`first AT&T Bell Lab -es
`
`in New Jersey will
`
`qappen late this month."
`
`read that correctly?
`
`Did I
`
`YES.
`
`(800)
`
`869-9132
`
`Merrill Corporation — San Francisco
`www.merrillcorp.com/law
`
`PAGE 000022
`
`
`
`DAV D M CHAfiL
`
`SCHWARTZ
`
`—
`
`12/10/2013
`
`Page 149
`
`What does
`
`,
`
`sentence describe?
`
`MR.
`
`%A1Ci1.:1?2
`
`Objection to
`
`form.
`
`A.
`
`That sentence describes the status o?
`
`telerecording project in July of 1984.
`
`BY MR. MARSH:
`
`Q. What's
`
`"CM: Labs"?
`
`A.
`
`I believe it stands
`
`‘or Ca1i‘ornia Microwave
`
`Incorporated.
`
`They're a Ca1i‘ornia corporation that
`
`makes electronic communications equipment.
`
`Q.
`
`A.
`
`What was CompuSonics's work with CM:
`
`Labs?
`
`CM:
`
`was the approved manu‘acturer o‘ AT&T's
`
`equipment that terminated the AccuNet at a customer
`
`location,
`
`so CM:
`
`actually manufactured the equipment
`
`AT&T,
`
`and AT&T's engineers wanted us to work directly
`
`with CM:
`
`to make sure that our equipment plugged into
`
`CM" ' s
`
`inter‘ace which was e
`
`"ecLive1y vhe inter ace
`
`or
`
`the AccuNet.
`
`Q.
`
`Does
`
`?Xhibit 1113,
`
`1316 describe the whole
`
`CompuSonics system?
`
`MR.
`
`%AiCHfiL:fiR2
`
`Ob
`
`jection to
`
`A.
`
`No.
`
`BY MR. MARSH:
`
`Q.
`
`What
`
`‘eatures o‘ the CompuSonics system does
`
`fixhibit 1113,
`
`316 describe?
`
`MR.
`
`%A1CHfiLDfiR2
`
`Objection to
`
`(800)
`
`869-9132
`
`Merrill Corporation — San Francisco
`www.merrillcorp.com/law
`
`PAGE 000023
`
`
`
`DAV D M CHAfiL SCHWARTZ —
`
`12/10/2013
`
`Page l5O
`
`A. Well, it describes the recording functionality,
`
`the telerecording functionality under development.
`
`That's about all it discusses with regard to the
`
`systems,
`
`technically.
`
`BY MR. MA?Si:
`
`Q. With respect to the telerecording functionality
`
`under development, were you undertaking experiments to
`
`further develop the telerecording features?
`
`A. Well, we were still writing software. At this
`
`point
`
`in time, we're telerecording.
`
`Q.
`
`In addition to writing software
`
`or
`
`,he purpose
`
`of telerecording, what additional aspects o.
`
`,he
`
`telerecording process were you working on a
`
`,his time?
`
`A. Well, Mr. Sohn was working on the DAT:
`
`"he
`
`,erface box for our side o" the system.
`
`think there were prototypes o_ it a,
`
`the date of
`
`tter, which is what were being tested with CM"
`
`t it was continuing to be developed.
`
`Q.
`
`In your work with AT&T and CMI, what was CM:
`
`working on with respect to telerecording?
`
`A.
`
`They were verifying that our interface met
`
`the
`
`industry standards so that we wouldn't damage the
`
`systems we were connecting to.
`
`Q.
`
`In your work with AT&T and CMI, what work was
`
`AT&T undertaking with respect to telerecording?
`
`(800) 869-9132
`
`Merrill Corporation — San Francisco
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`
`PAGE 000024
`
`
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`DAV D M CHAfiL SCHWARTZ —
`
`12/10/2013
`
`Page 151
`
`A.
`
`They were working on both their hardware and
`
`software protocols that transferred the data on the
`
`AccuNet
`
`to insure that we wouldn't have any data delays
`
`or drop—ou:s longer than we could fix on the fly in our
`
`hardware and software.
`
`So there was some furcher
`
`d v lopm n: r quir d on the AccuNet side.
`
`Q.
`
`In your testimony yesterday, you discussed an
`
`experimental proc dur wh r
`
`t l r cording was asserted
`
`to have occurred between Chicago and New York;
`
`subsequent
`
`to that experimental procedure, did you
`
`continue to work on either the hardware or software
`
`related to telerecording?
`
`MR. %A1CHfiLD1R: Objection to form.
`
`A.
`
`Yes,
`
`" be'ieve we continued co put e "ort
`
`into
`
`the project, both for hardware and software, after that
`
`point. We were still in the promotional phase,
`
`the
`
`concept.
`
`BY MR. MARSH:
`
`Q.
`
`When did CompuSonics terminate the
`
`telerecording program?
`
`A.
`
`Q.
`
`We never terminated it.
`
`When did CompuSonics conclude working on the
`
`telecommunications program —— telerecording program,
`
`sorry?
`
`A.
`
`"Working" to me means somebody was spending
`
`(800) 869-9132
`
`Merrill Corporation — San Francisco
`www.merrillcorp.com/law
`
`PAGE 000025
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`
`
`DAV D M CHAfiL SCHWARTZ —
`
`12/10/2013
`
`Page 152
`
`some time in the company, on company time and money, on
`
`telerecording, and we continued to talk about
`
`telerecording it promoted, even after our engineers had
`
`stopped writing software or designing hardware for it.
`
`So somebody was still working but not on the technical
`
`side.
`
`Q.
`
`When did CompuSonics stop writing software or
`
`designing hardware
`
`or
`
`,elerecording products?
`
`A.
`
`Q.
`
`I believe sometime in 1986,
`
`late 1986.
`
`Why did CompuSonics stop writing software or
`
`designing hardware for the telerecording products?
`
`A.
`
`We as a group came to the conclusion that we
`
`were beating our heads against the wall and spending
`
`money on a technology that could not be commercialized
`
`at the time.
`
`Q.
`
`After CompuSonics stopped writing software or
`
`designing hardware for the telerecording products, did
`
`AT&T or CM: continue to work on the telerecording
`
`project?
`
`A.
`
`AT&T continued to promote it in their
`
`literature and talk abou, it a,
`
`,heir various trade show
`
`presen,a,ions.
`
`I don't {now i_ ,hey continued to do any
`
`work on the system with regard to latency or drop—outs.
`
`CM: certainly did not do any further work once they
`
`Zidated our hardware.
`
`(800) 869-9132
`
`Merrill Corporation — San Francisco
`www.merrillcorp.com/law
`
`PAGE 000026
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`
`
`DAV D M CHAfiL SCHWARTZ —
`
`12/10/2013
`
`Page 153
`
`Q.
`
`At
`
`the time CompuSonics stopped writing
`
`software or designing hardware, was CompuSonics still
`
`working on latency or drop—out
`
`issues?
`
`MR. %AlCHfiLDfiR: Objection to form.
`
`A.
`
`Those engineering factors are always something
`
`we considered our system in various di
`
`"erent places o:
`
`the data stream.
`
`So I need to be —— hear a very
`
`specific question about —— about that,
`
`to answer it,
`
`specifically.
`
`BY MR. MARSH:
`
`Q.
`
`At any place in the data stream, do you
`
`recollect whether, when CompuSonics stopped working on
`
`telerecording, Lha
`
`la,ency or drop—out
`
`issues existed?
`
`MR. %AlCHfiLD1R: Objection to form.
`
`I'm sorry,
`
`I simply don't understand the
`
`Q.
`
`A.
`
`t are "latency" or "drop—out
`
`issues"?
`
`In the data stream that AccuNet provides,
`
`the
`
`bytes, or bits, or words, don't always come through at
`
`the exact same rate. And a_-er you request a file or
`
`request a set of data,
`
`i- may not be instantly provided
`
`to you. Latency is the time it takes to start providing
`
`data after it's requested. Drop—outs are where the data
`
`stream simply is missing data for a short period o;
`
`(800) 869-9132
`
`Merrill Corporation — San Francisco
`www.merrillcorp.com/law
`
`PAGE 000027
`
`
`
`DAV D M CHAfiL SCHWARTZ —
`
`12/10/2013
`
`Page 154
`
`time, and that data has to be retransmitted, which uses
`
`up some of the bandwidth.
`
`Q.
`
`Is a data stream that a cable, coaxial ——
`
`coaxial cable provides, di"”erenL "rom the data stream
`
`that AccuNet provides?
`
`A.
`
`They're both digital bit streams. Technically
`
`they're the same.
`
`Each server farm and each network is
`
`going to have its own characteristics for speeds,
`
`latency, number of drop—outs, error rate. All these
`
`factors vary from supplier or network -o ne-wor<.
`
`Q.
`
`Would you need to optimize any of
`
`,he DSP
`
`machines with respect to the particular data bit stream
`
`that is being used?
`
`A.
`
`I don't know. Maybe. Maybe not. Depends on
`
`the technical
`
`factors involved.
`
`Q.
`
`Did you optimize any DSP machine with respect
`
`to any data stream?
`
`A.
`
`Ever? Certainly. We wrote software, and
`
`believe we did not have to modify any hardware to do the
`
`interface circuit to the Sony systems. We had co ma-ch
`
`Sony specifications for speeds, error rate, and all the
`
`rest of the digital bit stream parameters.
`
`So we did do
`
`tweaking for the Sony connection.
`
`I don't think we had
`
`to do any tweaking whatsoever for the AccuNet connection
`
`because it was so slow. We're talking about bit rates
`
`(800) 869-9132
`
`Merrill Corporation — San Francisco
`www.merrillcorp.com/law
`
`PAGE 000028
`
`
`
`DAV D M CHAfiL SCHWARTZ —
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`12/10/2013
`
`Page 155
`
`o: 56,000 bits per second which then was considered kind
`
`o
`
`"ast, but compared to the other bit streams we were
`
`working with at the time, it was very, very slow.
`
`Q.
`
`Do you recollect any other da-a streams that
`
`CompuSonics DSP machines were recipients of?
`
`A.
`
`We nad an SCSI, commonly called SCS"
`
`interface
`
`on the machines as well, and we did transfer machines
`
`data from various devices, machine to machine, digital
`
`tape decks or backup decks,
`
`to DSPs. Various devices
`
`were attached to the SCS" port.
`
`?xcuse me.
`
`Q.
`
`Using the SCS"
`
`interface —— did you use the
`
`inter ace "or Lelerecording?
`
`A.
`
`No.
`
`Q.
`
`Is the transfer machine to machine, digital
`
`tape decks or backnp decks to DSPs,
`
`telerecording?
`
`MR. %AlCHfiLDfiR: Objection to form.
`
`A.
`
`"f tne data that's being transferred was music,
`
`and it was no- in the same room, you know, it was a
`
`remote connection,
`
`that would be telerecording.
`
`BY MR. MARSH:
`
`Q.
`
`Does Apple '
`
`“l3 and Apple Exhibit
`
`l3l6
`
`describe recording o
`
`"oppy —— super floppies,
`
`in
`
`a DSP 1000?
`
`MR. %AlCHfiLDfiR: Objection to form.
`
`I'm not seeing any reference to super floppies
`
`(800) 869-9132
`
`Merrill Corporation — San Francisco
`www.merrillcorp.com/law
`
`PAGE 000029
`
`
`
`DAV D M CHAfiL SCHWARTZ —
`
`12/10/2013
`
`Page 156
`
`in this 1et
`
`BY MR. MARSi:
`
`Q.
`
`COJld I bring your attention to the
`
`paragraph,
`
`right—hand column,
`
`last line --
`
`A.
`
`Oh,
`
`there it is.
`
`Thank you.
`
`MR. MARSH: Could you read back the question,
`
`please.
`
`(Record read.)
`
`MR. %AlCHfiLDfiR: Again, objection to
`
`A.
`
`Yes, it does.
`
`RY MR. MARSH:
`
`Q.
`
`Does it describe recording to any other memory?
`
`R. %AlCHfiLDfiR: Objection to jorm.
`
`A.
`
`Mo, not directly.
`
`BY MR. MA
`
`Q.
`
`Would a recipient o:
`
`the audiophile be able to
`
`edit the music he or she had recorded onto the blank
`
`super floppy?
`
`A.
`
`Yes.
`
`MR. MARSH:
`
`"'d 'ike to draw your attention to
`
`the last paragraph o‘ App'e ?xhibit 1113 and Apple
`
`Exhibit
`
`l3l6.
`
`The jirst sentence states:
`
`"CompuSonics is also on the war path :
`
`more financial backing."
`
`What did you mean by that?
`
`(800) 869-9132
`
`Merrill Corporation — San Francisco
`www.merrillcorp.com/law
`
`PAGE 000030
`
`
`
`DAV D M CHAfiL SCHWARTZ
`
`12/10/2013
`
`Page 157
`
`A.
`
`The company was undercapitalized,
`
`so it needed
`
`another round o
`
`"unding o"
`
`some sort i: it
`
`was going to
`
`survive.
`
`(Pause in the proceedings.)
`
`ME. MARSH:
`
`I'm going to provide you an exhibit
`
`that is not an Apple
`
`Exhibit.
`
`(Deposition
`
`Exhibit
`
`6 marked.)
`
`lHfi RfiBORlfi?2
`
`fixhibit 6.
`
`RS{:
`
`Do you recognize
`
`Exhibit 6?
`
`Yes.
`
`What is Exhibit 6?
`
`It's par, o
`
`a promotion or some kind o?
`
`Q.
`
`A.
`
`document where we're trying to promote the idea,
`
`CompuSonics is trying to promote the idea o;
`
`telerecording via cable TV.
`
`Q.
`
`What do you mean —— or what does the document
`
`mean when it refers to
`
`"subscriber audio selection
`
`options"?
`
`A. Well,
`
`this envisions that anybody who has a
`
`cable connection to their house is a subscriber to a
`
`cable company's system.
`
`That's the nature of
`
`what
`
`the
`
`customers were, at that time, called
`
`"subscribers."
`
`So
`
`it would have to be a subscriber to a specific cable
`
`system like Comcast or Western Cable or something.
`
`(800)
`
`869-9132
`
`Merrill Corporation — San Francisco
`www.merrillcorp.com/law
`
`PAGE 000031
`
`
`
`DAV D M CHAfiL SCHWARTZ —
`
`12/10/2013
`
`Page l58
`
`Q.
`
`What is meant by the statement "telephone call
`
`to touchtone key in order system"?
`
`A.
`
`An order desk that's automated for a lO—key on
`
`the phone as the interface.
`
`So it asks you questions
`
`and you answer 1, or 7, or 3 with
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