IN THE UNITED STATES DISTRICT COURT
`
`IN AND FOR THE WESTERN DISTRICT OF PENNSYLVANIA
`
`SIGHTSOUND . COM INCORPORATED,
`
`a Pennsylvania corporation,
`
`Plaintiff,
`
`vs.
`
`CIVIL ACTION NO. 98-0118
`
`N2K,
`
`INC.,
`
`a Delaware
`
`Corporation, CDNOW,
`
`INC.,
`
`EXHIBITS BOUND SEPARATELY
`
`a Pennsylvania corporation,
`
`and CDNOW ONLINE,
`
`INC., a
`
`cER'|'||-'|ED COPY
`
`Pennsylvania corporation
`
`Defendants.
`
`DEPOSITION OF DAVID M. SCHWARTZ
`
`Thursday, February 1, 2001
`
`VOLUME I
`
`Pages 1 to 210
`
`REPORTED BY:
`
`FRANCES ANN WEINROB, RMR, CRP 8, CSR 4029
`
`CERTI FIED REALTIME REPORTER
`
`GROSS.\I.»\1\‘ (‘K CO'l"I‘I-LR
`ClIR‘l‘Il’IF.D COURT Rl£I'()R'l‘l£RS
`
`2-I2lP:1rk Boulcvurd. Suilc A-20(1|‘aIo Alln.CzIIil'urn|:194J()b
`Phone 650.33-I.II8IF1Ix 650.324.4609
`
`SIGHTSOUND TECHNOLOGIES
`EXHIBIT 2325
`
`CBM2013—00023 (APPLE V. SIGHTSOUND)
`PAGE 000001
`
`
`
`IN AND FOR THE WESTERN DISTRICT OF PENNSYLVANIA
`
`SIGHTSOUND . COM INCORPORATED,
`
`a Pennsylvania corporation,
`
`Plaintiff,
`
`vs.
`
`CIVIL ACTION NO. 98-0118
`
`N2K,
`
`INC.,
`
`a Delaware
`
`Corporation, CDNOW,
`
`INC.,
`
`EXHIBITS BOUND SEPARATELY
`
`a Pennsylvania corporation,
`
`and CDNOW ONLINE,
`
`INC., a
`
`cER'|'||-'|ED COPY
`
`Pennsylvania corporation
`
`Defendants.
`
`DEPOSITION OF DAVID M. SCHWARTZ
`
`Thursday, February 1, 2001
`
`VOLUME I
`
`Pages 1 to 210
`
`REPORTED BY:
`
`FRANCES ANN WEINROB, RMR, CRP 8, CSR 4029
`
`CERTI FIED REALTIME REPORTER
`
`GROSS.\I.»\1\‘ (‘K CO'l"I‘I-LR
`ClIR‘l‘Il’IF.D COURT Rl£I'()R'l‘l£RS
`
`2-I2lP:1rk Boulcvurd. Suilc A-20(1|‘aIo Alln.CzIIil'urn|:194J()b
`Phone 650.33-I.II8IF1Ix 650.324.4609
`
`SIGHTSOUND TECHNOLOGIES
`EXHIBIT 2325
`
`CBM2013—00023 (APPLE V. SIGHTSOUND)
`PAGE 000001
`
`
`
`DAVID M. SCHWARTZ
`
`P
`
`E
`
`A
`
`R A
`
`N
`
`C
`
`E
`
`S
`
`FOR THE PLAINTIFF:
`
`KENYON & KENYON
`
`BY:
`
`BRIAN S. MUDGE, ESQ.
`
`(202) 220-4214 direct
`
`R.
`
`PAUL ZEINEDDIN, ESQ.
`
`(202) 220-4223 direct
`
`1500 K Street, N.W., Suite 700
`
`Washington, D.C.
`
`20005-1257
`
`(202) 220-4200 main
`
`(202) 220-4201 fax
`
`bmudge@kenyon.com
`
`pzeineddin@kenyon.com
`
`GROSSMAN & COTTER
`
`PAGE 000002
`
`
`
`DAVID M. SCHWARTZ
`
`E
`
`S
`
`(Continued)
`
`FOR THE DEFENDANTS CDNOW,
`
`INC. AND CDNOW ONLINE,
`
`INC..
`
`WILSON, SONSINI, GOODRICH & ROSATI
`
`BY:
`
`DAVID BERL, ESQ.
`
`(650) 320-4925 direct
`
`MONICA MUCCHETTI, ESQ.
`
`(AS NOTED)
`
`MICHAEL BARCLAY, ESQ.
`
`(AS NOTED)
`
`(650) 320-4849 direct
`
`650 Page Mill Road
`
`Palo Alto, California 94304-1050
`
`(650) 493-9300 main
`
`(650) 565-5100 fax
`
`dberl@wsgr.com
`
`mmucchetti@wsgr.com
`
`mbarclay@wsgr.com
`
`ALSO PRESENT:
`
`CHRISTOPHER J. REESE
`
`ANSEL SCHWARTZ
`
`GROSSMAN & COTTER
`
`PAGE 000003
`
`
`
`PDAVIFD M.
`
`SCH‘WA_v‘RTZ
`
`" LContinued)
`
`ALSO~PRESENT wContinued):
`
`EDAN Mommgz VIDEO PR0DUc$moNs,gLLc
`
`By:
`
`JOSH PORTER,'VIDEOCRHPHER'
`
`402 Dewey Boulevard
`
`San Francisco, Califoynia 94116
`
`44150 731-1300 main
`
`=.(»4l/5?)
`
`”7:3r1-028024‘ fax
`
`GR01s=$MAN.,:& -GOTTI_‘E:R.
`
`PAGE 000004
`
`
`
`DAVID M. SCHWARTZ
`
`EXAMINATION BY:
`
`Mr. Berl
`
`Mr. Mudge
`
`DEPOSITION EXHIBITS:
`
`1
`
`Copy, preliminary specification sheet,
`
`26
`
`"CompuSonics DSP—l000 Digital Disk
`
`Recorder/Player"
`
`CDNO26281
`
`Copy, application notes,
`
`"DSP 1000
`
`Digital Audio Disk Recorder"
`
`CDNO26489—49O
`
`Copy,
`
`"DSP 1000 Audio Computer Owners
`
`Guide"
`
`CDN025708—767
`
`Copy, 9/l/86 article from Electronic
`
`Engineering Times,
`
`"Optical—Disk—
`
`Based Digital Audio System Premieres"
`
`CDNO26284
`
`GROSSMAN & COTTER
`
`PAGE 000005
`
`
`
`DAVID M. SCHWARTZ
`
`DEPOSITION EXHIBITS
`
`5
`
`COPY, front and back of postcard,
`
`"The DSP 1000 Audio Computer"
`
`CDNO26285
`
`Copy, AES preprint, "Specifications
`
`and Implementation of a Computer
`
`Audio Console for Digital Mixing
`
`and Recording," by David M. Schwartz
`
`CDN025778-786
`
`Copy, AES preprint,
`
`"A High Speed
`
`Telecommunications Interface for
`
`Digital Audio Transmission and
`
`Reception," by Hyun Heinz Sohn
`
`CDN025772-777
`
`Videotape depicting a lecture given
`
`by David M. Schwartz
`
`CDN026253
`
`COPY! excerpt
`
`from April 1985 PC
`
`World magazine, "Hi-Fi Floppy"
`
`CDNO26305-312
`
`GROSSMAN & COTTER
`
`PAGE 000006
`
`
`
`DAVID M. SCHWARTZ
`
`DEPOSITION EXHIBITS
`
`10
`
`Copy, "CompuSonics DSP 2002 Version
`
`1.00 Preliminary User Manual, August
`
`28, 1985"
`
`CDN025668—707
`
`Confidential
`
`Copy, 5/21/85 Shareholder letter from
`
`110
`
`David M. Schwartz
`
`CDN026261-262
`
`Copy, 10/10/85 Shareholder letter
`
`from David M. Schwartz
`
`CDNO26382-383
`
`Copy, paper
`
`"Toward Electronic
`
`Delivery of Music: Sending and
`
`Receiving High Fidelity Digital Music"
`
`CDNO25867—873
`
`Copy, 6/8/84 article from Pro Sound
`
`141
`
`News,
`
`"CompuSonics Bows Totally
`
`Digital"
`
`CDNO2627l
`
`GROSSMAN & COTTER
`
`PAGE 000007
`
`
`
`DAVID M, SCHWARTZ
`
`DEPO5. IT I=ON\ EIXII-III BITS
`
`15'
`
`‘Copy, "Pay Per§Listen Cable Audio
`
`System"
`
`rCDNO263T9
`
`Copy,gdownload.f;omUDIALOG%R)Fi1e
`
`headed~with IZZZ9/86:Forbes article,
`
`"HLqh—fidElity heavem"
`
`CDN027lG8~lTO
`
`10
`
`11
`
`12
`
`13
`
`14
`
`15
`
`16
`
`17
`
`18
`
`19
`
`20
`
`21
`
`22
`
`23
`
`24
`
`25
`
`*GROSSMAN;& COTTER
`
`PAGE 000008
`
`
`
`DAVID M. SCHWARTZ
`
`BE IT REMEMBERED that, pursuant to
`
`notice, and on Thursday, February 1, 2001, commencing
`
`at the hour of 9:20 a.m.
`
`thereof, at 601 California
`
`Avenue, Conference Room Baylands 2B, Palo Alto,
`
`California, before me, FRANCES A. WEINROB, a
`
`Registered Merit Reporter, Certified Realtime
`
`Reporter, Certified Realtime Professional, and a
`
`Certified Shorthand Reporter,
`
`there personally
`
`appeared DAVID M. SCHWARTZ.
`
`THE VIDEOGRAPHER: Good morning.
`
`This marks the beginning of Videotape 1
`
`in
`
`the deposition of David Schwartz in the matter of
`
`SightSound.Com Incorporated versus N2K, et al.,
`
`in
`
`the U.S. District Court, Western District of
`
`Pennsylvania, Civil Action No. 98-0118.
`
`Today's date is February 1st, 2001, and the
`
`time is 9:20 a.m.
`
`The location of this deposition is
`
`601 California Avenue, Palo Alto, California.
`
`The deposition was noticed by attorneys for
`
`the defendant and the videotape is being produced on
`
`O9:
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`20:
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`12
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`09:
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`13
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`behalf of the same.
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`09:
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`54
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`09:
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`20:
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`56
`
`09:
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`20:
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`59
`
`09:
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`21:
`
`01
`
`The video operator is Josh Porter,
`
`a
`
`California Notary Public for the County of San
`
`Francisco, employed by Dan Mottaz Video Productions,
`
`402 Dewey Boulevard, San Francisco, California 94116.
`
`GROSSMAN & COTTER
`
`PAGE 000009
`
`
`
`DAVID M. SCHWARTZ
`
`10
`The court reporter today is Fran Weinrob of
`
`Grossman & Cotter.
`
`Would counsel present please identify
`
`themselves and state whom they represent.
`
`MR. MUDGE:
`
`I'm Brian Mudge with Kenyon &
`
`Kenyon, representing plaintiff Sightsound.
`
`MR. ZEINEDDIN: My name's Paul Zeineddin.
`
`I
`
`am with Kenyon & Kenyon, representing Sightsound.
`
`MR. REESE: My name is Christopher Reese.
`
`09:21:12
`
`09:21:14
`
`09:21:16
`
`09:21:18
`
`09:21:23
`
`09:21:26
`
`09:21:29
`
`09:21:31
`
`09:21:34
`
`1
`
`2
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`3
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`4
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`5
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`6
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`7
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`8
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`9
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`09:21:36
`
`10
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`I'm general counsel at Sightsound.
`
`09:21:38
`
`11
`
`MR. SCHWARTZ: Ansel Schwartz,
`
`09:21:39
`
`12
`
`self—practitioner representing SightSound.Com.
`
`09:21:44
`
`13
`
`MR. BERL: David Berl, Wilson, Sonsini,
`
`09:21:45
`
`14
`
`Goodrich & Rosati,
`
`representing defendants CDNOW and
`
`09:21:49
`
`15
`
`CDNOW Online.
`
`09:21:52
`
`16
`
`THE VIDEOGRAPHER:
`
`If there are no
`
`09:21:52
`
`17
`
`stipulations, will the court reporter please
`
`09:21:54
`
`18
`
`administer the oath.
`
`19
`
`20
`
`21
`
`22
`
`23
`
`DAVID M. SCHWARTZ,
`
`called as a witness by the defendants, and who, being
`
`first duly administered the oath, was thereupon
`
`examined and testified as hereinafter set forth.
`
`EXAMINATION BY MR. BERL
`
`09:22:12
`
`24
`
`Q.
`
`Hello, Mr. Schwartz, my name, as you know,
`
`09:22:15
`
`25
`
`is David Berl.
`
`I represent CDNOW and CDNOW Online in
`
`GROSSMAN & COTTER
`
`PAGE 000010
`
`
`
`O9:
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`22:
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`20
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`this case.
`
`DAVID M. SCHWARTZ
`
`09:
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`22:
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`21
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`09:
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`22:
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`22
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`09:
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`Could you state your full name for the
`
`record and spell your last name.
`
`A.
`
`Q.
`
`David Michael Schwartz, S-C-H—W-A-R-T-Z.
`
`Mr. Schwartz, have you ever lived in
`
`Pennsylvania?
`
`A.
`
`Yes,
`
`I was born in Pittsburgh, Pennsylvania,
`
`How long did you live there?
`
`I lived there until 1973.
`
`So did you go to high school there?
`
`Yes.
`
`I did all my education through college
`
`22:
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`52
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`09:
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`00
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`in Pittsburgh.
`
`What high school did you go to?
`
`Taylor Alderdice High School
`
`in Squirrel
`
`Is that outside of Pittsburgh?
`
`No, it's in the city.
`
`And do you still have family in Pittsburgh?
`
`No, no family in Pittsburgh.
`
`Could you state your work and home
`
`O9:
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`residences.
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`A.
`
`Presently my home address is 21 Madera
`
`Avenue, San Carlos, California. My work address is
`
`1313 Laurel Street, San Carlos, California.
`
`GROSSMAN & COTTER
`
`PAGE 00001 1
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`
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`DAVID M. SCHWARTZ
`
`Q.
`
`Do you have any current addresses in
`
`Pennsylvania?
`
`A.
`
`No,
`
`I do not.
`
`Have you ever testified in a case before?
`
`Yes,
`
`I have.
`
`And what case was that?
`
`I don't recall the name.
`
`It was the State
`
`of Kansas.
`
`It was a criminal case involving an oil
`
`drilling company in the State of Kansas.
`
`Q.
`
`A.
`
`And what was your role in that case?
`
`I was an engineer working for a company that
`
`owned some of the oil wells that were involved in the
`
`24
`
`case.
`
`09:
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`:01
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`09
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`:15
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`And you actually testified in court?
`
`Yes,
`
`I did.
`
`And have you ever testified in another case?
`
`Not to the best of my recollection.
`
`Have you ever been deposed before?
`
`Yes,
`
`I have, but I can't remember the name
`
`09
`
`:24
`
`:19
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`of the case.
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`09:
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`:35
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`Do you know about how long ago it was?
`
`25 years ago maybe.
`
`And what did the case involve? Generally
`
`Q.
`
`A.
`
`Q.
`
`speaking.
`
`A.
`
`I don't know if I could even remember.
`
`GROSSMAN & COTTER
`
`PAGE 000012
`
`
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`DAVID M. SCHWARTZ
`
`Q.
`
`Do you know what your role was,
`
`in what
`
`13
`
`capacity you were testifying?
`
`A.
`
`I was not any kind of an expert witness,
`
`I
`
`just happened to be a witness to something, and I
`
`can't even remember if it was a civil or criminal
`
`case.
`
`Too long ago.
`
`Q.
`
`A.
`
`Q.
`
`Do you remember where it was?
`
`In Pittsburgh, Pennsylvania,
`
`I believe.
`
`Just since it's been a long time,
`
`I'm going
`
`to go through some ground rules with you about the
`
`deposition process.
`
`the oath you just took has the
`
`09:
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`First of all,
`
`same effect that an oath you would take in court has.
`
`That is, you have to tell the truth and the whole
`
`truth as you would in court.
`
`I noticed you have a box of Kleenexes. Are
`
`you feeling okay?
`
`A.
`
`I feel pretty good.
`
`I do have what's left
`
`09:
`
`25:
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`21
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`of a cold.
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`Are you taking any drugs?
`
`I
`
`took two aspirin before I came here.
`
`Do you feel well enough to remember
`
`everything today?
`
`A.
`
`I don't think my cold has affected my
`
`memory.
`
`GROSSMAN & COTTER
`
`PAGE 000013
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`DAVID M. SCHWARTZ
`
`Q.
`
`Is there any other reason that you don't
`
`14
`
`think you can go forward and testify today?
`
`A.
`
`No,
`
`I'm fine.
`
`I may have to use a Kleenex
`
`occasionally.
`
`Q.
`
`Some of the things we're going to be talking
`
`about
`
`today go way back,
`
`so you may not be able to
`
`remember everything,
`
`I would guess.
`
`If that's the
`
`case, you can simply say you don't remember
`
`something. There's nothing wrong with that, and you
`
`can give your best recollection of the events as you
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`remember them.
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`09:
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`26:
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`the court reporter, as you see, can't
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`Also,
`
`pick up any physical gestures.
`
`So if the answer to a
`
`question is yes, you'll have to say yes instead of
`
`nodding your head yes or nodding your head no.
`
`Instead,
`
`just say no.
`
`I'm going to ask some questions here in the
`
`morning and, we'll see, it might go through lunch and
`
`a little after that, and then Sightsound will be able
`
`to ask you questions as well, and we'll go as long as
`
`it takes. Hopefully we'll be done by the end of the
`
`day.
`
`What is the highest degree you've earned?
`
`A.
`
`A professional degree in architecture,
`
`bachelor of architecture from Carnegie Melon
`
`GROSSMAN & COTTER
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`PAGE 000014
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`
`
`DAVID M. SCHWARTZ
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`University in Pittsburgh, Pennsylvania in l972.
`
`15
`
`Q.
`
`A.
`
`Where are you currently employed?
`
`I'm the founder and CEO of Imaginon,
`
`a
`
`publicly traded technology company in San Carlos,
`
`09:
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`26:
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`54
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`California.
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`09:
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`Q.
`
`A.
`
`What does Imaginon do?
`
`Software for Internet —— for networks,
`
`Internet and intranet networks. Media software
`
`primarily. Video processing and audio processing,
`
`and also webpage processing.
`
`Q.
`
`Is Imaginon involved in transmitting digital
`
`audio signals over the Internet?
`
`A.
`
`To the extent that they accompany video,
`
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`Q.
`
`And are they involved in transmitting any
`
`digital audio signals over a network other than the
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`09:
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`28
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`Internet?
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`09:
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`09:
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`27
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`:31
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`A.
`
`Intranets, which is the same —— using the
`
`same protocol that's used on the Internet, but
`
`in a
`
`09:
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`27
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`:35
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`local area network.
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`09:
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`09
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`:27:
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`47
`
`Q.
`
`And how long have you been employed at
`
`Imaginon?
`
`A.
`
`Well,
`
`I started the company,
`
`incorporated it
`
`in the spring of 1996.
`
`So I received my first
`
`paycheck probably in July or August of 1996.
`
`GROSSMAN & COTTER
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`PAGE 000015
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`
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`DAVID M. SCHWARTZ
`
`O9:
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`:52
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`09:
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`55
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`Q.
`
`And let's go back a little farther. After
`
`16
`
`university, what was the first full-time job that you
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`O9:
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`
`had?
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`:16
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`A.
`
`I was working —— I went to work for one of
`
`my former professors who had a start-up company.
`
`I
`
`can't remember the full name of the company.
`
`Something-Environmental Research,
`
`Incorporated.
`
`Q.
`
`And what was your title there, if you
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`09:
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`remember?
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`A.
`
`Q.
`
`Engineer, software engineer.
`
`And did that job involve the transmission of
`
`any digital audio signals?
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`:28:
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`A.
`
`Not at all.
`
`It was design of advanced
`
`prefabricated structures for buildings.
`
`Q.
`
`Okay. And what was the next
`
`job you held?
`
`Actually, let's go back. When did you hold that job,
`
`for how long?
`
`A.
`
`Oh, we started that —— started working for
`
`Tony in 1972 and worked for him through 1974. About
`
`two years.
`
`Q.
`
`A.
`
`And where did you go after that?
`
`I started a company with another —— a friend
`
`of mine who also worked for Tony. We split off and
`
`formed our own company in Pittsburgh and then very
`
`quickly moved into Boston in 1974.
`
`GROSSMAN & COTTER
`
`PAGE 000016
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`
`
`DAVID M. SCHWARTZ
`
`Do you remember the name of that company?
`
`17
`
`Sure.
`
`GNS,
`
`three initials,
`
`Inc.
`
`What did GNS stand for?
`
`I think it had several meanings, but we
`
`mainly called it Great Natural Structures.
`
`Q.
`
`A.
`
`And what did that job involve?
`
`We designed environmentally friendly
`
`prefabricated high—tech structures.
`
`Q.
`
`And when you say "structures," what do you
`
`mean by that?
`
`A.
`
`Well,
`
`they were things -- I think now it's
`
`called panelized construction in the industry. Where
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`you can put buildings together,
`
`like you would a toy,
`
`out of big pieces, and those included solar energy
`
`pieces so the building would generate a substantial
`
`part of its own heat or power.
`
`Q.
`
`A.
`
`Q.
`
`A.
`
`And how long were you at GNS?
`
`Till about 1978.
`
`And where did you go after that?
`
`I was recruited by a solar energy design
`
`company in Washington, D.C., and they set up a
`
`subsidiary called Energy Design and Analysis Company,
`
`EDAC,
`
`in Washington.
`
`Q.
`
`A.
`
`Do you remember your title there?
`
`Director of engineering services,
`
`I believe.
`
`GROSSMAN & COTTER
`
`PAGE 000017
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`
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`DAVID M. SCHWARTZ
`
`Q.
`
`A.
`
`And what were your responsibilities?
`
`Writing software, preparing proposals to
`
`the -- mainly to the federal government for various
`
`energy conservation projects for the Department of
`
`Energy, Department of Defense.
`
`I think it was called
`
`HUD, Housing and Urban Development, at that time.
`
`Q.
`
`And did the software you wrote there involve
`
`in any way the transmission of digital audio signals?
`
`No, it did not.
`
`And how long were you there?
`
`Oh, till 1980 —- or through 1980.
`
`Where did you go after that?
`
`In 1980,
`
`I moved to Denver, Colorado to work
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`00
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`09:
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`:08
`
`A.
`
`for a related firm.
`
`I'm not sure, it may even have
`
`been called Energy Design and Analysis Company in
`
`Denver.
`
`Same ownership.
`
`Q.
`
`A.
`
`What was your role there?
`
`Again, software and a systems design,
`
`project proposals.
`
`Q.
`
`So it was the same job essentially in a
`
`different place?
`
`A.
`
`Q.
`
`Essentially the same job in Denver, right.
`
`And how long did you stay there?
`
`Till nineteen -- I want to say 1983.
`
`And where did you go in 1983?
`
`GROSSMAN & COTTER
`
`PAGE 000018
`
`
`
`DAVID M. SCHWARTZ
`
`09:
`
`32:
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`13
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`19
`
`A.
`
`In 1983,
`
`I started a company called
`
`19
`
`Compusound, Inc., out of my house or condominium in
`
`09:
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`32:
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`Denver.
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`09:
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`Q.
`
`A.
`
`And what was the goal of Compusound,
`
`Inc.?
`
`To design, build and manufacture and sell
`
`digital audio equipment.
`
`Q.
`
`A.
`
`And how long were you at Compusound?
`
`Well,
`
`I resigned, although there was not
`
`really anybody to resign to,
`
`I resigned in 1989.
`
`Q.
`
`And was the company called Compusound,
`
`Inc.,
`
`the entire time from 1983 to 1989?
`
`A.
`
`No. Early on, and I couldn't give you the
`
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`
`exact date,
`
`I think it was 1984, middle of
`
`'84, we
`
`had to change the name because there was a firm in
`
`Southern California that owned the name Compusound in
`
`conjunction I think with a loud speaker system, and
`
`they informed us that they objected to our
`
`registration of it as a corporate name,
`
`so we changed
`
`the name to Compusonics.
`
`Q.
`
`And was it called Compusonics still at the
`
`time that you resigned in 1989?
`
`A.
`
`Q.
`
`Yes, it was.
`
`And what was the reason for your
`
`resignation?
`
`A.
`
`Well,
`
`the company did not have enough
`
`GROSSMAN & COTTER
`
`PAGE 000019
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`DAVID M. SCHWARTZ
`
`business to support itself, and I could not find
`
`20
`
`other sources of funding to keep it going,
`
`so I had
`
`to get a real job.
`
`Q.
`
`A.
`
`And what real job did you get?
`
`Well,
`
`I worked -— I had several consulting
`
`contracts,
`
`so you could say I worked as an
`
`independent consultant.
`
`I did consulting work, not
`
`just digital audio related, but digital signal
`
`processing, which is the technology that our software
`
`embodied.
`
`So I worked —— I did contracts for Tandy
`
`Corporation, for Atari Corporation, for Seagate.
`
`Q.
`
`And when you say "contracts," what do you
`
`09:
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`34:
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`42
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`:57
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`09:
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`
`O0
`
`09:
`
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`05
`
`09:
`
`35:
`
`07
`
`mean by that?
`
`A.
`
`Well,
`
`they're consulting contracts, where a
`
`company has a specific problem and they say, can you
`
`solve this problem or write this piece of software
`
`and tell us how much money you want, and then I would
`
`give them a bid and we would sign a letter agreement,
`
`and then within a certain period of time, I'd produce
`
`either the software or a report or what it was they
`
`had asked me to perform.
`
`Q.
`
`And how long did you work as an independent
`
`O9
`
`:35:
`
`O9
`
`consultant?
`
`09:
`
`35:
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`A.
`
`Not very long. About six months. And then
`
`one of the companies I was consulting for said,
`
`GROSSMAN & COTTER
`
`PAGE 000020
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`DAVID M. SCHWARTZ
`
`21
`basically, we think we could save some money if we
`
`hired you full-time.
`
`And what company was that?
`
`That was Starsignal in Campbell, California.
`
`How long did you work at Starsignal?
`
`About a year.
`
`In about 1990 --
`
`Yes.
`
`-— is that where we are? And what was your
`
`Starsignal?
`
`I'm pretty sure I was one of the VPs of
`
`engineering, but that was a big title over what was
`
`basically an engineering job.
`
`Q.
`
`And what were you engineering?
`
`09:
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`A.
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`The digital signal processing system for the
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`first color facsimile machine.
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`Image processing.
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`Q.
`
`A.
`
`Q.
`
`A.
`
`And you stayed there one year, you said?
`
`Yes.
`
`And where did you go after that?
`
`I went to work for Tandy Corporation.
`
`The
`
`Tandy research and —— R&D center, research and
`
`development center,
`
`in San José, California.
`
`Q.
`
`A.
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`And what was your role there?
`
`I headed the software engineering group.
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`It
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`would be too grand to call it a department.
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`DAVID M. SCHWARTZ
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`Q.
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`And in that job, were you involved with the
`
`22
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`transmission of digital audio signals?
`
`A.
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`Well,
`
`to some extent.
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`They were only
`
`transmitted locally.
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`The main purpose of the work
`
`there was to develop the first erasable compact disk
`
`recorder —— erasable disk for compact disk, you know,
`
`players, recorders.
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`Q.
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`A.
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`And was that endeavor successful?
`
`From a technical point of view, it was
`
`successful. We produced working machines,
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`finished
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`machines, and working devices.
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`They were not
`
`09:
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`marketed at that time.
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`How long did you stay at Tandy?
`
`Till I think June 1992.
`
`And where did you go in June of 1992?
`
`To Atari Corporation.
`
`And what were you doing at Atari?
`
`I'm trying to remember my exact title.
`
`I believe I started as a senior engineer
`
`group leader for the digital audio —— two digital
`
`audio projects. One,
`
`the digital audio for the Atari
`
`Falcon computer, 68040—based computer, and at the
`
`same time designing the digital —— the audio digital
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`signal processing circuit for the Jaguar video game
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`system.
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`GROSSMAN & COTTER
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`DAVID M. SCHWARTZ
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`Q.
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`And did that involve the transmission of
`
`23
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`digital audio signals?
`
`A.
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`Locally.
`
`You know,
`
`from here to there
`
`around the building and from one machine to another.
`
`Okay, but not outside of Atari?
`
`No.
`
`And how long did you stay at Atari?
`
`Till the company basically ceased operations
`
`09:
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`:24
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`in the summer of 1996.
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`Q.
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`A.
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`And in the summer of 1996, where did you go?
`
`Well,
`
`that overlaps with the start of my
`
`present company, with Imaginon.
`
`I started the
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`company with the permission of management of Atari,
`
`Q.
`
`A.
`
`Q.
`
`And you're still at Imaginon?
`
`Yes.
`
`Okay, now I'd like to circle back many jobs
`
`ago to Compusound. What was the corporate mission
`
`originally of Compusound?
`
`A.
`
`Well,
`
`to make money for the shareholders.
`
`Okay? That was the basic mission, but we were going
`
`to do that with two types of product. One, a
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`professional-level digital audio workstation and,
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`two, a consumer digital audio recorder, player,
`
`09:
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`editor.
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`Q.
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`And did you make a professional-level
`
`GROSSMAN & COTTER
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`PAGE 000023
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`
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`DAVID M. SCHWARTZ
`
`digital audio system?
`
`A.
`
`The workstation? Yes, we did. We were the
`
`first -— to the best of my knowledge, we were the
`
`first company to commercialize such a device.
`
`Q.
`
`A.
`
`And what did you call that device?
`
`The DSP 2000 series. There was the 2002,
`
`2004 and so on, depending on how many audio channels
`
`it could process in parallel.
`
`Q.
`
`And did you ever make the consumer device
`
`that you spoke of?
`
`A.
`
`Yes, we did. We started building it in
`
`prototype form almost
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`immediately.
`
`The first
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`prototype -- I built the first prototype personally
`
`in 1983, and it went
`
`through a series of prototypes
`
`up until the first batch of commercial units were
`
`produced in either late 1985 or early l986.
`
`Q.
`
`And who came up with the idea of making a
`
`consumer device for digital audio signal
`
`09:
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`40:
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`25
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`transmission?
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`09:
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`27
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`MR. MUDGE:
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`I'm going to object to the
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`question.
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`I think it mischaracterizes his testimony.
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`BY MR. BERL:
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`Q.
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`Who came up with the idea of making a
`
`consumer device for digital signal processing?
`
`A.
`
`Well,
`
`I'm going to take some credit for
`
`GROSSMAN & COTTER
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`
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`DAVID M. SCHWARTZ
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`09:
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`being, if not the first, among the very first people
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`to do that.
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`Digital signal processing, up until the time
`
`myself and a few other people in the industry started
`
`working with it, was purely the domain of the defense
`
`industry, really,
`
`the Navy in particular.
`
`The U.S.
`
`Navy had a very large effort in digital signal
`
`processing for audio for detecting submarines, you
`
`know, for coastal defense and processing signals to
`
`determine whether the hydrophones,
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`the microphones
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`underwater, were picking up, you know, whales or
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`dolphins or submarines.
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`:03
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`Q.
`
`What do you mean when you say "digital
`
`signal processing"?
`
`A.
`
`Well,
`
`then I have to describe what an analog
`
`signal is. There are generally two classes of
`
`signals.
`
`In layman's terms, an analog signal is the
`
`wiggly line you see on ER on the scope, on the screen
`
`when you're watching some patient's heart fail and it
`
`goes beep, beep, beep, beep, and the line goes across
`
`the screen, and then it goes flat and the person's
`
`dead. That's the analog representation of a signal,
`
`a wiggly line going across some screen someplace.
`
`A digital signal is a series of numbers that
`
`GROSSMAN & COTTER
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`PAGE 000025
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`
`
`DAVID M. SCHWARTZ
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`actually measures the —- represents the position of
`
`26
`
`that wiggly line in an X/y dimension.
`
`So it's a
`
`graph.
`
`You could say you plot the points that make
`
`up that line.
`
`So that's a digital signal.
`
`And when we say digital signal processing,
`
`it means to take that data,
`
`that set of numbers, and
`
`do something with it.
`
`And I'd like to go back to that consumer
`
`What did you call it?
`
`The DSP 1000.
`
`And "DSP" stands for?
`
`Well, we started saying digital signal
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`processor,
`
`then too many people said "What?"
`
`So we
`
`said digital sound processor, and it was never —— I'm
`
`not sure if it was clear completely to the press
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`which one it was.
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`MR. BERL: Okay.
`
`I'm now going to have this
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`marked Exhibit 1.
`
`09:
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`22
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`(WHEREUPON, DEPOSITION EXHIBIT 1 WAS MARKED
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`FOR IDENTIFICATION.)
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`BY MR . BERL:
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`Are you familiar with Exhibit 1?
`
`Yes,
`
`I am.
`
`Do you know who wrote Exhibit 1?
`
`Well,
`
`I probably wrote the first draft of
`
`GROSSMAN & COTTER
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`PAGE 000026
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`DAVID M. SCHWARTZ
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`it, and then our advertising agency, whoever they
`
`27
`
`were at the time -— I do remember who they were at
`
`the time -- Leber Katz Partners in New York City,
`
`they probably turned it into English.
`
`Q.
`
`And looking at Exhibit 1, which bears the
`
`number 26281 at the bottom,
`
`if I could direct your
`
`attention to the top,
`
`there are three bulleted lines.
`
`Could you read those to yourself for a second.
`
`A.
`
`Q.
`
`A.
`
`Yes.
`
`And could you read the first line out
`
`loud.
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`"In—home digital quality stereo
`
`recording from any source."
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`Q.
`
`A.
`
`And can you tell me what you meant by that?
`
`What it says, it means it acts like a tape
`
`deck,
`
`like a cassette deck.
`
`You plug a couple of
`
`wires into it from your radio or a microphone, and
`
`you record a radio show or copy an LP record onto
`
`this machine.
`
`It's a recording deck.
`
`The "any source" refers to whatever audio
`
`source you happen to have at hand.
`
`Q.
`
`A.
`
`And can you read the second bulleted line.
`
`"Digital recording from remote
`
`databases:
`
`'telerecording.'".
`
`And what did you mean by that?
`
`Well,
`
`I don't know if we invented this term.
`
`GROSSMAN & COTTER
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`PAGE 000027
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`DAVID M. SCHWARTZ
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`We never claimed to have invented this term, but
`
`28
`
`maybe we did or maybe our advertising agency did.
`
`Telerecording means to take digital audio
`
`data from some place outside of your home and record
`
`it onto your local disk drive.
`
`Q.
`
`And now directing your attention to the
`
`bottom of the page, are you familiar with what is
`
`pictured there?
`
`The picture?
`
`Yes.
`
`That's probably the second or third
`
`prototype of the DSP 1000.
`
`Q.
`
`And how do you know it's the second or third
`
`prototype?
`
`A.
`
`The first two were pretty ugly. This is one
`
`of the finished—looking ones.
`
`Q.
`
`A.
`
`And by "finished," what do you mean?
`
`It doesn't look like it was built in my
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`09:
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`kitchen.
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`46:32
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`Q.
`
`Okay.
`
`Do you know when this document was
`
`produced?
`
`A.
`
`Well, it says "Copyright 1984" at the
`
`bottom,
`
`so I'm pretty sure it was produced in 1984.
`
`Q.
`
`Does that comport with your memory of when
`
`the second or third prototype of the DSP 1000 ——
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`GROSSMAN & COTTER
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`PAGE 000028
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`DAVID M. SCHWARTZ
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`Yes, it does.
`
`1984 sounds about right.
`
`29
`
`MR. BERL:
`
`Now, if I could have this marked
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`as Exhibit 2.
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`17
`
`(WHEREUPON, DEPOSITION EXHIBIT 2 WAS MARKED
`
`FOR IDENTIFICATION .
`
`)
`
`MR. BERL: You'll want to hold on to
`
`Exhibit 2. We'll be using it quite a bit throughout
`
`the morning.
`
`Do you recognize this document?
`
`Yes,
`
`I do.
`
`And what do you recognize it as?
`
`A document that we produced for our
`
`salespeople and for the dealers who would sell the
`
`O9:
`
`47:
`
`22
`
`DSP 1000.
`
`09:
`
`47
`
`:24
`
`O9:
`
`47
`
`:27
`
`09:
`
`47
`
`:29
`
`O9:
`
`47
`
`:36
`
`09:
`
`47
`
`:43
`
`O9:
`
`47
`
`:48
`
`09:
`
`47
`
`:52
`
`O9:
`
`47:
`
`59
`
`O9:
`
`48
`
`:03
`
`09:
`
`48
`
`:08
`
`O9
`
`:48:
`
`12
`
`Q.
`
`Do you know who produced it for the
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