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Case 2:07-cv-00271-RSP Document 268 Filed 09/27/10 Page 1 of 140 PageID #: 13525
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`1
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`MARSHALL DIVISION
`
`AMERANTH, INC. * Civil Docket No.
` * 2:07-CV-271
`VS. * Marshall, Texas
` *
` * September 14, 2010
`MENUSOFT SYSTEMS CORPORATION * 8:30 A.M.
`
`TRANSCRIPT OF TRIAL
`BEFORE THE HONORABLE JUDGE CHAD EVERINGHAM
`UNITED STATES MAGISTRATE JUDGE
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`APPEARANCES:
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`FOR THE PLAINTIFFS:
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`MR. JOHN W. OSBORNE
`MR. JAMES W. GOULD
`MR. PETER N. FILL
`MR. STEVEN M. PURDY
`MR. PETER H. NOH
`Locke Lord Bissell & Liddell
`3 World Financial Center
`New York, New York 10281
`
`MR. MICHAEL C. SMITH
`Siebman Burg Phillips & Smith
`113 East Austin Street
`Marshall, TX 75670
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`APPEARANCES CONTINUED ON NEXT PAGE:
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`COURT REPORTERS:
`
`MS. SUSAN SIMMONS, CSR
`MS. JUDITH WERLINGER, CSR
`Official Court Reporters
` 100 East Houston, Suite 125
` Marshall, TX 75670
`903/935-3868
`
`(Proceedings recorded by mechanical stenography,
`transcript produced on CAT system.)
`
`Apple, Exhibit 1063, Page 1
`
`

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`Case 2:07-cv-00271-RSP Document 268 Filed 09/27/10 Page 2 of 140 PageID #: 13526
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`2
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`APPEARANCES CONTINUED:
`
`FOR THE DEFENDANTS:
`
`MR. MARC L. DELFLACHE
`MR. DUSTIN MAUCK
`Fulbright & Jaworski
`2200 Ross Avenue, Suite 2800
`Dallas, TX 75201
`
`MR. RICHARD S. ZEMBEK
`Fulbright & Jaworski
`1301 McKinney, Suite 5100
`Houston, TX 77010
`
`MR. OTIS CARROLL
`Ireland Carroll & Kelley
`6101 South Broadway, Suite 500
`Tyler, TX 75703
`
`* * * * * * *
`
` P R O C E E D I N G S
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`LAW CLERK: All rise.
`
`(Jury in.)
`
`THE COURT: All right. Thank you.
`
`Please be seated.
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`All right. Have a witness in the
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`courtroom?
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`Honor.
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`Good morning.
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`THE WITNESS: Good morning, Your Honor.
`
`THE COURT: Mr. Carroll?
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`MR. CARROLL: If the Court please, Your
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`Apple, Exhibit 1063, Page 2
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`

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`Case 2:07-cv-00271-RSP Document 268 Filed 09/27/10 Page 7 of 140 PageID #: 13531
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`7
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`A.
`
`Q.
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`Yes, I do.
`
`Okay. Now, this piece of -- this document --
`
`can you see it on your screen, by the way?
`
`A.
`
`Q.
`
`Yes, I can.
`
`Okay. This is called Hospitality Technology.
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`And in the very middle, it says: Our Premier Issue.
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`And then on the corner --
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`MR. CARROLL: Can you flip that thing
`
`over on the side, Jim?
`
`There we go. And lift that out.
`
`Q.
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`(By Mr. Carroll) And this says Keith McNally,
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`President, Ameranth Technology, 27201 Tourney Road,
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`Valencia, California, and then it gives a ZIP Code.
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`Is that your proper address, or was it at the time?
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`A.
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`It was the address of an old Ameranth office
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`at the time, yes.
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`Q.
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`Okay. But, again, you gave this to us out of
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`your files.
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`A.
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`Q.
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`You don't dispute that, correct?
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`No, we produced it.
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`Okay. So -- and can you find with me up in
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`22
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`the upper right-hand corner, the date on this document?
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`24
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`25
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`A.
`
`Q.
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`January of 1997, correct?
`
`Yes; that's correct.
`
`And that's before the date that you filed your
`
`Apple, Exhibit 1063, Page 3
`
`

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`Case 2:07-cv-00271-RSP Document 268 Filed 09/27/10 Page 8 of 140 PageID #: 13532
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`8
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`disclosure of your patent to the Patent Office by two
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`years, is it not?
`
`A.
`
`Q.
`
`Yes, it is.
`
`Now, let's look at this document that came
`
`from your files and the -- by the way, the title of the
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`issue says: Bringing Technology to the Table.
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`You see that, correct?
`
`Yes.
`
`Okay. Now, let's flip over to 37731, if we
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`A.
`
`Q.
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`can, where it says Wireless Technology. Here we go.
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`Okay. And this is a page out of this
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`magazine, correct? This is an article?
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`13
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`14
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`A.
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`Q.
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`Yes, it is.
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`And this starts out: For a small but growing
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`number of restaurant operators, order entry systems that
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`can communicate directly from a dining area to the
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`kitchen without being tied to a landline connection or
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`slashing customer wait times and beefing up employee
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`productivity in operations as diverse as hotels and
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`quick-serve restaurants.
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`A.
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`Q.
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`You see that, correct?
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`Yes.
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`And then you see a piece -- a picture.
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`That's -- that is the MICROS -- it says: Photo, MICROS
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`Systems, Inc., down in the right-hand corner of the
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`Apple, Exhibit 1063, Page 4
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`

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`Case 2:07-cv-00271-RSP Document 268 Filed 09/27/10 Page 9 of 140 PageID #: 13533
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`picture.
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`A.
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`Q.
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`That's a MICROS product, is it not?
`
`Yes.
`
`Okay. Now let's -- let's flip over to the
`
`next page, 37732, and up at the top, it starts talking
`
`about the Hilton Hotel chain or the Hilton Hotel at the
`
`Walt Disney World Village.
`
`See where I am?
`
`Yes.
`
`And it starts out saying: The 814-room Hilton
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`A.
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`Q.
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`at Walt Disney World Village has been using a handheld
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`touchscreen system from MICROS Systems, Inc., in its
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`pool area for about 18 months to deliver beverage
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`service in roughly the time it takes for guests to towel
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`themselves off.
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`A.
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`Q.
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`Do you see that, right?
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`Yes.
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`And then it goes on to describe the Hilton
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`uses four HHT units.
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`A.
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`Q.
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`What does that mean? Handheld transmitters?
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`That seems to be the case, yes.
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`Have you ever heard that term before, HHT?
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`THE COURT: The document refers to it as
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`touchscreen as opposed to a transmitter.
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`Q.
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`(By Mr. Carroll) Okay. Do you know what
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`Apple, Exhibit 1063, Page 5
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`

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`Case 2:07-cv-00271-RSP Document 268 Filed 09/27/10 Page 10 of 140 PageID #: 13534
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`HHT --
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`Q.
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`A.
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`Q.
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`MR. CARROLL: Thank you, Your Honor.
`
`(By Mr. Carroll) Do you know what HHT means?
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`Handheld terminal.
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`Handheld terminal.
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`Okay. Is that a -- is that an acronym that
`
`people in your industry use?
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`A.
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`Q.
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`It's -- yes, it's a common acronym.
`
`Okay. Okay. Then it goes on to say: Hilton
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`uses four of these HHT units that communicate via
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`spread-spectrum RF technology with the hotel's POS
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`system.
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`And we were told yesterday POS means
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`point-of-sale, correct?
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`A.
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`Q.
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`A.
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`Q.
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`Yes.
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`I mean, you agree with that, right?
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`Yes, I do.
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`Okay. The MICROS 8700 Hospitality Management
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`System, HMS, the HMS network in turn interfaces to
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`Hilton's proprietary property management system.
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`A radio module inside the HHT sends signals to
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`a base station with antenna mounted on the pool bar's
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`wall. The base station is wired to a PC that houses
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`application software and point-of-sale database.
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`You see that? Correct, you see that?
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`Apple, Exhibit 1063, Page 6
`
`

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`Case 2:07-cv-00271-RSP Document 268 Filed 09/27/10 Page 11 of 140 PageID #: 13535
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`11
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`A.
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`Q.
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`Yes, I do.
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`Now, my question for you, Mr. McNally, is a
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`real simple one. This is the same device that the
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`Patent Office heard about, not here but (indicates) in
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`connection with this continuation application, and
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`turned you down; isn't that true?
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`A.
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`I don't -- I don't accept that terminology,
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`no.
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`Q.
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`Okay. But the fact of the matter is that you
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`didn't tell the Patent Office about this MICROS 8700
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`System that was described in this article, sitting in
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`your office, that you gave to us in connection with this
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`lawsuit, when you asked for your patent in 1999, did
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`you?
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`A.
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`Q.
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`You didn't tell them about that?
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`No.
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`And then you did tell them about it years
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`later, because of this lawsuit, in connection with your
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`application for this continuation, where you said I want
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`to get more patent claims out of this same application,
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`and they said no. Not one but three said no, correct?
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`A.
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`Q.
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`Yes.
`
`So I'm going to put on our -- on our west side
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`of the fence line the MICROS 8700 -- and the date of
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`this document is January of '97.
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`Apple, Exhibit 1063, Page 7
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`

`

`Case 2:07-cv-00271-RSP Document 268 Filed 09/27/10 Page 12 of 140 PageID #: 13536
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`12
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`By the way, before we leave this document, I
`
`want to ask you about one other part of it.
`
`MR. CARROLL: Can you show me 37734,
`
`please, from this same document?
`
`Okay. In the upper right-hand corner
`
`where it starts out wireless order entry systems.
`
`Q.
`
`(By Mr. Carroll) It says: Wireless order
`
`entry systems that use handheld terminals to communicate
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`via radio frequency to a PC have long been common in
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`1 2 3 4 5 6 7 8 9
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`applications such as warehousing.
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`A.
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`Q.
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`You agree with that?
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`Yes.
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`These systems have just in the last few years
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`been introduced to the hos -- hospitality industry, but
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`they are being accepted.
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`Do you agree with that?
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`A.
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`I wouldn't agree with that statement at that
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`time, no.
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`Q.
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`In 1997?
`
`But you do agree with the statement that says
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`this same idea, this same concept had long been common
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`to applications such as warehousing.
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`25
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`A.
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`Q.
`
`Do you agree with that, correct?
`
`Which concept are you referring to?
`
`Exactly what the thing says up there.
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`Apple, Exhibit 1063, Page 8
`
`

`

`Case 2:07-cv-00271-RSP Document 268 Filed 09/27/10 Page 13 of 140 PageID #: 13537
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`13
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`Wireless order entry systems that use a handheld
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`terminal to communicate via radio frequency to a PC have
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`long been common in applications such as warehousing as
`
`of 1997, and you said you agreed with it.
`
`You want to stand by that testimony?
`
`A.
`
`Q.
`
`Yes.
`
`Okay. Mr. McNally, yesterday we talked some
`
`about a product called the TransPad.
`
`Do you remember that testimony?
`
`Yes.
`
`And the TransPad, you and Mr. Osborne told the
`
`A.
`
`Q.
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`1 2 3 4 5 6 7 8 9
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`jury a little bit about it, but it's -- it's true, is it
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`not, that your company, Ameranth, was marketing this
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`device called the TransPad well before the date you
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`applied for your patent you're suing us over?
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`A.
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`Q.
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`Yes, that's true.
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`And it's also true that you told the Patent
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`Office nothing about the TransPad when you applied for
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`that patent, correct?
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`A.
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`Q.
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`Yes.
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`Now, yesterday you told us -- I asked you
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`yesterday about the TransPad, and I referred to it as
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`your product, and you took issue with me on that. You
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`said it was not -- it was Synerdyne's product, hardware
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`product, that we were reselling.
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`Apple, Exhibit 1063, Page 9
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`

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`Case 2:07-cv-00271-RSP Document 268 Filed 09/27/10 Page 14 of 140 PageID #: 13538
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`14
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`Was that true --
`
`Yes.
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`-- what you told the jury yesterday?
`
`Yes.
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`So you were a reseller of this product? You
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`A.
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`Q.
`
`A.
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`Q.
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`didn't invent it at all?
`
`A.
`
`Q.
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`That's correct.
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`Okay. And as a reseller, you would have been
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`in the same boat as Brian Smith over here, who resells
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`Menusoft's products, correct?
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`A.
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`Q.
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`I think that's a fair comparison, yes.
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`Have you ever met Brian Smith, by the way,
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`13
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`before you sued him?
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`14
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`A.
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`I believe he was at the May 1999 show, but I
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`can't say for sure.
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`16
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`Q.
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`Okay. But one thing you can say for sure is
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`17
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`you never sent him any of these demand letters that you
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`18
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`told the jury about yesterday, before you pulled the
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`trigger on him, did you?
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`20
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`21
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`A.
`
`Q.
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`No.
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`And you also sued him out of what, 60
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`distributors of Menusoft products, and he's the only one
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`who drew the black bean?
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`25
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`A.
`
`Q.
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`Yes.
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`And you will agree with me it was just a shot
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`Apple, Exhibit 1063, Page 10
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`

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`Case 2:07-cv-00271-RSP Document 268 Filed 09/27/10 Page 15 of 140 PageID #: 13539
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`15
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`out of the dark, all of a sudden one day the sheriff
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`showed up and gave him your lawsuit. He -- you didn't
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`call him; you didn't give him a chance to take a
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`license; you didn't do any of those things you told the
`
`jury about with regard to some of these other folks.
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`You just hauled off and sued him; isn't that true?
`
`A.
`
`Q.
`
`A.
`
`Q.
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`Yes.
`
`Is that the way you do business?
`
`No.
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`So whatever this TransPad is, it's not yours,
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`11
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`is that what you're telling the jury?
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`A.
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`We didn't own any of the TransPads that we
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`13
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`were marketing, no.
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`14
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`15
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`Q.
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`Okay.
`
`MR. CARROLL: Let's find that letter.
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`16
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`Let me have 149, please.
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`17
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`Q.
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`(By Mr. Carroll) Can you see 149 up there,
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`18
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`Mr. McNally?
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`19
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`20
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`21
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`22
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`A.
`
`Q.
`
`A.
`
`Q.
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`Yes, I do.
`
`And the date is January the 4th of '97?
`
`Yes.
`
`And this is a letter that you wrote and you
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`23
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`signed, correct?
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`24
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`25
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`A.
`
`Q.
`
`Yes.
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`And it's written on the -- on the stationery
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`Apple, Exhibit 1063, Page 11
`
`

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