`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE NORTHERN DISTRICT OF ILLINOIS
`EASTERN DIVISION
`
`) Docket No. 10 C 715
`
`))
`
`
`TRADING TECHNOLOGIES
`INTERNATIONAL, INC.,
`
` v.
`
`9:35 a.m.
`)
`)
` )
` ) July 7, 2016
` ) Chicago, Illinois
`BGC PARTNERS, INC.,
`)
`
`)
` Defendant.
`)
`
`
`
`TRANSCRIPT OF PROCEEDINGS
`BEFORE THE HONORABLE VIRGINIA M. KENDALL
`
`
`
`APPEARANCES:
`
`For the Plaintiff:
`
`
`
`For the Defendants
`Interactive Brokers
`Group:
`
`
`
`For the Defendant
`TradeStation Group
`and TradeStation
`Securities:
`
`
`
`
`Court Reporter:
`
`McDONNELL BOEHNEN HULBERT & BERGHOFF by
`MR. LEIF R. SIGMOND, JR.
`MS. ANN PALMA,
`300 South Wacker Drive, 32nd Floor
`Chicago, Illinois 60606
`
`MANDELL MENKES LLC by
`MR. STEVEN P. MANDELL
`One North Franklin, Suite 3000
`Chicago, Illinois 60606
`
`FISH & RICHARDSON PC by
`MR. ADAM KESSEL (VIA TELEPHONE)
`One Marina Park Drive
`Boston, Massachusetts 02210
`
`GAYLE A. McGUIGAN, CSR, RMR, CRR
`Federal Official Court Reporter
`219 South Dearborn, Room 2318-A
`Chicago, Illinois 60604
`(312) 435-6047
`Gayle_McGuigan@ilnd.uscourts.gov
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`Page 1 of 15
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`TRADING TECH EXHIBIT 2344
`IBG ET AL. v. TRADING TECH
`CBM2015-00179
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`(In open court:)
`
`THE CLERK: 10 C 715, Trading Technologies versus BGC
`
`Partners.
`
`I have to make a call on this one.
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`(Clerk places telephone call.)
`
`THE COURT: Good morning.
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`MR. MANDELL: Good morning, your Honor. Steve Mandell
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`on behalf of IBG.
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`THE COURT: Good morning.
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`THE CLERK: I am going to transfer you into the
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`courtroom.
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`MR. SIGMOND: Good morning, your Honor. Leif Sigmond
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`on behalf of Trading Technologies.
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`MS. PALMA: Good morning, your Honor. Ann Palma on
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`behalf of Trading Technologies.
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`THE COURT: Good morning.
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`Good morning. Who is on the phone?
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`MR. KESSEL: Good morning, your Honor. This is Adam
`
`Kessel for the Trade Station defendants.
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`THE COURT: Okay. You are in open court and on the
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`record.
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`All right. Good morning, everyone.
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`I just thought it was interesting that the last three
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`times I've been with the federal circuit, which was like their
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`bench and bar conference, their circuit conference, and the
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`D.C. thing, this is the issue. Everybody is asking what to do
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`when it goes to PTAB and they want discovery and you've got a
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`protective order.
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`It's like percolating everywhere, but you know that
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`because that's your life.
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`So I got this morning this stipulation, right? Is it
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`this morning that came in?
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`MR. SIGMOND: I think -- so --
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`THE COURT: Or proposed --
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`MR. SIGMOND: Your Honor, we filed our motion, you
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`know, late last week to try to get here by today because we
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`have something we want to file tomorrow at the PTAB.
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`THE COURT: I know.
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`MR. SIGMOND: And so then last night they filed
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`something --
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`THE COURT: It's like a proposed stipulation.
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`MR. SIGMOND: Yes.
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`THE COURT: Right.
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`MR. KESSEL: Your Honor, we sent them a stipulation
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`several days ago, and then we had another compromise we offered
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`yesterday. Those were filed both yesterday afternoon.
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`THE COURT: But I was just notified of them.
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`MR. SIGMOND: Yeah, so I think, your Honor, they filed
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`them last night or yesterday afternoon and so -- yeah, so I
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`assume that's what you got this morning.
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`The problem is this: The problem is that we have a
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`situation where, I mean, if you look at what both parties
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`attached, the order from the PTAB denying our request for
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`additional discovery, if you look at page 10, they say as for
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`the document, this discovery request would not be necessary if
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`the District Court authorized patent owner to use the documents
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`in this proceeding.
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`So they gave us a couple stipulations, which basically
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`require us to go to the PTAB.
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`THE COURT: Who has already given you an answer.
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`MR. SIGMOND: Yeah, and the problem is every time we
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`go to the PTAB, they say -- I mean, we kind of -- we're in
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`this, like, catch-22 where --
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`THE COURT: I know.
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`MR. SIGMOND: And, your Honor, just so I can be very
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`clear, this is a situation where the same parties, in front of
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`two different tribunals, we got a bunch of discovery in this
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`case, and if you remember when we were in front of you getting
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`those depositions after the stay, you said I believe that -- I
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`know sometimes it's dangerous to quote yourself to you, but you
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`indicated on page 29 of the transcript that you thought this
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`stuff would be useful here, later, and in the PTAB. So now
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`we're trying to use it. And there is a protective order in the
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`PTAB. There's one here. All we're asking, big picture, is
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`that stuff that we have here, and I use "stuff" in the
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`scientific discovery way, stuff that we have here we can use in
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`the PTAB, and we'll, you know, file it under seal under their
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`protective order.
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`The one thing you haven't heard from defendants is why
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`is it a problem? In other words, the PTAB is free to say, Hey
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`TT, we're not going to listen to that, we don't want to look at
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`that evidence, but we can't even get it there for that
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`determination. And every time they give us a stipulation, it
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`kind of requires us to go to the PTAB first.
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`So we have two requests on our -- in our motion.
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`Request one is urgent. And, you know, I went back and
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`forth about whether to make this another emergency motion
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`because, again, we have a filing tomorrow, but we rushed to get
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`our paper to you on Friday so we could be here today. But if
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`you look at page 3 of our motion, Request 1 is, hey, we've
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`listed some transcripts and stuff -- I'm using the word "stuff"
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`again -- some documents, we give you a list that we want to use
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`in our filing tomorrow.
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`But then, more broadly, we'd like to stop doing this.
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`We'd like to just say, hey, if there's stuff under the
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`protective order here, let us use it in the PTAB, and we'll
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`follow their protective order there.
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`And, again, it's the same parties. You know, I
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`just -- I like it here, but --
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`THE COURT: I'd like a response, please.
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`MR. MANDELL: Okay, your Honor, if I may, I'll start
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`and then Mr. Kessel can fill in.
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`I don't know if your Honor has had a chance to look at
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`the two PTAB orders that were --
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`THE COURT: Of course.
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`MR. MANDELL: -- submitted in this case, but the PTAB
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`has a very strict and detailed procedure in terms of what it
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`allows for discovery. And the scope of the issues before the
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`PTAB, of course, is much more limited than the scope of issues
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`in this case.
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`As you know, the PTAB proceeding is the operative
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`proceeding here because the Court stayed this matter. And in
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`light of that, we made what we believe is a very reasonable
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`proposal, this was our second proposal, and that is that if the
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`PTAB says that discovery -- certain discovery is appropriate or
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`that certain documents should be considered by them, then we
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`would not argue that the plaintiff has to come back here every
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`time to seek to modify the protective order to be able to use
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`those documents.
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`Now, the plaintiff didn't respond to that proposal,
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`and the reason is is because the PTAB recently denied their
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`motion for additional discovery. And notwithstanding what
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`plaintiff says, it really was broader than that. They denied
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`it on procedural grounds.
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`They also found at page 10 of the order that the
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`patent order -- patent owner had not provided sufficient
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`explanation or reasoning as to why the requested discovery
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`could not be reasonably generated without a discovery request.
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`So what we think is going on here really is that this
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`is an effort to back-door or circumvent the PTAB's ruling with
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`respect to discovery.
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`And what they're doing is they're coming into court
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`and asking for a blanket order that notwithstanding what the
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`protective order in this case says, right? And your Honor
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`probably remembers what we went through on that protective
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`order, all the briefs filed. They insisted on a -- on this
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`protective order, which says the material shall not be used for
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`any purpose other than this proceeding, including any
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`proceedings in any other court, tribunal, or patent office.
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`Okay?
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`And there's a -- there's a standing protective order
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`in the PTAB proceeding, but that by no means addresses the
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`issues that were heavily negotiated that went into the
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`protective order in this case.
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`And that explains why TT, plaintiff, never made any
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`effort to meet and confer with us regarding this motion.
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`On two prior occasions, you'll recall, they came in to
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`seek to modify the protective order. We met and conferred. We
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`reached an agreement. In fact, they withdrew an emergency
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`motion because we reached an agreement. Right?
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`They didn't do that here because there's no middle
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`ground. They want to completely undo the protective order and
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`the protections that were heavily negotiated that went into
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`that protective order.
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`So we don't think that this Court needs to or ought to
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`get involved in what goes before the PTAB. The PTAB should
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`decide that, as they've been doing all along. If they want to
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`file a motion in front of the PTAB that says we want to offer
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`these documents and the PTAB says yes, end of story. We're not
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`going to argue, oh, there's a protective order in the District
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`Court. Right? They can do that. But to say --
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`THE COURT: How can they do that with the protective
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`order in place? They can't file the motion with the documents
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`saying I want to supplement discovery with the documents if the
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`protective order is in place. They need to get my permission
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`first, right?
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`MR. SIGMOND: That's the exact problem.
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`MR. MANDELL: First of all --
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`THE COURT: Don't interrupt.
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`MR. SIGMOND: Sorry, your Honor. I apologize.
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`MR. MANDELL: They can't have it both ways, right?
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`They came to you on this motion. We went to them and said,
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`fine, with respect to these documents, you can use that.
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`Right? You can go to the PTAB without a problem with the
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`protective order.
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`They don't want that. Okay?
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`So that's really an illusory concern, right?
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`If they really wanted to do this on a document by
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`document basis, we were willing to meet and confer and agree,
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`we offered to agree, so long as the PTAB says it's appropriate,
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`then we're okay with it.
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`THE COURT: Okay.
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`MR. MANDELL: They can describe -- they can describe
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`these documents without violating the protective order.
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`THE COURT: Okay.
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`MR. KESSEL: Your Honor, may I just -- I'm sorry to
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`interrupt. May I just make one additional point?
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`In the motion for discovery that TT filed with the
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`PTAB, they put -- it was something in the range of 10 to 20
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`documents before the PTAB. We said, okay, you can file those
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`with your motion for purposes of asking for additional
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`discovery. So they had them. They had what they needed to
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`show the PTAB what they wanted. And the PTAB said, no, you
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`can't have those because you haven't shown how it really
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`connects to the issues in this proceeding. They had a bunch of
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`reasons. There were maybe eight or nine different reasons why
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`the PTAB said that TT couldn't use those documents. But the
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`point was we enabled them to make the request. There was no
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`catch-22. They put them there. The PTAB denied the discovery
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`because it was -- they violated the page limits, they were late
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`filing. But then they got to the substance, and the real
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`substance was the PTAB doesn't want parties taking discovery or
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`introducing evidence of the sort which is really like
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`infringement evidence in a District Court litigation, which is
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`the sort of material they want to use here.
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`We're not going to stand in the way of them making the
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`request to the PTAB on the basis of this other proceeding, this
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`other protective order; but we do not believe it's proper for
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`them to use litigation discovery to circumvent the strict rules
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`of the PTAB, which are there for a very good reason, which is
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`to keep costs down, to keep the proceeding moving rapidly,
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`there's very strict page limits. If -- if they had free rein
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`to use everything from the litigation, what ends up happening
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`in the PTAB is we have a mini trial on infringement there, and
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`that's not what the PTAB wants, it's not what the procedure is
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`about.
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`We're just asking to have discovery managed in the
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`active proceeding, which is the CBM, and not the stayed
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`proceeding, which is the litigation.
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`THE COURT: Okay. Reply.
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`MR. SIGMOND: Well, your Honor, first of all, the PTAB
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`can decide if the evidence we give them if they want to listen
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`to it or not, but I can't even get it to them. I -- you know,
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`every time they say they're going to stipulate, we're involved
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`in this, well, you can use this, you can't use that. I mean,
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`all we -- they asked to stay so that there was an alternative
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`to litigation. And, you know, you gave us these depositions.
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`And, I mean, we have this evidence we want to use, and now
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`tomorrow we want to file, you know, for an offer of proof.
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`So, I mean, I'm constantly caught in this problem
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`where I -- I just can't use this stuff.
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`And here's what's kind of telling to me. I don't see
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`the risk. Your protective order is about protecting
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`confidential information. They've never said, nor can they,
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`that if we use this stuff under the protective order at the
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`PTAB that there's any risk of any loss of confidential
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`information. So I don't understand it.
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`They're trying to conflate the whole, hey, you know,
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`the PTAB doesn't want to see this evidence, and that issue I
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`guess I still think remains to be seen, and, you know,
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`confidentiality. We're here about confidentiality. There's
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`confidential documents under a protective order we want to use
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`somewhere else. We think that the protections in the somewhere
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`else, the PTAB, are adequate.
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`And, again, with our motion, we kind of need to get
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`Number 1 for tomorrow, but the broader concept of, you know,
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`not having to come back here every time, you know, we'd ask
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`that you grant that, too.
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`THE COURT: Okay.
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`MR. KESSEL: May I respond just briefly, your Honor?
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`THE COURT: Yes, briefly.
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`MR. KESSEL: One, we never said you can do this, you
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`can't do that. Every time they've asked, we've accommodated.
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`Two, the protective order in the PTAB is not as
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`protective as the District Court. The Board can sua sponte
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`determine the documents don't qualify and make them public.
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`The procedure at the termination of the proceeding doesn't
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`automatically keep the documents confidential. The protective
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`order there allows employees to see documents. It's not the
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`same level of protection. And we've accommodated -- the issue
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`for tomorrow, our stipulation would have avoided needing to go
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`to court at all. We said, okay, you can file these for the
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`purpose of trying to make an offer of proof. If the PTAB will
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`let you do that, you can file them. There's no -- there's no
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`part of being wrapped around here. We have not stood in the
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`way, other than insisting on the rules of the PTAB.
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`THE COURT: Okay. So the rules of the PTAB and the
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`rules of the Court are in conflict, and both are looking at
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`each other constantly as to what is the proper way to move this
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`along. And I've been frustratingly dealing with these stays so
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`that everybody can go before the PTAB.
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`The PTAB doesn't know what is relevant by simply a
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`statement that I believe this is relevant. The PTAB can't say
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`that. And in this case, the PTAB is saying I'm not going to
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`allow it in because the District Court has got a protective
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`order.
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`So I do not think that you're accurate in saying that
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`the protections of confidentiality are not the same in the PTAB
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`in that if a party seeking to submit information, who submits
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`it saying that it is protected at the District Court level and
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`it is either trade secret material or proprietary material, it
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`can under their procedures be deemed protected. It is expected
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`to be protected.
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`So you're looking at a different subsection of the
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`protective orders at the PTAB proceeding.
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`So because the PTAB doesn't know what you have, which
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`can be relevant to them, I'm granting the motion to provide.
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`Number 1, not Number 2. You're going to have to just keep
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`running back in here, if you want to do it. And it has to be
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`provided to the PTAB as confidential protected material.
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`I am only opening the protective order for the
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`purposes of this because the PTAB has to have all material,
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`relevant information, to make its determination. And to have
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`all of this relevant information that I've deemed to be
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`appropriate in this litigation and not have it in front of them
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`doesn't move the proceeding -- doesn't slow the proceeding
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`down, doesn't keep costs -- doesn't have costs rising.
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`Instead, it gives them what they need to make their decision in
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`the period of time that they're making it. And so Number 1 is
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`granted. Those materials are allowed to be turned over.
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`Page 13 of 15
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`You must say to them that it is solely for the
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`purposes of the PTAB proceeding and that it is confidential and
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`protected and that if there is any basis whatsoever for the
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`PTAB to consider releasing it publicly, that they must give the
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`parties notice so that you can articulate your reasons why it
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`shouldn't be.
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`I don't think that is even a real risk that the PTAB
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`is going to release something that is deemed materially
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`confidential and trade secret material or proprietary material
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`in my court. I cannot believe that they're going to look at
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`that and say, "You know, we disagree with what Judge Kendall
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`has put under proprietary confidentiality order."
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`So, yes, you may have it. And, no, you cannot have a
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`blanket order that every time you want to come back you don't
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`have to come see me.
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`That's my order. All right?
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`MR. MANDELL: Thank you, your Honor.
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`MR. SIGMOND: Thank you, your Honor.
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`MR. KESSEL: Thank you, your Honor.
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`MR. SIGMOND: Clarification. It's what's on page 1 of
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`page 3 of our motion.
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`THE COURT: It's the first -- well, I have to look at
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`the motion.
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`MR. SIGMOND: I don't think there's going to be
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`controversy over that.
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`Page 14 of 15
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`MR. KESSEL: Yes, your Honor. I think this is what we
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`offered to stipulate to.
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`MR. SIGMOND: Well, that's not true.
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`We'll go with what your Honor just ordered.
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`THE COURT: Okay. I've got a jury waiting for me, so
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`you need to move on. Thank you.
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`MR. SIGMOND: Thank you, your Honor.
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`MR. MANDELL: Thank you.
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`MR. KESSEL: Thank you.
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`(Proceedings concluded at 9:52 a.m.)
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`C E R T I F I C A T E
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`I certify that the foregoing is a correct transcript of the
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`record of proceedings in the above-entitled matter.
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`/s/ GAYLE A. McGUIGAN_____________ July 8, 2016
`Gayle A. McGuigan, CSR, RMR, CRR Date
`Official Court Reporter
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