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`BEFORE THE PATENT TRIAL AND APPEAL BOARD
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`IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
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`Page 1
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`TRIAL NOS.:
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`IPR 2013—00082 through 2013—00037
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`PATENT nos;
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`5,978,791; 6,415,280; 7,945,544;
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`7,945,539; 7,949,662; 8,001,096
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`PATENT OWNERS:
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`PERSONALWEB TECHNOLOGIES, LLC
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`& LEVEL 3 COMMUNICATIONS
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`PETITIONER:
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`EMC CORPORATION & VMWARE,
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`INC.
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`INVENTOR:
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`DAVID A. FARBER and RONALD D. LACHMAN
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`______—_...____._.__—_.._____..___—...___-_.__—_.___.___—___.____
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`DEPOSITION OF KEVIN G. BERMEISTER
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`Los Angeles, California
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`Tuesday, August 27, 2013
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`Reported by:
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`WENDY S. SCHREIBER
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`CSR NO- 3558: RPR
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`EEMHVMwmeummmMka
`IPR2013—83
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`EMCVMW 1077 _
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`BEFORE THE PATENT TRIAL AND APPEAL BOARD
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`IN THE UNITED STATES PATENT AND TRADEMARK OFFICE
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`Page 2
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`TRIAL NOS.:
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`IPR 2013-00082 through 2013—00087
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`PATENT NOS:
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`5,978,791; 6,415,280; 7,945,544;
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`-7,945,539; 7,949,662; 8,001,096
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`PATENT OWNERS:
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`PERSONALWEB TECHNOLOGIES, LLC
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`& LEVEL 3 COMMUNICATIONS
`
`PETITIONER:
`
`EMC CORPORATION & VMWARE,
`
`INC.
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`INVENTOR:
`
`DAVID A. FARBER and RONALD D. LACHMAN'
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`—————————————————————————————————————————————————
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`Videotaped Deposition of KEVIN BERMEISTER,
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`taken_at 350 S. Grand Avenue, Suite 2100 Los
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`Angeles, California, commencing at 10:02 A.M-,
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`and ending at 2:24 P.M., Tuesday, August 27, 2013,
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`before WENDY S. SCHREIBER, Certified Shorthand
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`Reporter No. 3558, RPR.
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`Page 3
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`APPEARANCES OF COUNSEL:
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`Attorneys for Patent Owner, PersonalWeb
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`,
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`Technologies, LLC:
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`NIXON & VANDERHYE, P.C.
`
`BY:
`
`JOSEPH A. RHOA, ESQ.
`
`901 N. Glebe Road
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`11th Floor
`
`Arlington, Virginia 22203
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`- and —
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`MCKOOL SMITH, P.C.
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`BY:
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`LAWRENCE HADLEY, ESQ.
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`865 South Figueroa Street
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`Los Angeles, California 90017
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`(213) 694—1200
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`lhadley@mckoolsmith.com
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`APPEARANCES-
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`(Continued):
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`Page 4
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`Attorneys for Petitioner, EMC
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`Corporation and VMware, Inc.:
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`WILMERHALE
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`BY:
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`ROBERT M. GALVIN, ESQ.
`
`950 Page Mill Road
`
`Palo Alto, California 94304
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`(650) 858-6017
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`robert.galvin@wilmerhale.com
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`4
`Video Operator - Julian Shine
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`INDEX
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`Page 5
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`TUESDAY, August 27, 2013
`
`WITNESS
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`EXAMINATION
`
`KEVIN G. BERMEIS'I‘ER
`
`(By Mr. Galvin)
`
`8, 158
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`(By Mr. Rhoa)
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`P, M. Session
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`I
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`161
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`90
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`_
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`DEPOSITION EXHIBITS
`
`KEVIN G. BERMEISTER
`
`NUMBER
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`DESCRI PT I ON
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`Exhibit 1 Warrant to Purchase Common
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`-
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`-
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`Stock of Brilliant Digital
`
`Entertainment,
`
`Inc.
`
`PAGE
`
`53
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`Exhibit 2
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`SEC Form S—3 Registration
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`57
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`Statement
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`Exhibit 3
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`SEC Form lO—KSB for Fiscal Year
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`71
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`Ended 12/31/02
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`Exhibit 4
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`SEC Form 10—KSB for Fiscal Year
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`104
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`Ended 12/31/03
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`212-279—9424
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`www.veritext.com
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`212-490—3430
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`VERHEXTREPORTDKECOMPANY
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`DEPOSITION EXHIBITS
`
`(Continued)
`
`KEVIN G. BERMEISTER
`
`Page 6
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`NUMBER
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`Exhibit
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`DESCRIPTION
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`PAGE
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`5
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`SEC Amendment No.
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`3 to Form 5-1
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`121
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`Registration Statement
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`Exhibit
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`6
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`SEC Form lO—KSB for Fiscal Year
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`146
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`12/31/05
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`Exhibit
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`7
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`Joint Enterprise Agreement Exhibit 154
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`10.6
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`Exhibit
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`8 Hoovers SEP Investments PTY
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`155
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`Limited Profile
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`PREVIOUSLY-MARKED EXHIBITS
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`NUMBER
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`DESCRIPTION
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`Exhibit
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`2009
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`Exhibit
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`2010
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`-
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`Exhibit
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`2011
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`Exhibit
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`2012
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`Exhibit
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`2014
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`PAGE
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`19
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`212-490—3430
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`VERHEXTRBPORTEKECOMPANY
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`LOS ANGELES, CALIFORNIA; TUESDAY, AUGUST 27, 2013
`
`10:02 A.M.
`
`
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`Page 7
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`
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`VIDEO OPERATOR: Good morning.
`
`-We are on
`
`the record at 10:02 a.m. on August 27th, 2013. This
`
`is the video—recorded deposition of Kevin
`
`Bermeister.
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`My name is Julian Shine, here with our
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`court reporter, Wendy Schreiber. We are here from
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`for Petitioner.
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`This deposition is being held at WilmerHale,
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`LLP, at 350 South Grand Avenue, Suite 2100,
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`in
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`Los Angeles, California.
`
`The caption of this case
`
`is Patent Owners:
`
`PersonalWeb Technologies, LLC and
`
`Level 3 Communications versus Petitioners EMC
`
`Corporation and VMware, Incorporated, Case No.
`
`IPR
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`2013-000823 through 2013-00087.
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`Please note that audio and video recording
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`20 will take place unless all parties agree to go off
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`the record. Microphones are sensitive and may pick
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`up whispers, private conversations, and cellular
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`interference.
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`I am not authorized to administer an oath.
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`I am not related to any party in this action nor am
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`212—279-9424
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`“HNnLverfiechonl
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`212-490—3430
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`VERHEXTREPORTDKECONWANY
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`I financially interested in the outcome in any way.
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`May I please have an agreement from all
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`Page 8
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`parties that we can proceed?
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`MR. GALVIN: Yes.
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`MR. RHOA:
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`Sure.
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`VIDEO OPERATOR: At this time will counsel
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`and all present identify themselves for the record.
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`MR. GALVIN:
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`Rob Galvin on behalf of
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`Petitioners EMC and VMware.
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`MR. RHOA:
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`Joe Rhoa for PersonalWeb.
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`MR. HADLEY: Larry Hadley.
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`VIDEO OPERATOR:
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`Thank you.
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`The witness
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`examination.
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`KEVIN G. BERMEISTER,
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`having been first placed under oath, testified as
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`follows:
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`‘
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`EXAMINATION
`
`BY MR. GALVIN:
`
`Q.
`
`A.
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`Good morning, Mr. Bermeister.
`
`Good morning.
`
`Q. Would you please state your full name.
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`Kevin Bermeister. Kevin Glen Bermeister.
`A.
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`212-279-9424
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`unvuhverfiextconi
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`2I2—490—3430
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`VERHEXTREPORTDK}COMPANY
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`W0pDWO
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`And where do you reside?
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`Sydney, Australia.
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`Are you currently employed?
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`I am.
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`And who do you work for?
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`My personal management company, Merada
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`Holdings.
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`Q.
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`A.
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`Q.
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`A.
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`How do you ~—
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`M-E-R-A-D-A.
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`Do you work for any other companies?
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`I'm the Chairman of a company called
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`mnmNH
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`12 Brilliant Digital Entertainment, a Non—Executive
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`Chairman of PersonalWeb, and a board director of
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`several other companies.
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`Q. What other companies are you on the Board of
`
`Directors of?
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`17
`A.
`A company called Manta Holdings, BUI
`18! Limited, SEP Holdings,
`some family trusts and that's
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`19
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`all I can recall right now.
`
`Q.
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`Do any of the entities that you just named
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`have any interest direct or indirect in PersonalWeb?
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`A.
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`Sorry, Jerusalem Management Limited is
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`another one.
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`Q.
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`So do any of these entities that you just
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`named have any direct or indirect interest in
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`212—279-9424
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`www.veritext.com
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`VERHEXTREPORTDKECOMPANY
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`Page 10
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`1
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`PersonalWeb?
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`A.
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`Yes,
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`I believe so.
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`Q. Which of them have --
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`A.
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`I believe Manta Holdings and Brilliant
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`57 Digital Entertainment.
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`A.
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`Q.
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`A.
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`.
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`How about SEP Holdings?
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`No, I don't think so.
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`Is there a company called SEP Investments?
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`There may be.
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`It may be SEP Holdings is SEP
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`Investments.
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`It's quite possible.
`
`Q.
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`Did SEP Investments at one time have an
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`interest in PersonalWeb or Brilliant Digital?
`
`A.
`
`You know,
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`I may be confusing Manta and SEP.
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`
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`14
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`15l
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`It could be held in either one of those companies.
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`I doubt that the holdings of PersonalWeb are held in
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`16% both of those companies but probably one of those
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`and I'm not sure r— I may be mistaken as to exactly
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`which ones.
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`They both relate to companies in which
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`I hold various investments so it's quite possible
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`20l
`21'
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`that you may be right and I may be wrong.
`Q.
`Other than you, who else has an interest in
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`SEP Investments or SEP Holdings?
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`MR. RHOA: Objection:
`
`relevance.
`
`THE WITNESS:
`
`SEP is primarily a company
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`that is established for my family interests, my
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`212~279—9424
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`unwuaverfiextconl
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`Page 11
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`immediate family interests, and so that's -— that's
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`how the holdings are structured.
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`BY MR. GALVIN:
`
`
`
`Q.
`
`And so the only people that would have an
`
`interest in SEP Investments would be you or members
`
`of your immediate family?
`
`A.
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`All corporations which are involved with my
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`immediate family.
`
`Q.
`
`Do you have any ownership interest currently
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`in Brilliant Digital Entertainment?
`
`A.
`
`Q.
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`I do.
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`And what percentage of ownership do you have
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`in Brilliant Digital?
`
`A.
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`I don‘t recall -- I don't recall right now
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`but a relatively -- personally I have a relatively
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`small percentage at present.
`
`Q.
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`A.
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`Who has the majority of Billiant, if anyone?
`
`I don't believe there is a majority control
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`of the company.
`
`Q.
`
`Is there anyone who has voting control of
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`Brilliant?
`
`
`
`A.
`
`Q.
`
`I don't believe so.
`
`How about Altnet? Do you have any ownership
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`interest in Altnet currently?
`
`A.
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`No.
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`Page 12
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`7 Brilliant Digital at this time?
`
`Q.
`
`Do you have any ownership interest in
`
`Kinetech currently?
`
`A.
`
`Q.
`
`A.
`
`Q.
`
`You're talking about me personally?
`
`Yes.
`
`No.
`
`Is Altnet a loo—percent-owned subsidiary of
`
`A.
`
`Q.
`
`I believe so.
`
`And is Kinetech a lOO-percent-owned
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`subsidiary of Brilliant Digital at this time?
`
`A.
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`I believe so. Yes,
`
`I think so.
`
`I can‘t
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`recall whether or not we actually sold the assets of
`
`Kinetech to PersonalWeb or whether or not we sold
`
`the corporate entity, but I believe Kinetech is
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`actually retained by Brilliant Digital.
`
`Q.
`
`Okay. Have you ever owned any interest
`
`direct or indirect in Skype?
`
`In —— in -— I held some shares in Skype in
`A.
`the beginning,
`in the early formation of the
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`company.
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`I answer the Question reservedly because
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`I'm just not sure exactly which entities I held
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`those shares in or whether or not your question
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`relates to today or at what point in time the
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`question relates.
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`Q.
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`Page 13
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`indirect interest in Skype?
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`A.
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`In about 2002, 2003 was my first interest in
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`the company.
`
`Q.
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`And was that approximately when the company
`
`was founded?
`
`A
`
`Roughly, yes .
`
`Q.
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`And at some time did your interest cease to
`
`exist?
`
`A.
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`Correct.
`
`Q.
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`A.
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`When was that?
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`I can't recall exactly the date but
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`somewhere in the -— somewhere around 2006 or'
`
`thereabouts, 2007.
`
`Q.
`
`A.
`
`Is that when Skype was sold to eBay?
`
`Correct.
`
`Q.
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`And when it was sold to eBay after it was
`
`sold to eBay you had no —— you no longer had an
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`interest in Skype?
`
`A.
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`Correct.
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`Q. After 2006 did you ever acquire any direct
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`or indirect interest in Skype?
`
`A.
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`I —- after H~ you're talking about once it
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`was sold to eBay?
`
`Q.
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`Yes.
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`So
`I need to understand.
`No. Well, sorry.
`A.
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`212—279-9424
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`Page 14
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`Ih-(JJNH
`-JOKU1
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`once the company was sold —- after it was sold to
`
`eBay I had no interest in Skype.
`
`Q.
`
`Any time after 2006 did you acquire a direct
`
`or indirect interest in Skype?
`
`A.
`
`No.
`
`Q. After 2006 did you ever acquire a direct or
`
`indirect interest in warrants in Skype?
`
`A.
`
`No.
`
`Q.
`
`Currently do you have any interest held
`
`directly or indirectly in Skype?
`
`A.
`
`Q.
`
`No.
`
`Have you ever had any direct or indirect
`
`interest in Sherman Networks Limited?
`
`A.
`
`I —— just explain indirect interest.
`
`I'm
`
`not sure whether or not it relates to a company ——
`
`contracts that I have with Sharman through my
`
`company or how are you ——
`
`Q.
`
`Any ownership interest.
`
`So either directly
`
`owning stock or owning an entity that owns stock.
`
`A.
`
`No.
`
`Q. What interests broadly or what relationship
`
`have you had with Sharman Networks Limited?
`
`
`
`A.
`
`Q.
`
`Back to inception?
`
`Yes.
`
`We had a -— my company Brilliant Digital
`A.
`
`
`
`212—279-9424
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`vvunN.verfiextconn
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`212-490-3430
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`VERHEXTREPORTDK}COM?ANY
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`Page 15
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`Entertainment had a relationship with Sharman to
`
`distribute technologies and to operate a business
`
`‘venture with Sharman.
`
`Q.
`
`So Brilliant Digital had contractual
`
`relationships with Sharman?
`
`A.
`
`Q.
`
`Correct.
`
`Besides these contractual relationships, any
`
`other relationships between the two companies?
`
`A.
`
`No.
`
`Sharman may have —- Sharman may have
`
`had some equity in Brilliant, if I'm not mistaken,
`
`or some warrants, one of the two.
`
`Q.
`
`How about Joltid Ltd., Jno-L-T-I—D, Ltd.?
`
`Have you ever had any direct or indirect ownership
`
`interest in Joltid Ltd.?
`
`A.
`
`Q.
`
`No.
`
`Have you or your —— or companies that you've
`
`been associated with had any contractual
`
`relationships with Joltid Ltd.?
`
`A.
`
`Yes.
`
`Q. What contractual relationships have you had?
`
`A. Altnet, which was a subsidiary of Brilliant
`
`today, but was originally formed as a joint venture
`
`with Joltid.
`
`Q.
`
`Oh, Altnet had contractual relationships
`
`
`
`with Joltid Ltd.; is that correct?
`
`
`
`212-279—9424
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`VERHEXTREPORTDMECOMPANY
`unwuhverfiextconl
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`212-490—3430
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`A.
`
`Correct.
`
`Q. Were there any contractual relationships
`
`between Brilliant and Joltid?
`
`A.
`
`Q.
`
`I can't recall.
`
`Are there any other companies that you've
`
`had an interest in which have had a contractual
`
`.relationship with Joltid Ltd. other than Altnet and
`
`Brilliant?
`
`A.
`
`At one stage I had a -— a management
`
`agreement‘with Joltid.
`
`I can't recall whether that
`
`was personally or through my management service
`
`company.
`
`Q.
`
`And what services did you provide Joltid
`
`Ltd. pursuant to that contract?
`
`A.
`
`Q.
`
`Consulting services, management services.
`
`And approximately what time frame did that
`
`17
`
`I
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`consulting relationship exist?
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`A.
`
`Q.
`
`I can't recall exactly.
`
`Sometime 2007.
`
`Did you have any consulting relationship
`
`before 2003 with Joltid?
`
`A.
`
`No.
`
`Q. What are your duties and responsibilities as
`
`a Non—Executive Chairman of PersonalWeb?
`
`A.
`
`I —— I provide advice to management and I
`
`provide it when they need it and we discuss matters
`
`
`
`
`
`212-279—9424
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`“nwuaverfiextconl
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`_
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`212—490-3430
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`VERHEXTREPORTHMECOMPANY
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`'Page 17
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`that are all public to the Board and then reach
`
`resolutions accordingly.
`
`Q.
`
`You've had your deposition taken before,
`
`correct?
`
`A.
`
`Q.
`
`A.
`
`I have.
`
`Have you ever testified in court before?
`
`I have.
`
`Q. Where did you testify in court?
`
`A.
`
`Q.
`
`In Sydney, Australia.
`
`Was this in connection with the lawsuit
`
`involving the KaZaA technology?
`
`A.
`
`No.
`
`Q.
`
`Did it have any relationship to any work
`
`that was done by Brilliant, Altnet or Kinetech?
`
`A.
`
`Q.
`
`No.
`
`Now, one thing I wanted -- I don't think I
`
`need to go through the rules of this examination but
`
`one thing I wanted to make you aware of and in case
`
`your attorney didn't is that under the U.S. Patent
`
`and Trademark Office's rules for inter parties
`
`reviewy once my questioning begins until it is
`
`concluded you're not allowed to consult or confer
`
`with your counsel regarding the substance of your
`
`
`
`
`testimony except for conferring on whether to assert
`
`Do you understand
`a privilege against testifying.
`
`
`212-279—9424
`
`“nvuaverflextconn
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`212—490—3430
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`VERHEXTREPORTDKECOMPANY
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`Page 18
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`that rule?
`
`A.
`
`Yes.
`
`Q.
`
`A.
`
`Q.
`
`And do you intend to comply with it?
`
`I do.
`
`Are you taking any medication that would
`
`interfere with your ability to provide truthful and
`
`accurate testimony today?
`
`A.
`
`Q.
`
`No.
`
`Could you briefly describe your educational
`
`background.
`I
`A.
`I completed high school.
`
`Q.
`
`A.
`
`In Australia?
`
`In South Africa.
`
`Q. What, if anything, did you do to prepare for
`
`your deposition testimony today,_examination?
`
`A.
`
`We had a meeting yesterday and -- in which
`
`we discussed the deposition today.
`
`Q.
`
`And who did you meet with?
`
`A. With my lawyers.
`
`Q.
`
`A.
`
`And did you review any documents?
`
`I did.
`
`Q. What did you review?
`
`MR. RHOA: Objection.
`
`The question calls
`
`for work product, attorney-client privilege.
`
`
`
`
`
`
`
`H
`
`LON
`
`uh
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`Obs-10“.“
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`ll
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`23'
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`The witness is instructed not to answer.
`
`
`212-279—9424
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`unwuaverhextcona
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`VERHEXTREPORTHMECOMPANY
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`Page 19
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`BY MR. GALVIN:
`
`Q.
`
`Did you review any agreements?
`
`MR. RHOA:
`
`Same objection.
`
`MR. GALVIN: Are you instructing him not to
`
`answer?
`
`MR. RHOA: Yep.
`
`(Exhibit 2009 previously marked.)
`
`(Exhibit 2014 previously marked.)
`
`BY MR. GALVIN:
`
`Q.
`
`Let me hand you what's been previously
`
`marked as Exhibit 2009 -—
`
`MR. RHOA: And, by the way} Rob, whenever I
`
`say "privileged" today,
`
`that covers both
`
`14' attorney“client privilege and work product.
`
`Is that
`
`1
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`25 l
`
`
`
`
`okay?
`
`MR. GALVIN: That is okay. Understood.
`
`Q.
`
`I'm handing you what‘s been previously
`
`marked as Exhibit 2009 and 2014,
`
`the Declaration of
`
`Kevin Bermeister and the Supplemental Declaration of
`
`Kevin Bermeister. Start with Exhibit 2009.
`
`Do you
`
`recognize ~-
`
`MR. RHOA: Rob, do you have copies for me?
`MR. GALVIN:
`Sorry.
`I
`
`i
`
`
`
`MR. RHOA:
`
`Thank you.
`
`//
`
`212-279—9424
`
`unwuaverfiextcon1
`
`212—490—3430
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`VERHEXTREHXUEflSCOMPANY
`
`
`
`
`
`
`
`BY MR. GALVIN:
`
`
`
`Page 20
`
`Q.
`
`Do you recognize Exhibit 2009 as the
`
`Declaration that you submitted in this inter parties
`
`review?
`
`A.
`
`I do.
`
`Q.
`
`A.
`
`And is that your signature on page 3?
`
`It is.
`
`Q.
`
`And looking at Exhibit 2014, is that the
`
`Supplemental Declaration that you submitted in this
`
`proceeding?
`
`A.
`
`Q.
`
`Yes, it is.
`
`Are there any corrections or errors that
`
`you're aware of in Exhibit 2009 and Exhibit 2014
`
`that you wish to make at this time?
`
`MR. RHOA: Objection:
`
`form.
`
`THE WITNESS:
`
`I believe 2014 corrects 2009
`
`in at least one place.
`
`BY MR . GALVIN :
`
`
`
`Q.
`
`Other than that correction, do you have any
`
`other corrections to Exhibit 2009?
`
`A.
`
`Q.
`
`No,
`
`I don't believe so.
`
`Does Europlay Capital currently own any
`
`interest in Brilliant Digital?
`
`A.
`
`I don't know.
`
`I don't know.
`
`Q.
`Does Europlay Capital own any interest in
`
`
`212-279—9424
`
`unwuhverflextconi
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`212-490-3430
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`VERHEXTREPOKHNGCONWANY
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`mmanI-I
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`.4
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`Page 21
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`PersonalWeb at this time?
`
`A.
`
`Q.
`
`Altnet?
`
`I believe it does.
`
`Does Europlay Capital own any interest in
`
`A.
`
`No.
`
`Q.
`
`Does Europlay Capital own any interest in
`
`Kinetech?
`
`A.
`
`No.
`
`Q.
`
`A.
`
`Joltid.
`
`Who are the original shareholders of Altnet?
`
`I believe that was Brilliant Digital and
`
`Q.
`
`And who are the principal investors behind
`
`Joltid?
`
`A.
`
`I don‘t know.
`
`I don't know who the
`
`investors were.
`
`Q. Were there two individuals that are
`
`associated with Joltid that you're aware of?
`
`A.
`
`Q.
`
`A.
`
`Q.
`
`A.
`
`Q.
`
`A.
`
`There are. There were.
`
`And who were they?
`
`Niklas Zennstrom and Janus Friis.
`
`And were they two of the founders of KaZaA?
`
`I believe so.
`
`And were they two of the founders of Skype?
`
`I believe so.
`
`
`
`Turning to Exhibit 2009, your declaration,
`Q.
`
`
`212—279—9424
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`VERHEXTREPORTEHECOMPANY
`\vawhverfiextconl
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`212-490-3430
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`
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`Page 22
`
`—1
`
`you're currently the Chief Executive Officer and
`
`Director of Brilliant Digital, correct?
`
`A.
`
`Q.
`
`Correct.
`
`Are there any other employees of Brilliant
`
`
`
`1
`
`2
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`3
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`14
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`
`
`5‘ Digital at this time?
`
`A.
`
`Q.
`
`Digital?
`
`A.
`
`Q.
`
`A.
`
`Yes, yes.
`
`And who else is employed by Brilliant
`
`The names?
`
`Yes.
`
`Anthony Neumann and one other.
`
`I just can‘t
`
`recall whether or not he's an employee or a
`
`contractor but I think he's a contractor.
`
`Q.
`
`And what's Anthony Neumann's position at
`
`15 Brilliant?
`
`16
`
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`21
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`22
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`23
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`
`
`A.
`
`Q.
`
`He's a Vice President.
`
`Does he have a particular area of
`
`responsibility?
`
`A.
`
`Q.
`
`No, business development.
`
`Does —— is Brilliant Digital an operating
`
`company at this time?
`
`A.
`
`Q.
`
`Not really.
`
`Why do you say not really?
`
`A. Well, because mostly its interests are
`
`really operated through other —— through its
`
`
`212—279-9424
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`VERHEXTREPORTDK3COMPANY
`www.veritext.com
`
`212—490—3430
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`
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`Page 23
`
`subsidiaries or other companies.
`
`Q.
`
`Now,
`
`in paragraph 3 you refer to the
`
`TruNames patents and you say that you are referring
`
`to the U.S. Patent Nos. 5,978,791 and all
`
`continuations thereof.
`
`If I use the name "TruNames
`
`patents" during this examination, will you
`
`understand that I'm referring to it in a way that
`
`you defined it in paragraph 3?
`
`A.
`
`Q.
`
`Yes.
`
`‘Is that fair? Now,
`
`in paragraph 3 you talk
`
`about the fact that the TruNames patents were
`
`originally owned by a company called Kinetech.
`
`To
`
`your knowledge was Kinetech the only owner of the
`
`TruNames patents?
`
`MR. RHOA: Objection:
`
`form.
`
`THE WITNESS:
`
`I don't know how you define
`
`"owner." Can you perhaps describe it a little bit
`
`more?
`
`BY MR. GALVIN:
`
`Q. Well, you say in paragraph 3 that the
`
`TruNames patents were originally owned by a company
`
`called Kinetech.
`
`In the way that you described it
`
`there, was it your understanding that Kinetech
`
`solely owned the TruNames patents originally?
`
`I know that Kinetech owned the patents
`Look,
`A.
`
`
`
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`25
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`212—279—9424
`
`VERHEXTREPORTDKECOMPANY
`unwunverfiextcon1
`
`,
`
`212—490—3430
`
`
`
`
`
` F.
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`Page 24
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`
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`and they also had an agreement with Level 3.
`
`I
`
`don't know —- I'm not a lawyer and I don't
`
`understand the
`
`—— the nature of ownership.
`
`So you
`
`used the term "oan and I'm just not sure whether or
`
`not I'm qualified to answer the question.
`
`Q.
`
`Then how —— do you know if -— did Kinetech
`
`own the patents ——
`
`A.
`
`I certainly know that Kinetech were an owner
`
`of the patents when we acquired them —— I acquired
`
`them from Kinetech.
`
`Q.
`
`And you entered into a license agreement
`
`first with Kinetech in 2002, correct?
`
`MR. RHOA: Objection to the form.
`
`BY MR. GALVIN:
`
`Q.
`
`A.
`
`Is that correct?
`
`In 2002 we —— Brilliant Digital licensed the
`
`patent in a field —— limited field of use from
`
`Kinetech.
`
`Q.
`
`Now, prior to entering into the license
`
`agreement, was there any relationship between
`
`Kinetech and Brilliant Digital?
`
`A.
`
`Q.
`
`No.
`
`Prior to entering into the license
`
`agreement, was there any relationship between -- let
`
`me withdraw that.
`
`
`
`212~279-9424
`
`VERITEXT REPORTING COMPANY ‘
`unwuhverfiextconl
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`212—490-3430
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`Page 25
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`Who were the officers or directors of
`
`Kinetech when you entered into the license in 2002?
`
`MR. RHOA: Objection:
`
`form.
`
`THE WITNESS:
`
`I don't know who they were.
`
`I
`
`know —— I don't know who they were.
`
`I know who I
`
`negotiated with but I don't know what positions they
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`held in the company.
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`BY MR. GALVIN:
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`Q.
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`And who did you negotiate the Brilliant
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`license with Kinetech?
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`A. With a gentleman called Ezra Goldman and Ron
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`Lachman.
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`Q.
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`And did you understand Ron Lachman to have
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`an ownership interest in Kinetech?
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`A.
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`Q.
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`I_be1ieve so, yeah.
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`Did you understand Ezra Goldman to have an
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`ownership interest?
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`A.
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`I don't know.
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`Q.
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`A.
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`Q.
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`A.
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`Was ——
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`I don't know.
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`Was Ezra Goldman an attorney?
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`I don't believe so.
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`He appeared to be
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`working for the company.
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`Q.
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`Prior to entering into -- prior to the
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`license agreement being signed between Brilliant and
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`212~279~9424
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`“nvuhverfiextconn
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`212-490—3430
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`VERHEXTRERNYHNGCONWANY
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`Page 26
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`F
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`Kinetech, was there any relationship between
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`Mr. Lachman and Brilliant Digital?
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`A.
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`Q.
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`No,
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`I don't believe so.
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`Now,
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`the agreement between Kinetech and
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`5 Brilliant Digital license agreement was signed in
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`October 2002; is that correct?
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`A.
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`You have the agreement there?
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`I believe it
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`was but maybe I said that in the declaration. Yes,
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`that's correct.
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`I believe so. Yes.
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`Q.
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`So prior to October 18th, 2002,
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`there was no
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`relationship between Mr. Lachman and Brilliant
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`_ Digital?
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`A.
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`Q.
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`I don't believe so.
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`Mr. Lachman had no ownership interest in
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`15 Brilliant Digital prior to October 18th, 2002?
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`A.
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`Q.
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`Don‘t think so.
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`Mr. Lachman didn't have any contractual
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`relationship with Brilliant Digital prior to October
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`18th, 2002?
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`A.
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`I don't believe so.
`
`I don't recall but I
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`don't believe so.
`
`Q. What do you recall about the negotiations
`
`between Kinetech and Brilliant Digital that led to
`
`the license agreement in 2002?
`
`I don‘t recall very
`That's a long time ago.
`A.
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`2 121—279—9424
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`212—490—3430
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`Page 27
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`much but —— more than ten years ago now —- so
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`perhaps if you ask me specific questions I can try
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`and recall but, you know, we —- we held meet —- a
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`meeting probably telephonically. We held -— I
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`recall having one or two meetings at my office with
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`Ron Lachman and negotiating an agreement to license.
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`Pretty much it -- that's it.
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`Q.
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`A.
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`‘Do you recall an exchange of drafts?
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`I don't specifically recall an exchange of
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`drafts.
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`I'm absolutely sure that there have been ——
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`there would have been an exchange of drafts but I
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`don't specifically recall one event.
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`Q.
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`Do you recall any particular points of being
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`in contention in the negotiation?
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`A.
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`I think the field of use was -— was a -— you
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`know, probably the most complex aspect of the
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`agreement.
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`Q.
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`Do you recall any discussions during the
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`negotiation about the consideration that Brilliant
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`would pay -~
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`A.
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`Yeah,
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`there were some discussions about
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`consideration but I don't specifically recall, you
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`know, any one of those.
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`I mean,
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`I generally have a
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`recollection of —— of a discussion about duration as
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`
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`
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`I do
`well as contract generally and, you know,
`._l
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`212—279—9424
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`VERHEXTREPORTEMECOMPANY
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`212—490—3430
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`7 Brilliant would issue warrants to Kinetech in
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`exchange for the license?
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`A.
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`You know, again, I haye some vague
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`recollection of board meetings and discussions at
`board meetings but I don't recall the specifics.
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`Q. Were you communicating via e—mail with
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`Mr. Lachman or Mr. Goldman during this time of the
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`negotiations?
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`A.
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`Q.
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`A.
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`Q.
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`Quite possibly.
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`And would you still have those?
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`No,
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`I wouldn't.
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`Now, originally in paragraph 7 you said that
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`the consideration for the Kinetech license was
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`approximately $5 million and then in your
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`21‘ Supplemental Declaration, Exhibit 2014, you
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`22
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`23
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`corrected it to say it.was $1 million.
`
`A.
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`Correct.
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`Page 28
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`recall field of use is one of those areas that we
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`spent quite a lot of time on.
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`Q.
`
`Do you recall any discussion in negotiations
`
`about what royalties Brilliant should pay?
`
`A.
`
`Q.
`
`I don't.
`
`Do you recall how it was decided that
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`24E
`25
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`Q. What's that valuation based on?
`A.
`The $1 million? .
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`:
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`212-279-9424
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`212-490—3430
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`/
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`“J
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`Page 29
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`—7
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`Q.
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`A.
`
`Yes.
`
`If I recall} it was based on the value of
`
`thereafter.
`
`Q.
`
`So how did you arrive at that number?
`
`A. Warrants times shares. Warrants times share
`
`value, I think.
`
`I just can't recall exactly how.we
`
`arrived at that number but I think that‘s how I
`
`calculated it.
`
`Q.
`
`_ So you performed this calculation in July of
`
`2013 when you submitted this declaration?
`
`A.
`
`I really —— I looked back at the share price
`
`at that time and then I poured the-calculation in.
`
`Q.
`
`And where do you look to see the share
`
`price?
`
`A.
`
`On one of the websites.
`
`Q.- Do you remember what website you looked at?
`
`A.
`
`Q.
`
`No,
`
`I can‘t recall exactly.
`
`And is there a site that keeps historic
`
`values for Brilliant?
`
`A.
`
`There are a few of them and I think I went
`
`back —— I just can‘t recall which one I used.
`
`Q.
`
`Okay. Which ones are you aware of that you
`
`could get this information?
`
`
`
`3 Brilliant's shares at the time or shortly'
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`I Googled one or two and found a few of them
`A.
`25‘
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`212—279—9424
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`Page 30
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`and I looked back at the website,
`
`the history.
`
`It
`
`may have been NB -- CNBC or Yahoo! or one of the
`
`websites that I found.
`
`Q.
`
`And so you recall in July 2013 doing a
`
`search and looking up the historic price of
`
`6 Brilliant Digital ~—
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`
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`A.
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`I spoke with Anthony Neumann as well and he
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`validated that the —— you know, my information was
`
`correct.
`
`Q. What did Anthony Newman tell you?
`
`A.
`
`Q.
`
`That the price was what I told him.
`
`So just going back, so you recall looking at
`
`some site, you can't recall what site?
`
`A.
`
`Q.
`
`Yeah, I can't recall the site now.
`
`And you -~ what date did you look up the'
`
`valuation?
`
`A.
`
`It was —— I looked back at the ten-year
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`history of BDLN was the —— was the last code I
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`believe and then that BD used on the AMEX or I think
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`at that time we were a pink sheet traded company and
`
`then I did some research.
`
`I used quite a few
`
`sites —— actually,
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`two or three different sites.
`
`That's why I just can't recall the name of any one
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`of them. There's several sites that offer services
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`25'
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`to go back and look at historical prices.
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`212-279-9424
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`VERITEXT REPORTING COMPANY
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`212—490—3430
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`Page 31
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`Q.
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`A.
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`But you don't remember any of them?
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`As I said, may have been Yahoo!, CNBC, one
`
`of those.
`
`I seem to recall that it had a specific
`
`name that related to the services that had offered
`
`historical stock prices or something.
`
`Q.
`
`A.
`
`So what was the Google search you ran?
`
`I want to try to find it and say historical
`
`stock prices for public companies.
`
`Q.
`
`A.
`
`And then you entered in -—
`
`It gave —- Google gave me back a list of
`
`site options and I used one of them.
`
`Q.
`
`And then you entered in —— what ticker code
`
`did you use?
`
`A.
`
`I think BDLN and I may have also used BDE,
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`15 Brilliant Digital.
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`I tried a few options.
`
`Q.
`
`A.
`
`Q.
`
`And you personally did this?
`
`I did, yes-
`
`And what date did you use to assess the
`
`valuation that you ascribe to -—
`
`A.
`
`Q.
`
`Roughly the October 2002 period.
`
`And so if I understand your methodology, if
`
`there were warrants for 5 million shares, if you
`
`arrived at a_valuation of approximately $1 million,
`
`then what was the share price, historical share
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`price?
`
`
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`2I2~279—9424
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`VERHEXTREPORTDMECOMPANY
`unwunverfiextconl
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`Page 32
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`A.
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`If I recall correctly, it was something in
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`the range of 30 cents, 35 cents, or something like
`
`that.
`
`It fluctuated a little bit around those days.
`
`Q.
`
`So if it was 30 or 35 cents, how did you
`
`reach a $1 million valuation on an issuance of 5
`
`1
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`5
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`6 million warrants or 5 million dollars worth of
`
`
`
`
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`‘
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`warrants?
`
`A.
`
`You know,
`
`there was some fluctuation in the
`
`share price around that time so I took —— I took a
`
`valuation.
`
`I made an approximate valuation and just
`
`estimated what I thought they were valued out
`
`because I know there's some calculation for -— you
`
`know, historically I've looked at things like
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`Black-Scholes and various methods of valuing shares
`so —- but I thought that the fairest way to do that
`
`was to multiply it by the share price that was
`
`fluctuating at that time.
`
`It was lower before we
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`made the announcement and higher after we made the
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`an
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