Ex. PGS 1026
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`Case 4:09-cv-01827 Document 109 Filed in TXSD on 06/09/10 Page 1 of 216
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`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF TEXAS
`HOUSTON DIVISION
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`
`
`WESTERNGECO LLC . 4:09-CV-01827
`PLAINTIFF . HOUSTON, TEXAS
` . MAY 14, 2010
` vs. . 9:00 A.M.
` .
`ION GEOPHYSICAL .
`CORPORATION .
`DEFENDANT .
`. . . . . . . . . . . . . . .
`
`
`
`TRANSCRIPT OF MARKMAN HEARING AND MOTION TO COMPEL HEARING
`BEFORE THE HONORABLE KEITH P. ELLISON
`UNITED STATES DISTRICT JUDGE
`
`
`A P P E A R A N C E S:
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`FOR THE PLAINTIFF:
`
`
`Lee K. Kaplan
`SMYSER KAPLAN & VESELKA LLP
`Bank of America Center
`700 Louisiana, Suite 2300
`Houston, Texas 77002
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`
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`FOR THE DEFENDANT:
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`
`John M. Desmarais
`Timothy K. Gilman
`KIRKLAND & ELLIS LLP
`601 Lexington Avenue
`New York, New York 10022
`
`David L. Burgert
`Ray T. Torgerson
`Paul A. Dyson
`PORTER & HEDGES LLP
`Reliant Energy Plaza
`1000 Main Street, 36th Floor
`Houston, Texas 77002
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`M a y r a M a l o n e , C S R , R M R , C R R
`7 1 3 . 2 5 0 . 5 7 8 7
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`Ex. PGS 1026
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`
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`Case 4:09-cv-01827 Document 109 Filed in TXSD on 06/09/10 Page 14 of 216
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`Fugro entities. Just to be clear, it is not this list, this
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`large list of different Fugro entities that we are
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`concentrating on that are relevant to any more of the dispute.
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`It is just the four Fugro Geoteam entities, and they all have
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`overlapping managers and directors. It is ultimately form over
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`substance to say these overlapping managers and directors can't
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`access the documents of their sister companies.
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`This issue about the Hague convention, when we
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`decided to file our subpoenas from this Court, first of all, we
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`believe these are the proper parties to subpoena. Second of
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`all, we wanted to have a court that is familiar with the
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`technology, a Court that is familiar with the case and familiar
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`with any relevance issues to adjudicate the scope of the
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`subpoena. Serving requests from the Hague Convention is a very
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`uncertain prospect as well, taking many, many months to do.
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`It's likely they couldn't be done in time for the trial that is
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`scheduled in this case. We decided to subpoena the U.S.
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`entities because we do have a good faith belief, based on our
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`publicly-obtained information, that they do have control. They
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`do have access to these documents. They are running jobs using
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`these products.
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`THE COURT: But your evidence consists of overlapping
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`officers and directors?
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`MR. GILMAN: Overlapping officers and directors. They
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`are marketing themselves as a single business entity.
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`M a y r a M a l o n e , C S R , R M R , C R R
`7 1 3 . 2 5 0 . 5 7 8 7
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`Ex. PGS 1026
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`Case 4:09-cv-01827 Document 109 Filed in TXSD on 06/09/10 Page 15 of 216
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`THE COURT: They hold themselves out as a single
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`entity?
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`MR. GILMAN: I'm sorry?
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`THE COURT: They hold themselves out as a single
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`entity?
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`MR. GILMAN: Correct. They roll their financial
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`statements into a single consolidated statement, and the
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`particular jobs where they are cooperating together, they are
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`operating together.
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`THE COURT: Say the last part again.
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`MR. GILMAN: In these particular jobs in Exhibit 79,
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`they are working together on a day-to-day basis on particular
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`jobs using the accused products. That seems to be the
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`definition of control. They are running the job that's using
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`foreign subsidiaries and foreign sister companies.
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`THE COURT: Thank you.
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`MR. ELSLEY: Your Honor, I will be less than a minute.
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`We have never run a job together. AS runs the seismic
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`equipment and bought the seismic equipment. And this job that
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`he is referring to, again, is a future job, and the reference
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`he is making to "we will be running the seismic job" is a
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`reference that Statoil is making, not a reference --
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`THE COURT: We have got a fact question though, don't
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`we?
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`MR. ELSLEY: Well, I would agree with counsel that we
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`M a y r a M a l o n e , C S R , R M R , C R R
`7 1 3 . 2 5 0 . 5 7 8 7
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`Ex. PGS 1026
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`Case 4:09-cv-01827 Document 109 Filed in TXSD on 06/09/10 Page 16 of 216
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`actually don't. Because if you look at the full content of the
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`documents that he has submitted, WesternGeco has submitted with
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`their reply, you will see that, in fact, the documents show the
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`operator of the vessel to be AS, and they actually just
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`reference Inc. to be the project manager. And the project
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`manager, as I told the Court, they are not even on the vessel.
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`It is just a person who sits in the Houston office and will
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`follow the job on a daily basis but does not operate the
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`seismic equipment. The seismic crew is still employed by the
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`Norwegian entity.
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`Of course, this is a future job and -- so we
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`don't even have the documents on this job yet. There would be
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`no documents to respond to a job that relates to August of
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`2010. That current vessel, Geo Celtic, is over in Australia
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`now under charter to the Norwegian entity.
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`MR. GILMAN: If there is a true factual dispute about
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`how much control Fugro Geoteam has over this job or has over
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`other jobs operating outside the United States, it may be
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`appropriate to have very limited discovery on this issue, one
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`or two depositions and an evidentiary hearing on that.
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`We believe that the evidence we submitted is
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`sufficient. But thank you, Your Honor.
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`THE COURT: I'm going to take this under advisement.
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`I don't want to rule hastily. I appreciate both counsel's
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`participation. Thank you. If you want to be excused, you may
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`M a y r a M a l o n e , C S R , R M R , C R R
`7 1 3 . 2 5 0 . 5 7 8 7
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`Ex. PGS 1026
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`
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`Case 4:09-cv-01827 Document 109 Filed in TXSD on 06/09/10 Page 45 of 216
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`provided by Schlumberger's in-house counsel, were discussing
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`royalty disputes related to oilfield tools. They don't claim
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`that it has any relevance to this litigation whatsoever. In
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`fact, they kind of skip over the whole relevance issue in their
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`motion. They don't discuss that these oilfield tools gave rise
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`to any products, relate to any products that are at issue here.
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`They don't talk about any technology at issue here. In fact,
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`they don't say that WesternGeco was involved in that. They say
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`that Schlumberger, the parent company, was the one that worked
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`with these three consultants.
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`When you examine this work that they are talking
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`about, ION will present evidence later that shows that it
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`really was a preliminary -- what has turned into an audit plan
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`on some damages issue. Schlumberger was, it appeared, reaching
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`out to people saying: "We may want to hire you to help us out
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`with this royalty dispute. Would you be willing to do it?"
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`From what we understand from FTI Consulting is
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`that they submitted this preliminary plan, which is what the
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`invoice is for that is attached to the WesternGeco motion.
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`This was just preliminary issues. They ended up not being
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`hired. Schlumberger did not continue on with them.
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`Schlumberger doesn't offer any evidence -- WesternGeco doesn't
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`offer any evidence that there was a continued relationship
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`after September 2007, any other contacts with them after
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`September 2007. They don't even assert that is what happened.
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`M a y r a M a l o n e , C S R , R M R , C R R
`7 1 3 . 2 5 0 . 5 7 8 7
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`Ex. PGS 1026
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`
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`Case 4:09-cv-01827 Document 109 Filed in TXSD on 06/09/10 Page 64 of 216
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`confined to a preferred embodiment." And that is exactly what
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`ION is trying to do in this case.
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`I think you will see, Your Honor, as we go
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`throughout all the various terms, this comes up repeatedly in
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`ION's proposed constructions.
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`It is clearly a preferred embodiment to have the
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`birds do both. You can have a bird that does vertical. You
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`can have a bird that does horizontal. Or you can have a bird
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`that does both. It would be wrong to limit the claims to only
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`birds that do both.
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`If we look at the claim itself, right in Claim 1,
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`we see that. Here is an excerpt from Claim 1 from the '017
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`patent. It says right in the text of the claim for the
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`streamer positioning device: "Having a wing and a wing motor
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`for changing the orientation of the wing so as to steer the
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`streamer positioning device laterally."
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`Here in Claim 1, it is telling you we are talking
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`about lateral or side to side steering. If you take ION's
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`proposed construction, they would add the word "and vertical"
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`to this claim, so they're taking a word that's not in the claim
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`and trying to stuff it into the definition of steering
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`positioning device when clearly this claim is only talking
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`about lateral steering.
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`And then if you look further into the detailed
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`description of the patent, you see that the patent does in
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`M a y r a M a l o n e , C S R , R M R , C R R
`7 1 3 . 2 5 0 . 5 7 8 7
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`Ex. PGS 1026
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