3607
`
`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF TEXAS
`HOUSTON DIVISION
`
`WESTERNGECO LLC,
`
`PLAINTIFF,
`
`VS.
`
`ION GEOPHYSICAL
`
`CORPORATION, FUGRO GEOTEAM,
`INC , ET AL,
`
`DEFENDANTS
`
`4:09-CV-01827
`HOUSTON, TEXAS
`
`VOLUME 11
`AFTERNOON SESSION
`
`AUGUST 7, 2012
`12:30 P.M.
`
`TRANSCRIPT OF JURY TRIAL
`BEFORE THE HONORABLE KEITH P. ELLISON
`UNITED STATES DISTRICT JUDGE
`
`A P P E A R A N C E S:
`
`FOR THE PLAINTIFF:
`
`Lee K. Kaplan
`SMYSER KAPLAN & VESELKA LLP
`Bank of America Center
`
`700 Louisiana, Suite 2300
`Houston, Texas
`77002
`
`Gregg F. Locascio
`KIRKLAND & ELLIS LLP
`655 Fifteenth Street Northwest
`
`Washington, DC 20005
`
`Sarah Tsou
`
`Timothy K. Gilman
`KIRKLAND & ELLIS LLP
`
`Citigroup Center
`153 East 53rd Street
`New York, New York
`‘..
`
`10022
`
`Mayra Malone, CSR, RMR, CRR
`mayrama1one@comcast.net
`
`
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`WESTERNGECO Exhibit 2123, pg. 1
`PGSVWNESTERNGECO
`|PR2014~00689
`
`WESTERNGECO Exhibit 2123, pg. 1
`PGS v. WESTERNGECO
`IPR2014-00689
`
`
`
`UNITED STATES DISTRICT COURT
`SOUTHERN DISTRICT OF TEXAS
`HOUSTON DIVISION
`
`WESTERNGECO LLC,
`
`PLAINTIFF,
`
`VS.
`
`ION GEOPHYSICAL
`
`CORPORATION, FUGRO GEOTEAM,
`INC , ET AL,
`
`DEFENDANTS
`
`4:09-CV-01827
`HOUSTON, TEXAS
`
`VOLUME 11
`AFTERNOON SESSION
`
`AUGUST 7, 2012
`12:30 P.M.
`
`TRANSCRIPT OF JURY TRIAL
`BEFORE THE HONORABLE KEITH P. ELLISON
`UNITED STATES DISTRICT JUDGE
`
`A P P E A R A N C E S:
`
`FOR THE PLAINTIFF:
`
`Lee K. Kaplan
`SMYSER KAPLAN & VESELKA LLP
`Bank of America Center
`
`700 Louisiana, Suite 2300
`Houston, Texas
`77002
`
`Gregg F. Locascio
`KIRKLAND & ELLIS LLP
`655 Fifteenth Street Northwest
`
`Washington, DC 20005
`
`Sarah Tsou
`
`Timothy K. Gilman
`KIRKLAND & ELLIS LLP
`
`Citigroup Center
`153 East 53rd Street
`New York, New York
`‘..
`
`10022
`
`Mayra Malone, CSR, RMR, CRR
`mayrama1one@comcast.net
`
`
`
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`WESTERNGECO Exhibit 2123, pg. 1
`PGSVWNESTERNGECO
`|PR2014~00689
`
`WESTERNGECO Exhibit 2123, pg. 1
`PGS v. WESTERNGECO
`IPR2014-00689
`
`
`
`Gilman Cross of Charles Ledet
`
`3646
`
`(Qpen court)
`
`BY MR. GILMAN:
`
`Q
`
`A
`
`Q
`
`Do you see the reference to Mr. Shotts there?
`
`Yes,
`
`I do.
`
`And Mr. Shotts is ION's patent lawyer who is in the gallery
`
`back there?
`
`A
`
`Q
`
`A
`
`Q
`
`Yes.
`
`And David Roland is ION's general counsel?
`
`Yes, that's correct.
`
`You didn't note that any ION attorney should be copied on
`
`any comunications with other customers,
`
`just with WesternGeco?
`
`A
`
`Yes. Again, we were concerned about all the questions they
`
`were asking, so we wanted to make sure that none of our
`
`techniques or approaches or IP would find their way into a
`
`WesternGeco product.
`
`Q
`
`At this point, you hadn't actually launched the DigiFIN
`
`device, right? This is 2006.
`
`A
`
`Q
`
`That was the comercial launch in 2006 at this show.
`
`We had heard earlier that you were still doing some
`
`qualification testing in 2008 of the DigiFIN on Fugro vessels?
`
`A
`
`Q
`
`Yes.
`
`I would like to show you the 2006 business plan for
`
`DigiFIN, which is Defendants’ Exhibit 125.
`
`Exhibit 125 is ION's business plan when deciding
`
`to proceed with the DigiFIN project?
`
`Mayra Malone, CSR, RMR, CRR
`mayramalone@comcast.net
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`WESTERNGECO Exhibit 2123, pg. 2
`PGSVWNESTERNGECO
`|PR2014~00689
`
`WESTERNGECO Exhibit 2123, pg. 2
`PGS v. WESTERNGECO
`IPR2014-00689
`
`
`
`Gilman Cross of Charles Ledet
`
`3647
`
`A
`
`Q
`
`A
`
`I'm sorry.
`
`Is that a question?
`
`Yes.
`
`It appears to be a business plan.
`
`I haven't looked at the
`
`whole thing. But typically, yeah, we would review this in
`
`terms of assessing the worth or the value on a potential
`
`development project.
`
`Q
`
`The 2006 business plan for DigiFIN would have been
`
`something you signed off on at the time?
`
`A
`
`Q
`
`Yes.
`
`In that executive summary on the first page, you knew in
`
`2006 —— towards the bottom,
`
`the third—to—last sentence —~ that
`
`by using DigiFIN, existing customers will be able to compete in
`
`the proprietary Q—Marine systems market space.
`
`Is that
`
`correct?
`
`A
`
`Yeah.
`
`The Q system was proprietary in that they did not
`
`offer it to sell to other contractors.
`
`So that is why we felt
`
`like we had a good -- were in a good position to offer it to
`
`other contractors, because it was proprietary for WesternGeco.
`
`They only used it themselves.
`
`They didn't sell it to other
`
`contractors.
`
`Q
`
`And your customers needed DigiFIN in order to be able to
`
`compete with WesternGeco's Q—Marine system?
`
`A
`
`They needed it in order to have lateral steering, which the
`
`oil companies were very interested in.
`
`Q
`
`If we can turn to the fifth page of the business plan --
`
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`25
`
`Mayra Malone, CSR, RMR, CRR
`mayramalone@comcast.net
`
`WESTERNGECO Exhibit 2123, pg. 3
`PGSVWNESTERNGECO
`|PR2014~00689
`
`WESTERNGECO Exhibit 2123, pg. 3
`PGS v. WESTERNGECO
`IPR2014-00689
`
`
`
`Gilman Cross of Charles Ledet
`
`3648
`
`1
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`I'm sorry,
`
`the fourth page -- toward the bottom,
`
`there is a
`
`section "Business Opportunities"?
`
`A
`
`Q
`
`Yes.
`
`And in 2006, for example,
`
`the third bullet point, you saw
`
`DigiFIN as an enabler for additional sales of other products
`
`like DigiRANGE and Orca?
`
`A
`
`In order to do cable steering, you needed to have better
`
`positioning and so better positioning can be effected through
`
`additional acoustic devices. And that was our DigiRANGE
`
`product, acoustic devices.
`
`Q
`
`Part of your business justification for DigiFIN was that
`
`you thought you would get extra sales of DigiRANGE and Orca if
`
`you sold DigiFIN?
`
`A
`
`Q
`
`Yes.
`
`If we turn to the next page, at the top,
`
`the value to your
`
`customers that you thought in 2006 was that DigiFIN provides
`
`better 3D images and enables 4D time lapse seismic surveys; is
`
`that correct?
`
`A
`
`Yes. We did believe that, and that's what it states here.
`
`Q Will you turn to the seventh page of the document. Under
`
`"Competitive Assessment," you note that: Currently the only
`
`competitor in the cable steerage market is WesternGeco with
`
`their proprietary Q system again.
`
`MR. ARWUIDI Your Honor,
`
`I obviously don't care
`
`whether the jury hears this, but the engineer has heard this
`
`Mayra Malone, CSR, RMR, CRR
`mayramalone@comcast.net
`
`WESTERNGECO Exhibit 2123, pg. 4
`PGSVWNESTERNGECO
`|PR2014~00689
`
`WESTERNGECO Exhibit 2123, pg. 4
`PGS v. WESTERNGECO
`IPR2014-00689
`
`
`
`Gilman Cross of Charles Ledet
`
`3649
`
`over and over again and my client is not going to get a chance
`
`to put its case on before everyone is exhausted if we are
`
`repetitive in the testimony.
`
`7hE COURT?
`
`I have a lot more confidence in the jury
`
`than that.
`
`I do understand the case has been lengthy and in
`
`some particulars tedious, but a long time ago,
`
`the founders
`
`decided to trust the jury and I think that choice remains
`
`sound.
`
`I'm going to allow it.
`
`BY MR. GILMAN:
`
`Q Why don't we turn to page 13 of the document,
`
`the specific
`
`financial analysis that you put into this 2006 business plan?
`
`A
`
`Q
`
`Okay.
`
`I'm there.
`
`If we look at that chart that is towards the bottom half of
`
`the page,
`
`in 2006, you were predicting total sales revenue
`
`going forward through 2011 of $195.5 million if you could
`
`proceed with DigiFIN, right?
`
`A
`
`Q
`
`That was the projection at the time, yes.
`
`And at the time for total R&D costs,
`
`in order to be able to
`
`launch DigiFIN, it looks like you were only going to have to
`
`spend $1.9 million in research and development.
`
`Is that true?
`
`A
`
`Q
`
`That was the estimate at the time, yes.
`
`And then toward the bottom left-hand corner,
`
`there is
`
`something that says NPV, correct?
`
`A
`
`Q
`
`Yes.
`
`That stands for net present value?
`
`Mayra Malone, CSR, RMR, CRR
`mayramalone@comcast.net
`
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`WESTERNGECO Exhibit 2123, pg. 5
`PGSVWNESTERNGECO
`|PR2014~00689
`
`WESTERNGECO Exhibit 2123, pg. 5
`PGS v. WESTERNGECO
`IPR2014-00689
`
`
`
`Gilman Cross of Charles Ledet
`
`3650
`
`A
`
`Q
`
`Yes.
`
`And that is the attempt to calculate the total value of
`
`proceeding with DigiFIN at the time in 2006?
`
`A
`
`Q
`
`Yes.
`
`And there you valued it as a plus of 75.82 million if you
`
`could proceed with the DigiFIN project at that time?
`
`A Yes.
`
`Q
`
`Now,
`
`I believe you testified that you had left ION in
`
`December of 2008?
`
`A
`
`Q
`
`Yes,
`
`that is correct.
`
`And that was just as this patent dispute was starting to
`
`heat up?
`
`I believe so, yes.
`
`And so you're no longer an ION employee today?
`
`That is correct.
`
`But
`
`ION is compensating you for your time here today?
`
`I'm self-employed, so whatever time I have to put in to
`
`A Q
`
`A
`
`Q
`
`A
`
`this case takes away from my other job.
`
`So I do charge my
`
`standard consulting rate to ION for my work on this case.
`
`Q
`
`And you are charging ION $200 an hour for your help in this
`
`case, right?
`
`A
`
`Q
`
`Yes,
`
`that is correct.
`
`Testifying here today, you are charging them $200 an hour?
`
`A Are you insinuating that that is somehow clouding my
`
`testimony, sir?
`
`Mayra Malone, CSR, RMR, CRR
`mayramalone@comcast.net
`
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`WESTERNGECO Exhibit 2123, pg. 6
`PGSVWNESTERNGECO
`|PR2014~00689
`
`WESTERNGECO Exhibit 2123, pg. 6
`PGS v. WESTERNGECO
`IPR2014-00689
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