Case a<§:G9—cv—~m 82? Bocumeni 449
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`Fiied in TXSB on O7/30f’§2 Page 1 01390
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`1209
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`UHITED STATES DI3TRICT COURT
`SOUTHERN DISTRICT OF TEXAS
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`HOUSTON DIVISION
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`gm“;
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`2
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`3 4
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`WESTERNGECO LLC
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`5 VS.
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`6
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`ION GEOPHYSICAL
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`O9~CV+1827
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`Houston, Texas
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`7:39 a.m.
`
`July 27, 2012
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`*
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`*
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`**
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`*
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`*
`*
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`JURY TRIAL
`
`Volume 5
`
`CORPORATION, FUGRO
`GEOTEAM,
`INC., ET AL
`
`7
`
`8
`
`9
`
`10
`
`ll
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`12
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`13
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`14
`
`BEFORE THE HONORABLE KEITB P. ELLISON
`UNITED STAEES DISRICT JUDGE
`
`APPEARANCES:
`
`15 FCE.THE PLAINTIFF:
`
`Lee L. Kaplan
`16 SMHSER, KAPLAN & VESEEKA, ELP
`700 Louisiana, Suite 2300
`17 Houston, Texas 77002
`713.221.2300
`
`18
`
`19 Gregg F. LoCascio
`KIRKLAND & ELLIS LLP
`20 655 Fifteenth Street Northwest
`
`Washington, DC 20005
`2 1 202 ., 879 . 5290
`
`22
`
`Sarah Tsou
`
`23 Timothy K. Gihnan
`KIRKLAND & ELLIS LLP
`
`24 Citigroup Center
`153 East 53rd Street
`
`25 New York, New York 10022
`212.446.6435
`
`-1477, 4 478
`
`
`
`,
`
`
`
`PGS Exhibit
`
`Johnny C. Sanchez, RMR, CR2 / jcscourtreporter@aol.com
`
`PGS Exhibit 1106, pg. 1
`PGS V. WestemGeco (IPR2014-01478)
`
`PGS Exhibit 1106, pg. 1
`PGS v. WesternGeco (IPR2014-01478)
`
`
`
`Fiied in TXSB on O7/30f’§2 Page 1 01390
`
`1209
`
`UHITED STATES DI3TRICT COURT
`SOUTHERN DISTRICT OF TEXAS
`
`HOUSTON DIVISION
`
`gm“;
`
`2
`
`3 4
`
`WESTERNGECO LLC
`
`5 VS.
`
`6
`
`ION GEOPHYSICAL
`
`O9~CV+1827
`
`Houston, Texas
`
`7:39 a.m.
`
`July 27, 2012
`
`*
`
`*
`
`**
`
`*
`
`*
`*
`
`JURY TRIAL
`
`Volume 5
`
`CORPORATION, FUGRO
`GEOTEAM,
`INC., ET AL
`
`7
`
`8
`
`9
`
`10
`
`ll
`
`12
`
`13
`
`14
`
`BEFORE THE HONORABLE KEITB P. ELLISON
`UNITED STAEES DISRICT JUDGE
`
`APPEARANCES:
`
`15 FCE.THE PLAINTIFF:
`
`Lee L. Kaplan
`16 SMHSER, KAPLAN & VESEEKA, ELP
`700 Louisiana, Suite 2300
`17 Houston, Texas 77002
`713.221.2300
`
`18
`
`19 Gregg F. LoCascio
`KIRKLAND & ELLIS LLP
`20 655 Fifteenth Street Northwest
`
`Washington, DC 20005
`2 1 202 ., 879 . 5290
`
`22
`
`Sarah Tsou
`
`23 Timothy K. Gihnan
`KIRKLAND & ELLIS LLP
`
`24 Citigroup Center
`153 East 53rd Street
`
`25 New York, New York 10022
`212.446.6435
`
`-1477, 4 478
`
`
`
`,
`
`
`
`PGS Exhibit
`
`Johnny C. Sanchez, RMR, CR2 / jcscourtreporter@aol.com
`
`PGS Exhibit 1106, pg. 1
`PGS V. WestemGeco (IPR2014-01478)
`
`PGS Exhibit 1106, pg. 1
`PGS v. WesternGeco (IPR2014-01478)
`
`
`
`Case 4:09-cv-01827 Document 449 Filed in TXSD on 07/30/12 Page 2 of 390
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`FOR ION GEOPHYSICAL CORPORATION:
`David L. Burgert
`Susan Kopecky Hellinger
`Jonathan M. Pierce
`Jonna N. Stallings
`Ray T. Torgerson
`Eric D. Wade
`PORTER & HEDGES LLP
`Reliant Energy Plaza
`1000 Main Street, 36th Floor
`Houston, Texas 77002
`713.226.6694
`
`FOR FUGRO GEOTEAM, INC.:
`Gordon T. Arnold
`Jason A. Saunders
`Anthony Hong
`ARNOLD KNOBLOCH LLP
`4900 Woodway Drive
`Suite 900
`Houston, Texas 77056
`
`James M. Thompson
`ROYSTON RAYZOR VICKERY & WILLIAMS LLP
`Pennzoil Place
`711 Louisiana Street, Suite 500
`Houston, Texas 77002
`713.890.3218
`
`Court Reporter:
`Johnny C. Sanchez, RPR, RMR, CRR
`515 Rusk, #8016
`Houston, Texas 77002
`713.250.5581
`Proceedings recorded by mechanical stenography. Transcript
`produced by computer-assisted transcription.
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`Johnny C. Sanchez, RMR, CRR - jcscourtreporter@aol.com
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`PGS v. WesternGeco (IPR2014-01478)
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`Case 4:09-cv-01827 Document 449 Filed in TXSD on 07/30/12 Page 3 of 390
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`I N D E X
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`WITNESS
`LIEF MORTEN BY
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`PAGE
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`DIRECT EXAMINATION BY MR. ARNOLD............... 1220
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`CROSS-EXAMINATION BY MR. TORGERSON:........... 1223
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`RECROSS EXAMINATION BY MR. LOCASCIO............ 1239
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`REDIRECT EXAMINATION BY MR. ARNOLD............. 1252
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`MICHAEL TRIANTAFYLLOU
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`DIRECT EXAMINATION BY MR. LOCASCIO............. 1256
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`LIEF MORTEN BY (Recalled)
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`REDIRECT EXAMINATION BY MR. ARNOLD............. 1294
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`RECROSS EXAMINATION BY MR. LOCASCIO............ 1303
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`REDIRECT EXAMINATION BY MR. ARNOLD............. 1307
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`PGS v. WesternGeco (IPR2014-01478)
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`Case 4:09-cv-01827 Document 449 Filed in TXSD on 07/30/12 Page 4 of 390
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`MICHAEL TRIANTAFYLLOU
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`CONTINUED DIRECT BY MR. LOCASCIO............... 1318
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`CROSS-EXAMINATION BY MR. PIERCE................ 1373
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`CROSS EXAMINATION BY MR. ARNOLD................ 1445
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`REDIRECT EXAMINATION BY MR. LOCASCIO........... 1486
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`JOHN LEONARD
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`DIRECT EXAMINATION BY MR. GILMAN............... 1500
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`CROSS-EXAMINATION BY MR. PIERCE................ 1528
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`CROSS-EXAMINATION BY MR. SAUNDERS.............. 1537
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`PGS v. WesternGeco (IPR2014-01478)
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`Case 4:09-cv-01827 Document 449 Filed in TXSD on 07/30/12 Page 5 of 390
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`THE COURT: Good morning and welcome. I
`understand we have something to talk about before the jury
`comes in.
`
`Is it something for which we need to
`excuse the witness or not?
`MR. LOCASCIO: I think it probably is.
`THE COURT: If you don't mind stepping outside.
`Okay. I have reviewed the motion, or I
`guess it's a bench memorandum. Tell me, is this the nature
`of a motion for rehearing on our summary judgment ruling?
`Is that --
`
`MR. ARNOLD: No, Your Honor. Mr. LoCascio
`opened the door yesterday when he began asking the witness
`about where the lateral controller came from, and the
`witness accurately said it's comes from an FTP site, which
`is a computer server that sits in the United Kingdom.
`This is important because, under the
`Microsoft case, software that is copied outside the United
`States and then loaded onto the computer outside of the
`United States, that's not a supply from the United States.
`It's a component.
`THE COURT: Where has this issue been, though,
`in our case? Why are we hearing about it now?
`MR. ARNOLD: Well, there was a summary judgment
`motion as to one claim, right, regarding a lateral
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`07:39:32
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`07:39:49
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`07:40:02
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`07:40:17
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`07:40:27
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`PGS Exhibit 1106, pg. 5
`PGS v. WesternGeco (IPR2014-01478)
`
`
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`Case 4:09-cv-01827 Document 449 Filed in TXSD on 07/30/12 Page 6 of 390
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`controller, where a -- what was relied on was a receipt for
`a license which did not show that anything had been -- any
`copy had been made in the United States. It was a receipt
`for --
`
`THE COURT: Have we heard this issue in
`particular before? I don't recall it.
`MR. ARNOLD: The FTP site has not been before
`
`the Court.
`
`THE COURT: Let me hear from the other side.
`MR. LOCASCIO: This isn't exactly an effort to
`reopen the summary judgment decision. And my asking a
`witness a question cannot change the law of the case or
`this Court's decision.
`The issue is: Are the substantial force
`of the components -- it's the same equipment for every
`single claim, for every single patent. We're talking about
`one set of equipment. It's not as if there were different
`products or different suites of products here.
`And for this product, the Court found no
`evidence was put forward by the defendants to rebut it. If
`this FTP issue was out there, it could have been raised.
`It wasn't. It not only wasn't raised ever on summary
`judgment when Your Honor ruled, okay, these two components
`are supplied from the United States, it was never raised in
`discovery when we asked for their bases for
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`07:40:43
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`07:40:51
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`07:41:02
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`07:41:14
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`07:41:30
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`PGS Exhibit 1106, pg. 6
`PGS v. WesternGeco (IPR2014-01478)
`
`
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`Case 4:09-cv-01827 Document 449 Filed in TXSD on 07/30/12 Page 7 of 390
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`noninfringement.
`
`And ION, the party that actually supplies
`it, is bound by their own request for admission that say it
`comes from the United States, both software and the device
`itself. And so, not only did we never have an opportunity
`to explore this, we had no need to explore it under
`Rule 36, given that our face for ION. And so, Fugro never
`raised this argument, they never took this position, and
`yesterday, for the first time ever, their witness spouts
`out that we get it from some FTP site in the UK.
`MR. ARNOLD: Thank you. There is also
`testimony in the record during discovery from Mr. Sweet
`man, Your Honor, to the same effect. And if I could have
`the ELMO on.
`
`We see here -- I'll bring this out through
`the witness, but these FTP sites, they show them from the
`UK and it's the lateral controller.
`THE COURT: Well --
`MR. ARNOLD: Not once, twice --
`THE COURT: But --
`MR. ARNOLD: -- and yet another time.
`THE COURT: None of this evidence was
`forthcoming in the summary judgment motion, though; right?
`MR. LOCASCIO: Correct, Your Honor.
`MR. ARNOLD: This evidence was not cited in the
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`07:41:44
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`07:42:01
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`07:42:30
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`07:42:38
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`PGS Exhibit 1106, pg. 7
`PGS v. WesternGeco (IPR2014-01478)
`
`
`
`Case 4:09-cv-01827 Document 449 Filed in TXSD on 07/30/12 Page 8 of 390
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`summary judgment motion, Your Honor, but the summary
`judgment also is not as to all claims of all patents.
`There is -- it's clearly coming from the United Kingdom,
`clearly coming to the United Kingdom.
`And in the summary judgment motion, what
`was relied on was an invoice for a license that shows
`nothing about the -- it shows nothing about the actual
`supply in the face of what I believe will be uncontroverted
`evidence that WesternGeco has nothing to rebut.
`MR. LOCASCIO: Your Honor --
`MR. ARNOLD: Secondly, the admission that he
`says ION made, which we did not make, right, is not
`inconsistent with this. The fact that the software was
`programed in Harahan is one thing; but under the Microsoft
`case, that's irrelevant. The question is where was the
`copy made that was installed on the computer that is on the
`vessel.
`
`MR. LOCASCIO: Your Honor, in response to that,
`first, ION's admissions are not about where it was
`programed. ION responded with R phase, ION supplies its
`lateral controller software from the United States to its
`consumers. Their witnesses have said or our people bring
`it and put it on the boat on a 30(b)(6) deposition. The
`lateral controller itself, the device, the device doesn't
`run on air, comes from the United States. And they also
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`07:42:53
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`07:43:12
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`07:43:30
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`07:43:43
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`07:44:02
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`PGS Exhibit 1106, pg. 8
`PGS v. WesternGeco (IPR2014-01478)
`
`
`
`Case 4:09-cv-01827 Document 449 Filed in TXSD on 07/30/12 Page 9 of 390
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`admitted that.
`
`So the suggestion that we didn't pursue this
`we had no need to, and were essentially never told about
`this argument. ION said it came from the U.S., Fugro in
`their responses to discovery on basis for noninfringement
`never said word one about this FTP argument.
`And so, we now have documents that they say
`show it comes from the UK, query this, if it's delivered
`from the U.S. originally, loaded on the lateral controller
`as the supplier of the component ION says it is, and then
`they update the software from some FTP site, who knows when
`that happens, or what piece of the code is changed, we've
`never in discovery been able to pursue that because we had
`no need to. So for Mr. Around now to say I have nothing to
`rebut it, indeed that's why it's rearguing the issue and
`improper to raise now.
`THE COURT: You want you wanted to say
`
`something.
`
`MS. RABORN: First, the lateral controller is
`software and so, ION's statement that it supplies lateral
`from the United States to its customers is not wrong, but
`it probably wasn't complete. What ION should have said was
`it supplies the lateral controller software --
`THE COURT: You're going too fast. Start the
`quote over again.
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`07:44:16
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`07:44:35
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`07:45:05
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`07:45:20
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`PGS Exhibit 1106, pg. 9
`PGS v. WesternGeco (IPR2014-01478)
`
`
`
`Case 4:09-cv-01827 Document 449 Filed in TXSD on 07/30/12 Page 10 of 390
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`MS. RABORN: ION supplies its lateral
`controller software from the United States to its
`customers, by supplying the lateral controller software on
`to an FTP site in the UK.
`Now, at one point we were doing that, we
`were as -- we were supplying the lateral controller by
`putting it on CDs, taking it out to vessels and installing
`it there. But not all of them, and so, that's what this
`issue goes to, as to some of them were supplied from the
`United States, and some copies were not supplied from the
`United States.
`THE COURT: This is a major, major issue
`though, the way I want to proceed is this. If you want to
`pursue this I need a motion for rehearing under Rule 59 or
`60.
`
`MR. ARNOLD: May I make that orally now, Your
`
`Honor?
`
`THE COURT: And I'm going to need briefing.
`This is a major switch in the case, it really would be.
`And I'll review it, but right now, on this record, I'm not
`going to change our ruling on the summary judgment.
`MR. ARNOLD: Your Honor, if I may, with regard
`to Mr. LoCascio's comment that he had no way of knowing
`about this. This is the testimony from I believe
`Mr. McNabb in his May of 2010 deposition, and he clearly
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`Johnny C. Sanchez, RMR, CRR - jcscourtreporter@aol.com
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`PGS Exhibit 1106, pg. 10
`PGS v. WesternGeco (IPR2014-01478)
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`
`
`Case 4:09-cv-01827 Document 449 Filed in TXSD on 07/30/12 Page 11 of 390
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`says where the FTP site is.
`THE COURT: Well, he may have, but you were
`going to use that factoid for this purpose, it should have
`appeared somewhere in the summary judgment briefing.
`Anything else before we --
`MR. ARNOLD: Your Honor, under all of the
`evidence we have, it happens to be the truth. We've got a
`witness who needs to be leaving. I can understand the
`Court's desire for briefing, it seems to me that I ought to
`be able to at least elicit the testimony in some way, shape
`or form, so that it can be relied on in the event --
`THE COURT: What's the -- what's the end result
`of allowing his testimony that we consider some of the
`products to be sent supplied from the U.S. and some
`supplied from the UK?
`MR. ARNOLD: Well, we've got e-mail with regard
`to -- from 2010, which is very early in the process that
`the lateral controller is coming from the United Kingdom,
`software is coming from the United Kingdom and it affects
`the damage model, it affects --
`THE COURT: This is a big issue. I mean, I
`just can't rule on it through oral argument, I really
`can't. It's a huge issue in this case. And I agree we'd
`have to change everything right now. We'd have to change
`the ruling on the summary judgment, we'd have to change
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`PGS Exhibit 1106, pg. 11
`PGS v. WesternGeco (IPR2014-01478)
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`
`
`Case 4:09-cv-01827 Document 449 Filed in TXSD on 07/30/12 Page 12 of 390
`Direct-By/By Mr. Arnold
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`damage model, we'd need new expert reports.
`MR. ARNOLD: May I have the witness testify to
`this, Your Honor, as an offer of proof.
`THE COURT: Outside the presence of the jury if
`you want to do that.
`MR. ARNOLD: I need to make a record in some
`way. Thank you.
`THE COURT: Okay. I'm not going to delay them
`much further.
`MR. ARNOLD: Given Dr. Triantafyllou's
`schedule, I think it would be more efficient if I put the
`witness up and make the offer of proof and then the jury
`comes in and then I go through questions that would be
`outside of this topic. No, we've waited along enough. I'm
`sorry, I'm just not terribly sympathetic to this argument
`so late in the case.
`(The following was held in the presence of the jury)
`THE COURT: Thank you very much, ladies and
`gentlemen. All right. You may resume your inquiry.
`MR. ARNOLD: Thank you, Your Honor.
`DIRECT EXAMINATION
`
`BY MR. ARNOLD:
`Good morning, Mr. By?
`Q.
`A.
`Good morning.
`Could I have PTX 020 brought up again, please.
`Q.
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`PGS Exhibit 1106, pg. 12
`PGS v. WesternGeco (IPR2014-01478)
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`
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`Case 4:09-cv-01827 Document 449 Filed in TXSD on 07/30/12 Page 13 of 390
`Direct-By/By Mr. Arnold
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`Mr. By, if you have it in front of you, PTX 020 is an
`exhibit that Mr. LoCascio put before you and he
`highlighted some language of the -- I don't believe he
`highlighted a key phrase in it on the second paragraph
`where it begins, "I believe."
`A.
`Is it possible to zoom in on that a bit?
`If we could zoom in, please on the second paragraph.
`Q.
`A little bit bigger on the second paragraph. And could we
`highlight that a little larger, please. There we go.
`Begins, "I believe we are okay, but
`someone higher up will have to decide or stand." Can you
`tell me what you meant by that?
`A.
`After I reviewed the patents, I saw that there were
`sort of similarities in the objective of what we were
`trying to achieve, but that's sort of objective that has
`been standard in the industry for all the time in trying
`to match feather based on tidal cycles and keeping
`streamers from tangles. That's not something new. But
`there are differences in the way we do things, and there
`are differences in the sort of end results. And I believe
`that that is not to infringe any patents. And I thought
`therefore, that we were okay. But, I, as a navigation
`manager, could not make such a legal conclusion on behalf
`of the company, so I basically say here that someone
`higher up in the system would have to decide our stand on
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`PGS Exhibit 1106, pg. 13
`PGS v. WesternGeco (IPR2014-01478)
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`
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`Case 4:09-cv-01827 Document 449 Filed in TXSD on 07/30/12 Page 14 of 390
`Direct-By/By Mr. Arnold
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`
`that point.
`And so, you folks sent it to the folks who could make
`Q.
`the call; right?
`A.
`Yes.
`And then you got assurances from ION; right?
`Q.
`A.
`Yes.
`And that was the Des Flynn e-mail that we saw that we
`Q.
`talked about yesterday; right?
`A.
`That's correct.
`MR. ARNOLD: No further questions.
`THE WITNESS: I would also like to comment on
`the last phrase here, where I say --
`BY MR. ARNOLD:
`I'm sorry, could we bring that back up for the
`Q.
`witness, please?
`A.
`I say, "With ORCA 1.7 (ghost functionality coming
`out) it can potentially be infringing their patents in
`every single survey we do." With that I meant, if I was
`wrong in my conclusion that we were fine, we could be
`infringing on every survey that we do.
`And that's pointing towards that the fact
`that I recognized this feature to be commonly used once we
`got it. It wasn't the feature that would be used once in
`awhile for a 4D survey, for example, just made -- just
`wanted to make it clear to management that this was a
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`07:52:00
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`07:52:28
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`07:52:46
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`PGS Exhibit 1106, pg. 14
`PGS v. WesternGeco (IPR2014-01478)
`
`
`
`Case 4:09-cv-01827 Document 449 Filed in TXSD on 07/30/12 Page 15 of 390
`Cross-By/By Mr. Torgerson
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`feature that we would probably be using a lot.
`BY MR. ARNOLD:
`Okay.
`Q.
`A.
`That's also highlighting why we need to make a proper
`decision on this.
`And the assurances that you got put you at ease I
`Q.
`think you said?
`A.
`Yes, that's correct.
`MR. ARNOLD: Thank you, sir.
`CROSS-EXAMINATION
`
`BY MR. TORGERSON:
`Good morning, Mr. By.
`Q.
`A.
`Good morning.
`I'd like to keep this same document up and highlight
`Q.
`that last sentence for me, if you would.
`With regard to your concern that you could
`potentially be infringing on every single survey we do
`you recall on your examination with Mr. LoCascio that
`there was a large discussion about surveys; right?
`A.
`Correct.
`Can you confirm for the jury that every single one of
`Q.
`those surveys was outside 12 miles of the United States?
`A.
`We haven't done very many surveys in the vicinity of
`the United States, so -- but I can't comment, I believe
`so, yes.
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`PGS Exhibit 1106, pg. 15
`PGS v. WesternGeco (IPR2014-01478)
`
`
`
`Case 4:09-cv-01827 Document 449 Filed in TXSD on 07/30/12 Page 16 of 390
`Cross-By/By Mr. Torgerson
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`Okay. You believe that everything was outside
`Q.
`12 miles?
`A.
`Yes, I believe so.
`Do you understand then, Mr. By, that any offer that
`Q.
`Fugro made to perform these surveys using whatever modes,
`separation mode, ghost mode, that that was an offer to
`perform a survey more than 12 miles out of the United
`States?
`A.
`When we were offered the product, we didn't really
`know what products were lying on the future, so I couldn't
`possibly comment on every anticipated in using them,
`really.
`Do you understand, sir, as you sit here today, that
`Q.
`this Judge has made a ruling, that if a survey is
`performed 12 miles outside when all of these bits and
`parts are put together, that that's not an infringement
`under United States law. Do you understand that?
`MR. LOCASCIO: Objection to form foundation.
`THE COURT: Ladies and gentlemen, once again, I
`will explain to you the law at the appropriate time, and
`what lawyers tell you about what the law is not final.
`Subject to that, can you answer the question?
`THE WITNESS: I don't -- I've heard fragments
`of information, but I haven't seen the full picture and am
`in no position to really understand it. I'm sorry.
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`PGS Exhibit 1106, pg. 16
`PGS v. WesternGeco (IPR2014-01478)
`
`
`
`Case 4:09-cv-01827 Document 449 Filed in TXSD on 07/30/12 Page 17 of 390
`Cross-By/By Mr. Torgerson
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`BY MR. TORGERSON:
`That's fair enough. I'd like to look at some other
`Q.
`documents rather quickly that were walked through with you
`by Mr. LoCascio, PTX 429. And I'd like to highlight at
`the bottom of the page once it comes up, the bottom e-mail
`on the first page of 429. And if you could highlight,
`Mr. Carlock, the sentence beginning basically Statoil.
`And in this in September of 2008, you were writing that
`Statoil wanted to qualify Fugro Geo team vessels Orca and
`DigiFIN as an alternative to the Q technology; correct?
`A.
`That's what I wrote, yes.
`And from your understanding, Statoil was interested
`Q.
`in testing this new technology; right?
`A.
`From my understanding, yes, but Statoil was never
`communicating with me on that topic, so I wrote -- got
`that understanding from within the company.
`And likewise, you got the understanding that in
`Q.
`addition to Statoil, that other major oil companies were
`interested in testing this alternative technology,
`including Conoco Phillips; right?
`A.
`Not necessarily in relationship to 4D projects the
`way Statoil -- but others were interested in the
`technology.
`Interested in the technology, perhaps for other
`Q.
`applications?
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`PGS Exhibit 1106, pg. 17
`PGS v. WesternGeco (IPR2014-01478)
`
`
`
`Case 4:09-cv-01827 Document 449 Filed in TXSD on 07/30/12 Page 18 of 390
`Cross-By/By Mr. Torgerson
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`A.
`Perhaps, yes.
`And that included Conoco Phillips?
`Q.
`A.
`I would think so, definitely.
`And that included Apache?
`Q.
`A.
`I would think so as well.
`And that included Maersk?
`Q.
`A.
`Yes.
`And that included Chevron?
`Q.
`A.
`Yes.
`If you could go to PTX 1004, Mr. Carlock, and
`Q.
`highlight the last paragraph, please. In this e-mail from
`January of 2009 the first sentence reads, "We are not
`allowed to discuss the Apache methods, as this is
`currently Apache's IP." IP stands for intellectual
`property general.
`Do you have an understanding of what
`Apache's IP is in connection with this statement?
`A.
`I believe that's referring to the Fresnel Zone
`Binning. But you were a little bit quick to bring up that
`part of it, so I don't really see who it was sent to and
`other people copied.
`That's a fair point. Let's get the context.
`Q.
`A.
`Okay.
`Mr. Carlock, highlight the entire e-mail at the
`Q.
`bottom. It's an e-mail that was forwarded to you I
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`PGS Exhibit 1106, pg. 18
`PGS v. WesternGeco (IPR2014-01478)
`
`
`
`Case 4:09-cv-01827 Document 449 Filed in TXSD on 07/30/12 Page 19 of 390
`Cross-By/By Mr. Torgerson
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`believe, but it was generated by Paul Young, who is Paul
`Young?
`A.
`Paul Young was the manager we had in our Australia
`office.
`Take a moment to read the e-mail and see if it
`Q.
`refreshes your recollection.
`A.
`Okay. Yes. I am -- it's strongly points toward that
`we're dealing with this Fresnel Zone Binning patents.
`And that's a technique, explain for now Zone Binning
`Q.
`to the jury if you could at a high level.
`A.
`That's fairly complicated. But it basically says
`that the data points that you're getting with the
`hydrophone data, they represent a much, much bigger area
`depending on how deep into the ground you get to the data,
`and also how far away from the source it is.
`So the hydrophones at the very tail of the
`streamer, they basically, one Data Point they cover a very
`big area.
`And is it your understanding that Apache has patents,
`Q.
`perhaps in connection with this Fresnel Zone Binning
`techniques?
`A.
`I believe so, yes.
`Are you aware of whether any of these other oil
`Q.
`companies, Statoil or Conoco Phillips, have patents as
`well dealing with either methods or techniques for
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`PGS Exhibit 1106, pg. 19
`PGS v. WesternGeco (IPR2014-01478)
`
`
`
`Case 4:09-cv-01827 Document 449 Filed in TXSD on 07/30/12 Page 20 of 390
`Cross-By/By Mr. Torgerson
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`using -- for surveying whether in the 3D or 4D
`applications that relate to in any way to lateral
`steering?
`A.
`Yes, I believe so.
`Okay. So they have their own little fences of
`Q.
`patents that they're entitled to utilize; correct?
`A.
`I believe so, yes.
`All right. Would you agree with me that these oil
`Q.
`companies Statoil, Conoco Phillips Apache and others
`wanted a competitive offering to Q-Marine and
`specifically, to lateral steering?
`A.
`Yes. I would think that what was their objective,
`yes.
`Did you have any knowledge or understanding, that
`Q.
`these oil companies had had prior experience using
`WesternGeco's Q-Marine in different context? If you know?
`A.
`I believe that Statoil had the experience with
`Q-Marine, but I can't really comment on the others.
`And at least in connection with Conoco Phillips with
`Q.
`an e-mail that was discussed with Mr. LoCascio yesterday,
`Conoco Phillips wasn't just encouraging the use of DigiFIN
`and the testing of DigiFIN, they offered to help pay for
`it. Is that fair?
`A.
`Yeah. I don't really remember that e-mail now, but I
`think you're right.
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`PGS Exhibit 1106, pg. 20
`PGS v. WesternGeco (IPR2014-01478)
`
`
`
`Case 4:09-cv-01827 Document 449 Filed in TXSD on 07/30/12 Page 21 of 390
`Cross-By/By Mr. Torgerson
`
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`Specifically, Plaintiff's Exhibit 474. And if we
`Q.
`could look at the bottom e-mail. It's from Svein Dale?
`A.
`Yeah.
`January 2008?
`Q.
`A.
`Correct.
`Copied to you. And that last paragraph, the first
`Q.
`sentence says, "We understand that Conoco Phillips also is
`interested in DigiFINs. They may be willing to
`quote-unquote, contribute towards fully populated
`streamers on the Atlantic." Did you understand that
`Conoco Phillips was so interested in testing DigiFIN and
`bringing it into the market that they were interested in
`perhaps paying for part of that?
`A.
`That would be speculation. I can't really draw that
`conclusion based on this statement alone because the
`author was my manager and they may be really -- might be
`speculation.
`And the point of these tests that were being
`Q.
`discussed that you spoke about with Mr. LoCascio, those
`were acceptance tests by Fugro to make sure that this new
`DigiFIN technology worked; right?
`A.
`Correct.
`And it was also to a certain extent an acceptance
`Q.
`test by the oil companies to make sure that that
`technology worked and that Fugro knew how to use it. Is
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`PGS Exhibit 1106, pg. 21
`PGS v. WesternGeco (IPR2014-01478)
`
`
`
`Case 4:09-cv-01827 Document 449 Filed in TXSD on 07/30/12 Page 22 of 390
`Cross-By/By Mr. Torgerson
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`that fair?
`A.
`Yes.
`Now, there was also a discussion -- you can take that
`Q.
`down, Mr. Carlock. If we could switch to the ELMO,
`please.
`
`There was a discussion yesterday with
`Mr. LoCascio about different lateral steering control
`devices. A few months after the initial tested on the
`Atlantic of DigiFIN Fugro also go test of DigiFin, Furgo
`also tested the Nautilus device that's manufactured by
`Sercel; right?
`A.
`A few months.
`What was the timeframe? You tell me, what was the
`Q.
`timeframe?
`A.
`I think it tested DigiFIN in December 2007, and that
`that it tested Nautilus in January 2009, I think.
`A year later, perhaps?
`Q.
`A.
`I think so, maybe, yeah.
`Okay. And in connection with that -- that was aboard
`Q.
`the NATUNA vessel?
`A.
`That's correct.
`And that Nautilus test didn't work because of the
`Q.
`issue with the fishing gear; correct?
`A.
`We basically never got to the point where we could
`test Nautilus because we caught the fishing gear while we
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`PGS Exhibit 1106, pg. 22
`PGS v. WesternGeco (IPR2014-01478)
`
`
`
`Case 4:09-cv-01827 Document 449 Filed in TXSD on 07/30/12 Page 23 of 390
`Cross-By/By Mr. Torgerson
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`were deploying the streamers, and so we couldn't really
`test the lateral benefits of it or that sort of technical
`ability. So we just saw had an wanted effect that the way
`that it caught the fishing nets.
`Mr. By, today, who are the four largest players in
`Q.
`the towed marine seismic market by way of contractors?
`A.
`That would be CCGV, Veritas, PGS, WesternGeco, and
`then you have Fugro or Palorkus that's number 4. That's a
`close race.
`Since you're here let's talk about Fugro. What kind
`Q.
`of device does CCGV, which was resulted from the merger of
`CGG and Veritas, what type of lateral steering device do
`they utilize?
`A.
`I don't know with certainty that. I know they have
`Nautilus on board but I also believe they have DigiFINs.
`What about PGS?
`Q.
`A.
`I believe again it's not absolute -- I don't have any
`evidence for it, but it's from my understanding that they
`have used the DigiFIN and that they are also now using
`this eBird system.
`And eBird is manufactured by yet another company
`Q.
`called Kongsberg?
`A.
`That's correct.
`And WesternGeco we know was has its Q-FIN device;
`Q.
`right?
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`PGS Exhibit 1106, pg. 23
`PGS v. WesternGeco (IPR2014-01478)
`
`
`
`Case 4:09-cv-01827 Document 449 Filed in TXSD on 07/30/12 Page 24 of 390
`Cross-By/By Mr. Torgerson
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`A.
`Yes, but I know very little about WesternGeco.
`And Fugro uses DigiFIN, clearly?
`Q.
`A.
`That's correct.
`So as we sit here today, there are one, two, three,
`Q.
`four devices that can accomplish lateral steering in the
`towed marine seismic market. Would you agree with that?
`A.
`Yes.
`And you would agree with me that CGG Veritas -- well,
`Q.
`let me back up. Nautilus is manufactured by a company
`called Sercel?
`A.
`That's correct.
`And Sercel is wholly owned by CGG Veritas?
`Q.
`A.
`I believe so, yes.
`All right. So you would agree with me, that
`Q.
`WesternGeco's largest competition in the market, in the
`form of CGGV and PGS is utilizing at least two other
`devices than DigiFIN to compete against WesternGeco in the
`lateral steering market; fair?
`A.
`That's fair.
`So it appears that CGG Veritas and PGS have accepted
`Q.
`an alternative product that can accomplish lateral
`steering; fair?
`A.
`Yes.
`All right. Can we switch back, if we could, and I'll
`Q.
`mark this as ION Demonstrative 3. I think that's right.
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`PGS Exhibit 1106, pg. 24
`PGS v. WesternGeco (IPR2014-01478)
`
`
`
`Case 4:09-cv-01827 Document 449 Filed in TXSD on 07/30/12 Page 25 of 390
`Cross-By/By Mr. Torgerson
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`If we could turn to Plaintiff's Exhibit 1002. If you look
`at this document, it's a PowerPoint presentation about
`DigiFIN. Do you recall discussing this with Mr. LoCascio?
`A.
`I do.
`Okay. One thing I wanted I want to clear up. If you
`Q.
`could to Page 859, it's about five pages in, Mr. Carlock.
`Yes, this flow diagram, you discussed this briefly with
`Mr. LoCascio. And I want to make sure that we're very
`clear about this.
`The lateral controller software is
`resident on a separate computer up here in the upper left.
`On the information flow it has an arrow showing -- going
`down to the PCS that in turn,
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