`
`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
`1
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`10022
`
`CSR, RMR, CRR
`Mayra Malone,
`mayrama1one@comcast.net
`
`
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`WESTERNGECO Exhibit 2157, pg. 1
`PGSVWNESTERNGECO
`|PR2014~01478
`
`WESTERNGECO Exhibit 2157, pg. 1
`PGS v. WESTERNGECO
`IPR2014-01478
`
`
`
`Gilman Cross of Charles Ledet
`
`3646
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`(Qpen court)
`
`BY M. GILMAN:
`
`Q
`
`A
`
`Q
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`Do you see the reference to Mr. Shotts there?
`
`Yes,
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`I do.
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`And Mr. Shotts is ION's patent lawyer who is in the gallery
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`back there?
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`A
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`Q
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`A
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`Q
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`Yes.
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`And David Roland is ION's general counsel?
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`Yes, that's correct.
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`You didn't note that any ION attorney should be copied on
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`any comunications with other customers,
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`just with WesternGeco?
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`A
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`Yes. Again, we were concerned about all the questions they
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`were asking, so we wanted to make sure that none of our
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`techniques or approaches or IP would find their way into a
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`WesternGeco product.
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`Q
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`At this point, you hadn't actually launched the DigiFIN
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`device, right? This is 2006.
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`A
`
`Q
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`That was the commercial launch in 2006 at this show.
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`We had heard earlier that you were still doing some
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`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?
`
`CSR, RMR, CRR
`Mayra Malone,
`mayramalone@comcast.net
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`WESTERNGECO Exhibit 2157, pg. 2
`PGSVWNESTERNGECO
`|PR2014~01478
`
`WESTERNGECO Exhibit 2157, pg. 2
`PGS v. WESTERNGECO
`IPR2014-01478
`
`
`
`Gilman Cross of Charles Ledet
`
`3647
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`A
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`Q
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`A
`
`I'm sorry.
`
`Is that a question?
`
`Yes.
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`It appears to be a business plan.
`
`I haven't looked at the
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`whole thing. But typically, yeah, we would review this in
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`terms of assessing the worth or the value on a potential
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`development project.
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`Q
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`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
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`2006 —— towards the bottom,
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`the third—to—last sentence —— that
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`by using DigiFIN, existing customers will be able to compete in
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`the proprietary Q—Marine systems market space.
`
`Is that
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`correct?
`
`A
`
`Yeah.
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`The Q system was proprietary in that they did not
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`offer it to sell to other contractors.
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`So that is why we felt
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`like we had a good —— were in a good position to offer it to
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`other contractors, because it was proprietary for WesternGeco.
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`They only used it themselves.
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`They didn't sell it to other
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`contractors.
`
`Q
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`And your customers needed DigiFIN in order to be able to
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`compete with WesternGeco's Q—Marine system?
`
`A
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`They needed it in order to have lateral steering, which the
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`oil companies were very interested in.
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`Q
`
`If we can turn to the fifth page of the business plan --
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`CSR, RMR, CRR
`Mayra Malone,
`mayrama1one@comcast.net
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`WESTERNGECO Exhibit 2157, pg. 3
`PGSVWNESTERNGECO
`|PR2014~01478
`
`WESTERNGECO Exhibit 2157, pg. 3
`PGS v. WESTERNGECO
`IPR2014-01478
`
`
`
`Gilman Cross of Charles Ledet
`
`3648
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`I'm sorry,
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`the fourth page —— toward the bottom,
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`there is a
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`section "Business Opportunities"?
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`A
`
`Q
`
`Yes.
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`And in 2006, for example,
`
`the third bullet point, you saw
`
`DigiFIN as an enabler for additional sales of other products
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`like DigiRANGE and Orca?
`
`A
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`In order to do cable steering, you needed to have better
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`positioning and so better positioning can be effected through
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`additional acoustic devices. And that was our DigiRANGE
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`product, acoustic devices.
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`Q
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`Part of your business justification for DigiFIN was that
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`you thought you would get extra sales of DigiRANGE and Orca if
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`you sold DigiFIN?
`
`A
`
`Q
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`Yes.
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`If we turn to the next page, at the top,
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`the value to your
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`customers that you thought in 2006 was that DigiFIN provides
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`better 3D images and enables 4D time lapse seismic surveys; is
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`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
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`competitor in the cable steerage market is WesternGeco with
`
`their proprietary Q system again.
`
`MR. ARNOLD.‘ 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 2157, pg. 4
`PGSVWNESTERNGECO
`|PR2014~01478
`
`WESTERNGECO Exhibit 2157, pg. 4
`PGS v. WESTERNGECO
`IPR2014-01478
`
`
`
`Gilman Cross of Charles Ledet
`
`3649
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`over and over again and my client is not going to get a chance
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`to put its case on before everyone is exhausted if we are
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`repetitive in the testimony.
`
`ThE'CCwRT7
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`I have a lot more confidence in the jury
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`than that.
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`I do understand the case has been lengthy and in
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`some particulars tedious, but a long time ago,
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`the founders
`
`decided to trust the jury and I think that choice remains
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`sound.
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`I'm going to allow it.
`
`BY M. GILMAN:
`
`Q
`
`Why don't we turn to page l3 of the document,
`
`the specific
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`financial analysis that you put into this 2006 business plan?
`
`A
`
`Q
`
`Okay.
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`I'm there.
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`If we look at that chart that is towards the bottom half of
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`the page,
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`in 2006, you were predicting total sales revenue
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`going forward through 20ll of $195.5 million if you could
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`proceed with DigiFIN, right?
`
`A
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`Q
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`That was the projection at the time, yes.
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`And at the time for total R&D costs,
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`in order to be able to
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`launch DigiFIN, it looks like you were only going to have to
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`spend $1.9 million in research and development.
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`Is that true?
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`A
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`Q
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`That was the estimate at the time, yes.
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`And then toward the bottom left-hand corner,
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`there is
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`something that says NPV, correct?
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`A
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`Q
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`Yes.
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`That stands for net present value?
`
`Mayra Malone, CSR, RMR, CRR
`mayramalone@comcast.net
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`WESTERNGECO Exhibit 2157, pg. 5
`PGSVWNESTERNGECO
`|PR2014~01478
`
`WESTERNGECO Exhibit 2157, pg. 5
`PGS v. WESTERNGECO
`IPR2014-01478
`
`
`
`Gilman Cross of Charles Ledet
`
`3650
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`A
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`Q
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`Yes.
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`And that is the attempt to calculate the total value of
`
`proceeding with DigiFIN at the time in 2006?
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`A
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`Q
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`Yes.
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`And there you valued it as a plus of 75.82 million if you
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`could proceed with the DigiFIN project at that time?
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`A
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`Q
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`Yes.
`
`Now,
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`I believe you testified that you had left ION in
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`December of 2008?
`
`A
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`Q
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`Yes,
`
`that is correct.
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`And that was just as this patent dispute was starting to
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`heat up?
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`I believe so, yes.
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`And so you're no longer an ION employee today?
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`That is correct.
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`But
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`ION is compensating you for your time here today?
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`I'm self—employed, so whatever time I have to put in to
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`A Q
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`A
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`Q
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`A
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`this case takes away from my other job.
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`So I do charge my
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`standard consulting rate to ION for my work on this case.
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`Q
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`And you are charging ION $200 an hour for your help in this
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`case, right?
`
`A
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`Q
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`Yes,
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`that is correct.
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`Testifying here today, you are charging them $200 an hour?
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`A Are you insinuating that that is somehow clouding my
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`testimony, sir?
`
`Mayra Malone, CSR, RMR, CRR
`mayramalone@comcast.net
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`WESTERNGECO Exhibit 2157, pg. 6
`PGSVWNESTERNGECO
`|PR2014~01478
`
`WESTERNGECO Exhibit 2157, pg. 6
`PGS v. WESTERNGECO
`IPR2014-01478