`
` UNITED STATES PATENT AND TRADEMARK OFFICE
` BEFORE THE PATENT TRIAL AND APPEAL BOARD
` Case IPR2015-01264
` Patent 7,945,856 B2
`----------------------------------------x
`BUNGIE, INC.,
` Petitioner,
` -against-
`WORLDS INC.,
` Patent Owner.
`----------------------------------------x
`
` DEPOSITION OF:
` THOMAS L. KIDRIN
` Thursday, May 5, 2016
` New York, New York
` 8:57 a.m. - 10:04 a.m.
`
` Reported in stenotype by:
` Rich Germosen, CCR, CRCR, CRR, RMR, CCRR
` NCRA, NJ and CA Certified Realtime Reporter
` NCRA Realtime Systems Administrator
` Job No. 107022
`
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`BUNGIE - EXHIBIT 1047
`Bungie, Inc. v. Worlds Inc.
` IPR2015-01264, -01268, -01269, -01319, -01321, & -01325
`
`
`
`Page 2
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` Deposition of THOMAS L. KIDRIN, taken in the
`above-entitled matter before RICH GERMOSEN, Certified
`Court Reporter, (License No. 30XI00184700), Certified
`Realtime Court Reporter-NJ, (License No. 30XR00016800),
`California Certified Realtime Reporter, NCRA Registered
`Merit Reporter, NCRA Certified Realtime Reporter, NCRA
`Realtime Systems Administrator, taken at the offices of
`WILSON SONSINI GOODRICH & ROSATI, 1301 Avenue of the
`Americas, New York, New York 10019-6022, on Thursday,
`May 5, 2016, commencing at 8:57 a.m.
`
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`A P P E A R A N C E S:
`
`WILSON SONSINI GOODRICH & ROSATI
`Attorneys for the Petitioner
` 701 Fifth Avenue
` Seattle, WA 98104
`BY: ANDREW BROWN, ESQ.
`
`DAVIDSON BERQUIST JACKSON & GOWDEY
`Attorneys for the Patent Owner
` 8300 Greensboro Drive
` McLean, VA 22102
`BY: WAYNE HELGE, ESQ.
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` IT IS HEREBY STIPULATED AND AGREED, by
`and between the attorneys for the respective parties
`herein, that filing and sealing be and the same are
`hereby waived.
` IT IS FURTHER STIPULATED AND AGREED
`that all objections, except as to the form of the
`question, shall be preserved to the time of trial.
` IT IS FURTHER STIPULATED AND AGREED
`that the within deposition may be signed and sworn
`to before any officer authorized to administer an
`oath, with the same force and effect as if signed
`and sworn to before the officer before whom the
`within deposition was taken.
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` THOMAS L. KIDRIN / 05.05.16
`--------------------------------------------------
` P R O C E E D I N G S
` 8:57 a.m.
` New York, New York
`--------------------------------------------------
` MR. BROWN: Should we put appearances
`on the record?
` Andy Brown of Wilson Sonsini Goodrich
`& Rosati on behalf of petitioner Bungie.
` MR. HELGE: Wayne Helge from Davidson
`Berquist Jackson & Gowdey for patent owner Worlds.
` (Whereupon, the court reporter
`administered the oath to the witness.)
`
`T H O M A S L. K I D R I N,
`conducting business at Worlds Inc., 11 Royal Road,
`Brookline, Massachusetts 02445, having been first
`duly sworn or affirmed, was examined and testified as
`follows:
`EXAMINATION BY MR. BROWN:
` Q. Good morning, Mr. Kidrin.
` A. Good morning.
` Q. Could you please tell us your full
`name.
`
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` THOMAS L. KIDRIN / 05.05.16
` A. Thomas Lloyd Kidrin.
` Q. And you are currently the president
`and CEO of Worlds; correct?
` A. Correct.
` Q. And you've been the president and CEO
`of Worlds since 1997?
` A. Correct.
` Q. Have you ever been deposed before?
` A. Yes.
` Q. So I suspect you're familiar with the
`process generally and your counsel has likely
`explained it to you as well.
` A. Yes.
` Q. Just as a reminder, there are a few
`things. Given that the court reporter is taking a
`transcript of everything that we say, it's good if
`you can try to wait until I finish my question to
`start your answer, and I will try to allow you to
`finish your answer before I start a new question.
` Is that okay?
` A. Sure.
` Q. And similarly try to answer the
`questions verbally with a yes or no rather than a
`shake of the head. Okay?
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` THOMAS L. KIDRIN / 05.05.16
` A. Yes.
` Q. Do you have an understanding as to
`why we're here today?
` A. Yes.
` Q. And what is that understanding?
` A. To be deposed on the statement I've
`given in the case.
` Q. I'll hand you a document that's
`previously been marked as exhibit 2018.
` A. (Reviews.)
` Q. Do you recognize exhibit 2018?
` A. Yes, I do.
` Q. What is it?
` A. It's a declaration I've given.
` MR. HELGE: Can we have the witness
`check all the pages to make sure that he's --
` MR. BROWN: Sure.
` A. It seems in order.
` Q. So this is the statement that you
`referred to that you've given in this case?
` A. Correct.
` Q. So the first paragraph of your
`declaration you give your residence, your address.
` A. Correct.
`
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` THOMAS L. KIDRIN / 05.05.16
` Q. That is the same address as the
`address that Worlds has given for, for example, its
`SEC filings; is that correct?
` A. Correct.
` Q. Is that because Worlds does not have
`any other office at this point?
` A. It's a home office.
` Q. Okay. Thank you.
` How many employees does Worlds
`currently have?
` A. Myself.
` Q. Just you?
` A. Correct.
` Q. And how long has that been the case?
` A. Approximately I'd say eight, nine
`years.
` Q. So going back to 2007; is that right?
` A. I would say 2010 or '11, so probably
`about five or six years ago.
` Q. So what other employees did Worlds
`have at that point?
` A. Ronald Britvich was an employee.
`Chris Ryan is the CFO, has been the CFO, but he's
`not a full-time employee.
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` THOMAS L. KIDRIN / 05.05.16
` Q. Okay. Going back earlier, back to
`1997 time frame that you talk about in your
`declaration a little bit, that's when you became
`involved with Worlds; correct?
` A. Correct.
` Q. What did you do prior to becoming
`involved with Worlds?
` MR. HELGE: Object to form.
` A. I was the president and CEO of a
`public company called College Television Network.
` Q. And College Television Network, is
`that the company -- sorry. Withdrawn.
` Look at your declaration. In
`paragraph four of your declaration you mention that
`you were the president and chief executive officer
`of a company that acquired Worlds; correct?
` A. Correct.
` Q. Was that company College Television
`Network?
` A. No.
` Q. So at what point did you leave
`College Television Network?
` MR. HELGE: Object to the form.
` A. I left College Television Network in
`
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` THOMAS L. KIDRIN / 05.05.16
`June of 1996.
` Q. And then did you go to a different
`company which is the company that acquired Worlds?
` A. No, the company was formed. I had
`been looking at Worlds for potential licensing, and
`when I was informed that the company was available
`for sale, I put together a company Worlds
`Acquisition Corp. with a financing group and began
`negotiations with Worlds to acquire it.
` Q. When you say you were looking at
`Worlds for potential licensing, what do you mean?
` A. At the time Worlds was developing
`projects for a number of clients, IBM, Steven
`Spielberg, Sony, and I had the idea of using the
`technology for the music industry, and I had the
`relationships in the music industry. So I had
`approached Worlds for an exclusive license to the
`music industry for an application using 3D Worlds
`and began negotiation --
` (Reporter clarification.)
` A. Using the technology.
` Q. Using 3D worlds.
` When the court reporter asks for
`clarification he typically wants what you said, not
`
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` THOMAS L. KIDRIN / 05.05.16
`an actual clarification.
` A. Okay.
` Q. So it was this acquisition company
`that you had formed that formally acquired Worlds?
` A. Correct.
` Q. Because I noticed that in your
`declaration as well as in the declaration of some of
`the other witnesses sometimes it switches back and
`forth where it talks about it as if you were
`personally acquiring Worlds?
` A. Correct.
` Q. So that may be from a lay perspective
`a way that one might talk about it, but formally it
`was actually the company that you founded that was
`the acquirer; correct?
` A. Correct.
` Q. And what was your purpose in
`acquiring Worlds?
` MR. HELGE: Object to form.
` A. Well, as I said before, initially the
`focus was on developing 3D music worlds and looking
`at other projects that 3D company applied to in the
`field of education and training and military
`simulation.
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` THOMAS L. KIDRIN / 05.05.16
` Q. Did those plans come to fruition?
` A. There were other developments in the
`education area with Pierson PLC. We developed some
`government projects as well.
` Q. And in what time frame was Worlds
`developing those projects?
` A. From the acquisition period going
`forward through 2001 and then continued in 2007 and
`'8.
` Q. And was it in 2001 -- sorry.
`Withdrawn.
` In 2001 Worlds began to have
`liquidity issues; correct?
` MR. HELGE: Object to form.
` A. I wouldn't say necessarily liquidity
`issues. The dot com bust occurred and we were in
`the process of raising $20 million in London and
`that financing fell through, and at that time we had
`close to a hundred employees, so we laid off many of
`those employees and a number of them worked on a
`contract basis. A number of them worked on a
`voluntary basis.
` Q. So say at the beginning of 2002 how
`many employees did Worlds have?
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` THOMAS L. KIDRIN / 05.05.16
` A. I'd say about three.
` Q. So it had gone down from 100 or so
`employees to three employees?
` A. Correct.
` Q. From 2001?
` A. But there were still, as I said,
`former employees, probably in the neighborhood of
`10, that were working on projects on a pro bono
`basis at that time.
` Q. When you say pro bono, what do you
`mean?
` A. For free.
` Q. So it was for free, but not for the
`public good?
` MR. HELGE: Object to the form.
` Q. When lawyers say pro bono, they
`typically mean for the public good, not just --
` A. I meant for the public good of the
`company, so I facetiously say that.
` Q. Okay. Understood.
` At the time that you acquired Worlds,
`what was your -- what was the amount of your
`personal interest in the company? You said that you
`had -- there was financing involved. So what I'm
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` THOMAS L. KIDRIN / 05.05.16
`trying to understand is say what percentage of
`Worlds --
` A. So equity is what you're asking?
` Q. Yes, yes, what was your equity?
` A. My equity at that time was roughly
`I'd say eight or 9 percent of the company.
` Q. And has that remained fairly constant
`to today?
` A. Roughly.
` Q. Do you know who owns the other
`roughly 90 percent of the company?
` MR. HELGE: Object to the form.
` A. We're a public company, so I believe
`it's publicly accessible, but it's about 650
`shareholders.
` Q. Are there any other major
`shareholders other than yourself?
` MR. HELGE: Object to form.
` A. Yes, there are.
` Q. And who would those individuals be?
`Who would those -- who would that be?
` A. Well, shares are held in the estate,
`the partner that I acquired the company with, he
`passed on, former chairman of Worlds Steven Chrust
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` THOMAS L. KIDRIN / 05.05.16
`and a number of other investors.
` Q. So going back to, you know, the
`changes at Worlds in the 2001 time frame, I think
`you mentioned 2007 and 2008 as being a period where
`there was additional activity?
` A. Correct.
` Q. Could you describe that for me?
` A. Well, 3D Virtual Worlds became
`popular again with Second Life in 2004, and
`effectively what Second Life was doing was what
`Worlds had done, and as the internet and dot com
`started to resurrect, investments were occurring and
`we still had the technology platform as I mentioned.
`People were working on it for me under contract
`development, so we had maintained the service up and
`running throughout the period of time from '97 still
`running today and made improvements, and I was able
`to secure a contract with MTV and did a development
`deal with them and did another development deal with
`Pierson for some educational content and a deal with
`D.M.C. from Run-D.M.C.
` Q. Did there come a time when Worlds
`pulled back from those sort of operational projects
`again?
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` THOMAS L. KIDRIN / 05.05.16
` MR. HELGE: Object to the form.
` A. When you say pull back --
` Q. What I'm trying to get at is in 2001
`Worlds spun off its operations; correct?
` A. Correct.
` Q. And it spun off its operation to?
`What was the name of the company that Worlds spun
`off --
` A. Worlds Online.
` Q. And does Worlds Online still exist?
` A. Yes.
` Q. So Worlds Inc. no longer has those --
`those sorts of projects within the scope of its
`business; correct?
` MR. HELGE: Object to the form.
` A. Worlds basically has the patent
`portfolio and rights to fees that Worlds Online
`through development services would provide back to
`Worlds Incorporated.
` Q. What are the amount of Worlds' fees?
` MR. HELGE: Object to the form.
` A. They would be negotiated based on the
`projects.
` Q. So has Worlds Online provided fees
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` THOMAS L. KIDRIN / 05.05.16
`back to Worlds Incorporated?
` A. No.
` Q. And when you say Worlds basically has
`the patent portfolio, you're referring to the
`patents that are the subject of these inter partes
`review proceedings; correct?
` A. Correct.
` Q. Does Worlds have any other assets?
` MR. HELGE: Object to form.
` A. No, it does not.
` Q. So is the value of Worlds as a
`company tied fairly directly to that patent
`portfolio?
` MR. HELGE: Object to form.
` A. I wouldn't say necessarily because
`Worlds is a public security, so its assets are also
`in the value of its stock.
` Q. When you say its assets are also in
`the value of its stock, what do you mean?
` A. Well, there are two elements. One,
`whatever the market ascribes to the value of the
`stock is a value; two, the company has a
`40 million-dollar net operating loss, so inherently
`that has a value to it as well.
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` THOMAS L. KIDRIN / 05.05.16
` Q. Do you know what the market ascribes
`to the value of the stock today?
` A. Yes. It's about a 3 million-dollar
`valuation.
` Q. And how much is that per share?
` A. Roughly two cents a share.
` Q. Do you know what the market ascribed
`to the value of the stock prior to these inter
`partes reviews being filed in 2015?
` A. Closer to 10 or $12 million.
` Q. And what would that be per share?
` A. About 12 cents to 16 cents.
` Q. What value would Worlds Incorporated
`as a company have if the patents were invalidated?
` MR. HELGE: Object to form.
`Incomplete hypothetical.
` A. I would have no idea.
` Q. Can you identify any value that it
`would have?
` A. Yeah. Well, I would say to you that
`the net operating loss on a per share basis is
`probably equivalent to about 13 or 14 cents a share.
` Q. And why is that?
` A. Because a 45 million-dollar net
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` THOMAS L. KIDRIN / 05.05.16
`operating loss divided by the number of shares would
`roughly be that amount per share.
` Q. I apologize. It may just be that I'm
`not a financial wizard, but how does a loss create a
`positive value?
` A. Well, because a loss offsets any
`taxable consequence.
` Q. So earlier you mentioned Ron
`Britvich. Mr. Britvich is still a consultant to
`Worlds today; correct?
` A. Correct.
` Q. Including in these proceedings?
` A. Correct.
` Q. Do you know how Mr. Britvich is being
`compensated in connection with these proceedings?
` A. Yes.
` Q. And how is that?
` A. He's received shares of stock.
` Q. How many shares has he received?
` A. 1 million shares.
` Q. And the 1 million shares that he
`received were specifically in connection with these
`inter partes reviews or was it for his work
`generally?
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` THOMAS L. KIDRIN / 05.05.16
` A. It was in general for ongoing patent
`litigation with Activision as well as the inter
`partes reviews.
` Q. And so was he given that compensation
`all at one time or was there --
` A. No. It vests over a six-month
`period.
` Q. Was that an arrangement that was
`reached -- sorry. Withdrawn.
` When was that arrangement with
`Mr. Britvich reached?
` A. Sometime I believe it was last
`summer, this past summer.
` Q. The litigation with Activision
`started prior to that though?
` A. Correct.
` Q. So was he not receiving compensation
`until that time or --
` A. No, he received compensation during
`the Activision initiation stage prior to the
`initiation of the Activision and through the first
`two years of that.
` Q. Was that also in the form of equity?
` A. Some of it was in equity. He was
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` THOMAS L. KIDRIN / 05.05.16
`also retained on a salary basis by Worlds Online for
`development work.
` Q. Prior to him having received stock in
`connection with his consulting work, was
`Mr. Britvich an owner of any stock in Worlds?
` A. Not that I'm aware of.
` Q. Whose idea was it to give
`Mr. Britvich stock in change for his consulting
`work?
` A. He suggested that he'd like to have
`stock.
` Q. Why would -- did he tell you why he
`would like to have stock?
` A. Well, he believed that the company
`had value intrinsically in its patents.
` Q. The patents that are the issue of
`these proceedings?
` A. As well as the Activision litigation.
` Q. Does that create any concern that
`there might be an issue with respect to bias or even
`an ethical issue giving a previously uninterested
`witness a direct interest in the outcome of the
`proceeding?
` MR. HELGE: Object to form.
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` THOMAS L. KIDRIN / 05.05.16
` A. No, because I know Ron to be a very
`blunt and ethical person who would speak his mind if
`he doesn't agree with something. He's not somebody
`that can be manipulated or words can't be put into
`his mouth. He's a straight shooter and that was his
`reputation when he was an employee of Worlds prior
`to my involvement with it.
` Q. If I could have you look back at your
`declaration. You describe the transfer of various
`documents and assets at the time that Worlds was
`acquired. So, for example, in paragraph five of
`your declaration you describe all corporate
`documents, PCs, hard drives and backup source code
`repositories, and you say you took possession of
`those assets by Federal Express and UPS shipping as
`well as by hand delivery on my trips to the
`San Francisco offices of Worlds Inc.
` A. Correct.
` Q. Do you see that?
` Why was it at the time of the
`acquisition that they would be transferring the
`assets to you presumably at your home in
`Massachusetts.
` A. Well, first of all, it wasn't my
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` THOMAS L. KIDRIN / 05.05.16
`home. It was -- we had a corporate office in
`Boston, Massachusetts. 15 Union Wharf was our
`office for until 2001.
` Q. Was that a new office that you formed
`around the time of the acquisition or had that been
`in existence?
` A. Well, it was my office for the
`College Television Network and then I took over the
`lease from the College Television Network when I
`left so --
` Q. Were you moving Worlds' operations to
`the new office?
` A. Well, we were closing -- we kept the
`San Francisco office open for I think a year and
`then moved the assets of the corporate office to
`Boston. We had a New York office as well. We had a
`Connecticut office, and we had an office in New
`Jersey as well.
` Q. In paragraph five when you refer to
`backup source code repositories, can you describe
`what those would have been?
` A. Well, it was the practice of Worlds
`prior to my involvement and post my involvement
`through all development efforts of the software
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` THOMAS L. KIDRIN / 05.05.16
`developers to back up the work they had done in hard
`drives that were securitized hard drives in
`facilities that were final product and development
`product. So when a version of code was tested and
`approved, it would go into a repository as the
`current version, and there was a separate set of
`servers for the developers until it would make it
`over to the formal repository.
` Q. So the backup source code
`repositories, would that just have been backups of
`those work repositories, or would they be something
`different?
` A. No, they would be the final version,
`and then we would back it up so that you wouldn't
`have one version in case there was a failure on the
`hard drives.
` Q. Do you know whether they sent the
`backup source code repositories to you by Federal
`Express, UPS, or by hand delivery?
` A. I'm pretty certain that was a Fed Ex
`delivery.
` Q. Actually if we turn to the next page
`of your declaration you say that: Upon acquiring
`Worlds you took possession of the software code
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` THOMAS L. KIDRIN / 05.05.16
`libraries from Conor Laffan's control of Worlds Inc.
`via a Federal Express package?
` A. Correct.
` Q. So is that -- I'm trying to maybe
`understand here is there complete overlap between
`what you describe in paragraph six and the source
`code repositories that you mentioned in paragraph
`five, or are those two separate occurrences?
` A. No, one in the same.
` Q. In paragraph seven you say:
`Currently code is stored on backup tapes given to me
`by Conor Laffan on December 3, 1997 on the formal
`date of closing of the acquisition of Worlds Inc.
` Is that the same as the source code
`described --
` A. Correct.
` Q. Are they actually backup tapes or I
`guess what form --
` A. They are literally tapes.
` Q. What type of tapes are they?
` A. A Brunnar tape and I forgot what the
`name of the other format was for the Sun Solaris
`system.
` Q. Does Worlds currently have the
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` THOMAS L. KIDRIN / 05.05.16
`ability to read the information that's stored on
`those tapes?
` MR. HELGE: Object to form.
` A. No, we don't maintain that. It was
`pulled because these are very old machines over 20
`years old now. So a software -- I'm trying to think
`of the term that they use there, a recovery, data
`recovery company pulled all the tape data.
` Q. And when was that done?
` A. I believe in 2008 and 2010.
` Q. What was the -- do you remember the
`name of the data recovery company?
` A. I would have to check. Tech Fusion.
` Q. Do you still have the backup tapes?
` A. Yes.
` Q. Where are they?
` A. In Boston.
` Q. Looking at paragraph six again you
`say that Conor Laffan has testified in this matter
`that these libraries reflected regular tape backups
`of Worlds software including Worlds Chat off of
`Worlds and Ace and Gamma software engines?
` A. Correct.
` Q. Worlds Chat is the product that was,
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` THOMAS L. KIDRIN / 05.05.16
`you know, released at some point in 1995; correct?
` A. Correct.
` Q. And that's the one that, you know, in
`this case at least I think we've been talking the
`most about?
` A. Right.
` Q. What is Alpha Worlds?
` A. Alpha Worlds was a second platform
`that Ron Britvich had been developing concurrently
`with Worlds Chat, and it had some different unique
`features as far as the underlying technology and the
`approach to the product itself as far as the
`consumer.
` Q. What was the Ace software engine?
` A. Worlds Chat was Ace.
` Q. And what was the Gamma software
`engine?
` A. Gamma was the third iteration of
`platform that Worlds had developed which was focused
`on Java.
` Q. Were either Alpha Worlds or Gamma I
`guess the software based on Gamma released to the
`public?
` A. Correct, they were.
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` THOMAS L. KIDRIN / 05.05.16
` Q. What was Alpha Worlds released to the
`public as?
` A. It was Active Worlds.
` Q. And what was the general time frame
`in which that would have been released?
` MR. HELGE: Object to form.
` A. It was same. I think it was the
`summer of '95. Of -- yeah, summer of '95.
` Q. Can you describe any of the
`differences between Worlds Chat and Active Worlds to
`me?
` MR. HELGE: Object to form.
` A. Worlds Chat was a fixed chat program
`with avatars in a virtual world and the Active
`Worlds Alpha Worlds platform provided users with the
`ability to buy virtual land and build their own
`virtual world.
` Q. You mentioned there being, you know,
`a development server as well as, you know, a final
`release server. In terms of how the developers at
`Worlds managed various versions of the softwares
`they're developing, do you know what version control
`software they used?
` MR. HELGE: Object to form.
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` THOMAS L. KIDRIN / 05.05.16
` Just for clarification, do you have a
`time frame you're asking about?
` MR. BROWN: In the 1995 time frame.
` MR. HELGE: Object to form.
` A. Again, prior to my involvement with
`the company I don't know what their process was
`other than it was a formal process with a project
`development head and lead developers and junior
`developers.
` Q. But in terms of what software they
`actually used to manage the repository, you're not
`sure?
` A. When you say what software, I'm not
`sure what you mean. You mean C++ or Java or --
` Q. Do you know what a document
`management system is?
` A. Yes.
` Q. So similar to a document management
`system there are software programs that allow you to
`keep track of different versions of software so that
`when you're developing it you can, you know, keep
`track of what changes are made.
` A. Right. They did have a track
`change -- a tracking software. What its name was
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`I'm not familiar with at this point.
` Q. Could it have been Grotto,
`G-r-o-t-t-o?
` A. That seems -- seems a name that I
`recall. I couldn't be certain, but I've heard that
`name.
` Q. Did Worlds' practices with respect to
`its software development processes change after you
`acquired Worlds?
` MR. HELGE: Object to form.
` A. We maintained the same systems that
`were in place prior to the acquisition.
` Q. Have you ever looked at what was
`stored on the backup tapes that Conor Laffan gave to
`you?
` MR. HELGE: Object to form.
` A. I'm not a programmer, so I don't now
`how to look and read code.
` Q. Have you ever looked at even, you
`know, the directory listing of what files are on
`there?
` A. I've looked at printouts.
` MR. HELGE: Object to the form.
` Q. Who would have given you the
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`printouts?
` A. I think it was the data recovery Tech
`Fusion printed out the directories.
` Q. In paragraph eight of your
`declaration you say: This code accurately reflects
`the code that was implemented as Worlds Chat.
` Did I read that right?