UNITED STATES PATENT AND TRADEMARK OFFICE
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`GOOGLELLC,
`
`Petitioner
`
`Vv.
`
`NEONODE SMARTPHONE LLC,
`
`Patent Owner
`
`Case IPR2021-01041
`
`U.S. Patent No. 8,095,879
`
`DECLARATION OF MARCUS BACKLUND
`
`nd
`
`
`
`BEFORE THE PATENT TRIAL AND APPEAL BOARD
`
`GOOGLELLC,
`
`Petitioner
`
`Vv.
`
`NEONODE SMARTPHONE LLC,
`
`Patent Owner
`
`Case IPR2021-01041
`
`U.S. Patent No. 8,095,879
`
`DECLARATION OF MARCUS BACKLUND
`
`nd
`
`
`
`Declaration of Marcus Backlund
`IPR2021-01041
`
`1.
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`2.
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`I, Marcus Backlund, declare as follows:
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`I amover 18 years of age and, if I am called upon to do so, I would be
`
`competent to do testify as to the matters set forth herein.
`
`3.
`
`In late 2003, I began meeting with Magnus Goertz and Thomas
`
`Eriksson about the prospect of investing in a business they had established to bring
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`a new type of mobile handset to the market. The name ofthe company was
`
`Neonode AB. In my meetings with them, they showed mea fully-functioning
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`model ofthe mobile handset that was released as the Neonode N1. And they
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`demonstrated the touch screen user interface that they had developed to operate the
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`N11, including the swipe to unlock, swipe to answera call, and tap-activatable
`
`iCORE
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`4.
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`In our meetings, they told us how they had developed the user
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`interface with its novel swipe and tap gesturesfirst, but found that the resistive and
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`capacitive touch screen technology at that time was unsatisfactory. They told me
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`that Magnusinvented a new optical touch screen technology called zForce to
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`implement the hand-gesture-based user interface that he had previously developed.
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`5.
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`At the time, in 2003, the major mobile handset manufacturers were
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`Nokia, Motorola, Samsung, LG-Electronics, and Siemens. Their high-end
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`handsetsall had screens, but not touch screens. Instead, the user interacted with
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`these handsets using mechanical buttons and keyboards. Apple would not
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`Declaration of Marcus Backlund
`IPR2021-01041
`
`announcethe first iPhone, which dispensed with most external mechanical buttons
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`and relied on a touch-sensitive screen and gesture-based user interface, until early
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`2007.
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`6.|When Magnus and Thomas demonstrated the N1 mobile handset to
`
`me in 2003,I believed that the gesture-based user interface, substantially without
`
`mechanical buttons, was revolutionary. Magnus had developed an interface with a
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`natural swipe movement that would enable a user to navigate the device easily
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`using a thumb to swipe up or down,right or left. The functionality ofthe handset
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`was awesome, and the gesture-based user interface was far aheadofits time.
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`7.
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`Tn around May 2004,after performing due diligence, I became an
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`investor in Neonodeandat about the same time I became Chief Executive Officer
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`ofthe company and servedin that capacity until around October 2005. In
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`connection with my investment, a new entity was established named Neonode
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`Sweden AB,which later changed its name to Neonode AB.
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`8.
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` Neonode’s initial business model was to offer the N1 on-line. To the
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`best of my recollection, the handset was offered at a price, in euros and local
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`currency, equivalent to approximately $1000 US dollars. This was approximately
`
`five times the price of other high-end handsets offered by Nokia and other handset
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`manufacturers. Nevertheless, the initial response from the consumer market was
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`Ue
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`Declaration of Marcus Backlund
`IPR2021-01041
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`spectacular; the phone had what would later be characterized as iPhone-type
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`attention queues.
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`9.
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`To the best ofmy recollection, Neonode had over 100,000 Internet
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`pre-orders, over 300 N1 units per day, which required the customer to pay a
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`substantial down payment to secure the customer’s place on the handset’s waiting
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`list. These pre-orders were in addition to the over 20,000 pre-orders Neonode
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`received following its initial brand release in December 2002.
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`10.
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`In addition, Neonode was contacted by a large number of companies
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`that expressed interest in purchasing the N1. In the commercial phase of the N1’s_
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`release, Neonode received substantial pre-orders from network operators around
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`the world.
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`11.
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`In my observation as CEO ofNeonode, the excitement in the market
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`about the NI handset was dueto its revolutionary swiping gesture user interface.
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`This was the principal user-facing differentiator ofthe N1 from all other mobile
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`handsets then on the market. This gesture-based user interface was far ahead ofits
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`time in one of the largest industries.
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`12. Neonode’s gesture-based user interface encountered skepticism from
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`other established companiesin the mobile handset industry. I personally met with
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`representatives ofNokia, Samsung and Ericsson, and although they were
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`impressed with the swiping-gesture user interface, they were skeptical that
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`Declaration of Marcus Backlund
`IPR2021-01041
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`consumers would want a keyboard-less mobile handset. They told us that the
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`touch screen might get greasy from users’ fingers performing gestures, thereby
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`obscuring the user interface. And they told us they thought that users were used to
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`buttons to navigate mobile phones and would be hesitant to accept one without
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`them.
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`13.
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`Samsung’s management was extremely impressed by the Neonode
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`N1, and in early 2005 began discussions with us about licensing the N1’s gesture-
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`based user interface and touch screen technology. Samsung’s representatives
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`expresseda great deal ofinterest in licensing Neonode’s gesture-based user
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`interface technology. We had manyhours of meetings with Samsung, and I went
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`at least once to Seoul, South Korea, to meet with Samsung representatives to
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`negotiate the terms of a license agreement.
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`14.
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`In July 2005, I, on behalf of Neonode, signed this license agreement
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`with Samsung.
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`15. Although Neonode ultimately did not succeed as a company,this fact
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`wasnot in any wayattributableto its revolutionary user interface. Rather, we
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`learned that there are substantial barriers to entry in the mobile handset
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`manufacturing market. Some ofNeonode’s contractors had never built a mobile
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`handset before, and they struggled to get manufacturing up to scale to meet the
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`demand from consumers and network providers. Quality control wasalso an issue
`
`4
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`ifUp
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`Declaration of Marcus Backlund
`IPR2021-01041
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`initially. This led to an insufficient inventory ofproductsto fill the growing
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`demandfor the N1 andits successor, the N2. Shifting network operator
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`specifications, which Neonode had to meetto sell mobile handsets to operators,
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`required engineering new features into Neonode’s phones. Neonode was working
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`successfully toward resolving these initial barriers to entry, but the financial crisis
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`following the collapse of Lehman Brothers, and its devastating impact on capital
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`lending and investment, led ultimately to the company’sfailure in 2008.
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`16.
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`ITamnolonger an officer of or major investor in Neonode. If
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`Neonode wereto receive a substantial recovery in this case, that would have no
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`material impact on my net worth.
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`17.
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`1 declare under penalty ofperjury under the laws ofthe United States
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`of America that the foregoing is true and correct, that all statements made herein of
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`my knowledgeare true, and that all statements made on information and belief are
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`believed to be true, to the best ofmy recollection, and that these statements were
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`made with the knowledgethat willful false statements and the like so made are
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`punishable by fine or imprisonment, or both, under Section 1001 of Title 18 of the
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`United States Code. Oct, a ZOz /
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`Dated:
`
`xv
`
`Marcus Backlund
`
`
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