Case 2:17-cv-00513-JRG Document 176 Filed 08/14/18 Page 1 of 78 PageID #: 7740
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`1
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`IN THE UNITED STATES DISTRICT COURT
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`FOR THE EASTERN DISTRICT OF TEXAS
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`MARSHALL DIVISION
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`AGIS SOFTWARE DEVELOPMENT
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`LLC
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`VS.
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`HUAWEI DEVICE USE INC.,
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`ET AL.
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`CIVIL DOCKET NO.
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`2:17-CV-513-JRG
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`MARSHALL, TEXAS
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`AUGUST 8, 2018
`
`9:03 A.M.
`
`EVIDENTIARY HEARING
`
`BEFORE THE HONORABLE CHIEF JUDGE RODNEY GILSTRAP
`
`UNITED STATES DISTRICT JUDGE
`
`APPEARANCES:
`
`FOR THE PLAINTIFF : (See Attorney Attendance Sheet docketed
` in minutes of this hearing.)
`
`FOR THE DEFENDANTS: (See Attorney Attendance Sheet docketed
` in minutes of this hearing.)
`
`COURT REPORTER:
`
`
`
`
` Shelly Holmes, CSR-TCRR
` Official Reporter
` United States District Court
` Eastern District of Texas
` Marshall Division
` 100 E. Houston Street
` Marshall, Texas 75670
` (903) 923-7464
`
`(Proceedings recorded by mechanical stenography, transcript
`produced on a CAT system.)
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`1
`
`IN THE UNITED STATES DISTRICT COURT
`
`FOR THE EASTERN DISTRICT OF TEXAS
`
`MARSHALL DIVISION
`
`AGIS SOFTWARE DEVELOPMENT
`
`LLC
`
`VS.
`
`HUAWEI DEVICE USE INC.,
`
`ET AL.
`
`)(
`
`)(
`
`)(
`
`)(
`
`)(
`
`)(
`
`)(
`
`
`
`CIVIL DOCKET NO.
`
`2:17-CV-513-JRG
`
`MARSHALL, TEXAS
`
`AUGUST 8, 2018
`
`9:03 A.M.
`
`EVIDENTIARY HEARING
`
`BEFORE THE HONORABLE CHIEF JUDGE RODNEY GILSTRAP
`
`UNITED STATES DISTRICT JUDGE
`
`APPEARANCES:
`
`FOR THE PLAINTIFF : (See Attorney Attendance Sheet docketed
` in minutes of this hearing.)
`
`FOR THE DEFENDANTS: (See Attorney Attendance Sheet docketed
` in minutes of this hearing.)
`
`COURT REPORTER:
`
`
`
`
` Shelly Holmes, CSR-TCRR
` Official Reporter
` United States District Court
` Eastern District of Texas
` Marshall Division
` 100 E. Houston Street
` Marshall, Texas 75670
` (903) 923-7464
`
`(Proceedings recorded by mechanical stenography, transcript
`produced on a CAT system.)
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`Case 2:17-cv-00513-JRG Document 176 Filed 08/14/18 Page 2 of 78 PageID #: 7741
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`2
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`I N D E X
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`August 8, 2018
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`Appearances
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`Hearing
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`Court Reporter's Certificate
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`Page
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`Case 2:17-cv-00513-JRG Document 176 Filed 08/14/18 Page 3 of 78 PageID #: 7742
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`3
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`COURT SECURITY OFFICER: All rise.
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`THE COURT: Be seated, please.
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`All right. This is the time set for an evidentiary
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`hearing in regard to AGIS Software Development versus
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`Huawei, et al. This is Civil Case No. 2:17-CV-513.
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`Let me call for announcements on the record.
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`What says the Plaintiff, AGIS Software?
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`MR. BAXTER: Good morning, Your Honor. Sam Baxter
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`and Jennifer Truelove from McKool Smith, and Fred Fabricant
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`and Vincent Rubino. And we're here for the Plaintiff, and
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`we're ready, Your Honor.
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`THE COURT: Thank you, counsel.
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`What says the Defendants?
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`MR. MANN: Good morning, Your Honor. Mark Mann on
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`behalf of LG Electronics, and along with me today are my
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`colleagues, Matt Wolf and Michael Berta. And we're ready to
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`proceed.
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`THE COURT: All right. Any other announcements?
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`Counsel, as you are aware, the Court has set for
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`today an evidentiary hearing based on -- or in relation to
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`Defendant LG's motion to dismiss for want of personal
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`jurisdiction. I've set out exactly what the parameters of
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`openings, presentation of evidence, and closing arguments
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`would be.
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`Before we proceed with this evidentiary hearing,
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`Case 2:17-cv-00513-JRG Document 176 Filed 08/14/18 Page 4 of 78 PageID #: 7743
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`4
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`though, my understanding is that most, if not all of the
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`evidence to be presented, is in deposition form. Are there
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`going to be live witnesses called who will testify? And I
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`guess asked another way, is there any chance there may be
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`something presented other than what's in the previously
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`established record, or is this a pro forma exercise for me
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`to watch and listen to what's already been recorded?
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`That's -- that's what I need input on.
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`Mr. Baxter?
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`MR. BAXTER: Your Honor, we do have a live witness
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`who has also executed an affidavit, Mr. Parish, who has
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`bought some of the products out in the Eastern District and
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`in Texas. The Defendants have graciously agreed that we
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`could present an affidavit by Mr. Parish, which we have --
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`which he has executed and we have here to admit into
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`evidence.
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`But if the Court wants to hear that testimony, he's
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`here, and we're certainly willing to proceed with it. I
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`don't think there would be much variance between his
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`testimony and the affidavit, hopefully, and I think they
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`have no objection.
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`MR. WOLF: That's right, Your Honor. For
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`expedience sake, we're happy to have you consider the
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`affidavit as written.
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`THE COURT: And to the extent the Defendants would
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`Case 2:17-cv-00513-JRG Document 176 Filed 08/14/18 Page 5 of 78 PageID #: 7744
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`5
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`be waiving the right to cross-examine Mr. Parish and
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`agreeing for the Court to rely on the affidavit and nothing
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`more from this witness, both Plaintiff and Defendant are
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`happy with that?
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`MR. WOLF: Yes, Your Honor.
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`MR. BAXTER: We are, Your Honor.
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`THE COURT: Well, as much as I might like the
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`opportunity to hear Mr. Parish testify live and see him
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`cross-examined, I understand what you're saying.
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`And I gather in addition to Mr. Parish, everything
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`else is deposition testimony?
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`MR. BAXTER: It is, Your Honor. And what -- what
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`we did is that we designated certain portions of at least
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`two depositions.
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`The Defendants designated their counter points, and
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`we have combined all of that into the playing of one
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`deposition for one witness and a second deposition.
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`The second deposition, there was a translator, Your
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`Honor. We have on the depo clip about three questions in
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`which there's actual translation, a Korean speaker. And
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`then after that, Your Honor, after the Court kind of got a
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`flavor of that, we simply went and cut out the Korean
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`portion and just left the English question and the
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`translator's answer.
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`THE COURT: So it starts out with the full
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`Case 2:17-cv-00513-JRG Document 176 Filed 08/14/18 Page 6 of 78 PageID #: 7745
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`6
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`presentation, including the Korean and the translation to
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`English, and then at some point, the Korean just drops out,
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`and it becomes strictly English?
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`MR. BAXTER: That's correct, Your Honor. It
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`would -- it would have doubled up the time, and certainly of
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`no import. Everybody agrees the translation was accurate,
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`and there's no problem on that.
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`And so those two depositions, Your Honor, are going
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`to constitute, besides argument from counsel and some
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`documentary evidence, the entire presentation today. We are
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`willing to play the depositions. We can also give the Court
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`a DVD of the depositions, and you can look at them at --
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`at -- in your office. And we also have the paper
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`transcripts that are highlighted. We can submit all of that
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`to the Court, or we can play them today, whatever the
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`Court's preference is.
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`And I think, Your Honor, the Defendants have no
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`preference. It's just up to whatever the Court wants.
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`MR. WOLF: That's correct, Your Honor. It's
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`entirely up to you, but it obviously would save the Court
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`some time if you would prefer to read it or look at it at
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`your convenience. I don't think there's anything terribly
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`controversial or exciting in the transcripts, to be candid.
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`THE COURT: Well, this is -- this is the parties'
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`evidentiary hearing, and I appreciate the explanation. If
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`Case 2:17-cv-00513-JRG Document 176 Filed 08/14/18 Page 7 of 78 PageID #: 7746
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`7
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`this is a pro forma exercise and everything that would be
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`submitted is already either on paper or on a DVD or some --
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`some other way reduced to its current form and there's no
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`possibility that there would be something new or unexpected
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`arise in either direct or cross-examination, I don't see any
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`benefit to anyone present, including the Court, to sit here
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`and go through the pro forma exercise of watching the
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`deposition and having Mr. Parish put on the stand to
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`basically be asked exactly what's in the affidavit and give
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`the same answers that are in the affidavit.
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`So with the assurance that that's the complete
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`scope of what's to be presented and with the representation
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`from both AGIS and LG that they're satisfied with the Court
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`reviewing that outside the formality of the courtroom and at
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`its leisure, then I'm prepared to hear -- let me -- let me
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`ask you this.
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`What's the parties' -- what are the parties'
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`preferences with regard to presenting argument to the Court?
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`Do you want to do that today? Do you want me to review what
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`you've prepared and are going to submit on an evidentiary
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`basis and then reschedule argument for a later date after
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`I've seen and reviewed all the evidence?
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`MR. WOLF: Your Honor, may --
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`MR. BAXTER: Can I -- can I consult with counsel
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`just a moment?
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`Case 2:17-cv-00513-JRG Document 176 Filed 08/14/18 Page 8 of 78 PageID #: 7747
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`8
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`THE COURT: Certainly.
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`I'll tell you what, counsel, rather than me asking
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`you a question, let me just answer it for you. Let's go
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`ahead and have the argument. And if I need to review the
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`argument after I've reviewed the evidence, I'll have the
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`transcript of the argument and I can read it again.
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`MR. WOLF: Very good, Your Honor.
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`THE COURT: So let's go ahead and use at least that
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`portion of the time we have allocated today.
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`MR. BAXTER: And I think probably what we'd do,
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`Your Honor, is in effect make an opening which we'd preview
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`what's coming that you're going to get to see, maybe a
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`slight -- a very short rebuttal perhaps, and that will
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`finish it up. It won't be very long, Your Honor. But I
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`think giving Court a preview today would be good.
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`THE COURT: Well, whether we want to call it an
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`opening followed by a closing or whether we want to call it
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`a closing with an overview at the beginning, I understand
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`what you're saying, Mr. Baxter, and I'm open to that.
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`I've allocated three hours for this based on what
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`you've told me, and the pro forma nature of the evidence
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`itself, we've got plenty of time. So let me hear from the
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`Plaintiff first --
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`MR. BAXTER: Thank you, Your Honor.
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`THE COURT: -- after which I'll hear from the
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`Case 2:17-cv-00513-JRG Document 176 Filed 08/14/18 Page 9 of 78 PageID #: 7748
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`Defendant.
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`MR. BAXTER: Mr. Fabricant is going to speak for
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`us, Your Honor.
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`THE COURT: All right.
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`MR. BAXTER: May Mr. Parish be excused?
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`THE COURT: Mr. Parish is off the hook. You're
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`welcome to stay. You're also free to leave, sir.
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`Mr. Fabricant --
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`MR. FABRICANT: Good morning.
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`THE COURT: -- you may proceed.
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`MR. FABRICANT: Good morning, Your Honor.
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`THE COURT: Good morning.
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`MR. FABRICANT: All of the testimony which will be
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`presented by those depositions, along with the exhibits
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`which are testified within the depositions themselves,
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`relates to the issue of personal jurisdiction, minimum
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`contacts over LG Electronics, Inc., the Korean company, the
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`only party to this litigation.
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`THE COURT: I understand that.
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`MR. FABRICANT: So there are two bases upon which
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`the Plaintiff seeks denial of this motion. And those two
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`bases, the first is specific or case-linked jurisdiction.
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`And the second, to the extent there's a separate
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`aspect of personal jurisdict -- personal jurisdiction in the
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`law, is the stream of commerce aspect of personal
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`Case 2:17-cv-00513-JRG Document 176 Filed 08/14/18 Page 10 of 78 PageID #: 7749
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`10
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`jurisdiction.
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`With respect to specific or case-link -- linked
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`jurisdiction, Your Honor, the evidence in the deposition
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`transcripts and in the exhibits will show that LG
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`Electronics, Inc., the Korean company, is the sole
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`manufacturer of the LG-branded product which is sold in the
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`United States. There's no dispute that they design it, they
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`manufacture it, they source the components, they put the
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`software on the phones over in Korea primarily outside of
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`the United States, none of that happens in the United
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`States, and that -- and this is the key, they, the Korean
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`company, fill out the customs forms, the commercial invoice
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`and packing list, which is required by U.S. Customs, as the
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`shipper, as the exporter, and they import those phones into
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`the United States to a final point of destination, CIP,
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`final point of destination.
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`And they sell and ship millions of LG-branded
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`accused phones overseas into the United States directly into
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`Texas, Your Honor, directly into the state of Texas. And,
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`in fact, Your Honor will see an exhibit which is a
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`commercial invoice, which is presented to Customs, signed by
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`the president of LG Electronics, Inc., the Korean company,
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`which represents that in one instance, $3 million worth of
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`accused LG phones were shipped to Dallas/Ft. Worth, Texas,
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`and were shipped -- the final point of destination was the
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`Case 2:17-cv-00513-JRG Document 176 Filed 08/14/18 Page 11 of 78 PageID #: 7750
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`11
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`AT&T Distribution Center in North Ft. Worth, Texas.
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`So that's specific or case-linked jurisdiction,
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`Your Honor. The Defendant itself is knowingly,
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`purposefully shipping goods into the state of Texas to be
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`distributed within the United States by -- by AT&T, a
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`national carrier.
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`THE COURT: And just so I'm clear and so the record
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`is clear, Mr. Fabricant, at issue here is LG Electronics,
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`Inc., which is the Korean parent, and LG Electronics Mobile
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`United States, correct?
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`MR. FABRICANT: Mobile Communications USA, Your
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`Honor.
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`THE COURT: Okay.
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`MR. FABRICANT: So there's no question in -- in the
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`record that Electronics, Inc., the Korean company, is the
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`manufacturer and seller. There's no question, no dispute,
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`that the buyer is LG Mobile Communications United States, no
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`question.
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`THE COURT: Let's just do this. For clarity and
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`for simplicity, let's call them LG Korea and LG United
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`States.
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`MR. FABRICANT: Yes, Your Honor.
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`THE COURT: Okay.
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`MR. FABRICANT: Now, in the deposition of Mr. Yoon,
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`who is the Korean United States director and IP senior
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`Case 2:17-cv-00513-JRG Document 176 Filed 08/14/18 Page 12 of 78 PageID #: 7751
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`12
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`counsel, he tries to minimize those shipments directly from
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`the Korean company to AT&T in Texas by saying, well, yes, it
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`happens, it happens on a rush basis from time to time when
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`the carrier needs them. It's a small percentage of the
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`billions and billions of dollars of phones shipped into the
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`United States, but he concedes this does happen and it
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`happens.
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`And, in fact, what Your Honor will also see in the
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`record that -- Mr. Yoon's testimony is Mr. Yoon presented an
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`Excel spreadsheet that is very large. And we will deliver,
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`obviously, all of these exhibits to Your Honor. And in the
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`Excel spreadsheet, which Mr. Yoon testifies is the best
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`evidence of what is, in fact, shipped to the carriers and
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`the stores in the state of Texas, are over 86 million phones
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`shipped to different cities in the state of Texas over a
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`period of 2012 to 2017.
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`So not only do we have direct shipments from the
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`Korean company to AT&T in Dallas/Ft. Worth, right to the
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`AT&T facility, knowing, purposeful, intended, but we also
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`have all of the other phones that are coming into the United
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`States, wherever they come in, that end up by the USA
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`MobileComm in Texas -- over 86 million of those phones.
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`And this adds up in 2016 over $6 billion worth of
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`phones sold in the U.S. by LG. And in 2017, close to
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`$6 billion worth of phones sold in the United States.
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`Case 2:17-cv-00513-JRG Document 176 Filed 08/14/18 Page 13 of 78 PageID #: 7752
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`13
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`THE COURT: And I gather there's no real dispute
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`here that LG United States is solely and wholly owned and
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`controlled by LG Korea and is a complete captive of the
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`Korean parent; is that correct?
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`MR. FABRICANT: That is correct. A hundred percent
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`controlling interest will be the testimony.
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`THE COURT: Okay.
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`MR. FABRICANT: Also, Your Honor, the stream of
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`commerce aspect of personal jurisdiction, if it were not
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`enough, and we think specific case-linked jurisdiction here
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`is dispositive, because this is not a Defendant like in many
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`of the cases a foreign Defendant where they're arguing it
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`was fortuitous, it was random, it was attenuated, it wasn't
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`intended, it happened, we didn't know they were going to
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`Texas, they might have gone to Canada. This is a situation
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`where the U.S. subsidiary only sells phones in the United
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`States to national carriers and national retail chains.
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`So every phone sold by Korea to their captive
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`company in the United States stays within the United States
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`and goes to a national carrier for distribution in every
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`state in this country, including Texas. And the record is
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`clear that they all know that phones are sold in Texas.
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`They know that in Korea, and they know that in the United
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`States, obviously.
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`So the records that Your Honor will see during
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`Case 2:17-cv-00513-JRG Document 176 Filed 08/14/18 Page 14 of 78 PageID #: 7753
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`14
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`the -- the review of the evidence, the custom required
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`shipping documents, customer contracts, customer user
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`guides, service manuals, U.S. trademark and copyright
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`registrations, the deposition of Mr. Yoon who is the -- the
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`USA representative and the deposition of Mr. Ryu, the Korean
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`representative, and, of course, the -- the testimony by
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`affidavit of Mr. Parish.
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`So Mr. Parish simply offers one body of testimony,
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`Your Honor, and that is that these phones not only come into
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`the state of Texas, but they're actually sold right here in
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`the Eastern District. And he purchased a significant number
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`of accused products right here in the Eastern District of
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`Texas.
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`So we know they're in the Eastern District. We
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`know they're in Texas. We know there are millions of them.
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`And the -- the customer contracts and customer user guides
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`and service manuals are also very telling, because the
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`customer guides, the user guides, and the service manuals,
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`they're made in Korea. They're copyrighted by the Korean
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`company in the United States. The United States copyright
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`registrations on the Korean companies' user guides which
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`then go to every end user in the United States of an -- of
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`an LG-branded phone.
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`The service manuals, copyrighted by the Korean
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`company in the United States, not by the American company.
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`Case 2:17-cv-00513-JRG Document 176 Filed 08/14/18 Page 15 of 78 PageID #: 7754
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`None of these are copyrighted by the American company.
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`And the same with trademarks. Your Honor will see
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`that the key trademarks of the phones, the LG-branded phones
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`are owned by the Korean company, not the sales
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`representative, the sales agent, the captive American
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`company. And we have the registrations.
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`THE COURT: Let me ask you this, counsel. You said
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`a moment ago that there was evidence of direct sales by LG
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`Korea to AT&T in Texas and that there's evidence of sales
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`from LG Korea to LG U.S. and then from LG U.S. to major
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`carriers in the United States, including in Texas.
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`Why would they do it both ways? Why was -- why is
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`there not a single system and approach? Why is there
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`variance in one case where there's a direct sale from Korea
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`and yet in other cases, there's -- I won't call it indirect
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`but a two-step process, as opposed to a one-step process.
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`Can you address that for me?
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`MR. FABRICANT: Yes, Your Honor. Your Honor's
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`statement is -- is not the argument I'm making exactly.
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`The -- the shipments of the Korean company's phones to AT&T
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`in Texas were shipments. The goods were still sold to the
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`U.S. LG.
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`THE COURT: Okay.
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`MR. FABRICANT: The goods were not purchased by
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`AT&T.
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`Case 2:17-cv-00513-JRG Document 176 Filed 08/14/18 Page 16 of 78 PageID #: 7755
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`THE COURT: Okay.
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`MR. FABRICANT: The critical here -- the way that
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`the company, Korea and USA, set up the sale was that the
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`Korean company ships the goods, pays for the goods, is
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`responsible for transport right to the point of final
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`destination, CIP Ft. Worth, Texas.
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`And one of the things we'll ask at the culmination
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`of -- of the hearing today is we're going to ask the Court
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`to take judicial notice of the meaning of CIP. Neither
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`witness of the Defendant or the non-party USA company was
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`able to testify that they had knowledge about what CIP to a
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`final destination means.
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`Well, the United States Government on the -- on its
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`export.gov site and the international -- and the United
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`States Department of Commerce have set forth what these
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`terms mean. They're well accepted, well published,
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`buyer/seller, everyone uses them -- industry standards as to
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`what a buyer does and what a seller does, and there are many
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`terms and they're called INCO terms, and they were published
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`in 2010. Not only were they used on every single one of
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`these commercial invoices been Korea and the USA, but
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`they're even referred to in the contracts between USA and
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`some of its customers like Sprint.
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`So we're going to ask the Court to take judicial
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`notice that CIP final destination -- in this case, CIP North
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`Case 2:17-cv-00513-JRG Document 176 Filed 08/14/18 Page 17 of 78 PageID #: 7756
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`Ft. Worth, Texas -- means carriers and insurance paid to
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`final destination. That means the shipper is responsible
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`all the way to the final destination, and that's what the
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`CIP INCO term means.
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`So you'll see the invoices. You'll see that they
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`all have those terms. Some say CIP Dallas/Ft. Worth. Some
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`say CIP Bolingbrook, Illinois, but CIP is an important term
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`because the Korean and the U.S. LG witnesses could not say
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`they had an understanding of what that terms means.
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`Very important, though, Your Honor, in connection
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`with taking judicial notice of this fact. Although we
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`subpoenaed the U.S. company, and we noticed documents in
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`deposition of the Korean company, not one contract of sale
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`between Korea and the USA was produced.
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`So we have no contracts of sale which would have
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`actually discussed the details of what this transaction was.
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`And all we have are the invoices which set forth the terms.
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`And one of the key terms is the shipping terms, CIP final
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`destination.
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`THE COURT: Is there objection from LG to the Court
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`taking judicial notice of this and other terms as published
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`on these government websites?
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`MR. WOLF: There's no objection to Your Honor
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`looking at the website and forming your own conclusion. I'm
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`not sure we agree with all the characterization, but we have
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`Case 2:17-cv-00513-JRG Document 176 Filed 08/14/18 Page 18 of 78 PageID #: 7757
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`18
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`no objection to Your Honor forming his own conclusions as to
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`what they say and what they mean.
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`THE COURT: And as -- and to the extent those
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`sources mentioned in the record by Plaintiff's counsel, to
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`the extent they offer definitions as to those abbreviations
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`or terms, Defendant has no objection to the Court accepting
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`those published definitions on the government --
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`MR. WOLF: Correct, Your Honor.
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`THE COURT: -- websites?
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`MR. WOLF: Correct, Your Honor.
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`THE COURT: Okay. That clarifies that.
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`Go ahead, Mr. Fabricant.
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`MR. FABRICANT: Thank you, Your Honor.
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`THE COURT: And just to make sure I'm completely
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`clear, so there are not instances where LG Korea makes a
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`direct sale to AT&T in Texas? LG Korea makes a sale to
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`LG U.S., but LG Korea delivers the product directly to AT&T?
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`MR. FABRICANT: Yes, Your Honor.
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`THE COURT: And is that the same mechanism that
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`plays out in other parts of the United States where perhaps
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`there's a Verizon warehouse in California and LG Korea makes
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`a sale, and though on paper, it may go through LG United
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`States, physically the phones leave LG Korea and are
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`delivered to Verizon in California?
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`MR. FABRICANT: Yes, Your Honor.
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`Case 2:17-cv-00513-JRG Document 176 Filed 08/14/18 Page 19 of 78 PageID #: 7758
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`THE COURT: Okay. So it's not different than
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`anywhere else?
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`MR. FABRICANT: It is not. But the reason we
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`believe it's critical is that the -- the motion --
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`THE COURT: I understand the significance of the --
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`MR. FABRICANT: Thank you.
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`THE COURT: -- of the facts.
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`MR. FABRICANT: Okay.
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`THE COURT: I just want to make sure I'm completely
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`clear.
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`MR. FABRICANT: Completely clear.
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`THE COURT: All right. Let's proceed.
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`MR. FABRICANT: So as I've stated, all of these
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`phones are sold by Korea to the U.S. entity. The U.S.
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`entity sells, in turn, to the -- in turn to the national
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`retailers and carriers. And there's no dispute that those
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`carriers, in turn, sell to end users throughout the United
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`States of America.
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`THE COURT: And going back one more time, you
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`indicated that there were no sales contracts produced
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`between LG Korea and LG U.S. or United States. Is that
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`because they don't exist, or do you know why they weren't
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`produced? Can you speak to that?
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`MR. FABRICANT: We asked Mr. Yoon. He said they
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`should exist. He said he didn't negotiate them, and he's
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`Case 2:17-cv-00513-JRG Document 176 Filed 08/14/18 Page 20 of 78 PageID #: 7759
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`never seen one, but they should exist.
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`And I asked him: Well, wouldn't that be the best
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`place to -- to know what the terms were, where -- where the
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`sale took place because it's the Defendants' position that
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`the sale, notwithstanding the shipping, that the sale took
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`place in Korea, not in the United States? It took place
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`overseas.
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`But he was unable to give any evidence as to how he
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`knows that, other than the fact that some accountant told
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`him that. And I asked him why -- why we don't we have the
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`contracts, and he didn't know.
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`THE COURT: Has there been no effort to compel the
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`production of those contracts or just accepting that they're
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`somewhere but not within either the parties' possession --
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`or at least the Plaintiff's possession, and they're
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`certainly not before the Court?
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`MR. FABRICANT: There has been no motion. We took
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`the deposition of Mr. Yoon last Thursday, Your Honor, in
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`Washington, D.C. And we don't think having the contract
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`itself really is critical to this Court making its decision
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`because we believe the evidence is overwhelming. And the
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`invoices -- the commercial invoices, what's presented to
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`Customs signed by the president of Korea, he represents to
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`Customs the terms of the sale. So we believe that should
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`be, you know, compelling evidence to which the Defendant is
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`Case 2:17-cv-00513-JRG Document 176 Filed 08/14/18 Page 21 of 78 PageID #: 7760
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`bound.
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`THE COURT: Okay. So you -- you've made a
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`conscious decision not to seek a motion or an order of the
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`Court compelling their production?
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`MR. FABRICANT: We have, Your Honor.
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`THE COURT: Okay. Let's go forward.
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`MR. FABRICANT: The distribution chain that we've
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`described here this morning, Your Honor, has existed in the
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`same forum for many years, hasn't changed, going all the way
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`back to at least the beginning of the 2000s. So this has
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`been the way they've done business, Korea to the United
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`States. And you'll hear Mr. Yoon agree that it's a
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`long-established chain of distribution.
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`Now, one of the important factors, I think, as
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`well, because the Defendant in Korea claims they don't know
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`exactly where all of these phones end up. They don't know
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`for sure that they're going to be sold in various states.
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`They don't know.
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`And I think the -- it is totally belied by the fact
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`that not only does the Korean company manufacture the
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`sale -- the device itself, but they put the trademarks and
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`logos of the U.S. carriers on the phones during the
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`manufacturing process. That phone has to go to Verizon, has
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`to go to AT&T. It's got the logo on it in the manufactured
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`phones.
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`Case 2:17-cv-00513-JRG Document 176 Filed 08/14/18 Page 22 of 78 PageID #: 7761
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`And that -- as if that weren't enough, when you
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`start the phone up, on the screen will come up Verizon,
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`AT&T, Sprint, T-Mobile. So the concept that they don't know
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`where these phones end up is preposterous. And yet you will
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`hear Mr. Ryu, the Korean gentleman, testify during his
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`deposition at first, he doesn't know, he couldn't tell you
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`one state in the United States that these phones were sold
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`into. He has no idea.
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`Then we confronted him with his declaration to this
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`Court in -- in this case where he says the -- the phones are
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`sold in the Northern District of California. And we had
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`just asked him if he knew whether they were sold in
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`California or not, and he said: No, I have no idea. And
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`then we said: Well, what do you say now? And he goes: I'd
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`like to change my testimony. I do know they're sold in
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`California. I do know they're sold in Texas.
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`So they're trying to hide what they're doing here
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`in the United States. They know exactly how many phones are
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`made for each customer because every single phone is
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`customized.
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`The G7 trademark, very important phone of theirs.
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`The ThinQ trademark owned by LG Korea. So it's on the
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`packaging. It's on the phone. It's sent into the United
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`States. Those trademarks are being used by the Korean
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`company throughout the United States to market their
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`Case 2:17-cv-00513-JRG Document 176 Filed 08/14/18 Page 23 of 78 PageID #: 7762
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`23
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`products here, including Texas.
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`Here's an example of accused phones, Your Honor.
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`You'll see that one has the AT&T symbol, and these are not
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`stickers. These are not painted on. This is in the
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`manufactured case. You'll see Verizon. Those are the logos
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`of the U.S. carriers. Those logos are being embedded as
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`part of the manufacturing process.
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`So, of course, they know where the phones are
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`going.
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`The user guides, the service guides.
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`Another important point. The Korean company,
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`because it's extremely important now, as they acknowledge in
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`one of the exhibits, to have software updates that are very
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`quick to fix problems with the phones, to upgrade the
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`operating system, they on their own website have published a
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`press release that they have opened a global software update
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`center in Korea. And this is the Korean company. And that
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`all of their customers around the world now have this great
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`service because they can get quick updates of their
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`software, but you have to go to the Korean company. So
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`every end user in the United States updates their phones by
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`going to the global software update center, which is the
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`Korean update center.
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`The Korean company, not the American company, has
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`licensed United States patents from others in connection
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`Case 2:17-cv-00513-JRG Document 176 Filed 08/14/18 Page 24 of 78 PageID #: 7763
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`24
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`with its sales of its own LG-branded phones throughout the
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`United States to cover their sales of phones in the United
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`States to protect them. And it's the Korean company that
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`acquired those licenses for practice in the United States,
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`not the United States company.
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`The Korean company has a global marketing team,
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`which Mr. Yoon at his deposition conceded, a global
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`marketing team in Korea is involved with the marketing and
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`advertising of its LG-branded phones in the United States.
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`So finally, Your Honor, I will end with this
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`concept of fair play and substantial justice, which is kind
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`of overriding -- a decision, such as the one Your Honor has
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`to make. This seems to
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