Case 6:12-cv-00855-RWS Document 992 Filed 11/02/20 Page 1 of 123 PageID #: 64104
`
`779
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`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`TYLER DIVISION
`
`VIRNETX INC., ET AL,
`
`PLAINTIFFS,
`
`VS.
`
`APPLE INC.,
`
`DEFENDANTS.
`
`
`
`CIVIL ACTION NO.
`6:12-CV-855-RWS
`
`
`)(
`)(
`)(
`)(
`)(
`TYLER, TEXAS
`)(
`)( OCTOBER 29, 2020
`)(
`9:15 A.M.
`)(
`
`TRANSCRIPT OF JURY TRIAL
`MORNING SESSION
`BEFORE THE HONORABLE JUDGE ROBERT W. SCHROEDER, III
`UNITED STATES CHIEF DISTRICT JUDGE
`
`APPEARANCES:
`
`FOR THE PLAINTIFF:
`BRADLEY W. CALDWELL
`JASON D. CASSADY
`JOHN AUSTIN CURRY
`CALDWELL CASSADY & CURRY
`2121 N. Pearl St., Suite 1200
`Dallas, Texas 75201
`T. JOHN WARD, JR.
`WARD, SMITH & HILL PLLC
`1507 Bill Owens Parkway
`Longview, Texas 75604
`R. CHRISTOPHER BUNT
`PARKER BUNT & AINSWORTH
`100 East Ferguson, Suite 418
`Tyler, Texas 75702
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`779
`
`IN THE UNITED STATES DISTRICT COURT
`FOR THE EASTERN DISTRICT OF TEXAS
`TYLER DIVISION
`
`VIRNETX INC., ET AL,
`
`PLAINTIFFS,
`
`VS.
`
`APPLE INC.,
`
`DEFENDANTS.
`
`
`
`CIVIL ACTION NO.
`6:12-CV-855-RWS
`
`
`)(
`)(
`)(
`)(
`)(
`TYLER, TEXAS
`)(
`)( OCTOBER 29, 2020
`)(
`9:15 A.M.
`)(
`
`TRANSCRIPT OF JURY TRIAL
`MORNING SESSION
`BEFORE THE HONORABLE JUDGE ROBERT W. SCHROEDER, III
`UNITED STATES CHIEF DISTRICT JUDGE
`
`APPEARANCES:
`
`FOR THE PLAINTIFF:
`BRADLEY W. CALDWELL
`JASON D. CASSADY
`JOHN AUSTIN CURRY
`CALDWELL CASSADY & CURRY
`2121 N. Pearl St., Suite 1200
`Dallas, Texas 75201
`T. JOHN WARD, JR.
`WARD, SMITH & HILL PLLC
`1507 Bill Owens Parkway
`Longview, Texas 75604
`R. CHRISTOPHER BUNT
`PARKER BUNT & AINSWORTH
`100 East Ferguson, Suite 418
`Tyler, Texas 75702
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`Case 6:12-cv-00855-RWS Document 992 Filed 11/02/20 Page 2 of 123 PageID #: 64105
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`780
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`FOR THE PLAINTIFFS:
`
`ANDY TINDEL
`MT2 LAW GROUP
`MANN TINDEL THOMPSON
`112 E. Line Street
`Suite 304
`Tyler, Texas 75702
`
`FOR THE DEFENDANT:
`GREGORY S. AROVAS
`ROBERT A. APPLEBY
`JEANNE M. HEFFERNAN
`JOSEPH A. LOY
`LESLIE M. SCHMIDT
`AARON D. RESETARITS
`KIRKLAND & ELLIS LLP
`601 Lexington Avenue
`New York, New York 10022
`AKSHAY S. DEORAS
`KIRKLAND & ELLIS LLP
`555 California Street
`San Francisco, California 94104
`MICHAEL E. JONES
`POTTER MINTON
`110 North College Avenue, Suite 500
`Tyler, Texas 75702
`
`COURT REPORTER:
`
`Ms. Shelly Holmes, CSR, TCRR
`Official Court Reporter
`United States District Court
`Eastern District of Texas
`Marshall Division
`100 E. Houston
`Marshall, Texas 75670
` (903) 923-7464
`
`(Proceedings recorded by mechanical stenography, transcript
`produced on a CAT system.)
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`Case 6:12-cv-00855-RWS Document 992 Filed 11/02/20 Page 3 of 123 PageID #: 64106
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`P R O C E E D I N G S
`(Jury out.)
`COURT SECURITY OFFICER: All rise.
`THE COURT: Please be seated.
`Good morning, everyone.
`I'm not aware of any issue that needs to be
`discussed before we begin this morning with -- with
`Mr. Weinstein.
`But I do know there is the issue with respect to
`Mr. Blaze's slides -- Dr. Blaze's slides, which will come
`up at some point during the day. So do the parties wish to
`be heard about that? I know generally what the dispute is.
`MR. CURRY: Good morning, Your Honor.
`THE COURT: Good morning.
`MR. CURRY: Austin Curry for the record.
`As the Court knows that Mr. Blaze -- or Dr. Blaze
`provided an untimely expert opinion comparing the value of
`the '504 and '211 versus the value of the other patents
`with respect to VirnetX's licenses and their licensees.
`And last -- not last night, but in this trial,
`we've received slides that indicate that Dr. Blaze is
`wanting to -- or appeared that Dr. Blaze is wanting to get
`into that subject matter.
`And so if I could have the document camera.
`So, Your Honor, these are Dr. Blaze's slides. He
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`Case 6:12-cv-00855-RWS Document 992 Filed 11/02/20 Page 4 of 123 PageID #: 64107
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`782
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`is highlighting the different patents in the Mitel license,
`and then he does the same for Aastra, NEC, Siemens, and
`Avaya.
`
`THE COURT: Could -- could you identify,
`Mr. Curry, for the record, which slides you're referring
`to?
`
`MR. CURRY: Yes. And I'm sorry, Your Honor.
`So this is DDX-5.30.
`And then the next one is DDX-5.31 where Dr. Blaze
`goes through the same exercise with Aastra, NEC, Siemens,
`and Avaya.
`DDX-5.32, Dr. Blaze looks like he'll be presenting
`something on the '504 and '211 patents.
`And more of that on DDX-5.34.
`And DDX-5.35, it looks like he'll want to present
`some Mitel configuration of their products.
`And then on DDX-5.36, he gets into VirnetX's
`infringement contentions, which as Your Honor knows, was
`one of our key concerns about Dr. Blaze's untimely opinion,
`how he was expressing his own personal disbelief of those
`contentions.
`And then what's most interesting to me is the
`following sequence with DDX-5.37, and then the following
`one at DDX-5.38.
`At 5.37, Dr. Blaze is going to be saying something
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`Case 6:12-cv-00855-RWS Document 992 Filed 11/02/20 Page 5 of 123 PageID #: 64108
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`783
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`about the role of the '135 patent and Mitel's products.
`And then immediately after that, in DDX-5.38,
`he'll be presenting something -- or he'll want to be
`presenting something about the '504 and '211 patents.
`And so this, in our view, is getting into the
`exact subject matter that Your Honor ruled was untimely.
`And as Your Honor wrote in Your Honor's ruling, Apple could
`have done this at any past trial and that Apple instead --
`so I want to read from Your Honor's ruling, Page 3 of
`Docket 937, which is the limine rulings in this trial --
`for this trial.
`But if Apple's position were correct, it would
`have been -- it would not have permitted -- I'm sorry -- it
`would not have been permitted to argue for a different
`royalty rate if only FaceTime or only VPN on Demand were --
`was found to infringe, yet Apple did just that.
`And then your Apple -- I'm sorry, Your Honor
`quotes trial testimony.
`In asking this question, Apple assumed only two
`patents, the '135 and the '151 patents, were infringed.
`Using the same tactic, Apple could have told the jury that
`if it finds FaceTime doesn't infringe but VPN on Demand
`does, then it should reduce damages because the FaceTime
`patents were more central.
`And this is what Dr. Blaze has later done and
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`Case 6:12-cv-00855-RWS Document 992 Filed 11/02/20 Page 6 of 123 PageID #: 64109
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`784
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`this -- for this trial, knowing that the -- the groundwork
`of the litigation has shifted following the Federal
`Circuit's ruling, and he tried to elevate the importance of
`the '504 and '211 over the '135 and '151 patents.
`Now, I've looked at Apple's response, and Your
`Honor has also made a ruling with respect to whether
`certain products and VirnetX's licensees were effectively
`licensed. And so on the meet and confer -- which I didn't
`participate. It was a couple of nights, but I was in the
`room -- and I heard the attorneys discussing on both sides.
`And we're -- we were asking Apple, how do you propose to --
`to navigate the Court's rulings so that Your Honor has
`allowed effectively licensed to come in but not the
`comparison of the '504 and '211.
`All we heard on the meet and confer was Apple
`saying, we won't say the words "more central". And we were
`like, well, that's not how limine rulings work. You can't
`just suggest something and not use a phrase, especially in
`a scenario here where it was an entire opinion that was
`excluded. And we heard no satisfactory response from Apple
`other than we won't use this phrase "more central."
`And so it appears from Dr. Blaze's slides that
`they're -- that they're wanting to do exactly that, which
`is elevate the importance of the '504 and '211 in VirnetX's
`licensees' products, and then suggest that and argue that
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`and the only thing that they've said they're not going to
`do is say, well, the '504 and '211 aren't more central.
`But they're going to use other words and other arguments to
`do this same thing.
`THE COURT: Let me ask you, Mr. Curry, where --
`where on the slides does Dr. Blaze contrast the importance
`of infringing functionalities?
`MR. CURRY: So that would be the -- the sequence
`of DDX-5.37, where he is going through the '135 patent and
`the products. And then the very next slide '504 and '211,
`Your Honor, at DDX-5.38.
`THE COURT: Okay. All right. Is that all,
`Mr. Curry?
`MR. CURRY: Yes, Your Honor.
`THE COURT: All right. Who's speaking on this on
`behalf -- Mr. Appleby?
`MR. APPLEBY: I am, Your Honor.
`THE COURT: Good morning, Mr. Appleby.
`MR. APPLEBY: Good morning, Your Honor.
`May I proceed, Your Honor?
`THE COURT: Yes, please.
`MR. APPLEBY: So VirnetX's Motion in Limine B was
`a targeted motion that addressed three categories in
`Dr. Blaze's opinions. One was the opinion that Dr. Blaze
`offered that the '504 was more central to the license --
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`Case 6:12-cv-00855-RWS Document 992 Filed 11/02/20 Page 8 of 123 PageID #: 64111
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`the VoIP licenses than the '135 patent.
`But there were two other aspects, one of which was
`that certain phones that were not royalty-bearing had the
`same functionality that was accused of infringement with
`phones that were royalty-bearing.
`And then there was a third issue that dealt with
`the contrasting of the patent -- the '135 and '151 over the
`prior art.
`We will not suggest that the '504/'211 were more
`important than the '135, more central than the '135. We
`will not weight the patents against one or the other. That
`is simply not -- we respect Your Honor's ruling, and we are
`not doing that.
`But Your Honor expressly permitted us to explore
`these licenses and, in particular, the issue of whether
`phones that were excluded from the license bore the same
`technology that was accused of infringement.
`What Dr. Blaze will do in those slides that
`Mr. Curry went through is simply say this is the technology
`that was accused of infringement of the '135 patent. This
`was the technology that was accused of infringement of the
`'504 and '211 patent, full stop. He will not weight one
`over the other.
`THE COURT: Is there any -- any overlap between
`that and the more central opinion that the MIL order
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`Case 6:12-cv-00855-RWS Document 992 Filed 11/02/20 Page 9 of 123 PageID #: 64112
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`relates to?
`MR. APPLEBY: So in his report, the more simple
`opinion was predicated on Dr. Blaze's views that if you dug
`into the infringement contentions, it would be possible to
`design around one and less possible to design around the
`others.
`Dr. Blaze will not be offering any opinion on
`those grounds. He will simply be sticking with the facts.
`Here are the infringement contentions, here's what they
`allege to be infringing in the '135, here's what they
`allege to be infringing in the '504/'211, here are the
`aspects of the system that include that technology, and
`then we'll use that as the predicate to the opinion that
`Your Honor expressly permitted us to offer, which is that
`the phones that did not bear a royalty had the same
`technology that the phones that did bear a royalty.
`THE COURT: And am I right, I mean, I'm assuming
`that Mr. Bakewell will rely in part on that testimony in
`his analysis of the license -- of the Mitel license, at
`least?
`
`MR. APPLEBY: Yes, Your Honor.
`THE COURT: All right. Mr. Curry, anything else?
`Is that all you had, Mr. Appleby?
`MR. APPLEBY: Yes, Your Honor.
`THE COURT: Okay. Thank you.
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`MR. CURRY: I think a lot of it just has to do
`with how it's presented, Your Honor. Your Honor's
`observation that there is overlap with what was excluded I
`think is squarely our concern. They're going one right
`after the other, and I don't know that that's necessary for
`the effectively licensed argument that they're trying to
`make. In fact, I think it's not necessary for that. And
`so we ask that our objection be sustained.
`THE COURT: All right. Let me ask you, Mr. --
`Mr. Appleby. Is it necessary to use the '504 and the '211
`to show that non-royalty bearing phones had infringing
`functionality?
`MR. APPLEBY: We believe it is, and we're just
`sticking with the facts, right. This is what was alleged
`to -- to infringe the '135, this is what was alleged to
`infringe the '504. If we don't go through both of them,
`then we're open to the argument that all the value was in
`the '135 patent.
`So the -- the -- we believe we need to lay out the
`license in full and that -- we're sticking strictly with
`the infringement contentions. And, again, I don't really
`understand the argument that just presenting what they
`allege to infringe would mean one was more central to the
`other. The opinion that Dr. Blaze offered was premised on
`the ease of design around in that technology, and he's
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`simply not going to offer that opinion.
`THE COURT: Okay.
`MR. APPLEBY: Thank you, Your Honor.
`THE COURT: Thank you, Mr. Appleby.
`MR. CURRY: Your Honor, that's not what they said
`in their response.
`So in their response -- and this is Page 3 -- they
`went through and said that Dr. Blaze explained that the
`newer Mitel phones include the same functionality accused
`of infringement for the '135. So if they want their
`effectively licensed argument, they can just present the
`'135.
`
`They also did it for the '504 and '211, says -- as
`they observed in their own response.
`So they can make their argument for the '135
`effectively licensed without getting into the '504 and '211
`at all, according to their own response.
`THE COURT: All right. Well, I'm going to
`consider the parties' arguments. I think we have at least
`one witness before we get to -- to Dr. Blaze, and I'll let
`you know my ruling in plenty of time to deal with the
`slides.
`
`MR. CURRY: Thank you.
`THE COURT: Okay. Mr. Ward?
`MR. WARD: On a separate issue, Your Honor, and I
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`790
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`just want this in your mind when you're considering this --
`this issue with respect to Dr. Blaze, Mr. Bakewell has
`given an opinion in the 2018 trials and the 2016 trials
`that there would be one rate regardless of the number of
`features that infringed.
`And I think that when they -- if they get into
`this and they start comparing the licenses for Mitel and
`comparing the '504 and '211, then they are opening the door
`to these prior opinions without getting into the rate from
`the early -- from the 417 trial, that, Mr. Bakewell, you
`held an opinion that if all four patents were infringed,
`it'd be the same rate, whether one feature infringed or two
`features infringed.
`And I just want that in Your Honor's mind because
`I think they are potentially opening the door to that prior
`inconsistent testimony that I think is inconsistent with
`what they'd be arguing with respect to Mitel phone licenses
`here.
`
`And that's the only thing I wanted to point out.
`THE COURT: Thank you, Mr. Ward.
`Anybody on -- on Apple's behalf wish to speak to
`
`that?
`
`MS. HEFFERNAN: Yes, Your Honor. Jeanne Heffernan
`for Apple.
`This is the first time we've heard that argument.
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`791
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`That was not raised during the meet and confer, so I would
`like some time to consider it. I don't think it's true,
`though, that they do need to go into Mr. Bakewell's
`opinions from those prior trials for at least the reason
`that I'm sure that he had opinions that there would be
`different royalty rates for certain features if other
`features were not also found to infringe. For example,
`FaceTime would have a different rate if only FaceTime was
`found to infringe.
`But I'd like some, I guess, time to consider --
`THE COURT: Fair enough. That's fair enough,
`certainly. Okay.
`Anything else before we have the jury brought in,
`if they are all here?
`They are all here, Mr. Richardson's tells us.
`Let's have the jury brought down.
`COURT SECURITY OFFICER: Yes, sir.
`All rise for the jury, please.
`THE COURT: Mr. Weinstein, if I could get you back
`on the stand, please -- Dr. Weinstein, sorry.
`MR. CASSADY: It is Mister.
`THE COURT: It is Mister.
`(Jury in.)
`THE COURT: Please be seated.
`Ladies and gentlemen of the jury, good morning and
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`Case 6:12-cv-00855-RWS Document 992 Filed 11/02/20 Page 14 of 123 PageID #: 64117
`792
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`welcome back. I hope you all had a pleasant evening. It's
`nice to see a little bit of sunshine this morning.
`You'll recall that when we concluded the day
`yesterday, counsel for Apple was in her cross-examination
`of the witness.
`At this time, Ms. Heffernan, you may continue.
`MS. HEFFERNAN: Thank you, Your Honor.
`ROY WEINSTEIN, PLAINTIFFS' WITNESS, PREVIOUSLY SWORN
`CROSS-EXAMINATION CONTINUED
`BY MS. HEFFERNAN:
`Q. Good morning, Mr. Weinstein.
`A. Good morning.
`Q. Now, if you would, I'd like to start by recapping for
`the jury where we left off yesterday.
`We were talking about the Microsoft 2010
`agreement. Do you recall that?
`A. I do.
`Q. And we had established that the Microsoft 2010
`agreement is a worldwide agreement, correct?
`A. That's true.
`Q. And we were -- we were discussing that if you used --
`well, as you did, you used only Microsoft's U.S. units of 1
`billion units even though we all know that Microsoft sells
`its units worldwide, right?
`A. That's true.
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`Case 6:12-cv-00855-RWS Document 992 Filed 11/02/20 Page 15 of 123 PageID #: 64118
`793
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`Q. And that's how you came up with your 19-cent per-unit
`royalty rate for Microsoft, correct?
`A. Correct.
`Q. And we had also established that we know that
`Microsoft -- its worldwide sales are 2 billion units,
`right?
`A. Yeah, roughly twice the U.S. sales.
`Q. And we had discussed yesterday that for -- for
`Microsoft, the greater the number of units in the
`denominator, the lower the per-unit rate, right?
`A. Other things equal, true.
`Q. All right. So let's -- let's do some math. This is
`where we left off yesterday.
`I have titled -- I've decided to do this on the
`ELMO. It's just easier.
`MS. HEFFERNAN: Let's bring up the ELMO if we
`
`could.
`Q. (By Ms. Heffernan) I've titled this -- this slide the
`Microsoft Agreement. Do you see that?
`A. I do.
`Q. And -- and we know that there are three things we need
`to look at when we are calculating a per-unit rate, right?
`We need to look at, number one, the royalty amount,
`correct?
`A. Correct.
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`Case 6:12-cv-00855-RWS Document 992 Filed 11/02/20 Page 16 of 123 PageID #: 64119
`794
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`Q. Number two, we need to look at the number of units,
`correct?
`A. Yes.
`Q. And then we do some math, we do a division there, and
`we come up with a per-unit rate, correct?
`A. True.
`Q. Okay. So we know what the royalty amount is for the
`Microsoft Agreement, right?
`A. We do.
`Q. And that's $200 million?
`A. Correct.
`Q. And if we were going to use Microsoft's worldwide
`sales, we would divide 200 million by 2 billion units,
`right?
`A. We could do that.
`Q. And that's pretty easy math. I don't think you need a
`calculator for that. $200 million divided by 2 billion
`worldwide units comes out to what?
`A. About 10 cents.
`Q. So if we were going to do the math using Microsoft's
`worldwide units, given the Microsoft 2010 agreement is a
`worldwide agreement, we would come up with a 10-cent
`per-unit rate for the Microsoft 2010 agreement, right?
`A. The math is -- is correct, yes.
`Q. Now, the reason your per-unit rate for Microsoft was
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`Case 6:12-cv-00855-RWS Document 992 Filed 11/02/20 Page 17 of 123 PageID #: 64120
`795
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`twice as high is that you only counted U.S. units, right?
`A. I only included U.S. units in that calculation, that's
`true.
`Q. And the primary reason you gave for only counting
`Microsoft's U.S. units is that you wanted to compare the
`Microsoft agreement to the other VirnetX agreements, and
`the other agreements only involved U.S. units. That was
`your reason, correct?
`A. That is true.
`Q. So you used the entire dollar amount that Microsoft
`paid, but you decided to only count Microsoft's U.S. units
`when you did your division, correct?
`A. This is true.
`Q. Mr. Weinstein, do you ever do the grocery shopping for
`your family?
`A. Very often.
`Q. Okay. I do, too. And you know that when you go to the
`grocery store, you can buy limes one at a time or by -- by
`the sack, right?
`A. You can buy them individually or sometimes they're
`packaged, yes.
`Q. And the same with lemons, you can buy those
`individually or you can buy them pre-packaged, correct?
`A. True.
`Q. And lemons and limes are priced about the same amount
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`Case 6:12-cv-00855-RWS Document 992 Filed 11/02/20 Page 18 of 123 PageID #: 64121
`796
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`for about the same volume when they come by the sack,
`right?
`A. Say that again.
`Q. Lemons and limes, when they're packaged --
`A. Yes.
`Q. -- pre-packaged by the sack, they're roughly the same
`price for roughly the same volume, true?
`A. You mean lemons and limes cost about the same --
`Q. Yes.
`A. -- comparing lemons to limes?
`Q. Yes.
`A. Actually I don't know that. That wouldn't surprise me,
`though.
`Q. Okay. Well, at the -- at the Walmart here, it's
`roughly $3.00 for about a sack of 10 lemons --
`A. Uh-huh.
`Q. -- and $3.00 for a sack of 10 limes. Will you accept
`that?
`A. Sure.
`Q. At least for purposes of this -- for this example let's
`use that.
`So let's say I bought a sack of 10 lemons and a
`sack of 10 limes and I spent a total of $6.00, are you with
`me?
`A. Okay.
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`Case 6:12-cv-00855-RWS Document 992 Filed 11/02/20 Page 19 of 123 PageID #: 64122
`797
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`Q. Okay. And let's figure out -- let's -- let's say I
`lost the receipt, but I wanted to figure out about how much
`I paid for each lime. It wouldn't make sense to take the
`entire $6.00 I spent and divide it by only 10 limes, would
`it?
`A. Because the $6.00 included the lemons --
`Q. That's right.
`A. -- in your example?
`Q. That's right.
`A. Yeah, that's true.
`Q. So we could take the entire $6.00 I spent and divide it
`by 20 lemons and limes to come up with 30 cents per lime,
`correct?
`A. We could.
`Q. Or we could say I -- I -- I spent -- what I spent -- I
`spent half, I guess, of what I spent on limes, and instead
`of starting with $6.00, we could start with $3.00, right?
`A. True.
`Q. And we could divide that $3.00 by 10 cents, and, again,
`come out to roughly 30 cents per lime, right?
`A. We divide the -- the $3.00 by 10 limes and come out
`with 30 cents --
`Q. That's right.
`A. -- per lime.
`Q. But it wouldn't make sense to start with the $6.00,
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`Case 6:12-cv-00855-RWS Document 992 Filed 11/02/20 Page 20 of 123 PageID #: 64123
`798
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`divide that by 10 limes, and get 60 cents. That -- that
`wouldn't be what I spent on limes, right?
`A. Not if half of the $6.00 was spent purchasing lemons,
`that's true.
`Q. That's right. So just as with that lime example, we
`could figure out the per-unit rate that Microsoft paid for
`U.S.-only units if we -- instead of starting with $200
`million, we started with half of that, a hundred million
`dollars, right?
`A. No, because Microsoft paid $200 million.
`Q. Okay. So if we wanted to find out what Microsoft paid
`for its total units, we would divide $200 million by 2
`billion worldwide units to come up with this 10-cent
`per-unit figure, correct?
`A. Well, that's -- that's your arithmetic, but I don't
`believe that's the appropriate calculation.
`Q. Okay. But you agree with me, don't you, that getting
`rights to VirnetX's patents outside the U.S. to cover
`Microsoft's sales outside the U.S. was part of what
`Microsoft paid $200 million to get rights to, correct?
`A. Microsoft did receive those rights, sure.
`Q. So we can quibble about how much VirnetX's patents are
`worth outside the United States, but we can agree, can't
`we, that by dividing $200 million by only Microsoft's U.S.
`units, as you did, attributes no value at all to the
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`Case 6:12-cv-00855-RWS Document 992 Filed 11/02/20 Page 21 of 123 PageID #: 64124
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`foreign patents that you agree Microsoft paid $200 million
`to get a license to, correct?
`A. No, I don't agree with that.
`Q. You agree with me, though, it -- it's up to the jury to
`decide whether that was the appropriate thing to do,
`correct?
`A. Whether what was the appropriate thing to do?
`Q. Not counting Microsoft's foreign units when you did
`your per-unit rate on the Microsoft 2010 agreement, whether
`that was reasonable to do or not is something this jury is
`going to decide, correct?
`A. I agree that ultimately the jury decides a fair payment
`here.
`Q. Now, the agreement that we've just been talking about,
`that was entered into in May of 2010, correct?
`A. Yes.
`Q. And we've heard some testimony at this trial that --
`that the Microsoft deal was discounted because VirnetX was
`having cash problems in 2010 when it did the deal, right?
`A. We did hear that testimony, yes.
`Q. And it's your opinion that those circumstances greatly
`diminished VirnetX's bargaining power relative to
`Microsoft, resulting in licensing terms that VirnetX would
`not agree to today, correct?
`A. There's no question that VirnetX's cash position
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`impacted its negotiating position with Microsoft at the
`time. There's no question.
`Q. And I think we heard something like that from
`Mr. Larsen at the trial, too, right?
`A. We did.
`Q. Well, I think it might be helpful to the jury if we
`gave a little history to the litigation between VirnetX and
`Microsoft.
`VirnetX sued Microsoft a first time in 2007,
`
`right?
`A. That sounds correct.
`MR. CASSADY: Your Honor, may we approach?
`THE COURT: Yes.
`(Bench conference.)
`MR. CASSADY: Your Honor, we're going to object --
`THE COURT: Shelly, can you hear? Try to speak
`
`up.
`
`MR. CASSADY: Is that better?
`THE COURT: Take your mask off.
`MR. CASSADY: Sorry, Your Honor.
`I'm going to object to her going into the details
`of the tortured history of the Microsoft license -- or
`license. They know it was a lawsuit. That's the only
`relevant factor. Going into it and -- and trying to over
`and over again push these facts regarding the details of
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`Case 6:12-cv-00855-RWS Document 992 Filed 11/02/20 Page 23 of 123 PageID #: 64126
`801
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`various acts of infringement went on when we're not going
`to tell the jury about what happened in this case regarding
`the aspects of the infringement, which we understand Your
`Honor doesn't want to go into. We understand --
`THE COURT: It's not relevant.
`MR. CASSADY: Right. But the Microsoft deal,
`making it sound as if VirnetX is litigious and has bad
`conduct --
`THE COURT: We don't know she's going to do that.
`MS. HE
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