Free Redacted Document - District Court of Delaware - Delaware

Case 1:04-cv-01338-JJF

Document 984-2

Filed 02/05/2008

Page 1 of 6

EXHIBIT 1

SHEET 1

Case 1:04-cv-01338-JJF

Document 984-2

Filed 02/05/2008

Wednesday, November Page 2 of 6

21, 2007

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I N THE UNITED STATES DISTRICT COURT I N AND FOR THE DISTRICT OF DELAWARE

- - HONEYWELL INTERNATIONAL, INC. ,I e t a1 . Plaintiffs, C I V I L ACTION

APPLE COMPUTER, I N C . , e t a l . , NO. 04-1338 (MPT) Defendants.

- - W i 1 m i n g t o n , Del aware Wednesday, November 2 1 , 2007 a t 1 1 : 4 7 a.m. TELEPHONE CONFERENCE
BEFORE: HONORABLE MARY PAT THYNGE, U.S. MAGISTRATE JUDGE

- APPEARANCES:

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MORRIS NICHOLS ARSHT & TUNNELL, LLP BY: THOMAS C . G R I M M , ESQ. and ROBINS KAPLAN MILLER & CIRESI, L . L . P BY: MATTHEW L . WOODS, ESQ., STACIE E. OBERTS, ESQ., and PETER SURDO, ESQ. (Mi nneapol is , M i n n e s o t a ) and ROBINS KAPLAN MILLER & CIRESI, L . L . P BY: ANTHONY FROIO, ESQ. (Boston, Massachusetts) Counsel on b e h a l f o f Honeywell I n t e r n a t i o n a l , I n c . , and Honeywell I n t e l 1e c t u a l P r o p e r t i e s , I n c .

B r i a n P. G a f f i g a n Regi s t e r e d M e r i t R e p o r t e r
U n i t e d S t a t e s D i s t r i c t Court

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Honorable Mary Pat Thynge

Case 1:04-cv-01338-JJF
SHEET 9

Document 984-2

Filed 02/05/2008

Page 3 of November Wednesday, 6

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30 are potential infringers, a l l of which are detailed i n the provisions I referenced earl i e r , The better cases, judge, from t h i s particular court, your court, i s the Constar case where i t specificall) states that a community of legal interests may arise betweer parties j o i n t l y developing patents. They have a common legal interest i n developing the patents t o obtain greatest protection and i n exploiting the patents, And that i s exactly what the 2003 agreement states and contemplates between Honeywell and LPL. So i t ' s an untrue statement, t o say, judge, as referenced i n Samsung's b r i e f , that only when you have an exclusive licensee and only when there i s a duty t o defend does t h i s common interest l i e , That i s j u s t not correct, MR. KORNICZKY: Steve Korniczky, Your Honor, We're being whipsawed here, Number one, the only interest here - THE COURT: Well, l e t me put i t t h i s way, I was reading through my opinion, quite frankly, i n the Block Drug case and also the Corning, Incorporated case by Judge Farnan i n 2004, My opinion, by the way, came down i n April of 2007, And i n reading through what i t i s , I'm not f u l l y comfortable that t h i s i s necessarily a j o i n t defense type argument, f u l l y comfortable, because I don't see proof that establishes that a t the time of the negotiations, LPL 31 and Honeywell shared common identical legal interests i n t h i s , There, t o me, i s r e a l l y negotiations between two corporations t o enter i n t o a licensing arrangement i n which LPL ended up with a financial gain, But I also don't agree with paragraph three necessari 1y , that i s , what defendants want t o say t o t h e i r c l i e n t , And i t would be only t o , i t i s my understanding, the level that i s in-house counsel and in-house counsel i n these companies could not disclose i t tc anyone else; i s that correct? MR, KORNICZKY: That's correct, Your Honor, THE COURT: So paragraph one w i l l be a1 lowed, paragraph two w i l l be allowed, And t h i s i s a t page two. Paragraph four w i l l be allowed because i t says, share the costs, licensing and defense of the patent as we1 1 as the proceeds from enforcement and licensing efforts overall These are just statements you are going t o be allowed t o say, nothing beyond that, MR. KORNICZKY: Understood, Your Honor, MR, OLLIS: Your Honor, might I request that with respect t o paragraph three, we be permitted t o say that there i s a dispute as t o Weather? THE COURT: No, No, you are not, No, paragrapt three i s just going t o be out e n t i r e l y . Once you s t a r t t e l l ing them that Honeywell and LPL have a 1icense, i t ' s a nonexclusive license and LPL shares i n the cost of
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32 enforcement, that i s going t o be enough t o t e l l your in-house counsel a t the respective companies what i s going on, So one, two and four w i l l be allowed, I ' m trying t o figure out what you are trying t o get a t a t paragraph f i v e . MR. KORNICZKY: Let me just read that through one more time, Your Honor, Hang on one second, please, Basically, number f i v e would confirm that they basically did what's stated there, They have shared i n the costs, f o r example. MR. FROIO: Well, Your Honor, i t directly reflects back t o paragraph number three, THE COURT: I understand that, I understand that, But t o the extent that i t adhered t o the terms of the agreement reflected i n four, I'm l u s t trying t o figure out - MR, KORNICZKY: What does i t add? THE COURT: Yes, what does i t add? That i s my whole problem, MR. FROIO: I t doesn't add anything, Your Honor, and again i t goes back t o the fundamental argument about what i s t h e i r basis f o r t h i s , s THE COURT: Yes. And so ~ t ' one, two and four, they're going t o be allowed t o share. Okay? MR. KORNICZKY: Thank you, Your Honor,
3 3. MR, OLLIS: Your Honor, t h i s i s Andy O l l i s from Optrex, I f I could make one point of c l a r i f i c a t i o n with. respect t o who the in-house counsel are at Optrex, For example, there are no U,S, attorneys that are in-house counsel but there are folks i n the Legal Department and IP, Department, a select group of two or three individuals who are i n comparable positions, And I wanted to confirm that that was - THE COURT: Are those individuals that were identified i n some way under the protective order? Because i t ' s my understanding, i t sounds t o me l i k e there i s a two t i e r protective order i n t h i s case, I can't r e c a l l , confidential and highly confidential, MR, ROSENTHAL: Your Honor, this i s Larry Rosenthal, There i s the three t i e r and the middle t i e r defines in-house counsel t o include more than just lawyers on both sides, I don't have i t i n front of me but I know there i s a d e f i n i t i o n that would extend t o non-lawyers a t F u j i , also a very limited number, a very limited number of non- 1awyers a t Honeywell , THE COURT: Okay, MR, FROIO: You know, Your Honor, that certainly would not be acceptable, and I don't think that i s f a i r under any stretch of the imagination, I mean t h i s particular issue has been t i e d t o potentially a patent

U n i t e d S t a t e s D i s t r i c t Court

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Honorable Mary Pat Thynge

Case 1:04-cv-01338-JJF
SHEET 10

Document 984-2

Filed 02/05/2008

Page 4 of 6 Wednesday, November

21, 2007

34 misuse claim, There i s absolutely no reason whatsoever that even t h i s information that Your Honor has allowed t o be disclosed needs t o be any further than in-house counsel, I t ' s highly, highly prejudicial t o Honeywell, THE COURT: Well, I don't know how highly, highly prejudicial i t i s , quite frankly, but the request, the way I read i t , was seeking t o only disclose i t t o a limited set o f in-house counsel, MR, FROIO: That was subject t o the protective order, r i g h t . THE COURT: And that i s what was essentially asked f o r , And what SDI indicated i n i t s l e t t e r that i t was seeking that Honeywell said no t o , and I'm going back t o that, i t ' s your paragraph a t page two, the second t o the l a s t paragraph: Samsung SDI j u s t i f i e d t h i s request by stating that those facts could potentially form the basis of a patent misuse claim, Further, Samsung SDI d i d not seek t o disseminate these facts as public information, instead seeking only t o disclose them t o a l i m i t e d set o f in-house counsel f o r Samsung SDI who have already agreed t o be bound by the protective order as confidential attorneys eyes only information. And that i s how i t ' s going t o be used, And that i s who i t ' s going t o be allowed t o go t o s MR, KORNICZKY: Yes, Your Honor, I t ' s Steve 35 Korniczky , Under that d e f i n i t i o n , they don't necessarily have t o be U,S, lawyers, THE COURT: Well, but are they going t o be bound by a court order? I'm assuming your c l i e n t s are going t o be bound by a court order; correct? MR, KORNICZKY: O course, Your Honor, Yes, f THE COURT: And that i s the way i t w i l l be then. So t o the extent that that i s covered i n there, I w i l l allow i t , but I don't expect i t t o be disseminated throughout a number o f nonlegal personnel, MR, KORNICZKY: And, Your Honor, t h i s information would also r e l a t e t o the common interest documents requested on page three o f our l e t t e r b r i e f ; correct? THE COURT: Wait a minute, Let me just see, Page three o f your l e t t e r b r i e f ? MR, KORNICZKY: I guess, Your Honor, what we're asking f o r , the documents that were withheld under the common interest that had gone back and f o r t h between Honeywell and LPL, MR, FROIO: And, Your Honor, what i s being sought again i s any and a l l communications by and between Honeywell ' s in-house counsel and LPL, negotiations over the license agreements, the j o i n t defense agreements I referenced t o e a r l i e r , a l l o f which contemplate a j o i n t

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36 defense agreement, And even, judge, the March 2003 1icense agreement i t s e l f states that i t ' s subject t o a j o i n t defense and common interest privilege r i g h t i n the language i t s e l f . THE COURT: Let me ask you, who are you asking f o r t o have access t o these communications? MR, KORNICZKY: Your Honor, outside counsel .. THE COURT: Outside counsel only, MR. KORNICZKY: Correct, MR. FROIO: Again, Your Honor, even a t that, i t i s violating a privilege that Honeywell and LPL are e n t i t l e d t o by v i r t u e of not just t h e i r actions but what they reduced t o writing, and I believe i t ' s inappropriate and the privilege ought t o be sustained, I t ' s f o r that . very purpose, judge , MR. KORNICZKY: Your Honor, I don't think that they can contract t h i s i s a privilege when i t ' s not, I t ' s not appropriate. MR. FROIO: No, the privilege was created by virtue of the language i n the agreement i t s e l f which the. parties contemplated Cleary that there was an identical . legal interest as we clearly stated. And that i s clearly stated i n the agreements, I don't know what more, judge, Honeywell and LPL could possibly have done t o better protect themselves i n t h i s regard, They contemplated t h i s exact situation. And t o allow that t o be defeated would be just
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3 7' wrong, MR, KORNICZKY: Your Honor, I think i t ' s the. underlying facts and scenario that dictate whether there, i s e a privilege i s there, and I think clearly there i s not, W completely disagree with opposing counsel. THE COURT: I know you do, MR, ROSENTHAL: Your Honor, this i s Larry Rosenthal again, Let me make two points. F i r s t o f a l l ; were there ever a privilege as t o t h i s agreement, i t was waived by i t s production and the reliance and the expert. reports. And I just hark back t o the clawback l e t t e r motions that Your Honor decided some time ago where a document was claimed t o have been inadvertently produced and upon the decision that i t r e a l l y wasn't privileged, i t was released again. But i t ' s clear t o me that the facts, even the recitations i n the agreement cannot be privileged, They can be highly confidential and use distribution can be restricted but I don't understand a l l the claim of priviSege since you can't have privilege on something that you use i n the l i t i g a t i o n , The second point i s that I have i n front of me now the three level protective order. The middle level , which i s called attorneys eyes only, permits disclosure t o up t o four in-house counsel, legal o r intellectual property s t a f f members regularly employed by a party or the parties

U n i t e d S t a t e s D i s t r i c t Court

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Honorable Mary Pat Thynge

Case 1:04-cv-01338-JJF
SHEET 11

Document 984-2
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38 related corporate a f f i l i a t e and responsible f o r assisting such party i n connection with t h i s action, hereinafter collectively in-house counsel - - collectively with in-house counsel And those people have t o agree t o be bound by the terms before they're given any disclosure, so there a middle ground which was defined i n the protective order as in-house counsel, THE COURT: I have already given you my ruling onwhatthatparticularlyisonthepriorissuesolet's pass by i t r i g h t now, MR, KORNICZKY: A l l r i g h t , THE COURT: The issue that i s s i t t i n g out there i s Honeywell provided i t t o t h e i r experts t o look a t and was part of the analysis the experts used i n preparing the reports and going through i t . MR. WOODS: Your Honor, t h i s i s Matt Woods, I'm just going t o jump i n because I can t e l l you that the agreement that opposing counsel have - - already have was provided t o the experts, but none of any of the materials that counsel and SDI are now seeking, none of those materials were provided t o any expert. The agreement, the underlying basic agreement that reflects the licensing was provided but none of the other materials, I apologize f o r jumping i n , Your Honor, but I'm not sure Mr, Froio i s familiar with that particular aspect,
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40 was taken by the defendants or she provided was that included i n any of your attachments t o me? MR, FROIO: I believe, judge, yes, The excerpts on the particular issues I believe were attached, yes. THE COURT: Okay, And that would have been with your l e t t e r i n response t o the defendants' motion? MR, FROIO: Yes, that's r i g h t , And, you know, Your Honor, we would even be w i l l i n g t o provide the common interest j o i n t defense privileged document that i s confidential by v i r t u e of our agreement with LPL i n camera that were necessary THE COURT: Yes, that's fine, That's fine, Hal much are we talking about as f a r as f o r my review? Because I did an i n camera review on the Block Drug case, too, MR. FROIO: Your Honor, i f I were t o submit, the two agreements I be1ieve are approximately f i v e pages each, W would also be w i l l i n g t o review Ms, Yeadon's e deposition i n those particular aspects to secure exactly t h e i r relationship and what LPL has i n fact done subsequent t o the execution of the agreement. We would be glad t o submit those, It wouldn't be voluminous a t a l l , THE COURT: A l l r i g h t . Get i t t o me within the next two weeks, and then Iw i l l look a t that issue from the standpoint of whether or not you get - - whether or not Samsung and the rest of the defendants get any

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39 THE COURT: You know, that i s an issue I'm going t o put aside f o r now, about whether or not the other communications are or are not protected, And i t ' s an m ' issue that I'm concerned about because I not 100 percent certain you necessarily have a j o i n t defense or common defense argument on t h i s , I r e a l l y do have some problems with i t . And l i k e I said, I was looking a t the Corning case and also was looking over one of the cases that I had, I n the case that I had i n the Block Drug case, at least the two entities that were being sued were both being sued, So I'm not 100 percent certain I'm real comfortable t o s i t there and say I a persuaded that Honeywell and LPL have a m j o i n t defense or common interest privilege just because they say they have a j o i n t defense and common interest privilege, MR, FROIO: Well, I certainly understand what Your Honor i s saying, And I would simply add again, Your Honor, not only what the parties said i n the agreement but also how they have interacted since that agreement, And Loria Yeadon t e s t i f i e d clearly as t o what t h e i r participation has been, I t ' s been a whole l o t more, judge, than just s i t t i n g back and collecting whatever windfall royalty, portion of the royalty that has come i n on t h i s case, I t ' s so much more than that, THE COURT: Well, d i d you provide me with what Ms, Yeadon t e s t i f i e d t o and i n response t o discovery that
U n i t e d S t a t e s D i s t r i c t Court

41 further information - MR, FROIO: Very well. THE COURT: - - pursuant I believe t o Docket Entry No, 925, a motion that Samsung and the defendants have filed, Now, counsel , I have run int o a problem, Excuse me f o r a moment, (Off the record ) THE COURT: Counsel, I have about 15 more ; minutes before I have t o go i n t o another teleconference, That teleconference should probably take me about a half; hour, i f i t turns out that I haven't finished up with the discussion that i s necessary, that may be necessary t o address Honeywell's issue that i t brought up regarding the discovery matter that i t wanted addressed. So I don't want t o shortchange Honeywell's issue, I just want t o warn you I ' v e got about 15 minutes t o address i t and then I possibly have t o take a break and then have counsel get back on thg phone, but I'm t e l l i n g you the next phone c a l l i s going t o probably l a s t roughly a half hour, MR, SURDO: Your Honor, this i s Peter Surdo on behalf of Honeywell, I ' m perfectly w i l l i n g t o t r y t o give you a short oral argument and figure we can get t h i s knocked out quickly, THE COURT: Okay,
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Honorable Mary Pat Thynge

Case 1:04-cv-01338-JJF

Document 984-2

Filed 02/05/2008

Page 6 of 6

EXHIBIT 2
FULLY REDACTED