Free Exhibit List - District Court of Arizona - Arizona

EXHIBIT 51

Case 2:04-cv-00400-PGR

Document 86-2

Filed 12/23/2005

Page 1 of 132

KEVIN IMES

March 10, 2005 Page 1

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA HYPERCOM CORPORATION § § § § § NO. CIV 04-0400 PHX PGR § § § § §

3 Plaintiff, 4 Vs. 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 VERVE L.L.C. and OMRON CORPORATION, Defendant(s).

******************************************************* ORAL AND VIDEOTAPED DEPOSITION OF KEVIN IMES March 10, 2005 Volume 1 of 1 *******************************************************

ORAL AND VIDEOTAPED DEPOSITION of KEVIN IMES, produced as a witness at the instance of the Plaintiff, and duly sworn, was taken in the above-styled and numbered cause on the 10th of March, 2005, from 9:05 a.m. to 1:57 p.m., before Pamela Nichols, CSR in and for the State of Texas, reported by computer-aided machine shorthand, at the offices of Fulbright & Jaworski, 600 Congress Avenue, 23rd Floor, Austin, Texas, pursuant to the Federal Rules of Civil Procedure and the provisions stated on the record or attached hereto.

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 ALSO PRESENT: Corey Bailey, Videographer FOR THE DEFENDANT VERVE L.L.C.: Mr. Gregory S. Donahue SIMON, GALASSO & FRANTZ, PLC 6300 Bridgepoint Parkway, Building One Suite 410A Austin, Texas 78730 (512) 231-1311 FOR THE PLAINTIFF: Mr. Sid Leach SNELL & WILMER, L.L.P. One Arizona Center Phoenix, Arizona 85004-2202 (602) 382-6000 A P P E A R A N C E S

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INDEX Appearances......................................... 2 Stipulations (attached)............................N/A KEVIN IMES Examination by Mr. Leach........................ 6 Signature and Changes............................. 129 Reporter's Certificate............................ 131

EXHIBITS 10 NO. DESCRIPTION 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 7.................................................. 62 Patent Assignment Between Omron and Verve 8.................................................. 64 Patent Assignment and License Agreement Between Omron and Verve 3.................................................. 47 Patent Assignment Between Omron and Verve 4.................................................. 49 United States Patent No. 4,678,895 Dated 7-7-87 5.................................................. 53 Patent Assignment Agreement Between Omron and Verve 6.................................................. 55 Request For Authorization, Omron Document No. 538 2.................................................. 24 Letter from Herbert Kerner to Raymond Galasso dated 8-18-03 1.................................................. Amended Notice of Videotaped Deposition of Kevin Imes 5 PAGE

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1 2 NO. DESCRIPTION 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

EXHIBITS CONTINUED PAGE

9.................................................. 66 Point-Of-Sale Portfolio Assessment and Market Analysis 10................................................. 71 Patent Assignment Between Omron and Verve 11................................................. 75 United States Patent No. 4,562,341 Dated 12-31-85 12................................................. 76 Addendum 1-033004 to Patent Assignment and License Agreement No. 031804 Between Omron and Verve 13................................................. 90 Various e-mail messages from Ray Galasso to Herbert Kerner and Herbert Kerner to Ray Galasso 14................................................. 89 E-mail message from Herbert Kerner to Raymond Galasso Dated 1-21-05 15................................................. 95 E-mail message from Raymond Galasso to Herbert Kerner Dated 1-28-04

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(Imes Exhibit No. 1 marked.) THE VIDEOGRAPHER: This is the videotaped

deposition of Kevin Imes, taken in the matter of Hypercom Corporation Vs. Verve L.L.C., et al, Civil Action No. 04-0400 PHX PGR, the United States District Court, District of Arizona, held in the offices of Fulbright & Jaworski, 600 Congress Avenue, in Austin Texas. The videographer's name is Corey Bailey. The

court reporter's name is Pam Nichols. March 10th, 2005.

Today's date is

We're on the record at 9:05 a.m.

Would counsel please introduce themselves. MR. LEACH: I'm Sid Leach. I'm

representing the plaintiff, Hypercom Corporation. MR. DONAHUE: And I'm Greg Donahue and

I'm representing the defendant, Verve L.L.C. THE VIDEOGRAPHER: swear in the witness. (Witness placed under oath by reporter.) MR. LEACH: For the record: I've marked The court reporter may

a copy of the amended notice of deposition as Exhibit 1. MR. DONAHUE: Can I -- I don't want to

interrupt during the deposition here, so let me just get one thing off the plate. I was wondering -- we

don't have a protective order in this case, as you

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know; and I think what we'd like to do -- and I don't imagine that you're necessarily going to be getting into any confidential information here; but to the extent we later designate something as confidential during the 30-day period, are you willing to allow that without the protective order? I mean, I think we disagree on what is confidential in this case. forth on it. We've kind of gone back and

But I think it makes sense that if --

whatever we ultimately enter into as a protective order, if something in this deposition ultimately fits one of those, the description of confidential, that we're allowed to designate it during the 30-day period for review. MR. LEACH: Sure. In the first instance, If we have some

we will agree to your designation.

disagreement about whether it's confidential, then we will proceed to challenge that. MR. DONAHUE: That's acceptable.

KEVIN IMES, having been first duly sworn, testified as follows: EXAMINATION BY MR. LEACH: Q. A. What is your name, please? It's Kevin Reed Imes.

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Q. A. Q. A. Q.

Are you employed? I'm self-employed. Are you one of the principals in Verve, L.L.C.? Yes, I am. What is your -- the percentage of your

interest in Verve, L.L.C.? A. Q. A. Q. L.L.C.? A. Q. A. Approximately 2002. Can you give me a more precise date? Fall. It could have been August time frame, It's half owner. Fifty percent? Fifty percent. When did you become a principal in Verve,

too, second half of the year. Q. You have a bachelor's degree in electrical

engineering; is that correct? A. Q. Yes, I do. Where did you -- what university or

institution did you receive that from? A. Q. A. Q. University of Texas at Austin. What year? 1998. Do you have any other degrees from

universities or colleges?

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A. Q.

No, I don't. You're also registered to practice before the

U.S. Patent and Trademark Office; is that correct? A. Q. That is correct. And in order to obtain that registration, you

passed a test administered by the United States Government testing your knowledge of patent procedure and practice? A. Q. Correct. When did you obtain your registration to

practice before the U.S. Patent and Trademark Office? A. Q. I believe it was 1999. At one time you worked for a law firm named

Thompson & Knight; is that correct? A. Q. A. That is correct. What was your position with Thompson & Knight? It was a patent agent and technical advisor,

in reverse order. Q. As a technical advisor were you involved in

the preparation of patent applications? A. Q. Yes. And then I assume you became a patent agent

after you became registered to practice before the U.S. Patent and Trademark Office? A. That would be correct.

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Q.

During what years were you employed by

Thompson & Knight? A. Q. of 2002? A. I worked for the law firm of Baker Botts -1998 to 1999. Where did you work between 1999 and the fall

actually, they had two names at the time, Baker & Botts, and now it's Baker Botts -- from 1999 until 2000, I want to say the latter part of 2000. And then

I was self-employed from 2000 to present, or I guess your question was through 2002, so ... Q. When you worked for Baker & Botts, what was

your position? A. Q. I was a patent agent. And as a patent agent at Baker & Botts, were

you involved in the preparation of patent applications and prosecution of patent applications? A. Q. A. Q. That is correct. What office of Baker & Botts did you work at? The Austin office. Since the year 2000 in which you've been

self-employed, do you work out of your house? A. Q. A. From time to time, yes. Where do you live? 2001 --

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Q. A. Q. A. Q.

Where did you live in year 2000? I'm sorry, I'm giving you an address. Oh, of 2001? Yes -- South MoPac, Austin, Texas, 78746. And 2001 South MoPac is your current residence

address; is that correct? A. Q. A. Q. A. Q. A. Yes, it is. How long have you resided there? Since July of last year. Since July 2004? July 2004. Where did you reside prior to that? I owned a home, 800 -- I'll just give you the And I'll have to spell It's

address -- Honeysuckle Lane.

the city for you, I don't think you'll get it. P-F-L-U-G-E-R-V-I-L-L-E.

The court reporter might have known, but -Q. A. Q. A. Q. A. Q. Of course it's in Texas, right? Yes, it is. And that's in the Austin, Texas area? Yes. And how long did you live there? I bought the home in 2000. Do you have any other business offices other

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than your home at 2001 South MoPac? A. Q. A. Yes, I do. Where at? 6300 Bridgepoint Parkway, Building One, Suite

410B, Austin, 78730. Q. Is the office at 6300 Bridgepoint Parkway

something that you lease personally or is that for some business? A. Q. A. Q. It's for a business. What business? Verve. When did Verve lease the office at 6300

Bridgepoint Parkway? A. Q. A. Q. A. Q. Last month, March -March of -No, February. February of 2005? Uh-huh. How many square feet do you have at 6300

Bridgepoint Parkway? A. Oh, gosh, I didn't walk it off or anything,

but I'd say my office would be eight, six -- I don't know, four, 500 square feet. It's a good size, but I'm Then, of course,

not too good with square footage.

entryways and stuff like that I'm not really counting,

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so ... Q. A. Q. A. Q. Did you sign a written lease? No, sure didn't. No written lease? No. Who are you leasing -- who is Verve leasing

the space from? A. Q. A. Q. A. I guess I have a question. Who owns the space? Well, Verve is leasing the space. Okay. But you asked me personally and that's what my

question is. Q. A. guess. Q. A. No, who is Verve leasing the space from? Verve leases the space from REIT Management, I I'm not sure. All right. But who? I

I'm not sure who the property owner is.

think it's REIT, Bridgepoint Parkway. Q. Who did Verve deal with in getting the lease?

Is there a management company or something? A. Q. A. Q. Yeah -Who is it? -- that is. REIT Management.

REIT Management?

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A. Q. A.

Yeah, R-E-I-T. R-E-I-T? Or R-I-E-T, one of the two. I always get my

"i before e" mixed up. Q. A. Q.

I think it's one of those two.

How long is the lease? Three years. Is there any understanding or intent that

you're going to sign a written lease or -A. Q. No, I believe there is. Oh, I'm sorry. I maybe misunderstood your

question [sic]. A. Yeah, and that's kind of the question that I

have for Greg. Q. A. Q. Verve? A. I don't have knowledge of that. I didn't sign Was there a written lease for that space? Yes, there is. And it's between REIT Management and -- is it

the lease, so I couldn't answer your question. Q. Do you have any information concerning who did

sign the lease? A. Greg will also -MR. DONAHUE: THE WITNESS: questions -Did you need to confer? Well, some of his

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 record. Q. today? A. Q. A. Q. A. Q. A. Q. A. Q. A. Q.

Yeah, could we take a minute? MR. LEACH: THE WITNESS: All right. I just want to understand a

few things, so ... not that it's a big deal, I mean. Are we off the record? THE VIDEOGRAPHER: The time is 9:17 a.m. (Recess from 9:17 to 9:19.) THE VIDEOGRAPHER: The time is 9:19 a.m. (BY MR. LEACH) Does Verve have any employees We're back on the We're off the record.

Not that I'm aware of. Does Verve have a telephone number? Yes. What is the phone number for Verve? It is 324-8712. And that's in area code 512? Yes, it is, uh-huh. And when did Verve get that phone number? It was last month. In February 2005? Correct. Is there any agreement between you and Raymond

Galasso relating to Verve?

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A. Q. A. Q.

Yes. Is the agreement in writing? No. Can you tell me what the substance of the

agreement is? A. Q. A. Our business relationship. Can you describe that to me, please. I believe we touched on it earlier: percentage

of ownership in the company. Q. A. Q. Okay. No. Is there any understanding between you and Anything else?

Mr. Galasso concerning division of responsibilities or who's going to do what relative to the business of Verve? A. Q. A. Yes. What is that? Ray handles more of the legal aspects and I

handle more of the business aspects. Q. A. Q. When did you first meet Raymond Galasso? In 1998. Was that during the time that you were working

at Thompson & Knight? A. Q. Yes, it was. Was Mr. Galasso also working at Thompson &

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Knight? A. Q. Yes, he was. When did you first have any contact or

communication with Mr. Galasso concerning what eventually ended up as your business relationship at Verve? A. Q. A. It was in 2002. Do you know more precisely when in 2002? It was probably two or three months prior to So I guess you

when I told you I became involved. could say summer of 2002. Q. A. Q.

Who initiated those contacts? I did. And what were the circumstances under which

you initiated contact with Mr. Galasso at that time? A. It was at a point where I could commit, you

know, more of my time to another business venture, so I initiated contact with Ray to see where Verve was. Q. A. Q. And at the time you were self-employed? Yes. What did Mr. Galasso tell you about Verve

prior to the time that you became a principal? A. Q. I don't understand what you're asking. I'd like to know what he told you about Verve Did he

prior to the time that you got involved.

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describe the business of Verve? Verve did? A.

Did he tell you what

He did say anything about Verve?

Well, I had a -- I had a general understanding

of what Verve did prior to that, so there wasn't any conversation about what Verve -Q. Okay. Where did you obtain your understanding

of what Verve did prior to those communications with Mr. Galasso? A. I knew that Mr. Galasso had a patent holding

company prior to that. Q. A. And how did you know that? Because Verve was in litigation in several

matters prior to 2002. Q. Did you have any involvement in that

litigation? A. Q. No, I sure didn't. So did you approach Mr. Galasso with a

proposal concerning Verve? A. Q. No. Other than as an employee of Thompson &

Knight, had you ever done any work for Mr. Galasso or Verve prior to becoming a principal at Verve? A. Q. No. What were the discussions that you had with

Mr. Galasso prior to the time that you became a

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principal in Verve concerning the possibility of getting involved? A. Okay. I thought that the -- Verve -- I I had a good

thought Verve was interesting.

understanding of patents and wanted to get involved, you know, in Verve as a company. Q. Prior to that time, to your knowledge, had

Mr. Galasso been the sole owner of Verve? A. Q. As far as I know. When you became a principal in Verve, did you

receive any shares of stock? A. Q. No. Did you sign any written agreement with

Mr. Galasso? A. Q. any? A. Q. A. Q. The one we talked about earlier. That you'd own 50 percent? Correct. Does your 50 percent ownership give you the No. What was the agreement that you did reach, if

right to 50 percent of the earnings of Verve? A. Q. Correct, and expenses, so ... Are you or Mr. Galasso paid any other fees in

addition to your 50 percent split?

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A. Q.

No. When you became a principal of Verve in

generally August of 2002, was there any particular project underway? Was Mr. Galasso involved at all in

any patents relating to the point-of-sale terminals, or POS terminals? A. Q. A. Q. No, there were not. Was there any discussion of Omron Corporation? No. When was the first occasion that there was any

activity or consideration or discussion concerning Omron Corporation? A. Q. A. Q. A. Q. I don't know what the first activity would be. What's the first that you know of? I believe it was in 2003 sometime. Do you know any more precisely when in 2003? Say June, July, August, that time frame. What are the first discussions that you're

aware of relating to Omron? A. I'm trying to think back to the first. It was

probably more of -- I think it was reviewing a patent or two that Omron owned, were the initial discussions. Q. Do you know who initiated the contacts between

Omron and Verve? A. No, I don't.

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Q. A.

Which patent was being reviewed? Okay. We can go with the last three numbers,

I guess would be convenient for all of us, wouldn't it? Q. A. Q. That's fine. The '895 and I want to say the '200. Were you involved in any of the communications

between Verve and Omron prior to the time that the first agreement was signed between Verve and Omron? A. Q. I don't believe so, no. As far as you know, were those communications

conducted on behalf of Verve by Ray Galasso? A. Q. I believe so. At the time that the first agreement was

entered into between Verve and Omron, what understanding, if any, did you have concerning what the agreement was? A. That it was -- that it was going to be an

assignment and -Q. A. proceeds. Q. A. Anything else? At the time, huh-uh. Outside of that general Anything else? -- and that it would be a revenue share on

business terms, nothing comes to mind. Q. Prior to the time that the first agreement was

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signed between Verve and Omron, did you prepare any proposals, analysis -A. Q. A. I was involved in proposals. Yes, I was.

Were there any written proposals? Yes. Oh, I'm sorry, the time frame again?

Q. A. Q.

Prior to the first agreement. No, I don't think. I don't know.

Were you involved in the preparation of any

proposals prior to the first agreement with Omron? A. Q. Gosh, I don't -- I don't recall. Did you prepare any sort of analysis or

information to present to Omron that you gave to Mr. Galasso for any of his communications? A. Q. A. Q. For the acquisition of these patents? For the first agreement. Right. I'm just talking about prior to the first

agreement. A. Q. Right. I don't recall.

Did you participate in any meetings with any

representatives of Omron prior to this first agreement between Verve and Omron? A. Q. Yes. How many meetings?

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A. Q.

One. Was that a meeting that took place at the

offices of Mr. Nakano in the Washington, D.C. area? A. Q. A. Q. last? A. Q. A. It was a few hours. Who else was there? Ray Galasso; Herb Kerner; Mr. Nakano, And there was one other fellow. His name Yes. When was that meeting? I want to say July, July or August of 2003. How long did that meeting with Mr. Nakano

obviously.

kind of escapes me right now, so ... Q. A. Q. Was it Tom Anderson? It could have been. What was discussed during this meeting with

Mr. Nakano in July, August 2003? A. The business -- well, actually I think it was

more of if we, Verve, thought that the '895 and '200 patents were interesting. And that's where I'm hazy.

I'm not sure if we made a formal proposal there or not to acquire it. Q. What was said, if anything, concerning whether

or not the '895 and '200 patents were interesting to Verve?

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A.

Technology-wise, more of that; you know, what

the patent included, what it covered. Q. A. What was said about what it covered? We read the patent, so ... I don't have it in

front of me, we'd have to pull it out, but we can certainly go over it if you want to. Q. meeting? A. Q. No. Was any manufacturer of POS terminals or Was Hypercom mentioned during this first

anyone in the industry mentioned during this first meeting? A. Q. A. Q. Yes. Who? Omron. Were any potential targets mentioned at all

during this first meeting with Mr. Nakano? A. Q. No. Were any potential terms of an agreement

discussed during this meeting with Mr. Nakano? A. about. Q. A. Who did the talking on behalf of Omron? I think everyone did. Well, Mr. Nakano and I believe so. The specifics I'm not sure

his counsel.

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Q. A. Q. A.

Mr. Kerner? Yes, and the other fellow. Was the other person there representing Omron? I believe so. He wasn't associated with

Verve, so ... Q. Was there any discussion about transferring

the patents to Verve at that time? A. Well, I'm sure there was. I mean, that's why

we were there. Q. Was there any discussion concerning any sort

of grant-back or temporary transfer of the patents to Verve? A. Q. I don't believe so. Was that the only meeting that you've ever

attended with any representatives of Omron? A. Q. Yes. And to your knowledge, did you have any

further direct communications with Omron after the date of that meeting? A. No. MR. LEACH: Let's mark this exhibit.

(Imes Exhibit No. 2 marked.) Q. (BY MR. LEACH) I'm handing you a document that Is this a

we've marked as Imes Deposition Exhibit 2.

copy or does this include a copy of the first agreement

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between Omron and Verve? A. Q. It appears to be. And this agreement was eventually signed by

Verve, correct? A. Q. I believe so. Did you sign the agreement on behalf of Verve,

or did Mr. Galasso? A. Q. I believe Mr. Galasso. Do you have any knowledge of the date that

Mr. Galasso signed the agreement? A. Q. No. Were any drafts or previous versions of this

agreement exchanged between the -- Verve and Omron prior to the date that the final version was signed? A. Q. I'm not sure. Were you involved at all in reviewing any

draft agreements prior to the date that this first agreement was signed? A. it over. Q. Do you recall any prior versions of this (Witness reviews document.) I might have read

agreement? A. Q. Not that I can recall. Were there any agreements between Verve and

Omron prior to date of this agreement that I've marked

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as Exhibit 2? A. Q. Not that I'm aware. Were there any collateral agreements that were

signed contemporaneously with the agreement marked as Exhibit 2? A. Q. I don't believe so. Were there any agreements between Omron and

the Simon, Galasso & Frantz law firm that were made contemporaneously with this? MR. DONAHUE: personal knowledge of that. MR. LEACH: knows, he knows. THE WITNESS: MR. LEACH: just say "I don't know." THE WITNESS: Q. know? A. Q. I don't know. Are you aware or have any information about I don't know. I -If he doesn't know, you can It doesn't matter. If he I object. He does not have

(BY MR. LEACH) So your answer is you don't

any other agreements, written or unwritten, that related -- that were contemporaneous with and related in any way to the agreement of Exhibit 2? A. No. Not that I'm aware of, no.

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Q.

Were there any side agreements with

Mr. Kerner, to your knowledge? A. Q. I don't believe so. Were there any agreements between Mr. Kerner

and Mr. Galasso, to your knowledge? A. Q. No. Were there any agreements between Verve and

the Simon, Galasso & Frantz law firm? MR. DONAHUE: knowledge. MR. LEACH: objection -MR. DONAHUE: MR. LEACH: MR. DONAHUE: MR. LEACH: Yes, it is. -- and you shouldn't make it. It's a valid objection. No, it is not. Listen, in Counsel, that's not a valid Objection, lack of personal

this district the court will stop you from making those kind of objections. That is not -He can answer the question. -- a proper objection. He can answer -That is not a proper

MR. DONAHUE: MR. LEACH: MR. DONAHUE: MR. LEACH: objection. MR. DONAHUE: MR. LEACH:

That is not -If you continue to do that,

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we'll take it up with the court. MR. DONAHUE: MR. LEACH: objection. MR. DONAHUE: the court. -- we can take it up with Well -That is not a proper

There's no reason to -MR. LEACH: There are only two objections

that are proper:

You can say object to the form of the

question and objection based on privilege. MR. DONAHUE: MR. LEACH: Well -But if you try to give him

objections to tip him off as to what you want him to say -MR. DONAHUE: MR. LEACH: objection. MR. DONAHUE: MR. LEACH: Well -Because every single question I'm not tipping him off. Well, then don't make the

I ask him may be a question he has no personal knowledge of, and he can tell me if that's the case. But that is not a proper objection. that is against the rules and -MR. DONAHUE: MR. LEACH: it. Sid --- I'm not going to permit I'm telling you,

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MR. DONAHUE:

Sid, but you're way outside

the -- for starters, you're way outside the bounds right now of what the scope of discovery is supposed to be in this case. We're in a personal jurisdictional

case -- excuse me -- discovery on a personal jurisdictional level only. You haven't asked a single I've let a lot go up

question that relates to Arizona.

to now, and I'm just tell you that you're asking him now things that he clearly doesn't have any personal knowledge of. MR. LEACH: MR. DONAHUE: MR. LEACH: That's -And it's --- way beyond the point that

But let me tell you that unless you're

willing to stipulate that there was a conspiracy between Verve and Omron, then I'm entitled to go into this. If you want to stipulate to that, then I don't

need to take discovery right now. MR. DONAHUE: to stipulate -MR. LEACH: take discovery -MR. DONAHUE: MR. LEACH: MR. DONAHUE: -- because that's not true. -- on it. Well, and then I'm allowing All right. Then I have to Obviously we're not going

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you to take some.

But, I mean, I'm telling you right

now you're getting now to the point where you're asking him questions about Simon, Galasso & Frantz -MR. LEACH: MR. DONAHUE: about. MR. LEACH: Well, he can tell me he That's exactly right -- which he knows nothing

doesn't know anything about, but if he does know information, I'll entitled to find it out. MR. DONAHUE: Okay. Well, I'm guessing

we're wasting our time, though. MR. LEACH: MR. DONAHUE: whether I'll -Q. (BY MR. LEACH) Do you have any knowledge of That's fine. Okay. I'll -- I'll decide

the circumstances under which the agreement that I've marked as Exhibit 2 was negotiated? A. Q. A. The business terms, yes. Tell me what you know about that. I'm vaguely remembering what we had just It's mainly

discussed earlier: revenue sharing -revenue sharing. Q.

Were there subsequent discussions after the

meeting that you attended with Mr. Nakano concerning the terms that ended up as the agreement marked as

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Exhibit 2? A. Q. I believe so. And did those discussions take place between

Mr. Galasso and representatives of Omron? A. Q. A. Q. Yes, they did. And you didn't participate in those, correct? No. Were you kept informed by Mr. Galasso of the

substance of his communications with Omron? A. Q. From time to time. What knowledge or information do you have

about the communications that took place with Omron? A. Gosh, they were phone conversations, so it

would be really difficult to pinpoint what that knowledge is. Q. please. A. More on whether -- I guess whether we're going Can you tell me anything that you remember,

to have a deal with Omron to acquire the assets, just kind of a status update. Q. When did you become aware that there would be

an agreement between Verve and Omron? A. Q. A. Shortly after the meeting. Shortly after the meeting with Mr. Nakano? Correct.

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Q.

How far in advance of the August 13, 2003 date

on which Mr. Nakano signed Exhibit 2 did you find out? A. Q. I don't know. How far in advance of the August 13, 2003 date

that Mr. Nakano signed Exhibit 2 did the meeting with Mr. Nakano take place? A. I think I told you it was July or August. I'm

not sure when.

I remember I spent a couple of days in

D.C., and it was summertime, so ... Q. A. Q. So it could have been six weeks or less? I don't know. Do you know whether Mr. Nakano had sought

approval from Japan to sign the agreement of Exhibit 2 prior to your meeting with him? A. I don't think so, or I don't have that

knowledge, I'll say. Q. Do you have any records, such as plane ticket

receipts, charge receipts, that would allow you to determine the date of the meeting with Mr. Nakano? A. Q. A. sure. Q. office? You don't keep any records at your home or I suppose I might, yeah. If you have such records, where would they be? It depends what my CPA did with them. I'm not

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A.

I may, but I'm not sure if he kept my receipts

or not, so that's what I'm saying. Q. A. Q. A. Q. Who is your CPA? Lawrence Meck. How do you spell Meck? M-E-C-K. Is Mr. Meck a CPA, and is he located in

Austin, Texas? A. Q. A. Q. CPA"? A. Q. A. Q. I believe it's "Lawrence Meck and Associates". Do you know where his office is located? Yes. Off of Spicewood Springs. Uh-huh. Is he affiliated with some firm? He owns his own firm. So is the name of his business "Lawrence Meck,

Do you know what the street address for his

office is? A. Q. A. Q. Sure don't. Do you know what street it is? It's off of Spicewood Springs, yeah. All right. So when you say it's off of

Spicewood -A. Q. I believe it's --- as far as you know it's --

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A.

I think it's right on there.

Yeah, I think

it's on Spicewood Springs. building faces, but yeah. Q.

I'm not sure which way the

After you learned that there was going to be

an agreement with Omron, did you undertake any activities in connection with licensing enforcement investigating the '895 patent? A. Q. I believe so. At some point did you identify Hypercom as a

potential target? A. Q. A. Yes. When? I'm not sure exactly when. I can tell you it

was in 2003. Q. Was it after the date that Mr. Nakano signed

Exhibit 2? A. Q. It may have been. I'm not sure.

Do you know whether it was before the date

that the agreement was signed? A. Q. I'm not sure. Do you have any more precise information as to

when in 2003 Hypercom was identified as a potential target? A. suit. I don't believe so. Well, prior to filing

So whenever that was, that would be more precise

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for you. Q. The suit was filed on September 11, 2003, so

it would have been prior to that date? A. Q. Correct. And would have been after the date of the

meeting with Mr. Nakano? A. Q. I -- I don't know. So it's possible that Hypercom was identified

as a potential target prior to the date of the meeting with Mr. Nakano? A. Q. It could be possible, correct. Who was involved in identifying Hypercom as a

potential target? A. Q. A. Q. A. Q. I was. And how did you go about doing that? Internet research and use. What do you mean by Internet research? Online research of point-of-sale terminals. And what exactly did you do in connection with

online research of point-of-sale terminals? A. Looking at the different manufacturers of

point-of-sale terminals that existed. Q. you do? A. I went to their website, looked at the In connection with Hypercom, though, what did

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products on their website. Q. A. What were you looking for? The products that Hypercom sold at their

website, point-of-sale terminal products. Q. Were you looking for any particular features

or characteristics of those products? A. Q. A. Q. A. I'm sure I was. Which ones? I don't know offhand. How can you be so sure that you were, then? Because -- because I was just generally

looking to see what point-of-sale terminals Hypercom sold, and they have a wide array with different features and functions. Q. A. Q. And that's it? That's all I can remember right now. So you did some Internet research to see if

Hypercom sold POS terminals and that was the basis for filing suit? A. Q. I don't believe that was your question, sir. What was the basis for you identifying

Hypercom as a potential target for the '895 patent? A. Looking at Hypercom's products relative to the

'895 patent. Q. So you looked at Hypercom's products, no

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particular functions or features, and identified Hypercom as potential target for the '895 patent? A. Q. That's not what I said. All right. Then what did you do to identify

Hypercom as a potential target for the '895 patent? A. Looked at their products relative to the

claims and specification of the '895 patent. Q. And what was it you were looking for relative

to claims and specification of the '895 patent? A. You'd have to show me the '895 patent. I

don't know offhand. Q. Did you obtain any samples of Hypercom

products to test in any way? A. Q. No. Did you make any effort to purchase any

Hypercom POS terminals to test prior to filing suit on September 11, 2003? A. Q. I don't believe so. Did you do any other investigation other than

your Internet research that served as a basis for identifying Hypercom as a potential target for the '895 patent? A. I'm not sure. I may have -- didn't pay

attention to point-of-sale terminals until I read the '895 patent; so I may have started paying attention to

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them in my day-to-day activities at that point. not sure. Q.

So I'm

What investigation or information formed the

good faith basis for filing the lawsuit against Hypercom in Michigan on September 11, 2003 concerning the '895 patent? A. Q. I don't know. Who was responsible for making any

investigation concerning the Hypercom products that were accused of infringement, if you know? A. suppose. Q. A. question? Q. No. It's intended to be very board. Were you involved in any way in the investigation that served as a good faith basis for accusing Hypercom products of infringement of the '895 patent prior to filing that lawsuit? A. Q. Other than what I told you already, no. Did you have any occasion to use any Hypercom But you weren't involved in doing that? Could you be a little more specific with your The law firm of Simon, Galasso & Frantz, I

POS terminals that formed the basis for your identifying Hypercom as a target for the '895 patent? A. I'm not sure.

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Q.

Did you have any occasion to observe use of a

Hypercom terminal that formed the basis for identifying Hypercom as a target for the '895 patent? A. Q. I'm not sure. Did you have any occasions to use or observe

anyone using any Hypercom terminals that formed the basis for filing suit against Hypercom in Michigan on September 11, 2003? A. Q. Again, I'm not sure. Were there any specific Hypercom products that

you identified in your Internet research prior to the filing of the lawsuit in Michigan on September 11, 2003? A. I'm sure there were. I'm not sure what those

are offhand. Q. research? A. I'm not sure. I know I made mental records, Did you make any records of your Internet

for sure, but -Q. If you had made any records, where would they

A. Q. A. Q.

Probably stored on my computer. Where at; at your home? I carry a laptop, so ... Do you have the same laptop today that you

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were using in August 2003? A. Q. No. What computer or laptop were you using in

August and September of 2003? A. Q. A. it. Q. A. Q. A. Q. I'm sorry? Best Buy kept it. You traded it in? It was under a warranty-type situation. When did you obtain the laptop that you're One that broke. Where is it now? Did you discard it? They kept

The Best Buy bone yard, I guess.

using today? A. Q. Sometime in 2004. The laptop that you -- that you used in

August, September 2003, was that the only laptop or computer that you used up until the time that Best Buy replaced it under warranty? A. Q. Correct. And the laptop or computer that Best Buy

replaced it with is the one that you're currently using today? A. Q. That is correct. What is the model number of the laptop that

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you're using today? A. Q. It's a Sony, a VAIO, so ... Did you -- prior to the time that the laptop

that you were using in September or August of 2003, prior to the time that it was replaced under warranty, did you make any backups of the hard drive? A. Q. A. Q. A. Q. A. Q. A. Q. I believe so. Do you still have those backups today? I'd have to look for them. I may.

If they exist, where would they be? In a box somewhere. At your home? Could be in storage, so ... In storage at your home? My garage, yeah. Do you have any storage space that you rent

anywhere other than your home? A. Q. No. During August and September of 2003, did you

have an Internet service provider that provided you with Internet access? A. Q. I'm not sure. How did you gain access to the Internet during

that time period? A. I use -- my system is wireless; so there's

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plenty of wireless networks out there that you can access that are free. Q. How did you obtain e-mail service, then, if

you didn't have a provider? A. Your provider doesn't give you e-mail service So you can go to various

unless you request it.

different free e-mail services that are out there. Q. I appreciate that's possible, but can you tell

me what you did for e-mail service, if you know. A. I'm trying to remember if Verve -- my Verve I believe it

e-mail address was working at that time.

was; so that's probably what I would have used, but I don't know. Q. A. Sure. So to answer your question, I'm trying to

narrow it down for you, so ... Q. When you obtained a Verve e-mail address, who

was the provider who hosted that e-mail service for you? A. Gosh, I don't know. We did it through a

marketing company. you. Q.

I could certainly find that out for

I don't know offhand. Who was the company that Verve worked with in

getting that e-mail service? A. Ellis Graphics.

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Q. A. Q. A. Q. A. know. Q. A.

L.S. Graphics? E-L-L-I-S Graphics. Are they located in Austin, Texas? They are. Do you have any knowledge of their address? It's on MoPac -- oh no, it's not. You'd have to look it up. Is Verve still using Ellis Graphics? Yes, we do. You got my accountant and my graphic I don't

artist. Q. e-mail? A. Q.

You want my hairdresser, too? Does your e-mail provider make backups of your

I don't know. Do they provide Verve with backups of any of

the e-mail? A. Q. A. Q. No, they don't. So if they make backups, you don't know? I don't know. Does Verve have any kind of a service

agreement with your e-mail provider? A. question. Q. What I'm trying to find out is if you have Can you be more -I don't understand the

some sort of agreement with them that might provide

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some terms in there that -- that have some sort of backup responsibilities or disaster recovery capability or something like that. So I'm asking if you have any

kind of agreement with them. A. basis. Q. I, you know, paid for the service on an annual What it includes, I couldn't tell you. Do you know whether there was any kind of a

written agreement that was signed with them? A. Q. I don't believe so. Okay. How do you access the Internet from

your home? A. Q. A. Q. A. Q. Via a wireless network. Provided by whom? Austin -- I'm sorry -- Time Warner Cable. And do you pay for access to that wireless -Yes. -- network? You're a subscriber of Time Warner Cable? A. Q. Yes. Do you have e-mail service through Time Warner

Cable as well? A. Q. Huh-uh, I sure don't. Is the only e-mail address that you use the

one that is the Verve address? A. No.

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Q. A. Q. A. Q. A. Q. A.

What other e-mail addresses do you use? My personal e-mail address. What is your personal e-mail address? Okay. Yes. You're not going to sell it, are you? No. Okay. It's K-R-I-M-E-S-2, that would be the Can I -You want my e-mail address?

number 2, K, the number 2, at yahoo.com. Q. K-R-I-M-E-S-Z-K -- excuse me, I can't read my

own writing. A. Q. K-R-I -K-R-I-M-E-S, the number 2, the letter K, the

number 2, at yahoo.com? A. Q. That's correct, right. Is that the personal e-mail address that you

used in August, September of 2003? A. Q. I don't believe so. When did you start using this e-mail address

as your personal e-mail address? A. Q. A. sure. Q. What e-mail address did you use prior to this I don't know. What -Oh, actually I might have -- yeah, I'm not

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for your personal e-mail? A. Q. A. You want to write it down? Yeah. K-E-V-I-N at, the number 3, the letter

G-F-O-T-O dot com. Q. During what time period did you use that

e-mail address? A. maybe. Q. Did you have any communications with Raymond Prior to the previous one and up to 2000,

Galasso using your e-mail address of [email protected]? A. Q. Probably from time to time. Did you have any communications with Raymond

Galasso using your e-mail address [email protected]? A. Q. Possibly. I'm not sure, so ...

Did you have any e-mail communications

relating to Verve using your e-mail address [email protected]? A. No, I don't believe so. MR. LEACH: this point. The VIDEOGRAPHER: The time is 10:09 a.m. (Recess from 10:09 to 10:20; Imes Exhibit No. 3 marked.) We're off the record. Why don't we take a break at

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 record. Q.

THE VIDEOGRAPHER: The time is 10:20 a.m.

We're back on the

(BY MR. LEACH) I've handed you as Exhibit 3 a

copy of a document produced in this case with production No. Omron 193. Is this a copy of an

agreement that was signed by Mr. Nakano at Omron relating to the '895 patent and the '200 patent, if you know? A. Q. I believe so. It's what it reads.

Do you have any understanding of the purpose

for having Mr. Nakano sign Exhibit 3? A. Q. Looks like an assignment. My question was, do you have any understanding

of the purpose for having him sign this? A. He's a representative of Omron and he's

assigning the '200 and '895 patents, or it's what it looks like. Q. Is this a document that was recorded in the

Patent and Trademark Office, if you know? A. Q. I -- I don't know. Had Verve already decided to file suit against

Hypercom by the time Mr. Nakano signed Exhibit 3 on September 5, 2003? A. Q. I don't know. Did you conduct any investigation concerning

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Hypercom or its products accused of infringement in the Michigan case between September 5, 2003, the date that Mr. Nakano signed Exhibit 3, and September 11, 2003, the date that Hypercom was sued in Michigan? A. Q. I don't know. Had the complaint against Hypercom already

been drafted by September 5, 2003? A. Q. I don't know. Was Omron informed that Verve was about to

file suit against Hypercom? A. Q. I don't know. Do you have any knowledge or information about

whether Herb Kerner was aware that Hypercom [sic] was about to file suit against Hypercom prior to the date that the Michigan lawsuit was filed? A. Can I ask her to read that back, please? It

was kind of long. Q. A. Q. I can ask it again. Okay, great. Do you have any knowledge or information

concerning whether Herb Kerner was aware that Verve was about to file suit against Hypercom prior to the date that the Michigan lawsuit was filed? A. I thought you said Hypercom against Hypercom,

so that's why I was a little confused by your question.

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Q. Q.

I don't know. Do you have any knowledge or information

concerning the extent to which Verve coordinated with either Herb Kerner or Omron prior to the date that the Michigan lawsuit was filed on September 11, 2003? A. Q. you know? A. I don't know. (Imes Exhibit No. 4 marked.) (BY MR. LEACH) Let me hand you a document that This is I don't know. Who would know the answer to that question, if

I've had the court reporter mark as Exhibit 4. a copy of U.S. Patent No. 4,678,895.

This is the

patent that we've been referring to as the '895 patent, correct? A. Q. Yes, it is. And this is the patent that was the subject of

the lawsuit filed against Hypercom in Michigan on September 11, 2003, correct? A. Q. I believe it was, yes. Now, earlier you indicated that if you had a

copy of the '895 patent you could tell me what functions or features you were looking for in Hypercom products. A. Sure.

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Q.

Can you tell me what functions or features you

were searching for in Hypercom products that served as the basis for suing Hypercom in Michigan on September 11, 2003? A. Well, you'd have to show me their product

literature at that time. Q. A. Well, what do you remember; anything? Sir, I haven't reviewed Hypercom's products in

a very long time; so it's very difficult for me to give you an answer to that question. Q. Well, what functions or features were you

looking for in Hypercom products, if any? A. Any function or feature that may be described

in the patent. Q. A. website. Such as? I don't know, I'd have to see Hypercom's So everything in the patent would be features

and functions that I would be looking for. Q. Well, you don't need to know what Hypercom has

on its website in order to answer the question what you were looking for. You might need that to tell me what Can't you tell me

you were -- what you actually found.

what you were looking for in Hypercom products, if anything? A. Everything in the patent.

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Q. A.

What do you mean "everything in the patent"? Any functions or features that are described

in the patent as they relate to Hypercom products. Q. So you were just looking at what was described

in the patent, not what was claimed? A. Well, we need to clarify something. When I

say "the patent," I mean everything in the patent, including the claims. Q. So you were looking for anything described in

the -- anywhere in the patent or in the claims; is that your answer? A. Q. A patent to me is inclusive of the claims. That's not my question. Were you looking for

anything in Hypercom products that was described in the patent or in the claims? A. Q. Yes. And that was the basis on which you designated

Hypercom products as allegedly infringing the '895 patent? A. Q. Sure, yeah. Initially, I guess you could say.

Are -- did you ever investigate any

point-of-sale terminal that you concluded did not infringe the '895 patent? A. Q. I suppose. I'm not sure.

Well, tell me what you remember, if anything.

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A. Q.

Offhand, I don't know. Now, you're aware that prior to the date that

the application for the '895 patent was filed there were point-of-sale terminals in use, both in the United States and Japan, correct? A. I'm not sure. I suppose there were. I was

pretty young then, so I'm not sure if there were. Q. Sure. When were you born? A. Q. In 1965. So you would have been 18 years old when the

application for the '895 patent was filed in 1983? A. Seventeen or 18. Didn't have a credit card;

so I don't know. me any. Q. A. Q. A.

They were pretty smart in not giving

Your parents didn't let you have a -That's right. -- credit card back in those days? Yep. Not that my wife lets me use it much now

either, so ... Q. Did you create any claim charts or records

where you compared any Hypercom products with any of the claims of the '895 patent prior to the date that the lawsuit was filed against Hypercom in Michigan on September 11, 2003?

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A. extent. Q.

I may have had notes, but I'm not sure to what

Can you answer that yes or no?

I mean, do you

have them or not? A. Q. I don't know. If you did have them, would they still be in

existence? A. Therein lies the rub. I'm not using the same

computer system right now.

I may have a backup of

them, but I'm not sure if I do or not. Q. All right. So if there were any records, they

would not be in existence unless they appear on a backup of the old computer you no longer have; is that fair? A. Well, unless I communicated them to counsel,

which I may have done. Q. Do you have any recollection of having done

A.

Not offhand. (Imes Exhibit No. 5 marked.)

Q.

(BY MR. LEACH) I've asked the court reporter

to mark as Exhibit 5 a document that has been produced in this litigation by Omron. Is this a copy of an

agreement between Omron and Verve relating to the '340 patent and the '341 patent?

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A. Q.

It appears to be, yes. Were there any other agreements between Verve

and Omron between the date of Exhibit 2 and Exhibit 5 other than the assignment agreement that we've marked as Exhibit 3? A. dates. Q. Okay. Exhibit 2 was signed by Mr. Nakano You gotta help me out there. I need some

in -- on August 13th, 2003. A. Q. Okay. And those agreements related to the '895 and

the '200 patents. A. Q. Okay. Were there any other agreements between Verve

and Omron prior to the date that the agreement of Exhibit 5 was signed? A. Q. A. Q. I don't believe so. Do you know what date Exhibit 5 was signed? I don't. The agreement on the last page has dates of

October 14, 2003 by both Mr. Nakano's signature and Mr. Galasso's signature. Do you have any knowledge or

information concerning whether or not this agreement was actually signed on October 14, 2003? A. I don't.

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Q.

Do you have any knowledge or information

concerning whether or not these signatures were back-dated? A. No. I know we acquired the patents. (Imes Exhibit No. 6 marked.) Q. (BY MR. LEACH) Exhibit 6 is a copy of a

document that's been previously marked and identified in this case with Omron production No. 538, and this has been identified as a copy of the message that Mr. Nakano sent to Japan seeking authorization to sign the agreement of Exhibit 5. And the record indicates that this request for authorization is dated October 28, 2003, which is after the dates indicated on Exhibit 5. Do you know or have any knowledge as to whether or not the agreement of Exhibit 5 was signed before Mr. Nakano asked for authorization to do so? A. Well, first, it's written in Japanese; so I

really don't know what it really says. Q. But my question is, do you have any knowledge

or information concerning whether or not Exhibit 5 was signed before Mr. Nakano requested authorization? A. I've never seen this before, so I don't know.

What was the title of the document, again? Q. That's -- that's really not necessary for my

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