Free Response in Opposition to Motion - District Court of Arizona - Arizona

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Sid Leach (#019519) Monica A. Limón-Wynn (#019174) SNELL & WILMER L.L.P. One Arizona Center 400 E. Van Buren Phoenix, AZ 85004-2202 Telephone: (602) 382-6372 Attorneys for Plaintiff Hypercom Corporation [email protected] [email protected] IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF ARIZONA Hypercom Corporation, Plaintiff, vs. Omron Corporation, Defendant. No. CV 04-0400 PHX PGR HYPERCOM CORPORATION'S RESPONSE IN OPPOSITION TO OMRON CORPORATION'S MOTION IN LIMINE NO. 12 TO EXCLUDE ANY EVIDENCE RELATED TO "REFERRAL FEE" BETWEEN HYPERCOM [SIC] AND DTK TECHNOLOGIES, LLC

Hypercom Corporation submits this Response in Opposition to Omron Corporation's Motion in Limine No. 12 To Exclude Any Evidence Related To "Referral Fee" Between Hypercom [sic]1 And DTK Technologies, LLC. Motion No. 12 should be denied because (1) the referral fee agreement is highly relevant to proving the existence of a conspiracy between Omron and Verve LLC, and (2) evidence of the referral fee agreement would not confuse the jury. This Response is supported by the following Memorandum of Points and Authorities and the Court's entire file in this matter.

Omron's Motion In Limine No. 12 erroneously refers to the referral fee as between Hypercom and DTK Technologies, LLC. The referral fee was between Verve and DTK Technologies, LLC.
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MEMORANDUM OF POINTS AND AUTHORITIES I. EVIDENCE OF THE REFERRAL FEE AGREEMENT IS RELEVANT Omron asks the Court to exclude any evidence regarding a March 2004 referral fee agreement between Verve LLC on the one hand and a company owned by the attorney who represented Omron during its negotiation of numerous assignment agreements with Verve, one Herbert V. Kerner, on the other. Under that agreement, Verve would pay to Mr. Kerner's company (named DTK Technologies, LLC) "a referral fee of ten percent (10%) of Verve's Net Proceeds" from the Omron patents. Hypercom believes that the evidence at trial will show that the agreement for the 10% referral fee existed at the outset, and is evidence that Omron was an instigator of the malicious lawsuits filed against Hypercom. The secret oral agreement was documented when Mr. Kerner left the law firm of Hunton & Williams and joined the law firm of Baker & Daniels LLP. (Plaintiff's Second Amended Complaint (doc. 127) at ¶ 24.)2 According to Omron's answers to Hypercom's interrogatories, Baker Daniels and Omron determined that the referral fee arrangement that Verve had with Mr. Kerner "was not desirable." Omron stated that as far as it knew as of February 2005, no money was ever paid to Mr. Kerner "under the terms of Verve's letter." Omron's answer is thrown into question, however, by an email communication from Verve to Mr. Kerner in January 2005, after Mr. Kerner had joined the Baker Daniels law firm. In that email, Verve acknowledged that "Baker Daniels may have an interest in one or more of Verve's licensing opportunities" and Verve asked Baker Daniels to perform a conflicts check on a list of companies. (Plaintiff's Second Amended Complaint (doc. 127) at ¶ 24.) Without doubt, the fact that the LLC owned by Omron's own lawyer the very In addition to negotiating licensing agreements between Omron and Verve on behalf of Omron, Mr. Kerner was also involved in such things as obtaining Omron's approval of Hypercom as a "licensing target," getting information from Omron that Verve needed to proceed with filing the complaint at the International Trade Commission ("ITC") that named Hypercom as a respondent, and Omron's obtaining of a lawyer in Japan to prepare the inventor of the patent in the ITC action "for any contacts he may receive from the other side." (Plaintiff's Second Amended Complaint (doc. 127) at ¶¶ 22, 26, 29.)
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lawyer who negotiated the licensing agreements between Omron and Verve on behalf of Omron and who took other steps in furtherance of Omron's assistance of what Judge Martone called a "litigation harassment scheme"3 had an agreement with Verve that would garner him a referral fee of ten percent of Verve's net proceeds from the Omron patents is evidence that is acutely relevant to showing the existence of a conspiracy between Omron and Verve. In addition, such a financial interest is relevant to the issue of aiding and abetting. Omron's simple assertion that the referral fee agreement "does not make the existence of a conspiracy more or less probable" represents wishful thinking, not legal analysis. (Motion No. 12 at p. 2.) Saying a thing does not make it so. Nor can Omron make this highly relevant evidence irrelevant by analogizing it to a contingency fee agreement or hourly payment. (Id.) What Omron ignores is that Mr. Kerner was Omron's lawyer, not Verve's lawyer. The point of the referral fee agreement evidence is that it ties Omron directly to Verve's pursuit of the "litigation harassment scheme." As for Omron's unsupported assertion that the letter agreement was not accepted and that no referral fee was ever paid (id. at p. 3), that is a fact issue for trial. Hypercom expects the evidence at trial to show that there was a secret unwritten agreement with Mr. Kerner before he left the Hunton & Williams law firm. Omron's arguments have nothing to do with relevancy. And the admitted fact that Verve sent the referral fee agreement to Omron's lawyer (see Omron's Answer to Plaintiff's Second Amended Complaint (doc. 132) at ¶ 24) standing alone, whether or not the agreement was accepted, is highly probative on the existence vel non of a conspiracy between Verve and Omron. In addition, Mr. Kerner's personal financial interest will be relevant to the issue of his bias and his credibility. II. EVIDENCE OF THE AGREEMENT WOULD NOT CONFUSE THE JURY Omron also contends that evidence of the referral fee agreement should be excluded under Evidence Rule 403 because of a supposed "danger of confusion of the 3 8/18/06 Order in Verve v. Hypercom (doc. 287) at p. 10 (attached as Exhibit A to Omron's Motion in Limine No. 5, at p. 11 of 14).
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issues and misleading the jury." (Motion No. 12 at p. 3.) According to Omron, the jury "is not likely to understand the referral fee." (Id.) Given that this litigation essentially involves trying the issue of whether or not Hypercom's products do or do not infringe Omron's patents, the referral fee agreement is likely to be one of the simplest things that this jury hears about. The jury should understand the financial interest created by a 10% kickback agreement between Verve and Omron's lawyer. Omron's suggestion of confusion of the issues and misleading the jury is spurious. And, if there were any genuine concern about jury confusion, the proper course would be for Omron to request an appropriate limiting instruction, see Evidence Rule 105, not to prevent the jury from hearing the evidence at all. III. CONCLUSION For the foregoing reasons, the Court should deny in its entirety Omron's Motion in Limine to Exclude Any Evidence Related To "Referral Fee" Between Hypercom And DTK Technologies, LLC. RESPECTFULLY SUBMITTED this 30th day of April, 2007. SNELL & WILMER L.L.P.

By s/ Monica A. Limón-Wynn Sid Leach Monica A. Limón-Wynn SNELL & WILMER L.L.P. One Arizona Center Phoenix, AZ 85004-2202 Attorneys for Plaintiff Hypercom Corporation

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CERTIFICATE OF SERVICE I hereby certify that on April 30, 2007, I electronically transmitted HYPERCOM CORPORATION'S RESPONSE TO OMRON CORPORATION'S MOTION IN LIMINE NO. 12 TO EXCLUDE ANY REVIDENCE RELATED TO "REFERRAL FEE"
BETWEEEN HYPERCOM AND DTK TECHNOLOGIES, LLC to the Clerk's Office using

the ECF System for filing and transmittal of a Notice of Electronic Filing to the following ECF registrants: David P. Irmscher John K. Henning, IV BAKER & DANIELS 300 N. Meridian Street, Suite 2700 Indianapolis, IN 46204 Phone: 317-237-1317 Fax: 317-237-1000 [email protected] [email protected] Attorneys for Defendant Omron Corporation A. Colin Wexler Matthew A.C. Zapf GOLDBERG KOHN BELL BLACK ROSENBLOOM & MORITZ, LTD. 55 E. Monroe Street, Ste. 3300 Chicago, IL 60603 Ph. 312-201-4000 Fax: 312-332-2196 [email protected] [email protected] Attorneys for Defendant Omron Corporation s/ Monica A. Limón-Wynn H. Michael Clyde Todd R. Kerr PERKINS COIE BROWN & BAIN P.A. 2901 N. Central Ave., Ste. 2000 Phoenix, AZ 85012-2788 Ph.: 602-351-8000 Fax: 602-648-7000 [email protected] [email protected] Attorneys for Defendant Omron Corporation

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