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telling them as they went along anything about what they were doing. And I would respectfully submit that this is going to
open the door to something -THE COURT: Well, is that in his report as the
foundation for his opinion? MR. LEACH: THE COURT: MR. LEACH: THE COURT: No, it is not, absolutely not. So that would be a second objection then? Yes, Your Honor. Mr. VanNorman, he says that none of this
is in the report, and none of this had been disclosed as a theory of the defendants' case that he was communicating with the Verve defendants while these actions were pending. MR. VanNORMAN: Your Honor, they've had an And so to the
opportunity to depose Mr. Gulko over two days.
extent that they wanted to explore that, they have had ample opportunity to explore what type of interaction Mr. Gulko would have had with Verve and/or its attorneys throughout the course of his engagement. If they chose not to explore that,
that was, you know, they had the opportunity. THE COURT: All right. The objection is sustained
for the reason that this is not a patent infringement case, members of the jury, and whether or not the patents were infringed or not is irrelevant. The only issues that remain
in this case for you to decide are the amount of damages, if any, that flow from the undisputed liability for abuse of UNITED STATES DISTRICT COURT
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process and malicious prosecution and also whether or not the defendants are liable for punitive damages. And with respect to punitive damages, the defendants' state of mind is relevant before and up to the filing of these actions. And so for those reasons, I'm excluding this witness's opinions. Do you have any other questions that you want to ask this witness that are within the scope of my ruling? MR. VanNORMAN: Well, Your Honor, since he was listed
also as a fact witness and was communicating with the defendants in this case, it would seem that we should be able to ask him what type of -- without rendering an opinion -what facts underlie -- were underlying his communication with the defendants in this case. THE COURT: What is the relevance of those
communications after the filing of the case? MR. VanNORMAN: Well, Your Honor, they go to the
state of mind -- I mean, there has been a host of evidence offered by the plaintiffs in this case that is circumstantial evidence with respect to state of mind, some of which may have been before the filing of those actions, some of which may have occurred after the filing of those actions. And so I think -- And in fact Mr. Leach has gone on record as saying past events and subsequent events are UNITED STATES DISTRICT COURT
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prosecution. Is it your position that that's simply irrelevant? MR. LEACH: Your Honor. That is correct, Your Honor. I'm sorry,
I thought I had answered that. All right.
I apologize.
THE COURT:
Thank you very much.
Mr. VanNorman, do you have any legal authority for the proposition that the information made known to the defendants after the actions were filed would be relevant to claims of malicious prosecution or abuse of process? MR. VanNORMAN: Your Honor, I can't at this moment The mere
cite a case chapter and verse to you unfortunately.
proposition that abuse of process doesn't start, cannot start, until a case is filed would indicate that anything with respect to abuse of process that occurs prior to that is not relevant to that claim. And so going forward on that abuse of process, the only thing relevant to that claim has to be what is involved with the abuse of -- with the alleged abuse of process. THE COURT: All right. The objection is sustained.
I believe there's not been an adequate showing that as a matter of law any communications between this witness and the defendants would be relevant to the claims of malicious prosecution and abuse of process, both of which claims have been adjudicated against these defendants and are based upon events that occurred before the actions were filed. UNITED STATES DISTRICT COURT
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In addition, the question of punitive damages has to be based upon the jurors' evaluation of the state of mind of the defendants before and up to the time of the filing of these actions. Mr. VanNorman. MR. VanNORMAN: One additional item, Your Honor.
If on a break at some time we would appreciate the opportunity to provide as a proffer outside the presence of the jury what Mr. Gulko would have testified to. THE COURT: Yes, you bet. We can do that at noon.
MR. VanNORMAN: THE COURT: Mr. Rash. MR. RASH: THE COURT: MR. LEACH: questions. THE COURT:
Thank you, Your Honor. Thank you.
All right.
I have no questions, Your Honor. Mr. Leach. Your Honor, obviously I have no
Thank you very much, sir.
You may step
And I think Mr. VanNorman would like your presence here
at around 12:00. All right. MR. DICHTER: Thank you very much. Your Honor, if it please the Court,
there was a second witness along the same lines as this witness that we'll also need to take up on proffer. We won't
go through the same process of bringing the witness into UNITED STATES DISTRICT COURT
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court.
I have no doubt that the Court's rulings would be the
same, and we'll need to do that by proffer too. THE COURT: MR. DICHTER: THE COURT: whenever you want to. MR. DICHTER: THE CLERK: Very well. Call Ray Galasso. We can do that at noon as well. Or thereabouts. Or whenever, at the end of the day, or
If you could state your name and spell
your last name for the record. THE WITNESS: G-a-l-a-s-s-o. RAYMOND GALASSO, COUNTERDEFENDANTS VERVE/SG&F/GALASSO'S WITNESS, SWORN DIRECT EXAMINATION BY MR. DICHTER: Q. A. Q. A. Q. A. Q. Please state your name. Raymond Galasso. And you are one of the defendants in this case? Yes, I am. Individually? Yes. Also as a partner or a member of the law firm of Simon Raymond Galasso. Galasso is
Galasso & Frantz? A. Q. Yes. And also as a member of Verve? UNITED STATES DISTRICT COURT
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THE COURT:
If you can summarize, if you summarize
his testimony briefly. MR. VanNORMAN: Your Honor. You need to be sworn. THE CLERK: for the record. THE WITNESS: B-e-r-m-a-n. (Charles Berman sworn.) MR. VanNORMAN: Mr. Berman, at this point we are Charles Berman, C-h-a-r-l-e-s If you could state your name and spell it That's what I will attempt to do,
going to -- I'm going to summarize what your testimony would be if you were allowed to testify to the jury in this case. Would you please listen to my summary of your testimony, and at the end I'll ask you if you agree with that or if there are any things that you think need to be changed with respect to that testimony. CHARLES BERMAN: MR. VanNORMAN: Okay. First of all, Mr. Berman is a patent
attorney, and he works as a share -- he is a shareholder at the law firm of Greenberg Traurig in the Los Angeles office in Santa Monica, California. He has an extensive experience in the practice of intellectual property. numerous times. He has served as an expert witness
And a significant amount of his practice is UNITED STATES DISTRICT COURT
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with regard to intellectual property and specifically patent infringement issues. He was contacted and hired by Verve and by Omron as well to do an analysis of the '341 patents, the '077 patents, patent, and the '895 patent, which he did. He began by looking at those patents and their file history. patents. He did -- construed the claims of each of those Particularly with respect to the '341 patent, he With respect to the '895 patent, he And with respect to the '077 patent, he
looked at claim one. looked at claim 12. looked at claim one.
He, as part of that, then, went out on the Internet and did some research with respect to Hypercom's devices. Specifically, he looked at a terminal called the ICE 5000 and the 5500 series of terminals and looked at those -- those series of terminals and compared them with these claims from the '341, '895, and '077 patent. In addition to that, he looked at a description of Hypercom's point of sale terminals as found on Hypercom's website. He looked at the Hypercom ICE 4000 hardware and He looked at the Hypercom 4000 HyperWare
installation manual.
Retail and Restaurant Software Guide. He looked at the Hypercom ICE 4000 troubleshooting manual on that and then, in addition, looked at the ICE 5000/5500 hardware and installation operator's manual, the UNITED STATES DISTRICT COURT
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Hypercom 5500/5700 HyperWare Retail and Restaurant Software Guide. He looked at a Hypercom white paper entitled "What is Point of Sale?" And after having looked at that information, which is publicly available information, he then did an analysis in which he compared each of the limitations within claim one of the '341 patent, which has to do with electronic cash registration, which would include a keyboard for cash registration and initiating customer credit inquiries. needed a card reader. It
It needed a communication control unit.
And it needed a means of converting data from the credit card center to visible information on a terminal. He then compared that with the Hypercom devices and determined that each and every element of this claim was met by a Hypercom device. With respect to the '895 patent, he looked specifically at claim number 12, which is a system for making payments or transactions. related to a sum payable. It needed a means for setting data It needed a card reader that it
could collect data from bank cards. It needed a means for setting an account number of the store, setting and relating that account number of a store to a credit card center. And it needed a means of
communicating with that center. UNITED STATES DISTRICT COURT
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After he construed the claims of claim 12 of the '895 patent, he then compared that to the Hypercom devices and determined that each and every element of that claim existed in those Hypercom devices. He then went through the same process with the '077 He did this with respect to two claims, claim number
one and claim number four. With claim number one, he determined that it required a credit and debit card terminal. It also required a credit
card processor, a debit card processor, a card discriminator, and a processing activator. After construing those claims, he then looked at the Hypercom devices and determined that each and every element of claim one of the '077 patent was contained in the Hypercom devices. He then did the same thing for claim four, which is a card processing system with a touch panel. Claim four
required a processor for effecting credit and debit card payments, a discriminator, a processing activator, and a touch panel controller. He then compared those requirements with the Hypercom device and determined that each and every element existed within the Hypercom device. And based on that, he concluded that Hypercom's terminals were infringing the '077 patent, the '895 patent, UNITED STATES DISTRICT COURT
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and the '341 patent. Mr. Berman, have I accurately relayed the testimony that you would have with respect to your expert services in this case? CHARLES BERMAN: You have, counsel. In addition,
last week I did review a Hypercom terminal, which I was going to talk about as well, if you needed that information. MR. VanNORMAN: Okay. I think we've satisfied our
proffer at this point, Your Honor. THE COURT: All right. Did any of the other lawyers
want to be heard in connection with the offer of proof related to this witness? MR. RASH: THE COURT: MR. LEACH: No, Your Honor. Mr. Leach? Yes, Your Honor. If we were to Thank you.
cross-examine this witness, we would establish that, as counsel said, he made an investigation that claims were met by a Hypercom device. But the Hypercom device in his expert report was not the ICE 6000, it was not the T7, it was not the T8, which were the products that were accused of infringement in the cases that are before the Court. THE COURT: Thank you very much.
And, Mr. VanNorman, anything -MR. VanNORMAN: Your Honor, I would just proffer what
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he would say in a redirect on that. THE COURT: Yes. Is that his response to that would be
MR. VanNORMAN:
that the claims associated with the '895 patent that was involved in the Michigan action were not limited to a specific Hypercom device, that it was listed there, but it was including but not limited to simply that device. The same situation is in the Texas complaint, that that was filed, and that it would not be restricted to one Hypercom device. It's including but not limited to.
And the same thing with respect to the California action. Thank you, Your Honor. THE COURT: MR. DICHTER: THE COURT: All right. Is there anything --
Your Honor -Does anything else need to be said in Mr. Dichter?
connection with the offer of proof? MR. DICHTER: THE COURT: heard.
No, not with the offer of proof. The witness looks like he wants to be
Mr. VanNorman, do you want him to be heard? MR. VanNORMAN: CHARLES BERMAN: Certainly. The device that I saw last week at a
Petco store happened to be the Hypercom 6000 plus device, if that has any meaning to the Court. MR. VanNORMAN: I offer that as well.
Thank you, Your Honor.
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THE COURT:
Let me ask the witness a question.
Sir, were the -- were you made aware of any knowledge or information that the defendants had available to them in connection with these patents before the actions were filed in Michigan, Texas, and California? CHARLES BERMAN: As part of the review that I
conducted about six months ago, I was aware of certain actions just from reading some paperwork, I think, from the expert Pretty, and that's about the information that I had. exactly sure how it came into our hands. I'm not
I think it came from
the defendant, either the defendant Verve or the defendant Omron, in a related case. THE COURT: I see. So you were retained to express
an opinion in connection with patent infringement; is that correct? CHARLES BERMAN: THE COURT: That's correct, Your Honor. You were not retained to express
I see.
an opinion in connection with the state of mind of the defendants before or at the time of the filing of the Texas, California, and Michigan actions? CHARLES BERMAN: THE COURT: That's correct, Your Honor. Thank you very much.
All right.
Anything else counsel wanted to add to their offer of
MR. VanNORMAN:
No, Your Honor.
UNITED STATES DISTRICT COURT
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THE COURT:
All right.
Thank you very much for
You're excused. CHARLES BERMAN: MR. DICHTER: THE COURT: MR. DICHTER: Thank you.
My only -Mr. Dichter? My other question was I wonder if the
Court, as we head into the afternoon, can tell us where we are time-wise? THE COURT: Oops. Yes. I'd be happy to. Are you all set?
Be careful there. Yes.
CHARLES BERMAN: THE COURT:
The plaintiff has consumed 9 hours and 42
The Verve defendants have consumed 6 hours and 45 And the Imes defendant has consumed 1 hour and 57
Is there anything else we need to do before we break for lunch? MR. DICHTER: MR. LEACH: THE COURT: No, thank you, sir. No, thank you, Your Honor. We'll see you right here at 1:30 then.
(Proceedings recessed from 12:15 p.m. until 1:30 p.m. Proceedings in the presence of the jury:) THE COURT: Welcome back, members of the jury. I
don't think our system is on, Kerry. Mr. Dichter, as soon as it's on, you may begin. UNITED STATES DISTRICT COURT
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