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UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

IN RE: ) MDL 2303

) 11 C 9308 and

INNOVATIO IP VENTURES, L.L.C. ) related cases

)

PATENT LITIGATION. ) Chicago, Illinois

) April 10, 2012

) 9:58 o'clock a.m.

TRANSCRIPT OF PROCEEDINGS

BEFORE THE HONORABLE JAMES F. HOLDERMAN

AND THE HONORABLE SIDNEY I. SCHENKIER, MAGISTRATE

APPEARANCES:

For the Plaintiff NIRO, HALLER & NIRO, LTD.

Innovatio IP Ventures, BY: MR. MATTHEW G. McANDREWS

L.L.C.: MR. GABRIEL I. OPATKEN

181 West Madison Street, Suite 4600

Chicago, Illinois 60602-4515

(312) 236-0733

For Plaintiff KRAUS FLAMING, L.L.C.

SonicWALL, Inc.: BY: MR. TODD H. FLAMING

20 South Clark Street, Suite 2620

Chicago, Illinois 60603

(312) 447-7217

For Plaintiffs Cisco KIRKLAND & ELLIS, L.L.P.

Systems, Motorola, BY: MR. ADAM R. ALPER

and NETGEAR; and a 555 California Street

number of San Francisco, California 94104

hotel defendants: (415) 439-1876

KIRKLAND & ELLIS, L.L.P.

BY: MR. GIANNI L. CUTRI

MR. JASON M. WEJNERT

300 North LaSalle Street

Chicago, Illinois 60654

(312) 862-2000

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APPEARANCES (Continued):

For 29 Marriott ROTHSCHILD, BARRY & MYERS, LLP

Defts.(in 11 C 6478): BY: MS. ROBIN KORMAN POWERS

55 West Monroe Street, Suite 3900

Chicago, Illinois 60603-5012

(312) 372-2345

For 13 Courtyard and HOEPPNER, WAGNER & EVANS, L.L.P.

other Defts. BY: MR. F. JOSEPH JASKOWIAK

(in 11 C 6478): 1000 East 80th Place, 6th Floor South

Merrillville, Indiana 46410

(219) 769-6552

For 21 hotel ECKERT SEAMANS CHERIN & MELLOTT, LLC

Defendants: BY: MR. SANDY GARFINKEL

MR. ERIC J. SCHWALB

600 Grant Street, 44th Floor

Pittsburgh, Pennsylvania 15219

(412) 566-6868

For Defendant Sage CAMPBELL KILLIN BRITTAN & RAY, L.L.C.

Client 300, LLC: BY: MR. WILLIAM C. BRITTAN

270 St. Paul Street, Suite 200

Denver, Colorado 80206

(303) 322-3400

For Defendant Chicago GREENBERG TRAURIG, L.L.P.

Marriott Northwest: BY: MR. KEVIN J. O'SHEA

77 West Wacker Drive

Chicago, Illinois 60601

(312) 456-8400

For Defendants LAW OFFICES OF JOHN C. MARTIN

Howard Johnson Chicago, BY: MR. JOHN C. MARTIN

Howard Johnson Elk Grove 30 North LaSalle Street

(O'Hare), Days Inn Suite 3400

Oglesby/Starved Rock, Chicago, Illinois 60602

among others: (312) 368-9000

For Defendant MANDELL MENKES, L.L.C.

Dominick's: BY: MR. STEVEN P. MANDELL

One North Franklin Street, Suite 3600

Chicago, Illinois 60606

(312) 251-1000

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APPEARANCES (Continued):

For Counter-Claimants OGLETREE, DEAKINS, NASH, SMOAK

Panera Bread and & STEWART, P.C.

Caribou Coffee: BY: DANIEL O. CANALES

155 North Wacker Drive, Suite 4300

Chicago, Illinois 60606

(312) 558-1422

For Counter-Claimants HOLLAND & KNIGHT, L.L.P.

Meijer, Inc. and BY: MR. ROBERT D. DONOGHUE

Accor North America: MR. DANIEL L. FARRIS

131 South Dearborn Street, 30th Floor

Chicago, Illinois 60603

(312) 578-6553

For Defendant Emerson LEVENFELD PEARLSTEIN, L.L.C.

Skokie Partners, L.L.C. BY: MR. MICHAEL P. PADDEN

d/b/a Comfort Inn Skokie:Two North LaSalle Street, Suite 1300

Chicago, Illinois 60602

(312) 346-8380

For 5 Comfort Inn JOHNSON WESTRA BROECKER WHITTAKER

Defendants: & NEWITT, P.C.

BY: MR. JOHN J. WESTRA

380 South Schmale Road

Carol Stream, Illinois 60188

(630) 665-9600

For Hewlett Packard BRACEWELL & GIULIANI, L.L.P.

Company: BY: MR. BARRY K. SHELTON

11 Congress Avenue, Suite 2300

Austin, Texas 78701

(512) 472-3693

COLLEEN M. CONWAY, CSR, RMR, CRR

Official Court Reporter

219 South Dearborn Street, Room 2524-A

Chicago, Illinois 60604

(312) 435-5594

colleen_conway@ilnd.uscourts.gov

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(Proceedings heard in open court:)

THE CLERK: 11 C 9308, In Re: Innovatio, for

scheduling.

MR. McANDREWS: Good morning, Your Honor.

On behalf of the Plaintiff Innovatio, Matt McAndrews.

THE COURT: All right. Good morning.

And I will ask each counsel to identify themselves as

well as the party that they represent, and that would assist my

court reporter who's going to be making what she calls a

dictionary and counsel each a designation of some sort. It's a

quick-handed way of presenting this. So -- all right.

MR. OPATKEN: Gabriel Opatken, O-p-a-t-k-e-n, also

for Innovatio.

MR. BRITTAN: William Brittan, B-r-i-t-t-a-n, for

Sage Client 300, L.L.C.

MR. GARFINKEL: Sandy Garfinkel, from Eckert Seamans

in Pittsburgh, representing 21 separate hotel defendants.

I can give you a written list of those, if that will

be helpful.

THE COURT: That actually would be helpful, if you

could file the list of clients that you represent, so that we

have it clear exactly in the record. Thank you.

MR. GARFINKEL: Sure.

MR. SCHWALB: Eric Schwalb, Eckert Seamans, same

attorney, same firm, and same hotels.

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THE COURT: Thank you very much.

MR. PADDEN: Mike Padden, Levenfeld Pearlstein, for

Emerson Skokie Partners, L.L.C. They're in case number 6481.

THE COURT: All right. Thank you. We will work our

way, then, south starting at the podium.

MR. FLAMING: Good morning, Judge.

Todd Flaming for SonicWALL.

THE COURT: Good morning.

MR. O'SHEA: Good morning, Your Honor.

Kevin O'Shea for Chicago Marriott Northwest.

THE COURT: Good morning.

MR. ALPER: Good morning, Your Honor.

Adam Alper for Cisco Systems, Motorola, and NETGEAR,

and then a number of the hotel defendants, and we'll provide

your clerk with a list.

THE COURT: If you would, that would be helpful.

MR. CUTRI: Gianni Cutri for that same list of

defendants.

MR. SHELTON: Good morning, Your Honor.

Barry Shelton and Bracewell & Giuliani, and I

represent a party that's not even here yet but will be

transferred today, and that is Hewlett Packard Company.

THE COURT: All right. And where is that pending

now?

MR. SHELTON: That is pending in the Northern

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Colleen M. Conway, Official Court Reporter

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District of California, Your Honor.

THE COURT: All right.

MR. SHELTON: And that case number is 12 CV 1076.

And the conditional transfer order from the MDL panel, in MDL

number 2303, will take effect today.

THE COURT: Okay.

MR. SHELTON: That will be transferred today.

MR. McANDREWS: Not opposed?

MR. SHELTON: It will be not opposed by anybody.

THE COURT: All right.

MR. SHELTON: Thank you, Your Honor.

THE COURT: Thank you.

MR. WESTRA: Good morning, Judge.

John Westra, W-e-s-t-r-a. I represent five Comfort

Inns.

THE COURT: All right. And if you could, Mr. Westra,

file the same statement -- or, well, let's call it -- I want to

make sure the docket will properly reflect it, so let's call

it -- use your name and your law firm and then, possessive,

Statement Identifying Clients.

MR. WESTRA: I will, Judge. Thank you.

THE COURT: All right? And then it will all be clear

on the record. If you could use that same format, that would

be helpful. Go ahead.

MR. WEJNERT: Good morning, Your Honor.

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Jason Wejnert, W-e-j-n-e-r-t, of Kirkland & Ellis,

same list as that of Adam Alper and Gianni Cutri.

THE COURT: All right.

MR. MANDELL: Good morning, Your Honor.

THE COURT: We have covered everybody over here. Now

we will work our way south.

MR. MANDELL: Good morning, Your Honor.

Steven Mandell on behalf of Dominick's grocery

stores.

THE COURT: Good morning.

MR. DONOGHUE: Good morning, Your Honor.

David Donoghue, D-o-n-o-g-h-u-e, on behalf of Meijer,

Incorporated and Accor North America.

THE COURT: Good morning.

MR. FARRIS: Good morning, Your Honor.

Daniel Farris for the same Meijer and Accor

defendants.

THE COURT: All right. Thank you.

MR. JASKOWIAK: Good morning, Your Honor.

Joe Jaskowiak, J-a-s-k-o-w-i-a-k, for 13 hotel

defendants in cause 6478.

THE COURT: All right. And if you could file --

MR. JASKOWIAK: Yes, Your Honor.

THE COURT: -- the same described format, that would

be helpful. Thank you.

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Colleen M. Conway, Official Court Reporter

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MS. POWERS: Good morning, Your Honor.

Robin Powers on behalf of 29 different Marriott

hotels in this same case, 6478.

THE COURT: All right. And if you could also file

the same format, that would be helpful --

MS. POWERS: Sure.

THE COURT: -- in the record.

MR. MARTIN: Good morning, Your Honor.

John Martin on behalf of the Howard Johnson Chicago,

Howard Johnson Elk Grove (O'Hare), and the Days Inn

Oglesby/Starved Rock.

THE COURT: All right. Good morning.

MR. CANALES: Good morning, Your Honor.

Daniel Canales, C-a-n-a-l-e-s, on behalf of Panera

Bread Company and Caribou Coffee.

THE COURT: All right. Good morning.

MR. CANALES: Good morning.

THE COURT: Have we covered everybody? Is there

anybody who's here who has not yet identified themselves for my

court reporter and for the record?

All right. Thank you. I appreciate very much your

attendance today and your organization.

I have reviewed the Form 52, and I appreciate the

time and effort that you have put in. I want to say that I

appreciate your resolving a number of issues.

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Upon the review of almost a hundred pages of

materials that you filed, I believe you have narrowed down

disagreements to approximately eight. At least that's what I

identified.

And let me say this. I know when I was a counsel in

MDL cases more than a quarter of a century ago, sometimes these

hearings took a long time. I am not going to try to delay it.

But if anybody needs to sit down, feel comfortable doing that,

you have permission.

What I'd like to do is identify those eight areas

that I think you have disagreement on and then the objective

would be for me to assist you in resolving those areas today.

And then what I'd like counsel to do is prepare a proposed

pretrial order number 3, which would be the scheduling order

using the format that we have. Pretrial order number 3 would

encompass not only the agreements that you have reached with

regard to scheduling, but also the resolutions we are going to

reach this morning, to the extent we can.

The first issue that I identified, but I am happy to

hear from any counsel on this at any point, is the phasing of

the case. Both sides agree that all parties will participate

in all proceedings, to the extent they desire, through the

claim construction determination in the case.

MR. GARFINKEL: Your Honor, if I may?

THE COURT: If you could just repeat your name.

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MR. GARFINKEL: Sure.

THE COURT: My court reporter is, in my opinion, the

best in the country, but she has not immediately memorized

everybody's name, but she will before the proceedings are over

at some point. Go ahead.

MR. GARFINKEL: Certainly. Your Honor, Sandy

Garfinkel. Again, I represent 21 separate hotels that were

named in some of the captions of these cases that are now in

the MDL.

THE COURT: Yes.

MR. GARFINKEL: I think it's worthy of note, Your

Honor, that not every defendant joined in the Form 52

submissions submitted by some of the defendants.

THE COURT: Okay.

MR. GARFINKEL: And this issue, phasing, is one of

the main items that cause some defendants not to join. At

least from our perspective, our defendants didn't want to join.

I think a view that is not represented in either of

the Form 52s that were submitted is a different approach to

phasing which would not require the end user defendants

necessarily to participate in the discovery and proceedings

leading up to trial.

My clients would dearly like to avoid having to

respond to discovery until the main issues involving liability

under the patents are resolved, and we're hoping that that view

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Colleen M. Conway, Official Court Reporter

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will be considered by Your Honor in addition to what's been

submitted to you in the two Form 52s.

THE COURT: All right. Well, let me say this.

That's why I had the little proviso on the end of my remark.

All parties will participate to the extent they desire.

MR. GARFINKEL: Okay.

THE COURT: If you desire not to participate in the

discovery, and a discovery -- I mean, if you desire not to

obtain discovery, you can certainly hold off on that, but it

seems to me that perhaps you may have information, your clients

may have information that's reasonably calculated to lead to

the discovery of admissible evidence in the case involving

other parties. It's possible.

MR. GARFINKEL: Okay.

THE COURT: And so, to some extent, if you want to

posture yourself really as kind of a non-party to the case

until liability or what you call the main issues are resolved,

that's something you can do, if you desire. But it's going to

basically be a one-way street from your standpoint because you

are going to be providing discovery but not obtaining

discovery.

MR. GARFINKEL: Okay. Well, obviously, Your Honor,

it's the "providing" part that we're trying to avoid. We

certainly do not --

THE COURT: Well, yes, you'd like to not be sued, and

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Colleen M. Conway, Official Court Reporter

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you can do that by settling.

MR. GARFINKEL: Okay.

THE COURT: But without that, it seems to me if you

have information that's reasonably calculated to lead to the

discovery of admissible evidence, we can't do anything about

it.

MR. GARFINKEL: Right. And --

THE COURT: I mean, I believe that it would perhaps

disrupt, certainly disrupt the concept of the multi-district

litigation of getting discovery dealt with in one court, one

proceeding to the extent we possibly can.

So I understand your position. I understand your

desire on the part of your clients. It will be up to you,

though.

MR. GARFINKEL: Okay.

THE COURT: You get to decide.

MR. GARFINKEL: Okay. I understand. Thank you, Your

Honor.

THE COURT: Okay? All right.

All right. Well, back to phasing. And I realize

this is kind of a key issue. And, to some extent, it is hard

for me, at the outset of this litigation, to think about case

phasing. And so what I'd like to do -- and I know that some

people might be disappointed. What I'd like to do is work the

case up to and including a claim construction determination and

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Colleen M. Conway, Official Court Reporter

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then make an evaluation.

Now, what harm will anyone suffer if we do that?

Plaintiff?

MR. McANDREWS: I think on behalf of plaintiff, Your

Honor, there are a couple of issues with respect to tiering

that plaintiff would be willing to compromise on. But to --

THE COURT: All right.

MR. McANDREWS: -- your direct question, I think,

speaking just on behalf of Innovatio, my client would like the

certainty, heading up through the claim construction phase, as

to what precisely -- what case they're going to be preparing as

they go into that first trial, which would be what we've

referred to as the tier I --

THE COURT: Yes.

MR. McANDREWS: -- class of litigants. And you have

seen the two competing proposals. Most of the defendants have

proposed that that first trial involve only the manufacturers.

THE COURT: Right.

MR. McANDREWS: And our argument, of course, is that

that can't be. Because for the majority of the claims that

have been asserted so far, and that we will assert through

trial, the only direct infringers are the network operators or,

as Mr. Garfinkel --

THE COURT: Sure.

MR. McANDREWS: -- referred to them, the end users.

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THE COURT: Well, let me just ask you about that

point. Even though the direct infringers are the end users,

these declaratory judgment actions brought by Cisco, Motorola,

SonicWALL, and --

MR. McANDREWS: NETGEAR.

THE COURT: -- NETGEAR -- and I was just commenting,

SonicWALL, the "WALL" is all caps; is that correct? Who's the

SonicWALL lawyer?

MR. FLAMING: I am, Your Honor. That's correct,

Sonic and W-A-L-L.

THE COURT: It is all one word. I am helping my

court reporter as she makes her dictionary. All right.

MR. SHELTON: Your Honor, if I could interrupt you?

I apologize. Barry Shelton again.

And Hewlett Packard also filed its declaratory

judgment action, and we would be a manufacturer.

THE COURT: Okay. You are coming in. You are

joining us today.

MR. SHELTON: Yes, Your Honor.

THE COURT: All right. Even though the direct

infringers are the end users, if those manufacturers have

created products that do not infringe or created services that

do not infringe, aren't we done?

MR. McANDREWS: We're not done, Your Honor.

THE COURT: Okay.

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MR. McANDREWS: That's a very good question. You

have different classes or categories of claims. And I know

we're not wired for video today, but I have a demonstrative,

but I think I can perhaps explain it verbally.

THE COURT: Okay.

MR. McANDREWS: There are claims that are certainly

directed to the access points, and those are the little units

that you see in the corner of the office with the antenna into

it.

THE COURT: Right.

MR. McANDREWS: The wireless access points that

facilitate a wireless network in an office environment or a

coffee shop or a hotel.

There are Innovatio claims directed to access points,

but there are also Innovatio claims directed to what we call

generically terminal devices. That will be -- an example will

be Your Honor's iPad or my Sony Vaio laptop or a Smartphone

that has wi-fi capability when you're in a wi-fi-accessible

zone.

THE COURT: Okay. Well, let me -- I actually don't

have an iPad yet, although the Clerk's providing it. We tested

iPads among some of the judges, and others of us are going to

get them.

But let me ask you, when I am on my iPad in Panera

Bread, am I infringing?

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MR. McANDREWS: It depends. For some of the claims,

you can be an infringer, yes. But there is also a system --

THE COURT: Maybe I shouldn't get an iPad.

(Laughter.)

MR. McANDREWS: I've got mine in my bag.

THE COURT: Okay. Well, I am not infringing with my

BlackBerry, right? Because that's what I've got.

MR. McANDREWS: Do you have wi-fi capability on the

phone?

THE COURT: Yeah.

MR. McANDREWS: All right. What we're focusing on --

this goes to an important point. It's the nature of the

infringement that Innovatio is pursuing in this case.

THE COURT: Okay.

MR. McANDREWS: And it's relevant to the issue of

damages and the specific type of infringement.

THE COURT: Okay.

MR. McANDREWS: So we've got our access points.

THE COURT: Okay. Let me just pause for a moment.

MR. McANDREWS: Sure.

(Court conferring with his law clerk.)

THE COURT: I apologize. I pulled out my BlackBerry

and realized that I had to address something else. That's the

problem of being Chief Judge. And that was the reason for the

delay. You get on these administrative things and --

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MR. McANDREWS: I thought perhaps your clerk was

helping you configure your wi-fi.

THE COURT: No, no, no, no.

(Laughter.)

THE COURT: Although, he is very adept, as are all

the young people seated over here, some of whom are externs,

some of whom are clerks.

MR. McANDREWS: All right. So, to finish the

thought, you've got access point claims, you've got terminal

device claims, and then, as importantly, and perhaps in many

instances more importantly, you've got system claims which are

directed to the actual network itself and the operation and

configuration of that network.

And it is entirely possible to have a claim where you

might have one or two elements of an access point that are met

by limitations of a system claim, you might have one or two

discrete elements of a terminal device claim; but, again, these

are claims that are directed to something less than an entire

access point or less than an entire terminal device, but as a

whole, they're directed to the network system.

And to answer your original question, under those

circumstances, non-infringement as to the access point claims

or even perhaps the terminal device claims would not mean

non-infringement as to the system claims.

THE COURT: All right. Okay. Well, that's helpful,

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and I appreciate that.

Does anybody else want to comment on that? Any

disagreement with the general description of the various

categories of claims that we are dealing with with regard to

the allegations that have been made by -- I guess I have been

mispronouncing this name -- Innovatio?

MR. McANDREWS: Innovatio.

THE COURT: Innovatio. Thank you. I will get it in

a few days.

MR. ALPER: Yes, Your Honor. Adam Alper for some of

the suppliers of the products, and it's actually Cisco,

Motorola, and NETGEAR.

THE COURT: Okay.

MR. ALPER: If I may, I'd like just to give you our

perspective on what this case is about, and I might just

address some of the things that Mr. McAndrews said.

THE COURT: Please do, as we are -- with the focus on

the case phasing. It is your desire to basically charge up

front and get the issues that you have set out in the

declaratory judgment not only out on the table but perhaps

resolved.

MR. ALPER: Yes. Maybe I can just give you our take

on what the case is about --

THE COURT: Please.

MR. ALPER: -- and then I'll spin back around and

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connect that up with the case phasing issue --

THE COURT: All right.

MR. ALPER: -- and then ultimately address your

proposal that we essentially see things go and then deal with

-- you know, address this around the Markman time.

THE COURT: All right. Go ahead.

MR. ALPER: So we have a little bit of background on

what this case is about from the first-filed ABP action,

because that action, you know, got off to a start and we were

able to get infringement contentions from the plaintiff in that

case on all 17 patents, so we had an opportunity to see what

the plaintiff says this case is ultimately going to be about.

And when we look at their infringement contentions,

what we see is that every element of every claim is applied to

a standard called 802.11, and that's also known as wi-fi.

That's the wi-fi standard.

And if we look at the technologies that every element

of every claim are being applied to, what we see is that

they're being applied to the creation, the organization, and

the timing of wi-fi signals and the actual implementation -- or

the actual, rather, production of the signals themselves.

And what we know is that the creation and

organization and timing of these wi-fi signals are implemented

on wi-fi microchips. And, in fact, not the entire chip, but a

portion of the microchip. And those things are made by third

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parties, and they're purchased by the suppliers in this action

and they're put into these access point boxes, and other wi-fi

products.

THE COURT: And where are they made?

MR. ALPER: They are made in various places around

the world.

THE COURT: Are any made in the United States?

MR. ALPER: I'm not sure about the chips --

THE COURT: Okay.

MR. ALPER: -- since those aren't my clients.

Actually, I'm not sure if the chips are made in the U.S. or

not.

THE COURT: Okay.

MR. ALPER: I would guess that -- I would just take a

wild guess that they're made all over the place.

THE COURT: Okay. Made all over the place but not

necessarily in the United States.

MR. ALPER: Not necessarily in the United States.

THE COURT: Okay.

MR. ALPER: I'd have to look into that.

THE COURT: All right. Thank you.

MR. ALPER: I think it depends on the supplier.

THE COURT: Sure.

MR. ALPER: So, from our perspective, because the

liability is focused on these wi-fi signals that are within the

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boxes, that seems to us to be the focal point of the case.

Now, it is true that there are apparatus claims,

there are system claims, and there are method claims at issue;

but regardless of what types of claims are at issue, the focal

point of the claims are on these wi-fi technologies that are

implemented within these boxes.

So that's kind of point one that I wanted to make. I

think there's a second important point to address specifically

some of the -- one of the issues that Mr. McAndrews raised.

Because he said, well, you know, there are some apparatus

claims that are directed at access points and then there are

other ones that are directed at terminal devices. And while

that may be true -- and I can't right now tell you what the

breakdown in terms of numbers is, which go to which one.

THE COURT: Yes.

MR. ALPER: I mean, there's also ones, like Mr.

McAndrews says, that go to combinations of access points and

terminals, and there's some that talk about methods and so

forth. While all that may be true, we have to look at that in

the context of this litigation.

So what's accused when it comes to the end user

defendants in this litigation are their provision of wi-fi

service, right? So they're not being accused of infringing, or

at least in large part not being accused of infringing, because

they go into one of their own stores and use a BlackBerry.

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They're being accused of infringement for their use of access

points.

So what this case is really about, even though you

have a number of different claims, this case, the liability

that is being pointed at by Innovatio when it comes to the end

users is the --

THE COURT: You have mispronounced it, too, I guess,

but that's all right.

MR. ALPER: Oh, sorry. I'm sorry. I apologize.

THE COURT: I try very hard when I can to pronounce

it correctly, but we will all have to start pronouncing it

Innovatio.

MR. ALPER: Innovatio.

MR. McANDREWS: Innovatio. Yeah, the client picked

the Latin pronunciation. We're certainly not insulted by

Innovatio. We've heard enough of it. But it's -- by the

client's choice, it's Innovatio.

THE COURT: Okay.

MR. ALPER: Innovatio.

THE COURT: Moving on.

MR. ALPER: I apologize.

MR. McANDREWS: No. That's okay.

MR. ALPER: So what's actually being accused by

Innovatio is the use of these access points and the offerings

of wi-fi to the public by the end users. And so, although

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there are some claims that may -- you may. I can't think of

one offhand. But let's just say we have a claim that's

directed to a terminal device. As applied against the

defendants, the end user defendants would, therefore, be

indirect infringers of some sort, I imagine, because they're

providing a wi-fi service to yet another end user down the

chain.

THE COURT: Right.

MR. ALPER: So, at the end of the day, what that --

what does that tell -- what's the takeaway? At the end of the

day, the takeaway -- or takeaways. There are a couple things.

Number one, the end users are not doing anything

other than using these products that have these wi-fi chips in

them, which are the focus of the actual technical case.

THE COURT: Yeah.

MR. ALPER: Right? Number two, when it comes to

claims, like method claims and system claims and claims that

may be directed at terminal devices, in the context of this

case, the focal point is still going to be the access points,

because that's what the bakeries and cafes and hotels are

purchasing and offering to the -- service through -- to the

public.

So, from our perspective, given all that, all this

kind of rolls up to the product suppliers, and we believe that

if you resolve the liability with respect to the product

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suppliers, that you're going to resolve liability or at least

substantially impact the liability of everyone else in the

case.

And so what I -- I mentioned a moment ago that I was

going to kind of flip this back around to the case phasing

concept, and I'd like to do that now and then address Your

Honor's proposal.

The question -- we all agree that after Markman, we

should try to figure out a subset of defendants to focus on

because we've got so many parties, and that would be an

efficient thing to do.

And I think we would all agree, or at least it's our

position, that the subset of defendants we should pick are the

ones that have the greatest, most substantial impact on the

rest of the defendants once we resolve their claims. Right?

That would be the most logical thing to do is let's pick the

subset; that if we bring them through expert discovery, bring

them through dispositive motions, and then ultimately trial,

that is going to have the greatest impact on everyone else.

It may not resolve every claim, it may not end the

case as a whole, but we want to pick the set that's going to

be -- have the most substantial impact, and the only set of

defendants that will have a substantial impact on everyone else

are the manufacturers or the suppliers.

And here's why I say that. Because if you resolve

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the liability of these standardized products and you resolve

liability with respect to these access points, then that is

going to cut across every single one of the asserted claims

because of the way -- of the context of this case, because

that's what the end users are offering, is this access point

service. And so at least we will touch on everyone.

If we instead focus on a subset of end users,

although, you know, there may be collateral estoppel issues if

things go a certain way, the fact of the matter is we are only

resolving the case as -- we are really focusing on, rather, the

case as to those end users, and you won't have that widespread

effect that you have with the suppliers who, by the way, have a

much greater incentive to see this thing through, to actually

get that substantial impact, than end users who are, you know,

one off hotels, one off bakeries who would much prefer to

settle this and even, you know, buy another -- you know, go to

some other platform or even not offer the service.

So that's why we think that the manufacturers are

really the only logical choice. Now, that said, Your Honor's

proposal does make some sense, because you have me up here

telling you that it's all about the suppliers. You have Mr.

McAndrews talking about -- I mean, there's some 340 asserted

claims, and, you know, he's talking about a bunch of different

asserted claims. And I could personally see that Your Honor

would -- you know, may like to see how this develops and, you

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know, and see additional information.

Now, it's our position nothing will change between

now and Markman to change the fact that the only parties that

will have a substantial impact are the suppliers, and I don't

think that there's anything that could be said today that will

change that fact as compared to the end users. But, of course,

if Your Honor would be more comfortable waiting to address this

at a later time, we are amenable to that.

THE COURT: Well, that was my initial proposal. I

had not thought that Mr. McAndrews would be opposed to that.

But what you want, Mr. McAndrews, is to basically

have a focus with regard to that first trial resolution?

MR. McANDREWS: Well, I think that was what both

sides had contemplated when they referred to tiering --

THE COURT: Yes.

MR. McANDREWS: -- in respect to Form 52 proposals.

I think -- and you hit on the point with Mr.

Garfinkel -- as long as discovery is open with respect to all

the parties -- and there's certainly no reason that it

shouldn't be -- you know, my sense is that Innovatio is going

to have access to the information that it needs from all of the

defendants.

THE COURT: You are.

MR. McANDREWS: Yeah, of course, right.

THE COURT: As long as it's reasonably calculated to

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--

MR. McANDREWS: Yeah, that's right.

THE COURT: -- lead to the discovery of admissible

evidence.

MR. McANDREWS: That's right, that's right.

THE COURT: All right. Well, can we do that, then?

Can we --

MR. McANDREWS: Yeah. I simply -- provided that

we're not foreclosing, we're not deciding anything right now on

what that tier I will be.

THE COURT: We are not foreclosing it --

MR. McANDREWS: Yeah.

THE COURT: -- but I have to say, Mr. Garfinkel's

idea of the nothing's going to change the fact that the

greatest impact will be a resolution of your allegations with

regard to the manufacturer --

MR. McANDREWS: Yeah. I don't agree on that point.

THE COURT: Okay.

MR. McANDREWS: And whether or not that bears on Your

Honor's decision or not. This isn't just about the 802.11

standard. Mr. Alper correctly referred to claims within the

Innovatio portfolio, the asserted claims that are directed to

what you would call standard essential operation or

functionality.

THE COURT: Yes, yes.

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MR. McANDREWS: There are also many, many claims,

more than half of them that are what we call standard

non-essential.

THE COURT: Okay.

MR. McANDREWS: And so any proofs that they might

offer with respect to the standard have nothing to do with the

underlying infringement.

It also for the same reason is certainly not just

about the access point. Again, we have method claims,

apparatus claims --

THE COURT: Yes.

MR. McANDREWS: -- terminal device claims, and system

claims. And if you've got a network operator that is the only

direct infringer, it doesn't make any sense, in my mind, that

you would proceed with a trial without that party as a named

litigant or a party-in-interest.

THE COURT: No, and I understand that. The MDL

concept is that there would be a consolidation of pretrial

proceedings and then the cases would basically spin off to

their various locales that they came from for trial. And I

understand from the Form 52s that these manufacturers who filed

primarily in Delaware -- I know you had the one, additional

one -- Hewlett's coming, joining us from the Northern District

of California -- are willing to try that case here.

Is that your position?

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MR. ALPER: It's -- Adam Alper for Cisco, NETGEAR,

and Motorola.

THE COURT: Yes.

MR. ALPER: We are willing to --

THE COURT: Mr. Alper.

MR. ALPER: -- have our cases tried here before Your

Honor.

THE COURT: All right.

MR. FLAMING: Your Honor, this is Todd Flaming for

SonicWALL.

Our client has not officially given us authorization,

but we should get that very soon.

THE COURT: Okay.

MR. SHELTON: Your Honor, Barry Shelton for Hewlett

Packard.

Since we're not even yet officially here, we are

considering that, and it is going to be my recommendation to my

client to do so.

THE COURT: Yes, I am not trying to force it on you,

but it seems to me if that is the situation, that is a factor

as to the tiering, simply because there has to be tiering.

Everybody agrees with this. We can't put a jury in the box

over here to the south side of the courtroom and say: Okay.

There are 17 patents. We've got how many claims. We've got

more parties than you can basically consider, and we are going

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to try the case. So we do need to focus. And there may be a

further focus, Mr. McAndrews, on a particular manufacturer if

that would assist in the resolution of others.

All right. Bearing in mind, then, that there will be

no foreclosure of discovery up to the claim construction

determination, and we are going to follow our local rule

pattern which allows for the reopening of discovery, to the

extent it is necessary, after a claim construction

determination, it seems to me that we will tend toward the

concept of perhaps proceeding with the tier I trial against one

or more manufacturers without today resolving that question.

Can you live with that, Mr. McAndrews?

MR. McANDREWS: I can. But let me raise another

issue --

THE COURT: Okay.

MR. McANDREWS: -- that may play into this.

THE COURT: Go ahead.

MR. McANDREWS: Currently, we have pending -- various

pending motions to dismiss --

THE COURT: Yes.

MR. McANDREWS: -- the DJ actions.

THE COURT: Right.

MR. McANDREWS: Of course, those have all been

consolidated. But, technically, those motions are still at

bar, still need to be resolved.

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What my team had considered in the past few days is

simply filing an omnibus motion to dismiss that will crystalize

all of these issues. And, of course, the jurisdictional issues

are no longer -- will no longer be part of the motions.

THE COURT: Right.

MR. McANDREWS: But we do want to talk about the

other issues, you know, the first to file, the fact that

resolution against the manufacturers will not -- necessarily

will not resolve all the issues against the direct infringers,

the network operators.

THE COURT: We understand that.

MR. McANDREWS: Can we set a briefing schedule on

that?

THE COURT: Yes, let's do that. I was going to ask

you to see if we can consolidate it. Let's call it a

consolidated --

MR. McANDREWS: Consolidated, sure.

THE COURT: -- as opposed to omnibus. Let's call it

a consolidated response.

That's really what you are considering, right?

MR. McANDREWS: It is. A consolidated response,

particularly in light of HP's arrival on the scene now with the

conditional transfer order.

THE COURT: Okay. When -- if in that consolidated

response you can make docket entry and case number references,

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so we can look precisely at things that you are referring to,

that would be helpful, so you don't have to hunt through the

record. When would you want to file the consolidated response?

MR. McANDREWS: We work on seven-day cycles, right?

So --

THE COURT: That's what our new Federal Rules of

Civil Procedure require, yes.

MR. McANDREWS: 21 days.

THE COURT: 21 days is just fine. Can your team put

it together in 21 days, which would be the 1st of May?

MR. McANDREWS: Yes, we can, Your Honor.

THE COURT: All right. All right. Now, can we

organize the defendants to have a consolidated reply?

MR. ALPER: Yes, Your Honor, I'm sure we can.

THE COURT: All right. And Hewlett Packard --

MR. SHELTON: Yes, Your Honor.

THE COURT: -- is agreeable to that and every other

defense counsel?

MR. FLAMING: Yes, Your Honor.

MR. SHELTON: Although, Your Honor -- Barry Shelton.

THE COURT: See, my court reporter has already got

names down already. Mr. Flaming didn't have to even state his

name.

MR. SHELTON: Your Honor, I'm a little bit confused,

though, because there are pending motions to dismiss, and so

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the response would really be from what you're calling the

defendants nominally declaratory judgment plaintiffs.

THE COURT: Correct.

MR. SHELTON: And so the reply then would be for

Innovatio.

THE COURT: Okay. Let me back up a second.

Yes, it is a consolidated motion to dismiss.

MR. McANDREWS: I'm sorry. Yeah.

THE COURT: Yes, that's -- well, I got off track.

MR. McANDREWS: If I said "response," I apologize.

THE COURT: I keep looking at you as plaintiff, and,

in fact, you are not with regard to these.

So it's a consolidated motion to dismiss in 21 days,

which would be May 1, and then a response by what date?

MR. ALPER: Two weeks is fine.

THE COURT: Two weeks would be May 15. And then how

much time for reply?

MR. McANDREWS: Given the number of defendants, if we

could have two weeks, Your Honor?

THE COURT: Two weeks would be the 29th of May. I

will rule electronically as promptly as possible.

And what I intend to do, since we have resolved the

case phasing/tier I trial indicating a tendency but not

necessarily making a determination, what I intend to do,

starting on June 7th, is to follow your recommendation of once

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a month having a status report unless you all agree that a

status report is not necessary.

You had made that suggestion. Actually, it was

Innovatio that made the suggestion, and there was no response

from the defendants. Innovatio suggested the first Thursday.

I would suggest the second Thursday.

MR. ALPER: Your Honor, if that's amenable to you,

that's fine with us. At least for --

MR. SHELTON: Sure, that's fine.

MR. ALPER: For, as far as I know, us.

THE COURT: Well, from a planning standpoint, again,

starting in June, we would have -- our first status report --

the second Thursday of each month -- would be June 14. Then

we'd move to July 12, August 9, September 13, October 11,

November 8, December 13 to exhaust 2012.

But what I want to do -- I mean, here in the Northern

District of Illinois, we have status reports. You see the

judge more often than in some other districts. But if we are

not going to accomplish anything, I don't want to waste your

clients' money having you all come in. Actually, I am also

going to consider the resources that the court has and to try

to set up a telephonic/video hookup that would allow counsel to

remain in their respective locations, if they desire, and still

participate in this.

So let me ask you about that concept. Is that all

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right?

MR. ALPER: Yes, Your Honor.

MR. McANDREWS: It -- on behalf of plaintiff --

THE COURT: I don't know if I will have a ruling to

you by June 14th with the briefing completed on May 29th, but I

will do my best. And I may have to cancel one or two as well.

All right. Resolving those two, what I consider to

be two of the eight points -- so basically we are reserving on

the determination of the tier I trial or tier I resolution at

this time, but with an indication that there may be focus on

the issues to be resolved with regard to the manufacturers.

The next item that I saw that was a difference is the

damages contentions. Several defendants suggested that the

parties file a full round of initial contentions, initial

responses, final contentions, final responses with regard to

damages prior to the close of discovery, followed by a damages

hearing to resolve disputed matters. Innovatio said that would

be prejudicial to Innovatio. Although, I have to say from a

discovery standpoint, I always like to have some concept of

what's at stake in the case.

So I will turn back to Innovatio and ask you, what's

at stake in this case?

MR. McANDREWS: From a damages perspective?

THE COURT: From a damages perspective.

MR. McANDREWS: From a damages perspective -- and

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this, again, goes back to the concept of tiering and direct

infringers and indirect infringers.

THE COURT: I understand.

MR. McANDREWS: The damages that Innovatio seeks are

based on the use by the network operators who derive the most

immediate and substantial and, in many cases, profitable

benefit out of the infringement. We're not simply talking

about, as Mr. Alper suggested, a tiny little portion of a radio

chip or a microprocessor. And that necessarily will require

discovery of the network operators, of the marketing plans that

they have, the value that they have assigned to wi-fi.

I'm sure Your Honor sees the free wi-fi signs in the

coffee shops or the restaurants that you walk into. In fact,

it's hard to find a place these days that doesn't offer that

service.

Many of the defendants of record right now in this

case actually upcharge for the wi-fi service. Some of the

higher-end hotels charge $11 or $14 a night for that service.

And all of that is --

THE COURT: Did some of you stay in such a hotel last

night? Mr. Alper?

MR. ALPER: It was completely free wi-fi.

THE COURT: Okay. All right. Go ahead.

MR. McANDREWS: Yeah. And even with respect to the

ones that offer it for free, they're doing that. They're doing

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that for a reason. There have been some recent articles, in

fact, in the Chicago Tribune and other publications, that talk

about the -- that being the number one draw for guests who are

staying at economy-level hotels. And even the ones who stay at

the upscale hotels are clicking on that radio button on their

laptop or their iPad, and they're paying the $14 a night. That

is a necessary component to Innovatio's damages story in this

case.

And what the defendants have proposed in terms of

this extra phasing, not just in the discovery phase with

respect to contentions, but also an entirely separate briefing

stage, is, in my view, precisely what the local patent rules

and our local rules beyond that were designed to avoid, which

is the hopeless morass of needless motion practice and

additional unnecessary steps in the discovery process. And

this is discovery that would ordinarily and necessarily come

out anyway as the case unfolds.

THE COURT: Mr. Alper or anybody else on this point?

MR. ALPER: Maybe I'll -- I can say a few words to

the damages contentions point.

I think for the reasons that Mr. McAndrews was

describing when we -- you know, damages contentions will be

very helpful in this case. And so I could just give one or two

examples of the issues that I think we're going to be

addressing here --

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THE COURT: Okay.

MR. ALPER: -- that really suggest that damages

contentions will help us, you know, not only focus damages

positions, but actually have an overall impact on the structure

of the case.

So one of them has to do with what is the appropriate

sales base in the case. Because the parties are really -- from

what I can tell, from what Mr. McAndrews has said here and in

previous status conferences and other discussions that we've

had, we're really in two separate worlds.

Like I was saying before, we've looked at the

infringement contentions that we received in the ABP case, and

we see the focal point of the claims going to technologies that

are buried within this access point box on this chip. And so

it seems logical to us that the focal point as a result of

damages should be -- or at least the sales base should be on

those products. And so that's where we're coming from.

Innovatio, on the other hand, proposes that instead

of looking at the products, we look at the end user revenues.

So these end users are bakeries and cafes and hotels and so

forth.

And to give Your Honor a sense for what that really

means, let me describe this by way of example. I can use one

of our end user clients as Cosi. And Your Honor may be

familiar with Cosi. They're a sandwich shop. They have a

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chain of sandwich shops. They sell sandwiches and coffee and

soda and chips and so forth.

And despite the fact that the claims are being

applied to technologies within these access point boxes that

create and produce the wi-fi signals, and despite the fact that

Cosi has no independent revenue stream associated with wi-fi,

Innovatio wants a percentage off the top of every sandwich, cup

of coffee, bag of chips, and soda that Cosi sells regardless of

how it relates to wi-fi, and we believe that the Federal

Circuit has looked at those type of entire market value

theories and expressly rejected them.

But we don't have to decide that here today. All we

have to do is recognize that there are over 200 end users in

this case; and from what we can tell, the primary reason that

they're even here is based on that damages theory.

And so, to us, we believe damages contentions provide

a couple things. One, the end users who are -- some are solo

owners of hotels and are now subject to a suit on 17 patents,

they're entitled to know the metes and bounds of why they're

here, and they are entitled to know in a formalized fashion

what that theory is that is actually pulling them into this

case. So that's one thing. The second -- and to have a form

of process for disclosure so we don't -- we necessarily can't

avoid that, since it's such a core issue in this proceeding,

the MDL proceedings, is important.

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Another thing that it allows us to do is to --

through the -- is through investigation, we have disclosure,

preliminary disclosure. Just like infringement contentions

lead up to a Markman and you, you know, really frame the core

issues on liability in the case and, you know, then are able to

present refined specific focus issues to the Court for

decision, the initial damages contentions followed by a

discovery period, followed by -- so that Innovatio gets all the

information that they need to provide meaningful final damages

contentions, so we really understand the metes and bounds of

that theory, that will allow us to raise narrow, focused,

decidable issues to the Court in the follow-on proceeding that

we propose, which is a short proceeding -- it's not going to

take long -- for either resolution or, at a minimum, guidance

as to the types of legal arguments and evidence that the

parties will be permitted to rely on going forward.

And so it's very important, A, for us to see what

those theories are, because they have such a substantial impact

on this case; and, B, be able to refine them to present them to

Your Honor for a decision; and, C, do it before we get to

expert discovery. Because if we wait for expert discovery,

then it's going to be like ships passing in the night. They're

going to have an expert disclosure that shoots at end user

revenues. We're going to have an expert disclosure that goes

in a different direction. And the next time we will hear about

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it is right before trial when we deal with Daubert. And in

this way, we can find out what our guidelines are going to be

in terms of these -- kind of, like I said, two different worlds

that we're in, and focus expert discovery in a meaningful

manner.

So that's why, just like all the reasons that you'd

have infringement contentions and responses to infringement

contentions, in a case like this where it has such a

substantial impact on all the parties, especially the over 200

end users, we think it's appropriate.

And there's other reasons. I just -- I know I've

been speaking for a while. I'll just give Your Honor one other

just exemplary reason. We believe that one of the chip makers,

at least one of the makers of the wi-fi chips has license to

the patents, and obviously --

THE COURT: And who is that? Who do you believe has

license?

MR. ALPER: We believe that has license to

the patents. They're one of the chip makers and a substantial

chip maker. And as a result, obviously if they're licensed,

then anyone who uses a product through exhaustion and

license principles would be licensed.

THE COURT: Well, can we find that out right away,

the licensing of ?

MR. McANDREWS: We've disclosed that information

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under the protective order, Your Honor.

THE COURT: Okay.

MR. McANDREWS: Yeah.

THE COURT: So they are licensed?

MR. ALPER: It appears they are licensed. I didn't

want to --

MR. McANDREWS: I just wanted to be --

MR. ALPER: Okay. I didn't want to --

MR. McANDREWS: -- careful on the open record. We

have produced that information to the defendants under the

protective order.

THE COURT: Let's do this. Let me ask my court

reporter, then, starting with the disclosure of the ,

you can stop with Mr. Alper's comment, "We believe one of the

chip makers is licensed," and then you can have my question,

who is that, and then from that point forward until right now,

we are going to be under seal.

THE COURT REPORTER: Would you rather, Judge, that I

just redact the name?

THE COURT: Yes.

THE COURT REPORTER: Okay.

THE COURT: Redact just the name.

The existence of the licensee, that's not a problem,

is it? The existence of a licensee, Mr. McAndrews?

MR. McANDREWS: No, that's not a problem.

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THE COURT: All right. Then we will just redact the

name. That's easier. Thank you.

MR. SHELTON: Your Honor, may I be heard briefly for

Hewlett Packard on this issue?

THE COURT: Sure.

MR. SHELTON: Hewlett Packard, number one, I totally

agree with Mr. Alper's remarks, and we join in the motion -- or

in the Form 52 submission on this issue of damages contentions.

And I wanted to just bring up one new point, Your

Honor, and that is that the damages contentions will further

underscore that the tiered approach to having the manufacturers

in a first trial makes an awful lot of sense, because what the

damages contentions will show quite clearly is that a trial

with just the manufacturers will be able to address all the

infringement issues. Because every single claim, whether it's

a method, apparatus, or system, is all based on the provision

of certain features of that IEEE 802.11 standard.

And Mr. McAndrews said, well, some are not required,

but they're still part of that standard, and the standard is

embodied in the chips within the products. And so there's not

a single claim out of the 343 in this case that can't be

decided by looking at the objects that are manufactured by the

manufacturers and then used by the end users. There's not a

single claim in the case that says use of a wireless network in

a supermarket or a coffee shop or a sandwich shop. And so the

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issue of justiciability of all the claims can be squarely

addressed by the declaratory judgment complaints that will be

before Your Honor. Thank you.

THE COURT: All right. Well, Mr. McAndrews, I

understand your hesitation to have this heard, is that at this

point, without knowing what added value the end users think the

wi-fi feature provides, you can't really evaluate your damages,

right?

MR. McANDREWS: That's right. I mean, I can read the

Chicago Tribune article and generally agree with the principle

that there's incredible value placed on this. But this is

ordinarily the type of stuff, especially when it is this

critical to our damages case -- and at the end of the day,

that's what this is all about, it's about damages -- that's

ordinarily the type of stuff you glean during the discovery

process. And then if defendants feel strongly about license or

exhaustion, that's what dispositive motion practice is for.

And it would seem to me that that would fit in at that portion

of this case. Otherwise, we're talking about front-end-loading

an awful lot of -- well, Innovatio's left in the position where

it's shooting in the dark --

THE COURT: Yes.

MR. McANDREWS: -- on perhaps the most relevant

portion of this case.

THE COURT: Yes.

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MR. ALPER: Your Honor, if -- just one further

comment.

It's those concerns, those types of concerns were the

very same types of concerns that were raised before the

infringement contentions and other patent rules were put into

effect, and it was exactly for that reason that we have the

contentions. It's to provide an orderly structure for parties

to exchange positions.

And if you look at the proposal that we've made, it's

not just final contentions in the next two months and then

Innovatio is done. It's initial contention -- just like the

infringement contentions, it's initial contentions followed by

a period of substantial -- the discovery period, just like

infringement contentions -- or initial contentions and then

responsive contentions, initial contentions, and then followed

by the discovery period leading up to final contentions. So

that concern is addressed and built into the proposal.

And I would -- it is our belief that because we

can -- we have addressed that concern, the great benefits that

we will have from damages contentions in this case are

absolutely justified.

MR. McANDREWS: Your Honor, if I may?

Proceeding with the defendants' approach also leaves

open the possibility, if not the likelihood, that Innovatio is

going to be at least informally foreclosed from advancing, you

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know, its most important damages theory, if it later discovers

something, you know, that right now we have no idea about at

the front end. I mean, it's front-end-loading the most

relevant issue in the case.

MR. ALPER: I mean, we can address that the same way

you would with infringement contentions, of course. It's for

good cause, if Innovatio needs to amend, for instance, you

know, genuinely, you know, good faith discovery of evidence

later in the case.

THE COURT: Specifically, it's the defendants'

position -- some of the defendants' proposal that Innovatio

provide its initial damages contentions by June 5. Boy, that

seems to be a difficult task.

Well, all right. Let me ask Innovatio, Mr.

McAndrews, what do you intend to do, then, with regard to

damages? If I don't follow the defendants' proposal, what do

you intend to provide?

MR. McANDREWS: Well, I --

THE COURT: Or do you want to hold off until we get

the Markman determination?

MR. McANDREWS: Well, I think we would gather

discovery, just as the defendants will be doing during this

pre-Markman phase, and we will be crafting our --

THE COURT: All right.

MR. McANDREWS: -- damages theory during that period

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and working on parallel tracks with our technical experts.

We'll be working with our damages experts during that period,

as we would in other patent cases.

THE COURT: All right.

MR. ALPER: If the date issue --

THE COURT: Go ahead.

MR. ALPER: -- is a problem, we are absolutely

amenable to a different date. I think it's the concept --

because we fear that Innovatio will -- it will be difficult to

get Innovatio's actual position -- actually, Innovatio said

this in their statement. They said that their actual position

is going to come in their expert reports. We think that that

is too late when the damages issues are just as significant as

the infringement issues for which we have disclosures.

And so we are fine moving the date back if that June

5th date creates discomfort. What's important for us is to

have some process in place, and it should be a very fair

process. And we are interested in being forthcoming with the

information that Innovatio needs in order to prepare its case.

But we feel there should be a formal process in place, and

we've provided a very simple proposal.

MR. McANDREWS: Your Honor, Your Honor, after expert

disclosures is precisely the time that this information allows

for significant narrowing of issues, if not dispositive issues,

and, you know, that's the summary judgment phase. It puts us

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through a much, much more difficult task if we're to

front-end-load this in any way.

THE COURT: Well, let me ask you. You say after the

disclosures of the expert. Would you be amenable, Mr.

McAndrews, to having initial damage contention disclosures and

a following of disclosures with initial response to damages

contentions, et cetera, on a track that commences the --

following a procedure that commences after you have sufficient

information that you feel comfortable you can provide your

initial damages contentions?

I guess what I am saying is do you have any problem

with the damages contentions scenario of contentions, response,

et cetera?

MR. McANDREWS: I think right now, I do.

THE COURT: Okay.

MR. McANDREWS: Because I don't know exactly what

we'll get from the defendants --

THE COURT: Right. Okay.

MR. McANDREWS: -- in the way of discovery.

THE COURT: Okay.

MR. McANDREWS: Whether there is going to be motion

practice and we're going to be in front of Judge Schenkier on

motions, I don't know.

THE COURT: Okay.

MR. McANDREWS: I would add, the parties have

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cooperated very well so far.

THE COURT: Right.

MR. McANDREWS: I think we intend to do that moving

forward. But it's burdensome, as we say. We don't mind hard

work, obviously. We've got our --

THE COURT: Let me speak with my clerk --

MR. McANDREWS: Yeah.

THE COURT: -- for a second.

(Court conferring with his clerk.)

THE COURT: Judge Schenkier, since you mentioned

him -- I know you were supposed to see him.

MR. McANDREWS: I was going to mention that we --

THE COURT: You know what? Why don't we do this.

Invite Judge Schenkier to join me.

THE CLERK: Okay.

THE COURT: We will bring another chair up on the

bench. And we won't make you go to another courtroom.

MR. McANDREWS: We forgot we were --

THE COURT: Yes.

MR. McANDREWS: -- 15 minutes late. I was going to

mention it.

THE COURT: I forgot, too. He called, and I'm glad

he did, and we are going to bring up another chair and we are

going to deal with his issues as well and you don't have to go

address them.

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Here's what I am thinking. And I will wait for Judge

Schenkier before I make a final determination. But here's what

I am thinking. We are going to proceed with the infringement

invalidity, the typical issues dealing with those aspects,

holding off with damages contentions. We will allow damages

discovery to go forward, because I think both sides really need

that, through the usual interrogatory/document request

proposals. But there will come a point in time where -- and we

will ask you, Mr. McAndrews, are you ready now? Since we are

going to have these monthly meetings and we are going to ask

for a prediction. I am thinking that we may want to crystalize

through the contention/response process the damages theory,

but, like you said, you feel you are shooting in the dark right

now. You don't know why they think -- why, the end users,

think it is so valuable to have wi-fi other than the fact that

we all have this -- I mean, we living in this day and time, the

communication age, all have this idea: I need to have that

information. I need to have that access.

I mean, that's the problem we have with jurors and

young people. I mean, I've got a three-year-old, a

three-year-old granddaughter who just wants the information --

and she can't really read yet, but she wants the information --

that's available instantaneously on one of these machines.

So what value is that? What value to each sandwich,

how many sandwiches, how many -- I understand the Federal

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Circuit's determinations about the entire market rule and

there's got to be a focus on the infringing aspect of the

product or service, but obviously the end users put some value

on this so they wouldn't do it, they wouldn't pay money to do

it, and you should have the benefit, you, plaintiff's counsel,

should have the benefit of what value they put on it before you

have to say: Okay. This is how much we think the infringement

that they are engaging in, assuming that you prove your case,

is worth to them and, therefore, should be paid to us. Right?

MR. McANDREWS: That's correct.

THE COURT: You are nodding in affirmance, but --

MR. McANDREWS: That's right, Your Honor.

THE COURT: Okay. All right. So that's how we are

going to handle that. Okay?

MR. McANDREWS: All right.

THE COURT: It may happen at some point. We will put

you down that funnel of damages contentions, responses down the

line, but not now.

All right. The next issue -- and I assume Judge

Schenkier is on his way up, and this -- and I didn't quite

understand, but the initial discovery that Innovatio is looking

for, Innovatio wants a chart of the network equipment used in

each of these 200 end users. Mr. Alper said there's 200 end

users. I don't quite understand what you are desiring there.

MR. McANDREWS: What this allows us to do, Your

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Honor, is quantify and take a look at the architecture of the

wireless network and equipment on each of the accused premises.

And based on discovery that we've already received, it's my

understanding that almost universally, whether you're talking

about hotel locations or coffee shops or Cosi, the sandwich

shops, the IS people have information that will allow us to

fill out these charts.

THE COURT: I'm sorry. The IS people?

MR. McANDREWS: The information services or the IT,

information technology, staff for each of the hotel brands or

the coffee shops or the restaurants or the retailers. They've

got information.

THE COURT: And is this information available at the

franchisor level? I assume a lot of these places are

franchises, aren't they?

MR. McANDREWS: I think most of them are --

THE COURT: Yeah, most of them.

MR. McANDREWS: -- franchises.

THE COURT: Yes.

MR. McANDREWS: Yeah. In many instances, that

information is available at the franchisor level. In some

instances, it's not. But the exercise of collecting this

information is not terribly burdensome.

THE COURT: Couldn't you get the same information on

a document request?

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MR. McANDREWS: We can get some of the information in

a document request, but it doesn't provide -- if you take a

look at the format that we have provided --

THE COURT: Yeah.

MR. McANDREWS: -- there's additional information.

And, incidentally, we have received this type of information

through document requests and interrogatories in the initial

go-around.

THE COURT: Well, and my -- I guess my question is

then why can't you get it in the normal course of discovery?

The defendants don't contend it is not discoverable. They are

not saying this is outside the ballpark so that it does not

lead to the discovery of admissible evidence. But why can't

normal course of discovery assist you?

MR. McANDREWS: I think if we press on it, Your

Honor, that should be sufficient.

I want to point out that we kind of tied this request

to the one that we just resolved. And that is if --

THE COURT: Yes.

MR. McANDREWS: -- we are to do these contentions, at

a bare minimum, we would have to -- but, again, it illustrates

the point that it would be perhaps overly complicating things

at the front end.

THE COURT: Okay.

MR. McANDREWS: But we will press for this, of

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course, and we anticipate that it will be produced.

THE COURT: Well, and --

MR. ALPER: If I may, Your Honor?

THE COURT: Yes.

MR. ALPER: In the ABP action, just by way of

background, when we received requests for this information in

the ordinary course of interrogatories and requests for

production, we were able to provide the information. I think

there was one round of meet-and-confers. We got the remaining

stuff that they wanted, and we got it all worked out.

So I think our main concern was that we just are able

to preserve objections. You know, to the extent that they're

asking for stuff that is in our possession, custody, or

control, we are not waiving anything.

THE COURT: Right.

MR. ALPER: And I truly believe that if we get a

round of interrogatories, we can just handle it just like we

did before and it will work out fine. So however the Court

prefers to handle it is fine with us.

THE COURT: Well, it seems to me that -- let's follow

that route at this point. And, Mr. McAndrews, you can press on

with normal discovery on this. And, as you said, since we kind

of dealt with the other -- the way we have dealt with it, we

will use this normal methodology --

MR. McANDREWS: Right.

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THE COURT: -- to get that done.

MR. McANDREWS: And to be clear, each side has

ongoing discovery disputes that aren't resolved.

THE COURT: Yes.

MR. McANDREWS: But we will handle that moving

forward.

THE COURT: Yes. All right. The other item -- or

not the other item, there are a couple more -- and that's the

final date to seek a stay pending reexamination.

Innovatio, you don't want any reexaminations at all.

The date you suggested has come and gone. But why not follow

our usual local patent rule suggestion of a deadline for

reexamination should be the same for that of the final

non-infringement enforceability and validity contentions which,

by the calculation that the defendants suggest, is November 13,

2012?

MR. McANDREWS: I think we'd be agreeable to that,

Judge. What we were doing is we were tying --

(Magistrate Schenkier entered proceedings.)

THE COURT: All rise. Judge Schenkier is entering

the courtroom.

How are you? Thank you for coming up. We all

apologize for being tardy here. To some extent, time got away

from us and --

MAGISTRATE SCHENKIER: Well, time flies when you're

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having fun.

THE COURT: Yes, right. And so we have resolved some

issues in the Form 52s, but I thought that perhaps we could

just jointly work on some of the remaining points. And rather

than spend the time counsel trekking down to your chambers, we

could just go ahead.

MAGISTRATE SCHENKIER: Sure.

THE COURT: And if you have additional things, we can

go ahead and deal with those things right here, since I am now

back on the 25th floor --

MAGISTRATE SCHENKIER: Here you are.

THE COURT: -- in my large courtroom. I know you

were one of the first judges to enjoy the spaciousness of the

10th floor.

MAGISTRATE SCHENKIER: Yes.

THE COURT: And so we are back.

Right now, we are in the process of resolving, and I

think we probably have resolved, the question -- one of the

issues, which was the date to seek a stay pending

reexamination. Mr. McAndrews was speaking as you came in --

MAGISTRATE SCHENKIER: Okay.

THE COURT: -- and he was saying he could live with

it, of November 13, 2012.

MR. McANDREWS: Yeah, provided that the date of

joinder of claims and parties is also extended. That's really

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what we had done.

THE COURT: Right.

MR. McANDREWS: In our view, the defendants can't

have it both ways. You can't apply the amendment and joinder

date of the original ABP action without applying that March

29th -- I think that was the date that we included for --

THE COURT: That was the date, yes.

MR. McANDREWS: Which, of course, was here and gone.

THE COURT: Right.

MR. McANDREWS: But that was our point. So if we

get -- if we likewise extend out that joinder date, which

should not be a problem --

THE COURT: Okay.

MR. McANDREWS: -- I don't think we have a problem.

THE COURT: And you want to extend that to the same

day? What day?

MR. McANDREWS: In terms of joinder for the -- what I

guess we'd call the tier I or the ABP action --

THE COURT: Yes.

MR. McANDREWS: -- May 21st, perhaps.

THE COURT: May 21st?

MR. McANDREWS: Yeah.

THE COURT: Of 2012?

MR. McANDREWS: 2012, yeah.

THE COURT: Okay. Can everybody live with that?

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MR. ALPER: Yes, Your Honor.

MR. SHELTON: Yes.

THE COURT: Who else are you thinking might --

MR. McANDREWS: Well, we're thinking, as we've been

discussing --

THE COURT: What other targets are out there?

MR. McANDREWS: Well, I got to be careful. I will

speak generically.

THE COURT: Yes. Okay. Yes, speak generically, or

we will have to go under seal again, yes.

MR. McANDREWS: No, no. To the point that I have

been making this morning, Your Honor, other relevant players

that really leverage wi-fi in their business operations.

Hotels are a really good example. It is not exclusive to that.

You see it in retail operation.

THE COURT: Well, it doesn't include any hotel that

Mr. Alper stays at.

MR. ALPER: Not any hotel, just --

THE COURT: Not any hotel. Just not last night.

MR. ALPER: Just last night.

THE COURT: Just last night.

MR. McANDREWS: Free wi-fi. So wi-fi is everywhere.

But I would say generally we'd be looking at relevant

players --

THE COURT: Okay.

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MR. McANDREWS: -- with a view toward that damage

model that we're talking about.

THE COURT: All right. May 21, 2012.

All right. Moving on, then, to the fact depositions.

Innovatio was saying that it would be subject to 75 hours of

depositions. Each manufacturer, 75 hours of depositions. Each

end user subject to 14 hours of depositions. Or if a network

operator owns multiple locations, like Caribou Coffee, then

Innovatio would take no more than 14 hours per location, and no

more than a total of 50 hours, total, for a network operator at

all locations.

The defendants' contention is Innovatio be subject to

175 hours of depositions, with each manufacturer subject to 29

hours of depositions, and each end user subject to 14 hours of

depositions.

What do you anticipate -- I am asking both sides now.

What do you anticipate -- when we get rolling with the

depositions, how does Innovatio anticipate proceeding? And

while you are thinking about that answer, let me speak with my

clerk.

(Court conferring with his staff.)

THE COURT: We are just going to take a quick, short

recess, and let me talk to Judge Schenkier, and you can think

about that, how you anticipate getting rolling and what, I

guess, thought process went into your fact deposition position,

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both sides. Okay?

MR. McANDREWS: Sure.

MR. ALPER: Yes, Your Honor.

THE COURT: All right. Thank you. A short recess.

(Recess from 11:20 a.m. until 11:32 a.m.)

THE COURT: My court reporter was chatting with me

about the fact that some of you need to go to other

obligations, and I fully understand that. I am not offended in

any way if you have to leave, although I am hoping we are going

to be able to wrap this up relatively shortly.

But if you have to leave, go ahead, please feel free

to do so.

All right. Back to the point that we were talking

about, and that's the fact depositions.

Further resolution during the break?

MR. McANDREWS: No, no stipulation on that.

Look, Innovatio, to the extent possible, and by

necessity, we want to streamline the discovery that we take of

the defendants.

You had asked, Your Honor, what we anticipate doing

over the course of a deposition. We are going to need basic

information, hopefully much of which we will glean from

documentary and interrogatory discovery, about network

operation, about the infrastructure, the actual equipment that

is used, and the manner in which it is used.

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There are many claims in the Innovatio portfolio that

go to network configuration, and that's information that's

going to be uniquely in the possession of the network operators

or, as my colleagues refer to them, the end users, the

restaurants and hotels and whatnot.

One of the things that my team is able to do, using

over-the-air network analysis software, is collect some of this

information, but we're also dealing with some brand names that

have hundreds of locations. And, in total, we're talking about

many thousands of locations.

THE COURT: All right. Let me just pause for a

moment.

MR. McANDREWS: Sure.

THE COURT: Because of the concept that you

mentioned, over-the-air network analysis software.

MR. McANDREWS: Yes.

THE COURT: What does that do?

MR. McANDREWS: Well, what it does is it allows an

agent or a person to go into a location that offers wi-fi --

THE COURT: And capture information about it?

MR. McANDREWS: And capture public information, sure.

If you think about a coffee shop -- a Starbucks is a really

popular example.

THE COURT: Okay. All right.

MR. McANDREWS: When I go into a --

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THE COURT: Who represents Starbucks here? Anybody

represent Starbucks? Starbucks is unrepresented here.

MR. McANDREWS: Not yet. But if I walk --

THE COURT: Well, let's use Caribou Coffee, then.

They are represented.

MR. McANDREWS: Well, sure, sure.

THE COURT: They can respond. Okay.

MR. McANDREWS: Sure. If I go into Caribou, I can

turn on the wi-fi feature on my Smartphone --

THE COURT: Yes.

MR. McANDREWS: -- and I will see a signal that's

broadcast. So I'm obtaining their projecting certain

information about their network. They're allowing me to join

that network.

THE COURT: Right.

MR. McANDREWS: There is software that's available

for free or for purchase -- and there are levels of

sophistication of this analysis software that you can buy. I

think one that we have is a $700 package. Use it on a laptop

computer with a special antenna, and you are able to obtain

certain information concerning network configuration and radio

bandwidth and --

THE COURT: Just by walking in, having a cup of

coffee, using and employing the software in a coffee shop on

your laptop?

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MR. McANDREWS: Some of the information, yes. Not

all of it. That's right.

THE COURT: Okay.

MR. McANDREWS: Yeah.

THE COURT: Okay.

MR. McANDREWS: Now, what we are not talking about is

cracking into encrypted packets, which, of course, is a

whole --

THE COURT: Yes.

MR. McANDREWS: That's not what we are interested in

doing. That's not what we are going to do. You're getting

into privacy issues there. But what we're talking about is

publicly available --

THE COURT: Okay. All right.

MR. McANDREWS: -- through this analysis. And I

would also add that it's perhaps something that we want to

contemplate in the order of the protective order if it's going

to streamline the process. The alternative is we turn around

and say, "Give this to us."

THE COURT: Yes.

MR. McANDREWS: And what we want to do is we want to

put in place protocols that allow us to very efficiently

analyze this type of data and reach stipulation with the

defendants, to the extent that we can.

THE COURT: Well, and it seems to me those folks

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representing the end users, they want to minimize their expense

in providing discovery would be cooperative on this point.

MR. McANDREWS: I would hope so.

THE COURT: Okay. Wouldn't you?

MR. GARFINKEL: Yes. As long as there are some very

clear protections on what data can be obtained through this

process. I mean, this is not typical --

THE COURT: Well, what data can be obtained is

anything that's publicly available --

MR. GARFINKEL: That should be available through

wi-fi, yeah.

THE COURT: -- by this over-the-air software that's

available for purchase. So you are basically every day -- as

long as your wi-fi is operating, you are providing underlying

information about your wi-fi and its network and its support, I

assume.

MR. McANDREWS: Configuration.

THE COURT: Your configuration.

MR. McANDREWS: Yeah.

MR. GARFINKEL: I understand, Your Honor. I don't

know anything about this software that counsel is referring to.

I don't know what --

THE COURT: I didn't either. That's why I asked.

MR. GARFINKEL: Right. It's fascinating.

THE COURT: Yes.

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MR. GARFINKEL: But I would want any protective order

to very clearly circumscribe what data can be obtained through

this process, even if the software is capable of doing more.

THE COURT: Well, you guys work out the protective

order. It seems to me that if you are basically publicly

advertising, "We've got this. We've got that. We're in this

configuration," by just providing the service out there, it

seems to me there isn't any privacy in connection with that if

it's publicly available.

MR. McANDREWS: No. I do think the parties ought to

get together on that, though.

THE COURT: Yes, yes.

MR. McANDREWS: Because, you know, in the ether, what

gets sent back and forth sometimes is a matter of degree or

type. For example, you may have a packet that is encrypted.

THE COURT: Sure.

MR. McANDREWS: And you could argue that's publicly

available, but you're not entitled to it. So I think we ought

to get with the defendants --

THE COURT: Yes.

MR. McANDREWS: -- and work out an appropriate

protocol and let them know what information we intend to seek

through our over-the-air analysis efforts.

THE COURT: Can you disclose now whether you have

done this already?

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MR. McANDREWS: We have done some sampling without

waiver.

THE COURT: Okay. That's good.

MR. McANDREWS: Yeah.

THE COURT: Okay. Go ahead. I apologize for the

interruption, but I think it was helpful.

MR. McANDREWS: No.

THE COURT: It certainly enlightened me. Go ahead.

MR. McANDREWS: Yeah. So to the extent possible,

what we are proposing here are the outer bounds, hopefully, for

what we'd be talking about in terms of deposing any particular

network operator location. In many instances, we are going to

be dealing with the information technology designee --

THE COURT: Sure.

MR. McANDREWS: -- or officer at a, you know, at a

Cosi or at a hotel.

THE COURT: Yes.

MR. McANDREWS: And that should significantly

streamline the process. For the other information that we'd be

seeking during depositions discovery and 30(b)(6), of course

issues going to the value that these various defendants place

on wi-fi.

THE COURT: Sure. Because some day we are going to

make you make a contention --

MR. McANDREWS: One of these days.

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THE COURT: -- of damages.

MR. McANDREWS: That's right.

THE COURT: Yes. So go ahead.

MR. McANDREWS: While we're at one of our status

conferences.

THE COURT: Yes.

MR. McANDREWS: And yeah, I -- Your Honor, I don't

think anything out of the ordinary. It's a complex case, there

are several moving parts, but at the end of the day, I think we

are going to have a very streamlined and straightforward

process for the depositions themselves.

THE COURT: Yes.

MR. McANDREWS: You know, I would point out we've

cooperated to date. We've had a great relationship with Mr.

Alper and his colleagues. But 22 days of depositions for one

representative at Innovatio, that just seems to push beyond the

spirit of the letter of the --

THE COURT: Okay. Well --

MR. McANDREWS: And I understand we're compromising

here. We're going over the -- you know, we're going over

recommended limits as well, but we've got a reason for that.

THE COURT: All right. Well, let me hear why 175

deposition hours of Innovatio.

MR. ALPER: Sure, Your Honor. Actually, if I may

begin by addressing the defendants' side of the deposition

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picture --

THE COURT: Sure, go ahead, go ahead.

MR. ALPER: -- and then I will come back around?

Because the Innovatio side is probably a little easier.

So I actually think the parties are relatively close

on deposition hours. We're suggesting 28 hours per supplier

and 14 hours per end user defendant. I think we have some more

flexibility on the supplier side because we do believe that's

where the action is going to be at when it comes to liability

and damages issues in this case.

THE COURT: Well, yes, that's your position,

especially if we are going to follow your proposal, which is to

have that be the tier I --

MR. ALPER: Yeah, absolutely.

THE COURT: -- evaluation and determination.

MR. ALPER: Absolutely. And so -- and we do want to

provide Innovatio with the discovery that it needs. Because I

think above all, our focus is to get the case -- get the issues

out there and focus.

So if 28 hours is too little with respect to

suppliers, we are amenable to a -- to additional hours, if

those are necessary.

When it comes to the end users, a lot of these folks

are -- you know, some of them are solo owners of hotels and,

you know, they're real small businesses. It sounds like, from

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what we heard Mr. McAndrews say, when it comes to discovery

that he's interested in, it is a lot of stuff that we can

provide in response to that chart.

THE COURT: Right.

MR. ALPER: Right? Which, like I said earlier, we

want to do. We did it in the ABP action. We were able to

resolve any issues without appearing before Judge Schenkier.

That was six months ago. We haven't heard complaints since

then. So I have a lot of confidence that we are going to be

able to get that information out there.

And, actually, we have an incentive to do it because,

as Your Honor noted, if we can get that to them, then we can

get on the path for those damages contentions.

So it seems like we can do a lot with that type of

discovery. And given how small the end user defendants are,

that's where we came up with 14 hours for the depositions per

party. And if for some reason 14 hours doesn't cut it, then we

can meet and confer over additional time for a particular

party. But we felt like that would be sort of a reasonable

cutoff for -- given the size of those defendants and how much

we can accomplish in other sort of discovery mechanisms.

THE COURT: Okay.

MR. ALPER: So that's our position on the defense

side. On Innovatio's side, I guess the -- you know, what Mr.

McAndrews said is they have one corporate representative.

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(Judges conferring.)

THE COURT: Go ahead.

MR. ALPER: They will have one corporate

representative. We don't have sufficient information about

Innovatio yet to make a determination as to what the -- what

their role in all of this is, whether it's going to be -- is

Innovatio one person who just has a deed to the patents or is

it a more sophisticated organization? Are we going to be going

to third parties and so forth?

(Judges conferring.)

THE COURT: Go ahead.

MR. ALPER: And so we picked a number of hours that

could accommodate a larger amount of discovery if it turned out

that Innovatio as a party was a more complicated, you know,

entity versus the smaller number of hours that Mr. McAndrews

proposed.

And I think I could just say we don't intend to abuse

the right to depose Innovatio. We just don't want to end up

agreeing to something in advance and then it turns out, once we

learn a little bit more about Innovatio, we end up getting

eclipsed.

THE COURT: Okay.

MR. ALPER: And I guess, you know, we then looked at

the massive disparity in hours between defendants and

plaintiffs when we saw, you know, just thousands -- we add it

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all up, even under our proposal, it's hundreds of thousands of

hours on the defense side, and we're just asking for 175.

THE COURT: How sophisticated is your client?

MR. McANDREWS: Our client is not terribly

sophisticated. He's a very bright guy, our client

representative.

THE COURT: Yes.

MR. McANDREWS: But I don't anticipate a great deal

of complexity in deposing Innovatio on a 30(b)(6) basis or an

individual basis, for that matter.

THE COURT: Okay.

MR. McANDREWS: Genuinely. I mean, I can't possibly

fathom that it couldn't be accomplished in fewer than, you

know, the ten days that we're proposing.

And I think perhaps the better approach would be to

enter an order that has restraint with the understanding that

as needed, the parties will cooperate and ask the Court for

relief, if that's called for and warranted in the future.

THE COURT: Okay. All right. You are together with

regard to the end users. What I am going to do on this one,

rather than force you for further compromise, is I am going to

adopt Innovatio's proposal with that understanding that was

proposed by Mr. McAndrews; that, frankly, once you get into it,

you are going to see how much is going to be necessary. But

Innovatio, 75 hours of depositions will be the limit. And the

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other proposals that the plaintiff made, those will be the

limits at this point, but that's a loose limit. I am going to

authorize Judge Schenkier to adjust those limits, if necessary,

in connection with the discovery so as to minimize disputes on

this point.

But let me also say, too, that as we get into this,

you are right, you are going to get a pattern. You are going

to know exactly what the questions are, exactly what the

information is going to be sought. The only thing that's going

to change is the deponent, and everything else is going to be

the same. And it may be that we'll be able to work out an

efficient mechanism. And, frankly, if you could obtain this

information that's publicly available, that would assist.

So that's what I'd like you to put in the proposed

order, along with those other agreements that you have made.

Now, there are just a couple other points. First of

all, we've got our next status report, June 14. We've got the

dates through 2012. I would like to receive from you, if you

can do it jointly, a written status report or an agenda --

maybe an agenda might be the better way to put it rather than a

written status report -- an agenda for each status report; in

other words, what are the points we are going to be covering

today. Because I want you to -- and I'd like you to file that

three days before. So for the June, it would be June 11th to

file the -- we will call that status report number 1.

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All right. And we did work out the amending the

pleadings for the plaintiff, adding new parties. Do the

defendants anticipate -- who else are you going to bring into

this? Who do you think you might?

MR. ALPER: You know, I think it's less amending

pleadings with respect to adding new parties, and I think it's

more if we have any counterclaims, for instance, declaratory

judgment counterclaims and other types of counterclaims. And

what we would ask -- I think if Innovatio's date for amending

the pleadings -- I think they would be more focused on joining

parties as opposed to --

THE COURT: Oh, yes. And May 21 is the date. They

agreed.

MR. ALPER: Right. So that's their date. Then for

us, we would suggest, just because our focus is going to

require a little bit more in the way of discovery in order to

amend pleadings --

THE COURT: Now you know how they feel with the

damages.

MR. ALPER: The damages, exactly. So, you know, I

think a number of months after that, you know, maybe early fall

would be something we'd target, if we wanted to shoot for --

what if we shot for -- I think we had --

THE COURT: How about the first day of fall?

MR. ALPER: Sure. I was going to propose the date

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that we had talked about earlier for the -- on the reexam

deadline, just because that's a --

THE COURT: November 13?

MR. ALPER: Yeah.

THE COURT: All right. Any problem with November 13?

MR. McANDREWS: That's for amendment as to claims?

THE COURT: That's to bring any counterclaims of

non-infringement or any other declaratory actions, basically.

You are not going to add any new parties that you

anticipate now?

MR. ALPER: I -- we do not anticipate right now

adding new parties. But I can't foreclose the possibility

between --

THE COURT: Why don't we -- yes. Can we move it back

just slightly? How about October 1?

MR. ALPER: Sure.

THE COURT: Can you agree with October 1? It is a

Monday.

MR. ALPER: We can agree with that, Your Honor.

THE COURT: It will be a nice day.

MR. McANDREWS: Can we have till October 1 for

joinder of claims? I think the 21st day in May is going to be

fine for --

THE COURT: Parties?

MR. McANDREWS: For parties, yeah.

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THE COURT: Okay.

MR. McANDREWS: But, you know, every once in a while

in the early stages of discovery, something comes up and --

MR. ALPER: If I could ask for a clarification as to

what that means?

THE COURT: Yes, that's -- I was --

MR. ALPER: You were going to --

THE COURT: What do you mean? What do you mean by

that, Mr. McAndrews?

MR. McANDREWS: Well, we've not asserted all of the

Innovatio patents right now, and we do have preliminary

infringement contentions out. But I suppose if we've got the

parties wrapped up by May 21st, that largely does --

THE COURT: Well, I will give you October 1, but I

think they need a little time after that.

MR. McANDREWS: They need time beyond that, yeah.

THE COURT: Yes. So I will give you October 1 --

MR. McANDREWS: Sure.

THE COURT: -- for claims.

MR. McANDREWS: Yes.

THE COURT: Initial claims. How about November 1 for

the defense? That's closer to your November 13.

MR. ALPER: If I may comment on that, Your Honor,

just so I understand what we're talking about?

THE COURT: Yes.

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MR. ALPER: If Mr. McAndrews is suggesting that he

have until October 1st to, say, add patents, that would seem to

me to conflict with the rest of the schedule, because I think

at that point --

THE COURT: Yes, it does.

MR. ALPER: -- we're going to be into Markman --

THE COURT: Yes, you are right.

MR. ALPER: -- on -- and we'll have wanted to be

along the ways on infringement contentions, damages

contentions, and validity. I think he's got --

THE COURT: You are right.

MR. ALPER: -- to bring any patent that he wants to

bring right now.

MR. McANDREWS: Well, I think it's called for in our

contentions, what we are going to be doing in the way of patent

claims.

THE COURT: But I don't want you to bring -- okay.

You have already got the patent claims in your contentions?

MR. McANDREWS: Well, we do right now, although we're

not at the date yet for the initial contentions --

THE COURT: Yes.

MR. McANDREWS: -- in this new consolidated action.

THE COURT: What I am concerned about, and what Mr.

Alper is concerned about, is we're going to have more claim

construction that's going to be kind of coming in --

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MR. McANDREWS: Yeah.

THE COURT: -- at the end --

MR. McANDREWS: Right.

THE COURT: -- and we want to get that claim

construction done in February. I mean, I want to be able to

provide something to you, well, before a year from now on claim

construction, and I don't want to be delayed by new patents,

new claim terms slowing us down.

MR. McANDREWS: Understood.

THE COURT: Yes.

MR. McANDREWS: And I am looking at the schedule now.

THE COURT: Sure.

MR. McANDREWS: May 22nd are the initial disclosures.

THE COURT: Yes.

MR. McANDREWS: And any infringement contentions

trail after that. So we'll use that May 21st date, then,

for --

THE COURT: Okay.

MR. McANDREWS: -- parties and joinder of additional

claims.

THE COURT: Okay. And then is October 1 okay for

them?

MR. McANDREWS: It is.

THE COURT: Okay.

MR. McANDREWS: It is.

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THE COURT: All right. You have reached agreement.

MR. McANDREWS: This is for what we're referring to

as tier I.

THE COURT: Tier I.

MR. McANDREWS: That's the cutoff for that. Any

later-filed actions are --

THE COURT: They're still safe and still available.

MR. McANDREWS: Yeah.

THE COURT: You aren't foreclosed.

MR. McANDREWS: Right.

THE COURT: Okay? All right.

All right. What other points have you folks got that

you see that -- because you are going to basically be building,

now you are going to be building the pretrial scheduling order

number 3, and I am going to put a date on your filing that or

your proposing it through the proposed_order e-mail system.

So is there anything else that you have as a dispute

that you need me to assist you in resolving?

MR. ALPER: I think just the issue that Mr. McAndrews

touched on a moment ago which has to do with filing of separate

actions and how they relate to this case. And, obviously, I am

going to let Mr. McAndrews give their position, but I can, I

think, summarize it.

Innovatio in their proposal I believe has a proposal

that later-filed cases would be -- has a proposal for combining

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later-filed cases with the schedule that we're going to put

into place.

THE COURT: Yes.

MR. ALPER: Our recommendation would be let's see

what those look like when they're filed and deal with them

then. Because it may make sense --

THE COURT: I agree with you on that.

MR. ALPER: Okay.

THE COURT: So we will make that -- we will cut to

the chase there.

MR. ALPER: Okay.

MR. McANDREWS: Yeah, we had actually intended to

retreat from that. That's what I was saying about the May

1st -- or May 21st deadline.

THE COURT: All right.

MR. McANDREWS: We will join parties by then --

that's tier I -- on the same trial track, subject to

whatever --

THE COURT: Right.

MR. McANDREWS: -- Your Honor later decides on that

specific issue.

THE COURT: Right.

MR. McANDREWS: And then anything else in tier II or

tier III are on their own schedules.

THE COURT: Okay. Right. Okay? Anything else?

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I've got -- anything else?

MR. ALPER: No. I think that's it, Your Honor.

THE COURT: Can you build this? Can you craft now

pretrial scheduling order number 3 and submit it? And how soon

can you get it done?

MR. ALPER: I think relatively quickly, so --

THE COURT: Yes. I think you can get it done today,

but I'm not --

MR. ALPER: Yeah. Seven to ten days is all we need.

THE COURT: All right. Well, we do things by

multiples of seven now, so seven days from today would be the

17th.

MR. ALPER: Well, maybe we should say two weeks just

because of the number of parties.

THE COURT: Two weeks. Yes, you've got a lot of

people to confer with. Let's make it the 24th.

All right. And let me back up just a second.

If there is a dispute -- if after you go back and you

confer, blah, blah, blah, and you've got a problem, "I don't

agree," here's what I am going to give you. I am going to give

you until May 1 to file final -- or not final, pretrial

scheduling order number 3. If there is a dispute, I want to

see you at 10:00 o'clock on the 10th of May. That will be our

first status. But you won't have to file a status report. I

will know what your dispute is because you are going to tell me

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in the filing -- or in the proposed order on the 1st of May.

Okay? So I will know. And I am hoping there will not be a May

10th status report. Do you see what I mean?

MR. ALPER: Yes. We only have a status on May 10th

if there's a dispute.

THE COURT: If there's a dispute. Okay?

MR. McANDREWS: Yeah. A final point, Judge.

THE COURT: And then I've got a final point. But go

ahead.

MR. McANDREWS: I'm sorry if I --

THE COURT: You get your final point first.

MR. McANDREWS: I didn't want to cut you off.

Please.

THE COURT: Yes. No, go ahead. You get your final

point first.

MR. McANDREWS: Approximately 120 to 125 of the hotel

defendants have neither contacted us nor entered appearances

yet, so one thought would be -- and it's just a thought at this

point. So that it doesn't forestall the schedule that we've

just talked about, depending on how quickly we can get them on,

we would tier them on a separate track or something like that.

THE COURT: Okay.

MR. McANDREWS: I wanted some guidance from the

Court.

THE COURT: Well, here's what I want to do. The

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first guidance I want to give you is to assist you in any way

to get their attention.

MR. McANDREWS: Yes.

THE COURT: So if you want me to note that some of

those hotel defendants are in default and then we send them an

order saying they're in default and give them a certain period

of time to cure the default or the matter will proceed to a

default judgment, that might get their attention. They might

then go talk to their lawyer. I mean, that's what -- we want

to get them in.

MR. McANDREWS: I -- there's no question about it.

With some of the defendants, in fact, some of my colleagues

here, there have been motions to dismiss based on misnomer.

THE COURT: Yes, right.

MR. McANDREWS: Not knowing the -- and sometimes you

hit the Secretary of State site, you just can't figure out who

owns the place.

THE COURT: Yes. Your client's bright but not

omnipotent, right?

MR. McANDREWS: No, that's right. My understanding

of the law was if they are reasonably put on notice that

there's a claim against them, that's binding. We've not

briefed the issue.

But I guess to your point about default, can you

enter a default against a party who is technically identified

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by a different name?

THE COURT: The answer is no.

MR. McANDREWS: Okay.

THE COURT: But we can get their attention.

MR. McANDREWS: Yes, right.

THE COURT: Because some day you will figure it

out --

MR. McANDREWS: Yeah.

THE COURT: -- and you'll sue him.

MR. McANDREWS: Right.

THE COURT: So you might as well resolve it now. I

leave that up to you.

MR. McANDREWS: Okay. Thank you for the --

THE COURT: So what I am going to say is that I will

help you in any way.

MR. McANDREWS: Thank you.

THE COURT: You bring it to my attention whenever you

can.

MR. McANDREWS: We will do --

THE COURT: And if you need to come in and see me on

May 10 for that purpose, you can do that, too.

MR. McANDREWS: Okay. And we will try to do it as

best we can informally --

THE COURT: And let everybody know.

MR. McANDREWS: But that's very helpful.

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THE COURT: Two other points. Is everybody getting

notice? Have we got -- any problems with that? I guess not.

Okay.

The next point and it involves Judge Schenkier. We

are blessed in this case to have the outstanding magistrate

judge that we have assigned to this case. It was at random.

And I couldn't be more thrilled to be partnering with Judge

Schenkier. We have done it in the past in other cases. In

fact, a rather simple but somewhat interesting case. Judge

Schenkier and I partnered together on resolving the trademark

infringement case involving the rooftop owners around Wrigley

Field.

Now, I don't know if anybody is this year, given the

way they are starting out, that they're going to go to rooftops

around Wrigley Field. But Judge Schenkier resolved that case,

and it was very difficult. And we partnered together on that.

We're going to do that.

But I want you guys to constantly have in the back of

your mind settlement. I want you to be thinking about it all

the time. Because this is a business dispute. This is about

resolving for financial purposes the issues in the case.

And I will turn it over to Judge Schenkier. What he

and I talked about was that each of these second Thursday

status reports that you'd see me, then you'd go see him, and

your seeing me today wouldn't take as long. Because my clerk

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is now wondering why am I taking this long now, because I've

got a noon hearing that's involving the secret stuff that the

Chief Judge in our court has to deal with, the grand jury and

wiretaps, et cetera, since the government can't go into a drug

house and set up a wi-fi and figure it out.

MR. McANDREWS: We could sniff it for you.

THE COURT: I'll turn it over to Judge Schenkier.

MAGISTRATE SCHENKIER: Well, you mentioned sniff.

That's actually up in the Supreme Court.

THE COURT: Yes.

MAGISTRATE SCHENKIER: Dog sniffs. So I guess I will

see, you know, everybody the second Thursday, you know, of the

month beginning at least in June.

THE COURT: Right.

MAGISTRATE SCHENKIER: And, you know, I certainly

want people to think about settlement. I mean, you are at the

beginning of what could be a very long road. And looking at

the number of hours that are allocated for depositions kind of

takes my breath away, you know.

I was trying to think, did I ever depose anybody for

22 days? I mean, it seems likely, but I don't think I did.

But I think that it's always useful to look at not

just what it is you think you need ultimately to try the case,

if it ever comes to that, but really what is it that you need

to know to fairly evaluate the case for purposes of settlement.

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Because I think we all know that that is a much smaller subset,

you know, of the form. And so I think that within the schedule

that you have, that's something that, you know, you always

should be evaluating, and I will discuss it with you, you know,

when we have our little meetings. But just to reinforce what

Chief Judge Holderman is saying, I think it is something worth

keeping in mind.

And obviously, you know, I'm available to do that.

There are other resources to do that also. But I'd be happy to

get involved if people think that would be constructive at some

point to start helping you resolve pieces of the case, whether

it's individual parties or groups, you know, however it may be.

THE COURT: The purchase of peace may be a reasonable

purchase for some of the defendants in this case. Also Judge

Schenkier will be available to assist in the resolution of any

discovery disputes.

MAGISTRATE SCHENKIER: Right.

THE COURT: But given you folks, the quality of the

lawyering, I think that aspect will be minimal. But he will be

available to assist you. We hope we can assist you to get this

resolved.

All right. Anything else anybody else has? All

right. We thank you, all, for your patience. We thank you for

coming in.

MAGISTRATE SCHENKIER: Thanks a lot.

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MR. McANDREWS: Thank you, Your Honors.

MR. ALPER: Thank you.

THE COURT: I will look forward to not seeing you on

May 10, and I will look forward to receiving that proposed

pretrial order number 3 by agreement by May 1.

MR. ALPER: Thank you, Your Honor.

MR. McANDREWS: All right. Thank you --

THE COURT: All right?

MR. McANDREWS: -- Judge.

THE COURT: Thank you, all.

(Proceedings concluded.)

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Colleen M. Conway, Official Court Reporter

C E R T I F I C A T E

I, Colleen M. Conway, do hereby certify that the

foregoing is a complete, true, and accurate transcript of the

proceedings had in the above-entitled case before the

HONORABLE JAMES F. HOLDERMAN, Chief Judge of said Court, and

the HONORABLE SIDNEY I. SCHENKIER, Magistrate Judge of said

Court, at Chicago, Illinois, on April 10, 2012.

/s/ Colleen M. Conway, CSR,RMR,CRR 04/16/12

Official Court Reporter Date

United States District Court

Northern District of Illinois

Eastern Division

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