Pages 1 - 28 

UNITED STATES DISTRICT COURT 

NORTHERN DISTRICT OF CALIFORNIA 

Before The Honorable Nathanael M. Cousins, Judge 

FEDERAL TRADE COMMISSION, )

 )

 Plaintiff, )

 ) 

 VS. ) NO. C 17-00220 LHK (NC)

 ) 

QUALCOMM INCORPORATED, A )

DELAWARE CORPORATION, )

 ) 

 Defendant. )

_______________________________) 

 San Francisco, California 

 Wednesday, August 9, 2017 

TRANSCRIPT OF OFFICIAL ELECTRONIC SOUND RECORDING 

OF PROCEEDINGS

APPEARANCES: 

For Plaintiff Federal Trade Commission: 

 Federal Trade Commission 

 600 Pennsylvania Avenue, N.W., 

 Washington, D.C. 20580 

 (202) 326 2912 

 BY: JENNIFER MILICI

 WESLEY GLEN CARSON 

For Defendant Qualcomm Incorporated: 

 Keker, Van Nest & Peters LLP 

 633 Battery Street 

 San Francisco, CA 94111-1809 

 (415) 391-5400 

 (415) 397-7188 (fax) 

 BY: ROBERT ADDY VAN NEST 

 ALEXANDER BARNES DRYER 

Also Present: Carol Lam, Mark Snyder 

Transcribed By: Lydia Zinn, CSR No. 9223, Official Reporter 

Case 5:17-cv-00220-LHK Document 170 Filed 08/16/17 Page 1 of 29
 2

 

PROCEEDINGS

Wednesday - August 9, 2017 3:08 p.m.

THE CLERK: Calling Civil 17-0220, Federal Trade

Commission versus Qualcomm Incorporated.

MR. VAN NEST: Good afternoon, Your Honor.

Bob Van Nest, of Keker Van Nest and Peters, for Qualcomm. I'm

here with my colleague, Alexander Dryer.

THE COURT: Good afternoon.

MR. VAN NEST: And we also have Carol Lam and

Mark Snyder here from Qualcomm.

THE COURT: Thanks for being here. Good afternoon.

MS. MILICI: Good afternoon, Your Honor.

Jennifer Milici, for the Federal Trade Commission. And I'm

joined by Wes Carson, from the Federal Trade Commission.

THE COURT: Good afternoon. Thank you both. Thanks

for being here. You can stand up, Mr. Van Nest. We'll kind of

have a little back-and-forth on the issues.

MR. VAN NEST: Perfect.

THE COURT: We are making a recording of today's

hearing. And there is no transcript that's being made

automatically, but either party or both may request one, and we

will create one. For that reason, we'll try to restate who's

speaking, to make for a good transcript.

Any objection to my ruling on the discovery issues will,

of course, go next door to Judge Koh, the trial judge in the

case, and must be filed within 14 days of my Order on the

 1

 2

 3

 4

 5

 6

 7

 8

 9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

Case 5:17-cv-00220-LHK Document 170 Filed 08/16/17 Page 2 of 29
 3

 

PROCEEDINGS

discovery issues.

MR. VAN NEST: Understood, Your Honor.

THE COURT: So that's the scene.

Have there been any further discussions and limiting of

the issues, or agreements, or partial agreements, or a changing

of the issues between the time of your brief and today?

MR. VAN NEST: I don't believe so, Your Honor,

unfortunately.

THE COURT: All right. And let me tell you my

thoughts. Having read the papers and the law, and having had

some firsthand experience with international antitrust

investigations in my past, there are two issues presented.

One is the challenge to the so-called "Dual Submissions";

those that were collected outside the United States, and then

came to the FTC and are in the possession, custody, or

control -- or all of the above -- of the FTC now. And Qualcomm

seeks production of those.

And a principal issue there is comity; not "comedy" -- we

need more comedy -- but "comity," with a "t," as to whether the

objections raised by the foreign antitrust enforcer should be

honored here in this country, and should be a bar to production

to Qualcomm in this case.

My instinct on that issue is that I don't see case

authority that applies in this circumstance, where the

materials are already in the United States, and are already in

 1

 2

 3

 4

 5

 6

 7

 8

 9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

Case 5:17-cv-00220-LHK Document 170 Filed 08/16/17 Page 3 of 29
 4

 

PROCEEDINGS

the possession of the FTC. There is authority where the

materials are outside the United States, and are being sought

by a party. That seems to me to be factually distinct from

what we're talking about here.

And then, secondly, I'm not overwhelmed by the degree of

the objections raised by the foreign antitrust authorities, as

far as the privilege or statutory basis that would say these

materials can't be produced. I get that they have a preference

that these things not be shared here, but as to a strength of

saying the FTC should not or may not provide them here -- I

don't really see it. It's more than a preference.

So I want the FTC to address the -- sort of the

seriousness and degree of the concerns raised by the foreign

investigators, because if it's not -- if it's just a

suggestion, and not something stronger, then I don't think that

carries as much comity weight here in this country. So that's

the issue number one. And I'll hear argument from both parties

in a moment as to what to do on that score.

And then there's the second issue, which is the assertion

of an informant's privilege. And that gets raised in various

contexts; both in a criminal context -- and this is not a

criminal proceeding, but there's an investigative proceeding

here.

And the parties cited to a previous case that I worked on

as a Judge -- the Seafood Peddler case -- in a different

 1

 2

 3

 4

 5

 6

 7

 8

 9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

Case 5:17-cv-00220-LHK Document 170 Filed 08/16/17 Page 4 of 29
 5

 

PROCEEDINGS

procedural context, where the Department of Labor asserted an

informant's privilege there. And so there is such a privilege.

It's a qualified privilege.

And what I'm going to seek more information from the

parties on here is how this discussion fits in with the bigger

case-management issues in the case; and that is if the FTC is

asserting, as it is, an informant's privilege for these

documents and for these witnesses, what's going to happen going

forward? Are you going to be disclosing that later? Are you

going to be agreeing not to use this information at trial or in

the case in some way? How are you going to carve out that

information from the case, if that's what you're proposing? 

Even in a criminal case, which this is not, oftentimes

informants are protected at the early stages of the case; but

as the case gets closer to trial or at trial, there is an

obligation for the prosecution to -- even for someone who might

have their life threatened, they still are turned over at or

before trial.

And so oftentimes in cases there's just a case-management

process of, All right. If we're not going to disclose it now,

maybe down the road it gets disclosed. And there might be also

some substantive way to provide the information, without

disclosing all that perhaps in a narrative form.

So I'm interested in both parties' ideas about the

case-management ways to provide this; or if the FTC is going to

 1

 2

 3

 4

 5

 6

 7

 8

 9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

Case 5:17-cv-00220-LHK Document 170 Filed 08/16/17 Page 5 of 29
 6

 

PROCEEDINGS

take the view that this privilege is so strong and inviolate,

that you'll never have to disclose it and never should be asked

about it, I'll want to hear what your plan is for how that's

going to play out if the case goes to trial some day, because

my tentative view here is that I think that there are -- I

recognize there's a privilege, but that there might be

disclosure somehow, some way. The question is when, and what

level of detail to allow Qualcomm to investigate and to ask

questions in discovery about what's been disclosed to the FTC;

but recognizing that these informants have some interest in

what's going on, and may have even a basis to at least defer

learning of them. So those are my tentative views.

Let's start with the Dual Submissions issue. And if I can

hear from the FTC first as to the strength of the objections,

and why I should honor that here.

MS. MILICI: Sure. Thank you, Your Honor. On the

Foreign Submissions we submitted with our -- with the Letter

Brief that -- the letters from both Directorate General for

Competition of the European Commission, and the KFTC. And both

of those letters expressed the sovereign interest of foreign

governments in the nondisclosure of these materials. And those

letters stated the position that disclosure to Qualcomm, who is

the target of their ongoing investigations, would impede

effective law enforcement in those countries, and have an

effect on international cooperation.

 1

 2

 3

 4

 5

 6

 7

 8

 9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

Case 5:17-cv-00220-LHK Document 170 Filed 08/16/17 Page 6 of 29
 7

 

PROCEEDINGS

So in the Aerospatiale case, the Supreme Court directed

American courts to exercise special vigilance to demonstrate

respect for any sovereign interest expressed by a foreign

state.

And in this case we have two foreign states who have

expressed sovereign interest. And to accord those due respect,

courts generally apply the balancing test from Aerospatiale.

And I think that the factors from that test weigh very heavily

against disclosure.

THE COURT: And in applying that balancing test, how

should the Court evaluate sort of the strength of the interest

expressed? Is it just sufficient to have the other sovereigns

say, We're interested, and want you to not disclose it; or

should the Court -- should I be doing some deeper analysis into

the statutory basis for sort of where that interest comes from?

MS. MILICI: Well, I think, Your Honor, that if there

are questions for the Court about what the position is of the

foreign governments, or what that position is based on, that

probably the appropriate thing to do would be to ask for

briefing from -- from those agencies. I believe that the

KFTC's letter expressed or the EC's letter expressly offered to

do that. These were preliminary letters sent to the FTC.

Obviously, if the Court has more questions, they would be

better positioned to answer those.

THE COURT: And are you in a good position to

 1

 2

 3

 4

 5

 6

 7

 8

 9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

Case 5:17-cv-00220-LHK Document 170 Filed 08/16/17 Page 7 of 29
 8

 

PROCEEDINGS

communicate to them that request?

MS. MILICI: I believe we can.

THE COURT: All right. Mr. Van Nest, let me hear

from you on the comity issue.

MR. VAN NEST: Your Honor, I think we see it pretty

much the way you sized it up. This isn't a traditional comity

case. I don't think the comity rules even apply.

These are documents that were provided by their authors to

the FTC. We're not seeking discovery from foreign authorities.

We're not seeking any foreign documents. It's irrelevant to us

that these documents were submitted to someone else.

They were submitted to the FTC. They've had the benefit

of them to guide their investigation, structure their

Complaint, evaluate the facts. And all we're seeking is a

level playing field.

I agree with you completely that these are very soft lobs

from these authorities. They could have intervened here. They

know the schedule. They're in touch with the FTC. They chose

not to do that.

We've got a lot of work to do. Judge Koh has us on a very

tight time schedule. I think Your Honor's aware of that.

So I don't think the comity rules even apply here. Even

if they did, though, their interests haven't really been

identified.

Our interest is very clear that these are important,

 1

 2

 3

 4

 5

 6

 7

 8

 9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

Case 5:17-cv-00220-LHK Document 170 Filed 08/16/17 Page 8 of 29
 9

 

PROCEEDINGS

operative witnesses in the investigation. These statements may

or may not be inconsistent with each other. They may be have

exculpatory material. We would need them to confront the

witnesses. I just think this is sort of a no-brainer, in that

this claim is not well made. The privilege is not well stated.

THE COURT: And speak to that; to what you'll do if

the information, should you get it -- of course, you're having

to speculate a little bit about what might be in there, but as

far as the timing of when you've got depositions coming. And

I'm thinking here about the remedy, and when things should

occur.

MR. VAN NEST: We need these right away. I mean,

discovery is under way right now. We have a very tight

calendar, where discovery closes early next year. Depositions

will begin soon, as soon as summer's over. We have subpoenas

out. Some of those subpoenas will take a little time to be

responded to. We're already feeling behind. And, as we all

know, it's not likely Judge Koh's going to move the trial date,

which is January 4th, 2019. There's just a lot to do.

THE COURT: I will go stronger than that, and say she

will not move the trial date; but yes, you're being generous.

MR. VAN NEST: There we go. Being polite.

But there's no reason to delay these.

And I think our request is that we get them ASAP. They're

in the possession of the FTC. Again, they were provided by the

 1

 2

 3

 4

 5

 6

 7

 8

 9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

Case 5:17-cv-00220-LHK Document 170 Filed 08/16/17 Page 9 of 29
 10

 

PROCEEDINGS

authors to the FTC. We didn't go to the foreign authorities.

They really don't have a dog in this fight.

In the case of the Korean authority, their investigation's

done. Right? That one's on appeal.

In the case of the EC, there are some parts of the

investigation may be still open; but most of that's closed up,

too.

So I really would urge the Court, if you see it our way,

to get this done promptly, and have these things turned over so

we can conduct further discovery if necessary, pursue further

witnesses if necessary, pursue further subpoenas if necessary,

because the clock is running, and it's not a long clock.

THE COURT: All right. Thank you.

Let's turn to the informant-privilege issue. So what's

the plan? If I uphold your informant privilege now, do you

have in mind disclosing something later, or is this going to be

through trial? What's your thought?

MS. MILICI: Let me start by explaining a little bit

about what's being withheld under the privilege. And what's

being withheld are communications with third parties that

identify them as informants. The bulk of these materials are

e-mails scheduling appointments and scheduling telephone calls.

There's a small subset of documents that are white papers,

or presentations. These are not akin to the kind of witness

statements that are in the Department of Labor cases. These

 1

 2

 3

 4

 5

 6

 7

 8

 9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

Case 5:17-cv-00220-LHK Document 170 Filed 08/16/17 Page 10 of 29
 11

 

PROCEEDINGS

are not, you know, factual recitations. So their use as

impeachment at trial, I think, is fundamentally different than

in some of these other cases with the case-management issues

that you mention.

That said, I think that we could revisit this as trial

gets closer, and once witnesses have been identified, and, you

know, we have some sense of what discovery has been obtained

from these third parties.

And we are happy to submit these documents and the other

documents withheld as Foreign Submissions for in camera review

at any time.

THE COURT: So if you have a -- theoretically. I'm

not compelling you to identify a particular informant or

witness, but if you theoretically have a witness at trial who's

going to testify about what Qualcomm did, and they wrote a

white paper, or they made a submission, they had a meeting,

they had some communication -- e-mails with the FTC -- when is

that -- you know, and you're asserting there may not be

something exculpatory. I do not know. I haven't seen it. Are

you suggesting you will turn over a white paper from that

witness before trial; and if so, when? What's your thought on

that?

MS. MILICI: Again, I think the thought is that the

discussion is somewhat premature; that we don't know who the

witnesses are, so we don't know what the content of the

 1

 2

 3

 4

 5

 6

 7

 8

 9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

Case 5:17-cv-00220-LHK Document 170 Filed 08/16/17 Page 11 of 29
 12

 

PROCEEDINGS

relevant white papers, if there are any relevant white papers,

is, and if they would be related at all to potential testimony. 

But you know, we would certainly be willing to participate

in a process further down the road, once we know what the

discovery has been from third parties, and we know who the

witnesses are going to be; that the Court can view these

documents, and you can make a call.

THE COURT: And at this point in time, you've

identified in your Rule 26 -- have you made witness

disclosures, at all? I know it's asserted by Qualcomm that

there's been already some disclosure of who these -- quote,

unquote -- "informants" are, so it's not a big deal to compel

more. What have you disclosed so far? And I'm trying to get a

better understanding of what remains to be disclosed, as far as

your actual witnesses.

MS. MILICI: Sure. We've disclosed our Rule 26

disclosures; a list of entities that are likely to have

knowledge about the facts.

We separately disclosed a list of the third parties that

submitted documents during the FTC's investigation.

As the case law cited in the brief sets forth, there is a

difference in the law between who's a submitter, or who submits

a witness statement, and who's an informant.

We only withhold those documents that identify which of

those third parties is an informant. If that company also

 1

 2

 3

 4

 5

 6

 7

 8

 9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

Case 5:17-cv-00220-LHK Document 170 Filed 08/16/17 Page 12 of 29
 13

 

PROCEEDINGS

submitted documents, then we produced all of those documents.

If they sat for investigational hearing, we've produced that

transcript.

So -- so it's -- the materials being withheld are only the

things that identify them as informants, which is different

from identifying them as a submitter, or a person with

knowledge.

THE COURT: Mm-hm. All right. Mr. Van Nest.

MR. VAN NEST: Your Honor, I was frankly shocked to

hear an informant's privilege invoked here, for a couple of

reasons.

We have a letter from the FTC, which Your Honor has seen.

It lists all of the folks from whom these documents were

received. They're all major, multinational,

multibillion-dollar corporations. Most of them have

self-identified.

For example, in the Korean investigation, NVIDIA, LG, and

Huawei -- they've all filed publicly adverse documents

expressing their view that Qualcomm did something wrong, and

identifying themselves as people that initiated the

investigation. Okay?

In the appeal from KFTC, Apple, Samsung, Huawei

MediaTek -- they've all intervened and filed adverse pleadings.

Apple has sued us in forums all over the world.

Nvidia has sued us in forums all over the world.

 1

 2

 3

 4

 5

 6

 7

 8

 9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

Case 5:17-cv-00220-LHK Document 170 Filed 08/16/17 Page 13 of 29
 14

 

PROCEEDINGS

Samsung has filed amicus briefs in this case. 

Intel has filed amicus briefs in this case. 

A lot of these folks have self-identified. 

And every single one of them and every single one on this

list I have is a major, multinational corporation. We all know

that this informant's privilege is for individuals; generally,

confidential informants. All of the cases that they've cited,

including Your Honor's case in Seafood Peddler, up from

San Rafael, that's either employees of a company who blew the

whistle, or it's individual confidential informants in drug or

gambling investigations. 

It wasn't even contemplated -- I don't believe -- that

this privilege would apply in an investigation like this, where

these folks are publicly campaigning against Qualcomm, and

they're all multinational, multibillion-dollar companies.

THE COURT: Are there any cases that limit the

informant's privilege to individuals, and not to companies?

MR. VAN NEST: Well, the cases that I've seen, save

one, are all individuals.

In other words, if you want to talk about Roviaro --

Roviaro, the Supreme Court case -- that's a drug case. It's a

confidential informant.

Reyes. Confidential informant. Drug case.

Tsannos. Informant in a gambling case.

Hodgson. Employees in a Fair Labor Standards Act case.

 1

 2

 3

 4

 5

 6

 7

 8

 9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

Case 5:17-cv-00220-LHK Document 170 Filed 08/16/17 Page 14 of 29
 15

 

PROCEEDINGS

Seafood Peddler, same thing.

Martin, same thing.

There's one case, the Pools case, where they don't

identify whether the so-called "informants" are individuals, or

companies; big companies. There's just simply no

identification, because that was a civil case here in the U.S.

where the FTC intervened, and the statement of the case is very

thin. So I haven't seen it.

If -- if the concern is somehow retaliation, or some such

thing, we can make these available to outside counsel only.

I mean, I have frankly never been in a situation where

this stuff of this nature was handled in this way, or where a

privilege was asserted.

Certainly, Your Honor, with respect to the folks I

identified that self-identified themselves and are openly

adverse publicly campaigning, there's no question there that

the privilege doesn't apply, because their identities are

known.

So those -- I think there's no question they have to be

turned over, and should be turned over, you know, right away.

I think that's true for everything on here. This list of 16 or

18 you've got as well as I do, Your Honor -- it's confidential

to the clients, so I'm not going to mention the names; but you

can peruse this. And you can tell me if there's any little

guys on here. I don't think so. And so I think they should be

 1

 2

 3

 4

 5

 6

 7

 8

 9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

Case 5:17-cv-00220-LHK Document 170 Filed 08/16/17 Page 15 of 29
 16

 

PROCEEDINGS

turned over, too.

If they're really, really concerned about retaliation,

then we can limit, you know, who gets access; but again, I

really don't want to push this down the road. They've made

their Rule 26 disclosures, and we have, too.

Judge Koh has told us, I'm not moving the schedule. If

you guys have to subpoena people -- and we're subpoenaing

people all over the world -- you've got to do it now. And if

you're going to do follow-up discovery, I don't want to hear

crying later about the deadline.

And so, again, they're the ones -- the FTC -- that asked

for a short schedule. They pushed for a short schedule. They

asked that the schedule be as fast as possible. And, okay,

that's what we're stuck with; but then please don't kick the

can down the road, as they like to do, and keep us from this

stuff. We ought to have it, and we ought to have it as soon as

possible.

THE COURT: All right. Thanks.

MR. VAN NEST: Thank you.

THE COURT: Can you address whether the informant

privilege should have some special rule for corporate entities?

MS. MILICI: Absolutely. The informant privilege

belongs to the Government. And it allows the Government to

withhold the identities of those -- furnish information about

possible law violations.

 1

 2

 3

 4

 5

 6

 7

 8

 9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

Case 5:17-cv-00220-LHK Document 170 Filed 08/16/17 Page 16 of 29
 17

 

PROCEEDINGS

The purpose of the privilege is the for the furtherance of

protection of the public interest. In law enforcement, that

policy applies no matter who the informant is. There's no

policy reason to separate individuals from corporations. The

interest here is if the -- if these disclosures are allowed,

will this chill future communications from industry

participants, which, as the declaration we submitted shows, is

key information that we rely on for our law-enforcement

function? So there's no reason in the policy or the law for

treating companies any differently.

And then I'd just also like to respond to this argument

that somehow, Qualcomm nose who the informants are. Qualcomm

does not know who the informants are. Qualcomm is making

guesses about who the informants are. And Qualcomm is arguing

that the informant's privilege shouldn't apply any time it

knows that -- that there are third parties who are adverse to

it; but knowing a third party is adverse to you is not the same

thing as knowing which of those third parties is an informant.

And the case law is clear that the informant's privilege

is only waived when the defendant knows the identity of the

informant as an informant; not that they know that this party

thinks that they're violating the law. That's not the test.

The test is: Do they know who the informants are? 

And they have not met that test.

THE COURT: And I understand the abstract concern

 1

 2

 3

 4

 5

 6

 7

 8

 9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

Case 5:17-cv-00220-LHK Document 170 Filed 08/16/17 Page 17 of 29
 18

 

PROCEEDINGS

about law enforcement.

What's the particularized harm here that would be caused,

or there's a threat to be caused to the informants?

Other cases -- in a drug case there's an articulable -- a

risk that a person's going to be killed, or they're going to

disappear. We don't have that sort of assertion in this case.

But the informant standard does not necessarily regard that

level of concern; but give me your best argument as to what the

harm would be if these informants were disclosed either now, or

soon.

MS. MILICI: Absolutely. First, I'd like to say that

the -- that the case law says that the Government can assert

the privilege as a right, and does not need to make a threshold

showing that retaliation is likely. So I don't think that

that's part of the analysis.

That said, as set forth in the Declaration, this case

concerns allegations that Qualcomm is a monopolist supplier;

that it controls essential inputs both in technology, and in

components; and that it has threatened customers in the past

with supply disruptions.

I think in those circumstance, it's not unreasonable for

an informant to fear that if their identity was known, that the

monopolist who they're complaining about might retaliate

against them.

And I would also say that in the case law -- and this

 1

 2

 3

 4

 5

 6

 7

 8

 9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

Case 5:17-cv-00220-LHK Document 170 Filed 08/16/17 Page 18 of 29
 19

 

PROCEEDINGS

is -- you can see this in the Department of Labor cases that we

cited -- the privilege isn't limited to informants who might

suffer some, you know, large retaliation. It covers subtle

retaliation. It covers social ostracism in cases.

So I think that asking, you know, What is the big,

terrible thing that Qualcomm could do? is a little bit of the

wrong question.

Could Qualcomm retaliate or make life more difficult for

these informants?

I think the answer to that is yes. And it's not

unreasonable for them to fear that.

THE COURT: And what about the timing? So it's been

asserted that Judge Koh has a tight schedule, and that she will

not be likely to grant extensions. And I agree that that is

unlikely to occur -- her granting an extension. And I'm

unlikely to recommend any extension of discovery in the case.

So given that, and the need to have a process in discovery

where there's follow-up by both parties on what information you

learn, how can I address the concern asserted by Qualcomm that

if they don't do this now, then later if they get it, they're

going to miss out on an opportunity to follow up on what they

do learn from informants?

MS. MILICI: Well, I -- I want to make a couple of

points --

THE COURT: Mm-hm.

 1

 2

 3

 4

 5

 6

 7

 8

 9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

Case 5:17-cv-00220-LHK Document 170 Filed 08/16/17 Page 19 of 29
 20

 

PROCEEDINGS

MS. MILICI: -- to this argument that there's a

timing concern here. First of all, we have been offering to

meet and confer about a date to exchange privilege logs

since -- oh, since discovery started. And they have not

engaged in that conversation. So this representation here that

there's some timing concern is, I think, not borne out by

actions that -- otherwise.

In addition, you know, as we've set forth in the brief,

Qualcomm has access to all of the information that it needs to

mount a defense. We've produced 370,000 ordinary-course

business documents that we received from third parties. We've

produced investigational hearing transcripts. They've

subpoenaed, you know, more than 40 companies, including every

company on that list.

So the idea that they're going to discover something and

not have time to subpoena them is, I think, false.

THE COURT: Now, what about the notion of using a

Protective Order as a protection for the informant companies

and their employees who have disclosed things, restricting the

use of that information, which is a lesser protection than

barring any discovery, but is some protection, nonetheless?

Why wouldn't that be a sufficient protection for them?

MS. MILICI: I think this was addressed in the

Seventh Circuit's Dole case. A Protective Order just isn't a

substitute for nondisclosure for privileged information. And,

 1

 2

 3

 4

 5

 6

 7

 8

 9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

Case 5:17-cv-00220-LHK Document 170 Filed 08/16/17 Page 20 of 29
 21

 

PROCEEDINGS

you know, I think that for the reasons stated there, that a

Protective Order -- it isn't sufficient.

In addition, when this was raised by Qualcomm during

meet-and-confers, we said we would be open to discussing

modifications to the Protective Order, but to make that

possible -- and never received a response.

But I think the Protective Order, as written, would not

give sufficient information -- protection to informants,

because it does allow in-house counsel to access the materials.

And frankly, you know, the case law says that the informant's

well-being shouldn't be placed in the hands of third-party

counsel who they don't know and don't trust. So I think that

there would have to be some limitation to the outside counsel

that -- that were allowed to see this; but again, I think that

the proper thing is to not produce them, at all.

THE COURT: And what is the status of the privilege

reference -- you've referenced that there's been privilege-log

negotiations and more conferring. And it's -- of course,

everyone's favorite task is to create privilege logs. Are

there internal deadlines set for when that's going to occur?

Can I help to move that process forward?

MS. MILICI: No. At this -- at this point, we

haven't been able to get Qualcomm to commit to when it's going

to finish its document production or produce a privilege log.

We've been in discussions about that. We're hoping to have

 1

 2

 3

 4

 5

 6

 7

 8

 9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

Case 5:17-cv-00220-LHK Document 170 Filed 08/16/17 Page 21 of 29
 22

 

PROCEEDINGS

that -- either an agreement or just submit to Judge Koh at the

next status conference.

At this point, the FTC is still working through documents,

and is -- and hasn't identified all of the privileged documents

yet. But we put on a schedule if we were to agree to one --

THE COURT: And the documents that you're seeking to

cloak under the informant's privilege -- are those all set

forth on a privilege log, or just -- at this moment, just by

category here in the Letter Brief?

MS. MILICI: They're just by category now.

I mean, we could produce a privilege log, but we have not.

Like I said, we haven't gone through all of the documents yet,

so we have -- we probably haven't identified them all yet.

THE COURT: All right. Thank you.

Mr. Van Nest, anything you want to follow up on?

MR. VAN NEST: I would like to respond to a number of

things here, Your Honor.

First of all, I think, based on what I know of these

documents, they are not only important, but may be critical.

These are the arguments that folks have put forward to the FTC.

They are the basis in fact for drafting the Complaint, the

discovery they took, the investigation they conducted. So to

say that they're not a big deal is absolutely wrong. They're

critical. And there's nothing else that replaces them. These

are, as they put it, the "white papers"; the Advocacy

 1

 2

 3

 4

 5

 6

 7

 8

 9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

Case 5:17-cv-00220-LHK Document 170 Filed 08/16/17 Page 22 of 29
 23

 

PROCEEDINGS

Documents. 

Obviously, as Your Honor knows, in cross-examining some of

these folks and conducting further discovery, this is the

critical thing: What did they tell the FTC? What did they

argue? What are the facts they presented in support of that?

Those are critical, number one.

Number two, it's not my point that the law doesn't allow

an application of this to a company -- this privilege. My

point is that where you're talking about large multinational

companies, the concern about retaliation or disclosure is far,

far reduced. We all know that. The classic cases are cases

where individuals are at risk. So I'm not arguing you could

never apply it to a company, but what I am arguing is: This is

not such an occasion.

And, as Your Honor notes, a limitation that made these

available to outside counsel, which Your Honor could order, is

more than enough protection. It's what Your Honor did in the

case when Intel was in here, arguing that they didn't want

inside Qualcomm folks looking at it. You said, Okay. Fine.

Limit it to the outside lawyers.

My firm and my co-counsel are pretty well known in this

District and in the country. I don't think they really have a

concern about us retaliating against anybody. And most of

these people -- most of the people on this list are people that

Qualcomm has accused of not dealing with, at all. I'm not sure

 1

 2

 3

 4

 5

 6

 7

 8

 9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

Case 5:17-cv-00220-LHK Document 170 Filed 08/16/17 Page 23 of 29
 24

 

PROCEEDINGS

how you retaliate against another chipmaker. The argument

there: You won't deal with them. Okay. I'm not sure what

form of retaliation they're worried about. So I think this is

trumped up. I think this is a delay tactic.

THE COURT: Is that a capital "T," or lower case?

MR. VAN NEST: Ah. Ha, ha, ha. Well put,

Your Honor.

THE COURT: No, no, no.

MR. VAN NEST: We'll keep that lower case.

But I would again urge the Court: Delay is not a good

answer.

And I didn't hear them say they're not going to rely on

this stuff. I didn't hear them say it's not going to be

relevant. We all know that at some point, this stuff is all

going to have to come out. And the sooner it does, the better,

in terms of keeping this case on track.

Thank you, Your Honor.

THE COURT: Thank you.

MS. MILICI: Your Honor, if I could respond just

briefly. We are not going to rely on any of these materials.

We have said that in the briefings to the Court. We've said

that in multiple letters to Qualcomm. We have no intention of

relying on anything we withhold for any purpose.

THE COURT: So what does that mean? So what would be

the test of that at trial; that you didn't rely upon some white

 1

 2

 3

 4

 5

 6

 7

 8

 9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

Case 5:17-cv-00220-LHK Document 170 Filed 08/16/17 Page 24 of 29
 25

 

PROCEEDINGS

paper you got from one of these informants?

MS. MILICI: Well, we're not going to introduce them

into evidence. We're not going to use them to cross-examine

anyone.

You know, the case that Qualcomm cited was a Sysco case,

where there were declarations from third parties that were

attached to a motion.

That is certainly not how we intend to use these. And

this speculation that somehow we relied on these for our

allegations is speculation.

Our case is based on the allegations in our Complaint,

which do not rely on the white papers, or -- or any of the

withheld materials. There we have provided -- we've produced

documents from which you could discern the factual basis for

our claims. And, you know, the Qualcomm has -- has many

avenues in which to -- to discover the relevant facts in this

case.

THE COURT: All right. You invited me to do an

in camera review of some of these materials. And I'm not

particularly enthusiastic about the idea, but when it comes to

asserting a privilege, one really does need a privilege log to

really thoroughly review the quality of the assertions, and

also to get a better sense of the volume and some of the

details of what's being withheld that sort of look at every

document, itself; but again, I'm not seeking to compel

 1

 2

 3

 4

 5

 6

 7

 8

 9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

Case 5:17-cv-00220-LHK Document 170 Filed 08/16/17 Page 25 of 29
 26

 

PROCEEDINGS

disclosure of something here in open court. But what kind of

volume are we talking about? You don't have a log yet,

detailing this.

MS. MILICI: Sure.

THE COURT: So are we talking about a million

documents? 10,000 documents? A thousand documents? A

hundred?

MS. MILICI: Oh.

THE COURT: What's the magnitude of -- if I said,

Give me a privilege log for what's being withheld on the

informant's privilege, how long would that privilege log be?

MS. MILICI: For the informant's privilege, we've

currently identified 273 documents, of which -- 50 to 60 of

them are substantive. And the remainder are the kind of

e-mails I mentioned of, you know, scheduling meetings, or

scheduling phone calls, or transmitting substantive materials.

But it's a small --

THE COURT: All right. Thanks very much to you both

for your arguments.

Here's what I'm going to order. I'm going to give one

more week to the FTC to provide any further declarations from

the foreign authorities. Of course, you've already presented

me with some. I'm not persuaded based on what I've seen so far

that I should bar discovery of what's come to the FTC from the

foreign authorities; but in the interest of giving full

 1

 2

 3

 4

 5

 6

 7

 8

 9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

Case 5:17-cv-00220-LHK Document 170 Filed 08/16/17 Page 26 of 29
 27

 

PROCEEDINGS

opportunity, and because you asked for more briefing -- and if

they want to, you know, submit it directly to the Court, that's

fine with me, or if they want to give it to you, and have you

file it, same difference. But I want to give them one more

week to give me their best arguments factually as to the

reasons that I should withhold production of something produced

to them then on the FTC.

Within that same time period, I want to have a privilege

log from the FTC, detailing the documents that have been

withheld under the informant's privilege. So the -- enough

information that I can make a determination as to whether the

privilege is properly made, or not. The who, the when, the

what description, without revealing the actual privileged

information. And that should be provided to Qualcomm, as well.

From there, I may decide that I want to look at the actual

documents to get a better or some of the actual documents, to

get -- you know, more granular information about what's in

there. 

My feeling right now is that I -- if I were in Qualcomm's

position, I would be wanting to see those materials. Maybe

it's just instinctual that if somebody does not want to give

it, it must be important; but white papers can be significant

in cross-examination, and might be a source of other discovery

that will lead to other things. So I want to learn a little

more, and give you a chance to establish the informant

 1

 2

 3

 4

 5

 6

 7

 8

 9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

Case 5:17-cv-00220-LHK Document 170 Filed 08/16/17 Page 27 of 29
 28

 

PROCEEDINGS

privilege with some more specificity.

I won't set a further hearing now. I may want to have a

further hearing after I look at those. So those will be due

both one week from today, August the 16th, to be filed and

provided to Qualcomm.

And I'll issue a ruling after that, or I'll schedule a

further hearing to discuss what I've received.

Thanks very much.

MR. VAN NEST: Thank you, Your Honor.

THE COURT: Yes.

MS. MILICI: Your Honor, can I ask one clarifying

question?

THE COURT: Yeah.

MS. MILICI: For the privilege log we're going to

produce in a week, do you want just the documents that are

being withheld under the informant's privilege on that, or do

you want --

THE COURT: Yes, just the ones covered by the

informant's privilege; the set of roughly 273 you identified

would be sufficient. Thanks very much.

MR. VAN NEST: Thank you, Your Honor.

THE COURT: Have a good afternoon.

(At 3:44 p.m. the proceedings were adjourned.)

 1

 2

 3

 4

 5

 6

 7

 8

 9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

Case 5:17-cv-00220-LHK Document 170 Filed 08/16/17 Page 28 of 29
 

CERTIFICATE OF REPORTER

I certify that the foregoing is a true and correct 

transcript, to the best of my ability, of the above pages of 

the official electronic sound recording provided to me by the 

U. S. District Court, Northern District of California, of the 

proceedings taken on the date and time previously stated in the 

above matter. 

I further certify that I am neither counsel for, related 

to, nor employed by any of the parties to the action in which 

this hearing was taken; and, further, that I am not financially 

nor otherwise interested in the outcome of the action. 

_______________________________August 16, 2017

Signature of Transcriber Date 

 1

 2

 3

 4

 5

 6

 7

 8

 9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

Case 5:17-cv-00220-LHK Document 170 Filed 08/16/17 Page 29 of 29