Case Clip(s) Detailed Report

Qualcomm

Monday, January 07, 2019, 12:51:40 AM

Case 5:17-cv-00220-LHK Document 1161-4 Filed 01/07/19 Page 1 of 7
Yu, Nanfen (Vol. 01) - 03/14/2018

 Would you please state and spell your name? ...

NY (63 SEGMENTS RUNNING 00:47:49.023)

 1. PAGE 8:09 TO 8:11 (RUNNING 00:00:12.612)

 09 Q Would you please state and spell your name? 

10 A My last name is Y-u, Yu, and my first name 

 11 is N-a-n-f-e-n, Nanfen. 

 2. PAGE 8:22 TO 8:23 (RUNNING 00:00:05.350)

 22 Q And what is your position at Huawei? 

23 A I'm a senior legal counsel. 

 3. PAGE 9:02 TO 9:04 (RUNNING 00:00:06.146)

 02 Q How long have you been senior legal counsel 

03 at Huawei? 

04 A 12 years. 

 4. PAGE 49:13 TO 49:23 (RUNNING 00:00:56.308)

 13 Have you ever heard that Qualcomm refused to 

14 supply chips to Huawei? 

15 MR. GIARDINA: Objection to form. 

16 THE WITNESS: Yes. 

17 BY MR. KENNAMER: 

18 Q When was that? 

19 A I cannot remember the specific date or year. 

20 But I understand that when we are trying to purchase 

21 the TDSCDMA chipset and the three mode chipset from 

22 Qualcomm, Qualcomm refused to provide those chipsets 

23 until we signed a license agreement. 

 5. PAGE 52:06 TO 52:11 (RUNNING 00:00:14.824)

 06 Q Do you know whether Qualcomm ever threatened 

07 to stop supplying chips -- base band processor chips 

 08 to Huawei? 

09 A Yes. 

10 Q When was that? 

11 A It was in 2013. 

 6. PAGE 52:12 TO 52:16 (RUNNING 00:00:42.973)

 12 Q And is that the only instance that you can 

13 think of? 

14 A That's the one I can clearly remember. 

15 Q You can't recall any others; right? 

16 A That is the one that I was involved in. 

 7. PAGE 52:17 TO 52:22 (RUNNING 00:00:23.655)

 17 Q When you say you were involved in this 

18 incident, what was the nature of your involvement? 

19 How were you involved? 

20 A That happened when we were discussing about 

21 the extension of the CDMA subscriber units license 

22 agreement. That was why I was involved. 

 8. PAGE 53:01 TO 53:08 (RUNNING 00:00:39.741)

Case 5:17-cv-00220-LHK Document 1161-4 Filed 01/07/19 Page 2 of 7
 00053:01 Q Was it said orally? Out loud? The way I'm 

 02 talking to you? Was it put in writing? 

03 A It's both in writing and orally. 

04 Q And did Qualcomm ever stop supplying CDMA 

05 chips to Huawei? 

06 A We did extend the CDMA license agreement; so 

07 that's probably why Qualcomm didn't stop supplying 

08 CDMA chipset. 

 9. PAGE 53:21 TO 54:02 (RUNNING 00:00:21.237)

 21 Q Okay. Did you ever hear this threat? 

22 A Yes. 

23 Q From whom? 

24 A From the Qualcomm team that we communicated 

25 and met with. 

 00054:01 Q Do you remember specific people? 

 02 A Eric Reifschneider. 

 10. PAGE 54:17 TO 54:24 (RUNNING 00:00:35.552)

 17 Q Yes. Anything you can remember. 

 18 A As far as I can remember, they said if we do 

 19 not extend CDMA license agreement, they would stop 

20 supplying the chipset to us, and it would be a 

21 disruption of Huawei's business. 

22 Q Do you know whether Qualcomm has a policy of 

23 coupling chip supply with a license agreement? 

24 A Yes. Everybody in this industry knows. 

 11. PAGE 55:20 TO 56:02 (RUNNING 00:00:38.696)

 20 Q Ms. Yu, you've been handed what's been 

21 marked as Exhibit QX2303. And it is an e-mail 

22 string, the first of which is an e-mail from Eric 

 23 Reifschneider dated May 8th, 2013. To Mr. Cheng and 

 24 CCing a variety of people including yourself; right? 

25 A Yes. 

 00056:01 Q Do you recognize receiving this e-mail? 

 02 A Yes. 

 12. PAGE 56:08 TO 56:12 (RUNNING 00:00:13.994)

 08 Do you see this e-mail from 

09 Mr. Reifschneider dated May 1st -- May 1st, 2013? 

 10 A Yes. 

11 Q And it's to Mr. Cheng; right? 

12 A Yes. 

 13. PAGE 59:19 TO 60:13 (RUNNING 00:01:07.458)

 19 Q And my -- my question to you is was it 

 20 Huawei's intention to allow the agreement to expire 

21 while it negotiated a new agreement? 

22 A We didn't have any specific intention. But 

23 if the parties needs more time, it's just consistent 

24 with the licensing practice in the industry. We 

25 don't see that it will cause any problem on both 

 00060:01 sides. 

 02 Q To allow the agreement to expire while you 

03 negotiate a replacement agreement? 

04 A That's the common practice. 

05 Q Is that the common practice with Qualcomm? 

06 A With everybody else. Not with Qualcomm. 

Case 5:17-cv-00220-LHK Document 1161-4 Filed 01/07/19 Page 3 of 7
 07 Because Qualcomm never allowed to have the period of 

08 time to negotiate. Otherwise, it would not provide a 

09 chipset. Because if you don't have a license 

10 agreement, they would just cutoff the chipset supply. 

11 That's why they're in a hurry to push us to conclude 

12 or the extension of the new agreement, and why they 

13 see it's a problem if we don't do it at that time. 

 14. PAGE 68:14 TO 68:23 (RUNNING 00:01:06.843)

 14 Q Did you ever ask Mr. Reifschneider to 

15 explain what he meant in this e-mail when he referred 

 16 to ways to avoid any disruption in chipset supply? 

17 A From Huawei's perspective, based on all the 

18 e-mails that has been exchanged at that time period 

19 and what the Qualcomm team has expressed orally, we 

20 considered that as a strong threat of stopping the 

21 chipset supply, and we didn't talk about the other 

22 ways to avoid such disruption, other than signing a 

23 license agreement in any form. 

 15. PAGE 69:07 TO 69:15 (RUNNING 00:00:41.571)

 07 Q But did you ever ask Mr. Reifschneider 

08 personally to explain what he meant when he wrote 

09 about ways to avoid any disruption in chipset supply 

10 at the end of this month, without creating undue risk 

11 for either party? 

 12 A Eric make it very clear that we have to sign 

 13 a license agreement in some form. And we didn't see 

14 that there's any other possible ways to avoid the 

15 disruption of the chipset supply. 

 16. PAGE 69:24 TO 70:02 (RUNNING 00:00:23.433)

 24 Q There wasn't a disruption in Huawei's supply 

25 of CDMA chips, was there? 

 00070:01 A There wasn't, because we extended the 

 02 license agreement. 

 17. PAGE 90:02 TO 90:03 (RUNNING 00:00:04.906)

 02 Do you recognize Exhibit QX2308? 

03 A Yes. 

 18. PAGE 90:24 TO 91:12 (RUNNING 00:00:42.846)

 24 THE WITNESS: This is an amendment to the 

25 license agreement between the parties entered into as 

 00091:01 of May 27th, 2013. 

 02 BY MR. KENNAMER: 

03 Q Right. And what's the subject matter of 

04 this amendment? 

05 A The subject matter is the license for CDMA 

06 subscriber units. 

 07 Q And did you participate in the negotiations 

 08 regarding this amendment? 

09 A Yes. 

10 Q What role did you play? 

11 A I'm responsible in reviewing and negotiating 

12 the license -- the terms in this amendment. 

 19. PAGE 91:21 TO 92:02 (RUNNING 00:00:42.441)

 21 Q How important was the 2014 amendment --

Case 5:17-cv-00220-LHK Document 1161-4 Filed 01/07/19 Page 4 of 7
 22 Exhibit QX2308 to Huawei? 

23 A It's very important for us in terms of the 

24 -- to make sure that we continue to get the CDMA 

 25 chips in supply. But for the amendment itself, it's 

 00092:01 just the consistency changes with the set of 

 02 agreements that we enter into in 2014. 

 20. PAGE 94:08 TO 94:19 (RUNNING 00:00:48.768)

 08 Q Ms. Yu, what's been marked as Exhibit QX2309 

09 is a document entitled Subscriber Unit License 

10 Agreement. It is entered into as of July 1st, 2014, 

11 between Qualcomm and Huawei. 

12 Do you know what this document is -- Exhibit 

 13 QX2309? 

14 A Yes. 

15 Q What is it? 

16 A It's a subscriber unit license agreement 

17 entered into between the parties in 2015. 

18 Q And what technology does it cover? 

19 A It covers both WCDMA and LTE licenses. 

 21. PAGE 95:03 TO 95:10 (RUNNING 00:00:40.584)

 03 Q And with respect to QX2309, this agreement, 

 04 and the amendment regarding the CDMA subscriber units 

05 QX2308, they're both dated as of July 1st, 2014. But 

06 do you understand that that's when the parties 

07 actually executed the agreements? 

08 A The parties signed the agreement on around 

09 December 15, 2014. But it's retroactively effective 

10 on July 1st, 2014. 

 22. PAGE 97:06 TO 97:15 (RUNNING 00:00:27.692)

 06 Q And did you recommend that Huawei enter into 

07 this agreement? 

08 A We -- we had no choice. 

 09 Q That wasn't my question. Did you recommend 

10 that Huawei enter into this agreement? 

11 A We had no choice. 

12 Q Did you recommend that Huawei enter into

13 this agreement? 

14 A I don't have a personal view on that, 

15 because that's what we had to do. 

 23. PAGE 98:04 TO 98:14 (RUNNING 00:00:48.363)

 04 Q Why do you say "we had no choice"? 

05 A Firstly, there were dependency and need from 

06 the business unit for us to sign to maintain license 

07 agreement for them to be able to obtain chipsets from 

08 Qualcomm. 

09 And secondly, we had an existing agreement 

10 previously for WCDMA which doesn't have a term there, 

11 meaning that we're going to pay royalty forever. 

12 Q What about LTE? 

13 A Qualcomm wouldn't agree to sign any 

14 agreement if we don't include LTE license here. 

 24. PAGE 113:25 TO 116:04 (RUNNING 00:04:50.143)

 25 Q Through your work, did you have an 

 00114:01 opportunity to become familiar with the Qualcomm 

 02 Huawei agreements? 

Case 5:17-cv-00220-LHK Document 1161-4 Filed 01/07/19 Page 5 of 7
 03 A Yes. My -- my job requires me to read and 

 04 interpret those agreements and requires me to be 

05 familiar with those agreements. 

06 Q I would like to show you a document which 

07 has been labeled as CX1018. 

 08 MR. COX: And I'll note for the record, 

 09 CX1018 is Bates labeled FTC-Huawei 0000704. 

10 Q And what is this document? 

11 A This is the CDMA subscriber unit license 

12 agreement entered into between Huawei and Qualcomm on 

13 May 29th, 2003. 

14 Q What are the key provisions of this 

15 contract, in your view? 

16 A It provides a license for CDMA patents of 

17 Qualcomm. And the key terms would include the 

18 license around the term of the contract, and the 

19 royalty -- royalties that is payable from Huawei to 

 20 Qualcomm. And that the license back from Huawei to 

21 Qualcomm, and also Huawei's purchase commitment made 

22 to purchase Qualcomm chipsets. 

23 So those are the key terms of the agreement. 

24 Q And when you say "purchase commitment," what 

25 do you mean by "purchase commitment"? 

 00115:01 A Purchase commitment means that Huawei was 

 02 committed under this agreement to purchase all the 

03 CDMA chipsets from Qualcomm. And if we purchase any 

04 single CDMA chipset from others, then Huawei would 

 05 have to apply for higher royalty rate. 

 06 Q And what portion of the contract concerns 

07 that issue of the higher royalty rates? 

08 A It's in Section 5.4. 

09 Q So and what does 5.4 require? 

10 A It requires that if -- commencing on the day 

 11 that Huawei or any affiliate of Huawei first sells 

12 subscriber units incorporating CDMA Asics not 

13 purchased from Qualcomm, or a Qualcomm affiliate, the 

14 royalties for all the subscriber units sold by Huawei 

15 and all Huawei affiliates shall be at least what's 

16 set forth in section 5.2B, meaning a higher royalty 

17 rate than set -- than the royalty rate set forth in 

 18 5.2A. 

19 Q You use the term Asic or A-s-i-c. 

 20 What does that mean? 

21 A That means chipset. 

22 Q And is the provision about higher royalty 

23 rate if you purchase a nonQualcomm CDMA chipset -- is 

 24 that still in effect today? 

25 A Yes. 

 00116:01 Q Have you had any -- has Qualcomm said 

 02 anything to you to indicate they do not require 

03 Huawei to honor that commitment? 

04 A No. 

 25. PAGE 120:01 TO 121:11 (RUNNING 00:02:32.749)

 00120:01 that document, this is a document that's been Bates 

 02 labeled CX1006. 

03 Is this another document that you've worked 

04 with at -- in your role at Qualcomm? 

 05 A Sorry. Can you repeat that question? 

06 Q Sure. Is this another document that you've 

07 seen in your role at Qualcomm? 

08 A At Huawei? Yes. 

Case 5:17-cv-00220-LHK Document 1161-4 Filed 01/07/19 Page 6 of 7
 09 Q Huawei. Thank you. I'm sorry. 

10 So can you tell me what this document is? 

11 A This is the component supply contract 

 12 between Huawei and Qualcomm. 

 13 Q Is it still in effect? 

14 A Yes. 

15 Q And so what -- in general, what is the 

 16 purpose of this contract? 

 17 A In general, this is a -- this is a contract 

 18 that defines the rights and obligations on both 

19 sides, and sets forth the relationship between the 

20 parties for the procurement of chipsets from Qualcomm 

21 to Huawei. 

22 Q And are there some terms in this contract 

23 that would you regard as key provisions? 

 24 A Yes. As IP counsel, that I generally only 

 25 review the provisions that's relevant to IPR. So I 

 00121:01 would review those provisions, such as the Section 9 

 02 and Section 11, which is relevant to IPR. 

03 Q And what language in Section 9 do you find 

04 to be of interest? 

05 MR. KENNAMER: Object to form. 

06 THE WITNESS: So Section 9 provides that --

 07 that the chipset that is sold by Qualcomm to Huawei 

08 does not contain the licenses of Qualcomm. And it 

09 requires that Huawei -- to obtain a separate license 

 10 and enter into a separate license agreement with 

11 Qualcomm for its patents. 

 26. PAGE 121:20 TO 121:25 (RUNNING 00:00:19.427)

 20 Q Are there other suppliers that have that 

21 practice? 

22 A Not that I'm aware. 

23 Q Is this referred to as exhaustion? 

24 A Yes. Qualcomm is trying to avoid exhaustion 

25 by this provision. 

Case 5:17-cv-00220-LHK Document 1161-4 Filed 01/07/19 Page 7 of 7