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UNITED STATES COURT REPORTERS

858

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

SAN JOSE DIVISION

FEDERAL TRADE COMMISSION, 

PLAINTIFF,

VS.

QUALCOMM INCORPORATED, A 

DELAWARE CORPORATION,

DEFENDANT.

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C-17-00220 LHK

SAN JOSE, CALIFORNIA

JANUARY 14, 2019

VOLUME 5 

PAGES 858-1111

SEALED PAGES 946-949, 1004,

 1024-1042, 1081-1083

TRANSCRIPT OF PROCEEDINGS

BEFORE THE HONORABLE LUCY H. KOH 

UNITED STATES DISTRICT JUDGE

A P P E A R A N C E S:

FOR THE PLAINTIFF: FEDERAL TRADE COMMISSION 

BY: JENNIFER MILICI

 DANIEL J. MATHESON 

 WESLEY G. CARSON

 KENT COX

 NATHANIEL M. HOPKIN

 PHILIP J. KEHL

 MIKA IKEDA 

600 PENNSYLVANIA AVENUE, NW 

WASHINGTON, D.C. 20580

APPEARANCES CONTINUED ON NEXT PAGE

OFFICIAL COURT REPORTERS: LEE-ANNE SHORTRIDGE, CSR, CRR

CERTIFICATE NUMBER 9595

IRENE RODRIGUEZ, CSR, CRR, RMR

CERTIFICATE NUMBER 8074

PROCEEDINGS RECORDED BY MECHANICAL STENOGRAPHY

TRANSCRIPT PRODUCED WITH COMPUTER

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UNITED STATES COURT REPORTERS

859

APPEARANCES (CONTINUED)

FOR THE DEFENDANT: KEKER, VAN NEST & PETERS 

BY: ROBERT A. VAN NEST

 JUSTINA K. SESSIONS

 EUGENE M. PAIGE

 CHRISTINA BLAIS

 MATAN SHACHAM

 CODY HARRIS

 KRISTIN HUCEK 

633 BATTERY STREET

SAN FRANCISCO, CALIFORNIA 94111 

CRAVATH, SWAINE & MOORE 

 BY: GARY A. BORNSTEIN

 MICHAEL BRENT BYARS

 YONATAN EVEN

 JORDAN D. PETERSON

 MING-TOY TAYLOR

 DEREK SUTTON

 ANDREW HUYNH 

 ANTONY RYAN

825 EIGHTH AVENUE 

 NEW YORK, NEW YORK 10019

ALSO PRESENT: MARK SNYDER 

JEFF DAHM

KEN KOTARSKI 

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UNITED STATES COURT REPORTERS

860

INDEX OF WITNESSES

PLAINTIFF'S

JEFF WILLIAMS

DIRECT EXAM BY MR. BAKER P. 864

CROSS-EXAM BY MR. PAIGE P. 893 

REDIRECT EXAM BY MR. BAKER P. 917

RECROSS-EXAM BY MR. PAIGE P. 917 

HWI-JAE CHO

DEPOSITION READING P. 922

RICHARD DONALDSON 

DIRECT EXAM BY MS. GILLEN P. 959 

CROSS-EXAM BY MR. PAIGE P. 978 

REDIRECT EXAM BY MS. GILLEN P. 994 

CHRISTINA PETERSSON

VIDEOTAPED DEPOSITION P. 1002 

BRIAN CHONG

VIDEOTAPED DEPOSITION P. 1110

 

MATTHEW LASINSKI

DIRECT EXAM BY MR. ROSS P. 1006

CROSS-EXAM BY MR. BORNSTEIN P. 1041 

REDIRECT EXAM BY MR. ROSS P. 1093 

RECROSS-EXAM BY MR. BORNSTEIN P. 1100

FURTHER REDIRECT EXAM BY MR. ROSS P. 1103

FURTHER RECROSS-EXAM BY MR. BORNSTEIN P. 1106 

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UNITED STATES COURT REPORTERS

861

INDEX OF EXHIBITS

MARKED ADMITTED

PLAINTIFF'S

0617 873

0599 876

5363 878

0526 882

861 913

0531, 0853, 6803,

6816, 8117, 

6774, PAGES 5 THROUGH 9, AND 

6809, PAGES 2 THROUGH 24 921

0853 (REMOVED FROM ADMISSION) 953 

101 973

4103, 4104, 4155 1002 

7218 1018

7492 1073

DEFENDANT'S

9070 900

9074 902

6457 1067

2053 1109

JOINT

37 905

59 907

0025, 0026, 0110 AND 0111 921

0120 1002

116 1025

0042 1110

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UNITED STATES COURT REPORTERS

862

SAN JOSE, CALIFORNIA JANUARY 14, 2019 

P R O C E E D I N G S

(COURT CONVENED AT 9:03 A.M.)

THE COURT: GOOD AFTERNOON AND WELCOME. 

MR. VAN NEST: GOOD MORNING. 

THE COURT: GOOD MORNING, I SHOULD SAY. 

OKAY. CALL YOUR NEXT WITNESS, PLEASE. 

MR. BAKER: GOOD MORNING, YOUR HONOR. JOE BAKER FOR 

THE FTC. 

BEFORE WE CALL OUR NEXT WITNESS, I JUST WANTED TO BRING TO 

YOUR ATTENTION TO ONE SEALING MATTER RELATED TO THIS WITNESS. 

THE COURT: OKAY. WHAT'S THAT? 

MR. BAKER: OVER THE WEEKEND, THE PARTIES HAVE 

CONFERRED AND QUALCOMM HAS AGREED TO WITHDRAW ITS SEALING 

REQUEST AS TO THE $7.50 AND $10 NUMBERS THAT ARE RELATED TO THE 

APPLE AGREEMENTS WITH QUALCOMM. 

THE COURT: OKAY. 

MR. BAKER: SO WE INTEND TO ELICIT TESTIMONY ABOUT 

THOSE NUMBERS AND THOSE NUMBERS WILL COME IN VARIOUS DOCUMENTS 

TODAY. 

THE COURT: OKAY. THEN ALL THOSE DOCUMENTS NEED TO 

BE REFILED WITH ALL THAT INFORMATION UNREDACTED. OKAY. WHEN 

IS THAT GOING TO HAPPEN? GIVE ME A DEADLINE, PLEASE. 

MR. BAKER: WE CAN DO THAT LATER TODAY. 

THE COURT: OKAY. 

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UNITED STATES COURT REPORTERS

863

THE FTC CALLS JEFF WILLIAMS. 

THE COURT: ALL RIGHT. THE $10 AND THE $7.50, WHAT 

DO THEY REPRESENT? 

MR. BAKER: THE $7 -- 

THE COURT: AND I'M CHARGING THIS ALL TO YOUR TIME. 

9:03 IS WHEN THIS CONVERSATION STARTED. GO AHEAD. 

WHERE IS HE? BRING THE WITNESS IN. WHERE IS HE? WHY HE 

IS NOT COMING FORWARD. 

MS. MILICI: I BELIEVE HE'S COMING IN. 

THE COURT: OH, OKAY. 

WHAT ARE THOSE NUMBERS? 

MR. BAKER: THE $7.50 NUMBER IS THE MARKETING 

INCENTIVE AGREEMENT FROM 2007. 

THE COURT: OKAY. 

MR. BAKER: THE $10 FIGURE IS IN THE BUSINESS 

COOPERATION AND PATENT AGREEMENT FROM 2013. 

THE COURT: OKAY. AND THEN YOU SAW MY ORDER, 

MR. VAN NEST HAD REPRESENTED THAT THE $1 BILLION NUMBER WAS 

PUBLIC, WHICH WAS NOT TRUE, AND ALSO THAT IT HAD NOT BEEN 

SEALED. 

I HAD SEALED IT AT THE REQUEST OF QUALCOMM. QUALCOMM HAD 

REPRESENTED THAT THAT WAS COMPETITIVE PRICING INFORMATION. I 

TOOK THEIR REPRESENTATION AS CORRECT, AND I SEALED IT. 

BUT THAT SHOULD ALL BE UNSEALED NOW. 

MR. BAKER: OKAY. 

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WILLIAMS DIRECT BY MR. BAKER

UNITED STATES COURT REPORTERS

864

THE COURT: SO YOU'RE WELCOME TO GO INTO IT WITH THIS 

WITNESS IF YOU WANT. 

MR. BAKER: OKAY. 

THE COURT: GO AHEAD, PLEASE. IT'S 9:05. LET'S GET 

HIM SWORN IN, PLEASE. 

(PLAINTIFF'S WITNESS, JEFF WILLIAMS, WAS SWORN.)

THE WITNESS: YES. 

THE CLERK: THANK YOU. PLEASE BE SEATED. 

WOULD YOU PLEASE STATE YOUR FULL NAME AND SPELL YOUR LAST 

NAME FOR THE RECORD. 

THE WITNESS: JEFF WILLIAMS. 

THE CLERK: SPELL YOUR LAST NAME FOR THE RECORD. 

THE WITNESS: W-I-L-L-I-A-M-S. 

THE COURT: OKAY. 9:05. GO AHEAD, PLEASE. 

DIRECT EXAMINATION

BY MR. BAKER: 

Q. GOOD MORNING, MR. WILLIAMS. 

A. GOOD MORNING.

Q. WHERE ARE YOU CURRENTLY EMPLOYED? 

A. APPLE.

Q. WHEN DID YOU JOIN APPLE? 

A. 1998.

Q. WHAT IS YOUR PRESENT POSITION? 

A. CHIEF OPERATING OFFICER.

Q. WHAT OTHER POSITIONS HAVE YOU HELD THERE SINCE 2005? 

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WILLIAMS DIRECT BY MR. BAKER

UNITED STATES COURT REPORTERS

865

A. I WAS IN CHARGE OF COMMODITY PROCUREMENT, THEN VICE 

PRESIDENT OF WORLDWIDE PROCUREMENT, VICE PRESIDENT OF IPOD 

OPERATIONS, THEN IPHONE OPERATIONS, THEN SENIOR VICE PRESIDENT 

OF OPERATIONS, AND THEN COO.

Q. DOES TONY BLEVINS REPORT TO YOU?

A. HE DOES. 

Q. AND TO WHOM DO YOU REPORT? 

A. TIM COOK.

Q. WHEN DID APPLE LAUNCH ITS FIRST IPHONE? 

A. 2007.

Q. WHAT, IF ANY, WAS YOUR INVOLVEMENT IN THE DEVELOPMENT OF 

THE ORIGINAL IPHONE? 

A. I WAS PART OF THE SMALL TEAM THAT WORKED ON THE IPHONE IN 

THE BEGINNING. 

Q. PRIOR TO THE LAUNCH OF THE IPHONE, DID APPLE HAVE ANY 

EXPERIENCE IN THE CELLULAR TELEPHONE SPACE?

A. NONE.

Q. AT A HIGH LEVEL, HOW DID APPLE ENVISION THE IPHONE 

COMPARED TO OTHER CELLULAR PHONES THAT WERE ON THE MARKET AT 

THE TIME? 

A. WE WERE, WE WERE SELLING THE IPOD AND CUSTOMERS LOVED IT, 

AND THEY WERE CARRYING IPODS, AND THEY WERE ALSO CARRYING A 

PHONE, BASICALLY A FEATURE PHONE AT THAT TIME. 

AND WE SAW AN OPPORTUNITY TO NOT ONLY MERGE THOSE, BUT 

OFFER SOMETHING EVEN, EVEN BIGGER AND DIFFERENT. 

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WILLIAMS DIRECT BY MR. BAKER

UNITED STATES COURT REPORTERS

866

AND PEOPLE DIDN'T LOVE THE USER INTERFACE OF THEIR PHONES. 

THEY -- IT WAS PRETTY FUNCTIONAL FOR MAKING PHONE CALLS, BUT WE 

SAW A CHANCE TO COMPLETELY CHANGE THAT, AND THAT WAS THE 

BEGINNING OF THE IPHONE. IT WAS A REALLY EXCITING TIME.

Q. HAVE YOU BEEN INVOLVED IN NEGOTIATING CONTRACTS WITH 

QUALCOMM OVER THE YEARS? 

A. I HAVE. 

Q. I'D LIKE TO PUT UP A DEMONSTRATIVE ON THE SCREEN THAT'S 

CDX 501. THIS SLIDE LISTS FIVE AGREEMENTS BETWEEN APPLE AND 

QUALCOMM THAT HAVE BEEN PREVIOUSLY ADMITTED INTO EVIDENCE. 

THEY ARE THE 2007 MARKETING INCENTIVE AGREEMENT, JX 40; THE 

2009 STRATEGIC TERMS AGREEMENT, JX 52; THE 2011 TRANSITION 

AGREEMENT, JX 57; THE 2013 FIRST AMENDMENT TO TRANSITION 

AGREEMENT, ALSO JX 57; AND THE 2013 BUSINESS COOPERATION AND 

PATH AGREEMENT, JX 78. 

YOU ALSO HAVE COPYING OF THESE IN YOUR EXHIBIT BINDER IN 

CASE YOU NEED TO REFER TO THEM. 

ARE YOU FAMILIAR WITH EACH OF THESE AGREEMENTS? 

A. I AM.

Q. WERE YOU INVOLVED IN THE NEGOTIATION OF EACH OF THESE 

AGREEMENTS? 

A. I WAS. 

Q. DID YOU SIGN EACH OF THESE AGREEMENTS ON BEHALF OF APPLE?

A. I DID.

Q. DOES THIS CHART LOOK ACCURATE TO YOU?

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WILLIAMS DIRECT BY MR. BAKER

UNITED STATES COURT REPORTERS

867

A. IT DOES. 

MR. BAKER: YOUR HONOR, IF I MAY APPROACH WITH A 

BINDER FOR THE WITNESS? 

THE COURT: GO AHEAD, PLEASE. 

MR. BAKER: HERE YOU GO (HANDING). 

THE WITNESS: THANKS. 

BY MR. BAKER: 

Q. HOW DID APPLE FIRST COME TO HAVE DISCUSSIONS WITH QUALCOMM 

ABOUT I.P. LICENSING? 

A. WE LEARNED THERE WERE I.P. HOLDERS IN THE SPACE THAT 

CHARGED LICENSES AND QUALCOMM WAS ONE OF THOSE, AND WE ENGAGED 

IN DISCUSSIONS WITH THEM. 

Q. DID APPLE TAKE A DIRECT LICENSE TO QUALCOMM'S CELLULAR 

STANDARD ESSENTIAL PATENTS? 

A. WE DID NOT.

Q. WHY NOT? 

A. QUALCOMM SAID THAT THE PRACTICE WAS WE HAD TO 

CROSS-LICENSE ALL OF OUR I.P. TO THEM. SO IN ESSENCE, THEY 

WANTED US TO PAY THEM FOR THEIR SEPS AND, IN ADDITION, WE WOULD 

CROSS-LICENSE ALL OF OUR I.P., SO ALL OF OUR MAC, IPOD, IPHONE, 

ALL OF THE I.P. THEY WOULD HAVE A LICENSE TO AND THAT STRUCK US 

AS PATENTLY UNFAIR, AND WE CHOSE NOT TO PURSUE THAT ROUTE.

Q. WHEN YOU SAY "CROSS-LICENSE," APPLE WOULD BE GRANTING A 

LICENSE TO QUALCOMM TO USE ALL OF APPLE'S I.P.; IS THAT RIGHT? 

A. RIGHT, AND AT THE SAME TIME WE PAY THEM.

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WILLIAMS DIRECT BY MR. BAKER

UNITED STATES COURT REPORTERS

868

Q. RATHER THAN TAKE A DIRECT LICENSE TO QUALCOMM'S STANDARD 

ESSENTIAL PATENTS, WHAT DID APPLE DO INSTEAD? 

A. INSTEAD WE REACHED AN AGREEMENT WHERE WE WOULD GET A NET 

LICENSE THAT WAS LOWER THAN THE STANDARD CONTRACT RATE. SO THE 

WAY IT WORKED IS QUALCOMM HAD A STANDARD AGREEMENT WITH 

CONTRACT MANUFACTURERS AND THE CONTRACT MANUFACTURERS PAID 

QUALCOMM, AND WE REIMBURSE THE CONTRACT MANUFACTURERS, AND THEN 

QUALCOMM GAVE US A REBATE DOWN TO A LOWER RATE. 

Q. SO WAS THAT ARRANGEMENT INITIALLY IMPLEMENTED UNDER THE 

2007 MARKETING INCENTIVE AGREEMENT?

A. IT WAS.

Q. YOU MENTIONED CONTRACT MANUFACTURERS. JUST TO BE SURE 

IT'S CLEAR, CAN YOU BRIEFLY EXPLAIN APPLE'S CONTRACT 

MANUFACTURING MODEL? 

A. SURE. WE DESIGN OUR PRODUCTS, AND WE DESIGN THE PROCESSES 

THAT MAKE OUR PRODUCTS, BUT THE FINAL ASSEMBLY FOR ALMOST ALL 

OF OUR PRODUCTS ARE DONE BY OTHER COMPANIES WHO EMPLOY THE 

LABOR AND DO THE ACTUAL FINAL ASSEMBLY. WE CALL THEM CONTRACT 

MANUFACTURERS.

Q. DID APPLE'S CONTRACT MANUFACTURERS HAVE DIRECT LICENSE 

AGREEMENTS WITH QUALCOMM BEFORE APPLE STARTED MAKING THE 

IPHONE? 

A. THEY DID.

Q. WHAT DID THESE EXISTING LICENSE REQUIREMENTS THE CONTRACT 

MANUFACTURERS TO PAY? 

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WILLIAMS DIRECT BY MR. BAKER

UNITED STATES COURT REPORTERS

869

A. 5 PERCENT OF THE COST OF THE PHONE IS WHAT WE WERE TOLD -- 

WE COULDN'T SEE THE AGREEMENTS DIRECTLY, BUT QUALCOMM TOLD US, 

AND OTHERS, QUALCOMM TOLD US THAT IT WAS 5 PERCENT OF THE COST 

OF THE PHONE, AND THAT'S ACTUALLY WHAT WE ENDED UP REIMBURSING 

THE CONTRACT MANUFACTURERS FOR.

Q. WHAT IS THAT IN DOLLARS? 

A. DEPENDS ON THE PHONE AT THE POINT IN TIME, BUT IT'S IN THE 

TEENS. SO ANYWHERE FROM, YOU KNOW, $12 TO $20 RANGE.

Q. ASIDE FROM THE SHEER DOLLAR AMOUNT, DID APPLE HAVE ANY 

VIEWS REGARDING THE STRUCTURE OF THE CM'S EXISTING LICENSES 

WITH QUALCOMM? 

A. YES.

Q. WHAT WERE THOSE? 

A. THE WHOLE IDEA OF A PERCENTAGE OF THE COST OF THE PHONE 

DIDN'T MAKE SENSE TO US. IT STRUCK AT OUR VERY CORE OF SENSE 

OF FAIRNESS. 

IT -- WE -- YOU KNOW, AT THE TIME WE WERE MAKING SOMETHING 

REALLY, REALLY DIFFERENT. WE WERE BRINGING SOME INNOVATION. 

AND, FOR EXAMPLE, WE WERE ONE OF THE FIRST AND LED THE CHARGE 

TO EMBED A LOT OF NAND MEMORY. WE DID THIS ON OUR IPODS, AND 

WE WERE GOING TO DO IT ON OUR IPHONES, AND IF WE PUT ANOTHER 

$100 OF COST IN NAND MEMORY, PER THE QUALCOMM AGREEMENT, THEY 

WOULD GET $5 OF THAT EVEN THOUGH THEIR I.P. HAD NOTHING TO DO 

WITH THAT. 

OR APPLE -- AS YOU KNOW, APPLE SPENDS A LOT OF TIME MAKING 

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WILLIAMS DIRECT BY MR. BAKER

UNITED STATES COURT REPORTERS

870

ITS PRODUCTS REALLY BEAUTIFUL, SO WE'LL SPEND AN EXTRA $60 ON 

THE STAINLESS STEEL AND ALUMINUM ENCLOSURES AND THINGS LIKE 

THAT. AND PER THE AGREEMENT, IF WE SPENT COST ON THAT, SAY 

THAT EXTRA $60, IT HAS NOTHING TO DO WITH OUR I.P., THE 

QUALCOMM ARRANGEMENT WOULD HAVE HAD THEM COLLECT $3. 

SO THAT, THAT DIDN'T MAKE SENSE TO US, AND STILL DOESN'T 

TODAY.

Q. AND SO THE AGREEMENT YOU'VE BEEN DESCRIBING IS THE 

CONTRACT MANUFACTURERS -- 

A. CORRECT.

Q. -- EXISTING LICENSE; IS THAT RIGHT? 

A. CORRECT.

Q. SO BACK TO THE MARKETING INCENTIVE AGREEMENT. UNDER THE 

REBATE ARRANGEMENT THAT YOU ULTIMATELY PUT IN PLACE WITH 

QUALCOMM IN 2007, WHAT WAS THE NET ROYALTY PAID TO QUALCOMM 

THROUGH THIS ARRANGEMENT? 

A. 7.50. SO THE CONTRACT MANUFACTURERS PAID THE 5 PERCENT, 

AND THEN QUALCOMM REBATED US DOWN TO THE 7.50.

Q. AND HOW DID THE PARTIES ARRIVE AT THE $7.50 FIGURE?

A. WE ORIGINALLY PROPOSED 5 PERCENT OF THE COST OF THE 

BASEBAND CHIP, WHICH IS $30, SO WE ORIGINALLY PROPOSED A DOLLAR 

50. WE FLEW DOWN TO SAN DIEGO AND PROPOSED THAT. THAT WAS 

REJECTED. 

AND WE ULTIMATELY LANDED ON 7.50. QUALCOMM SAID THAT THAT 

WAS THE AVERAGE PRICE THAT EVERYBODY ELSE WAS PAYING PER UNIT, 

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WILLIAMS DIRECT BY MR. BAKER

UNITED STATES COURT REPORTERS

871

AND THAT'S WHERE WE LANDED. 

Q. WHAT DID YOU THINK OF THAT IN TERMS OF ITS FAIRNESS FOR 

APPLE -- FOR QUALCOMM'S I.P.? 

A. I THOUGHT IT WAS TOO HIGH. WE HAD STARTED TO LEARN ABOUT 

OTHER RATES AND IT WAS EXCESSIVE. QUALCOMM CHARGES US MORE 

THAN EVERYBODY ELSE PUT TOGETHER. 

Q. WHY DID APPLE AGREE TO $7.50 IN 2007? 

A. WE DIDN'T HAVE A LOT OF ALTERNATIVES. IF WE DIDN'T AGREE, 

THEN WE WOULD BE PAYING THE CONTRACT MANUFACTURER RATE, WHICH 

WAS IN THE HIGH TEENS; OR IF WE SOMEHOW CHALLENGED IT, WE STOOD 

THE RISK OF OUR BRAND NEW IPHONE WE WERE WORKING ON GETTING 

ENJOINED. 

AND SO NOT A LOT OF GREAT OPTIONS. AND QUALCOMM HAD 

REPRESENTED IT WAS THE AVERAGE PRICE EVERYBODY WAS PAYING, AND 

SO WE ENDED UP SETTLING ON THAT.

Q. WE'RE GOING TO PUT ON THE SCREEN DEMONSTRATIVE CDX 502, 

WHICH IS AN EXCERPT FROM SECTION 5 OF THE 2007 MARKETING 

INCENTIVE AGREEMENT. 

IS THIS THE PROVISION THAT PROVIDED REBATES OF ROYALTY 

PAYMENTS OVER $7.50?

A. IT IS.

Q. THIS SECTION REFERS TO MARKETING INCENTIVES. DID YOU VIEW 

THIS AS A FUND TO BE USED FOR MARKETING? 

A. NO. 

Q. WHO DECIDED TO CALL IT A MARKETING INCENTIVE? 

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WILLIAMS DIRECT BY MR. BAKER

UNITED STATES COURT REPORTERS

872

A. QUALCOMM. 

Q. HOW DID YOU VIEW THIS? 

A. OH, IT WAS VERY SIMPLE. WE NEGOTIATED A RATE DOWN TO 

7.50, AND THIS WAS AN INSTRUMENT TO GET IT DOWN TO THE 7.50. 

THIS WAS OUR LICENSING RATE. THIS WAS THE REBATE THAT TOOK US 

FROM THE CONTRACT MANUFACTURING RATE TO THE 7.50 WE DISCUSSED.

Q. IN NEGOTIATING THE 2007 MARKETING INCENTIVE AGREEMENT, DID 

QUALCOMM DEMAND ANYTHING FROM APPLE IN EXCHANGE FOR THE ROYALTY 

REBATES DOWN TO $7.50? 

A. THEY DID. 

Q. WHAT DID THEY DEMAND? 

A. THAT WE NOT SHIP ANY WIMAX PRODUCTS. 

THEY ALSO ASKED US TO MAKE A STATEMENT SAYING THAT WE WERE 

SUING GSM AND NOT WIMAX FOR THE FUTURE. 

Q. I'D LIKE YOU TO TURN IN YOUR BINDER TO TAB 6, PLEASE. 

THIS IS AN EXHIBIT CX 0617. 

THIS IS AN E-MAIL EXCHANGE BETWEEN MARV BLECKER AND YOU. 

WHO IS MARV BLECKER?

A. MARV BLECKER WORKED FOR QUALCOMM, AND HE WAS IN THE 

LICENSING GROUP, AND HE LED THE NEGOTIATIONS ON THE MARKETING 

INCENTIVE AGREEMENT.

Q. DOES THIS E-MAIL RELATE TO THOSE NEGOTIATIONS? 

A. YES, IT DOES. 

MR. BAKER: YOUR HONOR, THE FTC MOVES TO ADMIT 

CX 0617. 

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WILLIAMS DIRECT BY MR. BAKER

UNITED STATES COURT REPORTERS

873

MR. PAIGE: NO OBJECTION. 

THE COURT: IT'S ADMITTED. 

(PLAINTIFF'S EXHIBIT CX 0617 WAS ADMITTED IN EVIDENCE.) 

THE COURT: GO AHEAD, PLEASE. 

BY MR. BAKER:

Q. MR. WILLIAMS, IF YOU LOOK IN PARAGRAPH 2 MUCH THIS 

EXHIBIT, MR. BLECKER WRITES TO YOU? 

A. "MOTIVATING APPLE TO SELECT WCDMA TO THE EXCLUSION OF 

WIMAX IS OUR PRIMARY MOTIVATION FOR ENTERING INTO THIS 

AGREEMENT. OTHERWISE, WE WOULD NOT BE DOING IT." 

WHAT WAS WIMAX? 

A. WIMAX WAS A COMPETING STANDARD TO CDMA AND GSM. I DON'T 

KNOW ALL THE DETAILS ABOUT IT. IT WAS EMERGING AT THE TIME. 

I KNOW INTEL WAS SUPPORTING IT. I KNOW STEVE WAS 

INTERESTED IN IT. I DON'T KNOW A TON ABOUT IT.

Q. DID QUALCOMM SAY IT WANTED APPLE TO RENOUNCE WIMAX? 

A. NO. 

Q. IN THE 2007 MARKETING INCENTIVE AGREEMENT, DID APPLE AGREE 

TO QUALCOMM'S DEMAND RELATING TO WIMAX? 

A. WE DID.

Q. AND FOLLOWING THE EXECUTION OF THAT AGREEMENT, DID APPLE 

PURSUE WIMAX FURTHER? 

A. NO. IN ESSENCE, IT WAS KILLED IN THE CRADLE FOR US. WE 

DID NOT. 

Q. FOR THE FIRST IPHONE IN 2007, WHAT TYPE OF MODEM CHIPS DID 

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874

APPLE USE? 

A. GSM. 

Q. AND WHO DID YOU PROCURE THOSE FROM? 

A. INFINEON. 

Q. DID THERE COME A TIME WHEN APPLE NEEDED TO PURCHASE CDMA 

MODEM CHIPS? 

A. YES.

Q. WHEN WAS THAT? 

A. WE SHIPPED OUR FIRST CDMA PHONE IN 2011. 

Q. WHY DID APPLE NEED TO CHIP CDMA PHONES? 

A. WELL, CUSTOMERS, CUSTOMERS LOVED THE IPHONE, AND WE WANTED 

TO GET IPHONES INTO MORE CUSTOMERS' HANDS, AND THERE WERE 

SEVERAL MARKETS IN THE WORLD WHERE THE INFRASTRUCTURE WORKED ON 

CDMA, LIKE ABOUT HALF OF THE U.S., VERIZON, FOR EXAMPLE, AND 

OTHER COUNTRIES AROUND THE WORLD. 

AND WE FOUND OUT THAT CUSTOMERS WERE ACTUALLY REALLY 

STICKING TO THEIR CARRIER, AND SO WE WANTED TO EXPAND INTO THE 

CDMA OPPORTUNITIES. 

Q. WHAT VENDORS WERE AVAILABLE TO SUPPLY CDMA MODEM CHIPS FOR 

APPLE'S 2011 IPHONE?

A. QUALCOMM. WE ALSO LOOKED -- THERE WAS ALSO A SMALL 

COMPANY IN TAIWAN, VIA, THAT WE LOOKED AT, BUT CONCLUDED THEY 

WEREN'T TECHNICALLY READY OR CAPABLE. SO JUST QUALCOMM. 

Q. CAN YOU TELL US ABOUT THE ORIGIN OF THE 2011 TRANSITION 

AGREEMENT BETWEEN APPLE AND QUALCOMM? 

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875

A. YEAH. YES, I CAN. 

TWO THINGS: ONE, WE DISCOVERED THAT THE 7.50 ROYALTY 

AGREEMENT THAT WE HAD REACHED WAS NOT GOING TO APPLY TO CDMA 

PHONES OR IPADS, AND THIS REALLY UPSET US. 

WE FLEW DOWN TO SAN DIEGO AND HAD A HEATED DISCUSSION 

ABOUT THIS BECAUSE THE RATES WERE GOING TO BE MUCH HIGHER FOR 

THE CDMA PHONES, WHICH MADE NO SENSE TO US. 

IF YOU SHIP A PHONE THAT'S GOT SOMEBODY ELSE'S CHIP IN IT, 

YOU PAY 7.50. IF YOU SHIP A PHONE THAT HAS QUALCOMM'S CDMA 

CHIP IN IT, WE PAY FOR THE CHIP, PLUS MORE THAN THE 7.50. SO 

IT DIDN'T MAKE ANY SENSE TO US. SO WE WERE TRYING TO GET 

RELIEF FOR THAT. 

AND THROUGH THE PROCESS, RELIEF WAS DISCUSSED IN THE FORM 

OF A BROADER DEAL. SO THAT WAS ONE PIECE. 

THE OTHER PIECE IS WE WERE GOING TO MOVE OUR BUSINESS FROM 

INFINEON TO QUALCOMM. WE NEEDED THEIR CDMA AND LTE TECHNOLOGY. 

WE WERE INTERESTED IN WORKING WITH THEM. THEY HAD GOOD 

ENGINEERING LEADERSHIP IN THAT SPACE, AND WE ASKED FOR 

TRANSITION FUNDS ASSOCIATED WITH MOVING BUSINESS TO THEM. 

Q. I'D LIKE YOU TO LOOK AT TAB 7 IN YOUR BINDER, PLEASE, 

EXHIBIT CX 0599. 

IN THIS EXHIBIT, YOU ARE FORWARDING AN E-MAIL CHAIN 

BETWEEN PAUL JACOBS OF QUALCOMM AND TIM COOK OF APPLE. 

DID YOU SEND THIS E-MAIL? 

A. I DID. 

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876

MR. BAKER: YOUR HONOR, THE FTC MOVES TO ADMIT 

CX 0599.

MR. PAIGE: NO OBJECTION. 

THE COURT: IT'S ADMITTED. 

(PLAINTIFF'S EXHIBIT CX 0599 WAS ADMITTED IN EVIDENCE.) 

THE COURT: GO AHEAD, PLEASE. 

MR. BAKER: THERE'S SEALED MATERIAL ON PAGE 2 OF THIS 

EXHIBIT, YOUR HONOR, BUT WE'RE ONLY GOING TO BE LOOKING AT PAGE 

1 TODAY. 

THE COURT: OKAY. 

BY MR. BAKER:

Q. NEAR THE BOTTOM OF PAGE 1 MR. JACOBS WRITES, "WE DID 

DISCUSS POTENTIALLY PROVIDING APPLE WITH A REBATE ON LARGER 

SCREEN DEVICES LIKE THE IPAD, BUT AS PART OF A LARGER BUSINESS 

RELATIONSHIP BETWEEN THE COMPANY, INCLUDING APPLE'S USE OF 

QUALCOMM CHIPS IN ITS IPHONES AND DEVICES LIKE THE IPAD." 

DOES THIS RELATE TO APPLE'S DESIRE TO HAVE THE MARKETING 

INCENTIVE AGREEMENT ROYALTY REBATES APPLY TO IPADS THAT YOU 

WERE JUST DISCUSSING? 

A. YES. 

Q. MR. JACOBS REFERS IN HIS E-MAIL TO A LARGER BUSINESS 

RELATIONSHIP. WHAT SORT OF LARGER BUSINESS RELATIONSHIP WAS 

QUALCOMM SEEKING IN RETURN? 

A. CHIP BUSINESS. 

Q. IF YOU COULD TURN TO THE NEXT TAB IN YOUR BINDER, PLEASE, 

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877

TO TAB EXHIBIT, EXHIBIT CX 5363. 

A. OKAY. 

MR. BAKER: YOUR HONOR, PORTIONS OF THIS EXHIBIT AS 

WELL HAVE BEEN SEALED, AND WE DO NOT INTEND TO LOOK AT THOSE 

PORTIONS. 

THE COURT: ALL RIGHT. GO AHEAD, PLEASE. 

BY MR. BAKER:

Q. IS THIS A DECEMBER 2010 E-MAIL EXCHANGE BETWEEN YOU AND 

STEVE MOLLENKOPF OF QUALCOMM? 

A. YES. 

Q. AND IN PARTICULAR ON PAGE 17 OF THIS EXHIBIT, IS THIS 

E-MAIL PART OF THE NEGOTIATION OF 2011 TRANSITION AGREEMENT? 

A. I SEE VERY LITTLE HERE. IT LOOKS LIKE A, A LOT OF IT HAS 

BEEN REDACTED. 

BUT I SEE VERY LITTLE LANGUAGE HERE. 

MR. BAKER: YOUR HONOR, IF I MAY APPROACH THE WITNESS 

AND PROVIDE A SEPARATE COPY? 

THE COURT: THAT'S FINE. GO AHEAD, PLEASE. 

MR. BAKER: HERE IS PAGE 17 (HANDING). 

THE WITNESS: GOT IT. THANK YOU. 

BY MR. BAKER:

Q. TURNING TO PAGE 17 OF EXHIBIT CX 5363, WAS THIS E-MAIL 

PART OF THE NEGOTIATION OF THE 2011 TRANSITION AGREEMENT? 

A. YES. 

MR. BAKER: YOUR HONOR, THE FTC MOVES TO ADMIT 

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WILLIAMS DIRECT BY MR. BAKER

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878

CX 5363. 

MR. PAIGE: YOUR HONOR, THIS IS SUBJECT TO AN HPO. I 

BELIEVE IT'S ONLY PAGES 6 THROUGH 18 OF THE EXHIBIT BEING 

ADMITTED; IS THAT CORRECT? 

MR. BAKER: THAT'S CORRECT. 

MR. PAIGE: NO OBJECTION. 

THE COURT: OKAY. 6 THROUGH 18 IS WHAT YOU'RE 

SEEKING TO ADMIT? 

MR. BAKER: YES, YOUR HONOR. 

THE COURT: ALL RIGHT. THEY'RE ADMITTED. 

(PLAINTIFF'S EXHIBIT 5363 WAS ADMITTED IN EVIDENCE.) 

THE COURT: GO AHEAD, PLEASE. 

BY MR. BAKER:

Q. IN THE E-MAIL FROM STEVE MOLLENKOPF TO YOU AT THE TOP OF 

PAGE 17 OF CX 5363 HE WRITES, "WE ARE UNWILLING TO HAVE THE 

MARKETING AGREEMENT APPLY TO CDMA IPHONES AS PART OF THIS DEAL 

BUT WE ARE WILLING TO PROVIDE A SEPARATE, SIGNIFICANT SUM OF 

MONEY AS PART OF THE CHIP DEAL." 

CAN YOU EXPLAIN THIS? 

A. WE HAD BEEN GOING BACK AND FORTH, THERE WERE A LOT OF BID 

ASKS THROUGH THE PROCESS OF THE TRANSITION AGREEMENT. WE WERE 

LOOKING FOR THE CDMA RELIEF. 

AT ONE POINT IN TIME, WE THOUGHT THAT WAS GOING TO COME 

THROUGH THE QTL, THE LICENSING GROUP AT QUALCOMM, AND THIS IS 

STEVE SAYING WE'RE NOT GOING TO DO THAT, EVERYTHING IS GOING TO 

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879

FLOW THROUGH THE CHIP SIDE. 

Q. SO LONG AS APPLE WAS GOING TO BE USING QUALCOMM CHIPS, DID 

APPLE CARE WHETHER THE REBATE CAME AS A ROYALTY REBATE FOR A 

CHIP DISCOUNT? 

A. NO, WE DID NOT. 

Q. WHAT WERE QUALCOMM'S MAIN ASKS AS PART OF THE CHIP DEAL IN 

THE 2011 TRANSITION AGREEMENT? 

A. THEY WANTED OUR BUSINESS. THEY WANTED EXCLUSIVITY. 

Q. IN 2010, DID APPLE PROPOSE TO QUALCOMM THAT IT WANTED TO 

GIVE QUALCOMM 100 PERCENT OF ITS BUSINESS IN ANY EVENT? 

A. NO. WHAT WE -- WE PROPOSED THAT WE WERE GOING TO GIVE 

THEM 100 PERCENT OF THE BUSINESS IN THE SHORT TERM. WE SAID WE 

WOULD SOLE SOURCE IN THE SHORT TERM. WE DIDN'T HAVE AN ISSUE 

WITH THAT. 

IN THE LONG TERM -- AND WE WANTED TO MOVE OUR BUSINESS TO 

QUALCOMM IN THE SHORT TERM. 

IN THE LONG TERM, THAT WASN'T OUR PLAN. WE ULTIMATELY 

WANTED TO BRING UP A SECOND SOURCE.

Q. CAN YOU ELABORATE ON THE DIFFERENCE BETWEEN THIS SHORT 

TERM SOLE SOURCE AND LONG TERM EXCLUSIVITY? 

A. YEAH. IN 2010 WHEN WE WERE DISCUSSING THIS AGREEMENT THAT 

WE SIGNED IN 2011, WE HAD PLANNED TO DO A MULTIMODE CHIP WITH 

CDMA. THEY WERE THE ONLY SUPPLIERS OF CDMA. AND THEY HAD 

LEADERSHIP IN LTE. 

AND SO WHEN WE MET WITH THEM WE SAID, LOOK, WE'RE GOING TO 

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WILLIAMS DIRECT BY MR. BAKER

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880

MOVE OUR BUSINESS TO YOU FROM INFINEON, AND INITIALLY YOU'LL BE 

SOLE SOURCE. WE'LL PUT OUR ENERGY IN ONE SUPPLIER. AND YOU'RE 

GOING TO GET A LOT OF BUSINESS FOR THAT. 

AND THAT WAS THE BEGINNING OF THE TRANSITION. 

THE EXCLUSIVITY, WHEN YOU'RE TALKING ABOUT THINGS LIKE 

PENALTIES AND CLAWBACKS FOR BRINGING UP ANOTHER SOURCE, THAT'S 

DIFFERENT. AND THAT WAS FROM QUALCOMM. 

Q. DID APPLE PROPOSE THAT QUALCOMM PAY APPLE $1 MILLION IN 

EXCLUSION FOR EXCLUSIVITY? 

A. NO. WE -- WE PROPOSED -- AGAIN, THERE WERE TWO THINGS WE 

WERE TRYING TO SOLVE. ONE WAS RELIEF, FINANCIAL RELIEF 

ASSOCIATED WITH THIS CDMA PRICE HIKE; AND THE OTHER IS 

TRANSITION FUNDS FOR MOVING BUSINESS OVER. 

WE DID SAY, SHORT TERM, THAT THEY WOULD BE THE ONLY 

SUPPLIER SOLE SOURCE. BUT LONG TERM EXCLUSIVITY WITH CLAWBACKS 

AND THAT, NO.

Q. AND DID THESE LONG TERM EXCLUSIVITY PROVISIONS END UP IN 

THE AGREEMENT? 

A. THEY DID. 

Q. I'D LIKE TO PUT UP A DEMONSTRATIVE, CDX 505, PLEASE. THIS 

IS PARAGRAPH 1.5 OF THE 2011 TRANSITION AGREEMENT. 

DOES THIS PROVISION RELATE TO THE EXCLUSIVITY THAT YOU'VE 

BEEN REFERRING TO? 

A. CORRECT. 

Q. I'D LIKE YOU TO LOOK AT THE FIRST SENTENCE, THE ONE THAT 

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881

CONTAINS THE WORDS "AUTOMATICALLY TERMINATE." 

CAN YOU EXPLAIN WHAT THAT SENTENCE PROVIDES? 

A. THAT JUST MEANS THAT IF WE SHIP A COMPETITOR'S BASEBAND 

MODEM IN ANY OF OUR PRODUCTS, THE AGREEMENT IS TERMINATED. 

Q. NOW, THE SECOND SENTENCE OF THIS PROVISION CONTAINS THE 

WORD "REIMBURSE." 

WHAT DOES THIS SENTENCE STATE? 

A. THIS, IN ESSENCE, IS A CLAWBACK. SO IN THE FIRST 

INSTANCE, IF WE'RE DOING BUSINESS AND WE START SHIPPING 

SOMEBODY ELSE'S MODEM, THE AGREEMENT STOPS. 

IN THE SECOND INSTANCE, THE CLAWBACK IS EVEN IF WE WERE 

COMPLIANT THE WHOLE TIME, IF WE ULTIMATELY SHIP SOMEBODY ELSE'S 

MODEM, WE OWE THEM MONEY BACK IN TIME. THAT'S THE CLAWBACK. 

Q. WITH WHOM DID YOU DISCUSS THESE PROVISIONS AT QUALCOMM? 

A. STEVE MOLLENKOPF. 

Q. WHO PROPOSED THE TERMINATION AND CLAWBACK PROVISIONS OF 

THIS AGREEMENT?

A. STEVE. 

Q. HOW DO YOU KNOW THAT? 

A. IT WOULD BE CONSTRAINING TO US, AND WE WOULD NOT WANT 

CLAWBACK PROVISIONS. IT'S NOT SOMETHING THAT WE'VE EVER DONE 

THAT I'M AWARE OF. 

Q. IF YOU COULD TURN TO TAB 9 OF YOUR BINDER, PLEASE. IT 

SHOULD BE AN EXHIBIT LABELED CX 0526? 

YOUR HONOR, THIS IS A PARTIALLY SEALED DOCUMENT. WE'VE 

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WILLIAMS DIRECT BY MR. BAKER

UNITED STATES COURT REPORTERS

882

REDACTED SOME INFORMATION ON PAGE 2. OTHERWISE WE WILL NOT BE 

REFERRING TO SEALED INFORMATION. 

ON PAGE 2 OF CX 0526, IS THIS AN E-MAIL THAT 

STEVE MOLLENKOPF SENT TO YOU IN WHICH HE WRITES, "ATTACHED IS A 

DECK EXPLAINING THE CHANGES WE WOULD LIKE TO MAKE TO THE MOST 

RECENT DRAFT"? 

A. YES. 

Q. WAS HE REFERRING TO THE DRAFT TRANSITION AGREEMENT? 

A. YES. 

Q. DOES THE DECK ATTACHED BY MR. MOLLENKOPF TO HIS E-MAIL 

APPEAR AT PAGE 8 OF THIS EXHIBIT? 

A. YES. 

MR. BAKER: YOUR HONOR, THE FTC MOVES TO ADMIT 

CX 0526. 

MR. PAIGE: NO OBJECTION. 

THE COURT: IT'S ADMITTED. 

(PLAINTIFF'S EXHIBIT CX 0526 WAS ADMITTED IN EVIDENCE.) 

THE COURT: GO AHEAD, PLEASE. 

BY MR. BAKER:

Q. WHAT WAS THE PURPOSE OF THE SLIDE DECK THAT APPEARS AT 

PAGE 8 OF THIS EXHIBIT? 

A. IT LOOKS LIKE, OR IT IS, THE LATEST VOLLEY IN THE 

DISCUSSIONS BACK AND FORTH IN TRYING TO REACH AGREEMENT ON THE 

TRANSITION AGREEMENT. 

Q. AND WHO PREPARED THIS DECK? 

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WILLIAMS DIRECT BY MR. BAKER

UNITED STATES COURT REPORTERS

883

A. THIS WAS FROM QUALCOMM. 

Q. AT PAGE 14 OF EXHIBIT 0526 TOWARDS THE END OF THE DECK, 

THERE'S A PAGE TITLED ADDITIONAL REQUIREMENTS. 

DO YOU SEE THAT? 

A. I DO.

Q. WHY IS SOME LANGUAGE UNDERLINED HERE? 

A. IT'S A RED LINE. IT'S -- IT'S THE BACK AND FORTH. SO 

THIS IS THE LATEST CHANGES TO THE PREVIOUS VERSION. 

Q. SO THESE ARE CHANGES THAT QUALCOMM IS PROPOSING?

A. CORRECT. 

Q. DO YOU SEE THE SECOND AND THIRD BULLET POINTS ON THIS 

PAGE? 

A. I DO.

Q. ARE THOSE DRAFT VERSIONS OF THE TRANSITION AGREEMENT 

PROVISION, PARAGRAPH 1.5, THAT WE WERE JUST LOOKING AT? 

A. YES. 

Q. WERE THESE PROVISIONS BEING PROPOSED BY QUALCOMM AS 

ADDITIONS TO THE DOCUMENT?

A. THEY WERE.

Q. AND JUST LOOKING AT THE BOTTOM LEFT CORNER OF THIS PAGE. 

IT READS PAGE 7. 

DO YOU SEE THAT? 

A. I DO. 

Q. TURN BACK TO PAGE 2 OF THIS EXHIBIT. AT THE BOTTOM OF THE 

PAGE AT END OF MR. MOLLENKOPF'S E-MAIL HE WRITES, "LASTLY, WE 

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884

ADDED BACK IN THE LANGUAGE ON GENERAL DESIGN COMMITMENTS (SEE 

OUR PAGE 7) THAT FELL OUT OF THIS DRAFT. THEY WERE IN EARLIER 

ONES AND ARE IMPORTANT TO US." 

WHAT DID YOU UNDERSTAND MR. MOLLENKOPF TO BE REFERRING TO 

HERE? 

A. THOSE WERE THE RED LINES WE JUST LOOKED AT, THE 

TERMINATION AND CLAWBACK PROVISIONS.

Q. AND MR. MOLLENKOPF WAS TELLING YOU THAT THEY WERE 

IMPORTANT TO QUALCOMM? 

A. HE WAS. 

Q. IS THAT CONSISTENT WITH YOUR DISCUSSIONS WITH 

MR. MOLLENKOPF AT THAT TIME? 

A. IT WAS. IT IS. 

Q. WAS THE CLAWBACK PROVISION ULTIMATELY INCORPORATED INTO 

THE FINAL TRANSITION AGREEMENT? 

A. IT WAS. 

Q. ONE LAST THING ON THIS EXHIBIT. ON PAGE 3 OF THE EXHIBIT, 

MR. MOLLENKOPF HAD WRITTEN IN AN EARLIER JANUARY 21ST, 2011 

E-MAIL, "I STILL REMAIN CONCERNED ABOUT THE LACK OF ANY TEETH 

IN THE DEAL IN THE OUT-YEARS BUT UNDERSTAND YOUR CLAWBACK 

CONCERNS." 

DO YOU SEE THAT? 

A. I DO.

Q. HAD YOU EXPRESSED CONCERNS TO QUALCOMM ABOUT THE CLAWBACK 

PROVISION? 

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885

A. I HAD. 

Q. WHEN DID THE $7.50 REBATE PROGRAM UNDER THE MARKETING 

INCENTIVE AGREEMENT EXPIRE?

A. 2012.

Q. DID APPLE NEGOTIATE ANY NEW AGREEMENTS WITH QUALCOMM AT 

THAT TIME? 

A. WE DID. 

Q. WHAT AGREEMENTS WERE THOSE? 

A. WE NEGOTIATED AN AMENDMENT TO THE TRANSITION AGREEMENT AND 

A BCPA. 

Q. LOOKING AT CDX 501 AGAIN BRIEFLY. ARE YOU REFERRING TO 

THE 2013 AGREEMENTS ON THIS SLIDE? 

A. I AM. 

Q. WERE THE BCPA AND THE FIRST AMENDMENT TO TRANSITION 

AGREEMENT NEGOTIATED IN PARALLEL? 

A. THEY WERE.

Q. WERE THEY SIGNED AT THE SAME TIME? 

A. THEY WERE.

Q. WERE THEY PART OF A PACKAGE DEAL? 

A. THEY WERE.

Q. WHAT WAS APPLE'S OBJECTIVE IN ENTERING INTO THESE 

AGREEMENTS? 

A. WE WERE -- WHAT WE WERE STARING AT IS AT THE END OF 2012, 

OUR 7.50 ARRANGEMENT WITH QUALCOMM WAS COMING TO AN END AND THE 

DEFAULT WAS THAT OUR ROYALTY RATE WAS GOING TO GO UP TO THE 

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WILLIAMS DIRECT BY MR. BAKER

UNITED STATES COURT REPORTERS

886

HIGH TEENS BECAUSE IT WAS JUST GOING TO FLOW THROUGH THIS, THIS 

CRAZY CONTRACT MANUFACTURING ARRANGEMENT. 

AND SO ON TOP OF THE CHIPS WE'RE BUYING, ON TOP OF THE 

7.50 WE'RE ALREADY PAYING, THERE WAS GOING TO BE ANOTHER $8 OR 

$10, WE WERE SELLING A HUNDRED MILLION PHONES, IT WOULD BE 

ANOTHER BILLION DOLLARS A YEAR IN ROYALTY FOR, FOR NO EXTRA 

VALUE FROM QUALCOMM. 

AND SO WE WERE SEEKING RELIEF FOR THAT. WE WERE TRYING TO 

FIND A WAY TO GET OUR ROYALTY DOWN TO SOMETHING REASONABLE, 

BELOW 7.50 IDEALLY. BUT WE ENDED UP STRIKING A DEAL TO GET IT 

DOWN TO 7.50. 

Q. SO APPLE WAS ABLE TO EFFECTIVELY ACHIEVE AN EXTENSION OF 

ITS ROYALTY REBATES UNDER THE 2013 BCPA AND AMENDED TRANSITION 

AGREEMENT? 

A. THROUGH SIGNING UP FOR CHIPS AND EXCLUSIVITY, YES. 

Q. DID THE 2013 AMENDED TRANSITION AGREEMENT CONTAIN 

TERMINATION AND CLAWBACK PROVISIONS SIMILAR TO THOSE THAT WE 

LOOKED AT EARLIER IN THE TRANSITION AGREEMENT? 

A. IT DID, EXCEPT THEY WERE MORE ONEROUS THIS TIME. THEY 

WERE LARGER VOLUMES, MORE MONEY AT STAKE. 

Q. AND WHO PROPOSED THE EXCLUSIVITY AT THIS STAGE OF THE 

NEGOTIATION? 

A. QUALCOMM.

Q. DID APPLE OBJECT? 

A. WE DID, BUT WE -- AGAIN, WE WERE STARING AT AN INCREASE OF 

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UNITED STATES COURT REPORTERS

887

OVER A BILLION DOLLARS A YEAR ON LICENSING. SO WE -- WE HAD A 

GUN TO OUR HEAD.

Q. CAN YOU DESCRIBE THE DIFFERENCE BETWEEN THE BCPA AND THE 

FIRST AMENDMENT TO TRANSITION AGREEMENT? 

A. THE BCPA WAS FROM THE LICENSING GROUP AND THE TRANSITION 

AGREEMENT WAS FROM THE CHIP GROUP. IN OTHER WORDS, WE WERE 

TRYING TO GET TO A NET 7.50. 

IN DISCUSSIONS WITH QUALCOMM, THE LICENSING GROUP WAS 

GOING TO CONTRIBUTE SOME, THE CHIP GROUP WAS GOING TO 

CONTRIBUTE SOME. 

THE BCPA TOOK THE CONTRACT MANUFACTURING RATE DOWN TO $10 

AND THEN THE CHIP SIDE PROVIDED THE REST TO GET TO 7.50. 

Q. IN ADDITION TO THE EXCLUSIVITY THAT YOU MENTIONED UNDER 

THE TRANSITION AGREEMENT, DID QUALCOMM MAKE ANY DEMANDS OF 

APPLE UNDER THE BCPA? 

A. YES. WE -- WE HAD DEMANDS THAT WE WERE -- THE BCPA WOULD 

TERMINATE IF WE PURSUED LEGAL ACTION AGAINST QUALCOMM, IF WE 

CHALLENGED FRAND, IF WE -- IF WE BROUGHT UP EXHAUSTION, IF WE 

INDUCED ANYBODY ELSE, THEN THE BCPA WOULD TERMINATE. 

Q. AND LET'S PUT ON THE SCREEN BRIEFLY CDX 0507, WHICH IS 

SECTION 7 OF THE BCPA. 

IS THIS THE PROVISION OF THE BCPA THAT YOU'RE REFERRING 

TO? 

A. YES. 

Q. SO ONE OF THE CONDITIONS OF THIS PACKAGE SEAL IN 2013 WAS 

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WILLIAMS DIRECT BY MR. BAKER

UNITED STATES COURT REPORTERS

888

THAT APPLE AGREE NOT TO CHALLENGE OR INDUCE OTHERS TO CHALLENGE 

QUALCOMM'S ROYALTY RATES? 

A. CORRECT. 

Q. WHAT EFFECT, IF ANY, DID APPLE'S SIGNING OF THE TRANSITION 

AGREEMENT AND THE AMENDED TRANSITION AGREEMENT HAVE ON APPLE'S 

ONGOING WORK WITH OTHER MODEM CHIP SUPPLIERS? 

A. IN THE SHORT TERM, NO EFFECT BECAUSE WE WERE MOVING OUR 

BUSINESS TO QUALCOMM. 

IN THE LONG TERM, IT MADE IT PROHIBITIVELY EXPENSIVE TO 

WORK WITH SOMEONE ELSE. FOR EXAMPLE, WHEN WE SIGNED -- OR WHEN 

WE WERE -- WE KNEW WE WERE GOING TO CLOSE THE 2013 AGREEMENT, 

WE CUT OFF THE WORK WE WERE DOING WITH INTEL ON AN IPAD. 

Q. FOLLOWING EXECUTION OF THE ORIGINAL TRANSITION AGREEMENT 

IN 2011, WHAT VENDORS SUPPLIED APPLE WITH MODEM CHIPS FOR NEW 

PRODUCTS BETWEEN 2011 AND THE SPRING OF 2016? 

A. QUALCOMM.

Q. ANYONE ELSE? 

A. NOT UNTIL '16. 

Q. YOU MENTIONED EARLIER THAT YOU CONSIDERED EVEN THE $7.50 

ROYALTY LEVEL TOO HIGH; IS THAT RIGHT? 

A. YES. 

Q. WHY DID YOU THINK THAT? 

A. YOU KNOW, THROUGH TIME WE ENDED UP CLOSING AGREEMENTS WITH 

ALL THE OTHER LICENSE HOLDERS AND QUALCOMM WAS CHARGING US MORE 

THAN EVERYONE ELSE PUT TOGETHER. AND 7.50 MAY NOT SOUND LIKE A 

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WILLIAMS DIRECT BY MR. BAKER

UNITED STATES COURT REPORTERS

889

LOT, BUT WE'RE SELLING HUNDREDS OF MILLIONS OF PHONES AND IT'S 

BILLIONS OF DOLLARS A YEAR AND IT'S -- IT'S JUST NOT FRAND, IN 

OUR VIEW, COMPARED TO EVERYBODY ELSE. 

Q. YOU TESTIFIED EARLIER ABOUT THE REASONS THAT APPLE 

ACCEPTED THAT 7.50 AMOUNT WHEN IT WAS FIRST LAUNCHING THE 

IPHONE IN 2007. 

WHY DID APPLE CONTINUE TO ACCEPT IT IN 2011, 2013? 

A. WELL, THE ALTERNATIVE WAS IF YOU DON'T ACCEPT IT, IT JUST 

DEFAULTS TO THE CONTRACT MANUFACTURING RATE OF $18 OR $17. 

AND WE NEEDED THEIR CHIP SUPPLY, AND IF WE TRIED TO PURSUE 

THEM LEGALLY, THEN WE WOULDN'T HAVE ACCESS TO THE CHIPS. 

AND SO WE DIDN'T HAVE A LOT OF OPTIONS, SO WE LIVED WITH 

IT. 

Q. DID THERE COME A TIME WHEN APPLE DECIDED TO DUAL SOURCE 

MODEM CHIPS IN THE IPHONE? 

A. YES. 

Q. WHEN IPHONE DID APPLE DUAL SOURCE MODEM CHIPS FOR? 

A. IPHONE 7 AND 7 PLUS, 2016. 

Q. AND WHAT FIRMS DID YOU DUAL SOURCE WITH? 

A. QUALCOMM AND INTEL. 

Q. HAS INTEL REQUIRED EXCLUSIVITY TO SUPPLY MODEM CHIPS TO 

APPLE?

A. THEY HAVE NOT.

Q. HAVE THEY REQUIRED VOLUME COMMITMENTS?

A. THEY HAVE NOT. 

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WILLIAMS DIRECT BY MR. BAKER

UNITED STATES COURT REPORTERS

890

Q. AS OF MARCH 2018 -- AND I'M GOING TO ASK YOU A COUPLE 

QUESTIONS NOW ABOUT RELATIVELY RECENT TIME PERIODS AND I'D LIKE 

YOU TO TRY TO LIMIT YOUR ANSWERS TO THE KNOWLEDGE YOU POSSESSED 

IN MARCH OF 2018, IF POSSIBLE. 

AS OF MARCH 2018, WAS IT APPLE'S STRATEGY TO LIMIT ITSELF 

TO ONE SUPPLIER OF CHIPSETS GOING FORWARD, INCLUDING FOR 5G? 

A. ABSOLUTELY NOT. OUR STRATEGY HAS BEEN TO DUAL SOURCE.

Q. DID APPLE FILE A LAWSUIT AGAINST QUALCOMM IN JANUARY 2017? 

A. WE DID. 

Q. AND AGAIN, LIMITING YOURSELF TO MARCH 2018, IF YOU CAN, 

WHAT HAPPENED TO THE APPLE/QUALCOMM CHIP SUPPLY RELATIONSHIP 

WHEN APPLE FILED ITS LAWSUIT AGAINST QUALCOMM? 

A. QUALCOMM HAS CONTINUED TO SHIP US PRODUCT ON THE DESIGN 

WINS THAT THEY HAVE AND HAD AT THE TIME. AND SO THEY HAVE 

CONTINUED TO SELL US CHIPS. 

WE HAVE BEEN UNABLE TO GET THEM TO SUPPORT US ON NEW 

DESIGN WINS PAST THAT TIME, AND THIS HAS BEEN A CHALLENGE. 

FOR EXAMPLE, IN -- FOR 2018 -- WE WERE DUAL SOURCED IN 

2016 AND 2017, AND OUR STRATEGY WAS TO DUAL SOURCE IN 2018 AS 

WELL, AND WE WERE WORKING TOWARDS DOING THAT WITH QUALCOMM. 

BUT IN THE END, THEY WOULD NOT SUPPORT US AND SELL US 

CHIPS. WE -- I CONTACTED QUALCOMM, I CONTACTED STEVE, I SENT 

HIM E-MAILS, I CALLED. WE TRIED TO GET THEM TO SELL US CHIPS, 

AND THEY WOULD NOT. 

AND I ENDED UP -- IN 2018, I ENDED UP ACTUALLY HAVING TO 

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WILLIAMS DIRECT BY MR. BAKER

UNITED STATES COURT REPORTERS

891

GO TO BRIAN KRZANICH, THE CEO OF INTEL AND SAY, KIND OF LAST 

MINUTE, HEY, SORRY, BUT INSTEAD OF 50 PERCENT OF OUR VOLUME, I 

NEED YOU TO SUPPORT 100 PERCENT. AND HE HAD TO SCRAMBLE. HE 

TOLD ME HE HAD TO GO TO THE BOARD AND GET APPROVAL FOR AN EXTRA 

ALMOST BILLION DOLLARS IN CAPITAL TO SUPPORT OUR VOLUMES. 

SO WE WERE LEFT, INSTEAD OF HAVING TWO SUPPLIERS, WITH 

ONE. 

AND SO WE WOULD LOVE TO CONTINUE TO HAVE ACCESS TO 

QUALCOMM'S TECHNOLOGY. 

Q. HAS QUALCOMM TAKEN ANY ADVERSE ACTIONS AGAINST APPLE SINCE 

APPLE FILED ITS LAWSUIT? 

A. YEAH. THEY'RE SUING US IN COURTS ALL OVER THE WORLD. 

THEY'RE SUING US ON NON-ESSENTIAL PATENTS, NON-SEPS, NEPS. 

THEY'RE SUING US AND WHAT THEY'RE TRYING TO DO IS GET A 

HIT IN ANY ONE OF THOSE COURTS TO CAUSE AN INJUNCTION THAT WILL 

CAUSE ENOUGH PAIN THAT WE'LL HAVE TO PAY THE TENS OF BILLIONS 

OF DOLLARS RANSOM ON THEIR SEP PROGRAM. TO USE THEIR LANGUAGE 

THEY USED WITH ME, WE HAVE TO BASICALLY RUN THE TABLE. WE HAVE 

TO WIN IN EVERY ONE OF THESE COURTS OR ELSE WE'RE -- WHAT THEY 

SAID IS YOU'RE AN IDEAL TARGET BECAUSE YOUR VOLUMES ARE SO BIG 

THAT YOU LOSE SO MUCH MONEY THAT UNLESS YOU RUN THE TABLE, THEN 

THEY KIND OF WIN. 

AND WE'VE GOT NO CHOICE BUT TO PAY THE RANSOM.

Q. ONE LAST QUESTION. YOU MENTIONED THAT QUALCOMM IS 

CONTINUING TO SUPPLY CHIPS FOR PRIOR PRODUCTS FOR WHICH IT HAD 

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WILLIAMS DIRECT BY MR. BAKER

UNITED STATES COURT REPORTERS

892

DESIGN WINS? 

A. THEY ARE, YES. 

Q. HAS APPLE EVER STOPPED PAYING QUALCOMM FOR THOSE MODEM 

CHIPS THAT APPLE HAS PURCHASED FROM QUALCOMM? 

A. WELL, THE CHIPS ARE ACTUALLY BOUGHT FROM THE CONTRACT -- 

BY THE CONTRACT MANUFACTURER. SO THE CONTRACT MANUFACTURER 

PAYS QUALCOMM, AND WE REIMBURSE THE CONTRACT MANUFACTURER FOR 

THE CHIPS. SO THEY'RE GETTING PAID FOR THOSE CHIPS, BUT WE 

DON'T PAY THAT DIRECTLY. IT'S INDIRECT.

Q. AND APPLE HASN'T CEASED PAYMENTS TO THE CONTRACT 

MANUFACTURERS FOR THOSE CHIPS; RIGHT? 

A. WE HAVE NOT. 

MR. BAKER: NO FURTHER QUESTIONS AT THIS TIME, YOUR 

HONOR. 

THE COURT: ALL RIGHT. IT'S 9:43. 

AND WHEN ARE YOU GOING TO REFILE THOSE DOCUMENTS WITH THE 

$10 AND 7.50 UNREDACTED? 

MR. BAKER: OUR GOAL WOULD BE TO DO SO TODAY, YOUR 

HONOR. 

THE COURT: OKAY. GREAT. 

MR. BAKER: WE WILL NEED TO COORDINATE WITH QUALCOMM, 

SO WE'LL DO OUR BEST TO DO THAT TODAY. 

THE COURT: OKAY, GREAT. THANKS. 

(PAUSE IN PROCEEDINGS.) 

THE COURT: OKAY. ARE YOU READY? 

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WILLIAMS CROSS BY MR. PAIGE

UNITED STATES COURT REPORTERS

893

MR. PAIGE: YES, YOUR HONOR. MAY I PROCEED? 

THE COURT: 9:44. GO AHEAD, PLEASE. 

CROSS-EXAMINATION

BY MR. PAIGE: 

Q. GOOD MORNING, MR. WILLIAMS. 

A. GOOD MORNING.

Q. APPLE DECIDED TO START WITH ONE GEOGRAPHY WHEN IT LAUNCHED 

THE IPHONE; CORRECT? 

A. YES.

Q. AND APPLE CHOSE TO START WITH ONE NETWORK OPERATOR FOR THE 

IPHONE?

A. CORRECT.

Q. AND THE CARRIER WAS AT&T; RIGHT? 

A. CORRECT. 

Q. STEVE JOBS MADE THE DECISION TO START WITH AT&T; RIGHT?

A. CORRECT, ALONG WITH THE TEAM. BUT YES.

Q. APPLE FELT THAT IT HAD THE BANDWIDTH AND ENERGY TO GO WORK 

WITH ONLY ONE CARRIER IN THE BEGINNING; RIGHT? 

A. CORRECT. 

Q. AT&T, THEY OPERATED A GSM, WCDMA NETWORK AT THAT TIME, DID 

THEY NOT? 

A. CORRECT. 

Q. AND CDMA DEVICES WOULDN'T WORK ON AT&T'S NETWORK; RIGHT? 

A. CORRECT. 

Q. SO APPLE HAD NO NEED FOR CDMA CHIPS IN ORDER TO LAUNCH THE 

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WILLIAMS CROSS BY MR. PAIGE

UNITED STATES COURT REPORTERS

894

IPHONE; RIGHT? 

A. CORRECT. 

Q. AND APPLE CHOSE WCDMA RATHER THAN CDMA TECHNOLOGY BECAUSE 

APPLE THOUGHT THE CELLULAR TECHNOLOGY AT&T WAS USING WAS MUCH 

MORE USEFUL IN TERMS OF EXPANDING AROUND THE WORLD; RIGHT? 

A. THAT'S CERTAINLY ONE REASON. 

Q. AND, IN FACT, APPLE FELT AT THE TIME THAT CDMA WAS A 

LIMITED AND DIEING TECHNOLOGY; RIGHT? 

A. MAYBE. YEAH, I -- I THINK SO. 

Q. OKAY. 

A. I DON'T -- 

Q. INDEED, YOU'VE CHARACTERIZED CDMA TECHNOLOGY AS NOT WORTH 

INVESTING IN; RIGHT? 

A. I MAY HAVE SAID SOMETHING LIKE THAT. I DON'T REMEMBER 

THAT. 

Q. IF YOU COULD OPEN YOUR BINDER, PLEASE, TO YOUR FIRST TAB 

UNDER DEPOSITION TRANSCRIPTS. 

MR. BAKER: COUNSEL, DO YOU HAVE A BINDER? OKAY.

BY MR. PAIGE: 

Q. THE FIRST ONE IS YOUR INVESTIGATIONAL HEARING THAT YOU 

GAVE TO THE FTC ON SEPTEMBER 16TH, 2016? 

A. OKAY.

Q. IF YOU COULD TURN TO PAGE 36 OF THAT, PLEASE, SIR. 

AND YOU GAVE THIS TESTIMONY UNDER OATH; CORRECT? 

A. I DID. 

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WILLIAMS CROSS BY MR. PAIGE

UNITED STATES COURT REPORTERS

895

Q. OKAY. AND JUST RUNNING THROUGH PAGE 36, LINE 19 -- 

THE COURT: HOW IS THIS IMPEACHMENT. 

MR. PAIGE: I'M SORRY, YOUR HONOR. 

THE COURT: THAT'S NOT IMPEACHMENT. 

MR. PAIGE: I'LL MOVE ON. 

THE COURT: OKAY.

BY MR. PAIGE: 

Q. NOW, YOU'VE BEEN RESPONSIBLE FOR IPHONE PROCUREMENT SINCE 

APPLE BEGAN WORKING ON THE IPHONE; CORRECT? 

A. I HAVE. 

Q. SO YOU HAVE OVERSIGHT OVER ALL OF THE PARTS THAT APPLE 

PURCHASES FOR THE IPHONE; CORRECT? 

A. ULTIMATELY. 

Q. AND THAT INCLUDES THE MODEM CHIPS USED BY THE IPHONE; 

RIGHT? 

A. YES.

Q. BUT AT YOUR MARCH 15TH, 2018, DEPOSITION, YOU WEREN'T 

AWARE OF ANY REQUESTS TO INFINEON FOR A CDMA COMPLIANT CHIP AT 

THE TIME APPLE FIRST DECIDED TO LAUNCH ON THE VERIZON NETWORK; 

RIGHT? 

A. CORRECT. 

Q. AND YOU WEREN'T AWARE OF ANY DISCUSSIONS WITH ERICSSON 

ABOUT A CDMA CHIP PRIOR TO LAUNCHING ON THE VERIZON NETWORK; 

RIGHT? 

A. I'M NOT -- I'M NOT FAMILIAR WITH ANY OF THOSE. 

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WILLIAMS CROSS BY MR. PAIGE

UNITED STATES COURT REPORTERS

896

Q. OKAY. AND YOU WEREN'T AWARE OF ANY DISCUSSIONS WITH TEXAS 

INSTRUMENTS REGARDING A CDMA CHIP PRIOR TO LAUNCHING ON THE 

VERIZON NETWORK; CORRECT? 

A. I'M NOT AWARE OF ANY OF THOSE.

Q. AND YOU WEREN'T AWARE OF ANY REQUESTS BY SAMSUNG, OR 

REQUESTS BY APPLE THAT SAMSUNG SUPPLY IT WITH CDMA MODEMS; 

CORRECT?

A. I'M NOT AWARE OF ANY OF THAT.

Q. OKAY. IN FACT, YOU WEREN'T AWARE OF ANY SPECIFIC REQUESTS 

BY APPLE TO ANY MODEM SUPPLIER OTHER THAN QUALCOMM TO DEVELOP A 

CDMA MODEM FOR APPLE BETWEEN 2005 AND 2013; RIGHT?

A. I KNOW THERE WAS AN INVESTIGATION OF VIA, BUT I WASN'T 

AWARE OF THE SPECIFIC REQUEST TO DEVELOP IT. 

Q. YOU WEREN'T LIKEWISE AWARE OF ANY ATTEMPT BY APPLE TO 

DEVELOP ITS OWN CDMA MODEM BETWEEN 2005 AND 2013; RIGHT? 

A. I WAS NOT AWARE OF ANY WORK AT APPLE TO DEVELOP A CDMA 

MODEM.

Q. OKAY. AND YOU WEREN'T AWARE OF ANY ATTEMPT BY APPLE TO 

BUY A CDMA MODEM SUPPLIER BETWEEN 2005 AND 2013; CORRECT? 

A. CORRECT.

Q. APPLE WAS THE INITIAL SUPPLIER OF BASEBAND PROCESSORS 

FOR -- I'M SORRY. 

INFINEON WAS THE INITIAL SUPPLIER OF BASEBAND PROCESSORS 

FOR APPLE'S IPHONE; CORRECT? 

A. CORRECT.

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WILLIAMS CROSS BY MR. PAIGE

UNITED STATES COURT REPORTERS

897

Q. AND INFINEON RECEIVED POOR TECHNICAL REVIEWS BEFORE APPLE 

STOPPED USING IT AS A BASEBAND SUPPLIER; CORRECT?

A. CORRECT.

Q. AND THEREAFTER, APPLE DECIDED TO STOP USING INFINEON AS A 

BASEBAND SUPPLIER BECAUSE INFINEON WAS BEHIND ON LTE; RIGHT? 

A. THAT'S ONE OF THE REASONS.

Q. IN FACT, THE BIGGEST CONCERN THAT APPLE HAD WITH INFINEON 

WAS THAT THEY FELL BEHIND TECHNICALLY; RIGHT? 

A. CORRECT.

Q. AND WHEN APPLE DECIDED TO STOP USING INFINEON CHIP, APPLE 

BELIEVED THAT QUALCOMM HAD A SIGNIFICANT LEAD IN LTE; RIGHT?

A. THAT'S CORRECT. 

Q. NOW, AT YOUR INVESTIGATIONAL HEARING, YOU TESTIFIED THAT 

QUALCOMM HAS NEVER DIRECTLY EXPRESSED A THREAT OF NOT SELLING 

APPLE CHIPS; RIGHT? 

A. NOT EXPLICITLY.

Q. OKAY. AND YOU'RE AWARE THAT BY 2017, APPLE HAD STOPPED 

REIMBURSING ITS CONTRACT MANUFACTURERS TO QUALCOMM ROYALTIES IN 

APPLE PRODUCTS; CORRECT?

A. CORRECT.

Q. YOU'RE ALSO AWARE THAT APPLE'S CONTRACT MANUFACTURERS 

STOPPED PAYING QUALCOMM ROYALTIES FOR APPLE PRODUCTS AS A 

RESULT; RIGHT? 

A. I'M AWARE.

Q. AND DESPITE THE FACT THAT APPLE STOPPED REIMBURSING THE 

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WILLIAMS CROSS BY MR. PAIGE

UNITED STATES COURT REPORTERS

898

CONTRACT MANUFACTURERS FOR QUALCOMM ROYALTIES, QUALCOMM HAS 

CONTINUED TO SHIP CHIPS FOR APPLE PRODUCTS; HASN'T IT? 

A. YES, PER THE AGREEMENT WE STRUCK WITH QUALCOMM.

Q. YOU BELIEVE THAT QUALCOMM'S CHIP PRICING IS ALMOST ALWAYS 

HIGHER THAN OTHER SUPPLIERS; CORRECT?

A. CORRECT.

Q. IN FACT, IN YOUR VIEW, YOU PAY QUALCOMM SUBSTANTIALLY MORE 

THAN INTEL FOR WHAT YOU BELIEVE TO BE ESSENTIALLY THE SAME 

SOLUTION; RIGHT? 

A. CORRECT. 

Q. YOU STATED IN RESPONSE TO QUESTIONS FROM THE FTC THAT 

APPLE COULDN'T ENTER INTO A DIRECT LICENSING AGREEMENT WITH 

QUALCOMM IN THE 2000'S BECAUSE QUALCOMM WOULD REQUIRE APPLE TO 

CROSS-LICENSE ALL OF ITS I.P. TO QUALCOMM. 

DO YOU RECALL THAT TESTIMONY? 

A. I DO.

Q. BUT NOBODY FROM QUALCOMM TOLD YOU WHETHER AND TO WHAT 

EXTENT THEY NEEDED A CROSS-LICENSE BACK FROM APPLE; RIGHT? 

A. NO, THAT'S NOT CORRECT. 

Q. OKAY. COULD I PLEASE PLAY THE DEPO AT 311:23 THROUGH 

312-4. 

(A VIDEOTAPE WAS PLAYED IN OPEN COURT OFF THE RECORD.) 

THE COURT: HOW IS THAT IMPEACHMENT? WHY DO YOU ALL 

KEEP DOING THIS? THESE ARE NOT REALLY IMPEACHMENT, BUT YOU -- 

ANYWAY, GO AHEAD, PLEASE. THIS HAS BEEN GOING ON WITH MULTIPLE 

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WILLIAMS CROSS BY MR. PAIGE

UNITED STATES COURT REPORTERS

899

QUALCOMM CROSS-EXAMINATIONS THAT THESE ARE NOT IMPEACHMENT.

BY MR. PAIGE: 

Q. I ASKED -- 

THE COURT: CAN YOU ANSWER MY QUESTION? WHY IS THAT 

IMPEACHMENT? 

MR. PAIGE: I JUST ASKED HIM WHETHER ANYONE FROM 

QUALCOMM TOLD HIM WHETHER AND TO WHAT EXTENT THEY NEED A 

CROSS-LICENSE BACK FROM APPLE. 

THE COURT: WHAT WAS HIS ANSWER? 

MR. PAIGE: THAT SAME QUESTION WAS ASKED AND HE SAID 

I DID NOT ENGAGE IN ANY DISCUSSIONS WITH QUALCOMM ON THE 

CROSS-LICENSING.

THE COURT: OKAY. SO HOW IS THAT IMPEACHMENT? 

ANYWAY, GO AHEAD, PLEASE. 

BY MR. PAIGE: 

Q. WERE YOU ASKED THAT QUESTION AND DID YOU GIVE THAT ANSWER? 

A. I WAS. 

Q. DO YOU STAND BY THAT TESTIMONY TODAY? 

A. I DO. I INTERPRETED YOUR QUESTION AS WE GOT VERY CLEAR 

INFORMATION FROM QUALCOMM ON THE REQUIREMENTS OF THE 

CROSS-LICENSE. THAT WAS WHETHER I HAD THE DIRECT 

CONVERSATIONS. SO I MIGHT HAVE MISINTERPRETED YOUR QUESTION. 

I WAS ANSWERING MORE BROADLY. SO NOT AN ISSUE. 

Q. OKAY. YOU DIDN'T HEAR FROM QUALCOMM ITSELF; RIGHT? YOU 

HEARD FROM THE LEGAL DEPARTMENT AT APPLE; IS THAT RIGHT?

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WILLIAMS CROSS BY MR. PAIGE

UNITED STATES COURT REPORTERS

900

A. BOTH THE LEGAL AND THE CHIP TEAM. 

Q. OKAY. 

A. AND I -- AND I THINK I SAW A STANDARD AGREEMENT THAT WAS 

GIVEN TO US OR THAT WAS WRITTEN IN IT. SO KIND OF IN ALL THREE 

PLACES.

Q. IF YOU COULD TURN TO EXHIBIT 9070 IN THE BINDER THAT I'VE 

GIVEN YOU. IT'S THE THIRD FROM THE LAST DOCUMENT, SIR. 

DO YOU HAVE THAT IN FRONT OF YOU? 

A. I DO. 

Q. OKAY. THIS IS AN E-MAIL FROM MR. MOLLENKOPF TO YOU IN 

JANUARY OF 2013? 

A. YES. 

MR. PAIGE: YOUR HONOR, MOVE THE ADMISSION OF 

QX 9070. 

THE COURT: ANY OBJECTION? 

MR. BAKER: NO OBJECTION. 

THE COURT: IT'S ADMITTED. 

(DEFENDANT'S EXHIBIT QX 9070 WAS ADMITTED IN EVIDENCE.) 

THE COURT: GO AHEAD, PLEASE.

BY MR. PAIGE: 

Q. TURNING TO PAGE 4 OF THE DOCUMENT, SIR, DO YOU SEE AN 

E-MAIL THERE FROM MR. TIM COOK TO PAUL JACOBS? 

A. YES. 

Q. DO YOU SEE WHERE MR. TIM COOK SAID, "I'VE ASKED JEFF TO 

MAKE ONE LAST ATTEMPT TO CLOSE WITH STEVE AND HAVE ASKED THE 

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WILLIAMS CROSS BY MR. PAIGE

UNITED STATES COURT REPORTERS

901

TEAM TO HOLD A PLANNED AWARD TO AN ALTERNATE SOURCE FOR A 

COUPLE OF DAYS WHILE THIS OCCURS." 

A. YES, I DO.

Q. AND THAT WAS JUST A FEW WEEKS BEFORE APPLE AND QUALCOMM 

ENTERED INTO THE FIRST AMENDMENT TRANCE -- FIRST AMENDMENT TO 

THE TRANSITION AGREEMENT AND THE BCPA; CORRECT? 

A. YES.

Q. APPLE DOESN'T HAVE AN AWARD PLAN TO ANOTHER COMPANY AT 

THAT TIME, DID IT? 

A. NO, WE DID. WE WERE WORKING WITH -- WE WERE DEFINITELY 

WORKING WITH INTEL, AND WE HAD THE IPAD THAT WE WERE WORKING ON 

FOR 2014. AND IF WE WEREN'T ABLE TO CLOSE THIS TRANSITION 

AGREEMENT, WHICH WE KNEW REQUIRED EXCLUSIVITY, WE WERE GOING TO 

GO DOUBLE DOWN AND DO EVEN MORE WITH THEM. 

Q. STEVE JOBS WAS A HANDS-ON BOSS WHEN IT CAME TO THE IPHONE; 

CORRECT? 

A. YES. 

Q. HE WASN'T SHY ABOUT SHARING HIS OPINIONS, WAS HE? 

A. NO. 

Q. HE WOULD INVOLVE HIMSELF IN DISCUSSING VARIOUS ISSUES 

RELATING TO THE IPHONE'S DESIGN AND MANUFACTURE; RIGHT? 

A. YES, FROM TIME TO TIME.

Q. AND WHEN APPLE WAS WORKING ON -- WELL, LET'S TURN TO THE 

NEXT DOCUMENT IN YOUR EXHIBIT, PLEASE, 9074. 

THAT'S AN E-MAIL FROM STEVE JOBS TO YOU, AMONG OTHERS? 

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WILLIAMS CROSS BY MR. PAIGE

UNITED STATES COURT REPORTERS

902

DATED FEBRUARY 2008; CORRECT, SIR? 

A. CORRECT. 

MR. PAIGE: MOVE THE ADMISSION OF QX 9074, YOUR 

HONOR. 

MR. BAKER: NO OBJECTION. 

THE COURT: IT'S ADMITTED. 

(DEFENDANT'S EXHIBIT QX 9074 WAS ADMITTED IN EVIDENCE.) 

THE COURT: GO AHEAD, PLEASE.

BY MR. PAIGE: 

Q. WHEN APPLE WAS WORKING ON WHAT WOULD BECOME THE 3G VERSION 

OF THE IPHONE, MR. JOBS EXPRESSED THE DESIRE TO HAVE ONLY ONE 

HARDWARE LINE FOR THE IPHONE; CORRECT? 

A. YEAH. I READ THIS -- LET ME MAKE SURE I READ THIS. GIVE 

ME A SECOND. 

(PAUSE IN PROCEEDINGS.) 

THE WITNESS: YEAH, THIS IS STEVE SAYING WE WANT A 

WORLD SKU. WE DON'T WANT A BUNCH OF DIFFERENT PRODUCTS FOR 

DIFFERENT COUNTRIES. WE WANT A WORLD SKU THAT COVERS 

EVERYTHING.

BY MR. PAIGE: 

Q. RIGHT. MR. JOBS SAID HE WANTED TO HAVE THAT ONE HARDWARE 

LINE BE THE SAME AROUND THE WORLD; CORRECT?

A. YES.

Q. AND WHEN APPLE FIRST RELEASED THE IPHONE, IT SOURCED THE 

BASEBAND PROCESSORS FROM INFINEON ONLY; CORRECT? 

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WILLIAMS CROSS BY MR. PAIGE

UNITED STATES COURT REPORTERS

903

A. CORRECT. 

Q. THEN YEARS LATER, AFTER INTEL BOUGHT INFINEON, APPLE 

SWITCHED OVER TO SOURCING BASEBAND PROCESSORS FOR NEW MODELS 

FROM QUALCOMM ONLY; CORRECT? 

A. CORRECT, FOR A PERIOD OF TIME. 

Q. ALL RIGHT. AND NOW APPLE IS SOURCING BASEBAND PROCESSORS 

FOR THE IPHONE MODEL IT FIRST RELEASED IN 2018 FROM INTEL ONLY; 

CORRECT? 

A. RELUCTANTLY BECAUSE QUALCOMM WILL NOT SELL US THEIR NEW 

TECHNOLOGY.

Q. APPLE SETS THE PRICE FOR IPHONES BASED ON WHAT IT 

PERCEIVES IS THE VALUE OF THE IPHONE, NOT BASED ON A MARKUP OF 

THE COST OF ITS COMPONENTS; RIGHTS? 

A. IT'S ACTUALLY A COMPLICATED PROCESS THAT WE USE. WE HAVE 

A PRICE COMMITTEE AND WE LOOK AT VARIOUS FACTORS. BUT 

ULTIMATELY WE SET A PRICE BASED ON A BALANCE OF WHAT WE THINK 

WE CAN AFFORD FROM THE COST STANDPOINT, WHAT WE THINK THE 

CUSTOMERS CAN AFFORD TO PAY BASED ON THE TECHNOLOGY, AND MANY 

FACTORS.

Q. OKAY. AND IN 2017, APPLE'S PRICING POLICY LED THE IPHONE 

10, BREAKING THE BARRIER OF $1,000 FOR A PHONE; RIGHT? 

A. I DON'T KNOW IF WE WERE THE FIRST TO SELL A PHONE OVER 

$1,000 OR NOT. 

Q. AND WHEN IT -- 

A. IN TERMS OF BREAKING THE BARRIER, I DON'T KNOW IF WE WERE 

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WILLIAMS CROSS BY MR. PAIGE

UNITED STATES COURT REPORTERS

904

THE FIRST.

Q. WHEN IT RELEASED THE IPHONE 10 AT THAT PRICE POINT, APPLE 

WAS NOT REIMBURSING CM'S FOR QUALCOMM ROYALTIES; RIGHT? 

A. CORRECT. 

Q. AND YOU MENTIONED A LITTLE BIT ABOUT INCREASED PRICE 

LEADING TO INCREASED ROYALTIES. BUT YOU UNDERSTAND THAT 

QUALCOMM HAS A CAP ON ROYALTIES IN ITS LICENSE AGREEMENTS; 

RIGHT? 

A. I -- I UNDERSTAND THAT THEY DO NOW.

Q. OKAY. AND YOU UNDERSTAND THAT THE TRANSFER PRICE THAT 

APPLE IS CHARGED ROYALTIES ON IS THE TRANSFER PRICE FROM THE 

CM'S TO APPLE, NOT FROM APPLE TO THE END CONSUMER; RIGHT?

A. I DO. 

Q. OKAY. I THINK I HEARD YOU SAY IN RESPONSE TO YOUR 

TESTIMONY TO THE FTC'S QUESTIONS THAT YOU ALWAYS THOUGHT 7.50 

WAS TOO MUCH TO PAY. 

DID I HEAR THAT CORRECTLY? 

A. CORRECT. 

Q. OKAY. AND MR. JOBS NEVER TOLD YOU HE THOUGHT THAT NUMBER 

WAS UNFAIR, DID HE? 

A. NO, HE DID NOT. 

Q. COULD I TURN YOU -- ASK YOU TO TURN TO JX 37 IN YOUR 

BINDER, PLEASE. 

SIR, IS JX 37 AN E-MAIL FROM YOU TO STEVE JOBS, AMONG 

OTHERS, IN NOVEMBER OF 2006? 

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WILLIAMS CROSS BY MR. PAIGE

UNITED STATES COURT REPORTERS

905

A. IT IS. 

MR. PAIGE: I MOVE THE ADMISSION OF JX 37, YOUR 

HONOR. 

THE COURT: ANY OBJECTION? 

MR. BAKER: NO OBJECTION. 

THE COURT: IT'S ADMITTED. 

(JOINT EXHIBIT JX 37 WAS ADMITTED IN EVIDENCE.) 

THE COURT: GO AHEAD, PLEASE.

BY MR. PAIGE: 

Q. OKAY. NOW, MR. JOBS WROTE TO YOU ABOUT THE PROPOSED 7.50; 

RIGHT? AND HE SAID, "THE GOOD PART IS THAT THEY ARE WILLING TO 

REBATE US FOR ANY PAYMENTS ABOVE 7.50 PER PHONE THAT WE MAKE TO 

ONE OF THEIR LICENSED ODM'S." 

RIGHT?

A. CORRECT.

Q. MR. JOBS SAID THAT QUALCOMM HAD MET THEIR REQUEST; RIGHT? 

A. CORRECT. 

Q. AND MR. JOBS SAID, THE NOT-SO-GOOD PART IS THAT QUALCOMM 

WANTED THIS TO EXPIRE AT THE END OF 2010 AND BE LIMITED TO 20 

MILLION PHONES; RIGHT? 

A. CORRECT.

Q. THEY SAW IT AS A LIMITED INCENTIVE OF $200 MILLION; 

CORRECT? 

A. CORRECT.

Q. AND MR. JOBS SAID HE'LL TRY TO PUSH THE EXPIRATION DATE TO 

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WILLIAMS CROSS BY MR. PAIGE

UNITED STATES COURT REPORTERS

906

THE END OF 2012 AND GET QUALCOMM TO ELIMINATE THE CAP ON THE 

NUMBER OF PHONES; RIGHT?

A. CORRECT.

Q. AND HE SAID THAT YOU SHOULD TAKE IT IF THEY TOOK THAT 

DEAL; RIGHT? 

A. YES. 

Q. AND YOUR RESPONSE WAS, THIS WAS GREAT NEWS; RIGHT, SIR? 

A. CORRECT. 

Q. AND YOU SAID THAT YOU AGREE WE SHOULD TAKE IT? 

A. I DID. 

Q. OKAY. AND, IN FACT, THE SIGNED VERSION OF THE MARKETING 

INCENTIVE AGREEMENT, THAT ENDED AT THE END OF 2012; RIGHT? 

A. YES. 

Q. AND THE SIGNED VERSION OF THE MARKETING INCENTIVE 

AGREEMENT, THAT HAD NO NUMERICAL CAP FOR THE NUMBER OF IPHONES 

ON WHICH AN INCENTIVE WOULD BE PAID; RIGHT? 

A. CORRECT.

Q. SO APPLE GOT THE TERMS THAT MR. JOBS WANTED IN THE 

MARKETING INCENTIVE AGREEMENT, DIDN'T THEY?

A. CORRECT.

Q. AND APPLE DIDN'T ENTER INTO THE MARKETING INCENTIVE 

AGREEMENT FOR ANY REASONS HAVING TO DO WITH WANTING TO BUY 

CHIPS FROM QUALCOMM; RIGHT?

A. CORRECT. BUT, BY THE WAY, GREAT NEWS IS NOT GREAT NEWS ON 

THE 7.50. GREAT NEWS IS WE'RE MOVING ON. 

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WILLIAMS CROSS BY MR. PAIGE

UNITED STATES COURT REPORTERS

907

THE ALTERNATIVES, AS YOU KNOW, IS WE WOULD HAVE PAID $18. 

Q. I'M SORRY? 

A. OR POSSIBLY BEEN ENJOINED. SO GREAT NEWS WAS GREAT NEWS 

WHERE WE'VE GOT SOME CLOSER. 

Q. NOW, IN MARCH OF 2011, YOU ISSUED A CHALLENGE TO QUALCOMM 

RELATING TO THE DEVELOPMENT OF A NEW MODEM CHIP; RIGHT? 

A. 2011? CORRECT. 

Q. LET ME ASK YOU TO TURN TO JX 59 IN YOUR BINDER, SIR. 

IS THIS AN E-MAIL FROM YOU TO MR. MOLLENKOPF AND 

MR. RENDUCHINTALA? 

A. IT IS. 

Q. OKAY. AND DATED MARCH 23RD, 2011? 

A. CORRECT. 

MR. PAIGE: I MOVE THE ADMIT JX 59, YOUR HONOR. 

MR. BAKER: NO OBJECTION. 

THE COURT: IT'S ADMITTED. 

(JOINT EXHIBIT JX 59 WAS ADMITTED IN EVIDENCE.) 

THE COURT: GEES.

BY MR. PAIGE: 

Q. AND THIS IS THE E-MAIL YOU SENT TO MR. MOLLENKOPF AND 

MR. RENDUCHINTALA AT QUALCOMM; RIGHT? 

A. IT IS.

Q. AND YOU CALLED IT THE MAN ON THE MOON CHALLENGE, DID YOU 

NOT?

A. I DID.

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WILLIAMS CROSS BY MR. PAIGE

UNITED STATES COURT REPORTERS

908

Q. AND ONE OF THE THINGS THAT YOU WANTED TO DO WAS TO 

EXPEDITE DEVELOPMENT OF THE QUALCOMM 9X15 MODEM PLATFORM; 

CORRECT? 

A. CORRECT.

Q. THE 9X15, THAT WAS AN LTE MODEM; RIGHT? 

A. CORRECT. 

Q. AND YOU DIDN'T ISSUE SUCH A CHALLENGE TO ANY OTHER CHIP 

COMPANY, DID YOU? 

A. WE DID NOT.

Q. OKAY. AND YOU ISSUED THE MAN ON THE MOON CHALLENGE 

BECAUSE STEVE JOBS HAD THOUGHT THAT THE VELCRO PATH FOR THE NEW 

IPHONE WAS A MISTAKE; CORRECT? 

A. COLLECTIVELY, THE TEAM THOUGHT IT WAS A MISTAKE.

Q. OKAY. AND THAT VELCRO PATH, THAT WAS USING TWO CHIPSETS 

RATHER THAN A SINGLE CHIP FOR THE CELLULAR MODEM; RIGHT? 

A. CORRECT.

Q. AND MR. JOBS WANTED TO DISCUSS GOING STRAIGHT FOR THE 9X15 

AT THE FASTEST POSSIBLE RATE; RIGHT?

A. WE AS A TEAM DID. 

Q. OKAY. AND QUALCOMM MET THAT CHALLENGE SUCH THAT APPLE WAS 

ABLE TO SHIP IN ROUGHLY THE TIMEFRAME IT WANTED; CORRECT? 

A. CORRECT. 

Q. AND THE PHONE APPLE SHIPPED CONTAINED THE QUALCOMM 9X15 

CHIP, THAT WAS THE IPHONE 5; RIGHT? 

A. I BELIEVE IT WAS THE IPHONE 5.

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WILLIAMS CROSS BY MR. PAIGE

UNITED STATES COURT REPORTERS

909

Q. AND THE IPHONE 5 WAS THE FIRST IPHONE THAT APPLE PRODUCED 

THAT HAD AN LTE CAPABILITY; RIGHT? 

A. I THINK THAT'S CORRECT.

Q. OKAY. NOW, APPLE DOES LAUNCH EVENTS FOR ITS NEW IPHONES, 

DOESN'T IT?

A. WE DO. 

Q. AND YOU SAW THE LAUNCH EVENT FOR THE IPHONE 5; RIGHT? 

A. I DID. 

Q. AND THE SINGLE CHIP LTE MODEM THAT QUALCOMM HAD PROVIDED 

TO APPLE AS PART OF THE MAN ON THE MOON PROJECT, THAT WAS 

FEATURED AS PART OF THE LAUNCH EVENT, WASN'T IT?

A. I DON'T REMEMBER. 

Q. IN FACT, APPLE SAID THAT THE CONVENTIONAL APPROACH OF 

DESIGNING LTE INTO A WORLD PHONE USES TWO CHIPS, WITH THE NEW 

IPHONE, BOTH VOICE AND DATA TECHNOLOGY ARE COMBINED INTO A 

SINGLE CHIP. THIS IS ONE OF THE REAL BREAKTHROUGHS THAT 

ENABLES IPHONE 5'S THIN DESIGN. 

ISN'T THAT RIGHT? 

A. I DON'T REMEMBER THAT, BUT WE COULD HAVE SAID THAT. 

MR. PAIGE: MAY I REFRESH HIS RECOLLECTION, YOUR 

HONOR. 

THE COURT: GO AHEAD, PLEASE. 

MR. PAIGE: PLAY 9200 FROM 53:37 THROUGH 54:14, 

PLEASE. 

(A VIDEOTAPE WAS PLAYED IN OPEN COURT OFF THE RECORD.) 

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WILLIAMS CROSS BY MR. PAIGE

UNITED STATES COURT REPORTERS

910

THE COURT: WAIT, I'M SORRY. STOP THIS A SECOND. I 

HAVEN'T HAD REALTIME ALL MORNING. 

WHAT WAS THE QUESTION? THIS IS NOT NORMAL REFRESHING 

RECOLLECTION IS THERE'S USUALLY A DOCUMENT, YOU HAVE THEM 

REVIEW IT QUITELY, THEY SAY MY MEMORY HAS BEEN REFRESH AND THEN 

THEY ANSWER. 

MR. PAIGE: THAT WAS A STATEMENT I JUST QUOTED IN THE 

QUESTION COMING UP IN A MOMENT. 

THE COURT: WHAT WAS THE QUESTION AGAIN, PLEASE? I'M 

SORRY, I DON'T HAVE REALTIME. 

MR. PAIGE: APPLE SAID THAT THE CONVENTIONAL APPROACH 

OF DESIGNING LTE INTO A WORLD PHONE USES TWO CHIPS. WITH THE 

NEW IPHONE, BOTH VOICE AND DATA TECHNOLOGY ARE COMBINED ONTO A 

SINGLE CHIP. THIS IS ONE OF THE REAL BREAKTHROUGHS THAT 

ENABLES IPHONE 5'S THIN DESIGN. 

THE COURT: OH. YOU'RE ASKING IF ANYONE IN THE 

COMPANY EVER MADE THAT REPRESENTATION. 

MR. PAIGE: I'M ASKING WHETHER HE RECALLS THAT BEING 

MADE AT THE LAUNCH EVENT FOR THE IPHONE 5, YES, AND HE SAID HE 

DIDN'T REMEMBER. SO I'M GOING TO REFRESH HIS RECOLLECTION WITH 

THE VIDEO OF THE LAUNCH EVENT. 

THE COURT: OKAY. I'VE NOT SEEN THIS EVER DONE 

BEFORE, BUT GO AHEAD. 

THE WITNESS: I -- 

THE COURT: I'M SORRY. DO YOU WANT TO STOP IT. DID 

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WILLIAMS CROSS BY MR. PAIGE

UNITED STATES COURT REPORTERS

911

YOU WANT TO SAY SOMETHING? 

THE WITNESS: I WAS GOING TO SAY I'LL STIPULATE IF 

THAT'LL MOVE FORWARD THAT THAT WAS SAID. I JUST DIDN'T 

REMEMBER THOSE EXACT WORDS. 

MR. PAIGE: SURE. LET'S JUST FINISH IT. 

MR. BAKER: OBJECTION, YOUR HONOR. 

THE COURT: OBJECTION. TAKE IT DOWN. I'VE NEVER 

SEEN REFRESHING RECOLLECTION DONE WITH A VIDEO LIKE THIS 

BEFORE. 

ANYWAY, GO AHEAD, PLEASE. 

MR. PAIGE: OKAY. 

THE COURT: DO YOU HAVE A CASE WHERE IT'S DONE THIS 

WAY? I'VE NEVER SEEN IT DONE THIS WAY. 

MR. PAIGE: I -- I DIDN'T HAVE A TRANSCRIPT, YOUR 

HONOR. 

THE COURT: WHERE IS IT EVER DONE THIS WAY? IS THERE 

A CASE YOU CAN CITE TO ME? 

MR. PAIGE: I'M NOT SURE I CAN. 

MR. VAN NEST: WE DID IT IN THIS DISTRICT IN ORACLE

VERSUS GOOGLE. WE REFRESHED MR. ELLISON'S RECOLLECTION ABOUT 

STATEMENTS HE'D MADE IN A PUBLIC EVENT AND PLAYED THE -- A VERY 

SHORT CLIP FROM HIS APPEARANCE. IT'S NOT -- I DOUBT IF THAT'S 

REPORTED. 

THE COURT: IT'S NOT EXACTLY THE SAME. 

ANYWAY, GO HEAD. WHAT WERE YOU GOING TO SAY? 

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WILLIAMS CROSS BY MR. PAIGE

UNITED STATES COURT REPORTERS

912

MR. BAKER: I WAS GOING TO POINT OUT THAT THESE ARE 

NOT MR. WILLIAMS'S STATEMENTS. 

THE COURT: I KNOW. THIS IS VERY UNUSUAL. WE CAN 

PLAY EVERY SINGLE APPLE COMMERCIAL IF WE WANT TO, TO SEE IF HE 

RECALLS THOSE REPRESENTATIONS BEING MADE BY THE COMPANY. BUT 

IT SEEMS LIKE AN ODD REFRESHING RECOLLECTION. 

BUT GO AHEAD, PLEASE.

BY MR. PAIGE: 

Q. YOU SUGGESTED IN YOUR ANSWERS TO THE FTC'S COUNSEL THAT 

THE TRANSITION AGREEMENT AND THE FIRST AMENDED TRANSITION 

AGREEMENT WERE EXCLUSIVITY ARRANGEMENTS; RIGHT? 

A. EXCLUSIVITY WAS A PIECE OF THOSE. 

Q. BUT YOU AGREE THAT UNDER THE TRANSITION AGREEMENT APPLE 

DID NOT HAVE AN OBLIGATION TO BUY QUALCOMM CHIPS; RIGHT? 

A. CORRECT. AND, AND -- 

Q. AND YOU AGREE THAT THE FIRST AMENDMENT TO THE TRANSITION 

AGREEMENT DID NOT REQUIRE APPLE TO PURCHASE ANY QUALCOMM CHIPS; 

RIGHT? 

A. CORRECT. 

Q. INSTEAD, YOUR POSITION IS THAT THE AGREEMENTS WOULD 

REQUIRE APPLE TO PAY A LOT OF MONEY BACK TO QUALCOMM IF APPLE 

CHOSE TO USE ANOTHER MODEM SUPPLIER; RIGHT? 

A. CORRECT. 

Q. BUT THAT WAS MONEY THAT QUALCOMM WAS PAYING TO APPLE UNDER 

THE AGREEMENTS; RIGHT? 

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WILLIAMS CROSS BY MR. PAIGE

UNITED STATES COURT REPORTERS

913

A. CORRECT. 

Q. WITHOUT THE AGREEMENTS IN PLACE, APPLE WOULD NOT HAVE 

RECEIVED THAT MONEY FROM QUALCOMM IN THE FIRST PLACE; RIGHT? 

A. CORRECT. 

Q. NOW, DURING THE NEGOTIATIONS OVER THE TRANSITION 

AGREEMENT, APPLE PROPOSED TO HAVE A PORTION OF THE MONEY 

DELIVERED UPFRONT AND A LARGER PORTION PAID IN FOUR EQUAL 

ANNUAL PAYMENTS FROM 2011 THROUGH 2014; RIGHT? 

A. THERE WERE MANY PROPOSALS BACK AND FORTH. 

I'M CERTAIN THAT'S ONE VERSION OF THEM. 

Q. COULD YOU TAKE A LOOK AT CX 861. IT'S IN YOUR BINDER FROM 

ME. THIS APPEARS TO BE AN UNSENT E-MAIL FROM YOU; CORRECT? 

A. GIVE ME A MINUTE. 

(PAUSE IN PROCEEDINGS.) 

THE WITNESS: YES, IT DOESN'T LOOK LIKE IT WAS SENT 

TO ANYONE. 

MR. PAIGE: MOVE THE ADMISSION OF CX 861, YOUR HONOR. 

MR. BAKER: NO OBJECTION. 

THE COURT: IT'S ADMITTED. 

(PLAINTIFF'S EXHIBIT CX 861 WAS ADMITTED IN EVIDENCE.) 

THE COURT: GO AHEAD, PLEASE.

BY MR. PAIGE: 

Q. DO YOU SEE THERE WHERE IT SAYS, "OUR PROPOSAL TO PAUL WAS 

TO HAVE THE 250 MILLION DELIVERED IN 2011 AND 2012, AND A 

TRANSITION FUND CONSISTING OF FOUR EQUAL ANNUAL PAYMENTS?"

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WILLIAMS CROSS BY MR. PAIGE

UNITED STATES COURT REPORTERS

914

A. I DO. 

Q. NOW, QUALCOMM ARGUED IT WAS APPROPRIATE TO SPREAD THE FULL 

AMOUNT OF THE MONEY ACROSS THE ENTIRE FIVE YEAR PERIOD WITH THE 

INCENTIVES GROWING AS APPLE'S VOLUMES GREW; CORRECT? 

A. CORRECT.

Q. THAT WAS BECAUSE STEVE MOLLENKOPF WAS CONCERNED THAT THE 

IMPACT TO HIS QCT FINANCIALS FOR THE INCENTIVE PAYMENT WOULD BE 

VERY MATERIAL IN 2011 AND 2012 WHEN OUR CHIP BUSINESS TOGETHER 

IS JUST GETTING STARTED; RIGHT? 

A. RIGHT.

Q. AND IN RESPONSE, APPLE PROPOSED A VOLUME BASED PLAN THAT 

ALLOWS US TO EARN TRANSITION FUNDS IN 2011 AND 2012 IF APPLE'S 

VOLUMES ARE STRONG AND SPREAD THINGS LATER IF NOT; RIGHT?

A. CORRECT.

Q. AND THAT ALLOWED QUALCOMM TO AVOID THE RISK OF A LARGE 

LUMP SUM PAYMENT AGAINST SMALL INCREMENTAL REVENUE FROM APPLE; 

RIGHT? 

A. CORRECT. 

Q. MR. MOLLENKOPF TOLD YOU, IN FACT, THAT THE $1 BILLION 

VALUE OF THE DEAL WAS FAR BEYOND THE COMFORT ZONE WE ASSUMED 

GOING INTO THE ORIGINAL DISCUSSIONS; RIGHT? 

A. CORRECT. 

Q. AND THAT'S IN CX 5363 THAT YOU LOOKED AT BEFORE WITH THE 

FTC'S COUNSEL, CORRECT, PAGE 18 OF THAT DOCUMENT? 

A. PAGE 18. 

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WILLIAMS CROSS BY MR. PAIGE

UNITED STATES COURT REPORTERS

915

Q. THIS IS IN EVIDENCE, YOUR HONOR. 

A. CORRECT. 

Q. OKAY. YOU SEE EARLIER ON PAGE 17, MR. MOLLENKOPF 

EXPRESSED CONCERNS THAT THE EARLIER STRUCTURE THAT APPLE HAD 

PROPOSED HAD ALMOST THE ENTIRE INCENTIVE PAID BEFORE THE END OF 

2012; RIGHT? 

A. CORRECT. 

Q. AND DO YOU SEE THE TOP OF THAT E-MAIL WHERE MR. MOLLENKOPF 

SAID THE $1 BILLION IS A HUGE NUMBER FROM QUALCOMM'S 

PERSPECTIVE? 

A. YES, I DO SEE THAT.

Q. OKAY. 

A. BUT THAT BILLION DOLLARS IS ASSOCIATED WITH WINNING MANY, 

MANY, MANY BILLIONS OF DOLLARS OF BUSINESS.

Q. IN OTHER WORDS, THE TRANSITION AGREEMENT ALLOWED QUALCOMM 

TO PROTECT ITSELF FROM HAVING TO MAKE LARGE INCENTIVE PAYMENTS 

TO APPLE IF APPLE DIDN'T BUY A LOT OF CHIPS; RIGHT? 

A. THAT'S CORRECT. WHAT WE ACTUALLY PUT IN PLACE, THE VAST 

MAJORITY OF THE FUNDS IN THE TRANSITION AGREEMENT WERE A PRICE 

VOLUME REBATE, MEANING IF WE DID A LOT OF BUSINESS WITH 

QUALCOMM, THEY GAVE US FUNDS. IF WE DIDN'T DO A LOT OF 

BUSINESS WITH QUALCOMM, THEY DIDN'T. NO RISK TO QUALCOMM. 

UPSIDE TO QUALCOMM. 

THAT'S A STANDARD PRACTICE WE DO WITH LOTS OF SUPPLIERS. 

IT ADDED UP TO A LOT OF MONEY, BUT IT WAS FOR BILLIONS AND 

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WILLIAMS CROSS BY MR. PAIGE

UNITED STATES COURT REPORTERS

916

BILLIONS OF DOLLARS OF BUSINESS. THAT'S STANDARD.

Q. NOW, YOU SAID THAT APPLE NEEDED TO GET THE MONEY UNDER THE 

TRANSITION AGREEMENT BECAUSE APPLE VIEWED QUALCOMM'S ROYALTY 

RATES AS TOO HIGH; RIGHT?

A. I SAID THERE WERE TWO PIECES, IF YOU REMEMBER. A PIECE OF 

IT WAS WE WERE TRYING TO GET RELIEF FOR THIS CDMA TAX, THIS 

ROUGHLY $250 MILLION OR SO THAT WE WERE GOING TO GET CHARGED IN 

ADDITION TO THE 7.50 ROYALTY IN ADDITION TO PAYING FOR THE 

CHIPS. SO THAT'S A PIECE. 

AND THE OTHER IS QUALCOMM HAD HIGH PRICES, WE WERE MOVING 

A BUNCH OF BUSINESS, AND WE WANTED TRANSITION FUNDS.

Q. AND QUALCOMM CHARGED THAT 7.50 ROYALTY FROM THE BEGINNING 

OF THE TIME YOU STARTED SELLING PHONES; RIGHT?

A. THEY DID. 

Q. FOR YEARS BEFORE YOU BOUGHT CHIPS FROM QUALCOMM; RIGHT? 

A. CORRECT.

Q. YOU NEVER CHOSE TO CHALLENGE THAT IN COURT, DID YOU, SIR, 

BEFORE 2017? 

A. WE, WE CERTAINLY DID NOT. WE CERTAINLY DID NOT, 

BECAUSE -- 

MR. PAIGE: NOTHING FURTHER AT THIS TIME, YOUR HONOR. 

THE WITNESS: -- BECAUSE WE -- 

THE COURT: ALL RIGHT. TIME IS 10:14. ARE YOU 

READY? 

MR. BAKER: YES. 

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WILLIAMS RECROSS BY MR. PAIGE

UNITED STATES COURT REPORTERS

917

THE COURT: OKAY. 10:14. GO AHEAD, PLEASE. 

REDIRECT EXAMINATION

BY MR. BAKER: 

Q. MR. WILLIAMS, WOULD YOU LIKE TO FINISH THE ANSWER YOU WERE 

JUST TRYING TO GIVE. WHY DID YOU NOT CHALLENGE QUALCOMM'S 

ROYALTIES PRIOR TO 2017? 

A. WELL, IF WE CHALLENGED THE ROYALTY -- WE NEEDED THEIR CDMA 

CHIPS. THEY WERE THE ONLY SUPPLIER OF CHIPS, THEY HAD THE LEAD 

IN LTE MODEMS, WE NEEDED THEIR CHIPS. AND IF WE CHALLENGED 

THEM, THEN WE WERE -- THE AGREEMENT WOULD TERMINATE, AND WE 

WOULD NOT HAVE SUPPLY, THEY WOULD SHUT OFF SUPPLY OF OUR 

IPHONES, WHICH IS -- CARRIES MOST OF THE COMPANIES REVENUE AND 

PROFIT. 

WE WEREN'T IN A GOOD POSITION TO CHALLENGE THEM.

MR. BAKER: NO FURTHER QUESTIONS, YOUR HONOR. 

THE COURT: OKAY. ANY FURTHER RECROSS? 10:15? 

RECROSS-EXAMINATION

BY MR. PAIGE: 

Q. YOU WEREN'T BUYING CDMA CHIPS UNTIL 2011; RIGHT, SIR?

A. CORRECT.

Q. YOU HAD FOUR YEARS TO CHALLENGE THOSE AGREEMENTS BEFORE 

THEN; CORRECT? 

A. CORRECT. 

MR. PAIGE: NO FURTHER QUESTIONS. 

THE COURT: ALL RIGHT. 10:15. 

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UNITED STATES COURT REPORTERS

918

ANY FURTHER REDIRECT? 

MR. BAKER: NOTHING FURTHER, YOUR HONOR. 

THE COURT: ALL RIGHT. MAY THIS WITNESS BE EXCUSED, 

AND IS IT SUBJECT TO RECALL OR NOT SUBJECT TO RECALL? WHAT DO 

YOU BOTH THINK? 

MR. BAKER: NOT SUBJECT TO RECALL. 

THE COURT: I'M SORRY. I DIDN'T HEAR. YOU WHAT? 

MR. BAKER: NOT SUBJECT TO RECALL. 

MR. PAIGE: NOT SUBJECT TO RECALL. 

THE COURT: NOT AS WELL? 

MR. PAIGE: CORRECT. 

THE COURT: OKAY. THEN YOU HAVE COMPLETED YOUR TRIAL 

TESTIMONY AND YOU'RE FREE TO LEAVE. 

PLEASE CALL YOUR NEXT WITNESS. 

I THINK YOUR NEXT WITNESS IS A VIDEO; IS THAT CORRECT? 

OH, NO, IT'S A WRITTEN DEPOSITION. 

MR. MERBER: YES, YOUR HONOR, THE NEXT WITNESS IS 

HWI-JAE CHO. WE PROVIDED WRITTEN TESTIMONY IN RESPONSE TO THE 

HAGUE CONVENTION REQUEST. 

THE COURT: OKAY. HOW ARE YOU GOING TO DO THAT, JUST 

HAVE TWO PEOPLE READ IT? 

MR. MERBER: CORRECT. 

THE COURT: GO AHEAD, PLEASE. 

MR. MERBER: I WOULD NOTE THERE'S A PORTION THAT'S 

BEEN SEALED THAT WE WOULD PROPOSE TO READ AFTER THE PUBLIC 

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PORTION IN A CLOSED SESSION. 

THE COURT: OKAY. HOW LONG IS THE PORTION THAT YOU 

NEED TO READ? 

MR. MERBER: THE TOTAL PORTION IS APPROXIMATELY 20 

MINUTES, OF WHICH APPROXIMATELY 1 MINUTE IS SEALED. 

THE COURT: OH, OKAY. SO WHY DON'T WE DO THIS: 

IT'S -- LET ME ASK LEE-ANNE, IS IT OKAY IF WE FINISH THIS OR DO 

YOU WANT TO TAKE A BREAK NOW? 

THE REPORTER: LET'S FINISH IT. 

THE COURT: WHY DON'T YOU READ THE 20 MINUTES AND 

THEN WE'LL SEAL THE COURTROOM, ASK EVERYONE TO LEAVE, WE'LL DO 

THE 1 MINUTE, AND THEN WE'LL TAKE OUR 15 MINUTE BREAK. 

DOES THAT SOUND OKAY? 

MR. MERBER: SOUNDS GREAT. 

THE COURT: ALL RIGHT. ARE YOU GOING TO HAVE SOMEONE 

SIT IN THE WITNESS STAND AND HAVE THEM ANSWER THE QUESTIONS? 

MR. CARSON: I'M HAPPY TO SIT IN THE WITNESS STAND, 

OR I CAN STAND AT THE PODIUM, WHICHEVER IS YOUR PREFERENCE. 

THE COURT: I DON'T HAVE A PREFERENCE. 

MR. CARSON: I'LL SIT ON THE WITNESS STAND. 

THE COURT: I THINK THAT'S BETTER. OKAY. ARE YOU 

READY, BECAUSE I'M GOING TO START CHARGING TIME? 

ARE THERE -- OKAY. LET ME KNOW WHEN YOU'RE READY, PLEASE. 

MR. MERBER: OKAY. YOUR HONOR, I'M NOW GOING TO MOVE 

TO ADMIT THE EXHIBITS. 

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THE COURT: AH, OKAY. WAIT ONE SECOND. 10:17. GO 

AHEAD, PLEASE. 

MR. MERBER: CERTAINLY. I MOVE TO ADMIT EXHIBITS 

JX 0025, JX 0026, JX 0110, JX 0111, CX 0531, CX 0853, CX 6803, 

CX 6816, CX 8117, CX 6774. 

THE COURT: OKAY. GIVE ME ONE MINUTE, PLEASE. 

MR. MERBER: CERTAINLY. 

THE COURT: I'M OUT OF PAPER. OKAY. I HAD CX 8117. 

WHAT'S THE NEXT ONE, PLEASE. 

MR. MERBER: THE NEXT ONE IS CX 6774, PAGES 5 THROUGH 

9, AND CX 6809, PAGES 2 THROUGH 24. 

THE COURT: ALL RIGHT. 

MR. MERBER: AND I WOULD NOTE THAT PORTIONS OF TWO OF 

THE EXHIBITS IN THIS BINDER, CX 6774 AND JX 0110, HAVE BEEN 

SEALED BY THE COURT'S ORDER. 

THE COURT: OKAY. 6774 IN ITS ENTIRETY, OR JUST 

PARTS? 

MR. MERBER: NO, JUST PORTIONS. 

THE COURT: AND WHAT WAS THE OTHER DOCUMENT THAT'S 

BEEN SEALED, PLEASE. 

MR. MERBER: JX 0110, WHICH I BELIEVE IS ALSO 

PORTIONS OF THE EXHIBIT. 

THE COURT: OKAY. ALL RIGHT. 

ANY OBJECTION TO INTRODUCING THOSE EXHIBITS? 

MR. BORNSTEIN: ONLY WITH RESPECT TO CX 6774 WITH 

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RESPECT TO WHICH YOUR HONOR GRANTED AN HPO IN PART, AND I THINK 

I CAN CONFIRM THAT THE FTC IS INTRODUCING ONLY THE PORTION THAT 

IS NOT SUBJECT TO THE GRANTED HPO. 

MR. MERBER: THAT IS CORRECT. 

MR. BORNSTEIN: SO ON THAT UNDERSTANDING, YOUR HONOR, 

NO OBJECTION. 

THE COURT: OKAY. WAS THAT THE ISSUE WITH THE KER 

E-MAILS? OR WHAT -- 

MR. BORNSTEIN: NO, YOUR HONOR. THAT'S A DIFFERENT 

SET OF OBJECTIONS. 

THE COURT: OKAY. OKAY. WHAT'S THE RULING? DO YOU 

KNOW THE DAY? 

MR. MERBER: YES. 

THE COURT: OR WAS THE OBJECTION JUST TO EXCLUDE 

PAGES 1 THROUGH 4? IS THAT THE OBJECTION? 

MR. BORNSTEIN: THAT'S -- 

THE COURT: YOU'RE SATISFIED WITH JUST ADMITTING 5 

THROUGH 9. 

MR. BORNSTEIN: THAT'S CORRECT, AND I THINK THAT'S 

CONSISTENT WITH THE COURT'S RULING. 

THE COURT: OKAY. THAT'S FINE. OKAY. THEN THESE 

ARE ALL ADMITTED. 

(PLAINTIFF'S EXHIBITS CX 0531, CX 0853, CX 6803, CX 6816, 

CX 8117, CX 6774, PAGES 5 THROUGH 9, CX 6809, PAGES 2 THROUGH 

24 AND JOINT EXHIBITS JX 0025, JX 0026, JX 0110, JX 0111, WERE 

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ADMITTED IN EVIDENCE.) 

THE COURT: GO AHEAD, PLEASE.

BY MR. MERBER: 

Q. PLEASE STATE YOUR NAME. 

A. HWI-JAE CHO.

Q. PLEASE STATE YOUR CURRENT TITLE AT LG ELECTRONICS, INC., 

(HEREINAFTER REFERRED TO AS "LGE")? 

A. DIRECTOR OF THE INTELLECTUAL PROPERTY CENTER IN LG 

ELECTRONICS.

Q. PLEASE DESCRIBE YOUR RESPONSIBILITIES IN YOUR CURRENT 

POSITION? 

A. I MANAGE ALL OF THE INBOUND AND OUTBOUND PATENT LICENSING 

MATTERS FOR LG ELECTRONICS. I REPORT DIRECTLY TO THE HEAD OF 

LGE'S INTELLECTUAL PROPERTY CENTER, EXECUTIVE VICE-PRESIDENT, 

AND HELP TO DEVELOP STRATEGIES FOR LGE PATENT LICENSING. 

Q. PLEASE DESCRIBE YOUR EMPLOYMENT HISTORY AT LGE? 

A. I JOINED LGE IN 2000 AS A MEMBER OF LGE'S INTELLECTUAL 

PROPERTY CENTER. I WAS IN CHARGE OF MANY NEGOTIATIONS RELATED 

TO THE MOBILE PHONE BUSINESS WITH COMPANIES SUCH AS QUALCOMM, 

NOKIA, ERICSSON, SIEMENS, AND APPLE. I WAS ALSO A TEAM LEADER 

FOR LGE'S MOBILE PATENT PROSECUTION TEAM, 2008, LGE'S LICENSING 

TEAM ACTION 2012, LGE'S LITIGATION TEAM, 2015, AND LGE'S 

LICENSING OUT TEAM, 2016. CURRENTLY, I AM A DIRECTOR IN LGE 

AGENCY INTELLECTUAL PROPERTY CENTER, AND I AM IN CHARGE OF ALL 

OF THE PATENT LICENSING CASES IN LGE. 

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Q. PLEASE REVIEW THE DOCUMENT MARKED EXHIBIT 1. EXHIBIT 1 IS 

A DOCUMENT TITLED "ASICS SUPPLY AGREEMENT," ENTERED INTO 

EFFECTIVE AS OF SEPTEMBER 1, 2000. THE DOCUMENT BEARS THE 

BATES NUMBER Q2017FTC00007738. 

DO YOU RECOGNIZE THIS DOCUMENT (HEREINAFTER REFERRED TO AS 

"THE SUPPLY AGREEMENT")?

A. YES.

Q. IS THE SUPPLY AGREEMENT A CONTRACT BETWEEN LGE AND 

QUALCOMM FOR THE SUPPLY OF BASEBAND PROCESSORS? 

A. YES. 

Q. HAVE LGE AND QUALCOMM SUBSEQUENTLY AMENDED THIS SUPPLY 

AGREEMENT?

A. YES.

Q. IF LGE AND QUALCOMM HAVE SUBSEQUENTLY AMENDED THE SUPPLY 

AGREEMENT, DOES THE SUPPLY AGREEMENT, AS AMENDED, CONTINUE TO 

GOVERN QUALCOMM'S SUPPLY OF BASEBAND PROCESSORS TO LGE? 

A. YES. 

Q. DOES THE SUPPLY AGREEMENT, AS AMENDED, REQUIRE LGE TO 

ENTER INTO A SEPARATE PATENT LICENSE AGREEMENT WITH QUALCOMM? 

A. YES. 

Q. DOES THE SUPPLY AGREEMENT, AS AMENDED, PROHIBIT LGE FROM 

USING QUALCOMM BASEBAND PROCESSORS IN UNLICENSED HANDSETS? 

A. YES.

Q. DOES THE SUPPLY AGREEMENT, AS AMENDED, ALLOW QUALCOMM TO 

TERMINATE THE AGREEMENT IF LGE IS IN DEFAULT UNDER ITS SEPARATE 

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LICENSE AGREEMENT? 

A. YES.

Q. HAVE OTHER SUPPLIERS OF COMPONENTS TO LGE REQUIRED LGE TO 

EXECUTE A SEPARATE LICENSE AGREEMENT IN ORDER TO OBTAIN ACCESS 

TO THEIR COMPONENTS? 

A. NO. 

Q. DID QUALCOMM AND LGE AMEND THE 1993 CDMA LICENSE IN 2004? 

A. YES. 

Q. DO YOU HAVE KNOWLEDGE OF THE EVENTS AND NEGOTIATIONS THAT 

LED TO THAT AMENDMENT? 

A. YES. 

Q. HOW DID YOU OBTAIN THAT KNOWLEDGE? 

A. ALTHOUGH THE LGE TEAM NEGOTIATING WITH QUALCOMM HAS 

CHANGED OVER THE YEARS, I WAS INVOLVED IN THE DISCUSSIONS WITH 

QUALCOMM AT THAT TIME. I ALSO PARTICIPATED IN ALMOST ALL OF 

THE INTERNAL COMMUNICATIONS AT LGE THROUGH IN-PERSON MEETINGS 

AND REPORTS REGARDING THIS NEGOTIATION. 

Q. PLEASE REVIEW THE DOCUMENT MARKED EXHIBIT 6, WHICH BEARS 

THE BATES NUMBER Q2014FTC01656705. 

DO YOU RECOGNIZE THE DOCUMENT MARKED EXHIBIT 6? 

A. YES. 

Q. IS EXHIBIT 6 A LETTER FROM QUALCOMM'S SENIOR VICE 

PRESIDENT AND GENERAL MANAGER, MARVIN BLECKER, TO LGE 

INTELLECTUAL PROPERTY CENTER SENIOR MANAGER JUNGSHEEK JUHN 

DATED OCTOBER 7, 2003? 

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A. YES.

Q. PLEASE TURN TO THE SECOND PAGE OF THE LETTER. DID 

MR. BLECKER ASSERT THAT UNLESS LGE BEGAN REPORTING AND PAYING 

ROYALTIES TO QUALCOMM ON ITS SALES OF PRODUCTS SUPPORTING WCDMA 

BASED STANDARDS, QUALCOMM WOULD BE ENTITLED TO TERMINATE THE 

1983 CDMA LICENSE? 

A. YES. 

Q. PLEASE REVIEW THE DOCUMENT MARKED EXHIBIT 7. EXHIBIT 7 IS 

A DOCUMENT TITLED "CLAIMANT QUALCOMM INCORPORATE'S REQUEST FOR 

ARBITRATION," DATED DECEMBER 11, 2003. THE DOCUMENT BEARS THE 

BATES NUMBER QNDCAL02123632. 

DO YOU RECOGNIZE THIS DOCUMENT? 

A. YES. 

Q. PLEASE TURN TO PARAGRAPH 19 OF THE REQUEST FOR 

ARBITRATION. DID QUALCOMM ASSERT IN ITS REQUEST FOR 

ARBITRATION THAT THE 1993 CDMA LICENSE REQUIRED LGE TO REPORT 

AND PAY ROYALTIES TO QUALCOMM ON LGE SALES OF WCDMA PRODUCTS? 

A. YES. 

Q. ON OR ABOUT FEBRUARY 23RD, 2004, DID LGE FILE AN ANSWER TO 

QUALCOMM'S REQUEST FOR ARBITRATION AND COUNTERCLAIMS? 

A. YES. 

Q. IF LGE DID FILE AN ANSWER AND COUNTERCLAIMS, IN ITS 

ANSWER, DID LGE STATE THAT THE 1993 CDMA LICENSE DID NOT 

REQUIRE LGE TO PAY ROYALTIES TO QUALCOMM ON HANDSETS 

IMPLEMENTING WCDMA BASED STANDARDS? 

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A. YES. 

Q. IF SO, WHAT WAS THE BASIS FOR LGE'S STATEMENT?

A. THE 1993 CDMA LICENSE AGREEMENT ONLY COVERS CDMA 

TECHNOLOGY THAT WAS DEVELOPED MAINLY BY QUALCOMM. WCDMA AROSE 

FROM A DIFFERENT TECHNOLOGY, GSM, WHICH IS DIFFERENT TECHNOLOGY 

FROM CDMA. 

ALSO, AT THE TIME OF THE 1993 AGREEMENT WAS EXECUTED, 

THERE WAS NO MUTUAL UNDERSTANDING BY LGE AND QUALCOMM THAT THE 

AGREEMENT COVERED WCDMA, WHICH HAD NOT EVEN STARTED TO BE 

DEVELOPED YET. 

Q. WHEN IT FILED THE ANSWER, DID LGE STATE THAT COMPANIES 

OTHER THAN QUALCOMM WERE PRIMARILY RESPONSIBLE FOR DEVELOPING 

WCDMA BASED CELLULAR COMMUNICATION STANDARDS?

A. YES. 

Q. IF SO, WHAT WAS THE BASIS FOR LGE'S STATEMENT? 

A. IT WAS WELL-KNOWN INFORMATION IN THE INDUSTRY BECAUSE, IN 

CONTRAST TO CDMA THAT WAS MAINLY DEVELOPED BY QUALCOMM, MANY 

COMPANIES, LIKE NOKIA, ERICSSON, AND NTT DOCOMO, AMONG OTHERS, 

PARTICIPATED TO DEVELOP WCDMA. THERE WERE NEWS ARTICLES 

INDICATING THAT QUALM'S PORTION OF CONTRIBUTION TO THE WCDMA 

STANDARD WAS ABOUT 20 PERCENT. PLEASE REFER TO ATTACHMENT 1. 

Q. PLEASE REVIEW THE DOCUMENT MARKED EXHIBIT 8, WHICH BEARS 

THE BATES NUMBER Q2014FTC03171263. 

DO YOU RECOGNIZE THIS DOCUMENT? 

A. YES. 

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Q. IS EXHIBIT 8 A LETTER FROM QUALCOMM EXECUTIVE VICE 

PRESIDENT STEVEN ALTMAN TO LGE TELECOMMUNICATIONS AND HANDSET 

BUSINESS PRESIDENT AND CEO MUN-HWA PARK DATED APRIL 7, 2004?

A. YES. 

Q. PLEASE REVIEW THE DOCUMENT MARKED EXHIBIT 9, WHICH BEARS 

THE BATES NUMBER Q2014FTC033708654. 

DO YOU RECOGNIZE THIS DOCUMENT?

A. YES. 

Q. IS EXHIBIT 9 A LETTER FROM LGE VICE PRESIDENT OF 

INTELLECTUAL PROPERTY, SU-YOUNG HAM, TO MR. ALTMAN DATED MAY 4, 

2004? 

A. YES. 

Q. IN THE LETTER, DID MR. HAM INFORM QUALCOMM THAT THE 

LICENSE TERMS OFFERED IN MR. ALTMAN'S APRIL 7, 2004 LETTER WERE 

UNACCEPTABLE AND FAILED TO ADDRESS MANY IMPORTANT ISSUES? 

A. YES. 

Q. IF SO, WHAT IMPORTANT ISSUES DID MR. ALTMAN'S TERMS FAIL 

TO ADDRESS? 

A. MOST OF THE KEY ISSUES IDENTIFIED DURING THE PENDING 

ARBITRATION, INCLUDING MFRR, INAPPLICABILITY OF WCDMA TO OUR 

LICENSE AGREEMENT, AND ANTITRUST ISSUES WERE NOT ADDRESSED BY 

MR. ALTMAN.

Q. PLEASE REVIEW THE DOCUMENT MARKED EXHIBIT 10, WHICH BEARS 

THE BATES NUMBER Q2014FTC01656708. 

DO YOU RECOGNIZE THIS DOCUMENT? 

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A. YES. 

Q. IS EXHIBIT 10 A LETTER FROM QUALCOMM'S SENIOR VICE 

PRESIDENT AND GENERAL COUNSEL LOUIS M. LUPIN TO MUN-HWA PARK 

DATED MAY 6, 2004? 

A. YES.

Q. IN THE LETTER, DID MR. LUPIN ASSERT THAT LGE HAD BREACHED 

SECTION 12 OF THE SUPPLY AGREEMENT BY USING QUALCOMM CHIPS TO 

DEVELOP, MANUFACTURE, AND SELL WCDMA HANDSETS?

A. YES. 

Q. IN THE LETTER, DID MR. LUPIN PURPORT TO TERMINATE THE MOU 

USED ON THIS ASSERTED BREACH? 

A. YES. 

Q. IN THE LETTER, DID MR. LUPIN ANNOUNCE THAT QUALCOMM WOULD 

NO LONGER PAY AMOUNTS THAT IT WOULD OTHERWISE HAVE OWED LGE 

UNDER THE MOU? 

A. YES. 

Q. PLEASE REVIEW THE DOCUMENT MARKED EXHIBIT 11, WHICH BEARS 

THE BATES NUMBER Q 2014 FTC 03923087. 

DO YOU RECOGNIZE THIS DOCUMENT? 

A. YES. 

Q. IS EXHIBIT 11 A LETTER FROM MR. HAM TO MR. LUPIN DATED 

MAY 25, 2004? 

A. YES. 

Q. PLEASE REVIEW THE DOCUMENT MARKED EXHIBIT 12, WHICH BEARS 

THE BATES NUMBER Q2014FTC03419779. 

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DO YOU RECOGNIZE THIS DOCUMENT? 

A. YES. 

Q. IS EXHIBIT 12 A LETTER FROM MR. ALTMAN TO MR. HAM DATED 

MAY 12, 2004? 

A. YES. 

Q. IN THE LAST PARAGRAPH OF THE LETTER, DID MR. ALTMAN STATE 

THAT THE CLAIMS THAT LGE HAD ASSERTED IN THE ARBITRATION WERE 

HARDLY THE ACTIONS TAKEN BY A STRATEGIC PARTNER AND THAT 

QUALCOMM WOULD HAVE NO CHOICE BUT TO RESPOND ACCORDINGLY AND 

RE-EVALUATE OTHER AREAS WHERE WE WOULD HAVE OTHERWISE TREATED 

LG AS A STRATEGIC LICENSEE? 

THE WITNESS: YES. 

THE COURT: CAN I INTERRUPT A MOMENT, PLEASE. I 

DON'T THINK I HAVE EXHIBIT 11, AND YOU'RE GOING REALLY FAST, SO 

I'M NOT REALLY KEEPING UP. 

JUST TO BE FRANK WITH YOU, IT'S GOING VERY FAST AND SOME 

EXHIBITS YOU HAVE INCLUDED, SOME YOU HAVEN'T. I CAN'T TELL 

WHICH ONES I HAVE, WHICH ONES I DON'T HAVE. IT'S GOING VERY 

FAST. 

MR. MERBER: I CAN SLOW DOWN FOR YOUR HONOR. 

THE COURT: SO WHAT NUMBER IS THIS? THIS IS WHICH 

NUMBER? I DON'T HAVE EXHIBIT 11. MINE GOES FROM EXHIBIT 10 TO 

EXHIBIT 12. IS THIS NUMBER 11? 

MR. MERBER: I BELIEVE -- 

MR. BAKER: THIS IS 12. 

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MR. MERBER: THIS IS 12 NOW. 

THE COURT: OH, THIS IS 12. OKAY. 

MR. MERBER: AND I THINK ANY DOCUMENT THAT'S 

REFERENCED THAT'S NOT IN THE BINDER IS ONE WE DIDN'T SEEK TO 

ADMIT. 

THE COURT: WHICH IS FINE. YOU'RE JUST GOING REALLY 

FAST, SO I'M HAVING DIFFICULTY FINDING OUT WHICH ONES YOU DID, 

WHICH ONES YOU DIDN'T. SO IF YOU COULD SLOW DOWN, PLEASE. 

MR. MERBER: CERTAINLY. 

THE COURT: THANK YOU. 

MR. MERBER: OKAY. 

THE COURT: SORRY FOR THE INTERRUPTION. GO AHEAD, 

PLEASE. 

MR. MERBER: CERTAINLY. 

Q. SO IS EXHIBIT 12 A LETTER FROM MR. ALTMAN TO MR. HAM DATED 

MAY 25, 2004? 

A. YES. 

Q. IN THE LAST PARAGRAPH OF THE LETTER -- OH, I APOLOGIZE. I 

ALREADY READ THAT QUESTION. 

HOW DID MR. -- HOW DID LGE INTERPRET MR. ALTMAN'S 

STATEMENTS? 

A. ALTHOUGH I FEEL MOST CONFIDENT ABOUT MY PERSONAL 

INTERPRETATION, MY RECOLLECTION WAS THAT WE INTERNALLY THOUGHT 

IT WAS A THREAT BY QUALCOMM. WE THOUGHT QUALCOMM WOULD USE 

WHATEVER LEVERAGE IT HAD BECAUSE QUALCOMM OFTEN MENTIONED 

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TERMINATION OF THE SUPPLY AGREEMENT. AS THREATENED IN THE 

LETTER, WE THOUGHT QUALCOMM WOULD DO SOMETHING ABOUT LGE'S 

BASEBAND CHIPSET SUPPLY.

Q. PLEASE REVIEW THE DOCUMENT MARKED EXHIBIT 13, WHICH BEARS 

THE BATES NUMBER Q2014FTC 01656714. 

DO YOU RECOGNIZE THIS DOCUMENT? 

A. YES. 

Q. IS EXHIBIT 13 A LETTER FROM MR. LUPIN TO MR. HAM DATED 

MAY 26TH, 2004? 

A. YES. 

Q. IN THE SECOND PARAGRAPH OF THE LETTER, DID MR. LUPIN STATE 

THAT LGE WAS IN BREACH OF THE SUPPLY AGREEMENT BASED ON ITS 

PURCHASE AND USE OF WCDMA BASEBAND PROCESSORS REGARDLESS OF THE 

OUTCOME OF THE ARBITRATION? 

A. YES. 

Q. IN THE LAST PARAGRAPH OF THE LETTER, DID MR. LUPIN STATE 

THAT WHILE QUALCOMM HAD, AT THE TIME, TERMINATED ONLY THE MOU, 

IT RESERVED THE RIGHT TO TERMINATE THE SUPPLY AGREEMENT AS 

WELL? 

A. YES. 

Q. HOW DID LGE INTERPRET MR. LUPIN'S STATEMENTS? 

A. ALTHOUGH I FEEL MOST CONFIDENT ABOUT MY PERSONAL 

INTERPRETATION, MY RECOLLECTION IS THAT LGE REGARDED IT AS A 

REAL THREAT TO LGE'S MOBILE BUSINESS. ALL OF LGE'S CDMA 

PRODUCTS USE QUALCOMM'S BASEBAND CHIPSETS AND LGE ALSO STARTED 

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TO USE QUALCOMM'S WCDMA BASEBAND CHIPS. THEREFORE, THERE WOULD 

BE SIGNIFICANT NEGATIVE IMPACT TO LGE'S BUSINESS IF QUALCOMM 

HAD TERMINATED THE SUPPLY AGREEMENT AND STOPPED PROVIDING ITS 

CDMA BASEBAND CHIPS. IF CHIPSET SUPPLY DISRUPTIONS DID HAPPEN, 

THERE WOULD HAVE BEEN IRREPARABLE HARM TO LGE'S MOBILE 

BUSINESS. 

Q. PLEASE REVIEW THE DOCUMENT MARKED EXHIBIT 14. EXHIBIT 14 

IS A DOCUMENT TITLED "AMENDMENT TO INFRASTRUCTURE AND 

SUBSCRIBER UNIT LICENSE AND TECHNICAL ASSISTANCE AGREEMENT," 

ENTERED INTO AS OF JULY 11, 2004. 

THIS DOCUMENT BEARS THE BATES NUMBER Q2014FTC00004888. 

DO YOU RECOGNIZE THIS DOCUMENT (HEREINAFTER REFERRED TO AS 

THE "2004 CDMA AMENDMENT")? 

A. YES. 

Q. PLEASE REVIEW THE DOCUMENT MARKED AS EXHIBIT 15. EXHIBIT 

15 IS A DOCUMENT TITLED "CHIPSET PURCHASE AND INCENTIVE 

AGREEMENT," ENTERED INTO EFFECTIVE AS OF JULY 11, 2004. 

THE DOCUMENT BEARS THE BATES NUMBER Q2014FTC03370696. 

DO YOU RECOGNIZE THIS DOCUMENT?

A. YES.

Q. PLEASE REVIEW THE DOCUMENT MARKED AS EXHIBIT 16. EXHIBIT 

16 IS A DOCUMENT TITLED "SETTLEMENT AND RELEASE," ENTERED INTO 

EFFECTIVE AS OF JULY 11, 2004. THE DOCUMENT BEARS THE BATES 

NUMBER Q2014FTC03412964. 

DO YOU RECOGNIZE THIS DOCUMENT (HEREINAFTER REFERRED TO AS 

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THE "2004 SETTLEMENT AND RELEASE")? 

A. YES. 

Q. IN THE 2004 SETTLEMENT AND RELEASE, DID LGE RELEASE 

QUALCOMM OF ANY CLAIMS LGE HAD ASSERTED IN THE ARBITRATION AND 

AGREE TO DISMISS THE ARBITRATION? 

A. YES. 

Q. DID QUALCOMM AND LGE NEGOTIATE THE 2004 CDMA AMENDMENT, 

THE CHIP PURCHASE AND INCENTIVE AGREEMENT, AND THE 2004 

SETTLEMENT AND RELEASE (HEREINAFTER REFERRED TO AS THE "2004 

AGREEMENTS"? 

A. YES.

Q. ARE THE ROYALTY TERMS OF THE 2004 CDMA LICENSE AMENDMENT 

SUBSTANTIALLY SIMILAR TO THOSE THAT MR. HAM DESCRIBED AS 

UNACCEPTABLE IN THE MAY 4, 2004 LETTER MARKED AS EXHIBIT 9? 

A. YES.

Q. IF SO, DID LGE'S ASSESSMENT OF THE FAIRNESS AND REASONABLE 

ABILITY OF THOSE TERMS CHANGE BETWEEN MAY AND JULY OF 2004? 

A. NO. 

Q. IF NOT, WHY DID LGE ACCEPT A LICENSE ON THESE TERMS? 

A. IN SHORT, LGE ACCEPTED SUCH TERMS BECAUSE LGE HAD LITTLE 

CHANCE TO EVALUATE QUALCOMM'S WCDMA PATENT PORTFOLIO. AND MOST 

IMPORTANTLY, LGE HAD TO CONSIDER THE BUSINESS RISKS. WHEN 

QUALCOMM THREATENED TO TERMINATE THE SUPPLY AGREEMENT, LGE HAD 

NO OPTION BUT TO AGREE TO WHATEVER QUALCOMM DEMANDED. LGE'S 

TOP MANAGEMENT DID NOT WANT TO TAKE THE RISK OF ENDANGERING 

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LGE'S MOBILE BUSINESS. 

Q. WHEN NEGOTIATING THE 2004 AGREEMENTS, DID LGE REQUEST 

CLAIM CHARTS OR OTHER INFORMATION FROM QUALCOMM CONCERNING THE 

VALIDITY, SCOPE, OR VALUE OF QUALCOMM'S LICENSED PATENTED? 

A. NO. BECAUSE THE DEAL WAS STRUCK SUDDENLY AFTER QUALCOMM 

THREATENED TO TERMINATE THE SUPPLY AGREEMENT. THEREFORE, LGE 

DID NOT HAVE AN OPPORTUNITY TO CHALLENGE THE REASONABLENESS OF 

THE ROYALTY RATE. 

Q. DID THE ROYALTY TERMS OF THE 2004 CDMA AMENDMENT 

APPROPRIATELY ACCOUNT FOR ANY DIFFERENCES BETWEEN THE VALUES OF 

QUALCOMM'S CONTRIBUTIONS TO CDMA BASE STANDARDS AND ITS 

CONTRIBUTIONS TO WCDMA BASED STANDARDS?

A. NO. 

Q. WHAT IS THE BASIS FOR YOUR ANSWER? 

A. FIRST, THE ROYALTY RATE FOR WCDMA, 5 PERCENT, WAS THE SAME 

AS THE ROYALTY RATE FOR CDMA TECHNOLOGIES DEVELOPED MAINLY BY 

QUALCOMM, WITHOUT AN EVALUATION PROCESS FOR QUALCOMM'S WCDMA 

STANDARD ESSENTIAL PATENT PORTFOLIO. AS THERE WAS ALMOST NO 

OTHER COMPANIES BESIDES QUALCOMM HAVING A CDMA PATENT 

PORTFOLIO, THE TOTAL ROYALTIES FOR CDMA REMAINED AT 

APPROXIMATELY 5 PERCENT. 

HOWEVER, THE TOTAL ROYALTIES SIGNIFICANTLY INCREASED FOR 

WCDMA AS OTHER PATENT HOLDERS, SUCH AS ERICSSON, ALSO CHARGED 

ROYALTIES ON TOP OF QUALCOMM'S ROYALTIES FOR WCDMA. 

Q. WHEN NEGOTIATING THE 2004 AGREEMENTS, DID LGE REGARD THE 

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NET SELLING PRICE OF LGE HANDSETS AS AN APPROPRIATE BASE ON 

WHICH TO CALCULATE ROYALTIES OWED BY LGE FOR QUALCOMM'S 

LICENSED PATENTS? 

A. NO.

Q. IF NOT, WHY NOT? 

A. BECAUSE THERE WERE MANY COMPONENTS THAT WERE NOT RELATED 

TO QUALCOMM'S STANDARD ESSENTIAL PATENTS. IN FACT, LGE ARGUED 

TO DEDUCT THE COST OF CAMERA MODULES AND DMB, WHICH THE KOREAN 

VERSION OF MOBILE TV MODULES, BECAUSE, AT A MINIMUM, THOSE TWO 

FEATURES WERE FUNCTIONALLY INDEPENDENT FROM QUALCOMM'S STANDARD 

ESSENTIAL PATENTS AT THAT TIME. 

HOWEVER, QUALCOMM REJECTED LGE'S ARGUMENT. QUALCOMM NOTED 

THAT LGE'S POSITION COULD NOT BE ACCEPTED BASED ON ITS COMPANY 

POLICY. 

Q. WHAT KINDS OF BASEBAND PROCESSORS WAS LGE PURCHASING FROM 

QUALCOMM WHILE NEGOTIATING THE 2004 CDMA AMENDMENT? 

A. CDMA BASEBAND PROCESSORS FOR ALL OF LGE'S CDMA HANDSETS, 

AND SOME WCDMA BASEBAND PROCESSORS. 

Q. WHAT IMPACT WOULD LOSING ACCESS TO QUALCOMM'S BASEBAND 

PROCESSORS HAVE HAD ON LGE'S BUSINESS? 

A. DURING THAT TIME PERIOD, ALMOST ALL OF THE PROFITS OF 

LGE'S MOBILE BUSINESS WERE FROM ITS CDMA HANDSETS AND QUALCOMM 

WAS THE ONLY CDMA CHIPSET SUPPLIER. THEREFORE, IF QUALCOMM 

WERE TO SUSPEND THE SUPPLY OF BASEBAND PROCESSORS, LGE WOULD 

NOT HAVE BEEN ABLE TO DEVELOP OR MANUFACTURE ANY CDMA HANDSET 

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PRODUCTS AND MOST OF LGE'S EMPLOYEES IN THE MOBILE SECTOR WOULD 

HAVE BEEN DORMANT.

Q. DID THE RISK OF LOSING ACCESS TO QUALCOMM BASEBAND 

PROCESSORS AFFECT LGE'S WILLINGNESS TO ENTER INTO THE 2004 CDMA 

AMENDMENT? 

A. YES. 

Q. IF SO, WHAT EFFECT DID IT HAVE? 

A. WHEN QUALCOMM ESCALATED ITS THREAT BY STATING ITS 

INTENTION TO TERMINATE THE SUPPLY AGREEMENT, LGE TOP MANAGEMENT 

DECIDED TO SETTLE. 

Q. PLEASE REVIEW THE DOCUMENT MARKED AS EXHIBIT 22. EXHIBIT 

22 IS A DOCUMENT TITLED "CLAIMANT LG ELECTRONIC'S INC.'S 

REQUEST FOR ARBITRATION," DATED DECEMBER 11, 2015. 

THE DOCUMENT BEARS THE BATES NUMBER Q2014FTC 2179930. 

DO YOU RECOGNIZE THIS DOCUMENT? 

A. YES. 

Q. DO YOU HAVE KNOWLEDGE OF THE EVENTS THAT LED LGE TO FILE A 

REQUEST FOR ARBITRATION ON OR ABOUT DECEMBER 11, 2015? 

A. YES. 

Q. IF SO, HOW DID YOU OBTAIN THAT KNOWLEDGE? 

A. I WAS A MEMBER OF THE TEAM RESPONSIBLE FOR THE 

DECISION-MAKING PROCESS IN LGE'S INTELLECTUAL PROPERTY'S CENTER 

FOR THE 2016 NEGOTIATION. I RECEIVED REPORTS AND PARTICIPATED 

IN THE MEETINGS TO DECIDE WHETHER LGE SHOULD FILE A REQUEST FOR 

ARBITRATION. 

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Q. PLEASE REVIEW THE DOCUMENT MARKED AS EXHIBIT 23. EXHIBIT 

23 IS A DOCUMENT TITLED "SETTLEMENT AGREEMENT AND RELEASE," 

EFFECTIVE AS OF APRIL 16, 2016. THE DOCUMENT BEARS THE BATES 

NUMBER Q2014FTC 03980685. 

DO YOU RECOGNIZE THIS DOCUMENT? 

A. YES. 

Q. PLEASE REVIEW THE DOCUMENT MARKED AS EXHIBIT 24. EXHIBIT 

24 IS A DOCUMENT TITLED "AMENDMENT TO LICENSE AGREEMENTS," 

ENTERED INTO AS OF JANUARY 1, 2016. THE DOCUMENT BEARS THE 

BATES NUMBER Q2014FTC 03980678. 

DO YOU RECOGNIZE THIS DOCUMENT? 

A. YES. 

Q. PLEASE REVIEW THE DOCUMENT MARKED AS EXHIBIT 25. EXHIBIT 

25 IS A DOCUMENT TITLED "STRATEGIC FUND AND INDEMNITY 

AGREEMENT," EFFECTIVE AS OF JANUARY 1, 2016. THE DOCUMENT 

BEARS THE BATES NUMBER Q2014FTC 03980695. 

DO YOU RECOGNIZE THIS DOCUMENT? 

A. YES.

Q. DO YOU HAVE KNOWLEDGE OF THE EVENTS AND NEGOTIATIONS THAT 

LED TO THE SETTLEMENT AGREEMENT AND RELEASE, THE AMENDMENT TO 

LICENSE AGREEMENTS, AND THE STRATEGIC FUND AND INDEMNITY 

AGREEMENT (HEREINAFTER REFERRED TO AS THE "2016 AGREEMENTS")?

A. YES.

Q. IF SO, HOW DID YOU OBTAIN THAT KNOWLEDGE? 

A. I WAS A MEMBER OF THE TEAM RESPONSIBLE FOR THE 

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DECISION-MAKING PROCESS IN LGE'S INTELLECTUAL PROPERTY CENTER 

FOR THE 2016 NEGOTIATION. I RECEIVED REPORTS AND PARTICIPATED 

IN THE MEETINGS TO DECIDE WHETHER LGE SHOULD FILE A REQUEST FOR 

ARBITRATION. 

Q. DID QUALCOMM AND LGE NEGOTIATE THE 2016 AGREEMENTS AS A 

PACKAGE? 

A. YES. 

Q. DID THE 2016 AGREEMENTS MODIFY THE ROYALTIES OWED BY LGE 

TO QUALCOMM UNDER THE CDMA LICENSE OR THE OFDM LICENSE? 

A. NO. 

Q. WHY DID LGE ENTER INTO THE 2016 AGREEMENTS? 

A. ALTHOUGH THERE WERE MANY FACTORS, OVERALL, IT WOULD 

REDUCTION LGE'S EFFECTIVE ROYALTY RATE THROUGH THE STRATEGIC 

FUND AND INDEMNIFICATION. 

MR. MERBER: YOUR HONOR, THAT CONCLUDES THE PUBLIC 

PORTION PLAINTIFF CHO'S TESTIMONY. 

THE COURT: OKAY. TIME IS NOW 10:41. 

LET ME ASK, IS THERE ANY COUNSEL FOR AVANCI HERE? 

ARE ANY PARTIES IN TOUCH WITH AVANCI? BECAUSE THEY FILED 

A MOTION TO SEAL ON SUNDAY NIGHT SAYING I HAD TO RULE ON IT 

SUNDAY NIGHT SO THAT EVIDENCE COULD BE USED TODAY. I DENIED 

THAT. THEN THEY REFILED THIS MORNING AND SAID I HAVE TO RULE 

ON IT RIGHT NOW WHILE I'M IN TRIAL. 

LIKE, WHY ARE THEY FILING SO LATE? I'VE ALREADY RULED ON 

AVANCI'S SEALING MOTION. WHEN DID YOU -- I DON'T KNOW WHOSE -- 

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AND I DON'T KNOW WHICH WITNESS IT COMES IN, WHICH PARTY IS 

SEEKING TO INTRODUCE THE INFORMATION. 

MR. BORNSTEIN: SO I CAN TAKE A SHOT AT THIS, YOUR 

HONOR? 

THE COURT: UM-HUM. 

MR. BORNSTEIN: THERE ARE TWO AVANCI DOCUMENTS, AS I 

UNDERSTAND IT. ONE OF THEM IS AN AGREEMENT AND ONE OF THEM IS 

A DEMONSTRATIVE THAT THE FTC INTENDS TO USE WITH THEIR EXPERT 

THIS AFTERNOON, MR. LASINSKI. 

WE DISCLOSED THE AGREEMENT TO AVANCI ON THURSDAY 

CONSISTENT WITH THE SCHEDULE THAT THE PARTIES HAD WORKED OUT, 

THAT IT WAS A DOCUMENT THAT WAS LIKELY TO BE INTRODUCED INTO 

EVIDENCE. 

AND WE FILED A MOTION TO SEAL ASPECTS AFTER THAT DOCUMENT 

THAT WE BELIEVED CONTAINED CONFIDENTIAL INFORMATION. 

THE -- AVANCI FILED A MOTION TO SEAL WITH RESPECT TO THE 

DEMONSTRATIVE. THEY NOTICED THAT THEY DID NOT SEAL CERTAIN 

INFORMATION THAT WE WOULD HAVE EXPECTED THEM TO MAINTAIN AS 

CONFIDENTIAL, AND SO YESTERDAY WE CONTACTED -- 

THE COURT: OKAY. I'M CHARGING THIS TIME TO YOU 

BECAUSE THIS IS JUST NOT -- YOU CAN'T -- YOU KNOW, THIS IS WHAT 

QUALCOMM DID LAST SUNDAY NIGHT AS WELL. YOU CAN'T JUST FILE 

SUNDAY NIGHT SAYING RULE ON IT SUNDAY NIGHT BECAUSE IT'S COMING 

INTO EVIDENCE MONDAY MORNING. THAT'S NOT REASONABLE. THAT'S 

NOT TIMELY. 

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MR. BORNSTEIN: YOUR HONOR, I AGREE WITH THAT. THE 

ONLY REASON THE SUNDAY NIGHT FILING HAPPENED IS BECAUSE WE 

REACHED OUT TO AVANCI BECAUSE WE DISCOVERED THE FTC HAD NOT 

INFORMED AVANCI THAT IT WAS INTENDING TO USE THIS INFORMATION. 

WE SPOTTED IT, WE THOUGHT IT WAS A PROBLEM FOR THEM, SO WE 

TOLD THEM ABOUT IT, AND THAT'S WHY THEY FILED SO LATE, BECAUSE 

WE CAUGHT THIS. AND WE WERE SURPRISED THAT THEY HADN'T MOVED 

TO SEAL THE INFORMATION. WE DISCOVERED THEY HAD NOT BEEN 

INFORMED BY THE FTC THAT THE FTC WAS PLANNING TO USE THE 

INFORMATION. AND THAT'S WHY IT CAME LATE. 

THE COURT: NOW, THE AVANCI, OR AVANCI LASINSKI 

DEMONSTRATIVE, I RULED ON THAT ON JANUARY 11TH. 

MR. BORNSTEIN: CORRECT. 

THE COURT: SO YOU'RE SAYING THERE'S MORE OF THAT 

DEMONSTRATIVE THAT QUALCOMM WANTS THEM TO SEAL? 

MR. BORNSTEIN: NO. WE ARE NOT SEEKING TO SEAL THE 

INFORMATION, YOUR HONOR. WE MOVED ON THE INFORMATION THAT WE 

BELIEVED WAS CONFIDENTIAL. 

AVANCI HAD NOT BEEN INFORMED BY THE FTC -- 

THE COURT: OKAY, WAIT. I'M SORRY TO INTERRUPT YOU. 

EARLIER YOU SAID THERE'S STILL LASINSKI DEMONSTRATIVES 

OUTSTANDING. 

MR. BORNSTEIN: THERE IS INFORMATION THAT AVANCI 

WOULD LIKE TO SEAL, YOUR HONOR, YES, NOT QUALCOMM. 

THE COURT: SO WHY DIDN'T THAT MAKE THAT PART OF THE 

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MOTION THEY FILED LAST WEEK THAT I RULED ON LAST WEEK? I 

GRANTED THEIR SEALING REQUESTS FOR PAGES 12 AND 13, FIGURES 31 

AND 32 FOR AVANCI FOR THE LASINSKI DEMONSTRATIVE. 

MR. BORNSTEIN: AGAIN, YOUR HONOR, IT'S BECAUSE THEY 

WERE NOT TOLD BY THE FTC THAT THERE WAS THIS OTHER INFORMATION 

IN THE DEMONSTRATIVE. THEY WERE DISCLOSED ONLY PORTIONS OF THE 

DEMONSTRATIVE BY THE FTC. WE CAUGHT THE PROBLEM, WE THOUGHT 

THEY MIGHT HAVE AN ISSUE WITH IT, SO WE ADVISED THEM YESTERDAY 

BECAUSE WE DISCOVERED THAT THEY HADN'T BEEN TOLD BY THE FTC 

THAT THIS INFORMATION WAS GOING TO BE USED. SO THEY WERE 

STUCK, AND THEY MOVED AS QUICKLY AS THEY COULD. 

THE COURT: NO. BUT WHAT ABOUT THIS -- OKAY. THAT'S 

THE DEMONSTRATIVE. 

MR. BORNSTEIN: CORRECT. 

THE COURT: THEY'RE DEALING WITH A 143 PAGE LICENSE 

AGREEMENT. 

MR. BORNSTEIN: YES. 

THE COURT: WHERE IS THAT? WHOSE DOCUMENT IS THAT? 

AND WHEN WERE THEY GIVEN NOTICE OF THAT DOCUMENT. 

MR. BORNSTEIN: THAT'S A DOCUMENT THAT WAS PRODUCED 

FROM QUALCOMM'S FILES AND WE ADVISED THEM, CONSISTENT WITH THE 

SCHEDULE THAT THE PARTIES HAVE BEEN USING TO DISCLOSING 

INFORMATION TO THIRD PARTIES. ONCE THE FTC TOLD US THEY 

INTENDED TO USE THE DOCUMENT WITH MR. LASINSKI, WE PROVIDED THE 

INFORMATION ABOUT THAT DIRECTLY TO AVANCI WITHIN TWO HOURS OF 

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BEING TOLD BY THE FTC. 

THE COURT: AND WHEN WAS THAT? 

MR. BORNSTEIN: THAT WAS ON THURSDAY. 

THE COURT: SO WHY ARE THERE -- LIKE, YOU WANT TO 

FOCUS ON A LASINSKI DEMONSTRATIVE. TO BE HONEST, RULING ON 

THAT IS FAIRLY SIMPLE. AT MOST IT'S LIKE A FEW PAGES. IT'S 

THIS LICENSE AGREEMENT THAT THEY FILE ON SUNDAY NIGHT SAYING 

I'VE GOT TO RULE ON IT ON SUNDAY NIGHT. IT'S JUST 

UNREASONABLE. SO YOU'RE SAYING YOU TOLD THEM ABOUT IT ON 

THURSDAY? 

MR. BORNSTEIN: CORRECT. 

THE COURT: AND THEY WAITED UNTIL SUNDAY NIGHT TO 

HAVE ME -- TO FILE AND ASK ME TO RULE ON A 143 PAGE LICENSE. 

THIS HAS TO STOP. THIS HAS TO STOP. 

SO I'M GOING TO SET A REQUIREMENT NOW THAT ANY SEALING 

MOTION BY A THIRD PARTY MUST BE FILED THE PRIOR BUSINESS DAY 

BEFORE THAT EVIDENCE WILL BE INTRODUCED NO LATER THAN 

10:00 A.M. AND IF YOU DON'T, I'M NOT GOING TO SEAL IT. AND 

THIS WILL BECOME PART OF THE PUBLIC DOMAIN. THIS IS -- IT'S 

UNREASONABLE. IF THEY HAD THAT DOCUMENT SINCE THURSDAY -- AND 

THEY FILED OTHER SEALING MOTIONS LAST WEEK. 

MR. BORNSTEIN: I CAN'T ANSWER THAT, YOUR HONOR, AS 

TO THEIR CHOICES. 

THE COURT: SO THE FACT THAT THEY WAIT UNTIL SUNDAY 

NIGHT TO MOVE IT, AND THEN THEY MOVE AGAIN THIS MORNING BECAUSE 

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I DENIED THE MOTION LAST NIGHT SAYING, WELL, YOU'VE STILL GOT 

TO DECIDE. 

IT'S UNREASONABLE. 

SO WHO'S THE LAWYER? THEY'RE BAKER BOTTS, OR -- 

MR. BORNSTEIN: THAT'S CORRECT, YOUR HONOR. 

THE COURT: ARE THEY HERE? 

MR. BORNSTEIN: THE GENTLEMAN WE'VE BEEN DEALING WITH 

IS BASED IN WASHINGTON. 

THE COURT: UH-HUH. SO THIS IS WHAT I'M GOING TO DO. 

IT IS NOT REASONABLE TO ASK ME TO BE HERE IN COURT, PRESIDING 

OVER A TRIAL, AND SIMULTANEOUSLY RULING ON SEALING MOTIONS. 

SO IT'LL JUST HAVE TO BE DONE ON TRIAL EVIDENCE TIME, JUST 

LIKE EVERYTHING ELSE, WE'LL GO THROUGH A 143 PAGE LICENSE AND 

YOU'LL HAVE TO SAY WHAT PAGES YOU WANT. NOW, THEY'RE NOT HERE, 

I GUESS, TO ASK WHAT THEY WANT SEALED. SO TOO BAD. IT'S TOO 

BAD. THEY'VE SLEPT ON THEIR RIGHTS. I DON'T UNDERSTAND IT. 

WHY WOULD THEY GO AHEAD AND FILE ON EVERYTHING ELSE, UNLESS 

THEY DON'T THINK IT'S CONFIDENTIAL AND QUALCOMM WANTS THEM TO 

SEAL IT. 

MR. BORNSTEIN: WELL, NO, YOUR HONOR. WE FILED THE 

MOTION WITH THE COURT AND THE COURT SEALED THE PORTIONS THAT WE 

BELIEVED WERE CONFIDENTIAL, WHICH WE DID IN A TIMELY WAY. 

I CAN'T SPEAK TO THE TIMING OF AVANCI'S MOTION, YOUR 

HONOR. IT'S NOT SOMETHING WE WERE INVOLVED IT OR HAD CONTROL 

OVER. 

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THE COURT: OKAY. SO WHO IS GOING TO USE THAT 

LICENSE? I MEAN, YOU ALL DON'T EVEN TELL ME UNDER WHICH 

WITNESS IT COMES UNDER. IT'S REALLY, LIKE, UNFORTUNATELY, 

OPERATING IN THE DARK. I DON'T KNOW WHICH WITNESSES DIFFERENT 

PIECES OF INFORMATION -- IT'S REALLY CHALLENGING. IT WAS THE 

SAME WAY FOR THE EVIDENTIARY OBJECTIONS. BUT IT'S ALSO WITH 

THE SEALING. I HAVE NO IDEA WHO'S TRYING TO INTRODUCE IT, AS 

TO WHICH WITNESS, WHAT THE TIMING IS, WHAT DAY IT IS. I JUST 

GET THESE EMERGENCY MOTIONS ON SUNDAY NIGHT SAYING DO IT SUNDAY 

NIGHT, WHICH I'M NOT GOING TO. I REFUSE. 

MS. MILICI: ABSOLUTELY UNDERSTOOD. 

THE COURT: SO -- 

MS. MILICI: THE AVANCI MATERIAL COMES IN THROUGH 

MR. LASINSKI. 

THE COURT: OKAY. SO HE IS, WHAT, YOU HAVE DONALDSON 

NEXT? WHO DO YOU HAVE AFTER DONALDSON? 

MR. MILICI: AFTER DONALDSON, I BELIEVE WE HAVE A 

VIDEO, AND THEN WE HAVE MR. LASINSKI AFTER THAT. 

THE COURT: OKAY. SO HE'S PROBABLY, WHAT, AFTER 

LUNCH? AFTER THE FIRST BREAK? AFTER THE SECOND BREAK? 

MS. MILICI: YOUR HONOR, I WOULD EXPECT IT TO BE 

AFTER LUNCH. 

THE COURT: OKAY. ALL RIGHT. WELL, BUT CAN YOU 

CONVEY TO THIRD PARTIES, IF THEY DON'T FILE BY 10:00 A.M. THE 

BUSINESS DAY BEFORE, IT WILL ALL AUTOMATICALLY BECOME PUBLIC 

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INFORMATION, AND I WILL FILE IT MYSELF PUBLICLY. THIS IS 

REALLY UNREASONABLE. 

MR. BORNSTEIN: WHEN WE DISCLOSE TO THEM THE 

INFORMATION THAT'S GOING TO BE, TO BE USED, ONCE THE PARTIES 

CONSULT WITH EACH OTHER, WE'LL INFORM THEM OF THAT AS WELL. 

THE COURT: WELL, I'M ALSO GOING TO FILE IT ON THE 

DOCKET, AND I'M GOING TO PUT IT IN AVANCI'S ORDER. THIS IS 

UNREASONABLE. THEY'VE HAD NOTICE OF THAT LICENSE SINCE 

THURSDAY AND THEY WAIT UNTIL SUNDAY NIGHT TO FILE A MOTION TO 

SEAL? IT'S JUST NOT REASONABLE. 

OKAY. THE TIME IS 10:49. WHAT I'D LIKE TO DO IS I THINK 

WE SHOULD TAKE OUR BREAK AND WHEN WE COME BACK, WE'LL DO THE 

ONE MINUTE OF SEALED TESTIMONY, AND THEN WE'LL HAVE -- OR MAYBE 

WE SHOULD JUST EMPTY THE COURT -- IS IT OKAY NOW? WE'VE BEEN 

HAVING TRANSCRIPTION FOR AN HOUR AND 50 MINUTES ALMOST. 

OKAY. LET'S GO AHEAD AND DO THAT. LET'S EMPTY THE 

COURTROOM, PLEASE. 

(PAUSE IN PROCEEDINGS.) 

THE COURT: OH, THE FIRM IS BAKER MCKENZIE AND NOT 

BAKER BOTTS. 

SO WE'LL TAKE A 15 MINUTE BREAK AFTER THIS ONE MINUTE OF 

SEALED TESTIMONY. 

(PROCEEDINGS UNDER SEAL FROM PAGES 946 TO 949.)

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(IN OPEN COURT.) 

THE COURT: SO LET ME ASK IF, DURING THE BREAK COULD 

WE HAVE JACKSON COME TO SEE -- I'M WONDERING IF WE'VE HAD THIS 

PROBLEM WITH OTHER TRIALS WHERE I CAN'T GET REAL TIME BECAUSE 

THERE'S TOO MANY PEOPLE IN THE SYSTEM? THIS MIGHT BE THE SAME 

PROBLEM I'VE HAD WITH OTHER TRIALS WHEN THERE HAVE BEEN TOO 

MANY PHONES IN THE ROOM. I CAN'T GET REALTIME. 

MR. MERBER: I BELIEVE WE HAVE THE SAME PROBLEM. 

THE COURT: ARE YOU NOT HAVING REAL TIME, EITHER? 

MR. EVEN: THIS IS A PROBLEM FOR EVERYONE, YOUR 

HONOR. 

THE COURT: HAS IT JUST BEEN TODAY, OR ALWAYS? 

MR. EVAN: JUST TODAY, YOUR HONOR. 

THE COURT: IT WAS JUST AT THE BEGINNING AROUND 

QUARTER TO 10:00 OR SOMETHING LIKE THAT. 

OKAY. I MEAN, IN THE PAST WE'VE HAD IT HARDWIRED AND THAT 

HAS HELPED. I DON'T KNOW IF WE HAVE TIME ENOUGH TO DO THAT. 

MAYBE DURING LUNCH? BUT WE'RE GOING TO HAVE TO ASK EVERYONE TO 

TAKE THEIR PHONES OFF, WHICH -- I MEAN, I -- I WILL PROBABLY 

NOT ASK THE MEDIA TO DO THAT, BUT EVERYONE ELSE WHO'S IN HERE, 

I'M GOING TO ASK THEM. I THOUGHT THE CSO'S TAKE THE PHONE 

ANYWAY. THEY DON'T? OKAY. 

ALL RIGHT. WE'LL JUST HAVE TO ASK. AND IF IT BECOMES A 

PROBLEM, I'M JUST GOING TO ASK HALF OF THE PEOPLE IN THE 

AUDIENCE TO STEP OUTSIDE UNTIL WE CAN GET REALTIME. THAT'S THE 

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ONLY WAY I CAN ENFORCE THEM TURNING OFF THEIR PHONES. I'VE HAD 

ISSUES WITH PEOPLE NOT TURNING OFF THEIR PHONES IN OTHER 

TRIALS, SO I'M GOING TO LET THEM KNOW, IF I LOSE MY REALTIME, 

I'M GOING TO ASK HALF THE AUDIENCE TO STEP OUTSIDE. 

OKAY. THAT'S THE ONLY LEVERAGE WE HAVE. 

OKAY. THANK YOU. LET'S TAKE A 15 MINUTE BREAK. 

(RECESS FROM 10:58 A.M. UNTIL GOOD 11:14 A.M.)

THE COURT: OKAY. ALL RIGHT. GOOD MORNING AND 

WELCOME. 

SO THERE WAS NO REALTIME THIS MORNING -- PLEASE TAKE A 

SEAT -- FOR THE PARTIES AND FOR MYSELF, AND THAT'S BECAUSE 

EVERYONE IS ON THE SAME WI-FI SYSTEM AND WHEN THERE ARE TOO 

MANY PHONES IN HERE, THE SYSTEM WILL SHUT DOWN. 

SO I'M GOING TO ASK YOU NOW TO PLEASE TURN OFF ALL YOUR 

PHONES. IN OTHER TRIALS, I'VE HAD DIFFICULTY WITH HAVING 

PEOPLE COMPLY WITH THAT REQUEST. 

SO IF MY MY WI-FI SHUTS DOWN AGAIN, I'M GOING TO ASK 

EVERYONE EXCEPT THE MEDIA TO LEAVE, AND WE'LL JUST HAVE THIS IN 

SEALED PROCEEDINGS. SO I HOPE THAT'S ENOUGH INCENTIVE FOR 

EVERYONE TO PLEASE TURN OFF THEIR PHONES. THE MOMENT MY WI-FI 

AND REALTIME GOES DOWN, I'M GOING TO SEAL THE COURTROOM. ARE. 

SO I'M MAKING THIS REQUEST TO PLEASE TURN OFF YOUR PHONE, 

OTHERWISE I WILL LIMIT WHO MAY BE IN HERE. IT MAY JUST BE THE 

PARTIES IF I CAN'T GET THE REAL TIME. SO PLEASE JUST DO THAT. 

ALL RIGHT. WHO'S YOUR NEXT WITNESS, PLEASE? 

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UNITED STATES COURT REPORTERS

952

MR. MERBER: YOUR HONOR, ONE MINOR CORRECTION I 

MENTIONED BEFORE THE CHO TESTIMONY. 

THE COURT: YES. 

MR. MERBER: I MENTIONED TWO THAT I DID NOT MEAN TO. 

CX 05 -- 

THE COURT: OKAY. I'M SORRY. I HAVE TO CHARGE YOU 

TIME. IT'S 11:15. GO AHEAD, PLEASE. 

MR. MERBER: CX 0531 AND 0853. I DID NOT MEAN TO 

REFERENCE THOSE AND WE -- ONE OF THOSE HAS ALREADY BEEN 

ADMITTED THROUGH A DIFFERENT WITNESS AND THE OTHER WE WERE NOT 

SEEKING TO ADMIT THROUGH MR. CHO. 

THE COURT: OKAY. WELL, THEY'VE BEEN ADMITTED. 

DOES QUALCOMM WANT THEM ADMITTED? 

MR. BORNSTEIN: YOUR HONOR, ONE OF THEM IS EVIDENCE 

ALREADY IN EVIDENCE. 

THE COURT: OKAY. 

MR. BORNSTEIN: AND 853 I UNDERSTAND THE FTC INTENDS 

TO INTRODUCE THROUGH A DEPOSITION VIDEO WHICH WILL BE PLAYED 

EITHER TODAY OR TOMORROW. WE DON'T ACTUALLY INTEND TO OBJECT 

TO THAT EXHIBIT WHEN IT IS INTRODUCED. 

THE COURT: SO DO YOU PLAN TO ADMIT IT LATER? 

MS. MILICI: POTENTIALLY, IF WE GET TO THAT VIDEO. 

THE COURT: SO IT'S ALREADY ADMITTED. I DON'T 

UNDERSTAND WHY WE WANT TO UNDO IT AND REDO LATER. 

MS. MILICI: WE'RE FINE WITH KEEPING IT ADMITTED. 

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UNITED STATES COURT REPORTERS

953

MR. BORNSTEIN: I WOULD PREFER THERE BE A FOUNDATION 

LAID BEFORE IT'S ADMITTED, YOUR HONOR. IF THEY'RE NOT GOING TO 

PLAY THE TESTIMONY, I DON'T THINK THE DOCUMENT SHOULD COME IN 

BECAUSE OF AN ERROR IN READING OFF THE EXHIBITS BEFORE THE CHO 

TESTIMONY, WHICH WE CAUGHT AFTERWARDS AND RAISED AND DISCUSSED 

WITH THE FTC AT THE BREAK. 

THE COURT: ALL RIGHT. WELL, I'LL TAKE OFF 853 THEN. 

MR. BORNSTEIN: THANK YOU, YOUR HONOR. 

(PLAINTIFF'S EXHIBIT CX 0853 WAS REMOVED FROM ADMISSION.) 

THE COURT: BUT 531 HAS ALREADY BEEN ADMITTED, SO 

THERE'S NO HARM IN -- 

MR. BORNSTEIN: THERE'S NO OBJECTION TO 531. 

THE COURT: -- BELTS AND SUSPENDERS. SO WHO'S YOUR 

NEXT WITNESS? 

MS. GILLEN: ELIZABETH GILLEN FOR THE FEDERAL TRADE 

COMMISSION. 

THE FTC NOW CALLS RICHARD DONALDSON. 

THE COURT: OKAY. 

MS. GILLEN: MAY I APPROACH WITH BINDERS FOR THE 

COURT? 

THE COURT: YES. TIME WAS 11:16. 

THIS IS AN UNRELATED QUESTION. AVANCI CLAIMS THAT THEY 

HAD NO IDEA OF QUALCOMM'S PROPOSED REDACTIONS TO THE LICENSE 

AGREEMENT UNTIL MID-NIGHT ON FRIDAY, JANUARY 11TH. 

NOW, I WOULD ASSUME THAT THEY COULD HAVE SEEN WHAT YOU 

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UNITED STATES COURT REPORTERS

954

WANTED TO REDACT IN YOUR MOTION TO SEAL FILING THURSDAY 

MORNING. 

MR. BORNSTEIN: I CAN'T SPEAK TO THAT. THAT MAKES 

SENSE TO ME, YOUR HONOR, WHAT YOU JUST SAID. 

THE COURT: YEAH. DID YOU SEPARATELY GIVE THEM THE 

REDACTIONS ON FRIDAY? 

MR. BORNSTEIN: I'M NOT -- 

THE COURT: BECAUSE THEY'RE CLAIMING THEY DID NOT 

RECEIVE QUALCOMM'S PROPOSED REDACTIONS TO THE LICENSE UNTIL 

MIDNIGHT ON FRIDAY, JANUARY 11TH. THIS IS THEIR DECLARATION, 

ECF 1291. 

MR. BORNSTEIN: YOUR HONOR, MAY I ASK MR. HOLTZ TO 

ADDRESS THIS? HE'S BEEN IN DIRECT CONTRACT. 

MR. HOLTZ: SURE, YOUR HONOR. HI. THIS IS 

JEFF HOLTZ, H-O-L-T-Z, COUNSEL FOR QUALCOMM. 

WHAT WE BEEN DOING IS GIVING THE PARTIES NOTICE THAT THIS 

DOCUMENT WILL BE USED AND THAT'S WHAT WAS DONE ON FRIDAY 

MORNING. TO -- IN OTHER WORDS, TO LET THEM KNOW THAT IF THEY 

WANT TO SEEK TO SEAL IT, THEY HAVE NOTICE. THIS WAS THURSDAY 

MORNING. 

THE COURT: UM-HUM. 

MR. HOLTZ: FRANKLY, I DON'T THINK WE YET -- BECAUSE 

WE HAD JUST BEEN GIVEN NOTICE THAT SAME MORNING FROM THE FTC 

THAT THEY INTENDED TO USE THE DOCUMENT. SO I DON'T THINK, WHEN 

WE GAVE NOTICE ON THURSDAY MORNING, WE EVEN KNEW YET WHAT WE 

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UNITED STATES COURT REPORTERS

955

WERE SEEKING TO REDACT. 

ONCE AVANCI ASKED US, WELL, WHAT ARE YOU SEEKING TO 

REDACT -- 

THE COURT: NO, NO, I'M SORRY TO INTERRUPT. YOU 

FILED A MOTION TO REDACT JX 116 BEFORE 8:00 A.M. ON THURSDAY, 

JANUARY 10TH.

MR. HOLTZ: THAT'S WHEN WE FILED OUR MOTION TO 

REDACT. 

THE COURT: YEAH. AM I WRONG ON THAT? 

MR. HOLTZ: WELL, THAT -- NO, THAT WAS SOMEBODY. 

MR. BORNSTEIN: IS THAT THE DEMONSTRATIVE, OR IS THAT 

THE -- 

THE COURT: THAT'S JX 116. I ASSUME THAT'S THE 

LICENSE AGREEMENT. 

MR. BORNSTEIN: THAT'S THE AGREEMENT.

MR. HOLTZ: THAT'S WHAT WE FILED THE MOTION. 

THE COURT: MAYBE YOU DIDN'T. MAYBE I'M GETTING 

THINGS MIXED UP.

MR. HOLTZ: NOW I'M SORRY THAT THIS WAS NOT MY -- I 

WASN'T THE ONE WHO ACTUALLY FILED THE MOTION, SO I DON'T KNOW 

THE DETAILS ON THAT, WHICH I APOLOGIZE FOR. 

BUT YOU ARE CORRECT, YOUR HONOR, THAT WE DID NOT GIVE 

AVANCI NOTICE OF WHAT WE WERE SEEKING TO REDACT UNTIL THEY 

ASKED US ON FRIDAY. 

THE COURT: AND YOU TOLD THEM THEN AT MIDNIGHT ON 

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UNITED STATES COURT REPORTERS

956

FRIDAY, JANUARY 11TH IS WHAT THEY'RE SAYING IN THEIR 

DECLARATION. 

MR. HOLTZ: IT WAS LATE. WE DID SEND IT TO THEM 

PROMPTLY AFTER THEY REQUESTED IT. SOME PARTIES WANT TO KNOW 

WHAT WE'RE SEEKING TO REDACT. MOST DON'T. SO AS A MATTER OF 

COURSE, WE DON'T TELL PEOPLE WHAT WE'RE SEEKING TO REDACT 

BECAUSE MOST JUST DON'T CARE. 

THE COURT: OKAY. SO YOU TOLD THEM THE LICENSE MIGHT 

BE COMING IN ON THURSDAY, BUT YOU DIDN'T GIVE YOUR PROPOSED 

REDACTIONS TO THIS DOCUMENT UNTIL FRIDAY NIGHT? 

MR. HOLTZ: THAT IS CORRECT. 

THE COURT: SO THEN WHY WAS MR. BORNSTEIN SO FOCUSSED 

ON THE LASINSKI SLIDES. THAT'S NOT EVEN PART OF THE RENEWED 

MOTION. IT'S ONLY PART OF THIS DOCUMENT. WHY ARE WE -- 

MR. BORNSTEIN: BECAUSE, YOUR HONOR, BOTH OF THESE 

THINGS WERE AT ISSUE IN THE MOTIONS THAT THEY FILED. 

THE COURT: THAT'S NOT AN ANSWER TO MY QUESTION. 

MR. BORNSTEIN: I WAS TRYING TO BE RESPONSIVE TO THE 

QUESTION ABOUT THE SUBJECT OF THEIR SEALING MOTIONS. 

THE COURT: THE MOTION THEY FILED THIS MORNING IS 

ONLY AS TO THIS LICENSE AGREEMENT. 

MR. BORNSTEIN: OKAY. 

THE COURT: AND THIS DECLARATION SAYS QUALCOMM DIDN'T 

TELL US THEIR PROPOSED REDACTIONS UNTIL MIDNIGHT ON FRIDAY. 

MR. BORNSTEIN: YES, YOUR HONOR, WE'VE ADVISED THEM 

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UNITED STATES COURT REPORTERS

957

OF THE DOCUMENT. IT'S THEIR RESPONSIBILITY TO DECIDE WHAT IN 

THE DOCUMENT WE WOULD LIKE TO SEAL. 

YOUR HONOR MENTIONED IN COURT ON FRIDAY THAT YOU WANTED US 

TO COORDINATE WITH THE THIRD PARTIES AND SINCE WE'VE HAD THAT 

CONVERSATION ON FRIDAY, WE'VE BEEN DOING THIS. WE ADDRESSED 

THIS DOCUMENT PRIOR TO YOUR HONOR'S SUGGESTION ON FRIDAY TO 

COORDINATE MORE CLOSELY WITH THE THIRD PARTIES. WE'VE BEEN 

DOING THAT NOW. 

WE ADVISED THEM OF THE FILING OF -- EXCUSE ME. WE ADVISED 

THEM OF THE FACT THAT THE FTC HAD IDENTIFIED THIS CONTRACT AS 

SOMETHING IT INTENDED TO USE, WE DID THAT PROMPTLY TWO HOURS 

AFTER BEING TOLD. 

THE COURT: OKAY. 

MR. BORNSTEIN: AND WE -- WE PROCEEDED ACCORDINGLY. 

THEY MOVED ON THE SPEED THEY MOVED. WE RESPONDED VERY 

PROMPTLY TO THEIR REQUEST TO US, TOO, ABOUT WHAT IT IS WE WERE 

SEEKING TO REDACT. 

THE COURT: OH, I SEE. SO YOUR MOTION TO SEAL WAS 

FILED AT 6:44 P.M. ON THURSDAY, IT LOOKS LIKE. I STILL DON'T 

UNDERSTAND WHY THEY WOULDN'T KNOW WHAT YOUR PROPOSED REDACTIONS 

WERE -- 

MR. BORNSTEIN: I CAN'T SPEAK TO THAT, YOUR HONOR. 

THE COURT: -- UNTIL FRIDAY NIGHT. 

ANYWAY. OKAY. I'M NOT GOING TO CHARGE TIME FOR THIS, BUT 

THE EARLIER TIME I AM GOING TO CHARGE TO QUALCOMM. 

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UNITED STATES COURT REPORTERS

958

ALL RIGHT. LET'S SWEAR IN THE WITNESS, PLEASE. 

MR. VAN NEST: EXCUSE ME, YOUR HONOR. COULD I 

REQUEST THAT EARLIER TIME BE SHARED? THIS IS NOT SOMETHING 

THAT WE CAUSED OR CREATED. WE'RE NOT THE ONES SPONSORING THE 

DOCUMENT. WE TRIED TO SOLVE IT AFTER YOUR COMMENTS ON FRIDAY. 

I DON'T UNDERSTAND WHY WE WOULD BE CHARGED THE ENTIRETY OF 

THAT. THEY'RE OFFERING INFORMATION AND BOTH THE PARTIES ARE 

PRESENTING STUFF WITH MR. LASINSKI. 

I THINK IT WOULD BE MORE FAIR TO SHARE THAT TIME. 

MS. MILICI: YOUR HONOR, TO BE FAIR, THIS IS A 

QUALCOMM PRODUCED DOCUMENT THAT WAS ON OUR EXHIBIT LIST WAY 

BACK IN NOVEMBER. 

MR. VAN NEST: BUT THEY'RE THE ONES -- 

MR. BORNSTEIN: IT'S A JOINT EXHIBIT. 

MR. VAN NEST: IT'S A JOINT EXHIBIT, YOUR HONOR. IT 

OUGHT TO BE JOINTLY SHARED. 

THE COURT: ALL RIGHT. I THINK THAT'S FAIR. 

MR. VAN NEST: THANK YOU. 

THE COURT: YOU'LL EACH GET DOCKED FIVE MINUTES. 

THE CLERK: PLEASE RAISE YOUR RIGHT HAND. 

(PLAINTIFF'S WITNESS, RICHARD DONALDSON, WAS SWORN.)

THE WITNESS: I DO. 

THE CLERK: THANK YOU. 

THE COURT: AND I HOPE YOU LET AVANCI KNOW YOUR 

DISAPPOINTMENT AT HOW MUCH TIME YOU LOST BECAUSE OF THEIR LATE 

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DONALDSON DIRECT BY MS. GILLEN

UNITED STATES COURT REPORTERS

959

FILING. 

ALL RIGHT. WOULD YOU PLEASE SPELL YOUR NAME FOR THE 

RECORD. 

THE CLERK: WOULD YOU PLEASE STATE YOUR NAME AND 

SPELL YOUR LAST NAME FOR THE RECORD. 

THE WITNESS: RICHARD DONALDSON. D-O-N-A-L-D-S-O-N. 

DIRECT EXAMINATION

BY MS. GILLEN: 

Q. GOOD MORNING, MR. DONALDSON. I'D LIKE TO START BY ASKING 

YOU ABOUT YOUR QUALIFICATIONS? 

THE COURT: IT'S 11:23. GO AHEAD, PLEASE.

BY MS. GILLEN:

Q. I'D LIKE TO START BY ASKING ABOUT YOUR QUALIFICATIONS. 

FIRST TO HELP PROVIDE SOME CONTEXT, COULD YOU PLEASE TELL THE 

COURT ABOUT THE GENERAL TYPES OF QUESTIONS YOU'LL BE ADDRESSING 

IN THIS CASE? 

A. YES. I'M GOING TO ADDRESS THE DYNAMICS OF THE NEGOTIATION 

PROCESS LOOKING AT WHAT NORMALLY HAPPENS DURING LICENSE 

NEGOTIATIONS, LOOKING AT WHO HAS BARGAINING POSITION, 

BARGAINING POWER AND HOW THAT CAME ABOUT, AND LOOKING AT THE 

LICENSE TERMS, WHETHER THEY'RE TYPICAL OR NOT TYPICAL TAKING -- 

LOOKING AT NORMAL LICENSE NEGOTIATIONS. 

Q. AND WHAT EXPERIENCE DO YOU HAVE AS AN EXPERT ON THESE 

TOPICS? 

A. I WORKED FOR 31 YEARS AT TEXAS INSTRUMENTS, AND MOST OF 

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DONALDSON DIRECT BY MS. GILLEN

UNITED STATES COURT REPORTERS

960

THAT TIME I WAS DIRECTLY INVOLVED IN NEGOTIATING PATENT 

LICENSES. 

Q. AND WHAT WAS YOUR TITLE AT TEXAS INSTRUMENTS? 

A. WELL, IT VARIED, OF COURSE, OVER MY CAREER. I STARTED OFF 

AS A PATENT ATTORNEY, AND THEN I WAS AN ASSISTANT TO THE 

LICENSING MANAGER WHERE I PROVIDED THE LEGAL AND TECHNICAL 

SUPPORT IN LICENSE NEGOTIATIONS. 

I THEN WAS GIVEN RESPONSIBILITY FOR RESPONDING TO ALL 

ADVERSE CLAIMS AGAINST TEXAS INSTRUMENTS AND NEGOTIATING 

AGREEMENTS TO SETTLE THOSE DISPUTES. 

I THEN BECAME A VICE PRESIDENT IN CHARGE OF LICENSING. AS 

LICENSING MANAGER, I NEGOTIATED LICENSES FOR ALL OF TI'S 

PRODUCTS, AND I RETIRED AS THE SENIOR VICE PRESIDENT AND 

GENERAL PATENT COUNSEL.

Q. CAN YOU DESCRIBE YOUR EXPERIENCE NEGOTIATING LICENSE 

AGREEMENTS FOR TEXAS INSTRUMENTS? 

A. YES. I NEGOTIATED, DURING MY CAREER, HUNDREDS OF LICENSE 

AGREEMENTS RELATED PRIMARILY TO THE SEMICONDUCTOR INDUSTRY AND 

TO THE COMPUTER INDUSTRY. 

AND DURING THAT PERIOD OF TIME, I NEGOTIATED AGREEMENTS 

WITH I THINK ALL OF THE MAJOR SEMICONDUCTOR MANUFACTURERS 

AROUND THE WORLD AND ALL THE COMPUTER MANUFACTURERS. 

I WAS THE LEAD NEGOTIATOR IN THESE AGREEMENTS, I DRAFTED 

THE AGREEMENTS, I HAD BUSINESS RESPONSIBILITY, SIGNATORY 

AUTHORITY FOR ENTERING INTO AGREEMENTS ON BEHALF OF TI. 

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DONALDSON DIRECT BY MS. GILLEN

UNITED STATES COURT REPORTERS

961

Q. AND WHAT EXPERIENCE DO YOU HAVE NEGOTIATING LICENSING 

RELATING TO WIRELESS CELLULAR TECHNOLOGY? 

A. DURING MY TENURE AT TI, WIRELESS AND CELLULAR BECAME MUCH 

MORE POPULAR. IN FACT, TI WAS ONE OF THE LEADING PROVIDERS OF 

BASEBAND CONTROLLERS, SELLING THESE DEVICES TO NOKIA, ERICSSON, 

MOTOROLA TO NAME SOME OF THE COMPANIES. 

I NEGOTIATED A NUMBER OF PATENT LICENSE AGREEMENTS DURING 

THAT TIME, AND THOSE LICENSE AGREEMENTS WERE STRUCTURED TO 

INCLUDE PATENT -- TO INCLUDE LICENSES THAT RELATED TO OUR 

MANUFACTURER OF THESE DEVICE, INCLUDING STANDARD ESSENTIAL 

PATENTS.

Q. ASIDE FROM YOUR EXPERIENCE AT TEXAS INSTRUMENTS, WHAT 

OTHER RELEVANT EXPERIENCE DO YOU HAVE? 

A. UPON RETIRING, I BECAME A LICENSING CONSULTANT. I 

PARTICIPATED IN THAT CAPACITY IN A NUMBER OF PATENT LITIGATIONS 

WHERE MY PRIMARY RESPONSIBILITY WAS TO EVALUATE PATENTS, TO 

EVALUATE DAMAGES, DETERMINE WHAT REASONABLE ROYALTIES WERE, 

THINGS OF THAT NATURE. AND I'VE TESTIFIED IN COURT A NUMBER OF 

TIMES CONCERNING THESE ISSUES. 

Q. AND CAN YOU DESCRIBE SOME OF THE CASES YOU'VE RECENTLY 

TESTIFIED IN? 

A. WELL, I TESTIFIED IN CASES SUPPORTING ERICSSON IN SOME OF 

THEIR LICENSING NEGOTIATIONS FOR STANDARD ESSENTIAL PATENTS; 

INTERDIGITAL FOR SOME OF THEIR PATENT ESSENTIAL PATENTS IN THE 

CELLULAR INDUSTRY; I WORKED WITH INTEL ON A NUMBER OF CASES. 

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DONALDSON DIRECT BY MS. GILLEN

UNITED STATES COURT REPORTERS

962

THOSE WERE PRIMARILY RELATED TO THE WIRELESS TECHNOLOGY, BUT, 

AGAIN, THERE WERE STANDARD ESSENTIAL PATENTS. 

I'VE WORKED FOR APPLE, AND LARGELY IN THE SAMSUNG 

LITIGATION THAT I THINK EVERYONE IS FAMILIAR WITH, AND I 

PARTICIPATED IN THAT. 

Q. THANK YOU. 

YOUR HONOR, AT THIS TIME THE FEDERAL TRADE COMMISSION 

TENDERS RICHARD DONALDSON AS AN EXPERT WITNESS IN PATENT 

LICENSING, INCLUDING PATENT LICENSE NEGOTIATIONS. 

THE COURT: WOULD YOU LIKE TO VOIR DIRE HIM YOURSELF? 

MR. PAIGE: NO, NO, YOUR HONOR. 

THE COURT: OR ANY OBJECTION. 

OKAY. SO YOU SAID THE SUBJECT MATTER IS PATENT LICENSING, 

INCLUDING PATENT LICENSE NEGOTIATIONS. 

OKAY. SO CERTIFIED AS AN EXPERT. GO AHEAD, PLEASE. 

BY MS. GILLEN:

Q. MR. DONALDSON, WHAT ARE THE CORE OPINIONS THAT YOU OFFER 

IN THIS CASE? 

A. I THINK PRIMARILY I'VE LOOKED AT LICENSE NEGOTIATIONS THAT 

QUALCOMM ENTERED INTO, CONSIDERED THE TYPE OF NEGOTIATIONS 

THESE WERE, AND HAVE CONCLUDED THAT THEY WERE VERY ATYPICAL. 

AND THEY WERE ATYPICAL FROM NORMAL PATENT LICENSE AGREEMENTS 

BECAUSE QUALCOMM HAD A POLICY THAT THEY CALLED "NO LICENSE, NO 

CHIPS," AND GIVING THE CRITICALITY OF THE CHIPS THAT QUALCOMM 

POSSESSED, THIS GAVE THEM TREMENDOUS BARGAINING POWER IN THE 

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DONALDSON DIRECT BY MS. GILLEN

UNITED STATES COURT REPORTERS

963

LICENSE NEGOTIATIONS AND RESULTED IN WHAT I BELIEVE ARE SOME 

VERY ATYPICAL LICENSE TERMS THAT COMPANIES AGREED TO BECAUSE OF 

THIS "NO LICENSE, NO CHIPS POLICY." 

A SECOND OPINION I WOULD OFFER IS THAT CHIP LEVEL 

LICENSING IS A VIABLE WAY OF LICENSING IN THIS INDUSTRY. IT'S 

SOMETHING THAT I DID DURING MY CAREER AT TEXAS INSTRUMENTS. WE 

LICENSED EXHAUSTIVELY CHIPS AT THE COMPONENT LEVEL AND SOLD 

PRODUCTS EXHAUSTIVELY AT THAT LEVEL. 

AND I HAD A SEPARATE LICENSING PROGRAM DIRECTED PURELY TO 

THE END ITEMS, LIKE COMPUTERS, AND THESE WERE SUCCESSFUL AND 

THEY WERE -- THEY WERE -- THOSE SPECIFIC ISSUES IN TRYING TO 

IMPLEMENT THEM.

Q. AND CAN YOU PLEASE EXPLAIN TO THE COURT THE PROCESS BY 

WHICH YOU FORMED YOUR OPINIONS? 

A. I HAVE, OF COURSE, RELIED UPON MY EXPERIENCE IN 

NEGOTIATING LICENSE AGREEMENTS IN THE INDUSTRY. 

BUT I'VE ALSO LOOKED AT THE RECORD, SUBSTANTIAL RECORD, A 

LOT OF DOCUMENTS PRODUCED IN THIS CASE. I'VE LOOKED AT LICENSE 

AGREEMENTS, I'VE LOOKED AT SUBMISSIONS TO THE FTC FROM VARIOUS 

PARTIES, I'VE LOOKED AT DEPOSITION TESTIMONY. 

AND, IMPORTANTLY, I'VE LOOKED AT TESTIMONY FROM WITNESSES 

WHO ACTUALLY ENGAGED IN NEGOTIATIONS WITH QUALCOMM, HOW THEY 

VIEWED THOSE NEGOTIATIONS AND THEIR -- THERE WAS A SIGNIFICANT 

AMOUNT OF CONTEMPORANEOUS DOCUMENTS RELATING TO THOSE 

NEGOTIATIONS THAT WERE AVAILABLE, SO I REVIEWED THOSE ALSO.

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DONALDSON DIRECT BY MS. GILLEN

UNITED STATES COURT REPORTERS

964

Q. AND WHAT PARTICULAR NEGOTIATIONS DID YOU FOCUS ON? 

A. I THINK WHERE I HAVE FOCUSSED QUITE A BIT OF ATTENTION 

WOULD BE NEGOTIATIONS WITH HUAWEI, WITH SAMSUNG AND LENOVO, 

WITH LG, WITH BLACKBERRY, AND SONY.

Q. AND WHY ARE THOSE OEM'S PARTICULARLY SIGNIFICANT TO YOU? 

A. THERE'S A COUPLE REASONS. THEY'RE, I UNDERSTAND, 

SIGNIFICANT PLAYERS IN THE CELLULAR BUSINESS. THEY ARE 

SOPHISTICATED COMPANIES. THEY HAD AN INCENTIVE, BEING 

SIGNIFICANT PLAYERS, TO NEGOTIATE AND TRY TO OBTAIN THE MOST 

FAVORABLE RATES THAT THEY COULD. 

AND ALSO IMPORTANTLY BECAUSE THERE WAS TESTIMONY FROM 

THESE COMPANIES THAT, FROM PEOPLE WHO ACTUALLY PARTICIPATED IN 

THOSE NEGOTIATIONS WITH CONTEMPORANEOUS DOCUMENTS, SO I COULD 

SEE THE EBB AND FLOW AND THE LEVERAGE THAT WAS APPLIED IN THE 

NEGOTIATIONS. 

Q. AND HAVE YOU SEEN ANY OF THE TRIAL TESTIMONY GIVEN IN THIS 

CASE ABOUT THOSE OEM'S NEGOTIATIONS?

A. YES, I HAVE. I HAVE SEEN WHAT WAS PLAYED IN THIS COURT I 

THINK WITH HUAWEI AND SAMSUNG AND LENOVO. 

Q. MR. DONALDSON, YOU FIRST DESCRIBED YOUR OPINION THAT 

QUALCOMM'S LICENSE NEGOTIATIONS WERE ATYPICAL. 

IN YOUR EXPERIENCE, HOW DOES A TYPICAL LICENSE NEGOTIATION 

USUALLY PROCEED? 

A. WELL, IN A TYPICAL PATENT LICENSE NEGOTIATIONS THE PARTIES 

WILL SIT DOWN TO NEGOTIATE THE BEST TERMS THAT THEY CAN GET. 

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DONALDSON DIRECT BY MS. GILLEN

UNITED STATES COURT REPORTERS

965

THE PARTIES -- EACH OF THE PARTIES WILL HAVE SOME 

BARGAINING POWER IN THE NEGOTIATIONS. ONE OF THE THINGS THAT 

GIVES BOTH PARTIES BARGAINING POWER IS THE FACT THAT THESE 

LICENSING PROFESSIONALS KNOW THAT IF THEY ARE UNABLE TO REACH 

AGREEMENT, THAT LITIGATION COULD OCCUR. 

AND LICENSING PROFESSIONALS ARE AWARE OF DAMAGES LAW, OF 

WHAT A COURT IS LIKELY TO DO IF IT GETS INTO A LITIGATION, WHAT 

A COURT MIGHT LIKELY DETERMINE A REASONABLE ROYALTY TO BE, WHAT 

PARAMETERS WOULD BE IMPORTANT IN THAT DECISION BY THE COURT. 

AND SO THEY STRUCTURE THEIR NEGOTIATIONS TAKING THIS 

POSSIBILITY INTO ACCOUNT, WHICH GENERALLY DRIVES THE PARTIES TO 

MORE REASONABLE PRESENTATIONS, MORE REASONABLE EXPECTATIONS. 

Q. AND HOW DOES THE POSSIBLE ALTERNATIVE OF LITIGATION AFFECT 

A PATENT OWNER DURING NEGOTIATIONS? 

A. WELL, A PATENT OWNER, THERE'S SOME BARGAINING LEVERAGE 

THAT HE HAS. IF HE GETS INTO A LITIGATION SCENARIO, IF THE 

PATENTS ARE HELD VALID AND INFRINGED, THERE'S A PROSPECT OF AN 

INJUNCTION, AND THAT IS PROBABLY THE MOST SEVERE REMEDY THAT 

WOULD OCCUR, AND THAT COULD BE VERY DISASTROUS FOR A LICENSEE. 

HE HAS SOME RISK THAT THE COURT WILL DETERMINE A 

REASONABLE ROYALTY THAT IS LESS THAN WHAT HE WOULD LIKE. SO 

THAT COULD BE A POTENTIAL DOWNSIDE.

Q. AND HOW DOES THE POSSIBLE ALTERNATIVE OF LITIGATION AFFECT 

THE BARGAINING POWER OF A PROSPECTIVE LICENSEE? 

A. WELL, A LICENSEE ALSO HAS SUBSTANTIAL RISK, OF COURSE THE 

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UNITED STATES COURT REPORTERS

966

INJUNCTION BEING ONE OF THEM. 

BUT IF HE IS OF THE OPINION THAT WHAT IS BEING PROPOSED, 

THE RATES BEING PROPOSED ARE UNREASONABLY HIGH, HE WOULD HAVE 

AN EXPECTATION THAT A REASONABLE COURT WOULD LOWER WHAT A 

REASONABLE -- HIS DETERMINATION OF A REASONABLE ROYALTY. 

AND HE WOULD ALSO HAVE THE ABILITY, DURING THIS LITIGATION 

PROCESS, TO INVESTIGATE AND PERHAPS COME UP WITH A DESIGN 

ALTERNATIVE WHERE HE COULD AVOID THE PATENTS AND, IN MY 

EXPERIENCE, THIS IS SOMETHING THAT IS VERY COMMONLY USED AND IN 

MY EXPERIENCE AT TI WHEN WE WERE INVOLVED IN LICENSE 

NEGOTIATIONS I BELIEVED MIGHT GO TO TRIAL, WE WOULD INSTITUTE A 

DESIGN AROUND PROJECT WITHIN THE COMPANY TO SEE WHAT OUR 

ALTERNATIVES WERE. 

AND YOU COULD USE THAT WITH THE OTHER PARTY IN THE 

NEGOTIATIONS, LOOK, I CAN DESIGN AROUND THIS FOR $500,000. SO 

THAT GIVES -- THAT WOULD HELP YOU RESOLVE THE DISPUTE.

Q. AND HOW WOULD THE RELATIVE BARGAINING POWER OF THE PARTIES 

CHANGE WHEN NEGOTIATING A LICENSE COVERING STANDARD ESSENTIAL 

PATENTS? 

A. WELL, IN STANDARD ESSENTIAL PATENTS, I THINK IT'S LIKELY 

WEAKER BARGAINING POWER FOR THE PATENT OWNER, DEPENDING ON WHAT 

HIS DEMANDS HAVE BEEN, PARTICULARLY IN TODAY'S ENVIRONMENT 

WHERE WE HAVE SEEN WHERE COURTS HAVE CONSIDERED FRAND RATES FOR 

STANDARD ESSENTIAL PATENTS, THEY TYPICALLY HAVE BEEN 

SIGNIFICANTLY LOWER THAN WHAT HAD BEEN DEMANDED BY THE PATENT 

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UNITED STATES COURT REPORTERS

967

OWNER. 

AND SO THAT WOULD BE A DOWNSIDE FOR A PATENT OWNER. 

Q. AND IN A TYPICAL NEGOTIATION COVERING STANDARD ESSENTIAL 

PATENTS, WHAT EFFECT WOULD YOU EXPECT THIS TO HAVE ON THE RATE 

THAT PARTIES MIGHT NEGOTIATE? 

A. I THINK THE RATE MOST LIKELY WOULD BE LOWER GIVEN THE 

CHANGES AND APPLICATION OF DAMAGES LAW. 

Q. SO NOW THAT YOU'VE WALKED US THROUGH WHAT A TYPICAL 

NEGOTIATION LOOKS LIKE, CAN YOU PLEASE EXPLAIN HOW QUALCOMM'S 

NEGOTIATIONS ARE DIFFERENT? 

A. WELL, THE BOTTOM LINE IS IN THE NEGOTIATIONS THAT QUALCOMM 

HAD WHERE THEY SUPPLIED CHIPS THAT WERE COMMERCIALLY NECESSARY 

FOR THE LICENSEE TO CONTINUE IN BUSINESS, FOR THOSE SITUATIONS, 

QUALCOMM ESSENTIALLY TOOK THE RISK OF LITIGATION OFF THE TABLE. 

IT WAS NOT AN ALTERNATIVE TO THE LICENSEE. 

Q. AND WHAT EFFECT WOULD THE REMOVAL OF THAT ALTERNATIVE HAVE 

ON THE NEGOTIATING PARTY'S BARGAINING POSITIONS? 

A. WELL, IT WOULD PUT THE LICENSEE AT A SEVERE DISADVANTAGE. 

HE'S BASICALLY -- AND AS THE TESTIMONY REFLECTS -- HE'S 

BASICALLY IN THE POSITION, I AGREE TO THE LICENSE OR BASICALLY 

GO OUT OF BUSINESS. 

Q. AND WHAT EFFECT DOES THIS CHANGE IN THE BARGAINING POWER 

HAVE ON THE ROYALTY RATES THAT MIGHT BE NEGOTIATED? 

A. WELL, I THINK IT RESULTS IN A DISPROPORTIONATELY HIGH 

ROYALTY RATE.

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DONALDSON DIRECT BY MS. GILLEN

UNITED STATES COURT REPORTERS

968

Q. ARE YOU AWARE OF ANY OTHER COMPANIES THAT HAVE A SIMILAR 

POLICY TO QUALCOMM'S? 

A. THE NO LICENSE, NO CHIPS? I AM NOT AWARE OF ANY OTHER 

SITUATION LIKE THAT. 

Q. IN FORMING YOUR OPINIONS, DID YOU CONSIDER EVIDENCE FROM 

OEM'S REGARDING THE PREVALENCE OF THE NO LICENSE, NO CHIPS 

POLICY? 

A. YES, I DID. 

Q. AND WHAT DID THAT EVIDENCE REFLECT? 

A. I THINK THE EVIDENCE WERE THAT PEOPLE UNIFORMLY SAID THEY 

WERE NOT AWARE OF ANY OTHER COMPANY WHO FOLLOWED THE SAME 

POLICY THAT QUALCOMM HAD IN THIS NO LICENSE, NO CHIP. 

Q. SO HOW DID QUALCOMM'S ENHANCED NEGOTIATION LEVERAGE 

MANIFEST ITSELF IN QUALCOMM'S LICENSE TERMS? 

A. I THINK QUALCOMM WAS ABLE TO ACHIEVE LICENSING TERMS THAT 

WERE ATYPICAL IN THE INDUSTRY. 

Q. AND WHAT WERE SOME OF THOSE ATYPICAL TERMS? 

A. I BELIEVE THAT THE ROYALTY RATE THAT QUALCOMM ACHIEVED WAS 

DISPROPORTIONATELY HIGH. I BELIEVE THAT THE TERM OF THE 

LICENSE THAT QUALCOMM WAS ABLE TO ACHIEVE -- YOU KNOW, MOST OF 

THEM BEING TEN YEARS OR LONGER -- THESE LONG-TERM LICENSING 

LOCKED IN THESE HIGH ROYALTIES, AND TO ME THAT IS VERY ATYPICAL 

IN LICENSE NEGOTIATIONS. 

I THINK THAT THEY WERE -- QUALCOMM, WITH THIS POLICY, WAS 

LARGELY ABLE TO AVOID LITIGATION WITH THE NO LICENSE, NO CHIP 

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DONALDSON DIRECT BY MS. GILLEN

UNITED STATES COURT REPORTERS

969

COMPANIES COULDN'T AFFORD TO GIVE UP THEIR SUPPLY OF CHIPS. 

AND SO QUALCOMM HAS NOT HAD TO REALLY SUBJECT ITS 

LICENSING PRACTICES TO A COURT DETERMINATION OF WHETHER THEIR 

PRACTICES WERE PROPER OR WHETHER THOSE RATES WERE FRAND.

Q. SO LET'S GO THROUGH THOSE ONE AT A TIME. 

FIRST, HOW DID YOU FORM YOUR OPINION THAT THE ROYALTIES 

OEM'S PAID TO QUALCOMM WERE DISPROPORTIONATELY HIGH? 

A. LARGELY THAT WAS BASED UPON EVIDENCE THAT I LOOKED AT IN 

THE RECORD, PEOPLE WHO HAD -- OEM'S, SIGNIFICANT OEM'S WHO HAD 

NEGOTIATIONS WITH QUALCOMM, THEY TESTIFIED THAT THE RATES 

QUALCOMM WAS ACHIEVING WERE MUCH, MUCH LARGER THAN OTHER 

COMPANIES IN THIS INDUSTRY WHO ALSO HAD SIGNIFICANT STANDARD 

ESSENTIAL PATENT PORTFOLIOS. 

I'VE LOOKED AT DOCUMENTS, I THINK SUPPLIED EVEN BY 

QUALCOMM, COMPARING THE TOTAL ROYALTIES THAT QUALCOMM HAS 

RECEIVED TO OTHER COMPANIES LIKE NOKIA, ERICSSON, INTERDIGITAL, 

AND IT REFLECTS QUALCOMM'S RATES ARE MUCH, MUCH HIGHER THAN 

ANYONE ELSE IN THE INDUSTRY. 

Q. AND DO YOU HAVE AN OPINION AS TO WHETHER THESE HIGHER 

RATES WERE THE SAME ACROSS DIFFERENT LICENSEES? 

A. YES. THAT IS ONE OF THE ANOMALIES THAT I HAVE RECOGNIZED, 

AND I -- AND THAT IS AN ANOMALY TO ME BECAUSE MANY OF THE 

QUALCOMM'S LICENSES WERE WITH OTHER COMPANIES WHO HAVE 

SIGNIFICANT PORTFOLIOS OF STANDARD ESSENTIAL PATENTS. 

AND THESE COMPANIES BASICALLY WERE REQUIRED TO GRANT 

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DONALDSON DIRECT BY MS. GILLEN

UNITED STATES COURT REPORTERS

970

ROYALTY-FREE, EXHAUSTIVE ROYALTY-FREE CROSS-LICENSES BACK TO 

QUALCOMM, INCLUDING LICENSES AT THE CHIP LEVEL. 

AND IN MY EXPERIENCE AT TEXAS INSTRUMENTS, WE HAD PATENTS 

THAT WE BELIEVED SHOULD COMMAND A CERTAIN ROYALTY RATE, BUT WE 

NEGOTIATED WITH ALL THESE DIFFERENT COMPANIES AND EVERY LICENSE 

WAS DIFFERENT. EVERY LICENSE WAS DIFFERENT BECAUSE EACH 

COMPANY HAD ITS OWN PATENT PORTFOLIO AND WE GAVE CREDIT AND 

VALUE TO THOSE PATENT PORTFOLIOS AND THAT JUST RESULTED IN 

DIFFERENT LICENSE RATES. 

SO TO ME, THIS WAS A REAL ANOMALY.

Q. I WANT TO ASK YOU ABOUT THE SECOND UNUSUAL FEATURE THAT 

YOU MENTIONED. WHAT IS YOUR OPINION REGARDING THE DURATION OF 

QUALCOMM'S AGREEMENTS? 

A. I THINK THE -- FROM MY EXPERIENCE OF WHAT LICENSE 

AGREEMENTS NORMALLY HAVE, A DURATION OF TEN YEARS OR LONGER IS 

VERY UNUSUAL WHEN IT LOCKS IN A HIGH ROYALTY RATE. 

A LICENSEE IN TYPICAL NEGOTIATIONS WOULD NOT WANT TO 

COMMIT THEMSELVES TO A HIGH ROYALTY RATE OVER A LONG PERIOD OF 

TIME, AND CERTAINLY IN MY EXPERIENCE IN LICENSING AT TI, WE 

WERE USING SHORTER TERMS DURING MY TIME, MOSTLY, LIKE, FIVE 

YEARS WHERE THE PARTIES HAD A CHANCE TO RE-EVALUATE ALL PATENTS 

AFTER FIVE YEARS BECAUSE JUST IN THE RAPID CHANGE IN THE 

TECHNOLOGY. 

SO THESE LONG TERMS WITH LONG TERM ROYALTY RATES I THINK 

REFLECT THE BARGAINING POWER THAT QUALCOMM HAD. 

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DONALDSON DIRECT BY MS. GILLEN

UNITED STATES COURT REPORTERS

971

Q. AND WHAT IS UNUSUAL GENERALLY ABOUT THINGS REMAINING 

STAGNANT OVER TIME? 

A. WELL, ONE THING IS IN THE LICENSING PROFESSION, YOU 

TYPICALLY SEE OVER TIME ROYALTY RATES DECREASING. 

Q. AND WHAT ARE SOME OF THE REASONS THAT ROYALTY RATES MIGHT 

DECREASE OVER TIME? 

A. WELL, FOR EXAMPLE, IN THE CASE OF QUALCOMM WHEN RATES WERE 

FIRST ESTABLISHED BACK WHEN CDMA WAS USED IN TELEPHONES WHERE 

OUR CELL PHONES WERE -- IT WAS JUST A CELL PHONE. NO OTHER 

CAPABILITIES. 

AND THOSE PRODUCTS HAVE CHANGED DRAMATICALLY OVER THE LIFE 

SINCE THEN AND WE NOW HAVE SMARTPHONES WITH MANY, MANY FEATURES 

THAT DO NOT INFRINGE THE CELLULAR PATENTS, THE SEPS. 

SO I WOULD EXPECT THAT TO DRIVE A LOWER ROYALTY RATE. 

AND ALSO, THE FACT THAT I THINK MANY PEOPLE HAVE 

TESTIFIED, PEOPLE WHO ARE IN THIS INDUSTRY, THAT SAMSUNG'S 

POSITION IN THE STANDARD ESSENTIAL PATENTS IS WEAKER, FOR 

EXAMPLE, IN LTE THAN IT WAS IN THE ORIGINAL CDMA, WHICH WOULD 

SUGGEST A LOWER ROYALTY RATE. 

AND IN THAT SAME LINE, MANY OF SAMSUNG'S EARLY -- 

SAMSUNG'S, I'M SORRY. 

MANY OF QUALCOMM'S EARLY PATENTS IN CDMA ARE EXPIRING 

WHICH, IN MY EXPERIENCE IN LICENSE NEGOTIATIONS, WHEN YOUR 

PORTFOLIO IS WEAKENED BY EXPIRING SIGNIFICANT PATENTS, THE 

ROYALTY RATE WOULD TYPICALLY DECREASE. 

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DONALDSON DIRECT BY MS. GILLEN

UNITED STATES COURT REPORTERS

972

AND I GUESS ANOTHER ISSUE IS OVER THIS PERIOD OF TIME THAT 

THERE HAS BEEN A SIGNIFICANT CHANGE IN PATENT LAW DAMAGES AND 

HOW PATENT LAW DAMAGES ARE ASSESSED, THE REQUIREMENT FOR 

LOOKING AT THE SMALLEST SALEABLE PATENT UNIT, AND THINGS OF 

THIS NATURE, SO I WOULD EXPECT THAT THE RATES WOULD HAVE 

DECLINED BASED ALSO ON THAT.

Q. AND THE FINAL UNUSUAL OBSERVATION YOU MENTIONED IS THAT 

QUALCOMM RARELY ENGAGED IN LITIGATION. 

WHAT IS YOUR OPINION REGARDING THE FREQUENCY WITH WHICH 

OEM'S RESORTED TO LITIGATION WITH QUALCOMM? 

A. I THINK THAT LITIGATION WAS VERY UNUSUAL WITH QUALCOMM, 

PARTICULARLY WITH THE COMPANIES WHO COULD PROBABLY MOST AFFORD 

TO GET INTO THE COST OF LITIGATION. THEY WERE THE ONES WHO 

WERE LARGER MANUFACTURERS WHO WERE PURCHASING QUALCOMM CHIPS TO 

WHICH THEY HAD NO REASONABLE ALTERNATIVE. 

AND THE NO LICENSE, NO CHIP POLICY TOOK LITIGATION OFF THE 

TABLE. 

SO QUALCOMM HAS NOT REALLY HAD TO SUBJECT ITS PRACTICES 

AND ROYALTY RATES TO COURT SCRUTINY BEFORE. 

Q. SIR, CAN YOU TURN TO THE FOURTH TAB IN YOUR BINDER LABELED 

CX 101. 

A. YES.

Q. AND DID YOU PREPARE THIS CHART? 

A. YES, I DID. 

Q. AND WHAT IS THE SOURCE OF THE INFORMATION YOU USED TO 

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DONALDSON DIRECT BY MS. GILLEN

UNITED STATES COURT REPORTERS

973

PREPARE THE CHART? 

A. THIS WAS BASED ON INFORMATION THAT COMPANIES SUBMITTED TO 

THE FTC. 

MS. GILLEN: YOUR HONOR, I MOVE TO ADMIT CX 101. 

MR. PAIGE: YOUR HONOR, WE FILED A HIGH PRIORITY 

OBJECTION SAYING THIS WAS NOT A PROPER SUMMARY OF THOSE 

DOCUMENTS. 

THE COURT: AND THAT WAS OVERRULED, SO THIS IS 

ADMITTED. 

(PLAINTIFF'S EXHIBIT CX 101 WAS ADMITTED IN EVIDENCE.) 

THE COURT: GO AHEAD, PLEASE. 

BY MS. GILLEN:

Q. WHAT DOES THIS CHART DEPICT? 

A. THIS SHOWS PATENT LITIGATIONS FOR COMPANIES LIKE ERICSSON, 

NOKIA, INTERDIGITAL, AND QUALCOMM DURING THE TEN YEAR PERIOD 

FROM 2006 TO 2016. 

Q. AND CAN YOU DESCRIBE WHAT THE CHART SHOWS IN TERMS OF THE 

RELATIVE AMOUNTS OF LITIGATION AMONG THOSE COMPANIES? 

A. YES. IT SHOWS THAT ERICSSON, NOKIA, AND INTERDIGITAL HAVE 

SIGNIFICANT NUMBER OF LITIGATIONS WHERE THEY'VE ACTUALLY HAD TO 

GO TO COURT TO ENFORCE THEIR -- TO TRY AND ENFORCE THEIR PATENT 

LICENSES. 

WHERE QUALCOMM HAS ONLY TWO WHICH WERE SORT OF UNRELATED 

TO TRYING TO ENFORCE THE SEP PATENTS. 

BUT THIS JUST TELLS PART OF THE STORY BECAUSE ERICSSON, 

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DONALDSON DIRECT BY MS. GILLEN

UNITED STATES COURT REPORTERS

974

NOKIA, AND INTERDIGITAL DID NOT HAVE A NO LICENSE, NO CHIP 

POLICY, SO THEIR NEGOTIATIONS WOULD HAVE ALWAYS INCLUDED, OR 

BEEN NEGOTIATED IN THE SHADOW OF WHAT POSSIBLE LEGAL REMEDIES 

MIGHT EXIST, WHICH WOULD HAVE -- WHICH WOULD SUGGEST THAT THEY 

WOULD HAVE BEEN MORE REASONABLE IN SETTING WHAT THEIR ROYALTY 

DEMANDS WERE AND AVOIDING LITIGATION IN A NUMBER OF CASES THAT 

AREN'T REFLECTED HERE. 

Q. AND WHAT WOULD BE THE RISKS FOR QUALCOMM OF ENGAGING IN 

LITIGATION LIKE ERICSSON, NOKIA, AND INTERDIGITAL DID? 

A. WELL, THE RISK WOULD BE THAT THEIR LICENSING PRACTICES, 

THEIR NO LICENSE, NO CHIP POLICY, AND THEIR HIGH, WHAT I 

BELIEVE ARE DISPROPORTIONATELY HIGH, ROYALTIES WOULD BE CHANGED 

BY A COURT DETERMINATION OF WHAT A FRAND RATE WOULD BE. 

Q. MR. DONALDSON, DO YOU HAVE AN UNDERSTANDING OF HOW 

QUALCOMM JUSTIFIES ITS NO LICENSE, NO CHIPS POLICY? 

A. I THINK CERTAINLY ONE OF THEIR JUSTIFICATIONS IS THAT THE 

CHIP PRICE DOES NOT ADEQUATELY REFLECT THE R&D EXPENSES THAT 

THEY HAVE IN DEVELOPING THE CHIPS. 

AND I THINK THEY ALSO ARGUE THAT THEY DO NOT WANT TO SELL 

OR TO PROVIDE A CHIP TO ITS CUSTOMERS THAT WOULD ENCOURAGE THEM 

TO INFRINGE QUALCOMM PATENTS. 

Q. AND WHAT ARE YOUR REACTIONS TO THE JUSTIFICATIONS QUALCOMM 

HAS OFFERED? 

A. THEY'RE NOT VERY PERSUASIVE TO ME.

Q. AND WHY IS THAT? 

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DONALDSON DIRECT BY MS. GILLEN

UNITED STATES COURT REPORTERS

975

A. WELL, BASED ON MY EXPERIENCE IN LICENSING AT TI, TI SOLD 

ITS CHIPS ON AN EXHAUSTIVE BASIS. TI LICENSED ITS CHIPS ON AN 

EXHAUSTIVE BASIS, AS DID EVERYONE ELSE IN THE SEMICONDUCTOR 

INDUSTRY. 

AND THESE COMPANIES, YOU KNOW, TI, INTEL, OTHER COMPANIES 

THAT PROVIDE CHIPS WERE ABLE TO RECOVER THEIR RESEARCH 

INVESTMENTS IN A SUCCESSFUL BUSINESS. 

SO IF -- SO I THINK IT IS VIABLE FROM THAT PERSPECTIVE. 

AS FAR AS CAUSING A CUSTOMER TO INFRINGE, IF THEY WERE 

LICENSING EXHAUSTIVELY AT THE CHIP LEVEL, WHEN THEY SOLD A CHIP 

TO A CUSTOMER, THERE WOULD BE NO ISSUE OF THEM INFRINGING 

QUALCOMM PATENTS THAT ARE IMPLEMENTED ON THAT PATENT -- ON THAT 

PRODUCT. 

NOW, QUALCOMM HAD PATENTS THAT APPLIED TO THE END DEVICE, 

A CLEAR SYSTEM PATENT. QUALCOMM WAS STILL FREE TO ASSERT 

THOSE, JUST LIKE WHAT TI WAS ABLE TO DO IN SELLING ITS 

SEMICONDUCTOR CHIPS AND STILL ASSERTING PATENTS AT THE SYSTEM 

OR COMPUTER LEVEL. 

Q. SIR, IF YOU COULD TURN TO THE FINAL TAB IN YOUR BINDER 

LABELED QUALCOMM OPENING SLIDES AND TURN TO PAGE 11. AND I'LL 

REPRESENT TO YOU THAT THIS IS A SLIDE QUALCOMM'S COUNSEL 

PRESENTED TO THE COURT DURING ITS OPENING STATEMENT ON THE 

FIRST DAY OF TRIAL. 

IS THIS, TO THE BEST OF YOUR KNOWLEDGE, A QUOTE FROM THE 

DEPOSITION TESTIMONY YOU GAVE IN THIS CASE? 

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DONALDSON DIRECT BY MS. GILLEN

UNITED STATES COURT REPORTERS

976

A. WELL, IT IS CERTAINLY PART OF A QUOTE. 

Q. CAN YOU EXPAND ON THAT? 

A. WELL, YES. THE REST OF THE SENTENCE NOT SHOWN TALKS ABOUT 

THIS IS THE WAY IT KIND OF GREW UP WHEN, IN THE EARLY PHONES 

WHEN THE END PRODUCT WAS A CELL PHONE AND NOTHING MORE, AND 

THERE HAVE BEEN TREMENDOUS CHANGES IN THE INDUSTRY SINCE THEN. 

Q. MR. DONALDSON, WHAT IS YOUR OPINION ON THE VIABILITY OF 

CHIP LEVEL LICENSING IN THE CELLULAR INDUSTRY? 

A. WELL, I THINK IT IS A VIABLE APPROACH. I THINK IT'S VERY 

COMPARABLE TO THE TYPE OF PROGRAM THAT TI AND I THINK OTHER 

COMPANIES ALSO HAVE, AND I THINK IT COULD HAVE BEEN USED, OR 

COULD BE USED. 

Q. AND WHEN TI USED THIS TYPE OF LICENSING PROGRAM, HOW DID 

YOU ACCOUNT FOR ANY EXHAUSTION CONCERNS THAT WERE RAISED? 

A. THEY WERE NOT A REAL PROBLEM. OCCASIONALLY AN END USER, 

FOR EXAMPLE, A COMPUTER MANUFACTURER, WOULD ARGUE THAT BY 

PURCHASING A CHIP FROM TI OR FROM PURCHASING A CHIP BY SOMEONE 

WHO TI HAD LICENSED, THAT, YOU KNOW, MAYBE THEY GOT SOME RIGHTS 

BECAUSE OF THAT. WE WERE ABLE TO SIT DOWN WITH THEM, WE HAD 

VERY CAREFULLY SEGREGATED OUR CHIP PATENTS FROM SYSTEM LEVEL 

PATENTS, AND I THINK REASONABLE PEOPLE WERE ABLE TO SIT DOWN 

AND WORK OUT THE ISSUES AND WE WERE ABLE TO WORK OUT ALL OF 

THOSE ISSUES TO BOTH PARTIES' SATISFACTION. 

Q. AND WHAT ARE THE ADVANTAGES OF LICENSING AT THE COMPONENT 

LEVEL? 

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DONALDSON DIRECT BY MS. GILLEN

UNITED STATES COURT REPORTERS

977

A. WELL, ONE ADVANTAGE IS -- CERTAINLY WHEN WE SET IT UP AT 

TI, ONE OF THE THINGS WE CONSIDERED WAS IT IS DIRECTLY 

REFLECTIVE OF WHAT WE THOUGHT PATENT LAW REQUIRED, THAT THEY 

WANTED TO LICENSE TO A -- THERE'S ALWAYS BEEN A REQUIREMENT TO 

APPORTION, AND WE WERE LICENSING AT THE LEVEL THAT OUR CHIP 

COVERED. 

AND YOU DIDN'T HAVE THE ISSUES THAT SOMEONE MIGHT RAISE, 

WELL, YOU'RE OVERREACHING, YOU'RE TRYING TO CHARGE A ROYALTY ON 

SOMETHING THAT'S NOT COVERED BY YOUR PATENT. 

SO I THINK THAT IS A PRIMARY ADVANTAGE. 

Q. IS IT YOUR OPINION THAT LICENSING AT THE CHIP OR COMPONENT 

LEVEL IS THE ONLY WAY TO COMPLY WITH THE APPORTIONMENT 

REQUIREMENT IN THE PATENT DAMAGES LAW? 

A. OH, NOT AT ALL. 

Q. CAN YOU EXPAND ON THAT? 

A. WELL, YES. I THINK IT'S QUITE POSSIBLE, AND SOMETIMES 

MAYBE MORE THAN EFFICIENT, TO LICENSE AT AN END PRODUCT LEVEL, 

WHICH THERE WOULD BE NO PROBLEM IF YOU APPROPRIATELY TAKE INTO 

CONSIDERATION HOW THE CALCULATION OF ROYALTY IS ACHIEVED. 

IF YOU LOOK AT WHAT PATENTS APPLY AT THE CHIP LEVEL AND 

APPLY AN APPROPRIATE ROYALTY AND THEN LOOK AT THE SYSTEM LEVEL 

AND THEN COME UP WITH AN EFFECTIVE ROYALTY THAT WOULD APPLY TO 

THE END DEVICE, THERE'S NOTHING WRONG WITH THAT AT ALL. AND I 

DID SOMETHING VERY SIMILAR TO THAT IN MANY AGREEMENTS THAT I 

NEGOTIATED AT TI.

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DONALDSON CROSS BY MR. PAIGE

UNITED STATES COURT REPORTERS

978

Q. SIR, QUALCOMM HAS TAKEN THE POSITION THAT IT IS STANDARD 

INDUSTRY PRACTICE TO LICENSE AT THE HANDSET OR END DEVICE 

LEVEL. 

DO YOU HAVE A REACTION TO THAT STATEMENT? 

A. I THINK THAT'S AN OVERSTATEMENT. I THINK THERE ARE 

CERTAINLY CIRCUMSTANCES THAT, IN THE CELLULAR INDUSTRY, PATENTS 

ARE LICENSED AT THE CHIP LEVEL. FOR EXAMPLE, I THINK, IN ALL 

OF THE GRANT BACK LICENSES THAT QUALCOMM GETS IN ITS LICENSE 

AGREEMENT, THEY GET CHIP LEVEL LICENSE EXHAUSTIVELY LICENSED 

BACK TO THEM. 

SO, YOU KNOW, IT TAKES PLACE IN THE INDUSTRY. 

MS. GILLEN: THANK YOU, SIR. I HAVE NO FURTHER 

QUESTIONS AT THIS TIME. 

THE COURT: OKAY. TIME IS 11:54. 

OKAY. LET ME KNOW WHEN YOU'RE READY. WE'LL JUST GO UNTIL 

NOON. 

MR. PAIGE: SURE. MAY I PROCEED, YOUR HONOR. 

THE COURT: GO AHEAD, PLEASE. IT'S 11:55. 

MR. PAIGE: THANK YOU, YOUR HONOR. 

CROSS-EXAMINATION

BY MR. PAIGE: 

Q. GOOD MORNING, MR. DONALDSON. 

A. GOOD MORNING.

Q. YOU USED TO WORK AT TEXAS INSTRUMENTS, WHICH I'LL CALL TI 

FOR THE SAKE OF BREVITY. CORRECT? 

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DONALDSON CROSS BY MR. PAIGE

UNITED STATES COURT REPORTERS

979

A. THAT IS CORRECT.

Q. AND WHEN YOU WERE AT TI, YOU ENTERED INTO LICENSES WITH 

COMPUTER MANUFACTURERS WHO ALSO BOUGHT CHIPS FROM TI; CORRECT? 

A. THAT IS CORRECT.

Q. AND IN THOSE SITUATIONS, THE COMPUTER MAKERS PAID A 

ROYALTY TO TI; RIGHT? 

A. FOR THE COMPUTER, THAT IS CORRECT. 

Q. AND THE COMPUTER MAKERS, THEY ALSO PAID TI FOR THE CHIPS 

THEY BOUGHT FROM TI; CORRECT? 

A. THAT IS CORRECT. 

Q. AND THERE WAS NOTHING WRONG WITH THE COMPUTER MAKERS 

PAYING ROYALTIES TO TI AND ALSO PAYING TO BUY CHIPS; RIGHT? 

A. I THINK I WOULD AGREE WITH THAT. 

I WOULD ALSO NOTE THAT SOME -- 

Q. THANK YOU, MR. DONALDSON. 

AND AT TI, YOU TREATED LICENSING AND CHIP SALES AS 

SEPARATE BUSINESSES; RIGHT? 

A. I THINK THAT IS CORRECT. 

Q. AND TI, IT ALSO MADE AN INTENTIONAL EFFORT NOT TO LICENSE 

COMPONENT MANUFACTURERS TO SYSTEM LEVEL PATENTS; RIGHT? 

A. I THINK THAT IS BASICALLY CORRECT. 

Q. NOW, IN YOUR REPORT YOU MENTIONED STUDIES OF CELLULAR SEPS 

THAT HAVE BEEN CREATED BY NUMEROUS FIRMS THAT ATTEMPT TO 

INDEPENDENTLY ASSESS, OR DEEM, WHICH PATENTS ARE ESSENTIAL; 

RIGHT? 

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DONALDSON CROSS BY MR. PAIGE

UNITED STATES COURT REPORTERS

980

A. I THINK MY REPORT MAKES REFERENCE TO THAT.

Q. AND YOU UNDERSTAND THAT THOSE STUDIES GENERALLY AGREE THAT 

QUALCOMM HAS ONE OF THE LEADING PORTFOLIOS OF DEEMED SEPS 

RELATED TO CDMA, UMTS WCDMA, AND LTE; RIGHT? 

A. I'M NOT SURE I WOULD GO THAT FAR. I DIDN'T REALLY STUDY 

THAT. I MADE REFERENCE TO IT, BUT THAT WASN'T PART OF MY JOB. 

I WAS LOOKING AT THE LICENSING DYNAMICS AND NEGOTIATIONS, 

NOT TRYING TO ASCERTAIN THE CORRECTNESS OF THESE OTHER 

NEGOTIATIONS.

Q. SIR, MY QUESTION WAS ABOUT THE STUDIES. DO THEY GENERALLY 

AGREE THAT QUALCOMM HAS ONE OF THE LEADING PORTFOLIOS OF DEEMED 

SEPS RELATED TO CDMA, UMTS, AND LTE? 

A. I DON'T KNOW. WHEN YOU ASK "DO I AGREE?" THE DOCUMENTS 

SHOW WHAT THEY SHOW.

Q. COULD I ASK YOU TO TURN TO PARAGRAPH 33 OF YOUR REPORT, 

SIR. AND -- ARE YOU THERE, SIR? 

A. I SEE THAT.

Q. AND DO YOU SEE WHERE YOU WROTE, THESE STUDIES GENERALLY 

AGREE THAT QUALCOMM HAS ONE OF THE LEADING PORTFOLIOS OF DEEMED 

SEPS RELATED TO CDMA, UMTS WCDMA, AND LTE? 

A. YES, I SEE THAT SENTENCE.

Q. OKAY. AND THE UPSHOT OF THAT IS THAT QUALCOMM HAS 

LITERALLY THOUSANDS AND THOUSANDS OF SEPS; RIGHT? 

A. I HAVEN'T STUDIED THAT, BUT I BELIEVE THAT'S PROBABLY 

CORRECT.

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DONALDSON CROSS BY MR. PAIGE

UNITED STATES COURT REPORTERS

981

Q. OKAY. NOW, YOU HAD RESPONSIBILITY FOR DEVELOPING CERTAIN 

LICENSING PROGRAMS FOR TI; CORRECT? 

A. THAT IS CORRECT. 

Q. BUT DURING YOUR TIME AT TI, YOU DIDN'T HAVE DIRECT 

RESPONSIBILITY FOR DEVELOPING ANY LICENSING PROGRAMS REGARDING 

CELLULAR WIRELESS PATENTS; CORRECT? 

A. TI DID NOT HAVE A SEPARATE LICENSING PROGRAM FOR THAT 

CATEGORY OF PATENTS.

Q. AND YOU DIDN'T HAVE ANY DIRECT RESPONSIBILITY FOR 

DEVELOPING ANY STRATEGIES RELATING TO CELLULAR WIRELESS 

PATENTS; CORRECT? 

A. I DON'T THINK I WOULD AGREE WITH THAT. 

Q. CAN WE PLAY THE DEPO AT 9:25 THROUGH 10:5, PLEASE. 

(A VIDEOTAPE WAS PLAYED IN OPEN COURT OFF THE RECORD.) 

MS. GILLEN: OBJECTION, YOUR HONOR. THIS IS IMPROPER 

IMPEACHMENT. THERE'S AN EXPLANATION IN THIS AFTER THE 

QUESTION. 

THE COURT: I CAN'T EVEN FIND IT IN THE DEPOSITION. 

IS THIS PAGE 9? 

MR. PAIGE: IT'S PAGE 9, STARTING ON 25 THROUGH PAGE 

10:5. 

THE COURT: ALL RIGHT. GO AHEAD, PLEASE.

BY MR. PAIGE: 

Q. SIR, WERE YOU ASKED THAT QUESTION AND DID YOU GIVE THAT 

ANSWER? 

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DONALDSON CROSS BY MR. PAIGE

UNITED STATES COURT REPORTERS

982

A. YES, I DID. AND I THINK THE NEXT SENTENCE EXPLAINS THE 

CONTEXT.

Q. DO YOU STAND BY THAT TESTIMONY TODAY, SIR? 

A. YEAH, TOGETHER WITH THE NEXT SENTENCE, YES. 

Q. YOU DON'T KNOW IF A PERCENTAGE OF TI'S PATENTS WERE 

STANDARD ESSENTIAL PATENTS; RIGHT? 

A. I DON'T, BECAUSE WE INTENTIONALLY DID NOT SEEK -- 

Q. THANK YOU, MR. DONALDSON. 

THE COURT: YOU'VE GOT TO LET HIM ANSWER THE 

QUESTION. YOU'RE CUTTING HIM OFF ALL THE TIME. SO YOU SHOULD 

AT LEAST LET HIM FINISH. 

IF HE GOES OFF, THEN I WOULD CUT HIM OFF, OKAY, IF WHAT HE 

SAYS GOES INTO A NARRATIVE. 

BUT YOU SHOULD AT LEAST LET HIM FINISH THE SENTENCE. 

GO AHEAD, PLEASE. 

MR. PAIGE: THANK YOU, YOUR HONOR. 

THE WITNESS: AND MY POINT WAS WE INTENTIONALLY MADE 

THE DECISION NOT TO SEEK STANDARD ESSENTIAL PATENTS BECAUSE OF 

OUR UNDERSTANDING OF THEIR NOT BEING VALUABLE, AND WE 

INTENTIONALLY PUBLISHED, LIKE, THE FANCY PUBLICATIONS INSTEAD 

OF SEEKING PATENTS.

BY MR. PAIGE: 

Q. OKAY. SO YOU HAVE NO REASON TO BELIEVE THAT TI HAD 

THOUSANDS AND THOUSANDS OF STANDARD ESSENTIAL PATENTS LIKE 

QUALCOMM HAS; RIGHT? 

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DONALDSON CROSS BY MR. PAIGE

UNITED STATES COURT REPORTERS

983

A. NO. I KNOW FOR A FACT THEY DID NOT AT THE TIME I WAS 

THERE. 

Q. OKAY.

THE COURT: I'M SORRY, I'M GOING TO INTERRUPT. 

IT'S 12:01. LET'S GO AHEAD, PLEASE, AND TAKE OUR ONE HOUR 

LUNCH BREAK. 

WE'RE IN RECESS. GO AHEAD, PLEASE. 

MR. PAIGE: THANK YOU, YOUR HONOR. 

(THE LUNCH RECESS WAS TAKEN FROM 12:02 P.M. UNTIL 

1:03 P.M.) 

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DONALDSON CROSS BY MR. PAIGE

UNITED STATES COURT REPORTERS

984

AFTERNOON SESSION

(COURT CONVENED AT 1:03 P.M.) 

THE COURT: OKAY. GOOD AFTERNOON AND WELCOME BACK. 

PLEASE TAKE A SEAT. 

FOR THE HIGH PRIORITY EVIDENTIARY OBJECTIONS FOR NEXT 

TUESDAY, PLEASE FILE THOSE BY THIS FRIDAY AT 8:00 A.M. OKAY? 

MONDAY IS A COURT HOLIDAY, SO WE WILL NOT HAVE TRIAL ON MONDAY. 

AND I'D ASK THE PARTIES TO FILE YOUR SEALING MOTIONS WITH 

YOUR HIGH PRIORITY OBJECTIONS IF NOT THE DAY BEFORE. OKAY. I 

DON'T WANT ANY SEALING -- YOUR SEALING MOTIONS SHOULD BE 

TIMELY. THEY SHOULD BE FILED A FULL BUSINESS DAY BEFORE YOU 

PLAN TO USE IT. 

OKAY. I'D ALSO LIKE TO LIMIT THE NUMBER OF CLOSING 

ARGUMENT SLIDES TO 50. 

AND YOU HAVE TO USE THEM ALL, YOU CAN'T JUST USE THAT AS A 

DE FACTO BRIEF AND STUFF A LOT OF ARGUMENT IN THERE. YOU'VE 

GOT TO USE EACH SLIDE, AND IT'LL BE 50 SLIDES. 

MR. VAN NEST: I'M SORRY. YOU SAID 50, 5-0. 

THE COURT: 5-0. 

ALL RIGHT. LET'S GO AHEAD AND RESUME THE 

CROSS-EXAMINATION. 

AND I'M GOING TO ASK -- YOU'VE BEEN CUTTING THE WITNESSES 

OFF AFTER THEY SAY TWO OR THREE WORDS. I FIND THAT REALLY 

IMPROPER. I'VE BEEN VERY TOLERANT AND HAVEN'T SAID ANYTHING 

UNTIL THE END, BUT I THINK YOU SHOULD LET THEM FINISH THEIR 

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DONALDSON CROSS BY MR. PAIGE

UNITED STATES COURT REPORTERS

985

SENTENCE. YOU DON'T GET TO CUT THEM OFF AFTER TWO WORDS OR 

THREE WORDS, WHICH IS WHAT YOU'VE BEEN DOING WITH BOTH 

WITNESSES. 

SO IF YOU CONTINUE TO DO THAT, I WILL FIGURE OUT SOME 

CONSEQUENCE, SO PLEASE DON'T. 

MR. PAIGE: UNDERSTOOD, YOUR HONOR. 

THE COURT: ALL RIGHT. GO AHEAD, PLEASE. IT'S 1:04. 

MR. PAIGE: THANK YOU, YOUR HONOR. 

Q. MR. DONALDSON, BEFORE LUNCH WE WERE TALKING ABOUT HOW 

TEXAS INSTRUMENTS DIDN'T OWN THOUSANDS AND THOUSANDS OF SEP 

PATENTS. AND, IN FACT, IN YOUR DEPOSITION YOU DISCUSSED TEXAS 

INSTRUMENTS LICENSING PRACTICES USUALLY INVOLVED LOOKING AT 

ABOUT 50 PATENTS AT A TIME; CORRECT?

A. THAT IS CORRECT.

Q. NOW, YOU RETIRED FROM TI IN 2000; RIGHT?

A. THAT IS CORRECT. 

Q. AND THAT WAS ABOUT THE TIME THAT 3G STANDARDS LIKE WCDMA 

WERE BEING IMPLEMENTED; RIGHT? 

A. I'M NOT SURE ABOUT THE EXACT DATE. 

Q. OKAY. AND IT WAS ALMOST A DECADE BEFORE THE 4G LTE 

STANDARD WAS OBVIOUSLY ADOPTED; RIGHT? 

A. THAT TIME IS PROBABLY ABOUT CORRECT. 

Q. AND IT WAS MORE THAN A DECADE BEFORE THE COURT CASES ON 

FRAND THAT YOU CITE IN YOUR EXPERT REPORT WERE DECIDED; RIGHT? 

A. I WOULD HAVE TO GO BACK AND LOOK AT WHAT THE EARLIEST 

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DONALDSON CROSS BY MR. PAIGE

UNITED STATES COURT REPORTERS

986

DATE, BUT IT WAS SOMETIME.

Q. YOU'RE NOT AN ECONOMIST, SIR, ARE YOU?

A. I AM NOT.

Q. AND YOU HAVEN'T CONDUCTED ANY RESEARCH IN THE ECONOMIC 

FIELD OF BARGAINING THEORY; CORRECT? 

A. PROBABLY NOT INTENTIONAL RESEARCH THAT YOU WOULD HAVE IN A 

UNIVERSITY, FOR EXAMPLE. 

Q. OKAY. AND YOU'VE NEVER PERSONALLY ATTENDED ANY MEETINGS 

OF ANY STANDARD SETTING ORGANIZATIONS; RIGHT? 

A. I PERSONALLY HAVE NOT. 

Q. OKAY. HOWEVER, YOU HAVE DONE WORK FOR PRIVATE PARTIES AND 

AS AN EXPERT IN LITIGATION OVER THE PAST 18 YEARS; CORRECT? 

A. THAT IS CORRECT.

Q. AND ONE OF THE PRIVATE PARTIES FOR WHOM YOU HAVE WORKED 

REPEATEDLY IS APPLE; CORRECT? 

A. I HAVE HAD SEVERAL ENGAGEMENTS WITH APPLE. 

Q. IN FACT, SINCE 2012, YOU'VE GIVEN A DEPOSITION ON BEHALF 

OF APPLE FOUR TIMES; RIGHT? 

A. THAT COULD BE POSSIBLE. I DON'T RECALL THEM OFF THE TOP 

OF MY HEAD.

Q. AND SINCE 2012, YOU'VE TESTIFIED AT TRIAL TWICE FOR APPLE; 

RIGHT? 

A. THAT'S PROBABLY CORRECT. 

Q. OKAY. AND YOU'RE AWARE THAT APPLE HAS ENTERED INTO A 

COMMON INTEREST AGREEMENT WITH THE FTC IN CONNECTION WITH THIS 

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DONALDSON CROSS BY MR. PAIGE

UNITED STATES COURT REPORTERS

987

LITIGATION, AREN'T YOU? 

A. I AM NOT. 

Q. YOU DIDN'T KNOW THAT? 

A. I DID NOT.

Q. OKAY. ARE YOU AWARE THAT APPLE HAS FILED SEPARATE 

LITIGATION AGAINST QUALCOMM IN THE SOUTHERN DISTRICT OF 

CALIFORNIA? 

A. NOT OF ANY PARTICULARS.

Q. OKAY. BUT YOU -- YOU UNDERSTOOD, WHEN YOU WROTE YOUR 

REPORT, THAT THAT LITIGATION INCLUDES FRAND AND ANTITRUST 

ISSUES; CORRECT? 

A. CAN YOU SHOW ME MY REPORT?

Q. SURE. 

A. I DON'T RECALL THAT EXACT WILL HE.

Q. IT'S THE END OF PARAGRAPH 60, SIR. 

A. YES, I SEE THAT.

Q. OKAY. AND YOU UNDERSTAND THAT APPLE, THEREFORE, HAS A 

FINANCIAL INTEREST IN THE OUTCOME OF THIS CASE; RIGHT? 

A. IT SOUNDS REASONABLE. I HAVE NO PERSONAL UNDERSTANDING OF 

THAT. 

Q. MR. DONALDSON, TI HAD SOME PATENTS THAT YOU THOUGHT WERE 

EXTREMELY VALUABLE; RIGHT? 

A. CERTAINLY DURING MY TENURE AT TI, THAT IS CORRECT.

Q. AND ON THE OTHER HAND, DURING YOUR TENURE AT TI, TI HAD 

SOME PATENTS THAT WERE NOT AS VALUABLE AS OTHERS; CORRECT? 

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DONALDSON CROSS BY MR. PAIGE

UNITED STATES COURT REPORTERS

988

A. THAT WOULD ALSO BE CORRECT.

Q. SO YOU WOULD AGREE THAT NOT ALL PATENTS ARE CREATED EQUAL? 

SOME PATENTS ARE MORE VALUABLE THAN OTHERS; RIGHT?

A. WE ARE TALKING ABOUT PATENTS IN GENERAL, AND I WOULD AGREE 

WITH THAT.

Q. OKAY. IN FACT, YOU'VE TESTIFIED THAT A SINGLE PATENT CAN 

DOMINATE AN ENTIRE INDUSTRY; RIGHT? 

A. COULD YOU SHOW ME THE CONTEXT OF THAT?

Q. IT WAS DURING YOUR DEPOSITION, SIR? 

A. DO YOU HAVE A PLACE?

Q. I DO. IT'S PAGE 236, LINE 10 THROUGH 237, LINE 2. 

A. 236. YES, THIS IS WITH REFERENCE TO THE KILBY BASIC 

INTEGRATED CIRCUIT FOR WHICH HE RECEIVED A NOBEL PRIZE, AND 

THAT WAS A VERY IMPORTANT PATENT.

Q. YOU SAID IT DOMINATED THE ENTIRE INDUSTRY; RIGHT, SIR?

A. YES.

Q. THAT ONE PATENT? 

A. YOU COULD NOT BUILD AN INTEGRATED CIRCUIT WITHOUT USING 

THAT PATENT.

Q. OKAY. BUT YOU DIDN'T INVESTIGATE ANY SPECIFIC QUALCOMM 

PATENTS TO SEE WHETHER THEY, TOO, MIGHT BE THE KIND OF PATENT 

THAT DOMINATES THE INDUSTRY, DID YOU? 

A. I DID NOT. THAT WASN'T PART OF WHAT I WAS ASKED TO DO AND 

I DID NOT DO THAT.

Q. OKAY. YOUR UNDERSTANDING IS THAT QUALCOMM HAS GENERALLY 

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DONALDSON CROSS BY MR. PAIGE

UNITED STATES COURT REPORTERS

989

BEEN ACKNOWLEDGED IN THE INDUSTRY TO HAVE A GOOD POSITION WITH 

RESPECT TO 2G CDMA; RIGHT? 

A. PROBABLY AS A GENERAL UNDERSTANDING. I HAVEN'T PERSONALLY 

INVESTIGATED THAT. 

Q. WELL, YOU UNDERSTOOD THAT QUALCOMM IS ONE OF THE ORIGINAL 

DEVELOPERS OF 2G CDMA TECHNOLOGY; RIGHT? 

A. YES, I UNDERSTOOD THAT. 

Q. OKAY. AND YOU'VE SUGGESTED IN YOUR TESTIMONY THAT 

QUALCOMM'S PORTFOLIO MAY HAVE CHANGED FOR THE WORSE OVER TIME 

WITH QUALCOMM'S SEP POSITION IN LTE BEING WEAKER THAN IN 

PREVIOUS STANDARDS; RIGHT? 

A. THAT TYPE OF A GENERAL STATEMENT, YES.

Q. BUT YOU HAVEN'T DONE ANY INDEPENDENT ANALYSIS OF WHETHER 

QUALCOMM'S POSITION, SEP POSITION IN LTE IS WEAKER THAN ITS 

POSITION IN OTHER STANDARDS; RIGHT? 

A. I HAVE NOT DONE THAT. I WAS NOT ASKED TO DO THAT.

Q. OKAY. AND YOU ALSO DIDN'T INQUIRE INTO THE PATENTS THAT 

QUALCOMM HAS ADDED TO ITS PORTFOLIO IN 3G; RIGHT? 

A. NOT ANY SPECIFIC PATENT, THAT IS CORRECT. 

Q. NOR DID YOU UNDERTAKE ANY ANALYSIS THAT WOULD COMPARE 

QUALCOMM'S NEW PATENTS WITH THOSE THAT WERE EXPIRING TO SEE 

WHICH SET OF PATENTS WERE MORE VALUABLE, DID YOU? 

A. AGAIN, I WAS NOT ASKED TO DID THAT, AND I DID NOT DO THAT.

Q. YOU SUGGESTED IN YOUR DIRECT TESTIMONY THAT QUALCOMM'S 

ROYALTY RATES DISPLAYED AN ODD CONSISTENCY FROM LICENSE TO 

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DONALDSON CROSS BY MR. PAIGE

UNITED STATES COURT REPORTERS

990

LICENSE; RIGHT? 

A. YES. 

Q. BUT YOU'RE AWARE THAT QUALCOMM NEGOTIATED ROYALTY RATES 

THAT DIFFER FROM ITS STANDARD RATES WITH ERICSSON; RIGHT? 

A. ERICSSON WAS ONE OF THE ANOMALIES, THAT IS CORRECT.

Q. AND QUALCOMM NEGOTIATED ROYALTY RATES THAT DIFFER FROM ITS 

STANDARD RATES WITH SAMSUNG; CORRECT? 

A. THAT IS -- THEY HAD SOME ANOMALIES. BUT I ALSO UNDERSTAND 

FROM QUALCOMM'S OWN TESTIMONY THAT THEY CONSIDERED ALL OF THESE 

ANOMALIES TO STILL CONFORM WITH THEIR STANDARD RATE. 

Q. OKAY. AND I'M JUST TALKING ABOUT THE RATES. IT 

NEGOTIATED RATES THAT DIFFERED FROM ITS STANDARD RATES WITH 

MOTOROLA AS WELL; RIGHT? 

A. THAT IS CORRECT.

Q. AND IT NEGOTIATED RATES THAT DIFFERED FROM ITS STANDARD 

RATES WITH NOKIA; RIGHT? 

A. I BELIEVE THAT IS ALSO CORRECT.

Q. AND IT NEGOTIATED ROYALTY RATES THAT DIFFERED FROM ITS 

STANDARD RATES WITH BLACKBERRY; CORRECT? 

A. THAT IS THE RATE THEMSELVES, IF YOU IGNORE THE UPFRONT 

PAYMENTS OF BILLIONS OF DOLLARS AND THINGS LIKE THAT, I THINK 

THAT IS CORRECT. 

Q. AND QUALCOMM HAS ENTERED INTO LICENSES THAT DIFFER IN THE 

AMOUNT OF THE UPFRONT FEE PAID; RIGHT? 

A. I HAVEN'T REALLY ANALYZED THAT.

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DONALDSON CROSS BY MR. PAIGE

UNITED STATES COURT REPORTERS

991

Q. OKAY. NOW, YOU TALKED A BIT ABOUT LITIGATION FOR PATENTS 

AND ENFORCEMENT OF PATENTS. 

YOU DIDN'T INVESTIGATE WHAT ARBITRATIONS OVER RATES 

QUALCOMM HAS ENGAGED IN; RIGHT? 

A. I DID NOT SPECIFICALLY LOOK AT THAT ASPECT, NO. 

Q. OKAY. THAT'S NOWHERE IN YOUR REPORT, IS IT, SIR? 

A. I'M NOT SURE.

Q. OKAY. YOU AGREE THAT PATENT LITIGATION CAN BE RISKY; 

RIGHT? 

A. IT CAN BE. 

Q. AND WHEN YOU WERE AT TI, THERE WAS A BIG RELUCTANCE TO 

ACTUALLY TEST SOME OF THE TI'S MOST VALUABLE PATENTS IN COURT; 

RIGHT? 

A. DURING THE PERIOD OF TIME BEFORE THE COURT OF APPEALS FOR 

THE FEDERAL CIRCUIT, THAT WAS CORRECT.

Q. OKAY. AND, IN FACT, YOU'VE CHARACTERIZED TI'S LEERINESS 

TO RISK ITS VALUABLE PATENTS IN LITIGATION AS COUNTER LEVERAGE 

AGAINST TI AS A LICENSOR, HAVEN'T YOU? 

A. COULD YOU SHOW ME WHERE THAT IS?

Q. THAT'S ON PAGE 107 OF YOUR DEPOSITION, SIR, STARTING AT 

LINE 19. 

(PAUSE IN PROCEEDINGS.) 

THE WITNESS: YES, THIS REFERENCE IS TO A TIME PERIOD 

BEFORE THE CAFC WHERE SOME OF OUR COURTS WERE -- HAD A PERFECT 

RECORD OF FINDING PATENTS INVALID.

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DONALDSON CROSS BY MR. PAIGE

UNITED STATES COURT REPORTERS

992

BY MR. PAIGE: 

Q. BUT YOU AGREE THAT THE POSSIBILITY OF INVALIDITY IS 

COUNTER LEVERAGE AGAINST A LICENSOR; RIGHT? 

A. IN THAT TYPE OF ENVIRONMENT, YES. 

BUT AFTER THE COURT OF APPEALS FEDERAL CIRCUIT, TI DID 

RESORT TO LITIGATION OF THE PATENTS IT CONSIDERED TO BE 

VALUABLE. 

Q. NOW, YOU'RE NOT OFFERING ANY OPINION AS TO THE FRAND RATE 

FOR QUALCOMM'S PATENT PORTFOLIO; RIGHT?

A. I AM NOT. I WAS NOT ASKED TO LOOK AT THAT.

Q. NOR ARE YOU OFFERING ANY OPINION FOR THE ROYALTY RATE -- 

AS TO THE ROYALTY RATE THAT ANY OEM WOULD HAVE AGREED TO PAY TO 

QUALCOMM IN THE ABSENCE OF WHAT YOU CALL CHIP LEVERAGE; RIGHT? 

A. AS TO AN ACTUAL ROYALTY RATE, I HAVE NO OPINION ON THAT.

Q. OKAY. NOW, EVEN IF CHIP LEVEL LICENSING WERE FEASIBLE, 

YOU AGREE THAT THE PRACTICE THAT HAS GROWN UP IN THE CELLULAR 

INDUSTRY IS THAT COMPANIES TAKE LICENSES AT THE DEVICE LEVEL; 

RIGHT? 

A. THAT HAS BEEN THE COMMON APPROACH, I WOULD AGREE. 

Q. FOR PURPOSES OF REACHING THE OPINIONS YOU EXPRESSED IN 

YOUR REPORT, YOU DIDN'T DO ANY RESEARCH INTO WHETHER THERE ARE 

ANY OEM'S WHO HAVE NEVER USED QUALCOMM CHIPS; RIGHT? 

A. I DID NOT CONDUCT RESEARCH INTO THAT SUBJECT, NO.

Q. OKAY. AND LIKEWISE, YOU DIDN'T DO ANY RESEARCH INTO 

WHETHER THERE ARE ANY OEM'S WHO HAVE NEVER INTENDED TO USE 

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DONALDSON CROSS BY MR. PAIGE

UNITED STATES COURT REPORTERS

993

QUALCOMM'S CHIPS; RIGHT? 

A. THAT IS ALSO CORRECT.

Q. AND YOU HAVEN'T DONE ANY ANALYSIS AT ALL, OR RANDOM SAMPLE 

OF, QUALCOMM LICENSEES TO DETERMINE IF AND TO WHAT EXTENT THE 

LICENSEES WERE DEPENDENT ON QUALCOMM'S CHIP AT ANY POINT IN 

TIME; RIGHT? 

A. CAN I HAVE THAT QUESTION AGAIN?

Q. YOU HAVEN'T DONE ANY ANALYSIS AT ALL OF ALL OR A RANDOM 

SAMPLE OF QUALCOMM'S LICENSEES TO DETERMINE IF, OR TO WHAT 

EXTENT, THE LICENSEES WERE DEPENDENT ON QUALCOMM'S CHIPS AT ANY 

POINT IN TIME; RIGHT? 

A. I DON'T THINK I CAN AGREE WITH THAT STATEMENT. 

Q. OKAY. SO SINCE YOU DIDN'T RESEARCH OEM'S THAT DON'T USE, 

OR DON'T INTEND TO USE QUALCOMM CHIPS, YOU CAN'T SAY WHETHER 

NEGOTIATIONS FOR LICENSES BY SUCH OEM'S RESULT IN DIFFERENT 

TERMS TO QUALCOMM; RIGHT? 

A. I HAVE NOT LOOKED AT THE ENTIRE UNIVERSE. I LOOKED AT THE 

RECORD THAT WAS DEVELOPED IN THIS CASE AND TESTIMONY FROM THOSE 

COMPANIES THAT DID ENGAGE AND DID CONSIDER USE OF QUALCOMM 

CHIPS TO BE ESSENTIAL TO THEIR FUTURE. 

Q. OKAY. YOUR TESTIMONY COMES FROM YOUR REVIEW OF CERTAIN 

DOCUMENTS IN THE RECORD IN THIS CASE; RIGHT? 

A. A VERY LARGE NUMBER OF DOCUMENTS IN THIS CASE, YES.

Q. AND YOU WERE SUPPLIED WITH THOSE DOCUMENTS BY COUNSEL FOR 

THE FTC; CORRECT? 

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DONALDSON REDIRECT BY MS. GILLEN

UNITED STATES COURT REPORTERS

994

A. YES. I ASKED COUNSEL FOR FTC TO SUPPLY DOCUMENTS RELATING 

TO CERTAIN SUBJECT MATTER AND DEPENDED UPON THEM TO SEND ME 

THOSE DOCUMENTS.

Q. AND YOU DIDN'T DO ANY REVIEW OF THE DOCUMENT PRODUCTIONS 

IN THIS CASE OTHER THAN WHAT WAS PROVIDED TO YOU BY THE FTC 

COUNSEL; RIGHT? 

A. THAT IS CORRECT. 

MR. PAIGE: THANK YOU. NO FURTHER QUESTION 

ATTENTION. 

THE COURT: ALL RIGHT. TIME IS 1:18. 

I FIGURED OUT WHAT THE PENALTY IS. IF SOMEONE CUTS OFF A 

WITNESS AFTER TWO OR THREE WORDS, I'M GOING TO START DEDUCTING 

TWO MINUTES OF TRIAL TIME FOR EACH SUCH BEHAVIOR. 

ALL RIGHT. ARE YOU READY TO GO? 

MS. GILLEN: YES. 

THE COURT: OKAY. 1:18. GO AHEAD, PLEASE. 

REDIRECT EXAMINATION

BY MS. GILLEN:

Q. MR. DONALDSON, YOU TESTIFIED EARLIER THAT RELATIVE 

BARGAINING POWER OF THE PARTIES MAY CHANGE WHEN THE PARTIES ARE 

NEGOTIATING A LICENSE FOR STANDARD ESSENTIAL PATENTS. 

DO YOU RECALL THAT? 

A. YES. 

Q. AND AS A LICENSING PROFESSIONAL, HOW DOES THE ABILITY TO 

DESIGN AROUND CHANGE FOR A PROSPECTIVE LICENSEE WHEN STANDARD 

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DONALDSON REDIRECT BY MS. GILLEN

UNITED STATES COURT REPORTERS

995

ESSENTIAL PATENTS ARE INVOLVED? 

A. WELL, FOR A STANDARD ESSENTIAL PATENT, IT COMPLETELY 

ELIMINATES THAT ALTERNATIVE, WHICH, IN MY EXPERIENCE, HAS BEEN 

A VERY VALUABLE ALTERNATIVE. 

IF IT'S A STANDARD ESSENTIAL PATENT, THERE ARE NO DESIGN 

AROUNDS AND IT WEAKENS HIS BARGAINING POSITION.

Q. AND AS A LICENSING PROFESSIONAL, HOW DOES THE ABILITY TO 

USE THE LEVERAGE OF A POTENTIAL INJUNCTION CHANGE WHEN STANDARD 

ESSENTIAL PATENTS ARE INVOLVED? 

MR. PAIGE: SORRY, YOUR HONOR. THIS APPEARS TO BE 

OUTSIDE THE SCOPE OF CROSS-EXAMINATION. 

THE COURT: WHAT'S YOUR RESPONSE TO THAT? 

MS. GILLEN: THIS TOPIC RELATES TO THE BARGAINING 

POWER TOPICS THAT MR. PAIGE ASKED MR. DONALDSON ABOUT. 

THE COURT: AND WHAT WERE THOSE? 

MS. GILLEN: HIS EXPERIENCE IN EXPLAINING THE 

RELATIVE BARGAINING LEVERAGE DURING THE NEGOTIATIONS.

MR. PAIGE: I BELIEVE THAT WAS ON DIRECT, NOT MY 

CROSS. 

THE COURT: NO. BUT YOU ASKED ABOUT THE LEVERAGE. 

OVERRULED. 

SIT DOWN, PLEASE. 

GO AHEAD. 

BY MS. GILLEN:

Q. I'LL REPEAT THAT. 

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DONALDSON REDIRECT BY MS. GILLEN

UNITED STATES COURT REPORTERS

996

A. OKAY. 

Q. AS A LICENSING PROFESSIONAL, HOW DOES THE ABILITY TO USE A 

LEVERAGE OF A POTENTIAL INJUNCTION CHANGE WHEN STANDARD 

ESSENTIAL PATENTS ARE INVOLVED? 

A. I THINK THEY'RE -- IN THE REALM OF STANDARD ESSENTIAL 

PATENTS, MY UNDERSTANDING OF WHERE WE ARE IS THAT INJUNCTIONS 

ARE -- COULD BE PROBLEMATIC IF IT'S A STANDARD ESSENTIAL PATENT 

FOR WHICH SOMEONE HAS SAID THEY WOULD GRANT A LICENSE. 

AND THAT WAS MY UNDERSTANDING WHEN I NEGOTIATED LICENSES 

AT TI, THAT, WORST CASE, YOU COULD ALWAYS PAY -- FOR TI'S 

POSITION, WE COULD ALWAYS PAY WHAT A COURT AGREED WAS A FAIR 

ROYALTY AND THERE WOULD BE NO INJUNCTION. 

Q. THANK YOU. 

QUALCOMM'S COUNSEL ASKED YOU EARLIER WHETHER TI LICENSED 

COMPONENT MAKERS TO SYSTEM LEVEL PATENTS. 

DO YOU REMEMBER THAT? 

A. THAT IS CORRECT. 

Q. NOW, DID TI LICENSE ITS CHIP LEVEL PATENTS TO CHIP MAKERS? 

A. WE DID. 

AND I SUSPECT THERE SHOULD BE ONE LITTLE CLARIFICATION. 

WHEN THE LICENSEE WAS A VERTICALLY INTEGRATED COMPANY, 

SOMETIMES ONE TRANSACTION WOULD LICENSE AN ENTIRE PORTFOLIO. 

SO IT WOULD COVER BOTH A CHIP LEVEL AND SYSTEM LEVEL. 

Q. NOW, QUALCOMM'S COUNSEL ALSO ASKED YOU WHETHER TI HAD 

SEPARATE GROUPS OR DIVISIONS FOR LICENSING AND CHIP SALES. 

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DONALDSON REDIRECT BY MS. GILLEN

UNITED STATES COURT REPORTERS

997

DO YOU REMEMBER THAT? 

A. THAT IS CORRECT. 

Q. AND DID TI HAVE A POLICY OF REFUSING TO SELL CHIPS TO 

CUSTOMERS UNLESS THEY TOOK A SEPARATE I.P. LICENSE -- 

A. NEVER.

Q. -- COVERING END DEVICES? 

A. NEVER. 

Q. QUALCOMM'S COUNSEL ALSO ASKED YOU ABOUT YOUR 

RESPONSIBILITY FOR WIRELESS SEPS WHILE AT TI. 

DO YOU REMEMBER THAT?

A. YES.

Q. CAN YOU EXPAND ON THE ANSWER YOU PROVIDED TO QUALCOMM'S 

COUNSEL AND TELL ME WHAT RESPONSIBILITY YOU HAD FOR CELLULAR 

WIRELESS STANDARD ESSENTIAL PATENTS? 

A. WELL, I THINK THE, THE DIRECT ANSWER, I DID NOT DEVELOP A 

SEPARATE LICENSING PROGRAM TO AFFIRMATIVELY LICENSE STANDARD 

ESSENTIAL PATENTS THAT TI OWNED. 

BUT I DID DEVELOP A STRATEGY FOR HOW TO DEAL WITH STANDARD 

ESSENTIAL PATENTS IN THE AGREEMENTS I NEGOTIATED TO ENSURE THAT 

TI HAD ACCESS TO ALL PATENTS, INCLUDING STANDARD ESSENTIAL 

PATENTS, THAT COULD BE USED IN OUR PRODUCTS. 

Q. QUALCOMM'S COUNSEL ALSO ASKED YOU ABOUT SITUATIONS IN 

WHICH TI'S CUSTOMERS PAID TI FOR BOTH CHIPS IT WAS PURCHASING 

AND ROYALTIES ON AN END DEVICE COMPUTER. 

DO YOU RECALL THAT? 

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DONALDSON REDIRECT BY MS. GILLEN

UNITED STATES COURT REPORTERS

998

A. I DO. 

Q. NOW, WHEN TI SOLD BOTH A CHIP AND CHARGED A ROYALTY FOR AN 

END DEVICE TO A CUSTOMER, WHAT ADJUSTMENTS WOULD YOU MAKE TO 

THE END DEVICE ROYALTY BASE? 

A. A COMMON APPROACH UNDER THOSE CIRCUMSTANCES, WHETHER THAT 

END DEVICE MANUFACTURER PURCHASED CHIPS FROM TI FOR WHICH WE 

MADE A PROFIT, OR WHETHER THEY PURCHASED CHIPS FROM A TI 

LICENSEE FOR WHICH WE HAD RECEIVED A ROYALTY, WAS IF IT WAS 

MORE THAN A DE MINIMIS AMOUNT, WE WOULD PERMIT THE SYSTEM LEVEL 

MANUFACTURER TO DEDUCT THE PRICE OF THOSE CHIPS FROM THE SALES 

PRICE SO THAT THERE COULD BE NO ARGUMENT THAT TI WAS COLLECTING 

DOUBLE ROYALTIES. 

Q. SO THAT ADJUSTMENT OCCURRED REGARDLESS OF WHETHER THE 

PRICE -- OR, I'M SORRY. 

THAT ADJUSTMENT OCCURRED REGARDLESS OF WHETHER THE CHIP 

PRICE DEDUCTED WAS A CHIP PURCHASED FROM TI OR ANOTHER CHIP 

MAKER? 

A. YES. BUT, AGAIN, IT WAS FOR SOMETHING MORE THAN 

DE MINIMIS, AND TI HAD A LOT OF COMPETITORS. AND THIS DID NOT 

COME UP VERY FREQUENTLY, BUT WHEN IT DID, THAT'S THE WAY WE 

HANDLED IT.

Q. AND THAT WAS A VIABLE BUSINESS MODEL FOR TI? 

A. IT WAS. 

MS. GILLEN: THANK YOU. 

I HAVE NO FURTHER QUESTIONS. 

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UNITED STATES COURT REPORTERS

999

THE COURT: OKAY. TIME IS 1:24. 

IS THERE ANY RECROSS? 

MR. PAIGE: NO. THANK YOU, YOUR HONOR. 

THE COURT: ALL RIGHT. IS THIS WITNESS EXCUSED 

SUBJECT TO RECALL OR NOT SUBJECT TO RECALL? 

MS. GILLEN: NOT SUBJECT TO RECALL. 

MR. PAIGE: NOT SUBJECT TO RECALL, YOUR HONOR. 

THE COURT: OKAY. THEN YOU HAVE CONCLUDED YOUR TRIAL 

TESTIMONY AND YOU ARE FREE TO LEAVE. 

THE WITNESS: THANK YOU, YOUR HONOR. 

THE COURT: OKAY. I'M SORRY, I FORGOT TO ASK, WITH 

HWI-JAE CHO, IS THAT A RECALL OR NOT SUBJECT TO RECALL WITNESS? 

MR. MERBER: NOT SUBJECT TO RECALL. 

THE COURT: DO YOU AGREE WITH THAT? 

MR. BORNSTEIN: MR. CHO IS IN KOREA AND WON'T COME. 

SO NOT SUBJECT TO RECALL, YOUR HONOR. 

THE COURT: OKAY. AND THAT'S THE SAME FOR 

MR. DONALDSON, A NOT-SUBJECT-TO-RECALL WITNESS. 

SO CALL YOUR NEXT WITNESS, PLEASE. 

MS. GILLEN: YOUR HONOR, THE FTC CALLS 

CHRISTINA PETERSSON, WHOSE TESTIMONY WILL BE PRESENTED BY 

VIDEO. 

THE COURT: OKAY. AND DOES THIS NEED TO BE SEALED OR 

NOT SEALED? 

MS. GILLEN: YOUR HONOR, THE LAST THREE MINUTES OF 

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UNITED STATES COURT REPORTERS

1000

THIS 24 MINUTE VIDEO REQUIRE SEALING PURSUANT TO YOUR HONOR'S 

ORDER -- 

THE COURT: OKAY. 

MS. GILLEN: -- ON JANUARY 10TH. SO WE WILL PAUSE 

THE VIDEO AT THE APPROPRIATE TIME. 

THE COURT: AND I'LL HAVE TO ASK EVERYONE TO LEAVE? 

MS. GILLEN: YES. 

THE COURT: OKAY. NOW, IS YOUR WITNESS AFTER THAT, 

ARE YOU GOING TO DO AN UNSEALED PORTION AND THEN DO A SEALED 

PORTION? OR -- 

MS. GILLEN: YES. 

THE COURT: OKAY. 

MS. GILLEN: AND, YOUR HONOR, JUST TO CLARIFY, THERE 

ARE CERTAIN EXHIBITS INTRODUCED IN THIS DEPOSITION THAT ARE 

ALSO SUBJECT TO YOUR HONOR'S SEALING ORDER. THE CONTENTS OF 

THOSE DOCUMENTS WILL BE UP ON THE SCREEN AND I WILL USE THE, 

THE PROJECTOR HERE TO REMOVE THOSE FROM PUBLIC VIEW. 

THE COURT: OKAY. 

MS. GILLEN: BUT THE TESTIMONY, OTHER THAN THAT FINAL 

PORTION, IS NOT SEALED. 

THE COURT: OKAY. SO DO YOU NEED TO MOVE IN 

EXHIBITS? 

MS. GILLEN: YES, I DO. 

THE COURT: OKAY. LET ME CHARGE YOU TIME. 

IT'S 1:26. GO AHEAD, PLEASE. 

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UNITED STATES COURT REPORTERS

1001

MS. GILLEN: JX 0120, WHICH IS PARTIALLY SEALED, 

CX 4103, CX 4104, AND CX 4155, WHICH IS ALSO PARTIALLY SEALED. 

THE COURT: CX 41 -- AND WHICH ONES ARE PARTIALLY 

SEALED AGAIN, PLEASE? 

MS. GILLEN: JX 0120 AND CX 4155. 

THE COURT: OKAY. ANY OBJECTION TO THESE FOUR 

EXHIBITS BEING ADMITTED? 

MR. BORNSTEIN: YES, YOUR HONOR, IN PART. 

THE COURT: ALL RIGHT. AND WHAT ARE THOSE 

OBJECTIONS? 

MR. BORNSTEIN: FOR BOTH CX 4103 -- 

THE COURT: OKAY. 

MR. BORNSTEIN: -- AND 4104, THESE ARE PRESS RELEASES 

AND WE WOULD OBJECT TO THEIR ADMISSION FOR THE TRUTH OF THE 

MATTER ASSERTED. 

THE COURT: ALL RIGHT. 

DO YOU HAVE ANY RESPONSE TO THAT? 

MS. GILLEN: YOUR HONOR, THESE EXHIBITS ARE NOT BEING 

ADMITTED FOR THE TRUTH OF THE MATTER. 

AND I'LL ALSO NOTE THAT QUALCOMM DID NOT RAISE A HIGH 

PRIORITY OBJECTION TO THE INTRODUCTION OF THESE EXHIBITS. 

THE COURT: OKAY. BUT IT SOUNDS LIKE YOU'RE IN 

AGREEMENT THAT YOU'RE NOT ASSERTING THESE FOR THE TRUTH OF THE 

MATTER ASSERTED; IS THAT CORRECT? 

MS. GILLEN: CORRECT. 

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PETERSSON DEPOSITION

UNITED STATES COURT REPORTERS

1002

THE COURT: OKAY. SO THAT CONDITION SHOULD BE NOTED, 

PLEASE, ON YOUR JOINT ADMITTED EXHIBIT LIST FOR 4103 AND 4104. 

AND THESE ARE ALL ADMITTED. 

(JOINT EXHIBIT 0120 AND PLAINTIFF'S EXHIBITS 4103, 4104, 

AND 4155 WERE ADMITTED IN EVIDENCE.) 

MS. GILLEN: THANK YOU, YOUR HONOR. 

THE COURT: ALL RIGHT. GO AHEAD, PLEASE, AND PLAY 

YOUR TAPE. 

(THE VIDEOTAPED DEPOSITION OF CHRISTINA PETERSSON WAS

PLAYED IN OPEN COURT OFF THE RECORD.)

THE COURT: I DON'T HAVE A PETERSON BINDER. I HAVE A 

BLECKER BINDER. 

THE CLERK: OH, HERE. 

THE COURT: OKAY. THANKS. 

(THE VIDEOTAPED DEPOSITION OF CHRISTINA PETERSSON WAS

PLAYED IN OPEN COURT OFF THE RECORD.) 

MS. GILLEN: YOUR HONOR, THE NEXT THREE MINUTES OF 

THE VIDEO ARE UNDER SEAL SUBJECT TO YOUR HONOR'S ORDER. 

THE COURT: OKAY. AND THEN AFTER THAT, YOU'LL HAVE A 

PUBLIC WITNESS OR A SEALED WITNESS? 

MS. GILLEN: AFTER THAT THREE MINUTE CLIP, THERE'S 

APPROXIMATELY ONE AND A HALF MORE MINUTES OF THIS VIDEO WHICH 

IS PUBLIC. 

THE COURT: OKAY. 

MS. GILLEN: AND THEN ANOTHER WITNESS, WHICH WILL BE 

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PETERSSON DEPOSITION

UNITED STATES COURT REPORTERS

1003

IN PART UNDER SEAL AND IN PART PUBLIC. 

THE COURT: AND WHICH ONE ARE YOU GOING TO DO FIRST, 

THE SEALED PART OR THE OPEN PART? 

MS. GILLEN: THE PUBLIC OPEN PART. 

THE COURT: OKAY. THEN LET ME ASK EVERYONE TO PLEASE 

STEP OUTSIDE, IT SOUNDS LIKE, FOR ABOUT FOUR MINUTES; IS THAT 

RIGHT? 

MS. GILLEN: CORRECT. 

THE COURT: OKAY. WOULD YOU PLEASE STEP OUTSIDE? 

SORRY FOR THE INCONVENIENCE. 

AND I'LL ASK THE PARTIES JUST TO MAKE SURE, ONCE THE ROOM 

HAS EMPTIED OUT, THAT YOU ARE OKAY WITH EVERYONE WHO IS STILL 

REMAINING IN THE COURTROOM.

(PROCEEDINGS UNDER SEAL FROM PAGE 1004 TO 1004.)

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PETERSSON DEPOSITION

UNITED STATES COURT REPORTERS

1005

(IN OPEN COURT.)

THE COURT: ALL RIGHT. WE'RE BACK IN OPEN COURT. 

PLEASE GO AHEAD. 

(THE VIDEOTAPED DEPOSITION OF CHRISTINA PETERSSON WAS

PLAYED IN OPEN COURT OFF THE RECORD.)

THE COURT: ALL RIGHT. 1:55. AND WAS ANY OF THIS 

COMPLETENESS TIME THAT SHOULD BE ATTRIBUTED TO QUALCOMM? 

MS. GILLEN: NO, I DO NOT BELIEVE TO. 

THE COURT: OKAY. 

ALL RIGHT. CALL YOUR NEXT WITNESS, PLEASE. 

MR. ROSS: YOUR HONOR, AARON ROSS FOR THE FEDERAL 

TRADE COMMISSION. 

AT THIS TIME THE FTC CALLS MICHAEL LASINSKI. 

THE COURT: OKAY. 

MR. ROSS: MAY I APPROACH WITH A BINDER? 

THE COURT: OH, I'M SORRY, I FORGOT TO ASK. IS 

MS. PETERSSON SUBJECT TO RECALL OR NOT SUBJECT TO RECALL? 

MS. GILLEN: NOT RECALL TO RECALL FOR THE FTC. 

MR. BORNSTEIN: ASIDE FROM OUR COUNTER, NO, YOUR 

HONOR. 

THE COURT: ALL RIGHT. THANK YOU. 

THE CLERK: PLEASE RAISE YOUR RIGHT HAND. 

(PLAINTIFF'S WITNESS, MICHAEL LASINSKI, WAS SWORN.)

THE WITNESS: YES. 

THE CLERK: PLEASE BE SEATED. PLEASE STATE YOUR FULL 

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LASINSKI DIRECT BY MR. ROSS

UNITED STATES COURT REPORTERS

1006

NAME AND SPELL YOUR LAST NAME FOR THE RECORD. 

THE WITNESS: MICHAEL JAMES LASINSKI. MY LAST NAME 

IS SPELLED L-A-S-I-N-S-K-I. 

MR. ROSS: GOOD AFTERNOON, MR. LASINSKI. 

THE WITNESS: GOOD AFTERNOON. 

THE COURT: WAIT, I'M SORRY. 

TIME IS 1:57. GO AHEAD, PLEASE.

DIRECT EXAMINATION

BY MR. ROSS: 

Q. I'D LIKE YOU TO TELL US A LITTLE BIT ABOUT YOURSELF. WHAT 

IS YOUR CURRENT POSITION? 

A. I AM THE CEO AND MANAGING DIRECTOR OF 284 PARTNERS.

Q. WHAT IS THE NATURE OF YOUR BUSINESS? 

A. WE ARE AN INTELLECTUAL PROPERTY CONSULTING FIRM. WE HELP 

COMPANIES IN LITIGATION MATTERS SURROUNDING INTELLECTUAL 

PROPERTY, AS WELL AS DO LICENSING AND OTHER TYPES OF 

INTELLECTUAL PROPERTY STRATEGY SUPPORT.

Q. HOW MANY YEARS OF EXPERIENCE DO YOU HAVE IN THE FIELD?

A. APPROXIMATELY 25. 

Q. WHAT IS YOUR EDUCATIONAL BACKGROUND? 

A. I HAVE A BACHELOR'S IN ELECTRICAL ENGINEERING, AS WELL AS 

A MASTER'S IN BUSINESS ADMINISTRATION.

Q. DO YOU HOLD ANY PROFESSIONAL CREDENTIALS? 

A. YES, I DO. I'M A CERTIFIED LICENSING PROFESSIONAL; I'M 

CERTIFIED IN FINANCIAL FORENSICS; AND I'M ALSO A CPA.

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LASINSKI DIRECT BY MR. ROSS

UNITED STATES COURT REPORTERS

1007

Q. HAVE YOU HELD ANY LEADERSHIP ROLES IN PROFESSIONAL 

ORGANIZATIONS? 

A. YES, I HAVE. I WAS THE PAST PRESIDENT OF THE LICENSING 

EXECUTIVE SOCIETY FOR U.S.A. AND CANADA. I'VE ALSO BEEN A 

DIVISION CHAIR FOR AN ABA I.P. SECTION.

Q. HAVE YOU BEEN RECOGNIZED AS A LEADER IN YOUR FIELD? 

A. YES. INTELLECTUAL ASSET MANAGEMENT PUBLISHES THE TOP 300 

LICENSING PROFESSIONALS, AND I'VE BEEN ONE OF THOSE.

Q. WE'LL GET TO YOUR SPECIFIC ASSIGNMENT IN A MOMENT, BUT ARE 

YOU HERE TO TESTIFY AS AN EXPERT ABOUT MATTERS RELATED TO 

LICENSING CELLULAR SEPS ON A FAIR, REASONABLE, AND 

NON-DISCRIMINATORY BASIS?

A. YES, I AM. 

Q. HAVE YOU EVER OFFERED EXPERT TESTIMONY IN OTHER MATTERS 

RELATED TO LICENSING SEPS ON A FRAND BASIS?

A. YES, I HAVE. 

Q. HAVE YOU EVER BEEN ADMITTED AS AN EXPERT ON MATTERS 

RELATED TO LICENSING SEPS ON A FRAND BASIS BY U.S. COURTS? 

A. YES, AS WELL AS I HAVE, AS WELL AS A U.K. COURT AND 

ARBITRATION.

Q. HAVE YOU EVER BEEN ADMITTED BY COURT ON LICENSING MATTERS 

AND ROYALTY RATE DETERMINATION IN CASES UNRELATED TO SEPS AND 

FRAND? 

A. YES, I HAVE, MANY TIMES.

Q. WHAT ARE THE GENERAL METHODOLOGIES USED IN THIS CASE? 

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LASINSKI DIRECT BY MR. ROSS

UNITED STATES COURT REPORTERS

1008

A. I USED THE, WHAT'S CALLED THE COMPARABLE AGREEMENTS 

APPROACH, AND THE TOP-DOWN APPROACH IN MY ANALYSIS.

Q. OKAY. HAVE YOU USED THE SAME GENERAL METHODOLOGY IN OTHER 

CASES? 

A. YES, I HAVE. 

Q. CAN YOU PROVIDE AN EXAMPLE? 

A. SURE. IN A RECENT CASE IN THE NORTHERN DISTRICT OF 

CALIFORNIA, HUAWEI V. SAMSUNG, I USED THOSE SAME METHODS.

Q. WAS THE METHODOLOGY CHALLENGED IN THAT CASE? 

A. YES, IT WAS. IT WAS THE SUBJECT OF A DAUBERT MOTION, BUT 

THAT MOTION WAS DENIED BY JUDGE ORRICK. 

Q. CAN YOU THINK OF ANY OTHER PUBLIC EXAMPLES WHERE THE 

TOP-DOWN APPROACH AND THE COMPARABLE AGREEMENTS APPROACH WERE 

USED? 

A. YES. WELL, IN -- FOR EXAMPLE, IN TCL V. ERICSSON, IT WAS 

USED, AND IN UNWIRED PLANET V. HUAWEI IT WAS USED. BUT THERE 

ARE OTHERS.

Q. NOW, IN MR. VAN NEST'S OPENING STATEMENT HE INDICATED THAT 

YOUR GENERAL METHODOLOGY HAS NEVER BEEN USED OUTSIDE OF 

LITIGATION; IS THAT ACCURATE? 

A. NO, THAT'S NOT ACCURATE. 

Q. HAVE YOU ASSISTED IN NEGOTIATIONS WHERE THESE 

METHODOLOGIES HAVE BEEN USED?

A. YES, I HAVE, MULTIPLE TIMES.

Q. AND IN THE ORDINARY COURSE OF YOUR BUSINESS, HAVE YOU 

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LASINSKI DIRECT BY MR. ROSS

UNITED STATES COURT REPORTERS

1009

ASSISTED CLIENTS IN NEGOTIATING LICENSING FOR A FRAND 

ENCUMBERED SEP PORTFOLIOS?

A. YES, I HAVE. 

Q. HAVE YOU ASSISTED BOTH LICENSORS AND LICENSEES? 

A. YES. 

Q. CAN YOU TELL ME A LITTLE BIT ABOUT THOSE NEGOTIATIONS? 

A. I CAN TELL YOU A LITTLE BIT ABOUT THEM. I HAVE 

CONFIDENTIALITY RESTRICTIONS. I CAN TELL YOU ABOUT INDUSTRIES. 

SO WITHIN THE MOBILE HANDSET INDUSTRY INFRASTRUCTURE, AS 

WELL AS IN AUTOMOTIVE TYPE APPLICATIONS. 

Q. ARE THERE ANY OF YOUR CLIENTS IN THE CELLULAR SPACE THAT 

YOU CAN NAME? 

A. YES. THERE ARE THREE CLIENTS THAT I KNOW ARE PUBLICLY 

AVAILABLE, NOKIA, HUAWEI, AND ZTE.

Q. SO WHEN MR. VAN NEST SAID IN HIS OPENING STATEMENT THAT 

YOU ARE BIASED IN FAVOR OF HUAWEI; IS THAT TRUE? 

A. THAT IS DEFINITELY NOT TRUE. HUAWEI IS A CLIENT, BUT I 

HAVE MANY OTHERS. 

MR. ROSS: YOUR HONOR, AT THIS TIME THE FTC TENDERS 

MICHAEL JAMES LASINSKI AS AN EXPERT IN LICENSING AND ROYALTY 

RATE DETERMINATION, INCLUDING IN RELATION TO FRAND ENCUMBERED 

SEPS. 

THE COURT: WOULD YOU LIKE TO VOIR DIRE HIM YOURSELF, 

OR ANY OBJECTION TO THE CERTIFICATION? 

MR. BORNSTEIN: ONLY TO THE EXTENT THAT HE'S GOING TO 

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LASINSKI DIRECT BY MR. ROSS

UNITED STATES COURT REPORTERS

1010

BE ASKED TO TESTIFY ABOUT A LEGAL INTERPRETATION OF FRAND, FOR 

WHICH I THINK HE'S NOT QUALIFIED. BUT WITH THAT CAVEAT, WE 

HAVE NO OBJECTION. 

THE COURT: DO YOU WANT TO RESPOND TO THAT? 

MR. ROSS: WE ARE NOT GOING TO ASK HIM TO TESTIFY TO 

LEGAL MATTERS. 

THE COURT: ALL RIGHT. SO HE IS CERTIFIED FOR 

LICENSING, ROYALTY RATE DETERMINATIONS, INCLUDING RELATING TO 

SEP FRAND. 

OKAY. 

BY MR. ROSS: 

Q. LET'S TURN TO WHAT YOU'RE HERE TO TESTIFY ABOUT TODAY. 

WHAT WAS YOUR ASSIGNMENT IN THIS MATTER? 

A. MY ASSIGNMENT WAS THREE-FOLD: FIRST, TO DETERMINE WHETHER 

OR NOT QUALCOMM'S ROYALTY RATES THAT IT'S CHARGED HISTORICALLY 

ARE FAIR AND REASONABLE; SECOND, TO DETERMINE WHETHER OR NOT 

THEY'RE PROPORTIONAL, THOSE SAME ROYALTY RATES ARE PROPORTIONAL 

TO OTHER LICENSOR'S ROYALTY RATES WHEN CONSIDERING PATENT 

PORTFOLIO STRENGTH; AND AS WELL AS TO DETERMINE WHETHER OR NOT, 

BASED ON MY UNDERSTANDING FROM A LICENSING PERSPECTIVE, 

QUALCOMM HAS MET ITS FRAND COMMITMENT.

Q. IS IT YOUR UNDERSTANDING THAT QUALCOMM COMMITTED TO 

LICENSE ITS SEPS ON A FRAND BASIS? 

A. YES. 

Q. AND TO CLARIFY, ARE YOU OFFERING ANY OPINIONS ON THE 

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PROPER LEGAL INTERPRETATION OF THE FRAND COMMITMENT? 

A. I AM NOT. 

Q. DO YOU HAVE AN UNDERSTANDING OF FRAND? 

A. YES, I DO, FROM A LICENSING PERSPECTIVE. 

Q. CAN YOU PLEASE BRIEFLY EXPLAIN QUALCOMM'S HISTORICAL 

LICENSING PRACTICES? 

A. YES. I MEAN, HISTORICALLY, THEY HAVE CHARGED 5 PERCENT 

FOR CDMA BASED DEVICES WITH -- WELL, THERE ARE CAPS ALSO.

Q. AND DO YOU HAVE AN OPINION AS TO WHETHER QUALCOMM'S 

LICENSING RATES ARE CONSISTENT WITH ITS FRAND OBLIGATIONS? 

A. YES. IN MY OPINION, THEY'RE FAR TOO HIGH TO BE CONSISTENT 

WITH THEIR FRAND OBLIGATIONS.

Q. WHAT METHODS DID YOU USE TO ASSESS QUALCOMM'S RATES?

A. AS WE SAID BEFORE, I'VE USED BOTH THE TOP-DOWN APPROACH AS 

WELL AS A COMPARABLE AGREEMENT APPROACH.

Q. HOW MANY ITERATIONS OF EACH OF YOUR METHODOLOGIES DID YOU 

RUN? 

A. SO BECAUSE I USED MY -- I RAN MY METHODOLOGY BASED ON A 

NUMBER OF DIFFERENT PORTFOLIO STRENGTH INDICATORS, I RAN 189 

PERMUTATIONS FOR EACH INDICATOR. 

Q. WHAT WERE THE DEVICE TYPES THAT YOU ANALYZED? 

A. I ANALYZED LTE MULTIMODE DEVICES; I ANALYZED WCDMA 

MULTIMODE DEVICES; AS WELL AS CDMA 2000 DEVICES. 

Q. WHAT WERE THE RESULTS OF YOUR ANALYSIS? 

A. SO THE RESULTS OF MY ANALYSIS ARE SHOWN HERE. 

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1012

AGAIN, I RAN MULTIPLE ITERATIONS FOR EACH ANALYSIS THAT I 

PERFORMED. BUT AS YOU CAN SEE, FOR SAMSUNG, THE HIGH 

REASONABLE RATE WOULD BE 0.65 PERCENT; FOR APPLE, IT WOULD BE 

0.72 PERCENT; FOR LG, 0.76 PERCENT; FOR MOTOROLA, 0.80 PERCENT, 

AND FOR HTC, 0.65 PERCENT OF WHOLESALE PRICES. 

Q. AFTER YOU REACHED THESE CONCLUSIONS, DID YOU DO ANY 

FURTHER WORK TO ASSESS THE REASONABLENESS OF YOUR RESULTS? 

A. YES. I DID A NUMBER OF DIFFERENT THINGS. ONE OF THEM IS 

TO TEST THE RESULTS OF MY TOP-DOWN APPROACH THAT WE'VE TALKED 

ABOUT WITH MY COMPARABLE AGREEMENTS APPROACH. 

I DID ANOTHER TEST, BUT I UNDERSTAND THAT I CAN ONLY TALK 

ABOUT THAT TEST IN THE SEALED SESSION. 

Q. HAS QUALCOMM OR HAVE ANY OF QUALCOMM'S EXPERTS ADVANCED 

ANY QUANTITATIVE ANALYSIS THAT YOU'RE AWARE OF DEMONSTRATING 

THAT QUALCOMM'S HISTORICAL RATES ARE FRAND? 

A. NO, NOT THAT I'M AWARE OF. 

Q. LET'S TALK ABOUT YOUR TOP-DOWN APPROACH SPECIFICALLY? 

A. OKAY. 

Q. WHAT DID YOU DO IN PERFORMING YOUR TOP-DOWN APPROACH?

A. SO IN PERFORMING MY TOP-DOWN APPROACH, THERE'S TWO STEPS 

EFFECTIVELY. ONE IS TO DETERMINE WHAT THE APPROPRIATE 

AGGREGATE RATE IS, IN THIS CASE I SHOW 6 PERCENT FOR LTE 

MULTIMODE DEVICES; AND THEN I NEEDED TO DETERMINE WHAT 

QUALCOMM'S SHARE OF THAT AGGREGATE RATE WOULD BE, IN THIS CASE 

I PROVIDED AN EXAMPLE OF 10 PERCENT. 

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SO 0.6 PERCENT AGGREGATE RATE -- I'M SORRY -- ROYALTY 

RATE.

Q. AND WHAT WERE THE RESULTS OF YOUR ANALYSIS? 

A. SO FOR THE TOP DOWN ANALYSIS FOR LTE MULTIMODE, I HAD A 

MINIMUM ROYALTY RATE OF 0.52 PERCENT, A MEDIAN ROYALTY RATE OF 

0.58 PERCENT, AND A MAXIMUM ROYALTY RATE OF 0.67 PERCENT. 

Q. AND YOU MENTIONED MULTIMODE. WHAT IS A MULTIMODE DEVICE? 

A. SO A MULTIMODE DEVICE IS A DEVICE THAT HAS MORE THAN JUST 

ONE STANDARD ON IT, FOR EXAMPLE, IT MAY HAVE A PRIMARY STANDARD 

LIKE LTE, BUT LTE MAY, MAY ALSO HAVE SECONDARY STANDARDS. 

SO LTE, WCDMA, GSM, OR THERE ARE PHONES THAT ARE LTE 

PRIMARY STANDARD, CDMA 2000 SECONDARY STANDARD.

Q. HOW DID YOU ADDRESS MULTIMODE IN YOUR ANALYSIS?

A. WHAT I DID WAS I DID AN ANALYSIS TO DETERMINE WHAT THE 

APPORTIONED SHARE OR VALUE OF EACH OF THE MODES FOR THE PHONE 

WOULD BE. 

Q. SO TAKING A STEP BACK, SO THE TOP-DOWN APPROACH USED IN 

ARM'S LENGTH LICENSING?

A. YES, IT IS.

Q. CAN YOU GIVE SOME EXAMPLES? 

A. SURE. WELL, I'M AWARE OF APPLE USING THE TOP-DOWN 

APPROACH, HTC, CERTAINLY ERICSSON, WE JUST HEARD ABOUT THE 

TOP-DOWN APPROACH. 

THERE ARE OTHERS. NOKIA. 

Q. IN WHAT CONTEXT -- YOU MENTIONED SAMSUNG. IN WHAT CONTEXT 

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HAVE YOU SEEN SAMSUNG USE THE TOP-DOWN APPROACH? 

A. SO IN -- THIS IS AN EXAMPLE WHERE SAMSUNG WAS ACTUALLY 

NEGOTIATING WITH QUALCOMM, AND THIS IS EXACTLY THE TYPE OF 

ANALYSIS THAT I'M TALKING ABOUT HERE WHERE THEY'VE DETERMINED 

WHAT A CUMULATIVE RATE IS FOR A WCDMA, IN THIS CASE IT'S 

5 PERCENT. 

AND THEN THEY'RE SAYING THAT ONE WOULD NEED TO CALCULATE 

WHAT QUALCOMM'S PERCENTAGE OR TOTAL SHARE IS TO ALLOCATE TO 

THAT SHARE. 

NOW, THIS WAS GOING TO BE A CROSS-LICENSE, SO THEN ONE 

WOULD HAVE TO CONSIDER SAMSUNG'S SHARE AS WELL OF THE TOTALITY 

OF THE WCDMA PORTFOLIO. 

Q. YOU MENTIONED THAT THE TOP-DOWN APPROACH REQUIRES AN 

AGGREGATE RATE. HOW DID YOU COME UP WITH THE APPROPRIATE 

REASONABLE AGGREGATE RATES? 

A. SURE. I USED A NUMBER OF ANNOUNCEMENTS THAT WERE MADE BY 

COMPANIES AROUND THE TIME OF THE LAUNCH OF THE LTE, FOR 

EXAMPLE, STANDARD. 

I ALSO LOOKED AT -- WELL, THERE ARE SOME RULINGS ON, 

RECENT RULINGS ON WHAT AN APPROPRIATE TOP-DOWN APPROACH WOULD 

BE. 

AND THEN ANOTHER -- AGGREGATE RATE WOULD BE. 

AND THEN ANOTHER METHOD IS I LOOKED AT WHAT MY TOP-DOWN 

APPROACH RATE, AGGREGATE RATES THAT I SELECTED WERE AND 

COMPARED THEM TO MY COMPARABLE AGREEMENTS APPROACH.

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Q. OKAY. WE JUST HEARD MS. PETERSSON TESTIFY THAT ERICSSON 

SUPPORTED A SINGLE DIGIT PERCENTAGE AGGREGATE RATE FOR LTE? 

A. YES.

Q. DID ERICSSON ALSO ENDORSE A MORE SPECIFIC RATE OR RANGE OF 

RATES? 

A. YES, THEY DID. THEY ENDORSED AN AGGREGATE RATE OF 6 TO 8 

PERCENT FOR LTE MOBILE DEVICES.

Q. DID OTHER MAJOR LICENSORS AND LICENSEES MAKE STATEMENTS 

CONCERNING REASONABLE AGGREGATE RATES? 

A. YES, OTHERS DID. NOKIA, NTT, I THINK SIEMENS, HUAWEI, ZTE 

AND OTHERS. 

Q. WHAT AGGREGATE RATE DID YOU CONCLUDE ON FOR LTE MULTIMODE 

IN YOUR ANALYSIS? 

A. I CONCLUDED ON 6 PERCENT. 

Q. YOU JUST TESTIFIED THAT ERICSSON ENDORSED A 6 TO 8 PERCENT 

RANGE FOR LTE AGGREGATE RATES? 

A. CORRECT.

Q. SO WHY DID YOU CONCLUDE ON 6 PERCENT?

A. I CONCLUDED ON 6 PERCENT FOR A NUMBER OF DIFFERENT 

REASONS. 

FIRST, WHEN YOU LOOK AT WHAT THE, THE WAY THE INDUSTRY HAS 

DEVELOPED SINCE THOSE STATEMENTS WERE MADE, THERE'S A LOT MORE 

APPLICATIONS GOING ON ON SMARTPHONES THAN AT THAT TIME. FOR 

EXAMPLE, THEY NOT ONLY HAVE MODEM CHIP, NOW THEY HAVE 

APPLICATION PROCESSORS ON THEM. 

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1016

ALSO, AT THAT TIME THERE WERE ESTIMATES ON HOW MUCH DATA 

WOULD BE OFFLOADED TO WI-FI NETWORKS, AND IT TURNS OUT THAT 

SIGNIFICANTLY MORE DATA IS BEING OFFLOADED TO WI-FI NETWORKS. 

AND THEN FINALLY, AS I MENTIONED BEFORE, THERE ARE COURT 

CASES WHERE THE TOP-DOWN APPROACH AND THE RESULTS OF THOSE 

COURT CASES ARE CONSISTENT WITH 6 PERCENT, SPECIFICALLY TCL.

Q. THAT'S THE TCL V. ERICSSON? 

A. THAT'S CORRECT. 

Q. MOVING ON. YOU SAID THAT THE NEXT STEP OF YOUR TOP-DOWN 

APPROACH INVOLVED ASSESSING PORTFOLIO STRENGTH; IS THAT 

CORRECT? 

A. CORRECT.

Q. CAN YOU SUMMARIZE THE PORTFOLIO STRENGTH METRICS THAT YOU 

CONSIDERED? 

A. YES. I CONSIDERED TWO PORTFOLIO STRENGTH METRICS. ONE IS 

DEEM SEPS, DEEM STANDARD ESSENTIAL PATENTS, AND THE OTHER IS 

APPROVED CONTRIBUTIONS.

Q. WHAT'S THE DIFFERENCE BETWEEN A DECLARED SEP AND A DEEMED 

SEP? 

A. SO A DECLARED SEP IS A PATENT OR PATENT APPLICATION THAT 

GETS DECLARED TO A STANDARD, OFTENTIMES AS THE STANDARD IS 

BEING SET OR ADOPTED OR STRUCTURED. 

AND A DEEMED SEP IS ACTUALLY A STANDARD ESSENTIAL PATENT 

THAT HAS GONE THROUGH A PROCESS, FOR EXAMPLE, A TECHNICAL 

EVALUATION, SOMETIMES THEY'RE DONE BY MECHANICAL MEANS, TO 

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LASINSKI DIRECT BY MR. ROSS

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1017

DETERMINE WHETHER OR NOT IT IS BELIEVED TO BE ACTUALLY 

ESSENTIAL TO THE STANDARD. 

Q. HOW DID YOU GO ABOUT CALCULATING THE PORTION OF DEEMED 

SEPS OWNED BY THE VARIOUS SEP HOLDERS?

A. THERE WERE NUMEROUS STUDIES THAT WERE AVAILABLE TO ME FROM 

THE RECORD, AND I USED EVERY STUDY THAT I HAD AVAILABLE TO ME 

THAT HAD A DEEMING PROCESS, OR SOME SORT OF A TECHNICAL 

EVALUATION PROCESS. 

Q. HAVE YOU SEEN ANY EVIDENCE THAT QUALCOMM HAS RELIED ON ANY 

OF THESE PUBLICLY AVAILABLE STUDIES?

A. YES, I HAVE. 

Q. COULD YOU PLEASE TURN TO THE TAB IN YOUR BINDER LABELED 

CX 7128. 

IT MAY ALSO SHOW UP ON YOUR SCREEN. 

WHAT IS THIS DOCUMENT? 

A. THIS DOCUMENT IS A -- I'M SORRY -- IS A PRESENTATION THAT 

QUALCOMM PREPARED IN ITS NEGOTIATIONS WITH LG FOR A LICENSE. 

Q. AND DID YOU CONSIDER THIS PRESENTATION IN FORMING YOUR 

OPINIONS? 

A. I DID, YES. 

MR. ROSS: YOUR HONOR, THE FTC MOVES TO ADMIT 

CX 7218. 

MR. BORNSTEIN: YOUR HONOR, THIS IS NOT BEING 

INTRODUCED WITH FOUNDATION THROUGH A FACT WITNESS. 

I HAVE NO OBJECTION TO MR. LASINSKI RELYING ON THE 

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LASINSKI DIRECT BY MR. ROSS

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1018

DOCUMENT, BUT I DON'T THINK IT'S A PROPER METHOD TO INTRODUCE 

THE DOCUMENT INTO EVIDENCE. 

MR. ROSS: YOUR HONOR, WE DON'T SEEK TO ADMIT THE 

DOCUMENT FOR THE TRUTH, ONLY TO SHOW MR. LASINSKI'S RELIANCE ON 

IT IN HIS ANALYSIS. 

THE COURT: ALL RIGHT. SO IT'S ADMITTED WITH THAT 

CONDITION, WHICH YOU'LL PUT IN THE JOINT ADMITTED EXHIBIT LIST. 

OKAY? 

(PLAINTIFF'S EXHIBIT CX 7218 WAS ADMITTED IN EVIDENCE.) 

THE COURT: ALL RIGHT. GO AHEAD, PLEASE. IT'S 

ADMITTED.

BY MR. ROSS:

Q. COULD YOU PLEASE TURN TO SLIDE 26, THIS IS CX 7128. 

THE COURT: IS ANY OF THIS SEALED? 

MR. ROSS: NO. 

THE COURT: OKAY.

BY MR. ROSS:

Q. WHAT IS SHOWN ON THIS SLIDE? 

A. SO THIS SLIDE IS ACTUALLY SHOWING A COMPARISON OF 

QUALCOMM'S POSITION TO LG'S POSITION BASED ON THE RESULTS OF 

STANDARD ESSENTIAL PATENT STUDIES THAT ARE COMMISSIONED BY 

DIFFERENT GROUPS. FOR EXAMPLE, FAIRFIELD, ARTICLE ONE, 

IRUNWAY, CYBER CREATIVE, SO A BUNCH OF DIFFERENT STUDIES THAT 

DO SEP AND DEEMING OF SEPS. 

Q. AND THESE WERE STUDIES THAT QUALCOMM PRESENTED? 

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1019

A. YES. THIS WAS PART OF THEIR PRESENTATION THAT THEY WERE 

PREPARING FOR LG, NEGOTIATIONS WITH LG.

Q. ARE ALL OF THE STUDIES ON THIS SLIDE DEEMED SEP STUDIES? 

A. NO, THEY'RE NOT. IN FACT, THERE IS ONE STUDY HERE, ABI 

RESEARCH, WHICH LOOKED AT RAND APPROVED CONTRIBUTIONS.

Q. DID YOU USE ANY OF THESE STUDIES IN YOUR ANALYSIS? 

A. YES. I MEAN, THOSE STUDIES THAT HAD A DEEMING PROCESS I 

USED IN MY ANALYSIS, AND AS WELL THERE WERE ADDITIONAL STUDIES 

IN THE RECORD THAT WEREN'T INCLUDED ON THIS SLIDE THAT HAD A 

DEEMING PROCESS THAT I USED.

Q. DID YOU SELECT ONE SEP STUDY AS BEING THE BEST OR MOST 

PROBATIVE FOR YOUR ANALYSIS? 

A. NO, I DID NOT. I USED ALL THE STUDIES THAT WERE AVAILABLE 

TO ME THAT HAD A DEEMING PROCESS.

Q. YOU SAID THAT IN ADDITION TO THE DEEMED SEPS, YOU ALSO 

CONSIDERED APPROVED CONTRIBUTIONS? 

A. YES, I DID. 

Q. WHY? 

A. APPROVED CONTRIBUTIONS, ACTUALLY AS WE JUST HEARD BY THE 

EARLIER TESTIMONY, ARE ACCEPTED AS AN INDICATOR OR A METRIC FOR 

PORTFOLIO STRENGTH AS IT RELATES TO THE MATTER AT HAND. 

Q. DID YOU QUANTITATIVELY TEST YOUR UNDERSTANDING THAT 

APPROVED CONTRIBUTIONS ARE CORRELATED WITH SEP PORTFOLIO 

STRENGTH? 

A. YES, I DID. I TESTED THEM VERSUS MY COMPARABLE 

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1020

AGREEMENTS, AND IT SHOWS THAT COMPANIES THAT HAVE STRONGER 

APPROVED CONTRIBUTIONS ARE ABLE TO NEGOTIATE HIGHER ROYALTY 

RATES THAN THOSE WITH FEWER APPROVED CONTRIBUTIONS.

Q. NOW, HAVE QUALCOMM OR ANY OF QUALCOMM'S EXPERTS PRESENTED 

ANY QUANTITATIVE ANALYSIS THAT APPROVED CONTRIBUTIONS ARE NOT 

CORRELATED WITH ROYALTIES RECEIVED IN ARM'S LENGTH 

NEGOTIATIONS? 

A. NOT THAT I'M AWARE OF. 

MR. BORNSTEIN: YOUR HONOR, THERE WILL BE TESTIMONY 

ON THIS, AND THERE'S AN EXPERT DISCLOSURE THAT WE'VE MADE. SO 

I'M NOT QUITE SURE WHAT THE TESTIMONY IS ON THAT POINT. 

THE COURT: I DON'T THINK THAT'S AN OBJECTION. IS 

THAT AN OBJECTION? 

MR. BORNSTEIN: IT IS ON OBJECTION. BUT I'LL 

WITHDRAW IT IF I'M OVERRULED. 

THE COURT: OVERRULED. GO AHEAD, PLEASE. 

BY MR. ROSS:

Q. ROUGHLY HOW MANY APPROVED CONTRIBUTIONS ARE THERE? 

A. WELL, IN THE CELLULAR STANDARDS SPACE, THERE'S THOUSANDS 

OF APPROVED CONTRIBUTIONS, AND COMPANIES LIKE QUALCOMM, NOKIA, 

AND ERICSSON EACH WILL HOLD THOUSANDS OF APPROVED 

CONTRIBUTIONS.

Q. IS EVERY APPROVED CONTRIBUTION AN EXTREMELY IMPORTANT 

CONTRIBUTION? 

A. NO, IT'S MY UNDERSTANDING THAT THEY WOULD NOT BE.

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1021

Q. WHEN LICENSEES AND LICENSORS CONSIDER APPROVED 

CONTRIBUTIONS DURING NEGOTIATIONS, DO THEY ATTEMPT TO RANK OR 

ASSESS THE RELATIVE VALUE OF SPECIFIC CONTRIBUTIONS? 

A. I HAVE NEVER WITNESSED A RANKING OF APPROVED 

CONTRIBUTIONS.

Q. WHAT DO THEY DO? 

A. THEY COUNT THE TOTAL NUMBER OF APPROVED CONTRIBUTIONS IN 

THEIR -- WELL, THEY COUNT THE NUMBER OF TOTAL APPROVED 

CONTRIBUTIONS BY MODE. 

Q. HAVE QUALCOMM'S EXPERTS TO DATE PUT FORTH AN ANALYSIS 

MEASURING THE RELATIVE VALUE OF VARIOUS COMPANIES' APPROVED 

CONTRIBUTIONS? 

A. NOT THAT I'M AWARE OF, NO.

Q. DO BOTH LICENSORS AND LICENSEES CONSIDER APPROVED 

CONTRIBUTIONS TO BE A PROXY FOR SEP, S-E-P, PORTFOLIO STRENGTH? 

A. YES, I'M AWARE OF THAT. 

Q. CAN YOU GIVE ME EXAMPLES? 

A. SURE, I CAN. WELL, OBVIOUSLY WE JUST HEARD FROM ERICSSON, 

APPLE, NOKIA, I'M AWARE OF HUAWEI AS WELL. 

Q. WHAT DOES THIS TESTIMONY DEMONSTRATE? I BELIEVE THIS IS 

TESTIMONY WE JUST HEARD? 

A. YES. I MEAN, SO THIS IS MS. PETERSSON AND WHAT SHE'S 

SAYING IS EXACTLY WHAT I'M TALKING ABOUT, THAT APPROVED 

CONTRIBUTIONS ARE A GOOD PROXY FOR ESTABLISHING THE SHARE OF 

THE I.P. THAT A COMPANY HOLDS, AND IT'S CONTRIBUTION TO THE 

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1022

STANDARD ALSO FROM AN IPR PERSPECTIVE. 

Q. HAS QUALCOMM EVER USED APPROVED CONTRIBUTIONS? WITH THAT 

INSTRUCTION, HAS QUALCOMM EVER USED APPROVED CONTRIBUTIONS. 

A. YES. WE JUST SAW AN EXAMPLE OF IT IN THE QUALCOMM LG 

PRESENTATION THAT I JUST SHOWED. 

MR. ROSS: YOUR HONOR, AT THIS TIME WE'VE REACHED THE 

PORTION OF MR. LASINSKI'S ANALYSIS THAT IS SUBJECT TO THE 

COURT'S SEALING ORDER, SO I WOULD ASK THAT WE PROCEED IN A 

SEALED SESSION. 

THE COURT: OKAY. WHY DON'T WE GO AHEAD AND TAKE A 

TEN MINUTE BREAK NOW SINCE IT'S 2:17. WE'LL TAKE A TEN MINUTE 

BREAK. AND WHEN WE COME BACK, APPROXIMATELY HOW LONG IS YOUR 

SEALED PORTION? 

MR. ROSS: APPROXIMATELY 20 TO 25 MINUTES. 

THE COURT: AND AFTER THAT, DO YOU HAVE ANOTHER 

PUBLIC SESSION, OR DOES IT THEN GO TO CROSS? 

MR. ROSS: CROSS. 

THE COURT: IT GOES TO CROSS. AND THEN THE CROSS 

WILL BE SEALED OR NOT SEALED? 

MR. BORNSTEIN: I EXPECT I CAN DO ALMOST, IF NOT THE 

ENTIRETY, OF THE CROSS IN A PUBLIC SESSION. OBVIOUSLY I 

HAVEN'T HEARD THE FULL DIRECT YET, SO I CAN'T COMMIT TO THAT. 

THE COURT: SURE. THAT'S FAIR. 

MR. ROSS: I WOULD ANTICIPATE THAT FOR COMPLETENESS 

OF THE WITNESSES'S ANSWERS, MANY OF THE ANSWERS IN CROSS WOULD 

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1023

NEED TO BE UNDER SEAL, BUT I HAVE NOT HEARD THE CROSS. 

THE COURT: OKAY. WELL, WE'LL DEAL WITH THAT LATER. 

LET'S GO AHEAD AND TAKE A TEN MINUTE BREAK NOW AND THEN 

WE'LL HAVE THE SEALED PORTION OF THE DIRECT, WHICH YOU SAID 

WOULD BE ABOUT 25 MINUTES; IS THAT RIGHT? 

MR. ROSS: THAT'S CORRECT. 

THE COURT: ALL RIGHT. THANK YOU. 

WE'LL TAKE A BREAK NOW. THANKS. 

(RECESS FROM 2:18 P.M. UNTIL 2:32 P.M.)

(PROCEEDINGS UNDER SEAL FROM PAGES 1024 TO 1042.)

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1043

 (IN OPEN COURT.)

THE WITNESS: EXCUSE ME. CAN I JUST GET UP AND GET 

WATER WHILE THEY'RE COMING IN? 

THE COURT: THAT'S FINE. 

THE WITNESS: THANK YOU. 

(PAUSE IN PROCEEDINGS.) 

THE COURT: OKAY. WELCOME BACK. 

ALL RIGHT. 2:56. GO AHEAD, PLEASE. 

MR. BORNSTEIN: THANK YOU, YOUR HONOR. 

Q. SO BEFORE WE OPENED THE COURTROOM, WE WERE TALKING ABOUT 

THE FACT THAT 284 PARTNERS, YOUR FIRM, HAS DONE WORK FOR HUAWEI 

IN CONNECTION WITH COMMERCIAL PATENT LICENSE NEGOTIATIONS WITH 

QUALCOMM; IS THAT CORRECT?

A. CORRECT.

Q. OKAY. AND THE 284 PARTNERS MANAGING DIRECTOR WHO LED THAT 

ENGAGEMENT WAS A GENTLEMAN BY THE NAME OF PHILIP KLINE; IS THAT 

ACCURATE? 

A. YES.

Q. AND MR. KLINE, WHO LED THAT ENGAGEMENT FOR 284 PARTNERS 

AGAINST QUALCOMM, HE WORKED WITH YOU IN THIS MATTER; ISN'T THAT 

RIGHT? 

A. YES, HE DID.

Q. AND MR. KLINE IS EVEN HERE IN THE COURTROOM TODAY, ISN'T 

HE? 

A. HE IS, YES.

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Q. OKAY. AND PERSONALLY, SIR, YOU'VE ACTED AS A WITNESS FOR 

HUAWEI MULTIPLE TIMES? 

A. I HAVE, YES. 

Q. THERE WAS A CONFIDENTIAL ARBITRATION THAT YOU MENTIONED; 

CORRECT? 

A. YES.

Q. THERE WAS A MATTER IN THE U.K., UNWIRED PLANET VERSUS

HUAWEI; CORRECT? 

A. THAT IS RIGHT, YES.

Q. AND YOU MENTIONED A CASE HERE IN THIS DISTRICT BEFORE 

JUDGE ORRICK. THAT'S HUAWEI AGAINST SAMSUNG; CORRECT? 

A. YES.

Q. AND YOU'VE BEEN DISCLOSED AS AN EXPERT BY HUAWEI IN AT 

LEAST ONE OTHER MATTER; IS THAT RIGHT? 

A. CORRECT.

Q. THAT'S A CASE IN THE ITC AGAINST INTERDIGITAL; CORRECT? 

A. WHO -- NO, NOT IN -- I ACTUALLY WORK FOR ZTE IN THE ITC.

Q. I UNDERSTAND YOU TESTIFIED FOR ZTE IN THAT MATTER. 

BUT HUAWEI DISCLOSED YOU TO THE COURT AS AN EXPERT; ISN'T 

THAT RIGHT? 

A. I DID NOT KNOW THAT. I DID NOT ACTUALLY WORK FOR THEM IN 

ANYTHING RELATED TO THAT, SO -- 

Q. OKAY. WELL, IN THE UNWIRED PLANET CASE -- 

A. YES.

Q. -- THERE WAS A WRITTEN DECISION ISSUED BY THE COURT IN MAY 

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OF 2017 IN WHICH THE JUDGE DISCUSSED YOUR TESTIMONY; IS THAT 

RIGHT? 

A. YES, THAT IS RIGHT.

Q. AND THE COURT IN THAT CASE WROTE, QUOTE, "I WAS CONCERNED 

ABOUT MR. LASINSKI'S APPROACH. OVERALL, HIS REPORTS AND ORAL 

EVIDENCE LEFT ME WITH THE IMPRESSION THAT MR. LASINSKI HAS 

TRIED TO AVOID MAKING WRITTEN STATEMENTS WHICH MIGHT BE 

CONSTRUED AS ADVERSE TO HUAWEI." 

DID THE COURT ISSUE THAT RULING? 

A. THE COURT WROTE THAT, YES, THEY DID.

Q. OKAY. 

A. HOWEVER, I CAN TELL YOU THAT THEY WENT WITH MY NUMBERS, 

SO -- 

Q. WELL -- 

A. THEY MIGHT HAVE WRITTEN THAT, BUT THEY WENT WITH MY 

NUMBERS.

Q. OKAY. WELL, YOU UNDERSTAND, SIR, THAT A REPRESENTATIVE OF 

HUAWEI TESTIFIED IN THIS CASE; CORRECT? 

A. YES, I -- I UNDERSTAND THAT, YES.

Q. AND YOU UNDERSTAND THAT HUAWEI IS A LICENSEE OF QUALCOMM; 

CORRECT?

A. YES, IT IS A LICENSEE OF QUALCOMM. THAT'S MY 

UNDERSTANDING.

Q. AND YOU UNDERSTAND THAT HUAWEI HAS IN THE PAST SOUGHT TO 

REDUCE THE ROYALTIES THAT HUAWEI -- THAT HUAWEI HAS SOUGHT TO 

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REDUCE THE ROYALTIES IT PAYS TO QUALCOMM THROUGH NEGOTIATION; 

CORRECT? 

A. YES. MOST LICENSEES DO, SO I WOULD EXPECT THAT.

Q. ALL RIGHT. AND YOUR FIRM, 284 PARTNERS, HAS ASSISTED 

HUAWEI IN THAT ENDEAVOR; CORRECT? 

A. WE RAN SOME ANALYSIS THAT THEY ASKED US TO RUN. 

Q. THAT HUAWEI ASKED YOU TO RUN FOR NEGOTIATIONS WITH 

QUALCOMM? 

A. CORRECT.

Q. NOW, YOU'RE NOT AN ECONOMIST; CORRECT, SIR? 

A. I'M NOT A PH.D. ECONOMIST, BUT I USE ECONOMICS EVERY DAY 

AS IT RELATES TO UNPACKING LICENSE AGREEMENTS AND PRICING 

LICENSE AGREEMENTS.

Q. YOU DON'T HAVE ANY DEGREE IN ECONOMICS AT ALL; CORRECT? 

A. I DO NOT.

Q. OKAY. 

A. THAT IS ACCURATE. 

I SHOULD ALSO SAY I'VE TAKEN ECONOMIC CLASSES, BUT I DON'T 

HAVE A DEGREE IN ECONOMICS.

Q. AND YOU'RE NOT TESTIFYING TODAY AS AN ECONOMIST; RIGHT? 

A. NO, I'M NOT.

Q. AND YOU'RE NOT PROVIDING AN OPINION IN THIS CASE FROM AN 

ENGINEERING PERSPECTIVE EITHER; CORRECT? 

A. CORRECT, FROM A LICENSING PROFESSIONAL STANDPOINT.

Q. RIGHT. YOU HAVEN'T DONE ANY REVIEW OF QUALCOMM'S STANDARD 

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ESSENTIAL PATENTS THEMSELVES; RIGHT? 

A. WELL, I HAVE LOOKED AT THEM, BUT NOT FROM A TECHNICAL 

PERSPECTIVE.

Q. OKAY. AND YOU'VE NOT DONE ANY TECHNICAL ANALYSIS OF 

QUALCOMM'S NON-SEPS EITHER; RIGHT? 

A. THAT IS ACCURATE, NOT FROM A TECHNICAL PERSPECTIVE.

Q. SO LET'S TALK ABOUT YOUR TOP-DOWN APPROACH. 

A. OKAY. 

Q. IN THE TOP-DOWN APPROACH, WHAT YOU DO IS YOU DETERMINE 

WHAT YOU CONSIDER TO BE AN AGGREGATE ROYALTY RATE FOR CERTAIN 

TYPES OF HANDSETS; RIGHT?

A. THAT'S THE FIRST STEP, YES.

Q. CORRECT. AND WHAT YOU MEAN BY AN AGGREGATE ROYALTY RATE 

IS THE TOTAL ROYALTY RATE THAT A HANDSET MAKER WOULD PAY FOR 

THE ENTIRE STANDARD; CORRECT? 

A. WELL, THEY MAY NOT HAVE TO PAY THAT ROYALTY RATE. BUT 

THAT'S WHAT THE VALUE -- OR THAT'S WHAT THEY MIGHT HAVE TO PAY. 

LIKE THEY'LL HAVE THEIR OWN SEPS, SO THEY DON'T HAVE TO PAY FOR 

THEIR OWN SEPS. 

SO, I MEAN, THEY DON'T HAVE TO PAY IT, BUT THAT'S WHAT -- 

WELL, I GUESS MAYBE IN A CASE WHERE THEY HAD NO SEPS WHATSOEVER 

AND EVERYONE TRIED TO COLLECT FROM THEM, THEY MIGHT HAVE TO PAY 

THAT. BUT NOT GENERALLY.

Q. RIGHT. SO YOU WOULD USE THE AGGREGATE ROYALTY RATE TO SET 

A LIMIT ABOVE WHICH A PARTICULAR LICENSOR, LIKE QUALCOMM, COULD 

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NOT PRICE WITHOUT VIOLATING ITS FRAND COMMITMENT; CORRECT? 

A. WELL, I DON'T USE IT TO SET A LIMIT. I THINK THAT IT'S A 

REASONABLE HIGH END OF WHAT SOMEONE SHOULD BE ABLE TO NEGOTIATE 

FOR ALL ITS CELLULAR SEPS.

Q. CAN YOU TAKE A LOOK AT PAGE 227 OF YOUR DEPOSITION, SIR, 

LINES 6 THROUGH 10. 

A. YES. 

Q. AND YOU WERE ASKED THE QUESTION -- 

A. I'M SORRY. COULD YOU -- 

Q. AND WE CAN PUT IT ON THE SCREEN IF IT'S HELPFUL. 

A. IF YOU COULD REPOINT ME TO THE PAGE YOU WERE TALKING 

ABOUT. 

Q. SURE. IT'S 227, LINE 6. 

AND YOU WERE ASKED THE QUESTION, "YOU TESTIFIED THAT YOU 

THINK IT'S APPROPRIATE TO USE A REASONABLE AGGREGATE RATE TO 

SET A LIMIT ABOVE WHICH QUALCOMM MAY NOT PRICE WITHOUT 

VIOLATING ITS FRAND COMMITMENT." 

A. YES.

Q. YOU ANSWERED, "CORRECT." YES? 

A. CORRECT.

Q. AND YOU GAVE THAT TESTIMONY, SIR? 

A. I DID. 

Q. AND YOU STAND BY IT? 

A. OF COURSE. I JUST VIEW IT AS A REASONABLE HIGH END.

Q. ALL RIGHT. BUT YOU TESTIFIED THAT IT'S SOMETHING YOU 

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COULD USE TO SET A LIMIT; CORRECT? 

A. CORRECT.

Q. ALL RIGHT. AND FOR WCDMA MULTIMODE DEVICES, THE AGGREGATE 

RATE THAT YOU USE TO SET THAT LIMIT IS 5 PERCENT; RIGHT?

A. FOR WCDMA DEVICES, YES.

Q. YES, MULTIMODE WCDMA DEVICES. 

A. CORRECT.

Q. AND YOU ESTIMATED THAT 5 PERCENT AGGREGATE ROYALTY RATE, 

IN PART, BASED ON STATEMENTS MADE BY INDUSTRY PARTICIPANTS; 

RIGHT?

A. IN PART, YES.

Q. AND YOU POINTED, FOR EXAMPLE, TO STATEMENTS BY ERICSSON 

AND NOKIA IN NOVEMBER OF 2002? 

A. RIGHT.

Q. AND THERE WERE OTHER COMPANIES AS WELL WHO SIGNED ON? 

A. SAMSUNG, WE JUST SAW A SIMILAR TYPE OF EXHIBIT THAT SHOWED 

5 PERCENT. SAME THING.

Q. AND YOU BELIEVE IT'S APPROPRIATE TO RELY ON THOSE 

STATEMENTS BECAUSE YOU THINK THAT THOSE STATEMENTS WERE, IN 

TURN, RELIED ON BY INDUSTRY PARTICIPANTS WHEN CHOOSING WHETHER 

TO ADOPT THE STANDARDS; RIGHT? 

A. THAT'S IN PART RIGHT, YES. 

THAT'S NOT MY ONLY ANALYSIS THAT I DID. AS I SAID, I 

COMPARED IT TO MY COMPARABLES ANALYSIS. BUT THAT'S IN PART.

Q. ALL RIGHT. SO IF YOU COULD -- I'M GOING TO TRY NOT TO 

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INTERRUPT YOU BECAUSE THAT'S NOT SOMETHING THAT WILL BE 

PROFITABLE FOR ME OR FOR YOU. 

A. SURE.

Q. BUT IF YOU COULD STICK TO THE QUESTION, I'D BE GRATEFUL. 

A. SURE.

Q. SO YOU DON'T ACTUALLY KNOW, HOWEVER, WHETHER ANY 

IMPLEMENTER OF CELLULAR STANDARDS ACTUALLY MADE ANY INVESTMENT 

DECISION ON THE BASIS OF THE STATEMENTS THAT YOU IDENTIFY OR AN 

AGGREGATE RATE OF 5 PERCENT FOR WCDMA; CORRECT? 

A. I GUESS I'M NOT SURE WHAT YOU'RE ASKING. 

Q. SURE. I'LL DO IT AGAIN. 

A. THESE GUYS -- OKAY.

Q. YOU TESTIFIED THAT YOU BELIEVE IT'S APPROPRIATE TO RELY ON 

THOSE STATEMENTS BECAUSE THEY WERE RELIED ON BY INDUSTRY 

PARTICIPANTS WHEN CHOOSING WHETHER TO ADOPT THE STANDARDS; 

RIGHT?

A. CORRECT. 

Q. ALL RIGHT. BUT YOU DON'T ACTUALLY KNOW WHETHER ANY 

INDUSTRY PARTICIPANT ACTUALLY MADE ANY INVESTMENT DECISION WITH 

THE EXPECTATION OF PAYING 5 PERCENT FOR WCDMA; RIGHT? 

A. WELL, I DON'T HAVE ACTUAL EVIDENCE. I MEAN, I KNOW THAT 

NOKIA AND ERICSSON MADE THOSE STATEMENTS AND THEY WERE MAKING 

INVESTMENTS IN THE INDUSTRY AT THAT TIME. 

SO -- 

Q. OKAY. YOU DON'T KNOW ONE WAY OR THE OTHER IF ANYBODY 

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LASINSKI CROSS BY MR. BORNSTEIN

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ACTUALLY MADE A DECISION TO INVEST IN A STANDARD ON THE BASIS 

OF AN EXPECTATION THAT THEY'D PAY 5 PERCENT; RIGHT? 

A. I DON'T HAVE DEFINITIVE EVIDENCE OF THAT. IT SEEMS 

LOGICAL GIVEN THAT THE PARTICIPANTS WERE MAKING THOSE -- WERE 

MAKING THOSE STATEMENTS.

Q. ALL RIGHT. SIR, LET'S TAKE A LOOK AT PAGE 241 OF YOUR 

DEPOSITION, PLEASE -- 

A. SURE.

Q. -- BEGINNING AT LINE 19. WE CAN PUT THAT ON THE SCREEN AS 

WELL IF IT'S EASIER. 

A. SURE. 

Q. YOU WERE ASKED THE QUESTION, "DO YOU KNOW ONE WAY OR THE 

OTHER WHETHER ANY IMPLEMENTER ACTUALLY MADE AN INVESTMENT 

DECISION WITH THE EXPECTATION THAT IT WOULD PAY AN AGGREGATE 

RATE OF 5 PERCENT ON WCDMA?"

AND YOU SAID YOU DON'T KNOW ONE WAY OR THE OTHER; IS THAT 

CORRECT? 

A. I DON'T HAVE DEFINITIVE EVIDENCE OF IT.

Q. OKAY. AND YOU STAND BY THAT TESTIMONY? 

A. YES, I DO.

Q. OKAY. AND YOU ARE AWARE, HOWEVER, THAT QUALCOMM, AT THE 

SAME TIME, MADE CLEAR THAT IT DISAGREED WITH THE STATEMENTS 

MADE BY ERICSSON AND NOKIA AND OTHERS; CORRECT?

A. I AM AWARE OF THAT, YES.

Q. AND QUALCOMM AFFIRMATIVELY OPPOSED THE IMPOSITION OF A 

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SINGLE DIGIT AGGREGATE CAP AT THE TIME FOR WCDMA; CORRECT? 

A. I BELIEVE THAT THAT'S CORRECT.

Q. AND THE 5 PERCENT RATE THAT QUALCOMM CHARGED FOR 3G 

STANDARDS LIKE WCDMA WAS WELL KNOWN AT THE TIME OF THOSE 

STATEMENTS ON WHICH YOU RELIED; CORRECT? 

A. I BELIEVE IT WAS WELL KNOWN. I -- I DON'T KNOW FOR SURE, 

BUT I DO BELIEVE IT WAS, YES.

Q. OKAY. DO YOU THINK YOU TESTIFIED AT YOUR DEPOSITION THAT 

IT WAS WELL KNOWN? 

A. I PROBABLY DID, YES.

Q. OKAY, GOOD. 

SO COMPANIES MAKING INVESTMENT DECISIONS ALSO KNEW THAT 

QUALCOMM WAS CHARGING 5 PERCENT FOR WCDMA WHEN THEY CHOSE 

WHETHER OR NOT TO ADOPT THE STANDARD AS WELL; CORRECT? 

A. THAT'S A SAFE ASSUMPTION, YES.

Q. ALL RIGHT. 

SO FOR LTE MULTIMODE DEVICES, YOU SELECTED A 6 PERCENT 

RATE; CORRECT? 

A. YES.

Q. AND THAT WAS ALSO BASED ON STATEMENTS MADE BY ERICSSON AND 

NOKIA AND OTHERS; YES? 

A. CAN I JUST SAY YES, IN PART. 

Q. IN PART? 

A. THERE WERE OTHER THINGS AS WELL.

Q. FAIR CLARIFICATION THAT I ACCEPT. 

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1053

AND THESE STATEMENTS ARE STATEMENTS THAT, AGAIN, QUALCOMM 

DID NOT SIGN ON TO; CORRECT? 

A. THAT IS MY UNDERSTANDING. 

Q. ALL RIGHT. AND WE WERE TALKING ABOUT UNWIRED PLANET WHERE 

YOU SAID THE COURT ADOPTED YOUR NUMBERS. 

BUT WHILE YOU'RE ARGUING FOR 6 PERCENT HERE, HUAWEI AND 

UNWIRED PLANET ARGUED FOR AN 8 PERCENT AGGREGATE RATE FOR 

MULTIMODE LTE HANDSETS; IS THAT RIGHT? 

A. I THINK THERE WAS DISCUSSION OF 8 PERCENT.

Q. OKAY. AND THE COURT ACTUALLY FOUND, IN THAT CASE, THAT 

HUAWEI'S CASE DOES NOT SUPPORT AN AGGREGATE ROYALTY BURDEN OF 

8 PERCENT. QUOTE, "IT SUPPORTS A HIGHER TOTAL BURDEN THAN 

THAT." 

CORRECT? 

A. IT MAY HAVE SAID THAT. I DON'T KNOW.

Q. OKAY. AND YOU'RE ALSO AWARE THAT IN UNWIRED PLANET, THE 

COURT FOUND THAT PATENT OWNER'S STATEMENTS ABOUT THE REASONABLE 

AGGREGATE RATE FOR LTE, QUOTE, "HAVE LITTLE VALUE IN ARRIVING 

AT A BENCHMARK RATE TODAY FOR A NUMBER OF REASONS. THE CLAIMS 

ARE OBVIOUSLY SELF-SERVING." 

ISN'T THAT WHAT THE COURT HELD IN THAT CASE, SIR? 

A. IN UNWIRED PLANET? 

Q. YES, SIR. 

A. IT MAY HAVE. I DON'T HAVE IT MEMORIZED, BUT IT MAY HAVE 

SAID THAT.

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Q. OKAY. IS THAT CONSISTENT WITH YOUR RECOLLECTION, SIR? 

A. IT'S NOT INCONSISTENT. 

Q. OKAY. LET'S TALK ABOUT THE COMPARABLE AGREEMENTS ANALYSIS 

THAT YOU DID. 

A. OKAY.

Q. AND YOU SELECTED -- AND I'M GOING TO DO THIS IN A WAY THAT 

WE CAN DO IN OPEN COURT, SO I'D ASK YOU TO TRY TO DO THE SAME. 

A. I WILL DO MY VERY BEST.

Q. OKAY. YOU SELECTED EIGHT AGREEMENTS THAT YOU DETERMINED 

TO BE COMPARABLE FOR THIS ANALYSIS; CORRECT? 

A. I DID, YES.

Q. OKAY. AND SIX OF THOSE AGREEMENTS WERE WITH EITHER APPLE 

OR SAMSUNG; RIGHT? 

A. SIX OF THEM, YES.

Q. AND ALL OF THE COMPARABLE AGREEMENTS WERE WITH ONE OF JUST 

THREE NET LICENSORS, INTERDIGITAL, NOKIA, OR ERICSSON; RIGHT?

A. CORRECT, YES.

Q. AND IN SELECTING THOSE LICENSORS, YOU LOOKED AT THE NUMBER 

OF DEEMED SEPS THAT THEY HAD AND THE NUMBER OF IMPROVED 

CONTRIBUTIONS THAT THEY HAD; CORRECT? 

A. THAT WAS ONE FACTOR. 

Q. OKAY. 

A. ANOTHER FACTOR, AS I SAID, WAS WHETHER OR NOT THEY HAD A 

SUCCESSFUL LICENSING PROGRAM.

Q. THEY HAD ACTIVE LICENSING PROGRAMS; RIGHT? 

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A. I CALL THEM SUCCESSFUL.

Q. OKAY. I'LL ACCEPT THAT. 

BUT YOU DIDN'T LOOK AT THE ACTUAL CONTENT OF ANY OF THOSE 

COMPANIES' PATENT PORTFOLIOS; CORRECT? 

A. WELL, I HAD INFORMATION ON IT FROM THE DEEMED SEP STUDIES 

THAT I USED. SO I DIDN'T READ THEIR PATENTS IF THAT'S WHAT 

YOU'RE ASKING.

Q. YOU DIDN'T FORM ANY OPINION, AS A TECHNICAL MATTER, 

WHETHER THEY COVERED SIMILAR TECHNOLOGIES OR ASPECTS OF 

CELLULAR STANDARDS; RIGHT? 

A. I GUESS I WOULD JUST CLARIFY. WE'RE TALKING ABOUT 4G, 3G, 

AND 2G. SO THAT SIMILAR, I COULDN'T GO THROUGH IT FROM A 

TECHNICAL PERSPECTIVE AND READ THEM AND SEE IF THAT'S A SIMILAR 

PORTION OF 4G OR 3G IF THAT'S WHAT YOU'RE ASKING.

Q. WELL, YOU DIDN'T FORM AN OPINION, FOR EXAMPLE, THAT ONE OF 

THEM HAD A STRONG CARRIER AGGREGATION PORTFOLIO OR ONE OF THEM 

HAD A STRONG HETNET PORTFOLIO; CORRECT? 

A. CORRECT. SO THOSE ARE WHAT I WAS JUST SAYING, TECHNICAL 

ASPECTS OF 4G.

Q. VERY GOOD. SO YOU EXCLUDED ALSO, AS YOU MENTIONED 

EARLIER, FROM YOUR ANALYSIS EVERY SINGLE ONE OF QUALCOMM'S OWN 

LICENSE AGREEMENTS AS A COMPARABLE; YES?

A. I DID NOT USE THEM AS COMPARABLES, CORRECT.

Q. AND ONE OF THE REASONS, AS YOU'VE SAID, THAT YOU DID THAT 

WAS BECAUSE YOU UNDERSTOOD FROM COUNSEL THAT THOSE LICENSE 

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AGREEMENTS WERE AFFECTED BY THE CONDUCT THAT IS BEING 

CHALLENGED IN THIS CASE; CORRECT?

A. CORRECT. 

Q. SO YOU DIDN'T USE ANY QUALCOMM AGREEMENTS THAT WERE SIGNED 

BEFORE QUALCOMM HAD A CHIP BUSINESS; RIGHT? 

A. CORRECT, I DID NOT.

Q. AND YOU DIDN'T USE ANY QUALCOMM AGREEMENTS WITH LICENSEES 

WHO NEVER BOUGHT A SINGLE CHIP FROM QUALCOMM; RIGHT? 

A. OH, QUALCOMM LICENSEES. 

Q. YES. 

A. I THOUGHT YOU WERE TALKING ABOUT MY LICENSEES. THEY DID. 

BUT, NO, NOT QUALCOMM LICENSEES.

Q. AND I'M TALKING ABOUT QUALCOMM AGREEMENTS; RIGHT? 

A. CORRECT.

Q. SO YOU DIDN'T USE ANY QUALCOMM WCDMA AGREEMENTS WHERE 

QUALCOMM WAS NOT EVEN ALLEGED TO HAVE MARKET POWER; CORRECT?

A. I DIDN'T USE ANY QUALCOMM AGREEMENTS. I'M NOT SURE 

WHETHER OR NOT THERE ARE QUALCOMM AGREEMENTS THAT ARE ALLEGED 

NOT TO HAVE MARKET POWER OR NOT.

Q. OKAY. YOU DIDN'T INCLUDE QUALCOMM AGREEMENTS THAT WERE 

EXECUTED UNDER THE SUPERVISION OF THE NDRC, THE CHINESE 

ANTITRUST REGULATORY AGENCY; CORRECT? 

A. I DID NOT INCLUDE QUALCOMM AGREEMENTS IN MY ANALYSIS.

Q. OKAY. AND JUST TO ROUND IT OUT, YOU ALSO EXCLUDED A 

QUALCOMM AGREEMENT WITH SAMSUNG EXECUTED A YEAR AGO IN JANUARY 

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2018 AFTER A DECISION BY THE KOREA FAIR TRADE COMMISSION AND 

UNDER ITS SUPERVISION; CORRECT? 

A. I DID NOT INCLUDE -- I THINK YOU'RE TALKING ABOUT AN 

AMENDMENT TO THEIR 2008 AGREEMENT OR SOMETHING LIKE THAT. IS 

THAT WHAT YOU'RE ASKING ABOUT?

Q. THERE'S A SET OF AGREEMENTS, SIR. SOME OF THEM ARE 

AMENDMENTS AND SOME OF THEM ARE BRAND NEW. 

YOU DID NOT INCLUDE THEM? 

A. I DID NOT INCLUDE THEM, YES, THAT'S CORRECT.

Q. OKAY. AND ONE OF THE CRITERIA YOU USED TO COLLECT YOUR 

COMPARABLE AGREEMENTS, HOWEVER, AS YOU MENTIONED, IS THE DATE 

ON WHICH THE AGREEMENT WAS EXECUTED; YES?

A. YES, THAT IS CORRECT.

Q. AND YOU PICKED AGREEMENTS THAT WERE EXECUTED AFTER THE 

DECISION BY JUDGE ROBARTS IN THE MICROSOFT VERSUS MOTOROLA CASE 

IN 2013? 

A. THAT TIMEFRAME, YES.

Q. AND THAT'S BECAUSE, IN YOUR OPINION, THE INDUSTRY'S 

UNDERSTANDING OF A FRAND COMMITMENT DEVELOPED SIGNIFICANTLY IN 

THE YEARS FOLLOWING THAT DECISION? 

A. YES. THE APPLICATIONS OF THE METHODS THAT PEOPLE USED 

CHANGED. 

Q. WELL, YOU EXCLUDED AGREEMENTS PRIOR TO 2013 BECAUSE THIS 

LESS DEVELOPED UNDERSTANDING OF FRAND COULD HAVE LED THOSE 

AGREEMENTS TO BE HIGHER THAN WHAT YOU CONSIDERED TO BE A FAIR 

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AND REASONABLE RATE; CORRECT? 

A. I MEAN, THE REASON THAT I EXCLUDED THEM WAS BECAUSE PRIOR 

TO THAT, PEOPLE WERE TRYING TO VALUE -- I KNOW PEOPLE THAT WERE 

TRYING TO VALUE THE STANDARD AND THE LICENSE BASED ON THE VALUE 

OF THE STANDARD, NOT THE VALUE OF THE PATENTS, AND THAT'S SORT 

OF A DELINEATING FACTOR THAT I'M TRYING TO LOOK AT. 

Q. OKAY. SO THERE WERE -- PRIOR TO 2013, YOUR VIEW IS THAT 

THE ROYALTY RATES DERIVED IN LICENSE AGREEMENTS FOR CELLULAR 

SEPS COULD VERY WELL HAVE BEEN ABOVE FRAND BECAUSE OF THESE 

OTHER FACTORS; RIGHT? 

A. THAT IS ONE OF THEM, YES.

Q. ALL RIGHT. AND SO YOU'RE AWARE THAT QUALCOMM HAS SIGNED 

LOTS OF LICENSE AGREEMENTS BEFORE 2013; RIGHT? 

A. I AM, YES.

Q. AND TO THE EXTENT THAT A QUALCOMM LICENSE AGREEMENT 

EXECUTED PRIOR TO 2013 EXCEEDS WHAT YOU CONSIDER TO BE A FRAND 

RATE, YOU CAN'T SAY, ONE WAY OR THE OTHER, WHETHER THAT'S 

BECAUSE OF CHIP LEVERAGE OR BECAUSE OF THIS LESS DEVELOPED 

UNDERSTANDING OF FRAND THAT EXISTED AT THE TIME; CORRECT? 

A. I CAN'T -- I CANNOT SAY. I HAVE AN OPINION THAT IT 

SHOULDN'T BE ABLE TO CONTINUE TO CHARGE THAT, BUT I CAN'T SAY 

FOR THOSE AGREEMENTS AT THAT TIME.

Q. SO YOU CAN'T -- YOU, IN FACT, ARE NOT OFFERING ANY OPINION 

AT ALL ON WHY QUALCOMM'S RATES ARE, AS YOU SAY, ABOVE A FAIR 

AND REASONABLE RATE; CORRECT? 

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A. CORRECT. 

Q. ALL RIGHT. 

YOUR ASSIGNMENT WAS NOT TO ISOLATE ANY KIND OF CHIP 

LEVERAGE; YES? 

A. IT WAS NOT.

Q. ALL RIGHT. AND IT'S ALSO TRUE THAT YOUR ANALYSIS DOESN'T 

GO BACK BEFORE 2011; RIGHT? 

A. THAT'S CORRECT, YES.

Q. SO YOU HAVE NOT EXPRESSED AN OPINION IN THIS CASE AS TO 

WHETHER ANY ROYALTIES PAID BY QUALCOMM LICENSEES PRIOR TO 2011 

WERE FAIR AND REASONABLE AT THE TIME THEY WERE PAID; YES? 

A. THE ONLY THING I WILL SAY IS IT DOESN'T SEEM LOGICAL THAT 

THEY WOULD NECESSARILY BE FRAND. 

BUT I DON'T HAVE AN OPINION ON THAT.

Q. AND YOU HAVEN'T DONE AN ANALYSIS THAT PREDATES 2011? 

A. I HAVE NOT DONE AN ANALYSIS THAT DOES THAT, NO.

Q. OKAY. SO YOU CANNOT EXPRESS A VIEW ONE WAY OR THE OTHER 

ON WHETHER THE RATES IN ANY QUALCOMM LICENSE AGREEMENT BEFORE 

2011 WERE OR WERE NOT ABOVE A FRAND RATE AT THE TIME THOSE 

AGREEMENTS WERE SIGNED; RIGHT? 

A. I GUESS IT DOESN'T SEEM REASONABLE THAT THEY WOULD BE. 

BUT I DON'T HAVE A -- I DIDN'T DO THE ANALYSIS TO HAVE AN 

OPINION ON IT. 

Q. OKAY. LET'S TALK A BIT ABOUT THE PORTFOLIO STRENGTH 

METRICS THAT YOU USED. 

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1060

AND TO DERIVE YOUR PORTFOLIO STRENGTH METRIC, ONE THING 

THAT YOU DID IS YOU CONSIDERED WHAT YOU CALLED PORTFOLIO 

STRENGTH INDICATORS; RIGHT?

A. CORRECT.

Q. AND THOSE ARE THE DEEMED SEPS AND THE APPROVED 

CONTRIBUTIONS WE'VE BEEN TALKING ABOUT THIS AFTERNOON? 

A. CORRECT.

Q. SO I'LL START WITH DEEMED SEPS. 

YOU CALCULATE THE PORTION OF DEEMED SEPS FOR EACH LICENSOR 

BY USING THE THIRD PARTY STUDIES THAT YOU REFERENCED EARLIER 

TODAY; YES? 

A. YES, CORRECT.

Q. AND WITHIN EACH CELLULAR STANDARD, YOU GIVE EACH OF THOSE 

STUDIES THE EXACT SAME WEIGHT; RIGHT? 

A. NO, THAT'S NOT TRUE. 

Q. WELL, WITHIN EACH STANDARD, YOU DIDN'T DIFFERENTIATE ON 

THE BASIS -- DO YOU HAVE A CORRECTION? 

A. I JUST WANT TO MAKE SURE THAT I UNDERSTAND. SO IF YOU'RE 

TALKING ABOUT LTE, I HAVE A HIGHER WEIGHTING FOR LTE FOR 

MULTIMODE DEVICES THAN CDMA. 

Q. I UNDERSTAND. THAT'S WHY I ASKED, WITHIN A GIVEN 

STANDARD -- 

A. OKAY.

Q. WITHIN A GIVEN STANDARD, YOUR ANALYSIS GIVES ALL STUDIES 

THE EXACT SAME WEIGHT; IS THAT RIGHT?

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A. THAT WOULD BE ACCURATE, YES.

Q. AND YOU DID NOT -- 

A. EACH PERMUTATION I RUN WOULD BE GIVEN THE SAME WEIGHT.

Q. AND WHEN YOU RUN THE PERMUTATIONS, EACH ONE GETS THE SAME 

WEIGHT; CORRECT? 

A. WITHIN A STANDARD.

Q. RIGHT. AND YOU DIDN'T DIFFERENTIATE IN ANY WAY ON THE 

IDENTITY OF THE SPONSOR OF THE STANDARD; IS THAT RIGHT? 

A. COULD I CORRECT MY LAST ANSWER? 

AGAIN, I'M RUNNING A BLEND HERE, AND SO IN CERTAIN CASES 

THE -- IN CERTAIN CASES, IF THE OPTIMAL BLEND WERE THAT YOU 

SHOULD PUT MORE WEIGHT ON THE APPROVED CONTRIBUTIONS THAN THE 

DEEMED SEPS, I WOULD HAVE CONSIDERED THAT. 

SO ONE STUDY MIGHT GET MORE WEIGHT VERSUS ANOTHER STUDY 

BASED ON MY ALGORITHM AND MY COMPARISON TO THE AGREEMENTS THAT 

I LOOKED AT, THE COMPARABLE AGREEMENTS.

Q. ALL RIGHT. WE'LL GET TO YOUR BLENDING. 

LET'S FOCUS ON THE STUDIES THEMSELVES TO START. 

YOU DIDN'T DIFFERENTIATE IN ANY WAY BASED ON THE IDENTITY 

OF THE SPONSOR OF THE STUDY; RIGHT? 

A. PRE-BLENDING, NO. 

Q. OKAY. 

A. I WOULD NOT HAVE.

Q. AND YOU DIDN'T DIFFERENTIATE AMONG ANY OF THE STUDIES 

BASED ON WHETHER THEY WERE PREPARED IN LITIGATION OR REGULATORY 

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PROCEEDINGS ON ONE HAND, OR IN AN ACADEMIC CONTEXT IN ANOTHER; 

CORRECT? 

A. I DID NOT, NO.

Q. AND YOU DIDN'T FORM A VIEW ON WHETHER ANY OF THESE 

PARTICULAR STUDIES IS MORE RELIABLE THAN ANOTHER; RIGHT? 

A. NO. I MEAN, THAT'S WHY I RAN EVERY SINGLE PERMUTATION I 

COULD.

Q. OKAY. AND EACH OF THESE STUDIES COUNTS THE NUMBER OF 

DEEMED SEPS AND ACCORDS EACH AND EVERY DEEMED SEP THE EXACT 

SAME WEIGHT; IS THAT RIGHT? 

A. NO, THAT'S NOT ACCURATE.

Q. OKAY. BECAUSE YOU'RE REFERRING TO THE IRUNWAY STUDY; IS 

THAT RIGHT? 

A. I'M REFERRING TO THE IRUNWAY STUDY, YES.

Q. THE IRUNWAY STUDY DISTINGUISHES BETWEEN SEMINAL PATENTS 

AND OTHER PATENTS; IS THAT RIGHT? 

A. THAT IS CORRECT, YES.

Q. BUT YOU IGNORED THAT DISTINCTION IN PERFORMING YOUR 

ANALYSIS AND TREATED ALL CELLULAR DEEMED SEPS AS HAVING THE 

EXACT SAME WEIGHT; CORRECT? 

A. I DIDN'T IGNORE IT. I USED THE SEMINAL RANKING, OR THE 

SEMINAL AMOUNTS, OR THE SEMINAL PATENTS IN MY ANALYSIS.

Q. ALL RIGHT. AND YOU TREATED EACH OF THEM THE EXACT SAME 

WEIGHT; CORRECT?

A. CORRECT.

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1063

Q. BUT YOU AGREE THAT NOT ALL CELLULAR SEPS HAVE THE EXACT 

SAME VALUE; CORRECT? 

A. THAT'S CORRECT. THAT'S WHY I BLEND THEM WITH APPROVED 

CONTRIBUTIONS.

Q. ALL RIGHT. SO THERE'S A WIDE DISPERSION AMONG THE VALUE 

OF INDIVIDUAL CELLULAR SEPS; RIGHT? 

A. THAT WOULD BE MY EXPECTATION.

Q. OKAY. SO YOU TESTIFIED THAT YOU FIXED THAT PROBLEM 

THROUGH YOUR BLENDING WITH APPROVED CONTRIBUTIONS; CORRECT? 

A. I DON'T WANT TO SAY I FIXED THAT PROBLEM. I TESTED THE 

OPTIMAL BLEND VERSUS THE COMPARABLE AGREEMENTS TO SEE WHAT 

WOULD MOST REPLICATE WHAT WAS NEGOTIATED IN THE REAL WORLD. 

Q. OKAY. SO LET'S BREAK THAT DOWN. 

FOR WCDMA AND LTE, YOUR APPROVED CONTRIBUTION ANALYSIS 

CAME FROM THE SIGNAL STUDY YOU MENTIONED TO MR. ROSS; CORRECT? 

A. YES, JUST WITH ONE CLARIFICATION. IN ADDITION TO THE 

SIGNAL STUDY, FOR CDMA 2000, I USED A STUDY THAT WAS USED BY -- 

DEVELOPED BY QUALCOMM.

Q. OKAY. AGAIN, SIR, JUST TRY AND FOCUS ON THE QUESTION. 

I ASKED YOU, FOR WCDMA AND LTE, THAT WAS THE SOURCE, THE 

SIGNAL STUDY WAS THE SOURCE OF YOUR APPROVED CONTRIBUTION 

COUNT; CORRECT?

A. YES, THAT IS CORRECT. 

Q. OKAY. AND YOU USED A DIFFERENT DOCUMENT FOR CDMA 2000? 

A. CORRECT. 

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1064

Q. ALL RIGHT. AND WITHIN -- LET'S DO SIGNALS FIRST. 

WITHIN THE SIGNALS RESEARCH REPORT, EACH CONTRIBUTION GETS 

THE EXACT SAME WEIGHT; CORRECT? 

A. YES. 

Q. OKAY. AND YOU DIDN'T LOOK AT THE UNDERLYING CONTRIBUTIONS 

THEMSELVES IN ORDER TO FORM YOUR OPINION? YOU JUST USED THE 

NUMERICAL COUNT OF CONTRIBUTIONS; CORRECT? 

A. THAT IS WHAT I DID, YES.

Q. OKAY. AND, IN FACT, IN FORMING YOUR OPINION, YOU DIDN'T 

KNOW WHAT THE CRITERIA WERE THAT SIGNALS USED TO DEEM A 

CONTRIBUTION APPROVED; CORRECT? 

A. THE ONE THING THAT I KNEW WAS THE WORKING GROUPS THAT THEY 

HAD SELECTED. SO I KNEW THAT. 

BUT I DIDN'T KNOW ALL OF THE REASONS WHY THEY APPROVED -- 

SELECTED THEM FOR CONTRIBUTIONS.

Q. AND YOU DIDN'T KNOW THE PROCEDURES THAT THE INDIVIDUAL 

WORKING GROUPS USED TO DECIDE WHETHER A CONTRIBUTION WAS 

APPROVED OR NOT? 

A. THAT IS ACCURATE, YES.

Q. OKAY. AND, IN FACT, YOU DIDN'T KNOW WHAT THE DISTINCTION 

WAS BETWEEN A CONTRIBUTION THAT IS APPROVED AND A CONTRIBUTION 

THAT IS NOTED BY A STANDARDS BODY; CORRECT? 

A. CORRECT. THAT'S WHY I TESTED THE AVANCI STUDY VERSUS MY 

COMPARABLE AGREEMENTS SO THAT I KNEW THAT IT WAS PROBATIVE OF 

WHAT A PORTFOLIO STRENGTH RATIO SHOULD BE.

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1065

Q. SIR, I'M RESTRAINING MYSELF FROM INTERRUPTING, BUT PLEASE 

STICK TO THE QUESTION. YOU'LL HAVE AN OPPORTUNITY TO ANSWER ON 

REDIRECT. OKAY? 

A. OKAY.

Q. ALL RIGHT. SO WHEN YOU FORMED YOUR OPINION, YOU ALSO 

DIDN'T CONSIDER OTHER TYPES OF STANDARDS BODY SUBMISSIONS. FOR 

EXAMPLE, YOU DIDN'T KNOW WHAT A STUDY ITEM WAS; CORRECT? 

A. I -- I DO NOT KNOW WHAT A STUDY ITEM IS. I'VE HEARD THE 

TERM, BUT I CAN'T -- I DON'T -- I'M NOT A TECHNICAL EXPERT, SO 

I DON'T KNOW.

Q. AND YOU DIDN'T KNOW WHAT A WORK ITEM WAS; CORRECT? 

A. AGAIN, I'VE HEARD THE TERM. I'VE BEEN AROUND THIS 

INDUSTRY. BUT I CAN'T DESCRIBE IT IN TECHNICAL DETAIL.

Q. AND YOU DON'T KNOW ONE WAY OR THE OTHER WHETHER THE SIGNAL 

STUDY COUNTED THOSE TYPES OF CONTRIBUTIONS; CORRECT? 

A. THAT IS ACCURATE.

Q. ALL RIGHT. SO I'D LIKE YOU TO LOOK AT TAB 6 IN YOUR 

BINDER, PLEASE. 

A. YES. 

Q. THIS IS A PUBLIC DOCUMENT, YOUR HONOR. 

AND THIS IS A STANDARDS CONTRIBUTION THAT WAS COUNTED BY 

THE SIGNAL STUDY, AS WE DISCUSSED AT YOUR DEPOSITION; CORRECT? 

A. WELL, YOU -- YOU REPRESENTED THAT TO ME, THAT IT WAS -- 

MR. ROSS: YOUR HONOR, I DON'T HAVE A TAB 6 IN MY 

BINDER. 

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1066

THE COURT: I THINK IT'S QX 6457. IS THAT RIGHT? 

MR. BORNSTEIN: YES, YOUR HONOR. QX 6457. 

THE COURT: DO YOU HAVE THAT, OR NOT? 

COULD YOU GET HIM ANOTHER BINDER? 

MR. BORNSTEIN: OF COURSE. 

IT'S COMING. 

THE COURT: OKAY. THANK YOU. 

MR. BORNSTEIN: YEP. SORRY ABOUT THAT. 

Q. AND SO YOU SAID I MENTIONED THIS TO YOU AT THE DEPOSITION. 

YOU DIDN'T GO BACK AFTER THE DEPOSITION TO FIND OUT ONE 

WAY OR THE OTHER WHETHER THAT CONTRIBUTION WAS COUNTED BY THE 

SIGNAL STUDY; IS THAT RIGHT? 

A. WELL, IT'S NOT POSSIBLE TO FIGURE THAT OUT BECAUSE I ONLY 

HAVE THE SIGNAL STUDY WHICH HAS AGGREGATE NUMBERS, SO I DON'T 

KNOW WHETHER OR NOT THIS WAS IN THERE OR NOT.

Q. SIR, YOU HAVE THE SPREADSHEET THAT WAS PRODUCED BY AVANCI 

AND RELIES ON THE SIGNAL STUDY AS WELL; CORRECT? 

A. I DON'T KNOW. I -- I USED THE TOTALS, SO I DON'T KNOW IF 

IT'S IN THERE. 

Q. YOU DIDN'T LOOK TO SEE EVEN WHAT THE UNDERLYING 

CONTRIBUTIONS WERE IN THE SPREADSHEET THAT WAS PRODUCED BY 

AVANCI IN THIS CASE? 

A. I DID NOT, NO.

Q. OKAY. LET'S LOOK AT THE CONTRIBUTION JUST TO HAVE AN 

EXAMPLE OF ONE OF THE THINGS THAT WAS COUNTED. 

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1067

THIS IS A DOCUMENT, YOU CAN SEE THE SOURCE OF QX 6457 -- 

THE COURT: WOULD YOU LIKE TO ADMIT THIS? 

MR. BORNSTEIN: I DON'T THINK I NEED TO ADMIT IT, 

YOUR HONOR. I'M HAPPY TO. 

THE COURT: ARE YOU GOING TO BE PUTTING IT UP ON THE 

MONITOR? 

MR. BORNSTEIN: IF IT MAKES THINGS EASIER, I'LL MOVE 

TO ADMIT IT IN EVIDENCE. IT'S A PUBLIC DOCUMENT, YOUR HONOR. 

THE COURT: NO OBJECTION? 

MR. ROSS: NO OBJECTION. 

THE COURT: IT'S ADMITTED. 

(DEFENDANT'S EXHIBIT QX 6457 WAS ADMITTED IN EVIDENCE.) 

THE COURT: GO AHEAD, PLEASE. 

MR. BORNSTEIN: OKAY. THANK YOU, YOUR HONOR. 

Q. SO THE SOURCE IDENTIFIED FOR QX 6457 IS NOKIA; RIGHT? 

A. YES. 

Q. ALL RIGHT. AND THE DOCUMENT REFLECTS THAT THE REASON FOR 

THE CHANGE BEING SUBMITTED TO THE STANDARDS BODY HERE WAS THAT 

SOME OF THE REFERENCES TO 24.008 TO THE FORMER 03.22 ARE NOW 

OUT OF DATE; CORRECT?

A. CORRECT. 

Q. AND IT EVEN SAYS THAT THIS LATE R99 CR -- WHICH IS CHANGE 

REQUEST -- HAS NO IMPACT ON THE IMPLEMENTATIONS; CORRECT? 

A. I SEE THAT IT SAYS THAT, YES.

Q. AND IF YOU LOOK AT THE ACTUAL CHANGE REQUEST, JUST BY 

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LASINSKI CROSS BY MR. BORNSTEIN

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1068

TURNING THE PAGES, YOU CAN SEE THAT ALL THAT IT DOES HERE IS IT 

RED LINES SOME OF THE CROSS REFERENCES TO CHANGE THEM FROM ONE 

SECTION TO ANOTHER; CORRECT? 

A. YES, I SEE THAT. 

Q. ALL RIGHT. AND YOU'RE NOT REPRESENTING THAT THESE REVISED 

CROSS REFERENCES REFLECT SOME SUBSTANTIVE INNOVATION ON NOKIA'S 

PART; IS THAT RIGHT?

A. THAT'S RIGHT. AS I TESTIFIED ON DIRECT, I THINK THAT 

THERE WOULD BE ALL DIFFERENT TYPES OF APPROVED CONTRIBUTIONS.

Q. LET'S LOOK AT ONE MORE. 

TAKE A LOOK AT TAB 5, PLEASE. AND TAB 5 IS A BIG 

DOCUMENT. IT'S QX 9144. 

DO YOU HAVE TAB 5? 

MR. ROSS: YOUR HONOR, I OBJECT TO THIS DOCUMENT. I 

BELIEVE COUNSEL FOR QUALCOMM WITHDREW ALL DOCUMENTS EXCEPT FOR 

WHAT'S ADMITTED AS QX 6457 THROUGH THE HPO PROCESS. 

MR. BORNSTEIN: THAT'S THE ONLY PORTION OF THE 

DOCUMENT THAT I INTEND TO USE. 

THE COURT: BUT DID YOU WITHDRAW IT IN THE HPO 

PROCESS? 

MR. BORNSTEIN: NO, YOUR HONOR. WE INDICATED THAT 

THAT WAS THE ONLY PORTION WE INTENDED TO ADMIT. 

AND I HAVE A LITTLE RED STICKY -- 

THE COURT: I'D LIKE THE PAPER, PLEASE. WHAT IS 

THAT? IS THAT A -- 

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LASINSKI CROSS BY MR. BORNSTEIN

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1069

MR. ROSS: THIS IS AN E-MAIL. 

THE COURT: OKAY. I'LL TAKE A LOOK AT IT. 

MR. BORNSTEIN: OKAY, SURE. THERE'S A LITTLE RED 

STICKY TAB ON THE PORTION WE INTEND TO USE IN YOUR BINDER. 

(PAUSE IN PROCEEDINGS.) 

THE COURT: THIS IS 7472? 

MR. BORNSTEIN: 7492, YOUR HONOR. THERE SHOULD BE A 

RED STICKY TAB AT THE TOP. 

THE COURT: I'M SORRY. THIS IS QX 9144; IS THAT 

RIGHT? 

MR. BORNSTEIN: THAT'S CORRECT, YES. 

THE COURT: OKAY. WELL, ON THIS EXHIBIT TAG, IT SAYS 

IT'S 7472. 

MR. BORNSTEIN: 7472 IS ON THE FIRST PAGE, YOUR 

HONOR. 

THIS DOCUMENT IS A COMPILATION OF SEVERAL EXHIBITS THAT 

WERE INTRODUCED AT DEPOSITION, AND WE'RE INTENDING TO USE -- 

THERE SHOULD BE, AT THE VERY TOP OF YOUR HONOR'S BINDER, A RED 

STICKY FLAG THAT IDENTIFIES THE PAGE THAT WE'RE INTENDING TO 

REFER TO. 

THE COURT: OKAY. GIVE ME JUST ONE MINUTE, PLEASE. 

MR. BORNSTEIN: SURE. 

THE COURT: WHAT'S THE RELEVANT -- THIS IS AN E-MAIL 

CHAIN, SO WHICH ONE SHOULD I BE READING? 

MR. BORNSTEIN: I DEFER TO COUNSEL FOR THE FTC ON 

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1070

THAT. I'M NOT QUITE SURE WHAT YOUR HONOR IS LOOKING AT. 

MR. ROSS: YOUR HONOR, I APOLOGIZE. 

I UNDERSTOOD QX 6457, WHICH IS NOT ON QUALCOMM'S EXHIBIT 

LIST, TO REPRESENT THIS DOCUMENT THAT QUALCOMM IS INTENDING TO 

USE HERE. 

THE COURT: I'M SORRY. SAY THAT AGAIN. 

MR. ROSS: I'M SORRY. THIS DOCUMENT, QX 9144, IS A 

COMPILATION OF MANY DOCUMENTS. 

THE COURT: YES. 

MR. ROSS: QUALCOMM AGREED TO WITHDRAW ALL BUT ONE OF 

THESE DOCUMENTS -- 

THE COURT: OKAY. 

MR. ROSS: -- AND WOULD USE ONE DOCUMENT. 

THE COURT: ALL RIGHT. 

MR. ROSS: I UNDERSTOOD WHAT I WAS JUST HANDED AS 

TAB 6, QX 6457, WAS THAT DOCUMENT. 

MR. BORNSTEIN: NO. 

MR. ROSS: IF THAT'S NOT TRUE, THEN THE FTC OBJECTS 

TO THE ADMISSION OF QX 6457 AS NOT ON QUALCOMM'S EXHIBIT LIST. 

THE COURT: OH, I SEE WHAT YOU'RE SAYING. YOU 

THOUGHT 6457 WAS THE PORTION OF 9144 THAT WAS GOING TO BE 

USED -- 

MR. ROSS: YES. 

THE COURT: -- DURING THE CROSS? 

MR. ROSS: YES, YOUR HONOR. 

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1071

THE COURT: AND THAT'S REPRESENTED IN THIS E-MAIL? 

OR WHERE IS THAT REPRESENTED? 

MR. ROSS: NO, THAT'S NOT AN E-MAIL. 

THE COURT: OKAY. BUT YOU'RE SAYING NOW THEY WANT TO 

GET IN OTHER PARTS OF 9144 SEPARATE FROM QX 6457? 

MR. BORNSTEIN: YOUR HONOR, WE ONLY WANT TO GET IN 

THAT ONE PART OF -- AND ONLY WANT TO USE WITH THE WITNESS THE 

PART OF 9144 THAT WAS IDENTIFIED TO THE FTC AND HAS THE RED 

FLAG AT THE TOP OF YOUR HONOR'S BINDER AND IT'S LABELED 

CX 7492. 

THE COURT: OKAY. WHAT'S YOUR POSITION ON THAT? 

MR. ROSS: YOUR HONOR, I'M NOT SURE WHERE THAT 

DOCUMENT ENDS. 

THE FTC HAS NO OBJECTION TO THAT IF QUALCOMM WILL WITHDRAW 

QX 6457, WHICH WAS NOT ON QUALCOMM'S EXHIBIT LIST. 

MR. BORNSTEIN: QX 6457 WAS DISCLOSED TO THE FTC AS 

PART OF THE HPO PROCESS, YOUR HONOR. I'M NOT SURE WHERE THIS 

OBJECTION IS COMING FROM. WE HEARD NOTHING ABOUT IT UNTIL 

RIGHT NOW. 

MR. ROSS: I WILL TAKE COUNSEL'S REPRESENTATION ON 

THAT. IF THAT IS TRUE, THEN WE WILL NOT OBJECT. 

MR. BORNSTEIN: I HAVE MY OWN E-MAIL. 

THE COURT: OKAY. GIVE ME JUST ONE MINUTE. 

THESE WOULD BE ON THE LASINSKI HPO'S? 

MR. BORNSTEIN: THERE WAS NO FILING ON IT, YOUR 

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1072

HONOR, BUT YES. WE DISCLOSED IT TO THE FTC AS PART OF THE HPO 

PROCESS WHEN WE EXCHANGED EVIDENCE WITH EACH OTHER AND THEY DID 

NOT FILE ANY OBJECTION TO IT WITH THE COURT. 

THE COURT: OKAY. SO DO YOU HAVE ANY OBJECTION TO 

6457 OR 7292? CX 7492? 

MR. ROSS: IF COUNSEL FOR QUALCOMM COULD IDENTIFY 

WHERE CX 7492 ENDS, WE WOULD NOT OBJECT TO ITS ADMISSION. 

MR. BORNSTEIN: CX 7492 ENDS, I BELIEVE, AT THE 

VERY -- OH, NO. IT ENDS -- THERE ARE FOUR PAGES, IT'S WHERE 

7493 BEGINS. 

THERE'S ACTUALLY SOMETHING AT THE -- 

THE COURT: IT'S LONGER THAN FOUR PAGES. 

MR. BORNSTEIN: NO, NO. THERE ARE FOUR PAGES LEFT IN 

THE DOCUMENT, YOUR HONOR, AFTER 7492 ENDS. 

I CAN SHOW COUNSEL FOR THE FTC. 

THE COURT: HOW MANY PAGES IS THIS DOCUMENT, BECAUSE 

THERE'S NO PAGE NUMBERING, FOR 7492? 

MR. BORNSTEIN: 7492 IS, IT LOOKS LIKE 17 PAGES, YOUR 

HONOR. HAPPILY, IT ENDS WITH SOMETHING THAT SAYS "END OF 

MODIFIED SECTION" AFTER THE TABLE. 

THE COURT: OKAY. I DON'T GET 17 PAGES, BUT THAT'S 

FINE. 

SO YOU JUST WANT 7492? 

MR. BORNSTEIN: THAT'S RIGHT. 

MR. ROSS: THE FTC HAS NO OBJECTION. 

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1073

THE COURT: OKAY. IT'S CONFUSING BECAUSE YOU HAVE 

ALL OF THIS AS ONE BIG DOCUMENT. 

MR. BORNSTEIN: THAT WAS HOW IT WAS MARKED ON THE 

EXHIBIT LIST, YOUR HONOR. IF IT WOULD BE HELPFUL -- 

THE COURT: ALL RIGHT. BUT YOU'RE NOT INCLUDING 

7493, WHICH IS ON THE SAME PAGE? 

MR. BORNSTEIN: CORRECT. 

THE COURT: ALL RIGHT. 

DO YOU HAVE ANY OBJECTION TO 7492 ONLY? 

MR. ROSS: NO OBJECTION. 

THE COURT: ALL RIGHT. IT'S ADMITTED. 

(PLAINTIFF'S EXHIBIT 7492 WAS ADMITTED IN EVIDENCE.) 

THE COURT: GO AHEAD. 

BY MR. BORNSTEIN:

Q. MAYBE YOU HAD SOME TIME TO LOOK AT THIS DOCUMENT WHILE WE 

WERE HAVING THE DISCUSSION, MR. LASINSKI. 

WHAT HAS NOW BEEN ADMITTED AS CX 7492 IS ANOTHER CHANGE 

REQUEST WITH THE SOURCE IDENTIFIED AS ERICSSON; IS THAT RIGHT? 

A. I SEE THAT, YES. I HAVEN'T BEEN ABLE TO FIND IT IN MY 

BINDER, BUT I CAN SEE THAT ON THE SCREEN. 

THE COURT: WHY DON'T YOU GO UP THERE AND SHOW IT TO 

HIM. 

MR. BORNSTEIN: IF I MAY JUST HAND THE WITNESS MY 

BINDER. (HANDING.) 

THE WITNESS: THANK YOU. 

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MR. BORNSTEIN: AND I'LL TAKE YOURS. WE'LL TRADE. 

THE WITNESS: OKAY. 

BY MR. BORNSTEIN:

Q. OKAY. AND YOU CAN SEE IT ON THE SCREEN AS WELL, SIR. 

A. I CAN, YES.

Q. AND DO YOU SEE WHERE IT SAYS, A LITTLE LOWER DOWN FROM 

WHAT WE HAVE ON THE SCREEN, THAT THE REASON FOR THE CHANGE IS 

THAT THE FORMATTING OF SOME OF THE UE CAPABILITIES IS 

INCORRECT? 

IS THAT RIGHT? 

A. THAT'S WHAT IT SAYS. 

Q. AND THEN THERE ARE SOME OTHER REASONS FOR THE CHANGE 

IDENTIFIED, LIKE THE NAMING CAPABILITY IS NOT EXACTLY THE SAME 

AS IN TS 25.331, AND CLOSE TO MY HEART, A HYPHEN IS MISSING IN 

MULTI CELL. 

DO YOU SEE THAT?

A. I SEE THAT, YES.

Q. AND IF YOU LOOK AT THE DOCUMENT ITSELF AS YOU TURN THE 

PAGES, YOU WILL SEE THE ONLY CHANGES BEING MADE TO THE 

SPECIFICATION ARE FORMATTING AND CHANGES AND THE ADDITION OF 

HYPHEN AND THE LIKE; CORRECT? 

A. YES.

Q. AND YOU'RE ALSO NOT REPRESENTING THAT THIS CHANGE REQUEST, 

WHICH IS AN APPROVED CONTRIBUTION, REPRESENTS SOME KIND OF 

SUBSTANTIVE CONTRIBUTION TO THE STANDARD MADE BY ERICSSON; 

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CORRECT? 

A. NO. I MEAN, NO, I'M NOT A TECHNICAL PERSON, SO I CAN'T DO 

THAT.

Q. AND YOU'RE NOT REPRESENTING, EITHER, THAT THIS CORRELATES 

IN SOME WAY TO A VALUABLE CELLULAR SEP THAT ERICSSON HOLDS; 

RIGHT? 

A. NOT THIS INDIVIDUAL DOCUMENT. 

Q. ALL RIGHT. 

A. THE ENTIRE AVANCI STUDY, YES, I DO SAY THAT. BUT NOT THIS 

SPECIFIC DOCUMENT.

Q. AND YOU HAVEN'T DONE A REVIEW TO ASSESS WHETHER THE TWO 

CHANGE REQUESTS WE JUST LOOKED AT ARE ISOLATED EXAMPLES OR 

WHETHER THERE ARE HUNDREDS OF SIMILAR SUBMISSIONS INCLUDED IN 

THE AVANCI STUDY? YOU HAVEN'T CHECKED THAT; RIGHT? 

A. NO, I HAVEN'T. I DIDN'T NEED TO.

Q. RIGHT. BECAUSE YOUR ANALYSIS GIVES EACH AND EVERY ONE OF 

THESE CONTRIBUTIONS THE EXACT SAME WEIGHT; CORRECT? 

A. WELL, FIRST OF ALL, IT'S NOT MY ANALYSIS. IT'S AVANCI'S 

COMMISSIONED STUDY. 

Q. THE STUDY ON WHICH YOU RELIED, SIR? 

A. I DID RELY ON IT, YES.

Q. SORRY? 

A. IT'S AVANCI'S STUDY.

Q. ALL RIGHT. AND THAT STUDY ON WHICH YOU RELIED GIVES EACH 

AND EVERY ONE OF THESE APPROVED CONTRIBUTIONS, INCLUDING THE 

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ONES WE LOOKED AT, THE EXACT SAME WEIGHT; CORRECT? 

A. THAT WOULD BE MY UNDERSTANDING, YES.

Q. AND YOU HAVEN'T ANALYZED WHETHER STRONGER PATENTS ARE MORE 

LIKELY TO HAVE MORE APPROVED CONTRIBUTIONS ASSOCIATED WITH 

THEM; CORRECT? 

A. CORRECT, I HAVEN'T DONE THAT SPECIFIC ANALYSIS -- 

Q. AND -- 

A. -- FROM A PATENT-BY-PATENT-STANDPOINT. CERTAINLY FROM A 

PORTFOLIO STANDPOINT, YES, I HAVE DONE THAT. 

Q. SIR, YOU HAVEN'T ANALYZED WHETHER STRONGER PATENTS ARE 

MORE LIKELY TO HAVE MORE APPROVED CONTRIBUTIONS ASSOCIATED WITH 

THEM; ISN'T THAT RIGHT? 

A. NOT INDIVIDUAL PATENTS, THAT'S CORRECT. 

Q. OKAY. AND THE COURT, IN TCL VERSUS ERICSSON, WHICH YOU'VE 

MENTIONED A FEW TIMES, IT FOUND, QUOTE, "AN ABSENCE OF ANY 

EVIDENCE THAT CONTRIBUTION COUNTING CORRESPONDS TO ACTUAL 

INTELLECTUAL PROPERTY RIGHTS." 

ISN'T THAT RIGHT? 

A. I THINK THAT THOSE ARE THE WORDS ON THE PAGE. HOWEVER, I 

WILL NOTE THAT IN TCL ERICSSON, THEY DID USE APPROVED 

CONTRIBUTIONS TO UNPACK ONE OF THE AGREEMENTS.

Q. WELL, THE TCL COURT ALSO SAID, AND I'LL QUOTE, 

"CONTRIBUTIONS CAN BE MADE FOR IDEAS THAT ARE UNPATENTED, 

UNPATENTABLE, PATENTED BY SOMEONE ELSE, OR SPLIT INTO MULTIPLE 

CONTRIBUTIONS." 

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IS THAT RIGHT? 

A. THAT IS NOT INCONSISTENT WITH MY RECOLLECTION. 

Q. OKAY. AND YOU ACTUALLY AGREE WITH THAT STATEMENT, DON'T 

YOU? 

A. I AGREE THAT THAT'S POSSIBLE, YES.

Q. YOU AGREE THAT CONTRIBUTIONS CAN BE MADE FOR IDEAS THAT 

ARE UNPATENTED, UNPATENTABLE, PATENTED BY SOMEONE ELSE, OR 

SPLIT INTO MULTIPLE CONTRIBUTIONS; RIGHT?

A. YES. 

Q. OKAY. NOW, YOU MENTIONED EARLIER IN CLARIFYING FOR ME 

THAT YOU ALSO RELIED ON THE DOCUMENT FROM QUALCOMM THAT 

IDENTIFIED CONTRIBUTIONS RELATING TO CDMA 2000; IS THAT RIGHT?

A. CORRECT, YES.

Q. AND THAT DOCUMENT ADDRESSED CONTRIBUTIONS ONLY BETWEEN 

2003 AND 2005; RIGHT?

A. THAT IS CORRECT. BUT THERE WAS -- 

Q. BUT THE CDMA 2000 STUDY, SIR, WAS PUBLISHED ORIGINALLY IN 

THE YEAR 2000; RIGHT? 

A. THAT IS ACCURATE. HOWEVER, THERE WAS ANOTHER STUDY IN THE 

RECORD WHICH HAD A LONGER TIMEFRAME AND THE 2003 TO 2005 

DOCUMENT HAD MORE -- A LARGER PERCENTAGE FOR QUALCOMM THAN THE 

OTHER STUDY.

Q. OKAY. BUT YOU RELIED ON THAT ONE DOCUMENT, IS THAT RIGHT, 

SIR, IN REACHING YOUR OPINIONS IN THIS CASE? 

A. YES, BECAUSE IT WAS CONSERVATIVE.

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Q. WELL, BUT IT RELATED TO CONTRIBUTIONS ONLY IN 2003 TO 

2005; CORRECT?

A. THAT IS CORRECT. BUT WHAT I'M DOING IS CALCULATING 

QUALCOMM'S SHARE, AND SO THAT HAD A HIGHER PROPORTION OF SHARE 

FOR APPROVED CONTRIBUTIONS THAN THE OTHER INFORMATION IN THE 

RECORD. 

SO WHEN YOU CALCULATE -- WHEN YOU'RE USING IT FROM A 

SHARING PERCENTAGE, THAT'S WHAT MATTERS, NOT THE TOTAL NUMBER 

OF CONTRIBUTIONS.

Q. EXCEPT YOU USED ONE OF TWO THINGS THAT ARE IN THE RECORD 

WITHOUT PAYING ATTENTION TO THE FACT THAT NEITHER ONE COULD BE 

GOOD; RIGHT? JUST BECAUSE ONE IS BETTER DOESN'T MEAN YOU 

SHOULD HAVE RELIED ON IT; AM I RIGHT? 

A. I -- ULTIMATELY -- ULTIMATELY, IT IS GOOD AND I KNOW IT'S 

GOOD BECAUSE I TESTED IT, I TESTED THE USE OF THAT VERSUS THE 

COMPARABLE AGREEMENTS. SO -- 

Q. SO LET'S JUST DO THE FACTS, OKAY? 

A. SURE.

Q. THE FACT IS THE DOCUMENT ON WHICH YOU REPLIED COUNTS 

CONTRIBUTIONS MADE BETWEEN 2003 AND 2005; CORRECT? 

A. THAT IS CORRECT, YES.

Q. ALL RIGHT. AND THE STUDY WAS PUBLISHED -- EXCUSE ME. 

THE STANDARD WAS FIRST PUBLISHED IN THE YEAR 2000; 

CORRECT? 

A. THAT'S MY UNDERSTANDING, YES.

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Q. ALL RIGHT. AND YOU ALSO UNDERSTAND THAT MORE 

CONTRIBUTIONS ARE MADE PRIOR TO THE INITIAL PUBLICATION OF THE 

STANDARD THAN AFTER; RIGHT? 

A. CORRECT, YES. 

Q. OKAY. SO YOUR CONTRIBUTION SHARE FOR CDMA 2000 DOESN'T 

TAKE ACCOUNT OF THE MAJORITY OF THE CONTRIBUTIONS THAT WERE 

MADE TO THAT STANDARD; CORRECT? 

A. THAT'S HIGHLY LIKELY. I DON'T KNOW THE ANSWER TO THAT. 

Q. OKAY. 

THE COURT: COULD I INTERRUPT YOU? 

MR. BORNSTEIN: OF COURSE. 

THE COURT: COULD WE TAKE OUR BREAK? 

MR. BORNSTEIN: YES, OF COURSE. MAY I MAKE ONE 

SUGGESTION, YOUR HONOR? 

THE COURT: WHAT'S THAT? 

MR. BORNSTEIN: THERE IS A SHORT BIT OF 

CROSS-EXAMINATION THAT I COULD PROBABLY DO MORE EASILY UNDER 

SEAL. MAYBE WE CAN DO THAT FOR A MINUTE WHEN WE GET BACK FROM 

THE BREAK AND THEN OPEN THE COURTROOM. 

THE COURT: UM -- 

MR. BORNSTEIN: OTHERWISE I CAN TRY AND DO IT WITHOUT 

A SEALED COURTROOM. THAT'S FINE WITH ME, TOO. 

THE COURT: IT'S ONE MINUTE? IS THAT YOUR END, OR 

YOU HAVE MORE TO DO? 

MR. BORNSTEIN: I DO HAVE MORE. I JUST THOUGHT -- 

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1080

THE COURT: THEN LET'S GO AHEAD AND TAKE A BREAK IF 

THAT'S OKAY. 

MR. BORNSTEIN: YEAH, OF COURSE. 

THE COURT: LET'S TAKE A TEN MINUTE BREAK, AND WE CAN 

DO THE SEALED FIRST. THAT'S FINE. 

MR. BORNSTEIN: OKAY. THANK YOU. 

THE COURT: ALL RIGHT. WE'RE IN RECESS. PLEASE GO 

AHEAD. 

(RECESS FROM 3:37 P.M. UNTIL 3:45 P.M.)

(PROCEEDINGS UNDER SEAL FROM PAGES 1081 TO 1083.)

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1084

(IN OPEN COURT.)

THE COURT: ALL RIGHT. ARE YOU READY TO PROCEED? 

MR. BORNSTEIN: YES, YOUR HONOR. 

THE COURT: 3:48. GO AHEAD, PLEASE. 

MR. BORNSTEIN: THANK YOU. 

Q. I'D LIKE TO TALK ABOUT NON-STANDARD ESSENTIAL PATENTS, 

MR. LASINSKI. 

A. OKAY.

Q. IN THE PORTFOLIO STRENGTH METRIC THAT YOU CONSTRUCTED IN 

THIS MATTER, YOU ARE MEASURING THE RELATIVE VALUE OF QUALCOMM'S 

SEP PORTFOLIO AND OTHER PATENT HOLDERS' SEP PORTFOLIO; CORRECT? 

A. YES.

Q. ALL RIGHT. YOU'RE NOT TAKING ACCOUNT OF THE VALUE OF 

EITHER QUALCOMM'S OR ANY OTHER PATENT HOLDER'S NON-SEPS IN THAT 

METRIC; RIGHT?

A. I'M NOT MEASURING THAT, NO.

Q. ALL RIGHT. AND YOU -- YOU DON'T ACTUALLY KNOW HOW MANY 

NON-SEPS QUALCOMM HAS; RIGHT? 

A. THAT'S CORRECT, YES.

Q. AND YOU'RE NOT AWARE OF THE VARIOUS TECHNOLOGY AREAS THAT 

ARE COVERED BY QUALCOMM'S NON-SEPS; RIGHT?

A. WELL, THAT'S NOT TRUE. I AM AWARE OF SOME OF THE 

TECHNOLOGY AREAS. I DON'T KNOW ALL OF THEM.

Q. OKAY. FAIR ENOUGH. 

AND WE'RE TALKING HERE ABOUT CELLULAR SEPS AND NON-SEPS? 

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IS THAT RIGHT? THAT'S YOUR UNDERSTANDING OF MY QUESTIONS? 

A. I THINK WHAT YOU'RE TALKING ABOUT IS WHAT I CALL 

IMPLEMENTATION PATENTS IMPLEMENTING NON-CELLULAR TECHNOLOGY, OR 

NON-STANDARD TECHNOLOGY.

Q. LET'S HAVE COMMON TERMINOLOGY. YOUR PORTFOLIO STRENGTH 

METRIC MEASURES THE RELATIVE VALUE OF QUALCOMM'S CELLULAR SEPS 

VERSUS OTHERS CELLULAR SEPS; CORRECT? 

A. CORRECT. 

Q. IT DOES NOT MEASURE WHAT I WAS CALLING NON-SEPS AND YOU 

WERE CALLING IMPLEMENTATION PATENTS; RIGHT? 

A. CORRECT.

Q. AND YOU UNDERSTAND THOSE TWO TO BE THE SAME THING BY A 

DIFFERENT NAME? 

A. I THINK WE'RE ON THE SAME PAGE.

Q. OKAY. BUT YOU HAVE CONCLUDED THAT THE PORTION OF 

QUALCOMM'S HISTORICAL LICENSING REVENUE THAT IS ATTRIBUTABLE TO 

NON-STANDARD ESSENTIAL PATENTS IS DE MINIMIS; RIGHT? 

A. YES. WELL, THE PORTION OF THEIR REVENUES THAT THEY'VE 

RECEIVED IS DE -- WOULD BE DE MINIMIS FOR NON-STANDARD 

ESSENTIAL PATENTS, YES.

Q. CORRECT. THAT WAS WHAT I ASKED YOU. 

A. OKAY.

Q. NOW, I KNOW YOU CAME HERE AFTER THE LUNCH BREAK TODAY, BUT 

WERE YOU AWARE THAT MR. DONALDSON THIS MORNING TESTIFIED THAT 

HE WOULD EXPECT THE ROYALTY RATE FOR CELLULAR SEPS TO BE LOWER 

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1086

THAN FOR NON-SEPS? 

A. I WAS NOT AWARE OF THAT, NO. 

Q. OKAY. NOW, IN YOUR TOP-DOWN ANALYSIS, THE AGGREGATE RATES 

THAT YOU'VE IDENTIFIED, THE 5 PERCENT, THE 6 PERCENT, THOSE ARE 

FOR CELLULAR SEPS ONLY; RIGHT?

A. THOSE ARE, YES.

Q. AND THE RANGE OF RATES THAT YOU PUT ON THE SCREEN FOR 

QUALCOMM'S PORTFOLIO, THAT'S ALSO JUST QUALCOMM'S CELLULAR 

SEPS; CORRECT? 

A. THOSE ARE FOR, YEAH, WHAT WOULD BE APPROPRIATE TO 

CALCULATE, TO COLLECT FOR THEIR SEPS. 

Q. AND IF QUALCOMM'S OTHER PATENTS, THE IMPLEMENTATION 

PATENTS, THE NON-SEPS, HAVE MORE THAN A DE MINIMIS VALUE, THEN 

QUALCOMM'S FULL PORTFOLIO RATE SHOULD BE HIGHER THAN THE 

NUMBERS THAT YOU PUT ON THE SCREEN; CORRECT? 

A. FROM A MATHEMATICAL STANDPOINT, THAT WOULD BE ACCURATE, 

YES.

Q. OKAY. AND YOU WOULD ALSO AGREE THAT IF A COURT IN GERMANY 

OR CHINA OR SOMEWHERE DETERMINED THAT AN OEM, LIKE APPLE, 

INFRINGED QUALCOMM'S NON-SEPS AND ENJOINED APPLE FROM SELLING 

INFRINGING DEVICES, THAT COULD ALTER YOUR CONCLUSION ABOUT 

WHETHER THOSE NON-SEPS HAD JUST A DE MINIMIS VALUE; RIGHT? 

A. NO, IT WOULDN'T. I MEAN, WHAT I'M CALCULATING HERE IS 

WHAT THE ROYALTY REVENUE SHOULD BE, AND I SAY THAT THE ROYALTY 

REVENUE -- THE AMOUNT OF ROYALTY REVENUE THAT THEY'RE 

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1087

COLLECTING FROM THEIR NON-SEPS IS DE MINIMIS. 

AGAIN, I DIDN'T SAY THAT THEIR IMPLEMENTATION PATENT 

PORTFOLIO IS DE MINIMIS.

Q. OKAY. SO LET'S TAKE A LOOK AT PAGE 92 OF YOUR DEPOSITION. 

A. YEP.

Q. WE CAN CALL THAT UP ON THE SCREEN, TOO, FOR EASE, 

BEGINNING AT PAGE -- EXCUSE ME, LINE 11. 

YOU WERE ASKED THE QUESTION, "IF AN INJUNCTION WERE ISSUED 

BY A FOREIGN COURT ON A NON-STANDARD ESSENTIAL PATENT, BARRING 

APPLE FROM SELLING INFRINGING DEVICES, WOULD THAT AFFECT YOUR 

CONCLUSION AS TO WHETHER QUALCOMM'S NON-SEPS HAD ANY VALUE?"

AND THEN YOU FAIRLY CORRECTED ME TO SAY, NO, NO, I MEANT 

DE MINIMIS VALUE, AND I TOOK YOUR CLARIFICATION AND YOU SAID 

"IT MAY." 

CORRECT? 

A. I -- YES, EXACTLY.

Q. OKAY. AND YOU STAND BY THAT TESTIMONY? 

A. YES, EXACTLY. THAT'S WHAT I'M TRYING TO SAY.

Q. ALL RIGHT. YOUR PORTFOLIO STRENGTH METRIC, YOU DIDN'T, AS 

YOU SAID, USE EITHER DEEMED SEPS OR APPROVED CONTRIBUTIONS 

ALONE, YOU BLENDED THEM; RIGHT? 

A. I DID, YES. 

Q. ALL RIGHT. AND YOU DID THAT BECAUSE NEITHER METRIC 

PRODUCED WHAT YOU REFERRED TO AS CONSISTENT RESULTS WHEN USED 

ALL BY ITSELF WITH YOUR COMPARABLE AGREEMENTS? 

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A. HAS CONSISTENT RESULTS, YES. 

Q. OKAY. AND SO YOU CREATED THE OPTIMAL BLENDING OF THE TWO, 

THE TWO METRICS; CORRECT?

A. I DETERMINED THE OPTIMAL BLENDING.

Q. ALL RIGHT. AND YOU DETERMINED A DIFFERENT OPTIMAL BLEND 

FOR EACH OF YOUR 189 PERMUTATIONS OF DEEMED SEP STUDIES; RIGHT? 

A. YES. 

Q. ALL RIGHT. SO THERE'S NOT ONE OPTIMAL BLEND, THERE ARE 

189 BLENDS, EACH OF WHICH YOU HAVE SAID IS OPTIMAL UNDER THE 

CIRCUMSTANCES; CORRECT? 

A. YES, FOR EACH INDIVIDUAL SET OF STUDIES THAT I USED IT 

WOULD BE OPTIMAL.

Q. AND FOR SOME OF THOSE BLENDS THAT YOU CALL OPTIMAL, YOU 

GIVE MORE WEIGHT TO THE DEEMED SEPS, AND IN SOME OF THEM YOU 

GIVE MORE WEIGHT TO THE APPROVED CONTRIBUTIONS; RIGHT? 

A. THAT IS CORRECT, YES. 

Q. OKAY. AND THE WAY YOU DETERMINED, TO USE YOUR WORD, THE 

OPTIMAL BLENDS IS WHAT YOU CALLED A STANDARD DEVIATION 

ANALYSIS; RIGHT?

A. IT'S COMMONLY REFERRED TO AS STANDARD DEVIATION, YES, 

EXACTLY.

Q. OKAY. AND THE STANDARD DEVIATION THAT WE'RE TALKING ABOUT 

HERE IS THE STANDARD DEVIATION OF THE AGGREGATE RATES THAT WERE 

IMPLIED BY THE EIGHT COMPARABLE AGREEMENTS THAT YOU SELECTED; 

RIGHT? 

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1089

A. WELL, THAT'S A MATHEMATICAL WAY THAT I LOOKED AT IT. 

I'M BASICALLY CALCULATING THE STANDARD DEVIATION OF WHAT'S 

MOST PREDICTIVE OF WHAT THE DIFFERENCE IN THE -- WHAT TWO 

PATENT HOLDERS OR WHAT TWO COMPANIES CAN NEGOTIATE FOR THEIR 

SEPS.

Q. YOU CALCULATED THE STANDARD DEVIATION OF THE AGGREGATE 

RATES THAT WERE IMPLIED BY THE EIGHT COMPARABLE AGREEMENTS THAT 

YOU SELECTED; RIGHT? THAT WAS THE METHODOLOGY THAT YOU 

EMPLOYED? 

A. THAT'S THE MATH BEHIND IT. 

Q. OKAY. SO IF YOU CHANGED THE COMPARABLE AGREEMENTS THAT 

YOU RELIED ON, THAT COULD LEAD TO DIFFERENT OPTIMAL BLENDING OF 

THE DEEMED SEPS AND THE APPROVED CONTRIBUTIONS; RIGHT? 

A. THAT'S POSSIBLE. 

Q. AND YOU BELIEVE THAT HAD THIS METHODOLOGY LEADING TO A 

PORTFOLIO STRENGTH METRIC WOULD BE RELIABLE FOR THE COURT EVEN 

IF DEEMED SEPS THEMSELVES ARE NOT A GOOD MEASURE OF THE 

STRENGTH OF A CELLULAR SEP PORTFOLIO; CORRECT? 

A. I GUESS I'VE NEVER, I'VE NEVER RUN INTO A SITUATION WHERE 

THEY'RE NOT A GOOD MEASURE. BUT -- 

Q. ALL RIGHT. LET'S LOOK AT YOUR DEPOSITION, SIR. 

A. YES, SIR. SURE.

Q. PAGE 44 BEGINNING AT LINE 2, I ASKED YOU THE QUESTION, "DO 

YOU BELIEVE THAT YOUR PORTFOLIO STRENGTH RATIO CAN BE RELIED ON 

BY THE COURT IN THIS MATTER EVEN IF DEEMED SEPS ARE NOT A 

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1090

RELIABLE METRIC OF THE STRENGTH OF THE CELLULAR SEP PORTFOLIO?"

AND YOU SAID "YES"; CORRECT?

A. CORRECT.

Q. AND YOU STAND BY THAT TESTIMONY? 

A. I DO, YES. 

Q. ALL RIGHT. AND YOU ALSO BELIEVE THAT THE COURT CAN RELY 

ON YOUR PORTFOLIO STRENGTH METRIC EVEN IF APPROVED 

CONTRIBUTIONS ARE NOT A RELIABLE METRIC OF THE STRENGTH OF A 

CELLULAR SEP PORTFOLIO? 

A. I DO, YES.

Q. IN FACT, SIR, YOU BELIEVE THE COURT CAN RELY ON YOUR 

METHODOLOGY EVEN IF NEITHER DEEMED SEPS NOR APPROVED 

CONTRIBUTIONS IS ACTUALLY A GOOD INDICATOR OF THE STRENGTH OF A 

CELLULAR SEP PORTFOLIO; RIGHT? 

A. YES.

Q. OKAY. 

A. I CHOSE WHERE I DOUBLE-CHECKED IT, SO FOR SURE.

Q. OKAY. AND YOU DIDN'T ATTEMPT TO ESTABLISH ANY THRESHOLD 

STANDARD DEVIATION LEVEL TO SHOW THAT YOUR PORTFOLIO STRENGTH 

METRIC HAS EXPLANATORY VALUE, DID YOU? 

A. I DID NOT, NO.

Q. AND YOU JUST PICKED THE STANDARD DEVIATION -- EXCUSE ME. 

YOU JUST PICKED THE BLEND WHERE THE STANDARD DEVIATION WAS 

THE LOWEST; RIGHT? 

A. I PICKED, YES, WHERE IT WAS LOWEST.

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1091

Q. AND YOU'RE NOT AWARE OF ANYBODY, OTHER THAN YOURSELF, WHO 

HAS APPLIED THIS KIND OF STANDARD DEVIATION ANALYSIS TO BLEND 

APPROVED CONTRIBUTIONS AND DEEMED SEPS; RIGHT? 

A. THAT IS ACCURATE.

Q. YOU'RE NOT AWARE OF ANY ACADEMIC METHODOLOGY, ACADEMIC 

STUDY THAT USES THIS METHODOLOGY; RIGHT? 

A. WELL, AS I SAID, I DON'T THINK YOU COULD BECAUSE WHERE ARE 

YOU GOING TO GET EIGHT AGREEMENTS THAT YOU CAN LOOK AT IN 

ACADEMIA? IT'S NOT POSSIBLE. SO I'M NOT AWARE OF ONE.

Q. YOU'RE NOT AWARE OF ANYBODY -- IN FACT, THIS IS A 

METHODOLOGY THAT YOU DEVELOPED YOURSELF, CORRECT, ALONG WITH 

YOUR TEAM AT 284 PARTNERS? 

A. WELL, USING THE STANDARD DEVIATION. BLENDING IS NOT A 

METHODOLOGY THAT I DEVELOPED MYSELF.

Q. BLENDING APPROVED CONTRIBUTIONS AND DEEMED SEPS TO DERIVE 

A PORTFOLIO STRENGTH METRIC IN THIS WAY IS SOMETHING THAT YOU 

AND YOUR TEAM DEVELOPED YOURSELVES; CORRECT? 

A. WE, YES. 

Q. ALL RIGHT. AND YOU DEVELOPED IT IN THE CONTEXT OF 

LITIGATION; IS THAT RIGHT? 

A. YES. I'M NOT SURE YOU COULD DO IT OUTSIDE OF LITIGATION 

BECAUSE YOU'RE NOT GOING TO HAVE ALL THE AGREEMENTS THAT WE 

HAVE HERE.

Q. WELL, IT WASN'T THIS LITIGATION, WAS IT? YOU DEVELOPED 

THIS IN A DIFFERENT LITIGATION? IT WAS THE HUAWEI AGAINST 

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LASINSKI CROSS BY MR. BORNSTEIN

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1092

SAMSUNG LITIGATION WHERE YOU FIRST EMPLOYED THIS ANALYSIS? 

A. THAT'S WHERE WE FIRST EMPLOYED IT, YES.

Q. ALL RIGHT. AND IN THAT CASE, SIR, YOU TESTIFIED FOR WHOM? 

A. FOR HUAWEI. WELL, I WILL BE TESTIFYING IF IT GOES TO 

TRIAL.

Q. ALL RIGHT. AND YOU WERE DEPOSED ON BEHALF OF HUAWEI; IS 

THAT RIGHT?

A. YES.

Q. OKAY. AND THE METHODOLOGY THAT YOU DEVELOPED FOR HUAWEI 

IN THAT CASE IS THE METHODOLOGY THAT YOU ARE NOW EMPLOYING HERE 

FOR THE FTC; IS THAT RIGHT? 

A. I DEVELOPED THAT METHOD FOR MY OPINION, NOT FOR HUAWEI. 

BUT I WAS WORKING FOR HUAWEI, CORRECT.

Q. AND IT'S THE SAME METHODOLOGY THAT YOU'RE EMPLOYING HERE; 

CORRECT? 

A. YES. 

MR. BORNSTEIN: OKAY. THANK YOU. I HAVE NO FURTHER 

QUESTIONS, YOUR HONOR. 

THE COURT: OKAY. IT'S 3:59. AND THAT TIME STARTED 

AT 3:49, NOT 3:48. 

OKAY. LET ME KNOW WHEN YOU'RE READY, AND I'LL START YOUR 

TIME. 

MR. ROSS: YOUR HONOR. I ANTICIPATE NEEDING TO ASK 

ONE OR TWO QUESTIONS UNDER SEAL. I CAN DO THAT EITHER AT THE 

BEGINNING OR THE END AS YOU PREFER. 

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THE COURT: OKAY. WHY DON'T YOU DO THAT AT THE END, 

PLEASE. 

OKAY. ARE YOU READY? 

MR. ROSS: YES. 

THE COURT: 3:59. GO AHEAD, PLEASE. 

REDIRECT EXAMINATION

BY MR. ROSS: 

Q. MR. LASINSKI, COUNSEL FOR QUALCOMM ASKED YOU A NUMBER OF 

QUESTIONS ABOUT YOUR WORK FOR HUAWEI. HOW MANY CLIENTS ROUGHLY 

DOES 284 PARTNERS HAVE? 

A. I KNOW THAT WE HAVE MORE -- SINCE I STARTED, I KNOW WE 

HAVE MORE THAN A HUNDRED, OR HAVE HAD MORE THAN A HUNDRED.

Q. AND QUALCOMM IS GENERALLY A NET LICENSOR; IS THAT CORRECT? 

A. YES.

Q. HAVE YOU DONE WORK FOR NET LICENSORS? 

A. YES. 

Q. COUNSEL FOR QUALCOMM ALSO ASKED YOU A SERIES OF QUESTIONS 

ABOUT THE AGGREGATE RATES YOU PICKED. 

DO YOU RECALL THAT? 

A. YES.

Q. AND IN PARTICULAR, HE ASKED YOU ABOUT AN 8 PERCENT 

AGGREGATE RATE? 

A. CORRECT. 

Q. IF YOU HAD USED AN 8 PERCENT AGGREGATE RATE, WOULD THAT 

CHANGE YOUR CONCLUSIONS? 

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1094

A. NO, NOT AT ALL. I MEAN, THE FRAND RATES THAT I CALCULATE 

VERSUS WHAT QUALCOMM HAS HISTORICALLY CHARGED ARE WAY BEYOND 

WHAT AN 8 PERCENT AGGREGATE RATE WOULD ALLOW EITHER.

Q. SO THAT RATE WOULDN'T EVEN BE -- THE RESULTS YOU WOULD 

DERIVE USING AN 8 PERCENT RATE WOULDN'T EVEN BE CLOSE TO A 

FRAND RATE? 

A. CORRECT.

Q. COUNSEL FOR QUALCOMM ASKED YOU ALSO ABOUT GIVING ALL OF 

THE STUDIES YOU'VE USED IN YOUR ANALYSIS THE SAME WEIGHT. 

DO YOU RECALL THAT TESTIMONY?

A. YES.

Q. WHEN HE SAYS THE SAME WEIGHT, COULD YOU CLARIFY WHAT THAT 

MEANS? 

A. I -- I THINK WHAT HE MEANS IS THAT WE RAN 189 DIFFERENT 

PERMUTATIONS, SO WE USED THEM, YOU KNOW, IN EACH OF OUR 

DIFFERENT -- YOU KNOW, WE USED DIFFERENT STUDIES FOR EACH OF 

OUR PERMUTATIONS. SO I RAN 189 PERMUTATION, I DIDN'T REJECT 

ANY.

Q. DID YOU PICK ONE AS BEING THE BEST OR THE MOST PROBATIVE? 

A. NO, I DID NOT. 

Q. YOU ENDED UP WITH A RANGE OF RESULTS BASED ON THOSE 189 

PERMUTATIONS; CORRECT? 

MR. BORNSTEIN: OBJECTION. LEADING, YOUR HONOR. 

THE WITNESS: I DID, YES. 

THE COURT: EXCUSE ME. IF I CAN GIVE ME ONE MINUTE. 

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UNITED STATES COURT REPORTERS

1095

SUSTAINED. I'LL STRIKE THE QUESTION. GO AHEAD AND REPHRASE 

THAT LAST ONE, PLEASE. 

BY MR. ROSS:

Q. HOW DID YOU GET FROM THOSE 189 STUDIES TO YOUR 

CONCLUSIONS? 

A. OKAY. THERE WEREN'T 189 STUDIES, THERE WERE 10 STUDIES. 

AND IF YOU LOOK AT EACH STUDY BY EACH MODE OF THE DEVICE, 

DEVICES, FOR EXAMPLE, GSM, WCDMA, LTE, AND ALTER THE STUDIES IN 

EVERY PERMUTATION POSSIBLE, YOU GET 189 PERMUTATIONS.

THE COURT: WHAT DOES THAT MEAN? I DON'T EVEN KNOW 

WHAT THAT MEANS. 

BY MR. ROSS:

Q. MR. LASINSKI, WHAT DOES THAT MEAN? 

A. SO THERE ARE THREE STUDIES FOR -- THERE ARE TWO STUDIES 

FOR GSM, PLUS THE AVERAGE; THERE ARE TWO STUDIES FOR WCDMA PLUS 

AN AVERAGE; THERE ARE TWO STUDIES I BELIEVE, IF I'M CORRECT, 

FOR CDMA 2000, AND THEN SIX STUDIES FOR LTE. 

IF YOU HAVE TO VARY EACH STUDY EACH TIME, YOU WOULD END UP 

WITH THREE TIMES, THREE TIMES, THREE TIMES SEVEN, WHICH WOULD 

GET YOU 189 DIFFERENT PERMUTATIONS, VARYING ONLY ONE VARIABLE 

AT A TIME. 

Q. DID YOU PICK ONE OF THESE PERMUTATIONS AS THE BEST STUDY 

SET TO USE? 

A. NO, I DID NOT. 

Q. HOW DOES THE RANGE OF RATES YOU CALCULATED USING EACH OF 

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1096

THOSE POSSIBLE PERMUTATIONS COMPARE TO THE RATES QUALCOMM HAS 

HISTORICALLY CHARGED?

A. THE RANGE IS SIGNIFICANTLY BELOW. 

Q. COUNSEL FOR QUALCOMM ASKED YOU A SERIES OF QUESTIONS ABOUT 

IMPLEMENTATION PATENTS. 

DO YOU RECALL THAT TESTIMONY?

A. YES. 

Q. ARE YOU AWARE OF OTHER EXAMPLES BESIDES THE HUAWEI EXAMPLE 

YOU MENTIONED WHICH SUPPORT YOUR CONCLUSIONS ON THE PORTION OF 

QUALCOMM REVENUES ATTRIBUTABLE TO IMPLEMENTATION PATENTS? 

A. YES. I CAN THINK OF A FEW THINGS. 

I MENTIONED THE HUAWEI AGREEMENT WHERE HUAWEI IS CHARGED 

THE SAME RATE WITH AND WITHOUT A LICENSE TO ITS IMPLEMENTATION 

PATENTS. 

MR. BORNSTEIN: YOUR HONOR, I JUST WANT TO MAKE SURE 

THE WITNESS IS NOT GOING TO GET INTO ANYTHING THAT MIGHT 

REQUIRE SEALING THE COURTROOM. 

THE WITNESS: OH, I THINK IT COULD. 

MR. ROSS: I CAN MOVE ON AND RE-ASK THAT QUESTION 

UNDER SEAL. 

THE WITNESS: OKAY. 

THE COURT: OKAY. WHY DON'T WE DO THAT. 

BY MR. ROSS:

Q. COUNSEL FOR QUALCOMM ASKED YOU A SERIES OF QUESTIONS ABOUT 

YOUR STANDARD DEVIATION PART OF YOUR ANALYSIS? 

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LASINSKI REDIRECT BY MR. ROSS

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1097

A. YES.

Q. DID COUNSEL FOR -- DID QUALCOMM PUT FORTH ANY EXPERT 

ANALYSIS CORRECTING YOUR ANALYSIS OR QUANTITATIVELY SHOWING 

WHAT WOULD HAPPEN IF YOU USED A DIFFERENT METHODOLOGY? 

A. NO, THEY DID NOT. 

Q. WHY DO YOU BELIEVE YOUR ANALYSIS IS RELIABLE EVEN IF ONE 

PIECE OR A COMPONENT OF YOUR ANALYSIS MAY NOT BE?

A. BECAUSE, AGAIN, I SHOWED 189 DIFFERENT PERMUTATIONS, SO 

189 DIFFERENT BLENDS. 

SO IF ONE PIECE OF IT ISN'T RELIABLE, THERE'S ALL THE 

OTHER ANALYSES THAT I PERFORMED. AND SO IT WOULD, IT WOULD NOT 

BE JUST -- IT'S NOT JUST ONE PERMUTATION. IT'S 189 DIFFERENT 

PERMUTATIONS. 

Q. JUST ONE THING BEFORE WE MOVE UNDER SEAL. 

CAN I GET THE SECOND TO LAST SLIDE IN OUR DECK UP, PLEASE. 

MR. KOTARSKI: I BELIEVE THAT'S UNDER SEAL. 

MR. ROSS: I WILL SEAL IT. THANK YOU. 

Q. WITHOUT READING THE NUMBERS FROM THIS SLIDE, CAN YOU 

EXPLAIN WHAT THE BLUE BARS ON THIS SLIDE ARE? 

A. THE BLUE BARS SHOW WHAT -- THE RANGE OF RATES THAT I CAME 

UP WITH FOR QUALCOMM'S FRAND RATE, AND THE RED BARS SHOW WHAT 

THE ACTUAL CASH COLLECTIONS ARE.

Q. AND HOW CLOSE ARE THE BLUE BARS TO THE RANGE THAT 

QUALCOMM -- THE RATES THAT QUALCOMM ACTUALLY CHARGES?

A. THEY'RE SIGNIFICANTLY BELOW. 

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LASINSKI REDIRECT BY MR. ROSS

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1098

Q. SO IF YOU HAD MADE AN ADJUSTMENT TO SOME SMALL PIECE OF 

YOUR METHODOLOGY, WOULD THAT HAVE AFFECTED THE CONCLUSION YOU 

REACHED IN THIS MATTER? 

A. I DO NOT BELIEVE SO, NO. 

Q. WAS YOUR ASSIGNMENT IN THIS MATTER TO DETERMINE A SPECIFIC 

FRAND RATE? 

A. NO, IT WAS NOT.

Q. WHAT WAS IT? 

A. IT WAS TO DETERMINE ULTIMATELY WHAT I THOUGHT AN 

APPROPRIATE FRAND RATE FROM AN OVERALL RANGE STANDPOINT WOULD 

BE, AND THAT'S WHAT I DID TO SHOW THAT QUALCOMM'S RATES ARE NOT 

CONSISTENT WITH WHAT I THINK A RANGE OF FRAND RATES WOULD BE.

Q. AND ARE YOU CONFIDENT IN THOSE CONCLUSIONS EVEN AFTER THE 

QUESTIONS YOU WERE ASKED BY QUALCOMM'S COUNSEL?

A. YES, I AM. 

MR. ROSS: I HAVE TWO UNDER SEAL QUESTIONS, YOUR 

HONOR. 

THE COURT: OKAY. YOU LOOK LIKE YOU WERE JUMPING UP. 

MR. BORNSTEIN: WELL, I JUST WANT TO FIND OUT THE 

COURT'S REFERENCE ON HOW TO HANDLE THIS. I HAVE A COUPLE OF 

QUESTIONS I CAN DO THAT ARE NOT GOING TO BE UNDER SEAL IF YOU 

WANT TO DO THAT BEFORE EVERYONE GOES IN AND OUT, OR I CAN WAIT 

UNTIL MR. ROSS DOES HIS SEALED QUESTIONS BEFORE I CONTINUE. 

THE COURT: I DON'T HAVE A PREFERENCE. DO YOU HAVE A 

PREFERENCE? 

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LASINSKI REDIRECT BY MR. ROSS

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1099

MR. ROSS: I DO NOT. 

MR. BORNSTEIN: WHY DON'T WE FINISH UP AND THEN I CAN 

DO MINE IF THAT'S OKAY. 

MR. ROSS: THAT'S FINE. ARE YOU GOING TO ASK ANY 

UNDER SEAL? 

MR. BORNSTEIN: THAT'S WHY I SUGGESTED YOU GO FIRST, 

BECAUSE I DON'T KNOW THE ANSWER. 

MR. ROSS: THAT'S FINE. 

THE COURT: WAIT. WHAT'S HAPPENING? I THINK I 

MISSED THAT. 

MR. ROSS: I THINK WE'RE GOING UNDER SEAL. 

MR. BORNSTEIN: YES. 

THE COURT: I THOUGHT YOU WERE ASKING TO DO YOUR 

PUBLIC VERSION NOW. 

MR. BORNSTEIN: I WAS ASKING YOUR HONOR'S PREFERENCE, 

BUT I THINK THIS MAKES SENSE TO LET MR. ROSS FINISH AND I CAN 

FINISH UP AFTERWARDS. 

MR. ROSS: WHATEVER YOU PREFER IS FINE. 

THE COURT: I PREFER TO DO BOTH PUBLIC AND THEN BOTH 

SEALED. WHAT DO YOU THINK ABOUT THAT? 

MR. ROSS: THAT'S FINE WITH THE FTC. 

THE COURT: OKAY. BECAUSE IT COULD BE IT'LL GET 

CLOSE TO 4:30 AND THEN WE'LL JUST HAVE EVERYONE LEAVE FOR GOOD. 

MR. BORNSTEIN: I'LL BE VERY BRIEF, YOUR HONOR. 

THE COURT: OKAY. GO AHEAD, PLEASE. IT'S 4:07.

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LASINSKI RECROSS BY MR. BORNSTEIN

UNITED STATES COURT REPORTERS

1100

RECROSS-EXAMINATION

BY MR. BORNSTEIN:

Q. MR. ROSS JUST ASKED YOU A QUESTION AS TO HOW IT IS THAT 

THE COURT CAN RELY ON YOUR ANALYSIS IF ONE COMPONENT OF THE 

PORTFOLIO STRENGTH METRIC IS UNRELIABLE. DO YOU REMEMBER THAT 

QUESTION? 

A. YES.

Q. AND YOUR ANSWER WAS, WELL, I DID 189 DIFFERENT 

PERMUTATIONS, SO IF ONE OF THEM TURNS OUT TO BE A STINGER, 

THAT'S OKAY BECAUSE I HAVE 188 OTHERS; CORRECT?

A. I DIDN'T SAY THAT. 

Q. BUT THAT'S A FAIR SUMMARY OF WHAT YOU SAID; RIGHT, SIR? 

A. I WOULD SAY THAT THERE ARE MANY DIFFERENT PERMUTATIONS AND 

SOME MAY BE MORE RELIABLE THAN OTHERS.

Q. OKAY. BUT THE QUESTION I HAD ASKED YOU DURING MY 

CROSS-EXAMINATION WASN'T ABOUT ONE PERMUTATION BEING 

UNRELIABLE. 

I ASKED YOU WHETHER YOUR PORTFOLIO STRENGTH RATIO COULD BE 

RELIED ON BY THE COURT EVEN IF DEEMED SEPS THEMSELVES WERE NOT 

A RELIABLE INDICATOR OF PORTFOLIO STRENGTH; RIGHT? 

A. YES.

Q. OKAY. AND SO YOUR ANSWER ABOUT, WELL, I HAVE 188 OTHER 

PERMUTATIONS, THAT'S NOT REALLY RESPONSIVE TO THAT PROBLEM, IS 

IT? 

A. I MEAN, I GUESS IF YOU TAKE ALL OF THE DEEMED SEP STUDIES 

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LASINSKI RECROSS BY MR. BORNSTEIN

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1101

OUT OF THE EQUATION IT WOULDN'T BE RESPONSIVE. 

Q. RIGHT. 

A. BUT AGAIN, I SAID THAT THERE ARE OTHER ANALYSES THAT ONE 

COULD LOOK AT. FOR EXAMPLE, THE AVANCI PORTFOLIO STRENGTH 

RATIO.

Q. SURE. YOU ALSO SAID, THOUGH, THAT IF WE TOOK APPROVED 

CONTRIBUTIONS AND DETERMINED THAT THAT'S NOT RELIABLE, THE 

COURT COULD STILL RELY ON YOUR ANALYSIS; RIGHT? 

A. CORRECT. 

Q. OKAY. 

A. BECAUSE MY ANALYSIS, AGAIN, IS CONSISTENT WITH WHAT AVANCI 

IS COMING UP WITH.

Q. AND WHAT YOU TESTIFIED, SIR, WAS EVEN IF DEEMED SEPS ARE A 

BAD INDICATOR AND EVEN IF APPROVED CONTRIBUTIONS ARE A BAD 

INDICATOR, YOU THINK THE COURT CAN STILL RELY ON THE PORTFOLIO 

STRENGTH METRIC THAT YOU CONDUCTED AND CONSTRUCTED WITH THOSE 

TWO VARIABLES; RIGHT? 

A. I THINK THAT IT CAN RELY ON MY RESULTS BECAUSE I CAN -- I 

DOUBLE-CHECKED THOSE RESULTS VERSUS AVANCI. 

MR. BORNSTEIN: I HAVE NOTHING ELSE, YOUR HONOR. 

MR. ROSS: YOUR HONOR -- 

THE COURT: WHAT WAS YOUR -- 

MR. ROSS: THE COURT MAY NEED TO BE UNDER SEAL FOR 

THE REST OF THAT ANSWER, BUT THAT'S FINE. 

THE COURT: OKAY. ALL RIGHT. SO YOU'VE CONCLUDED AT 

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UNITED STATES COURT REPORTERS

1102

4:09. 

SO NOW WE'RE GOING TO ASK EVERYONE TO LEAVE. 

HOW MUCH TIME DO YOU THINK EACH OF YOU HAS, OR WILL NEED? 

MR. ROSS: TWO MINUTES, YOUR HONOR. 

THE COURT: TWO MINUTES. OKAY. 

MR. BORNSTEIN, WHAT ABOUT YOU? HOW MUCH TIME DO YOU THINK 

YOU'LL NEED UNDER SEAL. I'M WONDERING WHETHER I SHOULD TELL 

PEOPLE TO COME BACK. 

MR. BORNSTEIN: I HAVE NO IDEA, BUT IF HE HAS TWO 

MINUTES, I EXPECT I CAN'T GO LONGER THAN THAT. 

THE COURT: SO THEN I THINK FOLKS SHOULD WAIT OUTSIDE 

BECAUSE I THINK WE'LL HAVE MORE TESTIMONY TODAY. 

ALL RIGHT. IF EVERYONE WILL PLEASE STEP OUTSIDE AGAIN. 

SORRY FOR ANY INCONVENIENCE. 

I'LL ASK THE PARTIES, ONCE EVERYONE IS OUT, TO CONFIRM 

WITH ME THAT YOU ARE FINE WITH EVERYONE WHO REMAINS. 

(PROCEEDED UNDER SEAL FROM PAGES 1104 TO 1109.)

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1103

 (SEALED PROCEEDINGS FROM PAGES 1104 TO 1109.)

THE COURT: ALL RIGHT. LET ME ASK BOTH PARTIES -- 

MR. BORNSTEIN: LOOKS GOOD, YOUR HONOR. 

THE COURT: -- IS EVERYONE OKAY? 

MR. ROSS: THE FTC IS OKAY. 

THE COURT: ALL RIGHT. THE COURTROOM IS NOW SEALED. 

LET'S GO BACK NOW TO FTC. ARE YOU READY? OR DO YOU WANT 

A MINUTE? 

MR. ROSS: I'M READY, YOUR HONOR. 

THE COURT: OKAY. 4:10. GO AHEAD, PLEASE.

FURTHER REDIRECT EXAMINATION

BY MR. ROSS:

Q. COUNSEL FOR QUALCOMM ASKED YOU A SERIES OF QUESTIONS ABOUT 

THE SIGNAL STUDY AND THE COMPONENTS OF IT. 

DO YOU RECALL THAT?

A. YES.

Q. DID YOU NEED TO KNOW THE DETAILS OF THAT STUDY? 

A. NO, NOT THE TECHNICAL DETAILS, I DID NOT.

Q. WHY NOT? 

A. BECAUSE I TESTED WHETHER OR NOT THE RESULTS OF MY ANALYSIS 

WERE CONSISTENT WITH ACTUAL NEGOTIATED AGREEMENTS. SO I DID 

NOT NEED TO KNOW THE DETAILS OF THE STUDY. 

Q. IN YOUR EXPERIENCE IN LICENSING NEGOTIATIONS, ARE THESE 

STUDIES GENERALLY -- ARE THE DETAILS OF THESE STUDIES GENERALLY 

ASSESSED? 

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1104

A. I MEAN, WHEN YOU'RE SHOWING NUMBERS AND YOU'RE LOOKING AT 

WHAT THE NUMBERS ARE, NO, ONE IS NOT ASSESSING THE DETAILS OF 

THE STUDY. 

Q. AND DID AVANCI USE THE SIGNAL STUDY THAT YOU USED? 

A. THAT IS MY UNDERSTANDING, YES, THEY DO USE IT.

Q. AND QUALCOMM IS A MEMBER OF AVANCI; IS THAT CORRECT? 

A. CORRECT. 

Q. AND YOU WERE ASKED A COUPLE OF QUESTIONS ABOUT QUALCOMM'S 

NEGOTIATIONS TO ENTER AVANCI; IS THAT CORRECT? 

A. YES. 

Q. SO QUALCOMM HAD TO NEGOTIATE TO ENTER AVANCI; IS THAT 

CORRECT? 

A. I WOULD THINK THAT THEY WOULD HAVE TO NEGOTIATE WITH 

ERICSSON IN ENTERING AVANCI, YES.

Q. AND THEY AGREED TO USE APPROVED CONTRIBUTIONS AND DEEMED 

SEPS AS PART OF THE ROYALTY DISTRIBUTION MODEL; IS THAT 

CORRECT?

A. YES, THEY CALL THEM EVALUATED SEPS, BUT THEY DO, YES. 

Q. I ASKED YOU A QUESTION EARLIER ABOUT IMPLEMENTATION 

PATENTS? 

A. YES.

Q. AND YOU COULDN'T FINISH YOUR ANSWER. 

COULD YOU DESCRIBE SOME OF THE ANALYSIS YOU CONDUCTED THAT 

HELPED YOU TO CONCLUDE THAT THE PORTION OF ROYALTY REVENUES 

ATTRIBUTABLE TO IMPLEMENTATION PATENTS IS DE MINIMIS? 

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1105

A. SO ONE OF THE -- ONE OF THE THINGS I LOOKED AT WAS THE 

HUAWEI AGREEMENT THAT WE DISCUSSED EARLIER. 

I ALSO CONSIDERED THE FACT THAT THE CONTRACT MANUFACTURERS 

FOR APPLE WERE PAYING THE SAME RATES EVEN THOUGH THEY DIDN'T 

GET A LICENSE TO ALL OF THE IMPLEMENTATION PATENTS. 

FINALLY, ANOTHER DATA POINT THAT I THINK IS USEFUL IS THE 

FACT THAT QUALCOMM HAS BEEN CHANGING -- OR CHARGING THESE EXACT 

SAME RATES FOR, YOU KNOW, THAT IT HAS BEEN CHARGING EVEN THOUGH 

THERE WERE NOT A LOT OF IMPLEMENTATION PATENTS ON PHONES OVER 

TIME. 

THAT'S WHEN -- AND THEN ANOTHER THING THAT I KNOW IS WHEN 

WE LOOKED AT THE AVANCI INFORMATION, QUALCOMM, WHEN IT LOOKS AT 

ITS HISTORICAL REVENUE, INCLUDES WHAT I THINK IS ALL OF ITS 

HISTORICAL LICENSING REVENUE WHEN DETERMINING WHETHER OR NOT -- 

OR WHAT PORTION OR SHARE IT SHOULD GET FOR ITS DISTRIBUTION.

Q. WHY IS IT IMPORTANT THAT QUALCOMM DECLARE ALL OF ITS 

REVENUE TO AVANCI?

A. WELL, AVANCI SAYS THAT YOU NEED TO DECLARE REVENUE THAT'S 

PREDOMINANTLY RELATED TO YOUR SEPS. 

Q. IF YOU HAD ASSIGNED SOME VALUE TO QUALCOMM'S 

IMPLEMENTATION PATENTS, OR SOME PORTION OF QUALCOMM'S REVENUE 

TO QUALCOMM IMPLEMENTATION PATENTS, WOULD THAT CHANGE YOUR 

CONCLUSIONS? 

A. NO. I'M AWARE OF SOME INFORMATION IN THE RECORD WHICH 

INDICATES THAT THE IMPLEMENTATION PATENTS COULD BE AS MUCH AS 

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1106

35 PERCENT. I THINK IT'S A RATE CARD THAT WAS PUBLISHED -- OR 

I DON'T THINK IT WAS PUBLISHED. I THINK IT WAS A DRAFT RATE 

CARD FROM 2017, AND THAT CERTAINLY WOULDN'T CHANGE MY 

CONCLUSIONS. 

Q. ULTIMATELY, YOUR CONCLUSIONS ARE THAT QUALCOMM'S RATES ARE 

FAR ABOVE WHAT'S FRAND? 

A. YES, THEY ARE.

Q. AND IF YOU CHANGED ONE OR TWO OF THESE COMPONENTS OF YOUR 

ANALYSIS, WOULD THAT CHANGE YOUR CONCLUSION? 

A. I WOULD NOT EXPECT SO. 

MR. ROSS: THANK YOU. NO FURTHER QUESTIONS. 

THE COURT: ALL RIGHT. IT'S 4:14. 

LET ME KNOW WHEN YOU'RE READY. 

MR. BORNSTEIN: I AM READY, YOUR HONOR. 

THE COURT: ALL RIGHT. GO AHEAD, PLEASE. 4:14. 

MR. BORNSTEIN: THANK YOU.

FURTHER RECROSS-EXAMINATION

BY MR. BORNSTEIN:

Q. SO YOU TALKED ABOUT THE HUAWEI AGREEMENT BETWEEN QUALCOMM 

AND HUAWEI THAT HAS -- THAT YOU RELIED ON FOR YOUR POINT ABOUT 

IMPLEMENTATION PATENTS; CORRECT? 

A. CORRECT.

Q. AND YOU'RE AWARE, SIR, THAT QUALCOMM HAS MULTIPLE 

LICENSEES WHO PAY MORE FOR A FULL PORTFOLIO LICENSE THAT 

INCLUDES NON-SEPS THAN THEY PAY FOR A CELLULAR SEP ONLY 

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LASINSKI FURTHER RECROSS BY MR. BORNSTEIN

UNITED STATES COURT REPORTERS

1107

LICENSE; CORRECT? 

A. YES, I WOULD EXPECT THAT, YES.

Q. YES. THE HUAWEI AGREEMENT ON WHICH YOU WERE RELYING, SIR, 

ON OUTLIER, ISN'T IT?

A. I WOULD NOT AGREE THAT IT'S AN OUTLIER.

Q. WELL, YOU DID NOT IDENTIFY ANY OTHER AGREEMENT THAT 

QUALCOMM HAS THAT IS LIKE THAT, DID YOU? 

A. THE APPLE AGREEMENT -- WELL, THE CONTRACT MANUFACTURER 

APPLE AGREEMENT ALSO DOESN'T HAVE A LICENSE TO ALL OF THE 

IMPLEMENTATION PATENTS.

Q. BUT THERE IS, FOR THE CONTRACT MANUFACTURERS, THERE'S A 

CAPTURE PERIOD THAT CUTS OFF THE NON-SEPS THAT THEY RECEIVE; 

RIGHT? 

A. CORRECT, YES. 

Q. AND THEY RECEIVE A LARGE, LARGE NUMBER OF NON-SEPS IN 

THEIR LICENSE, DON'T THEY? 

A. THEY DO. THEY DO CAPTURE SOME. I DON'T KNOW IF IT'S A 

LARGE, LARGE NUMBER.

Q. OKAY. SO THE CONTRACT MANUFACTURER LICENSES ARE NOTHING 

LIKE THE HUAWEI LICENSE BECAUSE THEY INCLUDE A LARGE PORTFOLIO 

OF NON-SEPS, DON'T THEY? 

A. I DON'T KNOW EXACTLY HOW MANY THEY DO.

Q. OKAY. WELL, THE ONLY NON-SEPS THAT FALL OUTSIDE THOSE 

LICENSES ARE THE ONES THAT POST-DATE THE CONTRACTUAL CAPTURE 

PERIOD; ISN'T THAT RIGHT? 

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UNITED STATES COURT REPORTERS

1108

A. THAT IS MY UNDERSTANDING, YES. 

MR. BORNSTEIN: OKAY. THANK YOU, SIR. 

I HAVE NOTHING ELSE, YOUR HONOR. 

THE COURT: OKAY. IT'S 4:16. 

DO YOU HAVE ANYTHING MORE? 

MR. ROSS: NO, YOUR HONOR. 

THE COURT: ALL RIGHT. MAY THIS WITNESS BE EXCUSED, 

AND IS IT SUBJECT TO RECALL OR NOT SUBJECT TO RECALL? 

MR. BORNSTEIN: NOT SUBJECT TO RECALL FROM OUR SIDE. 

MR. ROSS: NOT SUBJECT TO RECALL FROM OUR SIDE AS 

WELL. 

THE COURT: OKAY. THEN YOU ARE EXCUSED AND YOU'VE 

COMPLETED YOUR TRIAL TESTIMONY. 

THE WITNESS: THANK YOU. 

THE COURT: CALL YOUR NEXT WITNESS. 

IS THIS A -- NOTHING ELSE NEEDS TO BE SEALED TODAY; IS 

THAT RIGHT? 

MR. BAKER: THAT'S RIGHT. 

THE COURT: OKAY. THEN WOULD YOU PLEASE OPEN UP THE 

COURTROOM. 

AND ARE THE REST VIDEOS? IS THAT RIGHT? 

MR. BAKER: YES, YOUR HONOR. 

THE COURT: OKAY. 

(END OF SEALED PROCEEDINGS.)

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UNITED STATES COURT REPORTERS

1109

(IN OPEN COURT.)

THE COURT: OKAY. IS THERE ANY DIVISION OF TIME ON 

THIS VIDEO? 

MR. BAKER: THE VIDEO IS APPROXIMATELY NINE MINUTES, 

AND QUALCOMM COUNTER-DESIGNATIONS ACCOUNT FOR APPROXIMATELY TWO 

MINUTES OF IT. 

THE COURT: ALL RIGHT. AND DO YOU WANT TO ADMIT 

EXHIBITS? 

MR. BAKER: YES. 

THE COURT: ALL RIGHT. 

MR. BAKER: WE ARE CALLING BRIAN CHONG OF -- 

THE COURT: GIVE ME ONE MINUTE, PLEASE. I'VE GOT TO 

CHARGE YOU TIME. 

OKAY. IT'S 4:19, GO AHEAD, PLEASE. 

MR. BAKER: THE FTC IS CALLING BRIAN CHONG OF WISTRON 

CORPORATION. 

AND WE'D LIKE TO ADMIT EXHIBIT QX 2053, AND THIS IS 

SUBJECT TO A PARTIAL SEALING ORDER. 

THE COURT: IS THAT IT? 

MR. BAKER: YES. 

THE COURT: OKAY. ANY OBJECTION? 

MR. BORNSTEIN: NO, YOUR HONOR. 

THE COURT: ALL RIGHT. IT'S ADMITTED.

(DEFENDANT'S EXHIBIT QX 2053 WAS ADMITTED IN EVIDENCE.)

THE COURT: GO AHEAD, PLEASE. PLEASE SHOW THE VIDEO. 

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CHONG DEPOSITION

UNITED STATES COURT REPORTERS

1110

(THE VIDEOTAPED DEPOSITION OF BRIAN CHONG WAS PLAYED IN 

OPEN COURT OFF THE RECORD.)

THE COURT: IS THAT IT? 

MR. KOTARSKI: LINE 2 IS NEXT. 

THE COURT: OH, OKAY. THANK YOU. 

(THE VIDEOTAPED DEPOSITION OF BRIAN CHONG WAS PLAYED IN 

OPEN COURT OFF THE RECORD.)

THE COURT: ALL RIGHT. IT'S 4:27. 

MR. BAKER: YOUR HONOR, IF I CAN MAKE ONE CORRECTION? 

THE COURT: WHAT'S THAT? 

MR. BAKER: I STATED THAT THE EXHIBIT WE WERE 

ADMITTING WAS QX 2053. THAT'S THE DEPOSITION EXHIBIT NUMBER. 

THE TRIAL EXHIBIT NUMBER IS JX 0042. 

THE COURT: OKAY. IT IS -- WHAT IS IT AGAIN, JX? 

MR. BAKER: 0042. 

THE COURT: OKAY. SO THAT'S ADMITTED. 

(JOINT EXHIBIT JX 0042 WAS ADMITTED IN EVIDENCE.) 

THE COURT: ALL RIGHT. SO THE TIME IS 4:28. 

LET'S JUST GO AHEAD AND END FOR THE DAY SINCE IT'S ALREADY 

4:28. 

OKAY. LET ME GIVE YOU YOUR TIME ESTIMATES. 

QUALCOMM HAS USED 2 HOURS AND 5 MINUTES TODAY. ALL RIGHT. 

AND THE FTC HAS USED 3 HOURS AND 31 MINUTES TODAY. 

DO YOU WANT YOUR TOTAL TOTALS, OR -- 

MR. VAN NEST: PLEASE. 

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UNITED STATES COURT REPORTERS

1111

THE COURT: OKAY. 

(PAUSE IN PROCEEDINGS.) 

THE COURT: ALL RIGHT. SO AS OF LAST WEEK, THE FTC 

HAD USED 14 HOURS AND 25 MINUTES. TODAY, JANUARY 14TH, YOU'VE 

USED 3 HOURS AND 31 MINUTES. YOUR TOTAL IS 17 HOURS AND 56 

MINUTES USED TOTAL. OKAY? 

AND THEN QUALCOMM, LAST WEEK YOU HAD USED 7 HOURS AND 17 

MINUTES. WITH TODAY'S 2 HOURS AND 5 MINUTES, YOU'VE USED A 

TOTAL OF 9 HOURS AND 22 MINUTES. 

OKAY. ANYTHING ELSE? 

MR. VAN NEST: NO, YOUR HONOR. 

THE COURT: OKAY. THEN I WILL SEE YOU TOMORROW 

MORNING AT 9:00 A.M. THANK YOU ALL VERY MUCH. 

MR. VAN NEST: THANK YOU. 

THE COURT: THANK YOU. WE'RE IN RECESS. 

GO AHEAD, PLEASE.

(PAUSE IN PROCEEDINGS.) 

THE COURT: CAN WE DO THIS ON THE RECORD? 

I APOLOGIZE, I FORGOT ONE THING. 

IS MR. CHONG SUBJECT TO RECALL OR NOT? I DON'T KNOW. 

MR. VAN NEST: NOT FROM US. 

MR. BAKER: NO. 

THE COURT: OKAY, NOT SUBJECT TO RECALL. 

ALL RIGHT. THANK YOU. SORRY FOR THE INTERRUPTION. 

(THE EVENING RECESS WAS TAKEN AT 4:32 P.M.)

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UNITED STATES COURT REPORTERS

CERTIFICATE OF REPORTERS

WE, THE UNDERSIGNED OFFICIAL COURT REPORTERS OF THE 

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF 

CALIFORNIA, 280 SOUTH FIRST STREET, SAN JOSE, CALIFORNIA, DO 

HEREBY CERTIFY: 

THAT THE FOREGOING TRANSCRIPT, CERTIFICATE INCLUSIVE, IS 

A CORRECT TRANSCRIPT FROM THE RECORD OF PROCEEDINGS IN THE 

ABOVE-ENTITLED MATTER. 

______________________________

IRENE RODRIGUEZ, CSR, CRR

CERTIFICATE NUMBER 8076

_______________________________

LEE-ANNE SHORTRIDGE, CSR, CRR 

CERTIFICATE NUMBER 9595

DATED: JANUARY 14, 2019

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