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UNITED STATES COURT REPORTERS

1585

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 22, 2019

VOLUME 8 

PAGES 1585-1828

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

1586

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

NORTON ROSE FULBRIGHT 

BY: MARC COLLIER

 TALBOT HANSUM

98 SAN JACINTO BOULEVARD, SUITE 1100

AUSTIN, TEXAS 78701

BY: ERIC B. HALL

 DANIEL LEVENTHAL

1301 MCKINNEY, SUITE 5100

HOUSTON, TEXAS 77010 

ALSO PRESENT: MARK SNYDER 

JEFF DAHM

KEN KOTARSKI 

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UNITED STATES COURT REPORTERS

1587

INDEX OF WITNESSES

DEFENDANT'S

JEFFREY ANDREWS

DIRECT EXAM BY MR. HALL P. 1589

CROSS-EXAM BY MR. ANSALDO P. 1614

LORENZO CASACCIA

DIRECT EXAM BY MR. COLLIER P. 1620

CROSS-EXAM BY MR. MERBER P. 1650

REDIRECT EXAM BY MR. COLLIER P. 1659 

DIRK WEILER 

DIRECT EXAM BY MR. TAFFET P. 1664

CROSS-EXAM BY MS. GILLEN P. 1685

MARVIN BLECKER 

VIDEOTAPED DEPOSITION P. 1691

STEFAN WOLFF

VIDEOTAPED DEPOSITION P. 1692

TASNEEM CHIPTY

DIRECT EXAM BY MR. EVAN P. 1693

CROSS-EXAM BY MR. MATHESON P. 1738

REDIRECT EXAM BY MR. EVEN P. 1765

 RECROSS-EXAM BY MR. MATHESON P. 1770

FURTHER REDIRECT BY MR. EVAN P. 1773 

EDWARD SNYDER 

DIRECT EXAM BY MR. SHACHAM P. 1776

CROSS-EXAM BY MS. IKEDA P. 1805 

THOMAS LINDNER

VIDEOTAPED DEPOSITION P. 1815 

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UNITED STATES COURT REPORTERS

1588

INDEX OF EXHIBITS

MARKED ADMITTED

PLAINTIFF'S

8262 1654

6336 1655

6138 1657

DEFENDANT'S

7475 1638

22 1691

110 AND 113 1814

JOINT

0107 1746

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ANDREWS DIRECT BY MR. HALL

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1589

SAN JOSE, CALIFORNIA JANUARY 22, 2019 

P R O C E E D I N G S

(COURT CONVENED AT 9:02 A.M.) 

THE COURT: GOOD MORNING AND WELCOME. 

MR. VAN NEST: GOOD MORNING, YOUR HONOR. 

THE COURT: PLEASE TAKE A SEAT, AND PLEASE CALL YOUR 

FIRST WITNESS. 

MR. HALL: GOOD MORNING, YOUR HONOR. ERIC HALL WITH 

NORTON, ROSE, FULBRIGHT. 

QUALCOMM CALLS DR. JEFFREY ANDREWS. 

THE CLERK: PLEASE RAISE YOUR RIGHT HAND. 

(DEFENDANT'S WITNESS, JEFFREY ANDREWS, 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: JEFFREY ANDREWS. A-N-D-R-E-W-S. 

THE COURT: ALL RIGHT. TIME IS 9:02. GO AHEAD, 

PLEASE. 

MR. HALL: YOUR HONOR, MAY I APPROACH THE WITNESS? 

THE COURT: YES, PLEASE.

DIRECT EXAMINATION

BY MR. HALL: 

Q. GOOD MORNING, DR. ANDREWS. 

A. GOOD MORNING.

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ANDREWS DIRECT BY MR. HALL

UNITED STATES COURT REPORTERS

1590

Q. WOULD YOU PLEASE INTRODUCE YOURSELF TO THE COURT? 

A. YES. MY NAME IS PROFESSOR JEFFREY ANDREWS. I'M A 

PROFESSOR AT THE UNIVERSITY OF TEXAS AT AUSTIN. 

Q. WHAT DO YOU TEACH?

A. ELECTRICAL ENGINEERING BROADLY SPEAKING, ALSO SPECIFICALLY 

WIRELESS COMMUNICATIONS.

Q. PLEASE TELL US ABOUT YOUR EDUCATION. 

A. WELL, I DID MY BACHELOR'S AT HARVEY MUDD COLLEGE IN 

SOUTHERN CALIFORNIA, AND THEN MY MASTER'S AND PH.D. AT 

STANFORD.

Q. DO YOU HAVE ANY INDUSTRY EXPERIENCE? 

A. YES. I WORKED AS AN ENGINEER AT INTEL AND AT QUALCOMM IN 

THE 1990S. 

Q. WHAT IS THE WIRELESS NETWORKING AND COMMUNICATIONS GROUP? 

A. THIS IS U.T. AUSTIN'S WIRELESS RESEARCH CENTER. IT'S ONE 

OF THE WORLD'S LARGEST, AND I HELPED FOUND IT IN 2002 WHEN I 

JOINED U.T.

Q. ARE YOU AN EDITOR OF ANY TECHNICAL JOURNALS? 

A. YES. I WAS THE EDITOR-IN-CHIEF OF THE "IEEE TRANSACTIONS 

WIRELESS COMMUNICATIONS" FOR SEVERAL YEARS UNTIL JUST RECENTLY, 

WHICH IS THE -- GENERALLY CONSIDERED THE TOP TECHNICAL JOURNAL 

FOR WIRELESS COMMUNICATIONS RESEARCH.

Q. PLEASE TELL US ABOUT YOUR PUBLICATIONS? 

A. I HAVE NEARLY 400 PUBLICATIONS AT THIS POINT, MANY OF 

WHICH ARE HIGHLY CITED AND HAVE WON BEST PAPER AWARDS.

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ANDREWS DIRECT BY MR. HALL

UNITED STATES COURT REPORTERS

1591

Q. HAVE YOU WRITTEN ANY BOOKS?

A. YES, I'VE WRITTEN TWO TEXTBOOKS ON 4G CELLULAR STANDARDS, 

AND ONE ON LTE, AND ONE ON WIMAX.

Q. ARE YOU A MEMBER OF IEEE? 

A. I'M A FELLOW OF THE IEEE, WHICH IS THE LARGEST 

PROFESSIONAL ORGANIZATION FOR ELECTRICAL ENGINEERS.

Q. WHAT IS A FELLOW OF IEEE? 

A. IT'S THEIR HIGHEST GRADE OF MEMBERSHIP. IT'S ACCORDED AS 

AN HONOR TO ABOUT .1 PERCENT OF THE MEMBERSHIP IN ANY GIVEN 

YEAR.

Q. HAVE YOU WON ANY AWARDS? 

A. YEAH, I'VE WON SEVERAL AWARDS.

Q. CAN YOU GIVE US SOME EXAMPLES? 

A. WELL, I WON THE AMERICAN SOCIETY OF ENGINEERING EDUCATORS, 

THEIR FREDERICK TERMAN AWARD, WHICH IS SPONSORED BY 

HEWLETT-PACKARD. THAT RECOGNIZES SOMEONE UNDER THE AGE OF 45 

WHO'S MADE EXTRAORDINARY CONTRIBUTIONS TO THE ENGINEERING 

PROFESSION, PRIMARILY THROUGH EDUCATION. 

Q. ANY OTHER EXAMPLES? 

A. RECENTLY I JUST WON THE IEEE KIYO TOMIYASU AWARD, WHICH IS 

GIVEN ONCE TO AN ELECTRICAL ENGINEER GLOBALLY WHO'S MADE 

PARTICULARLY INNOVATIVE CONTRIBUTIONS TO ANY FIELD OF 

ELECTRICAL ENGINEERING BEFORE THE AGE OF 45.

Q. WHAT WAS YOUR CONTRIBUTION? 

A. I WAS HONORED FOR THEORETICAL CONTRIBUTIONS TO CELLULAR 

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ANDREWS DIRECT BY MR. HALL

UNITED STATES COURT REPORTERS

1592

COMMUNICATION SYSTEMS. 

MR. HALL: YOUR HONOR, QUALCOMM TENDERS 

DR. JEFFREY ANDREWS AS AN EXPERT IN WIRELESS COMMUNICATIONS AND 

CELLULAR NETWORKS. 

THE COURT: ANY OBJECTION OR DO YOU WANT TO VOIR DIRE 

HIM YOURSELF? 

MR. ANSALDO: NO OBJECTION. 

THE COURT: ALL RIGHT. AND LET ME JUST MAKE SURE I 

GOT THE TOPIC CORRECTLY. IT'S ELECTRICAL ENGINEERING AND -- 

NO, IT'S WIRELESS COMMUNICATIONS IN CELLULAR NETWORKS.

MR. HALL: YES, YOUR HONOR. 

THE COURT: OKAY. SO CERTIFIED. GO AHEAD, PLEASE.

BY MR. HALL: 

Q. DR. ANDREWS, WHAT HAVE YOU BEEN ASKED TO DO IN THIS CASE? 

A. I WAS ASKED TO EXAMINE SOME OF THE QUALCOMM'S PATENTS, 

PARTICULARLY RELATED TO MY RESEARCH EXPERTISE, AND TO DETERMINE 

IF THESE PATENTS ARE ESSENTIAL TO CELLULAR STANDARDS, IN 

PARTICULAR THE LTE STANDARD, AND WHETHER THOSE PATENTS 

CONTRIBUTED IN A FUNDAMENTAL AND IMPORTANT WAY TO THE 

STANDARDS.

Q. AND CAN YOU SUMMARIZE YOUR FINDINGS FOR THE COURT? 

A. YES. I ANALYZED AND SHOWED THAT 34 PATENTS THAT QUALCOMM 

HOLDS MADE VERY FUNDAMENTAL CONTRIBUTIONS TO CELLULAR 

STANDARDS, 3G, 4G, WHICH IS LTE, AS WELL AS 5G, AND THAT THESE 

PATENTS ARE OVER A WIDE RANGING AND VERY IMPORTANT SET OF 

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ANDREWS DIRECT BY MR. HALL

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1593

TOPICS THAT ENABLE DATA COMMUNICATION OVER CELLULAR NETWORKS.

Q. WHY DID YOU ADDRESS 34 PATENTS, WHY THAT PARTICULAR 

NUMBER? 

A. WELL, IT WAS A LOT TO DO. IT WAS A -- THE LARGEST NUMBER 

THAT I COULD DO THAT WAS MANAGEABLE, AND I FELL IT WAS 

SUFFICIENT TO SUPPORT MY OPINION THAT THEY HAD A WIDE RANGING 

PORTFOLIO OF FUNDAMENTAL PATENTS.

Q. DID YOU PREPARE CLAIM CHARTS FOR EACH OF THOSE 34 PATENTS?

A. I DID. 

Q. HOW MANY PAGES OF CHARTS TOTAL? 

A. I THINK BY THE END IT WAS ALMOST 400 PAGES.

Q. WHAT DID YOU DO IN PREPARING THOSE CHARTS? 

A. WELL, EACH OF THESE CHARTS IS FOR PATENTS, AN INDEPENDENT 

CLAIM OF A PATENT, AND I WOULD SHOW THAT THIS CLAIM WAS 

REQUIRED TO BE PRACTICED BY ONE OF THE CELLULAR STANDARDS. 

LIKE I SAID, MOST OF THEM WERE FOR LTE, SO I WOULD FIND 

THE CORRESPONDING FEATURE IN THE LTE STANDARD AND THEN SHOW 

THAT EACH AND EVERY CLAIM ELEMENT WAS REQUIRED IN ORDER TO 

PRACTICE LTE. 

Q. WHAT OTHER STANDARDS DID YOU CONSIDER? 

A. A HANDFUL OF PATENTS THAT I CONSIDERED WERE FOR THE LATER 

VERSIONS OF THE 3G WCDMA STANDARDS, AND THEN ANOTHER HANDFUL 

FOR THE RECENTLY RELEASED 5G NR, OR NEW RADIO STANDARD. 

Q. MR. DAHM, WOULD YOU PLEASE PUT UP SLIDE NUMBER 4.

DR. ANDREWS, HAVE YOU PREPARED SOME SLIDES FOR YOUR 

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ANDREWS DIRECT BY MR. HALL

UNITED STATES COURT REPORTERS

1594

TESTIMONY TODAY? 

A. YES, THIS LOOKS LIKE ONE OF THOSE.

Q. AND IS THIS AT QDX 9347, THE NUMBER IN THE LEFT CORNER? 

ARE THESE THE SLIDES? 

A. YES. 

Q. BASED ON THE PATENTS THAT YOU'VE ANALYZED, DO YOU HAVE AN 

OPINION ON WHETHER OR NOT QUALCOMM'S PATENT PORTFOLIO IS 

STATIC? 

A. NO. TO THE CONTRARY, MY PATENTS -- THE PATENTS I ANALYZED 

SHOW THAT THE PATENT PORTFOLIO IS CONTINUALLY GROWING AND 

EXPANDING AND MAKING FUNDAMENTAL CONTRIBUTIONS TO CELLULAR 

COMMUNICATION. 

IN PARTICULAR, I CONSIDERED TWO MAIN CATEGORIES OF 

PATENTS. ONE IS FOR BASICALLY FUNDAMENTAL TOPICS THAT HAVE TO 

BE IN ANY CELL STANDARD, SUCH AS THINGS LIKE HOW YOU DO CONTROL 

CHANNELS OR WAVEFORMS OR ACQUIRE THE BASE STATION, VERY 

FUNDAMENTAL AND IMPORTANT, BUT THINGS THAT HAVE TO BE DONE IN 

ANY STANDARD. 

AND THEN I ALSO CONSIDERED SEVERAL -- THREE CATEGORIES -- 

WELL, ANOTHER CATEGORY WITH THREE EXAMPLES WHERE QUALCOMM 

PIONEERED A NEW AREA THAT'S HAD A MAJOR IMPACT ON DATA RATES IN 

PARTICULAR FOR LATER VERSIONS OF LTE AND INTO 5G.

Q. AND DO YOU HAVE SOME EXAMPLES OF THAT FIRST CATEGORY YOU 

MENTIONED OF THE INNOVATION IN ESTABLISHED AREAS? 

A. YES. AS I JUST MENTIONED, THE UPLINK WAVEFORM, SO THIS IS 

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ANDREWS DIRECT BY MR. HALL

UNITED STATES COURT REPORTERS

1595

THE PHONE TRANSMITTING TO THE BASE STATION, SO QUALCOMM 

INVENTED THAT WAVEFORM. 

SECONDLY, THE DATA, THE CONTROL INFORMATION THAT'S SENT 

FROM THE PHONE TO THE BASE STATION FOLLOWS A PARTICULAR 

PROCEDURE THAT QUALCOMM INVENTED. 

AND THEN FINALLY, THE BASE STATION ACQUISITION PROCEDURE, 

WHICH IS THE MECHANISM BY WHICH THE PHONE LOCKS ON AND CAN 

BEGIN COMMUNICATING WITH THE BASE STATION. 

Q. AND ARE YOU GOING TO EXPLAIN SOME MORE ABOUT THOSE 

CATEGORIES THIS MORNING? 

A. YES, I PREPARED A FEW SLIDES, AND I EXPECT TO TALK ABOUT 

THAT. 

Q. DO YOU HAVE ANY EXAMPLES OF THAT SECOND CATEGORY OF BROAD 

PATENT COVERAGE IN NEW AREAS? 

A. YEAH. THESE ARE THE THREE LISTED HERE. SO THE FIRST IS 

CARRIER AGGREGATION, AND I'LL EXPLAIN A BIT MORE WITH THE HELP 

OF SOME PICTURE WHAT THAT IS. 

AND THEN ALSO THE USE OF UNLICENSED SPECTRUM TO FURTHER 

INCREASE DATA RATES THAT CELLULAR USERS CAN EXPERIENCE. 

AND THEN THE LAST ONE, WHICH IS A SUBJECT VERY NEAR AND 

DEAR TO MY HEART BECAUSE I'VE DONE A LOT OF RESEARCH ON IT, 

WHICH IS HETEROGENOUS NETWORKS.

Q. BASED ON THE PATENTS THAT YOU'VE ANALYZED, DO YOU HAVE AN 

OPINION ABOUT QUALCOMM'S ROLE IN 4G AND 5G? 

A. YES. 

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UNITED STATES COURT REPORTERS

1596

Q. AND WHAT IS THAT? 

A. WELL, MY OPINION IS THAT THEY'VE MADE EXTREMELY IMPORTANT 

CONTRIBUTIONS TO THOSE STANDARDS AND REALLY BEEN A PIONEER IN 

LEADING NEW AREAS FOR THOSE STANDARDS.

Q. MR. DAHM, WOULD YOU PLEASE GO TO SLIDE NUMBER 5. 

DR. ANDREWS, I BELIEVE THIS IS THE FIRST CATEGORY OF THE 

TWO CATEGORIES YOU JUST MENTIONED, AND SO I'LL ASK YOU, WHAT IS 

SHOWN HERE ON THIS FIGURE IN SLIDE 5? 

A. WELL, THIS IS JUST THOSE THREE EXAMPLES, LIKE YOU SAID, 

FROM THE FIRST CATEGORY. IT'S JUST A RELATIVELY SIMPLE 

SCHEMATIC HERE THAT JUST SHOWS THAT IN A CELLULAR SYSTEM, 

THERE'S TWO DIFFERENT DIRECTIONS OF COMMUNICATION. 

THE FIRST IS THE UPLINK, WHICH IS THE PHONE TRANSMITTING 

TO THE BASE STATION, AND THEN THERE'S THE DOWNLINK, WHICH IS 

BASE STATION TRANSMITTING TO THE PHONE, OR U.E. AND SO OF 

THESE EXAMPLES, TWO OF THEM ARE FOR THE UPLINK DIRECTION, SO 

FOR EXAMPLE, THE UPLINK WAVEFORM, WHICH IS SHOWN AS SC-FDMA, 

AND EVERYTHING THE PHONE SENDS USES THAT WAVEFORM. THAT'S THE 

MECHANISM FOR TRANSMISSION. 

IN ADDITION TO THAT, ON THAT WAVEFORM, THE UPLINK CONTROL 

CHANNEL IS ANOTHER EXAMPLE, AND I'LL EXPLAIN MORE ABOUT THAT IN 

A MOMENT. 

IN THE DOWNLINK DIRECTION, THE FIRST DOWNLINK THING THE 

PHONE DOES IS IT HAS TO ACQUIRE THE BASE STATION, SYNCHRONIZE 

TO IT, AND BE ABLE TO LOCK ON TO BEGIN COMMUNICATION, AND THIS 

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ANDREWS DIRECT BY MR. HALL

UNITED STATES COURT REPORTERS

1597

PROCESS IS CALLED BASE STATION ACQUISITION. 

Q. DR. ANDREWS, ARE WAVEFORMS IMPORTANT TO A USER OF A CELL 

PHONE? 

A. YES. I MEAN, THE WAVEFORM IS THE MECHANISM WHEREBY, IF 

YOU HAVE DATA TO SEND, LIKE, YOU KNOW, BINARY DATA, WHETHER 

IT'S A FILE OR VIDEO OR AN E-MAIL, TEXT MESSAGE, IT'S HOW IT 

GETS TRANSLATED INTO A SIGNAL THAT CAN ACTUALLY GET RADIATED 

FROM THE ANTENNA. SO THIS IS A FUNDAMENTAL ASPECT OF A 

WIRELESS COMMUNICATION SYSTEM. 

AND THERE'S MANY -- THERE'S UNCOUNTABLE NUMBER OF WAYS TO 

DO IT, AND YOU WANT THESE WAVEFORMS TO BE ROBUST, TO BE ABLE TO 

BE SHARED BY MANY USERS, BECAUSE A CELLULAR SYSTEM HAS TO 

SUPPORT THOUSANDS OF USERS, AND, YOU KNOW, FOR IT TO HAVE A 

HIGH DATA RATE. SO IT'S QUITE A SCIENCE, THE DESIGN OF THESE 

WAVEFORMS.

Q. DOES QUALCOMM HAVE ANY PATENTS THAT COVER LTE WAVEFORMS? 

A. YES. I MEAN, THE UPLINK WAVEFORM, WHICH IS SHOWN AS 

SC-FDMA, WAS INVENTED BY QUALCOMM. 

Q. LET ME -- LET'S TALK ABOUT THAT ONE. 

MR. DAHM, WOULD YOU PLEASE PUT UP SLIDE NUMBER 6. 

AND I BELIEVE THIS WAS THE FIRST EXAMPLE OF THE THREE YOU 

GAVE EARLIER FOR INNOVATIONS IN ESTABLISHED AREAS; IS THAT 

RIGHT? 

A. YES. 

Q. WHAT IS SC-FDMA? 

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UNITED STATES COURT REPORTERS

1598

A. WELL, OTHER THAN A 6 LETTER ACRONYM, IT IS THE UPLINK 

WAVEFORM, AS I MENTIONED. AND TO UNDERSTAND HOW IT WORKS, IT'S 

USEFUL TO CONTRAST IT TO THE DOWNLINK WAVEFORM, WHICH PREDATED 

SC-FDMA AND IS CALLED OFDMA, OR ORTHOGONAL FREQUENCY DIVISION 

MULTIPLE ACCESS. 

AND THE IDEA HERE IS TO CREATE A ROBUST WAVEFORM THAT'S 

ROBUST TO THE WIRELESS CHANNEL THAT CAN ALSO BE SHARED BETWEEN 

MANY USERS SIMULTANEOUSLY FOR SENDING DATA, AND IT CAN BE 

SHARED IN A VERY FLEXIBLE AND DYNAMIC WAY DEPENDING ON, FOR 

EXAMPLE, HOW MUCH DATA THEY NEED, BECAUSE DATA SYSTEMS ARE VERY 

DIFFERENT THAN VOICE SYSTEMS. SO THIS IS A NEW THING FOR LTE. 

AND OFDMA IS GREAT, BUT IT DOES HAVE A MAJOR PROBLEM 

THAT'S PARTICULARLY A PROBLEM FOR THE PHONE, WHICH IS THAT IT 

HAS WHAT'S CALLED A HIGH PEAK TO AVERAGE RATIO. 

SO ALL THESE DIFFERENT FREQUENCY DOMAIN BOXES HERE WHICH 

I'VE SHOWN, SO THIS IS A TIME FREQUENCY GRID IS WHAT I'VE SHOWN 

ON THIS FIGURE, SO YOU CAN DIVIDE THIS UP. 

BUT ALL THESE FREQUENCY COMPONENTS GET SENT AT THE SAME 

TIME, THIS CREATES A VERY PEAKY SIGNAL. SO IT CAN BE VERY 

LARGE, VERY SMALL, VERY LARGE, AND THIS WREAKS HAVOC ON THE 

PHONE AND THE POWER AND REQUIRES A LOT OF SACRIFICES TO BE 

MADE. 

SO SC-FDMA IS A CLEVER WAY TO AVOID THIS PROBLEM WHILE 

STILL MAINTAINING ALL THE BENEFITS OF OFDMA. IT REQUIRES EACH 

U.E. PHONE TO TRANSMIT ONLY OVER A CONTIGUOUS SET OF SUB BANDS 

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ANDREWS DIRECT BY MR. HALL

UNITED STATES COURT REPORTERS

1599

AT A TIME, AND IT CAN STILL DO THIS DYNAMICALLY AND DIGITALLY, 

AND THAT'S THE INVENTION OF SC-FDMA.

Q. DR. ANDREWS, YOU MENTIONED U.E. WHAT IS THAT? 

A. IT STANDS FOR USER EQUIPMENT, AND IT'S CELLULAR SPEED FOR 

A PHONE, OR SIMILAR DEVICES.

Q. DOES SC-FDMA MATTER TO A USER OF A CELL PHONE? 

A. YES. I MEAN, THE -- THE DIFFERENCE TO THE USER IS MAINLY 

TWO-FOLD. IT REDUCES THE SIZE AND THE COST OF THE POWER 

AMPLIFIER, WHICH THEN ALSO INCREASES BATTERY LIFE BECAUSE 

YOU'RE BURNING LESS POWER. 

SIMILARLY, FOR A GIVEN AMOUNT OF POWER, YOU CAN TRANSMIT 

CLOSER TO THE MAXIMUM WITHOUT THIS PEAKY BEHAVIOR, AND THIS 

ALLOWS YOU TO INCREASE THE TRANSMISSION RANGE. IT CAN BE VERY 

SIGNIFICANT, ON THE ORDER OF HUNDREDS OF METERS OF TRANSITION 

RANGE, WHICH IS A BIG DIFFERENCE IN THE COVERAGE AREA FOR A 

CELLULAR NETWORK.

Q. DR. ANDREWS, I'LL ASK YOU TO SLOW DOWN JUST A TAD, PLEASE. 

A. YES.

Q. BECAUSE THEY'RE TAKING EVERYTHING DOWN AS YOU SPEAK. 

A. OKAY. 

Q. DOES QUALCOMM HAVE ANY PATENTS ON SC-FDMA? 

A. YES. AS I MENTIONED EARLIER, THEY HOLD THE PATENT ON 

SC-FDMA AND IDENTIFY THESE CHALLENGES AND THEN PROVIDE A 

SOLUTION TO THEM. 

Q. HOW OFTEN IS SC-FDMA USED? 

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ANDREWS DIRECT BY MR. HALL

UNITED STATES COURT REPORTERS

1600

A. IT'S USED EVERY TIME THE PHONE TRANSMITS ANYTHING. SO IT 

COULD BE USED THOUSANDS OR EVEN MILLIONS OF TIMES A SECOND. 

Q. MR. DAHM, PLEASE GO TO SLIDE NUMBER 8. 

AND, DR. ANDREWS, I BELIEVE THIS SLIDE SHOWS THE SECOND 

EXAMPLE OF THE THREE YOU GAVE EARLIER OF INNOVATIONS IN 

ESTABLISHED AREAS, AND I'LL ASK YOU, WHAT IS UPLINK -- WHAT IS 

AN UPLINK CONTROL CHANNEL? 

A. SO BEFORE WE TALK ABOUT THE UPLINK CONTROL CHANNEL THAT'S 

USED IN LTE, IT'S PERHAPS USEFUL TO TALK ABOUT UPLINK CONTROL 

INFORMATION, WHICH IS WHAT THAT CHANNEL CARRIES. 

AND SO THE PHONE TRANSMITS TWO MAIN CATEGORIES OF 

INFORMATION BACK TO THE BASE STATION. THE FIRST IS DATA, WHICH 

WE'RE ALL FAMILIAR WITH, YOU WANT TO SEND A TEXT OR AN E-MAIL 

OR A FILE. 

BUT WHAT'S KIND OF INVISIBLE TO THE USERS, BUT CRUCIAL, IS 

THE CONTROL INFORMATION. AND THE CONTROL INFORMATION IS REALLY 

THE GLUE THAT BRINGS THE WHOLE CELL TOGETHER AND ALLOWS THE 

BASE STATION TO SEE WHAT'S GOING ON IN THE CELL. WITHOUT THIS, 

IT'S BLIND. 

SO THE PHONES ARE CONTINUALLY FEEDING BACK CONTROL 

INFORMATION, THINGS LIKE THE QUALITY OF THE CHANNELS IT'S 

RECEIVING FROM THE BASE STATION, YOU KNOW, WHICH PACKETS HAVE 

BEEN SUCCESSFULLY RECEIVED FROM THE BASE STATION. 

AND SO EVEN IF YOU'RE JUST RECEIVING DOWNLINK DATA, SUCH 

AS STREAMING A VIDEO, YOU NEED TO SEND THIS CONTROL INFORMATION 

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FOR THE BASE STATION TO BE ABLE TO DO THAT FOR ALL THE USERS. 

SO THE CONTROL INFORMATION IS THIS CRUCIAL ASPECT, WITHOUT 

WHICH IS CELLULAR COMMUNICATIONS DOESN'T WORK.

Q. SO IS CONTROL INFORMATION IMPORTANT TO A USER OF A CELL 

PHONE? 

A. WELL, YES. I MEAN, THIS IS HOW THE BASE SUMMARY 

ADJUDICATION SERVES IT, AND IT'S HOW IT'S ABLE TO GET ALLOCATED 

RESOURCES. SO IT'S CRITICAL.

Q. IS THERE ANY RELATION BETWEEN DATA AND CONTROL 

INFORMATION? 

A. YES. IN A LIMITED AMOUNT OF BANDWIDTH IN A GIVEN CELL, 

FOR EXAMPLE, EVERY BIT OF BANDWIDTH YOU USE FOR CONTROL 

INFORMATION IS THAT MUCH LESS YOU CAN USE FOR DATA. 

SO YOU WANT THE CONTROL INFORMATION TO BE EXTREMELY 

EFFICIENT, AND GRANTED, YOU'RE SENDING CONTROL INFORMING FOR 

ALL THESE PHONES MANY TIMES PER SECOND. SO IT'S QUITE A LOT OF 

INFORMATION THAT NEEDS TO BE SENT EFFICIENTLY. 

FURTHERMORE, BECAUSE THIS INFORMATION IS CRITICAL, IT HAS 

TO BE EXTREMELY ROBUST SO IT CAN BE RECEIVED WITH HIGH 

RELIABILITY BY THE BASE STATION FROM ALL THESE DIFFERENT PHONES 

THAT ARE, YOU KNOW, JUST SENDING IT BACK AND THE PHONES AREN'T 

SYNCHRONIZED AND SO ON.

Q. I NOTICE IN YOUR FIGURE THAT SOME OF THE, SOME OF THE 

PHONES HAVE RED AND BLUE LINES AND SOME JUST HAVE RED LINES. 

WHY IS THAT? 

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1602

A. YES. AS I MENTIONED, EVEN IF THE PHONE DOESN'T HAVE DATA 

TO SEND BACK TO THE BASE STATION, IT STILL SENDS CONTROL, YOU 

KNOW, SEVERAL TIMES A SECOND SO THAT THE PHONE -- THE BASE 

STATION CAN TRACK IT AND SERVE IT. 

Q. LET'S GO TO SLIDE NUMBER 9, PLEASE. 

AND, DR. ANDREWS, WHAT'S SHOWN ON THIS SLIDE? 

A. THIS IS A SCHEMATIC, A BLOCK DIAGRAM OF HOW THE UPLINK 

CONTROL INFORMATION IS ENCODED IN LTE. SO THIS IS THE, THE 

UPLINK CONTROL CHANNEL FOR LTE, AND GRANTED, IT'S EXTREMELY 

COMPLICATED, AND I ONLY PUT IT UP HERE TO JUST SHOW THAT THIS 

IS A VERY SOPHISTICATED PROCEDURE, AND THIS WAS ARRIVED AT, YOU 

KNOW, I THINK AT -- IT'S A VERY NOVEL -- I DON'T KNOW EXACTLY 

HOW THEY ARRIVED AT THIS, BUT IT'S WORKING INCREDIBLY WELL, AND 

IT ALLOWS MANY USERS TO MULTIPLEX SIMULTANEOUSLY THEIR CONTROL 

INFORMATION, EVEN IF THEY'RE UNSYNCHRONIZED. IT'S VERY ROBUST, 

VERY EFFICIENT, AND IT USES A LOT OF COMPLEX MATHEMATICS IN 

ORDER TO DO THIS.

Q. DR. ANDREWS, NEAR THE BOTTOM OF THAT FIGURE, I SEE PUCCH. 

WHAT IS THAT? 

A. SO THAT IS THE LTE TERMINOLOGY, AND IT STANDS FOR PHYSICAL 

UPLINK CONTROL CHANNEL. SO PUCCH IS THE UPLINK CONTROL CHANNEL 

IN LTE.

Q. AND HOW IS THAT RELATED TO THE CONTROL INFORMATION YOU 

TALKED ABOUT? 

A. IT'S WHAT CARRIES THE CONTROL INFORMATION. 

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1603

Q. LET'S GO TO SLIDE NUMBER 10, PLEASE. AND, DR. ANDREWS, 

WHAT IS SHOWN ON THIS SLIDE? 

A. WELL, BECAUSE THIS UPLINK CONTROL INFORMATION IS SO 

CRITICAL AND, YOU KNOW, THERE'S DIFFERENT TYPES OF IT, THERE'S 

ACTUALLY DIFFERENT FORMATS OF THIS PUCCH DEPENDING ON WHAT YOU 

NEED TO DO, WHAT YOU NEED TO SEND. 

SO IN FACT THERE'S THREE MAIN FORMATS WITH SEVERAL SUB 

FORMATS THAT ARE POSSIBLE FOR THIS PUCCH THAT ARE OPTIMIZED FOR 

THE CONDITIONS AND THE TYPE OF CONTROL INFORMATION. 

Q. WHO INVENTED THE PUCCH? 

A. EACH OF THESE FORMATS IS SLIGHTLY DIFFERENT AND QUALCOMM 

HOLDS PATENTS ON ALL OF THEM. QUALCOMM INVENTED THE FORMAT, 

INVENTED THE PUCCH AND EVERY LAST FORMAT.

Q. SO YOU'RE SAYING QUALCOMM INVENTED ALL THE FORMATS ON THIS 

SLIDE? 

A. YES. 

Q. LET'S LOOK AT SLIDE NUMBER 11, PLEASE. 

DR. ANDREWS, I BELIEVE THIS IS THE THIRD OF THE THREE 

EXAMPLES YOU GAVE FOR QUALCOMM'S INNOVATION IN ESTABLISHED 

AREAS. SO I'LL ASK YOU, WHAT IS BASE STATION ACQUISITION? 

A. YEAH. THAT'S RIGHT. SO THIS IS NOW THE DOWNLINK EXAMPLE. 

SO THE BASE STATION IS CONTINUALLY SENDING OUT WHAT'S KNOWN AS 

THE PHYSICAL BROADCAST CHANNEL, OR PBCH, AND IT CARRIES A 

PRIMARY SYNCHRONIZATION SEQUENCE, PSS, AS WELL AS A SECONDARY 

SYNCHRONIZATION SEQUENCE, OR SSS. 

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ANDREWS DIRECT BY MR. HALL

UNITED STATES COURT REPORTERS

1604

AND SO THE U.E., WHEN IT FIRST COMES OUT OF IDLE MODE, IT 

POWERS ON, IT LISTENS FOR THESE IN A SPECIFIED WAY AND RECEIVES 

THE PSS, AND THEN THE SSS AND THIS PROCEDURE ALLOWS IT TO 

ACQUIRE THE TIMING OF THE BASE STATION, LEARN THE BARE MINIMUM 

INFORMATION IT NEEDS IN ORDER TO BEGIN COMMUNICATING WITH THE 

BASE STATION, FOR EXAMPLE, SENDING UPLINK CONTROL INFORMATION. 

SO IT'S A VERY IMPORTANT PROCEDURE.

Q. WHAT IS THE PBCH? 

A. YEAH. SO AS I SAID, THAT'S THE PHYSICAL BROADCAST 

CHANNEL, AND THAT'S WHAT CARRIES THE PSS AND THE SSS. 

Q. IS BASE STATION ACQUISITION IMPORTANT TO A USER OF A CELL 

PHONE? 

A. YES. I MEAN, WHEN THE PHONE TURNS ON, YOU WANT -- IT'S 

OBVIOUSLY VERY FRUSTRATING IF YOU HAVE TO WAIT A WHILE TO GET A 

CONNECTION. SO IT'S WHAT ALLOWS YOU TO CONNECT VERY QUICKLY, 

AND IT'S ALMOST INSTANTANEOUS FROM A USER'S POINT OF VIEW DUE 

TO THIS PROCEDURE.

Q. DOES QUALCOMM HAVE ANY PATENTS THAT COVER BASE STATION 

ACQUISITION? 

A. YES. SO THEY INVENTED THIS TWO STEP PSS, SSS PROCEDURE AS 

IT'S USED IN LTE, AND IN PARTICULAR THE WAY IT USES THE MIDDLE 

OF THE BAND SO THAT IT'S EASY FOR THE U.E. TO FIND.

Q. DR. ANDREWS, I'D LIKE TO SWITCH GEARS A LITTLE BIT AND NOW 

LOOK AT THE SECOND CATEGORY YOU TALKED ABOUT, WHICH I BELIEVE 

IS QUALCOMM'S INNOVATIONS IN NEW AREAS. 

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1605

AND CAN WE PLEASE PUT UP SLIDE NUMBER 12. 

DR. ANDREWS, WHAT IS CARRIER AGGREGATION? 

A. SO CARRIER AGGREGATION IS A VERY IMPORTANT PARADIGM FOR 

NEWER CELLULAR COMMUNICATION SYSTEMS IN THAT IT ALLOWS YOU TO 

TAKE DIFFERENT BANDS THAT ARE SCATTERED AROUND THE SPECTRUM. 

AND SO BY HERE CARRIERS MEAN BANDS. THEY MEAN A CERTAIN AMOUNT 

OF BANDWIDTH. 

SO, FOR EXAMPLE, AT&T OR VERIZON MIGHT HAVE A BAND OF, A 5 

MEGAHERTZ BAND AND THAT CAN ONLY CARRY A CERTAIN AMOUNT OF DATA 

AND THEY WANT MORE. BUT THE OTHER BANDS THEY OWN ARE WAY UP IN 

DIFFERENT PARTS OF THE SPECTRUM. 

SO CARRIER AGGREGATION IS THE SCHEME WHEREBY YOU CAN GLUE 

THESE TOGETHER TO CREATE WHAT LOOKS LIKE EFFECTIVELY A MUCH 

LARGER CHANNEL. 

SO ON THIS EXAMPLE IN THE SLIDE HERE, I'VE SHOWN WHERE YOU 

TAKE A 5 MEGAHERTZ BAND AND THEN TWO 10 MEGAHERTZ BANDS THAT 

ARE SCATTERED ANYWHERE, AND IT'S ABLE TO CREATE BASICALLY WHAT 

LOOKS LIKE A BIG 25 MEGAHERTZ BAND, WHICH WOULD BE FIVE TIMES 

THE DATA RATE OR FIVE TIMES THE BANDWIDTH OF A SINGLE MEGAHERTZ 

BAND THAT YOU HAVE BEFORE.

Q. DOES CARRIER AGGREGATION OFFER ANY ADVANTAGES TO A USER OF 

A CELL PHONE? 

A. YEAH. IT AMPLIFIES DATA RATE. IT CAN RECEIVE VERY 

SIGNIFICANTLY, IN THIS EXAMPLE BY A FACTOR OF 5, WHICH IS A 

PRETTY REALISTIC EXAMPLE. 

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1606

SO FROM A USER'S POINT OF VIEW, THE FILES WOULD BE 

DOWNLOADED FIVE TIMES FASTER, DATA FIVE TIMES FASTER AND SO ON. 

Q. WERE THERE ANY DIFFICULTIES IN DESIGNING CARRIER 

AGGREGATION? 

A. YES, A NUMBER. I MEAN, EVERYTHING BECOMES A BIT MORE 

COMPLICATED WHEN YOU START TRANSMITTING SIMULTANEOUSLY OVER 

MULTIPLE BANDS THAT ARE SCATTERED AROUND THE FREQUENCY 

SPECTRUM. YOU NEED OVERHEAD SPECTRUM, MORE CONTROL SIGNALLING, 

MORE OVERHEAD SIGNALLING TO SUPPORT THESE DIFFERENT BANDS. 

AND ALSO, FOR EXAMPLE, FOR THE CASE OF UPLINK CARRIER 

AGGREGATION WHERE THE PHONE IS TRANSMITTING OVER MULTIPLE 

BANDS, IT NOW HAS TO DIVIDE ITS POWER BETWEEN THOSE BANDS 

DYNAMICALLY DEPENDING ON THE CHANNEL CONDITIONS. SO POWER 

CONTROL BECOMES MUCH MORE COMPLICATED. 

AND THEN FINALLY, AS THE USER MOVED AROUND THE SYSTEM, 

WHICH IS CRUCIAL FOR A CELLULAR SYSTEM TO SUPPORT MOBILITY, AS 

YOU HAND OFF FROM ONE BASE STATION TO ANOTHER, YOU HAVE TO HAND 

OFF MULTIPLE BANDS. SO HANDOFF BECOMES MORE COMPLICATED. 

THERE'S A LOT OF COMPLICATIONS WHEN YOU GO TO CARRIER 

AGGREGATION PARADIGM. 

Q. DOES QUALCOMM HAVE ANY PATENTS THAT COVER CARRIER 

AGGREGATION? 

A. THEY DO. IN FACT, ALMOST A THIRD OF MY REPORT IS 

DEDICATED TO CARRIER AGGREGATION PATENTS, AND BASED ON MY 

RESEARCH ON THIS, IT'S CLEAR TO ME THAT QUALCOMM PIONEERED THIS 

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1607

AREA, REALLY INVENTED THE CONCEPT, AND SOLVED ALL THESE 

PROBLEMS WHICH I'VE JUST LISTED, AND THEY HAVE PATENTS THAT 

PRESENT THOSE SOLUTIONS. 

Q. BASED ON THE 34 PATENTS THAT YOU LOOKED AT AND ANALYZED, 

DO YOU HAVE AN OPINION ON QUALCOMM'S PATENT PORTFOLIO IN THE 

AREA OF CARRIER AGGREGATION? 

A. YES. I MEAN, BASED ON THE PATENTS I LOOKED AT, THEY HAVE 

A VERY BROAD AND DEEP PORTFOLIO AS FAR AS CARRIER AGGREGATION 

IN PARTICULAR IS CONCERNED. 

Q. DOES CARRIER AGGREGATION PLAY ANY ROLE IN 5G? 

A. YES. I MEAN, I THINK OF CARRIER AGGREGATION AS BEING EVEN 

MORE IMPORTANT. IT'S LIKE THE CENTRAL ORGANIZING PRINCIPLE OF 

5G. BECAUSE ONE OF THE MAIN POINTS OF 5G IS TO BRING IN MORE 

SPECTRUM, INCLUDING SUBPRIME SPECTRUMS, SUCH AS MILLIMETER WAVE 

SPECTRUM, WHICH IS TENS OF GIGAHERTZ. 

AND SO CARRIER AGGREGATION IS EVEN MORE CRUCIAL TO 5G. 

Q. LET'S PUT UP SLIDE 15, PLEASE. 

AND, DR. ANDREWS, I'D LIKE TO ASK YOU NOW ABOUT THE SECOND 

EXAMPLE OF THE THREE THAT YOU GAVE FOR QUALCOMM'S INNOVATIONS 

IN NEW AREAS, AND I BELIEVE THAT WAS CELLULAR IN UNLICENSED 

SPECTRUM. 

WHAT IS THAT? 

A. THIS IS CELLULAR IN UNLICENSED SPECTRUM IS SIMILAR TO 

CARRIER AGGREGATION, BUT INSTEAD OF USING DIFFERENT LICENSED 

SPECTRUM THAT THE OPERATORS OWN, INSTEAD YOU USE UNLICENSED 

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1608

SPECTRUM. THERE'S A LOT OF UNLICENSED SPECTRUM. IT'S A PUBLIC 

RESOURCE. IT'S -- SPECIFICALLY IN THE 5 GIGAHERTZ BAND, 

THERE'S HUNDREDS OF MEGAHERTZ. IT'S USED BY WI-FI, BABY 

MONITORS, BLUETOOTH, CORDLESS PHONES. IT'S, AGAIN, SUB PRIME 

SPECTRUM THAT IS CHALLENGING TO USE AND HISTORICALLY HAS NOT 

BEEN USED BY THIS REASON FOR OPERATORS. 

BUT QUALCOMM PIONEERED THE TECHNIQUES THAT ALLOW AN ANCHOR 

CARRIER TO HELP NAVIGATE THE USE OF THIS SPECTRUM, WHICH REALLY 

CAN REALLY INCREASE THE DATA RATES THAT A CELLULAR PHONE USER 

EXPERIENCES. 

Q. SO WHAT, IF ANYTHING, DOES THIS HAVE IN THE WAY OF BENEFIT 

FOR USERS AND OPERATORS? 

A. YEAH. SO THIS IS ANOTHER WAY TO BRING MORE BANDWIDTH INTO 

THE PICTURE AND INCREASE DATA RATES AND CAPACITY, SIMILAR TO 

CARRIER AGGREGATION, IT CAN BE BY A SEVERAL-FOLD INCREASE. SO 

VERY SIGNIFICANT INCREASE.

Q. DOES QUALCOMM HAVE ANY PATENTS THAT COVER CELLULAR IN 

UNLICENSED SPECTRUM? 

A. YES. I ANALYZED QUALCOMM PATENTS IN THIS AREA AND FOUND 

THAT THEY'RE SPECIAL TO THE LTE STANDARD. 

Q. LET'S PUT UP SLIDE 16, PLEASE. 

AND I BELIEVE, DR. ANDREWS, THIS WAS THE THIRD OF THE 

THREE EXAMPLES YOU GAVE FOR INNOVATIONS IN NEW AREAS. 

SO WHAT ARE HETEROGENEOUS NETWORKS? 

A. SO HETEROGENOUS NETWORKS, OR HETNETS, REFER TO CELLULAR 

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ANDREWS DIRECT BY MR. HALL

UNITED STATES COURT REPORTERS

1609

NETWORKS THAT ADD DIFFERENT TYPES OF BASE STATIONS TO THE 

NETWORK TO SUPPLEMENT THE MACRO CELLS, WHICH ARE THE COMMON, 

LARGE TOWERS THAT PROVIDE THE OVERALL COVERAGE IN THE NETWORK. 

SO WHAT YOU DO IN A HETNET IS YOU ADD, YOU KNOW, MICRO 

CELLS, PICOCELLS AND FEMTOCELLS, WHICH HAVE SMALLER TRANSIT 

POWERS AND THUS SMALLER COVERAGE RANGES, AND THESE ARE DEPLOYED 

AT HOT SPOTS TO PROVIDE CAPACITY IN SPECIFIC AREAS. 

Q. I BELIEVE YOU SAID EARLIER, WAS THIS THE CATEGORY YOU SAID 

WAS NEAR AND DEAR TO YOUR HEART? 

A. YES.

Q. CAN YOU TELL US WHY THAT IS? 

A. WELL, I'VE DONE A LOT OF RESEARCH ON THESE TYPE OF 

NETWORKS AND THE INTERFERENCE ISSUES AND OTHER PERFORMANCE 

ASPECTS OF THEM FOR OVER A DECADE, SO IT'S AN AREA I'M 

CONSIDERED A LEADER IN. 

Q. DO YOU HAVE AN OPINION ABOUT QUALCOMM'S ROLE IN THE 

DEVELOPMENT OF HETNETS? 

A. QUALCOMM PLAYED A PRETTY FORMATIVE ROLE. I FOLLOWED THEIR 

WORK, AND I THINK THEY FOLLOWED MINE, YOU KNOW, AND THEY DID A 

LOT OF VERY FUNDAMENTAL WORK THAT MADE HETNETS POSSIBLE.

Q. DO HETNETS PROVIDE ANY, ANY BENEFITS TO A USER OF A CELL 

PHONE? 

A. YES. I MEAN, HETNETS ARE A MECHANISM WHEREBY THE NETWORK 

CAN DENSIFY. SO YOU CAN ADD A LOT MORE BASE STATIONS IN A COST 

EFFECTIVE WAY. AND EACH BASE STATION YOU ADD CREATES A NEW 

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1610

CELL WHERE YOU CAN REUSE THE SCARCE SPECTRUM. SO IF YOU'RE A 

USER ON ONE OF THESE SMALL CELLS, YOU CAN NOW USE ALL THE 

NETWORK, ASSUMING YOU CAN HANDLE THE INTERFERENCE PROBLEMS. 

JUST A SIMPLE EXAMPLE, IF I TOOK A CELL AND DIVIDED IT 

INTO FOUR CELLS, EACH USER WOULD NOW GET ABOUT FOUR TIMES THE 

DATA RATE IF YOU DO EVERYTHING CORRECTLY. 

SO IT'S A VERY POWERFUL MECHANISM FOR INCREASING DATA 

RATES WITHOUT ADDING MORE SPECTRUM, WHICH AS WE KNOW IS SCARCE. 

Q. ARE THERE ANY CHALLENGES TO USING HETNETS? 

A. YES. THE MOST OBVIOUS ONE, WHICH I MENTIONED, IS THE 

INTERFERENCE. INTERFERENCE IN PARTICULAR TO THE SMALL CELLS IS 

A BIG PROBLEM. 

YOU HAVE THESE MACRO CELL TOWERS THAT ARE HIGH UP IN THE 

AIR BLASTING AWAY AT 40 WATTS WITH DIRECTIONAL ANTENNAS, IT 

CAUSES A LOT OF INTERFERENCE TO THE PICOCELLS. 

IF YOU DON'T DO ANYTHING TO SOLVE THAT, THE PICOCELLS HAVE 

A TINY COVERAGE AREA, AND DON'T SERVE ANYONE, WHICH DEFEATS THE 

WHOLE POINT. 

YOU NEED TO HAVE A VERY CLEVER WAY TO ALLOW THE PICOCELLS 

TO SUPPRESS THIS INTERFERENCE FOR THE MACRO CELLS TO TURN OFF 

BRIEFLY TO ALLOW THE PICOCELLS TO EXPAND, COVERAGE AREAS TO 

EXPAND AND -- YEAH, I THINK THAT'S WHAT I SAID.

Q. DR. ANDREWS, DID YOU ANALYZE ANY QUALCOMM PATENTS RELATED 

TO HETNETS? 

A. YES, I DID. 

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1611

Q. AND WHAT DID YOU FIND? 

A. I FIND THEY HAD VERY FUNDAMENTAL AND IMPORTANT STANDARD 

ESSENTIAL CONTRIBUTIONS TO SOLVING THESE INTERFERENCE PROBLEMS 

IN PARTICULAR. 

Q. DO HETNETS PLAY A ROLE IN THE 5G STANDARD? 

A. YES. HETNETS ARE THE KEY MECHANISM FOR CONTINUED 

DENSIFICATION OF THE NETWORK, WHICH IS VERY IMPORTANT FOR 5G, 

IN PARTICULAR, SINCE 5G WILL RELY A LOT ON MILLIMETER WAVE 

COMMUNICATION, AND THIS IS SHORT RANGE -- THIS IS A SHORT RANGE 

TYPE OF COMMUNICATION, THE NETWORK WILL HAVE TO BE MUCH MORE 

DENSE, SO THE HETNET IDEAS I THINK WILL BE MORE IMPORTANT IN 

5G. 

Q. DR. ANDREWS, I WANT TO ASK YOU NOW A FEW QUESTIONS ABOUT 

ONE OF THE TWO BOOKS THAT YOU TOLD US ABOUT EARLIER. 

WHAT ARE THE TOPICS OF THOSE TWO BOOKS? 

A. WELL, THE FIRST BOOK I WROTE WAS ON WIMAX, WHICH WAS AN 

EARLY 4G STANDARD, AND THEN THE SECOND BOOK I WROTE WAS ON LTE 

SHORTLY AFTER LTE CAME OUT. 

Q. WHAT IS WIMAX? 

A. SO WIMAX IS AN INDUSTRY FORUM THAT DEVELOPED A STANDARD 

BASED ON THE IEEE 802 .16 SUITE OF STANDARDS, AND IT WAS 

INTENDED INITIALLY TO PROVIDE FIXED BROADBAND ACCESS. 

AND BY "FIXED" I MEAN THAT IT DIDN'T SUPPORT MOBILITY, SO 

NOT A TRUE CELLULAR NETWORK. BUT IT EVOLVED TO SUPPORT 

MOBILITY AROUND 2005, AND THAT WAS KNOWN AS MOBILE WIMAX. 

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1612

Q. WHAT HAPPENED TO MOBILE WIMAX? 

A. WELL, IT DIDN'T -- YOU KNOW, IT CAUSED A LOT OF EXCITEMENT 

AT THE TIME, BUT EVENTUALLY, YOU KNOW, EARLY DEPLOYMENTS DIDN'T 

WORK ALL THAT GREAT, AND MOST OF THE CELLULAR OPERATORS AND 

VENDORS WAITED FOR LTE, WHICH SOLVED A LOT OF THOSE PROBLEMS, 

TO COME ALONG.

Q. AS THE PERSON WHO I GUESS LITERALLY WROTE THE BOOK ON 

WIMAX, CAN YOU GIVE US SOME TECHNICAL REASONS FOR WHY WIMAX, 

WHY THAT HAPPENED TO WIMAX? 

A. YEAH. I MEAN, ONE BIG ONE THAT WE SAW BACK THEN WAS THAT 

THE OVERHEAD CHANNELS IN LTE -- IN WIMAX, RATHER, WERE NOT VERY 

EFFICIENT. THEY WERE REALLY OVERDESIGNED. AND SO THEY 

CONSUMED A LOT OF THE RESOURCES, SO THERE WAS A LOT LEFT -- A 

LOT LESS LEFT FOR DATA. IT WAS SO BAD, IN FACT, THAT MANY SO 

OF THE PEOPLE I TALKED TO, YOU KNOW, THEY JUST TURNED OFF A LOT 

OF THESE ADVANCED CONTROL FEATURES AND JUST DID A VERY SIMPLE 

OPTION IN WIMAX. 

SO THIS WAS A MAJOR DEFICIENCY, THE CONTROL CHANNELS AND 

THE OVERHEAD PROCEDURE. 

AND THEN, YOU KNOW, ANOTHER WAS IT USED OFDMA IN BOTH 

DIRECTIONS, AND AS WE DISCUSSED EARLIER, THE SC-FDMA WHICH 

QUALCOMM INVENTED HAD A BIG IMPACT ON THE UPLINK EFFICIENCY AND 

RANGE FOR LTE. 

AND THEN A THIRD IS THAT WIMAX WAS A CLEAN SLATE STANDARD, 

FROM A TOTALLY NEW STANDARDS BODY, SO IT DIDN'T OFFER BACKWARDS 

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UNITED STATES COURT REPORTERS

1613

COMPATIBILITY, LIKE LTE OFFERED CONSIDERABLY MORE BACKWARDS 

COMPATIBILITY WITH EARLIER STANDARDS.

Q. SO HOW THEN DID WIMAX COMPARE TO LTE? 

A. I THINK, YOU KNOW, ONCE LTE CAME OUT, IT BECAME CLEAR THAT 

LTE WAS SUPERIOR TO WIMAX FOR CELLULAR TECHNOLOGY ON A 

TECHNICAL LEVEL IN BASICALLY EVERY WAY.

Q. IS THERE A RELATION BETWEEN THE PROBLEMS OF WIMAX THAT YOU 

JUST MENTIONED AND THE QUALCOMM PATENTS THAT YOU ANALYZED? 

A. WELL -- 

MR. ANSALDO: OBJECTION, YOUR HONOR. BEYOND THE 

SCOPE OF HIS REPORT. 

THE COURT: WHY DON'T YOU GIVE ME THE REPORT AND SHOW 

ME WHERE HE COMMENTS ON THAT, PLEASE? 

WHAT WAS THE QUESTION? CAN YOU REPEAT THE QUESTION, 

PLEASE. 

UNFORTUNATELY, MY REALTIME HAS STOPPED. 

HAS YOUR REALTIME STOPPED? 

MR. VAN NEST: YES, YOUR HONOR. 

THE COURT: DOES EVERYONE IN THE ROOM HAVE THEIR CELL 

PHONES OFF? IF YOU DON'T, I'M GOING TO JUST HAVE EVERYONE 

LEAVE THE ROOM BECAUSE WE NEED THE REALTIME. 

OKAY. LET'S DO IT. IT'S 9:35.

(PAUSE IN PROCEEDINGS.)

THE COURT: I'M GOING TO HAVE EVERYONE LEAVE THE 

ROOM, AND JUST HAVE THE PARTIES HERE. WE NEED TO HAVE THE 

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1614

WI-FI, AND IF THERE ARE TOO MANY PHONES ON THE SYSTEM, THEN WE 

CAN'T HAVE REALTIME. 

(PAUSE IN PROCEEDINGS.) 

THE COURT: OTHERWISE I GUESS WE COULD JUST TRY AT 

THE 10:30. THAT'S FINE, TOO. 

ALL RIGHT. LET'S GO AHEAD. IT'S 9:38. WE'LL GO AHEAD 

WITHOUT THE TRANSCRIPT FOR AN HOUR. IT'S UNFORTUNATE. 

OKAY. WHAT WAS THE QUESTION? 

MR. HALL: YOUR HONOR, IN THE INTEREST OF TIME, I'LL 

WITHDRAW THAT QUESTION. I BELIEVE IT'S SUPPORTED, BUT WE'LL 

WITHDRAW THAT QUESTION. 

THE COURT: ALL RIGHT. GO AHEAD, PLEASE. 

MR. HALL: AND WITH THAT, WE PASS THE WITNESS. 

THE COURT: ALL RIGHT. TIME IS 9:38. 

(PAUSE IN PROCEEDINGS.) 

MR. ANSALDO: MAY I APPROACH THE WITNESS WITH A 

BINDER? 

THE COURT: GO AHEAD, PLEASE. 

(PAUSE IN PROCEEDINGS.) 

THE COURT: ALL RIGHT. TIME IS 9:39. GO AHEAD, 

PLEASE. 

CROSS-EXAMINATION

BY MR. ANSALDO: 

Q. PROFESSOR ANDREWS, YOU DISCUSSED FEATURES BEING IMPORTANT 

TO USERS. DO YOU REMEMBER THAT? 

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ANDREWS CROSS BY MR. ANSALDO

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1615

A. YES.

Q. ARE YOU OFFERING AN OPINION AS TO THE DOLLAR BENEFIT OF 

ANY BENEFIT THAT MIGHT ACCRUE TO USERS? 

A. NO, SIR.

Q. AND USERS THAT HAVE LTE ENABLED PHONES THAT ALSO HAVE 

WI-FI CAN USE THE WI-FI FOR DATA TRANSMISSION; IS THAT CORRECT? 

A. ASSUMING THEY'RE CONNECTED TO A WI-FI ACCESS POINT THAT 

WORKS, YES. 

Q. AND WHEN YOU SAY THAT QUALCOMM HAS VALUABLE PATENTS, ARE 

YOU REFERRING TO YOUR OWN ASSESSMENT OF TECHNICAL VALUE; RIGHT? 

A. YES. 

Q. AND THAT'S BASED ON 34 QUALCOMM PATENTS THAT YOU 

DISCUSSED? 

A. YES. 

Q. AND YOU'RE NOT ASCRIBING A DOLLAR VALUE TO THOSE PATENTS; 

IS THAT CORRECT? 

A. YES.

Q. YOU'RE NOT OFFERING ANY OPINION ABOUT WHAT A REASONABLE 

ROYALTY WOULD BE FOR THOSE PATENTS? 

A. NO, SIR.

Q. AND YOU'RE ALSO NOT OFFERING AN OPINION ABOUT WHAT A 

REASONABLE ROYALTY WOULD BE FOR QUALCOMM'S PORTFOLIO AS A 

WHOLE; IS THAT CORRECT? 

A. THAT'S CORRECT.

Q. NOR ARE YOU OFFERING AN OPINION AS TO HOW THE VALUE OF 

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ANDREWS CROSS BY MR. ANSALDO

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1616

QUALCOMM'S PATENTS HAS CHANGED OVER TIME? 

A. NO. I MEAN, I -- NOT WITH REGARDS TO DOLLAR VALUE. I DO 

SPEAK WITH REGARDS TO THE TECHNICAL VALUE OF THE PATENTS OVER 

TIME. 

Q. SO I'D LIKE TO DISCUSS HOW YOU CAME TO YOUR OPINIONS ABOUT 

TECHNICAL VALUE, AND IT'S TRUE THAT YOU DID NOT USE A 

METHODOLOGY TO DETERMINE WHETHER A PATENT IS OR IS NOT 

VALUABLE? 

A. I MEAN, I USED MY OWN PERSONAL EXPERIENCE FOR DECADES IN 

THE FIELD.

Q. BUT YOU DID NOT USE A METHODOLOGY TO MAKE THAT 

DETERMINATION? 

A. NOT LIKE A CHECKLIST OR ANYTHING LIKE THAT. 

Q. AND SO THE METHOD THAT YOU EMPLOYED WAS BASED ON YOUR 

EXPERIENCE AND YOUR REACTION WHEN REVIEWING THE PATENTS; IS 

THAT CORRECT? 

A. YEAH, MY ANALYSIS AND REACTION, YES.

Q. AND YOU DESCRIBE THAT AS A GUT FEELING? 

A. WELL, IT'S BASED ON, YOU KNOW, 20-PLUS YEARS OF READING 

PATENTS AND RESEARCH CONTRIBUTIONS.

Q. BUT IT'S NOT BASED ON A METHODOLOGY? 

A. THAT'S CORRECT. 

Q. AND TURNING, I GUESS, TO THE SCOPE OF THE OPINIONS YOU'RE 

OFFERING, YOU'RE NOT OFFERING AN OPINION ABOUT QUALCOMM'S 

NON-ESSENTIAL PATENTS; IS THAT CORRECT? 

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ANDREWS CROSS BY MR. ANSALDO

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1617

A. THAT'S CORRECT.

Q. YOU'RE ALSO NOT OFFERING AN OPINION ABOUT ANY QUALCOMM 

PATENTS RELATED TO TECHNOLOGIES OUTSIDE OF CELLULAR STANDARDS?

A. THAT'S TRUE. 

Q. AND THERE ARE OTHER TECHNOLOGY AREAS THAT ARE IMPORTANT TO 

QUALCOMM -- TO CELLULAR COMMUNICATIONS THAT YOU DO NOT OPINE 

ON; RIGHT? 

A. I THINK THAT'S FAIR. 

Q. AND YOU'RE NOT OFFERING AN OPINION AS TO WHERE OTHER 

COMPANIES HAVE VALUABLE PATENTS FOR THE CELLULAR TECHNOLOGIES 

THAT YOU DID DISCUSS? 

A. THAT'S RIGHT. 

Q. YOU DID NOT RELY ON ASSESSMENT OF NOKIA PATENTS IN FORMING 

YOUR OPINION? 

A. CORRECT. 

Q. AND SO YOU'RE NOT OFFERING AN OPINION THAT QUALCOMM 

PATENTS ARE MORE VALUABLE THAN NOKIA'S? 

A. YEAH, THERE'S NO COMPARISON IN ANY OF MY REPORTS LIKE 

THAT. 

Q. AND THERE'S NO COMPARISON THAT SAYS QUALCOMM'S PATENTS ARE 

MORE VALUABLE THAN INTERDIGITAL'S? 

A. CORRECT.

Q. AND THERE'S NO COMPARISON THAT SAYS QUALCOMM PATENTS ARE 

MORE VALUABLE THAN ERICSSON'S PATENTS? 

A. CORRECT.

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ANDREWS CROSS BY MR. ANSALDO

UNITED STATES COURT REPORTERS

1618

Q. IN FACT, YOU'RE NOT OFFERING AN OPINION AS TO ANY OTHER 

COMPANY; RIGHT? 

A. CORRECT.

Q. AND THE OPINION THAT YOU'RE OFFERING IS ABOUT 34 PATENTS 

OF QUALCOMM'S? 

A. YES. 

MR. ANSALDO: I HAVE NO FURTHER QUESTIONS. 

THE COURT: OKAY. TIME IS 9:42. 

ANY REDIRECT? 

MR. HALL: WE HAVE NO MORE QUESTIONS, YOUR HONOR. 

THE COURT: OKAY. MAY THIS WITNESS BE EXCUSED, AND 

IS IT SUBJECT TO RECALL OR NOT SUBJECT TO RECALL? 

MR. HALL: NOT SUBJECT TO RECALL BY US. 

THE COURT: DO YOU AGREE? 

MR. ANSALDO: WE AGREE. 

THE COURT: OKAY. THEN YOU'VE COMPLETED YOUR TRIAL 

TESTIMONY, AND YOU ARE FREE TO GO. 

THE WITNESS: THANK YOU, YOUR HONOR. 

THE COURT: AND I'M GOING TO RETURN THE EXPERT REPORT 

TO MR. HALL. 

LET'S TAKE A COUPLE MINUTE BREAK TO SEE IF WE CAN GET THE 

REALTIME RESTORED. IF WE CAN GET IT RESTORED, I'LL INVITE 

EVERYONE BACK. BUT IF IT SHUTS DOWN AGAIN, I'M JUST GOING TO 

EXCUSE EVERYONE FOR THE REST OF THE DAY, BECAUSE I'M SORRY, BUT 

I NEED THE TRANSCRIPT. 

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UNITED STATES COURT REPORTERS

1619

OKAY. LET'S TAKE A COUPLE MINUTE BREAK JUST TO SEE IF WE 

CAN GET THIS RESOLVED. 

THANK YOU. 

(RECESS FROM 9:43 A.M. UNTIL 9:49 A.M.)

THE COURT: ALL RIGHT. WELCOME BACK. PLEASE TAKE A 

SEAT. 

NOW, WE HAVE A COLLECTIVE ACTION PROBLEM WITH THIS ALL THE 

TIME. EVERYONE THINKS I NEED MY DEVICE, OTHER PEOPLE CAN TURN 

THEIRS OFF. 

SO THE WAY I'M GOING TO SOLVE THIS COLLECTIVE ACTION 

PROBLEM IS THERE WILL BE COLLECTIVE CONSEQUENCES. I'M GOING TO 

ASK YOU ONE MORE TIME, IF YOU CAN, PLEASE TURN OFF YOUR 

DEVICES. 

IF THIS SHUTS DOWN AGAIN, THE REST OF THE DAY I'M JUST 

GOING TO ASK EVERYONE TO STEP OUTSIDE AND I'M ONLY GOING TO 

HAVE THE PARTIES CAN STAY. SO THERE WILL BE COLLECTIVE 

CONSEQUENCES IF YOU DON'T TURN OFF YOUR DEVICES. 

I'M SORRY, BUT I NEED THE TRANSCRIPT. ESPECIALLY WITH 

SOMETHING TECHNICAL, I REALLY NEED THE TRANSCRIPT. SO IT WAS A 

REAL HANDICAP NOT TO HAVE THIS DURING THE LAST WITNESS, WHO WAS 

SPEAKING VERY FAST. 

SO I'M GOING TO ASK ONE LAST TIME, PLEASE TURN OFF YOUR 

DEVICES. I WILL ASK EVERYONE TO LEAVE IF THIS SHUTS DOWN 

AGAIN. 

SO CALL YOUR NEXT WITNESS, PLEASE. 

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CASACCIA DIRECT BY MR. COLLIER

UNITED STATES COURT REPORTERS

1620

MR. COLLIER: YOUR HONOR, MARK COLLIER FROM NORTON, 

ROSE, FULBRIGHT. AT THIS TIME QUALCOMM CALLS LORENZO CASACCIA. 

THE CLERK: PLEASE RAISE YOUR RIGHT HAND. 

(DEFENDANT'S WITNESS, LORENZO CASACCIA, 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: YES. LORENZO CASACCIA. 

C-A-S-A-C-C-I-A. 

THE COURT: ALL RIGHT. THE TIME IS 9:51. GO AHEAD, 

PLEASE. 

DIRECT EXAMINATION

BY MR. COLLIER: 

Q. GOOD MORNING, MR. CASACCIA. CAN YOU INTRODUCE YOURSELF? 

A. YES. I'M LORENZO CASACCIA. I WAS BORN IN ITALY. I'M AN 

ITALIAN NATIONAL. I LIVE IN BARCELONA. AND I'M A VICE 

PRESIDENT OF TECHNICAL STANDARDS AT QUALCOMM. 

Q. AND WHAT ARE SOME OF YOUR RESPONSIBILITIES AS VICE 

PRESIDENT OF TECHNICAL STANDARDS? 

A. I'M RESPONSIBLE FOR THE 3GPP STANDARDIZATION AT QUALCOMM, 

AND I OVERSEE THE TEAM THAT ATTENDS 3GPP MEETINGS. AT THIS 

POINT IN TIME, WE HAVE ABOUT 90 ENGINEERS ATTENDING 3GPP 

MEETINGS. 

Q. AND WHAT IS THE RELATIONSHIP BETWEEN THE STANDARDS TEAM 

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CASACCIA DIRECT BY MR. COLLIER

UNITED STATES COURT REPORTERS

1621

AND QUALCOMM'S R&D GROUP? 

A. WE WORK VERY MUCH HAND IN HAND. SOME OF THE ENGINEERS 

FROM R&D DO ATTEND 3GPP MEETINGS UNDER OUR SUPERVISION, AND 

SOME OF THE ENGINEERS FROM MY TEAM ARE EMBEDDED IN RESEARCH 

PROJECTS UNDER R&D SUPERVISION. 

Q. OKAY. CAN YOU GIVE US A SUMMARY OF YOUR EDUCATIONAL 

BACKGROUND? 

A. YES. I HAVE COLLEGE DEGREES IN ELECTRICAL ENGINEERS AND 

TELECOMMUNICATION ENGINEERS, B.S. AND M.S. EQUIVALENT WHICH I 

GOT IN THE YEAR 2000. 

AND THEN I HAD ALWAYS BEEN INTERESTED IN HUMANITIES AND 

PHILOSOPHY, AND I WENT BACK TO COLLEGE AND I GOT A B.A. 

EQUIVALENT IN PHILOSOPHY IN 2008 AND M.A. EQUIVALENT IN 

PHILOSOPHY OF KNOWLEDGE IN 2015.

Q. OKAY. AND CAN YOU GIVE US A BRIEF HISTORY OF YOUR 

PROFESSIONAL EMPLOYMENT? 

A. YES. I JOINED QUALCOMM IN THE YEAR 2000 AS AN ENGINEERING 

INTERN, AND I'VE BEEN WITH QUALCOMM EVER SINCE. I HAD A NUMBER 

OF ROLES THROUGHOUT THE YEARS RELATED TO RESEARCH AND 

TECHNOLOGY STANDARDIZATION. 

FROM 2005 TO 2008, I'VE BEEN LEADING THE TEAM ON LTE 

SYSTEM ARCHITECTURE, AND FROM ABOUT 2009, I'VE BEEN RESPONSIBLE 

FOR 3GPP STANDARDIZATION. 

Q. OKAY. HAVE YOU GIVEN ANY PRESENTATIONS OUTSIDE OF 

QUALCOMM ABOUT CELLULAR STANDARDS FOR 3GPP? 

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CASACCIA DIRECT BY MR. COLLIER

UNITED STATES COURT REPORTERS

1622

A. YEAH. I'VE BEEN GIVING NUMEROUS PRESENTATIONS. THE VERY 

FIRST TIME WAS IN 2002. I WAS INVITED BACK BY MY ALMA MATER IN 

ITALY TO GIVE A TWO-DAY SEMINAR TO UNDERGRAD STUDENTS ON CDMA 

TECHNOLOGY. 

MORE RECENTLY I'VE BEEN GIVING SEMINARS ON CELLULAR 

COMMUNICATION IN 5G TO ITALIAN UNIVERSITIES. 

LAST YEAR, I WAS A KEYNOTE SPEAKER AT IEEE CONFERENCE ON 

WIRELESS AND NETWORKING, ONE OF THE MOST IMPORTANT ONES, AND 

THERE'S ALSO OTHER SUCH EVENTS.

Q. OKAY. DO YOU HOLD ANY PATENTS? 

A. YES. I HAVE ABOUT 50 PATENTS GRANTED IN THE U.S. AND A 

FEW HUNDRED WORLDWIDE.

Q. AND WHO OWNS THOSE PATENTS? 

A. QUALCOMM. 

Q. YOU MENTIONED EARLIER IN YOUR ANSWERS 3GPP. CAN YOU TELL 

US BRIEFLY, WHAT IS 3GPP? 

A. YES. 3GPP IS THE GLOBAL ORGANIZATION IN CHARGE OF 

DEFINING CELLULAR STANDARDS. THAT IS 3G, 4G, 5G. PRETTY MUCH 

EVERY COMPANY IN THE INDUSTRY IS A MEMBER OF 3GPP. THERE ARE 

ABOUT 500 MEMBER COMPANIES, WHICH ARE MEMBERS THROUGH THEIR 

RESPECTIVE REGIONAL ORGANIZATIONS, SUCH AS ETSI FOR EUROPE, 

CCSA FOR CHINA, AND SO ON. 

THE INPUT OF 3GPP ARE CONTRIBUTIONS, WRITTEN CONTRIBUTIONS 

MADE BY COMPANIES, AND THE OUTPUT OF 3GPP ARE THOSE STANDARDS 

IN TECHNICAL SPECIFICATIONS. 

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CASACCIA DIRECT BY MR. COLLIER

UNITED STATES COURT REPORTERS

1623

THERE ARE A FEW THOUSANDS OF TECHNICAL SPECIFICATIONS 

PRODUCED BY 3GPP.

Q. AND IN YOUR ANSWER, YOU MENTIONED ETSI. IS THAT E-T-S-I?

A. YES. 

Q. AND WHAT IS THE RELATIONSHIP BETWEEN 3GPP AND ETSI? 

A. ETSI IS ONE OF THE SEVEN REGIONAL PARTNERS OF 3GPP AND IS 

SORT OF LEADERS AMONG EQUALS. 

Q. DO YOU HAVE AN UNDERSTANDING OF HOW MUCH 3GPP MEETINGS 

YOU'VE ATTENDED IN YOUR CAREER? 

A. YES. A FEW HUNDRED. 

Q. AND YOU MENTIONED THAT THE -- AN INPUT TO 3GPP IS A 

CONTRIBUTION. WHAT IS A CONTRIBUTION? 

A. A CONTRIBUTION IS A WRITTEN DOCUMENT WHICH IS SUBMITTED TO 

A 3GPP MEETING. IN TECHNICAL TERMS, IT IS ALSO CALLED TDOC, 

AND IT IS UNIQUELY IDENTIFIED BY A NUMBER, AND THEN IT IS 

STORED ON THE INTERNET PUBLICLY AVAILABLE TO ANYONE. 

Q. AND DO YOU REVIEW QUALCOMM'S TDOCS AS PART OF YOUR WORK 

WITH 3GPP? 

A. YES, OF COURSE I DO. I ALSO DON'T REVIEW PERSONALLY ALL 

OF THE WRITTEN CONTRIBUTIONS WE MAKE TO 3GPP. WE HAVE 

THOUSANDS OF THEM PER YEAR. BUT PEOPLE FROM MY TEAM DO THAT. 

Q. DO YOU REVIEW TDOCS AND CONTRIBUTIONS FROM OTHER COMPANIES 

TO 3GPP? 

A. YES, I DO. 

Q. OKAY. AND DO YOU HAVE AN ESTIMATE AS TO HOW MANY TDOCS 

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CASACCIA DIRECT BY MR. COLLIER

UNITED STATES COURT REPORTERS

1624

YOU'VE REVIEWED IN YOUR 18 YEARS OF WORKING WITH 3GPP?

A. TENS OF THOUSANDS. MAYBE EVEN MORE.

Q. HAVE YOU PUBLISHED ANY PAPERS RELATED TO CELLULAR 

STANDARDS? 

A. I HAVE. ABOUT IN THE SUMMER OF 2017, I WANTED TO EXPLAIN 

TO THE GENERAL PUBLIC HOW 5G WOULD BE PUT TOGETHER, AND, 

THEREFORE, I PUBLISHED ON THE QUALCOMM WEBSITE A BLOG IN FOUR 

PARTS WHICH EXPLAINS WHAT 3GPP IS, HOW IT WORKS, HOW CELLULAR 

STANDARDS ARE PRACTICALLY PUT TOGETHER, HOW THEY ARE BORN. AND 

AS PART OF, AS PART OF THAT FOUR-PART BLOG, I EXPLAINED ALSO 

WHY CONTRIBUTION COUNTING IS NOT A RELIABLE MEASURE FOR 

ANYTHING. 

Q. OKAY. WHEN YOU SAY, "CONTRIBUTION COUNTING," WHAT IS THAT 

CONCEPT? 

A. CONTRIBUTION COUNTING IS THE NOTION ACCORDING TO WHICH YOU 

COULD COUNT CONTRIBUTIONS MADE BY 3GPP, EITHER SUBMITTED 

CONTRIBUTIONS OR APPROVED CONTRIBUTIONS, AND FROM THAT NUMBER, 

FROM THOSE NUMBERS YOU COULD MAKE SOME INFERENCE ON THE VALUE 

OF A COMPANY'S CONTRIBUTION TO 3GPP. AND THAT NOTION IS 

COMPLETELY FLAWED. IT JUST DOESN'T WORK. 

Q. OKAY. AND WHAT DOES IT MEAN FOR A TDOC OR A CONTRIBUTION 

TO BE APPROVED FOR 3GPP PURPOSES? 

A. APPROVED IS A VERY SPECIFIC BUREAUCRATIC STATUS, 

ADMINISTRATIVE STATUS WHICH IS GIVEN TO CERTAIN PROPOSALS THAT 

MAKE CHANGES TO ALREADY EXISTING AND COMPLETED TECHNICAL 

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CASACCIA DIRECT BY MR. COLLIER

UNITED STATES COURT REPORTERS

1625

SPECIFICATIONS. 

SO, FOR EXAMPLE, BUG FIXES OR EDITORIAL MODIFICATIONS MADE 

TO SPECIFICATIONS THAT ARE ALREADY COMPLETED WHERE ALL OF THE 

FUNDAMENTAL DEFINITION OF THE SPECIFICATION HAS TAKEN PLACE. 

Q. ARE 3GPP TECHNICAL STANDARDS BUILT OUT OF THOSE APPROVED 

CONTRIBUTIONS? 

A. NO. THAT IS WHAT IS VERY IMPORTANT TO UNDERSTAND. THE 

3GPP STANDARDS ARE NOT BUILT THROUGH THE ACCUMULATION OF 

APPROVED CONTRIBUTIONS. THE 3GPP STANDARDS ARE PRIMARILY PUT 

TOGETHER BY EDITORS. 

Q. OKAY. I'D ASK YOU TO TURN IN YOUR WITNESS BINDER TO A 

DEMONSTRATIVE, QDX 9346.005. 

MR. DAHM, CAN WE HAVE THAT ON THE SCREEN? 

IS THIS A DEMONSTRATIVE YOU PREPARED? 

A. YES. 

Q. AND CAN YOU PLEASE EXPLAIN WHAT THIS SLIDE GENERALLY WILL 

SHOW TO THE COURT? 

A. YES. THIS SLIDE SHOWS THE LIFECYCLE, A TYPICAL LIFECYCLE 

OF A TECHNICAL SPECIFICATION IN 3GPP. 

MR. MERBER: OBJECTION. THIS LOOKS LIKE EXPERT 

TESTIMONY, EXPERT OPINION WHICH HE'S NOT BEEN OFFERED AS AN 

EXPERT. 

MR. COLLIER: YOUR HONOR, HE HAS BEEN OFFERED AS AN 

EXPERT. IN FACT, WE DISCLOSED HIM AS AN EXPERT. IF YOU'D 

LIKE, I'LL MAKE A FORMAL TENDER NOW. I'M HAPPY TO DO THAT. 

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CASACCIA DIRECT BY MR. COLLIER

UNITED STATES COURT REPORTERS

1626

SO AT THIS TIME, YOUR HONOR -- 

THE COURT: ALL RIGHT. THAT'S FINE, GO AHEAD. 

MR. COLLIER: AT THIS TIME, YOUR HONOR, I'LL TENDER 

MR. CASACCIA AS AN EXPERT IN THE FIELD OF 3GPP CELLULAR 

STANDARDS, HOW THE STANDARDS ARE FORMED, AND CONTRIBUTIONS. 

MR. MERBER: I WOULD JUST NOTE HE WAS NOT IDENTIFIED 

AS AN EXPERT ON THE WITNESS LIST THAT WAS FILED LAST NIGHT. HE 

DID SUBMIT AN EXPERT DISCLOSURE DURING DISCOVERY. BUT -- 

THERE'S -- 

THE COURT: I DON'T FEEL LIKE I'VE HEARD ENOUGH TO 

CERTIFY HIM AS AN EXPERT ON THOSE TOPICS. WHY DON'T YOU VOIR 

DIRE HIM A LITTLE FURTHER. 

MR. COLLIER: OKAY. 

THE COURT: HE GOES TO MEETINGS. IS THAT ENOUGH? 

MR. COLLIER: NO, YOUR HONOR. 

THE COURT: ALL RIGHT. WHY DON'T YOU LAY MORE 

FOUNDATION BECAUSE I'M NOT GOING TO CERTIFY HIM BASED ON WHAT 

I'VE HEARD.

BY MR. COLLIER: 

Q. MR. CASACCIA, HOW MANY YEARS HAVE YOU BEEN INVOLVED WITH 

3GPP? 

A. EIGHTEEN YEARS.

Q. AND CAN YOU DESCRIBE FOR THE COURT, STARTING FROM WHERE 

YOU STARTED AT QUALCOMM UNTIL THE END OF YOUR 18 YEARS, YOUR 

RESPONSIBILITIES AS THEY RELATE TO 3GPP? 

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CASACCIA DIRECT BY MR. COLLIER

UNITED STATES COURT REPORTERS

1627

A. YES. I HAVE ATTENDED, FIRST, THE WORKING GROUPS IN CHARGE 

OF 2G TECHNOLOGY, SO I WAS RESPONSIBLE FOR DECIDING THE 

QUALCOMM INPUTS TO THOSE WORKING GROUPS, WRITING THEM, 

PRESENTING THEM, AND THEN REPORTING BACK TO QUALCOMM. 

THEN I MOVED TO THE WORKING GROUPS IN CHARGE OF SYSTEM 

ARCHITECTURE WHERE I BUILT A TEAM OF QUALCOMM ENGINEERS AND I 

DID THE SAME, I WAS RESPONSIBLE FOR PRODUCING OUR INPUT TO 

THOSE MEETINGS, PRESENTING IT, AND THEN REPORTING THEM. 

REPORTING IT BACK. 

AND THEN I BECAME RESPONSIBLE FOR THE ENTIRE TEAM OF 3GPP 

ENGINEERS AND EVERYTHING THAT WE DO IN 3GPP. 

THE COURT: THAT'S FOR QUALCOMM; CORRECT? HE'S 

QUALCOMM'S REPRESENTATIVE TO THE 3GPP? 

MR. COLLIER: EXACTLY, YOUR HONOR. 

THE COURT: OKAY. SO WHAT IS IT THAT YOU'RE -- WHY 

DON'T YOU FINISH WHATEVER YOU'RE GOING TO ASK HIM.

BY MR. COLLIER: 

Q. AS PART OF YOUR WORK, YOU SAID YOU SUBMIT INPUTS TO 3GPP. 

CAN YOU GIVE THE COURT SORT OF A LIFECYCLE OF HOW AN IDEA IS 

TURNED INTO AN INPUT AT 3GPP AND WHAT HAPPENS? 

A. YES. SO WHEN YOU WANT TO PROPOSE SOMETHING TO 3GPP, YOU 

PROPOSE, FOR EXAMPLE, FIRST A PROJECT. YOU GO TO A PLANNING 

MEETING, YOU PROPOSE A WORK ITEM OR A STUDY ITEM. YOU HAVE TO 

GIVE CONSENSUS EXPLAINING IT TO OTHER COMPANIES, YOU HAVE TO 

COLLECT COMMENTS FROM OTHER COMPANIES, AND A VERY IMPORTANT 

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CASACCIA DIRECT BY MR. COLLIER

UNITED STATES COURT REPORTERS

1628

ASPECT OF 3GPP IS THAT ALL OF THE DECISIONS HAVE TO TAKE PLACE 

BY CONSENSUS. 

AND ONCE YOU HAVE ESTABLISHED CONSENSUS, YOU CAN START THE 

PROJECT THAT YOU WANT. 

AFTER THE PROJECT STARTS, THEN THE PROJECT DEVELOPS IN 

SEVERAL WORKING GROUPS IN PARALLEL, AND THEN YOU HAVE TO MANAGE 

THE DIFFERENT PARTS OF THE PROJECT IN THOSE WORKING GROUPS 

THROUGH A LARGE NUMBER OF TECHNICAL CONTRIBUTIONS. 

AT THE SAME TIME, ALL OTHER MEMBER COMPANIES ARE FREE TO 

SUBMIT MEMBER CONTRIBUTIONS FOR THE SAME PROJECT THAT YOU 

PROPOSED, AND YOU GO THROUGH THESE ITERATIVE PROCESS OF 

REVIEWING OTHER COMPANIES' CONTRIBUTIONS AND BUILDING BRICK BY 

BRICK THE VARIOUS STEPS TOWARDS THE COMPLETION OF THE PROJECT.

Q. AND YOU'VE SAID THAT YOU HAVE TO CONSULT WITH OTHER 

COMPANIES. 

DOES THAT INVOLVE UNDERSTANDING WHAT OTHER COMPANIES ARE 

SUBMITTING TO 3GPP? 

A. YES, OF COURSE. 

Q. AND YOU HAVE 90 PEOPLE UNDER YOU; IS THAT CORRECT? 

A. YES. 

Q. AND WHO, OVERALL AT QUALCOMM, IS RESPONSIBLE FOR 

QUALCOMM'S CONTRIBUTIONS TO 3GPP? 

A. I AM. 

Q. AND HOW MANY, OVER THE LAST 18 YEARS, HOW MANY HOURS WOULD 

YOU ESTIMATE THAT YOU'VE SPENT ON PREPARING INPUTS, REVIEWING 

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1629

INPUTS, AND ATTENDING 3GPP MEETINGS? 

A. WE WOULD HAVE TO DO THE MATHEMATICS, BUT I WOULD SAY 80 OR 

90 PERCENT OF MY WORKING TIME IN THE LAST 18 YEARS HAS BEEN 

DEDICATED TO 3GPP. SO I DON'T -- HUNDREDS OF THOUSANDS OF 

HOURS PROBABLY. 

MR. COLLIER: YOUR HONOR, AT THIS POINT I BELIEVE 

I'VE LAID A FOUNDATION, AND QUALCOMM WOULD TENDER MR. CASACCIA 

AS AN EXPERT IN THE FIELD OF 3GPP CELLULAR STANDARDS, HOW THOSE 

STANDARDS ARE FORMED, AND CONTRIBUTIONS. 

THE COURT: ALL RIGHT. ANY OBJECTION? 

MR. MERBER: I'M SORRY. I DIDN'T CATCH, DID YOU SAY 

WITH RESPECT TO 3GPP OR STANDARDS GENERALLY? 

MR. COLLIER: I SAID WITH RESPECT TO 3GPP. 

MR. MERBER: NO OBJECTION, YOUR HONOR. 

THE COURT: ALL RIGHT. SO CERTIFIED. 

SO IT'S THE STANDARDS, HOW THEY ARE FORMED, AND 

CONTRIBUTIONS. 

MR. COLLIER: YES, YOUR HONOR. 

THE COURT: OKAY. GO AHEAD, PLEASE. SO CERTIFIED. 

MR. MERBER: AT 3GPP. 

THE COURT: 3GPP CELLULAR STANDARDS, HOW THEY ARE 

FORMED, AND CONTRIBUTIONS. 

GO AHEAD, PLEASE. 

MR. COLLIER: THANK YOU. 

Q. ARE 3GPP TECHNICAL STANDARDS BUILT FROM APPROVED 

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1630

CONTRIBUTIONS? 

A. NO, THEY ARE NOT. AS I MENTIONED EARLIER, IT IS IMPORTANT 

TO UNDERSTAND THAT 3GPP TECHNICAL STANDARDS ARE NOT BUILT FROM 

THE ACCUMULATION OF APPROVED CONTRIBUTIONS. THEY ARE PRIMARILY 

PUT TOGETHER BY EDITORS. 

IN THIS SLIDE -- 

Q. AND YOU'RE POINTING TO THE DEMONSTRATIVE? 

A. YES. IN THIS DEMONSTRATIVE, WE CAN SEE A TYPICAL 

LIFECYCLE OF A TECHNICAL SPECIFICATION IN 3GPP, AND THE TWO 

PARTS THAT IT CONSISTS OF. 

THERE IS A SUBSTANTIVE WORK PHASE, AND THERE IS A CHANGE 

CONTROL PHASE. 

IT ALSO SHOWS THAT THE VAST MAJORITY OF FORMALLY APPROVED 

DOCS TAKES PLACE IN THE CHANGE CONTROL PHASE. 

Q. OKAY. AND WHY DID YOU PICK -- I SEE IT SAYS TS 36.211. 

COULD YOU TELL THE COURT WHAT THAT REFERS TO? 

A. I PICKED THAT BECAUSE IT'S ONE OF THE MORE IMPORTANT 

TECHNICAL SPECIFICATIONS. IT'S THE SPECIFICATION THAT 

DESCRIBES THE TRANSMISSION AND MODULATION FOR 4G LTE, WHICH IS 

HOW A PHONE TALKS TO A CELL TOWER FOR THE RELEASE OF LTE. 

THE EXACT SAME STRUCTURE AND LIFECYCLE WOULD APPLY TO ALL 

OF THE OTHER THOUSANDS OF TECHNICAL SPECIFICATIONS OF 3GPP.

Q. SO IS THIS REPRESENTATIVE OF THE LIFECYCLE FOR OTHER 

TECHNICAL STANDARDS AT 3GPP?

A. ABSOLUTELY.

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1631

Q. AND LOOKING AT YOUR SLIDE, YOU FLAGGED ON THE LEFT-HAND 

SIDE A DATE OF NOVEMBER 2004. 

CAN YOU EXPLAIN WHAT THAT IS? 

A. YES. NOVEMBER 2004 IS WHEN WORK ON 4G LTE STARTED. THERE 

WAS A VERY FIRST WORKSHOP ON 3GPP LONG TERM EVOLUTION, WHICH IS 

WHAT LTE STANDS FOR, AND THE WORKSHOP TOOK PLACE IN TORONTO. I 

ATTENDED PERSONALLY THAT WORKSHOP. 

AND THAT'S WHEN WORK ON 4G LTE STARTED. 

Q. AND AT THE OTHER END OF YOUR SUBSTANTIVE WORK PHASE, THERE 

IS A LINE THAT SAYS SEPTEMBER OF 2007. 

CAN YOU EXPLAIN WHAT THAT IS? 

A. SEPTEMBER 2007, THE FIRST DRAFT OF THE TECHNICAL 

SPECIFICATION 36.211 WAS CONSIDERED STABLE AND APPROVED. 

SO "STABLE" MEANS THAT 3GPP DECIDED THAT ALL OF THE 

FUNDAMENTAL DECISIONS THAT WENT INTO THESE TECHNICAL 

SPECIFICATIONS HAD BEEN TAKEN AND WOULD NO LONGER CHANGE, AND, 

THEREFORE, THERE WAS CONFIDENCE THAT COMPANIES THAT WANTED TO 

BUILD THE PRODUCTS AROUND THIS TECHNOLOGY COULD START THEIR 

PRODUCT PLANNING. 

Q. OKAY. AND LOOKING AT THE PHASE THAT YOU CALL SUBSTANTIVE 

WORK BOUNDED BY THE 2004 AND 2007 DATES, WHAT WORK AT 3GPP IS 

HAPPENING IN THAT PHASE? 

A. PRIMARILY THREE THINGS HAPPEN DURING THAT PHASE. 

ONE, COMPANIES SUBMIT THEIR IDEAS THROUGH WRITTEN 

CONTRIBUTIONS, WHICH IS TDOCS, INTO MEETINGS. 

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1632

TWO, THOSE IDEAS ARE DISCUSSED BY COMPANIES AT THOSE 

MEETINGS. CERTAIN WINNING IDEAS DO EMERGE. THE WINNING IDEAS 

ARE THOSE AROUND WHICH THERE IS CONSENSUS. AS I MENTIONED 

EARLIER, ALL OF THE DECISIONS IN 3GPP TAKE PLACE BY CONSENSUS. 

AND THIRD, THERE IS AN INDIVIDUAL WHICH IS APPOINTED BY 

THE GROUP, AND THAT IS CALLED THE EDITOR, AND THE EDITOR 

DISTILLS THE WINNING IDEAS AND ASSEMBLES A WORKING DOCUMENT. 

THE WORKING DOCUMENT EVOLVES MONTH AFTER MONTH FROM -- AND 

THE EDITOR MAKES IT BECOME, LITTLE BY LITTLE, THE FIRST STABLE 

DRAFT THAT I MENTIONED WAS COMPLETED IN SEPTEMBER 2007. 

Q. IS THERE ANY WAY TO LOOK AT THE FIRST STABLE DRAFT IN THE 

3GPP RECORDS AND DETERMINE WHICH WINNING IDEAS WERE TAKEN INTO 

THE EDITOR'S DRAFT? 

A. NO, ABSOLUTELY NOT, BECAUSE THE SYSTEM IS NOT -- SO THE 

3GPP ADMINISTRATIVE SYSTEM IS NOT SET UP TO DO THAT SORT OF 

THING AT ALL. THE 3GPP ADMINISTRATIVE SYSTEM IS SET UP TO 

FACILITATE COLLABORATIVE WORK AMONG THE COMPANIES. 

Q. SO WHAT ADMINISTRATIVE STATUS WOULD BE GIVEN TO TDOCS 

SUBMITTED BY COMPANIES DURING THE SUBSTANTIVE WORK PHASE THAT 

WERE WINNING IDEAS? 

A. GENERALLY THEY GET THE ADMINISTRATIVE STATUS OF NOTED OR 

TREATED, WHICH ARE JUST TERMINOLOGY IN 3GPP WHICH MEANS PUT 

AWAY. 

Q. OKAY. 

A. THEY ARE NOT APPROVED. 

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1633

Q. SO IF A WINNING IDEA WAS GIVEN THE ADMINISTRATIVE STATUS 

OF NOTED OR TREATED DURING THE SUBSTANTIVE PHASE, UNDER AN 

APPROVED CONTRIBUTION COUNTING MODEL, HOW MUCH CREDIT WOULD BE 

GIVEN TO THOSE WINNING IDEAS? 

A. ZERO. 

Q. NOW, WHAT IS THE PHASE AFTER THE SUBSTANTIVE WORK PHASE 

AND THERE'S A FIRST STABLE DRAFT AT 3GPP?

A. I CALL THAT THE CHANGE CONTROL PHASE, AND I MENTIONED 

EARLIER, THIS IS WHEN THE TECHNICAL SPECIFICATION IS CONSIDERED 

STABLE AND THE PEOPLE CAN START PLANNING FOR PRODUCTS AROUND 

IT. 

BECAUSE OF THAT REASON, FROM THAT POINT ONWARDS, THERE IS 

A MORE RIGOROUS BUREAUCRATIC PROCESS TO MAKE FURTHER CHANGES TO 

THE SPECIFICATIONS. 

THE CHANGES TO THE SPECIFICATION FROM THIS POINT ONWARDS 

ARE TYPICALLY BUG FIXES, CORRECTIONS TO ERRORS, VERY MUCH LIKE 

WHEN YOU RELEASE A SOFTWARE, THEN YOU FIND SOME BUGS AND THEN 

YOU RELEASE AN UPDATED VERSION OF THAT SOFTWARE. 

AND DURING THAT PHASE, THOSE BUG FIXES OR EDITORIAL 

CORRECTIONS THAT FIND CONSENSUS DO GET THE ADMINISTRATIVE 

STATUS OF APPROVED. 

Q. AND SO THOSE BUG FIXES THAT ARE GIVEN THE ADMINISTRATIVE 

STATUS OF APPROVED IN THE CHANGE CONTROL PHASE, WOULD AN 

APPROVED CONTRIBUTION COUNTING MODEL GIVE CREDIT TO THOSE 

IDEAS? 

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1634

A. YES.

MR. MERBER: OBJECTION, YOUR HONOR. HE HASN'T BEEN 

OFFERED AS AN EXPERT ON MODELS FOR COUNTING OF GROUP 

CONTRIBUTIONS. 

MR. COLLIER: THAT'S PART OF CONTRIBUTIONS, YOUR 

HONOR, AND HE WAS DISCLOSED AND HAS BEEN DEPOSED AND GIVEN 

TESTIMONY AS TO THE CONTRIBUTIONS, AND ALL WE'RE TALKING ABOUT 

IS THE ADMINISTRATIVE STATUS THAT'S GIVEN TO EACH CONTRIBUTION 

UNDER AN APPROVED CONTRIBUTION COUNTING MODEL, ONLY APPROVED 

CONTRIBUTIONS COUNT AS MR. CASACCIA SAID. 

THE COURT: CAN I ASK YOU, WHY ON YOUR WITNESS LIST 

DID YOU NOT LIST HIM AS AN EXPERT. YOU LISTED MR. ANDREWS AS 

AN EXPERT AND OTHERS. 

MR. COLLIER: HE'S AN EMPLOYEE WHO HAS EXPERTISE, SO 

AS AN ABUNDANCE OF CAUTION, WE NOT ONLY DISCLOSED HIM AS AN 

EXPERT, WE GAVE AN 11 PAGE DISCLOSURE. HE WAS OFFERED UP FOR 

YET A THIRD DEPOSITION SOLELY IN HIS EXPERT CAPACITY, YOUR 

HONOR. 

SO WHILE I BELIEVE MOST OF THESE THINGS ARE WITHIN HIS 

EXPERIENCE, OUT OF AN ABUNDANCE OF CAUTION, WE DID DISCLOSE HIM 

AS AN EXPERT. IN FACT, IF YOUR HONOR MAY RECALL, WE FILED AN 

HPO TO ONE OF THE EXHIBITS THEY WANTED TO USE TO CROSS HIM, AND 

THEY SAID THAT THEY'RE ALLOWED TO USE THAT EXHIBIT BECAUSE HE 

IS AN EXPERT AND THEY WANT TO TEST HIS EXPERT OPINION. 

SO EVERYONE HAS KNOWN FOR MONTHS THAT HE'S AN EXPERT, YOUR 

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1635

HONOR. HE'S BEEN FULLY DISCLOSED, AND, IN FACT, THEY'VE 

PREVAILED IN HAVING OBJECTIONS OVERRULED BECAUSE HE IS AN 

EXPERT. 

THE COURT: OKAY. SO THEN WHY DIDN'T YOU LIST HIM ON 

YOUR WITNESS LIST AS AN EXPERT? 

MR. VAN NEST: THAT'S MY FAULT, YOUR HONOR. HE'S A 

COMPANY EMPLOYEE, AND I APPROVED THE WITNESS LIST THAT WENT 

OUT. I THINK VIRTUALLY ALL OF THIS IS WITHIN HIS PERSONAL 

KNOWLEDGE AND YOUR HONOR HAS RULED PRETRIAL THAT FOLKS COULD 

TESTIFY WITHIN THEIR PERSONAL KNOWLEDGE. 

SO THAT'S MY OMISSION. I ASSUMED HE WAS A COMPANY 

EMPLOYEE, HE IS A COMPANY EMPLOYEE, AND I SHOULD HAVE LISTED 

HIM AS AN EXPERT, TOO, AND I FAILED TO DO THAT. I APOLOGIZE. 

THE COURT: THAT'S ALL RIGHT. THE OBJECTION'S 

OVERRULED. 

GO AHEAD, PLEASE.

BY MR. COLLIER: 

Q. MR. CASACCIA, I BELIEVE THE QUESTION BEFORE YOU WAS THESE 

BUG FIXES THAT ARE GIVEN THE ADMINISTRATIVE STATUS OF APPROVED, 

WOULD THEY BE COUNTED IN AN APPROVED CONTRIBUTION COUNTING 

MODEL? 

A. YES. 

Q. LET'S ASSUME THAT WE'RE IN THE CHANGE CONTROL PERIOD AND 

SOME COMPANY DOESN'T WANT TO PROPOSE A BUG FIX OR AN UPDATE TO 

SOME CROSS-REFERENCES BUT WANTS TO HAVE A FUNDAMENTAL, NEW 

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1636

TECHNOLOGY OR IDEA INCORPORATED INTO THE STANDARD, WHAT HAPPENS 

THEN? 

A. THEN THAT COMPANY GOES BACK TO A PLANNING MEETING AND 

PROPOSES A NEW PROJECT. THAT WOULD TYPICALLY HAPPEN IN THE 

NEXT RELEASE OF THE STANDARD. AND IF THE CONSENSUS IS FOUND 

AROUND THAT NEW PROJECT, A NEW LIFECYCLE, EXACTLY LIKE THIS 

ONE, WOULD START FOR THE NEXT RELEASE OF THE STANDARD. 

AND, THEREFORE, THAT CONTRIBUTION THAT WAS PROPOSING THAT 

NEW FUNDAMENTAL IDEA WOULD AGAIN FALL UNDER THIS SUBSTANTIVE 

WORK PHASE AND ALSO WOULD NOT BE ADMINISTRATIVELY MARKED AS 

APPROVED. 

Q. AND BY NOT BEING ADMINISTRATIVELY MARKED AS APPROVED, WHAT 

CREDIT WOULD BE GIVEN FOR THAT FUNDAMENTAL IDEA UNDER AN 

APPROVED CONTRIBUTION COUNTING MODEL? 

A. AGAIN, ZERO. 

Q. NOW, OVER YOUR 18 YEARS OF WORK AT 3GPP, DO YOU HAVE AN 

UNDERSTANDING AS TO WHETHER OR NOT QUALCOMM IS GENERALLY 

SUCCESSFUL IN GETTING ITS IDEAS INTO THE DRAFT SPECIFICATIONS 

FOR 3GPP?

A. WE HAVE BEEN FAIRLY SUCCESSFUL.

Q. AND WHY IS THAT? 

A. I BELIEVE BECAUSE OF OUR SYSTEM ENGINEERING APPROACH TO 

WHAT WE DO IN 3GPP. 

WE TRY TO SUBMIT OR PROPOSE THINGS IN 3GPP FOR WHICH WE 

HAVE DONE EARLY R&D, IN SOME CASES WE'VE ALSO DONE PROTOTYPING 

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1637

BEFORE PROPOSING THINGS TO 3GPP. 

AND THEN IMPORTANTLY ALSO, WE TRY TO THINK OF THE RIPPLE 

EFFECTS OF OUR PROPOSALS. SO, FOR EXAMPLE, IF WE MAKE A 

PROPOSAL TO OUR AIR INTERFACE COMPONENT, THEN WE TRY TO 

UNDERSTAND WHETHER IT HAS AN IMPACT ON THE SECURITY PART. 

AND IF IT DOES, WE SOLVE THAT PROBLEM AND THEN WE GO TO 

THE WORKING GROUP IN CHARGE OF SECURITY TO MAKE THE 

CORRESPONDING PROPOSAL ACCORDINGLY. 

ONE THING THAT IS IMPORTANT TO UNDERSTAND IS THAT IN 3GPP, 

THERE ARE 16 DIFFERENT WORKING GROUPS RIGHT NOW IN CHARGE OF 16 

DIFFERENT TECHNOLOGY AREAS. 

Q. DOES EVERY OTHER COMPANY AT 3GPP HAVE SUCH BROAD SYSTEMS 

ENGINEERING TYPE COVERAGE? 

A. NO. 

Q. I'D ASK YOU TO TURN TO CX 7475 IN YOUR BINDER, AND I'LL 

ASK IF YOU CAN IDENTIFY THIS DOCUMENT FOR THE COURT? 

A. YES. THIS IS A PROPOSAL THAT QUALCOMM -- IT'S A 

CONTRIBUTION FROM QUALCOMM TO A MEETING IN FEBRUARY 2015 TO A 

RAND ONE MEETING, RAN 1. 

AND IT'S A PROPOSAL ON PHYSICAL LAYER OPTIONS FOR LAA. 

Q. AND IS THIS A TRUE AND CORRECT COPY OF THE TECHNICAL 

DOCUMENT SUBMITTED TO 3GPP? 

A. YES. 

Q. IS IT PUBLICLY AVAILABLE ON YOUR WEBSITE? 

A. YES. AS I MENTIONED, ALL DOCUMENTS ARE ON THE INTERNET. 

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CASACCIA DIRECT BY MR. COLLIER

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1638

MR. COLLIER: AT THIS POINT, YOUR HONOR, WE'D MOVE TO 

ADMIT QX 7475. 

MR. MERBER: NO OBJECTION, YOUR HONOR. 

THE COURT: IT'S ADMITTED. 

(DEFENDANT'S EXHIBIT QX 7475 WAS ADMITTED IN EVIDENCE.) 

THE COURT: GO AHEAD, PLEASE.

BY MR. COLLIER: 

Q. AND, MR. CASACCIA, IN YOUR ANSWER, YOU MENTIONED THAT THIS 

WAS A PROPOSAL RELATED TO LAA. 

CAN YOU TELL THE COURT WHAT LAA IS? 

A. LAA IS THE TECHNICAL TERM FOR LTE IN UNLICENSED SPECTRUM, 

WHICH IS THE ABILITY TO TRANSMIT AND RECEIVE LTE WAVEFORM IN 

SPECTRUM THAT DOESN'T HAVE A LICENSE FROM THE GOVERNMENT OR THE 

REGULATOR. 

Q. AND WHEN YOU SAY, "UNLICENSED SPECTRUM," DOES THAT HAVE 

ANYTHING TO DO WITH PATENT LICENSING? 

A. NO. IT'S JUST THE REGIME OF THE SPECTRUM, HOW IT IS 

ALLOCATED BY, FOR EXAMPLE, THE FCC IN THE U.S. 

Q. WERE YOU PERSONALLY INVOLVED IN PRESENTING THE CONCEPTS OF 

LAA TO 3GPP? 

A. YES. THE ORIGINAL CONCEPT OF LTE IN UNLICENSED SPECTRUM 

WAS PRESENTED IN DECEMBER 2013 AT A PLENARY MEETING. I 

REMEMBER THAT VERY WELL BECAUSE I MADE THE PRESENTATION MYSELF. 

AND I RECALL VERY WELL THAT THE RECEPTION WAS FAIRLY SKEPTICAL 

AND NEGATIVE AT THAT MEETING. MANY COMPANIES DID NOT THINK THE 

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1639

IDEA WOULD WORK. 

Q. AND DESPITE OTHER COMPANIES IN THE INDUSTRY BELIEVING THE 

IDEA WOULDN'T WORK, DID QUALCOMM PERSIST IN THIS IDEA? 

A. YES. WE WERE VERY CONFIDENT THAT THE IDEA INDEED COULD 

WORK, AND THEN WE CONTINUED TO WORK WITHIN THE 3GPP PROCESS TO 

PURSUE THE PROPOSAL.

Q. WELL, SO WHAT WAS THE OUTCOME? 

A. WELL, THE OUTCOME EVENTUALLY WAS VERY POSITIVE BECAUSE THE 

TECHNOLOGY HAS BEEN STANDARDIZED, HAS BECOME PART OF THE LTE 

STANDARD, AND ALSO HAS BEEN BUILT INTO PRODUCTS. IT HAS BEEN 

DEPLOYED, AND IT IS A VERY KEY ELEMENT THAT ALLOWS, FOR 

EXAMPLE, TO HAVE GIGABIT LTE CONNECTIONS IN YOUR SMARTPHONE.

Q. WELL, WHAT DOES IT MEAN TO NON-ENGINEERS TO HAVE GIGABIT 

ACCESS TO SMARTPHONE? 

A. WELL, IT MEANS THAT YOU CAN TRANSMIT AND RECEIVE DATA MUCH 

FASTER. SO IT BECOMES EASIER TO WATCH NETFLIX, WATCH YOUTUBE 

ON YOUR SMARTPHONE, OR FOR ME, IT'S EASIER TO SEND VIDEOS OF MY 

SON TO MY FATHER. 

Q. AND DURING WHICH OF THE TWO PHASES, THE SUBSTANTIVE PHASE 

OR THE CHANGE CONTROL PHASE, WAS CX 7475 SUBMITTED BY QUALCOMM? 

A. THIS IS THE SUBSTANTIVE WORK PHASE. 

Q. AND WHAT ADMINISTRATIVE STATUS WAS GIVEN TO THE TDOC 

CX 7475 BY 3GPP? 

A. THE ADMINISTRATIVE STATUS IS AVAILABLE, WHICH BASICALLY 

MEANS IT HAS BEEN REVIEWED, DISCUSSED, AND THEN PUT AWAY.

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1640

Q. OKAY. WELL, UNDER AN APPROVED CONTRIBUTION COUNTING 

METHODOLOGY, DOES QUALCOMM GET ANY CREDIT FOR THE FUNDAMENTAL 

IDEAS CONTAINED IN THIS TDOC? 

A. NO. QUALCOMM GETS NO CREDIT FOR THOSE IDEAS. AND IT 

IS -- IT'S WORTH MENTIONING THAT IN THIS DOCUMENT, THERE ARE 

SIX FUNDAMENTAL IDEAS. IN SECTION 2, THERE ARE SIX 

SUBSECTIONS, FROM 2.1 TO 2.6, AND THEN IN THE CONCLUSIONS, 

THERE ARE SIX PROPOSALS ACCORDINGLY, AND THESE ARE SIX 

DIFFERENT TECHNICAL AREAS OF LAA WITH SIX DIFFERENT 

CORRESPONDING PROPOSALS. 

Q. AND -- 

A. ALSO, IN FACT, THIS WAS A VERY FUNDAMENTAL DOCUMENT 

PROPOSING HOW LAA WAS SUPPOSED TO WORK. 

Q. AND HOW MANY OF THE SIX FUNDAMENTAL IDEAS FOUND THEIR WAY 

INTO THE FINAL 4G LTE SPECIFICATIONS? 

A. ALL OF THEM. 

Q. NOW, IS THIS TDOC THE ONLY EXAMPLE OF QUALCOMM'S 

FUNDAMENTAL CONTRIBUTIONS TO 4G LTE? 

A. NO. OF COURSE THERE WOULD BE MANY, MANY MORE EXACTLY 

LOOKING LIKE THIS ONE.

Q. CAN YOU NAME A COUPLE? 

A. YES, OF COURSE. SO, FOR EXAMPLE, THERE IS THE DEFINITION 

OF THE LTE SYNCHRONIZATION CHANNEL. THAT IS VERY IMPORTANT 

BECAUSE CELL PHONES AND CELL TOWERS HAVE TO BE ON THE SAME 

CLOCK, SO TO SAY, WITH THE PRECISION OF A VERY SMALL FRACTION 

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1641

OF A SECOND. AND A SYNCHRONIZATION CHANNEL IS HOW THAT IS 

ACHIEVED. 

ANOTHER EXAMPLE IS THE UPLINK SINGLE CARRIER FDM WAVEFORM. 

THAT IS VERY CRITICAL BECAUSE IT'S HOW YOU CAN TRANSMIT FROM 

YOUR PHONE, KEEPING THE BATTERY SIZE OF YOUR PHONE REASONABLE. 

OTHER ONES ARE HOW CARRIER AGGREGATION IS DEFINED. 

CARRIER AGGREGATION WAS PIONEERED BY QUALCOMM IN 3G AND THEN IT 

EVOLVED IN 4G, AND THEN IT IS ALSO FROM THAT EVOLVING INTO 5G. 

AND THOSE ARE JUST THREE EXAMPLES, BUT THERE COULD BE 

MORE.

Q. SO YOU MENTIONED 5G. HAS QUALCOMM ALSO SUBMITTED TDOCS 

CONTAINING FUNDAMENTAL IDEAS FOR 5G AS OF MARCH 2018? 

A. YES. THERE ARE ALSO SEVERAL DOCUMENTS LIKE THIS ONE 

SUBMITTED TO 5G THAT HAVE BEEN SUCCESSFUL IN DEFINING THE 5G 

STANDARD. 

FOR EXAMPLE, TECHNIQUES TO MAKE MILLIMETER WAVE TO WORK 

FOR CELLULAR SYSTEMS. MILLIMETER WAVE ARE HIGH FREQUENCY BANDS 

WHICH WERE NOT ACCESSIBLE TO ANY OF THE PREVIOUS GENERATIONS OF 

CELLULAR STANDARDS, 3G OR 4G, AND THOSE ARE ONE NOVELTY OF 5G. 

THERE ARE SOME VERY SPECIFIC PROBLEMS ASSOCIATED WITH THOSE 

BANDS WHICH WE SOLVED AND NOW OUR TECHNOLOGIES HAVE BEEN 

PROPOSED IN DOCUMENTS LIKE THIS AND HAVE BECOME PART OF THE 

STANDARD. 

SECURITY FOR 5G IS ANOTHER ONE. 5G HAS A DIFFERENT 

SECURITY ARCHITECTURE. IT IS MORE SECURE THAN 4G AND 3G. 

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ALSO, THAT IS BECAUSE OF SOME VERY SPECIFIC TECHNICAL 

SOLUTIONS PROPOSED IN DOCUMENTS LIKE THIS ONE BY QUALCOMM AND 

THAT ALSO HAVE BECOME PART OF THE 5G STANDARD.

Q. AND WOULD QUALCOMM, UNDER AN APPROVED CONTRIBUTION 

COUNTING SCHEME, GET CREDIT FOR ANY OF THOSE FUNDAMENTAL 

SUBMISSIONS? 

A. NO, ABSOLUTELY ZERO BECAUSE IN ALL THOSE CASES, IT'S 

SIMILAR, AS I MENTIONED EARLIER. IN ALL THOSE CASES, THE 

SPECIFICATION IS PHYSICALLY BUILT, ASSEMBLED BY AN EDITOR, AND 

ALL OF THE DOCUMENTS WITH THE WINNING IDEAS GET NOTED OR PUT 

AWAY OR MARKED AS TREATED BY THE SECRETARY. THEY ARE NOT 

GETTING THE STATUS OF APPROVED, EVEN THOUGH THE IDEAS CONTAINED 

IN THEM DO MOVE FORWARD. 

Q. DID YOU -- I'D LIKE TO GO BACK TO YOUR DEMONSTRATIVE, IF I 

COULD. 

LOOKING AT THE CHANGE CONTROL PERIOD AGAIN, DID YOU HAVE 

AN OPPORTUNITY TO REVIEW THE TWO TECHNICAL DOCUMENTS QX 6457 

AND CX 7492 -- ALREADY ADMITTED, YOUR HONOR -- THAT 

MR. LASINSKI TESTIFIED ABOUT AT TRIAL? 

A. YES.

Q. AND DO YOU RECALL BRIEFLY WHAT THOSE TWO T DOCUMENTS 

CONTAINED? 

A. YES. ONE WAS MAKING SOME EDITORIAL CLEANUPS OF THE 

SPECIFICATION, SUCH AS ADDING HYPHENS ;AND ANOTHER ONE WAS 

UPDATING CERTAIN REFERENCES TO OTHER DOCUMENTS. 

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Q. AND DO YOU KNOW WHAT PHASE THESE TWO T DOCUMENTS CAME 

FROM? 

A. YES. THEY ARE FROM THE CHANGE CONTROL PHASE. THAT CAN BE 

VERY EASILY SEEN BY THE FACT THAT THERE IS A VERY SPECIFIC 

COVER PAGE, WHICH IS THE ONE THAT WE SEE ON THE SCREEN, THAT IS 

EMPLOYED, AND THAT IS THE COVER PAGE THAT MUST BE USED IN THE 

CHANGE CONTROL PHASE. 

Q. AND WHAT ADMINISTRATIVE STATUS DID 3GPP ASSIGN TO THESE 

TWO TDOCS? 

A. APPROVED BECAUSE, AS I SAID, IN THAT PHASE THERE IS A MORE 

ADMINISTRATIVE PROCESS TO MAKE THOSE CHANGES. THERE WAS 

CONSENSUS TO MAKE THOSE CLEANUPS, AND, THEREFORE, THE DOCUMENTS 

WERE APPROVED. 

Q. AND SO UNDER AN APPROVED CONTRIBUTION COUNTING 

METHODOLOGY, WOULD THE AUTHORS OF THESE TWO BUG FIX AND 

TYPOGRAPHICAL ERROR UPDATING CONTRIBUTIONS GET CREDIT? 

A. YES. 

Q. AND ARE THESE THE ONLY APPROVED TDOCS YOU'RE AWARE OF THAT 

CONTAIN TYPOGRAPHICAL UPDATES OR BUG FIXES? 

A. NO. WE COULD FIND HUNDREDS, THOUSANDS OF THEM. 

Q. WELL, WE'VE DISCUSSED ISSUES IN THE SUBSTANTIVE PHASE AND 

THE CHANGE CONTROL PHASE WITH THE CONCEPT OF APPROVED 

CONTRIBUTION COUNTING. 

ARE THERE OTHER FLAWS? 

A. THERE ARE SEVERAL OTHER FLAWS. THE MOST IMPORTANT OTHER 

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1644

FLAW IS THAT APPROVED CONTRIBUTION COUNTING IS SUBJECT TO 

MANIPULATION BY COMPANIES AND, IN FACT, IN MY EXPERIENCE OF 

SEVERAL YEARS IT HAS BEEN MANIPULATED BY COMPANIES. 

WITH THIS, IT MEANS THAT COMPANIES HAVE BEEN ARTIFICIALLY 

TRYING TO INFLATE THEIR NUMBERS OF EITHER SUBMITTED 

CONTRIBUTIONS OR APPROVED CONTRIBUTIONS. 

AN EXAMPLE OF HOW A COMPANY WOULD DO THAT IS VERY SIMPLE. 

SUPPOSE THAT THERE IS A BUG FIX THAT HAS TO BE DONE IN FOUR 

DIFFERENT SECTIONS OF THE SPECIFICATION. THEN YOU CAN SPLIT 

THAT IN FOUR DIFFERENT PROPOSALS, ONE PER SECTION OF THE 

SPECIFICATION, EVEN THOUGH IT IS EXACTLY THE SAME THING. 

AND THEN YOU WOULD GET, INSTEAD OF ONE, FOUR FORMALLY 

APPROVED DOCUMENTS. 

IT IS KNOWN THAT COMPANIES, CERTAIN COMPANIES, HAVE BEEN 

GIVEN DIRECTIVES TO THEIR ENGINEERS, OR IN SOME CASES EVEN 

INCENTIVES TO THEIR ENGINEERS, TO DO THAT. 

MR. MERBER: OBJECTION. HE'S TESTIFYING TO 

SOMETHING -- 

THE WITNESS: AND -- 

MR. MERBER: I'M JUST OBJECTING TO THE FACT THAT 

SOMETHING IS KNOWN WITHOUT STATING BY WHOM OR FROM WHERE HE 

OBTAINED THIS INFORMATION. 

THE WITNESS: I KNOW. I KNOW THAT CERTAIN -- 

THE COURT: WELL, THE OBJECTION IS OVERRULED. BUT IT 

WOULD BE -- IT WOULD BE HEARSAY, RIGHT? HE'S SAYING WHAT OTHER 

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COMPANIES TOLD THEIR EMPLOYEES. JUST LAY THE FOUNDATION FOR 

HOW HE KNOWS THAT, PLEASE. 

MR. COLLIER: YES, YOUR HONOR. AND OF COURSE HE'S AN 

EXPERT. 

Q. BUT, MR. CASACCIA, LET ME -- 

A. I -- 

Q. I UNDERSTAND THAT YOU KNOW, AND NOW THE COURT WOULD LIKE 

TO KNOW HOW YOU KNOW THAT OTHER COMPANIES INCENTIVIZE THEIR 

DELEGATES TO INCREASE CONTRIBUTIONS? 

A. I KNOW FROM DIRECT EXPERIENCE FROM HAVING SEEN MYSELF 

THOSE DOCUMENTS AND THOSE PRACTICES BEING MADE. 

AND, FOR EXAMPLE, TWO COMPANIES THAT HAVE HAD THIS 

PRACTICE OF ARTIFICIALLY INFLATING THE NUMBER OF CONTRIBUTIONS, 

BE IT SUBMITTED CONTRIBUTIONS OR APPROVED CONTRIBUTIONS, 

SYSTEMATICALLY THROUGHOUT THE YEARS TWO OF THOSE COMPANIES HAVE 

BEN ERICSSON AND HUAWEI. 

Q. ARE YOU OR OTHER MEMBERS OF QUALCOMM COMPENSATED IN ANY 

WAY FOR THE AMOUNT OF CONTRIBUTIONS OR APPROVED CONTRIBUTIONS 

WE HAVE? 

A. NO. WE DON'T HAVE ANY QUOTAS THAT WE NEED TO REACH OR ANY 

NUMERIC TARGETS OF CONTRIBUTIONS THAT WE NEED TO REACH, UNLIKE 

SOME OTHER COMPANIES. 

MR. MERBER: OBJECTION, YOUR HONOR. I DON'T KNOW OF 

HIS BASIS FOR DESCRIBING THE COMPENSATION SYSTEMS OF OTHER 

COMPANIES. 

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1646

MR. COLLIER: I'LL LAY THAT FOUNDATION, YOUR HONOR. 

THE COURT: I DON'T EVEN KNOW WHAT DOCUMENTS HAS HE 

SEEN. HE SAID, "I'VE SEEN MYSELF THOSE DOCUMENTS." 

MR. COLLIER: OKAY. 

THE COURT: WHO'S HE REFERRING TO, PLEASE ? 

MR. COLLIER: I CAN DO BOTH, YOUR HONOR. 

THE COURT: OKAY.

BY MR. COLLIER: 

Q. CAN YOU GIVE THE COURT A DESCRIPTION OF THE TYPE OF 

DOCUMENTS THAT YOU HAVE SEEN THAT ARTIFICIALLY SPLIT 

CONTRIBUTIONS IN THE APPROVED PHASE. 

A. YES. FOR EXAMPLE, AS I MENTIONED EARLIER, YOU CAN FIND 

THE DOCUMENTS THAT DO A CERTAIN BUG FIX OR EDITORIAL 

CORRECTIONS, AND THEY HAVE TO DO THAT THROUGHOUT A 

SPECIFICATION. 

A SPECIFICATION, A TECHNICAL SPECIFICATION IS A DOCUMENT 

TYPICALLY OF A COUPLE OF HUNDRED PAGES. SO YOU CAN DO THAT, 

CORRECTING THOSE ERRORS, IN A SINGLE PROPOSAL, IN A SINGLE 

DOCUMENT, THAT THEN WOULD GET APPROVED, OR YOU CAN DECIDE TO 

SPLIT THOSE EDITORIAL CORRECTIONS INTO ONE DOCUMENT PER SECTION 

OF THE SPECIFICATION. 

SO OUT OF ONE BUG FIX, YOU CAN GENERATE 5, 10, 20 APPROVED 

CONTRIBUTIONS THAT EFFECTIVELY -- THAT ARE EFFECTIVELY JUST 

PURSUING ONE SINGLE BUG FIX. 

AND I HAVE SEEN THOSE DOCUMENTS FIRSTHAND THROUGHOUT MY 

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1647

EXPERIENCE IN MANY WORKING GROUPS. 

Q. THANK YOU. 

MR. MERBER: YOUR HONOR, I DON'T BELIEVE THAT 

ADDRESSED THE POINT ABOUT THE COMPENSATION SCHEME AT THIRD 

PARTIES. THAT DID ADDRESS HIS VIEW OF DOCUMENTS HE'S REVIEWED, 

BUT NOT THIRD PARTY COMPENSATION PLANS. 

MR. COLLIER: YOUR HONOR, I'LL RESPECTFULLY SUGGEST 

THIS SOUNDS MORE LIKE CROSS, BUT I'LL ASK HIM THAT QUESTION. 

THE COURT: NO. YOU SAID YOU WERE GOING TO ADDRESS 

BOTH ISSUES. SO GO AHEAD, PLEASE. 

MR. COLLIER: ALL RIGHT. 

Q. HAVE YOU BEEN PERSONALLY MADE AWARE BY PEOPLE WHO WOULD 

KNOW WHETHER OR NOT DELEGATES AT CERTAIN OTHER COMPANIES ARE 

FULLY FINANCIALLY INCENTIVIZED TO SUBMIT CONTRIBUTIONS? 

A. YES, I'VE BEEN PERSONALLY MADE AWARE BY THOSE DELEGATES 

THEMSELVES IN SOME CASES. 

Q. DELEGATES OF THE COMPANIES THAT HAVE BEEN INCENTIVIZING 

OR -- 

A. YES, DELEGATES OF COMPANIES THAT HAD A CERTAIN INCENTIVE 

THAT WOULD, FOR EXAMPLE, ASK US, CAN YOU PLEASE LET ME, LET ME 

ADD MY NAME TO THIS DOCUMENT BECAUSE I NEED TO REACH A CERTAIN 

QUOTA OF APPROVED CONTRIBUTIONS TO SHOW MY BOSS. 

Q. OKAY. SO TO PULL BACK A LITTLE BIT, DO ALL TDOCS HAVE A 

SOURCE OR AUTHOR LINE? 

A. YES. ALL TDOCS MUST HAVE A SOURCE BECAUSE THEY HAVE TO 

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1648

COME FROM SOMEONE, AND THE SOURCE IS NOT SUPPOSED TO IDENTIFY 

THE DIRECT AUTHOR OF THE CONTENT. THIS IS YET ANOTHER PROBLEM 

OF COUNTING APPROVED CONTRIBUTIONS THAT I DIDN'T MENTION UP TO 

NOW. 

SO IN SOME CASES, FOR EXAMPLE, PEOPLE ADD THEMSELVES TO 

THE SOURCE BECAUSE THEY WANT TO EXPRESS SUPPORT. SO, FOR 

EXAMPLE, LET'S SAY QUALCOMM COULD SUBMIT A DOCUMENT AND THEN 

LET'S SUPPOSE THAT AT&T WANTS TO, WANTS TO SHOW THAT THEY 

SUPPORTED THE DOCUMENT, AND THEN THEY ASK THEMSELVES TO BE 

ADDED AS A CO-SOURCE OF THE DOCUMENT. 

THIS IS A VERY COMMON PRACTICE IN 3GPP. SO USING THE 

SOURCE OF THE DOCUMENT TO EXPRESS SUPPORT. 

IN ADDITION TO THAT, AS I MENTIONED, THERE HAS BEEN 

NUMEROUS CASES WHERE COMPANIES HAVE ASKED TO BE ADDED TO 

DOCUMENTS FOR WHICH THEY DIDN'T REALLY AUTHOR THE CONTENT SO 

THAT LATER THEY COULD REPORT HOME THAT THEY HAD REACHED A 

CERTAIN QUOTA TO THEIR BOSS. 

THIS HAS BEEN A DIRECT REQUEST AS A SORT OF FAVOR AMONG, 

YOU KNOW, FELLOW ENGINEERS THAT HAS BEEN MADE TO US. 

Q. CAN YOU NAME THE COMPANY OR COMPANIES THAT YOU HAVE 

FIRSTHAND KNOWLEDGE THAT THEIR ENGINEERS HAVE ASKED TO BE ADDED 

TO OUR CONTRIBUTIONS BECAUSE THEY'RE INCENTIVIZED BY THEIR 

COMPANIES TO DO SO? 

A. HUAWEI. 

Q. IS 3GPP, AS AN ORGANIZATION, AWARE OF THIS PROBLEM OF 

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1649

CONTRIBUTION MANIPULATION? 

A. YES. IT IS, IT IS A FACT THAT IS VERY VISIBLE, AND I 

BELIEVE EVERYBODY WITH SOME EXPERIENCE IN ATTENDING 3GPP 

MEETINGS WOULD SAY THE SAME THINGS THAT I JUST SAID. 

ONE THING TO MENTION IS THAT, AS I MENTIONED, THERE ARE 16 

WORKING GROUPS. EACH WORKING GROUP HAS A CHAIRMAN OR CHAIR 

WOMAN THAT IS ELECTED AND THIS PRACTICE OF ARTIFICIALLY 

INFLATING THE NUMBER OF CONTRIBUTIONS DOES CREATE SOME 

ADMINISTRATIVE BURDEN BECAUSE IT JUST CREATES MORE CONFUSION OR 

MORE, MORE BURDEN TO RUN THE MEETING. 

SO IN ONE OF THE WORKING GROUPS, RAN 1, THE CHAIRMAN SOME 

TIME AGO HAS INSTITUTED A POLICY WITH A CAP FOR THE NUMBER OF 

CONTRIBUTIONS THAT A COMPANY WOULD BE ABLE TO SUBMIT FOR 

CERTAIN AGENDA ITEMS. 

THIS, OF COURSE, IS -- WAS ONLY CERTAIN AGENDA ITEMS OF A 

WORKING GROUP, NOT -- IT DOESN'T APPLY TO ALL THE OTHER 15 

WORKING GROUPS WHERE THE PROBLEM IS STILL VERY MUCH PRESENT. 

Q. OKAY. AND THAT CHAIRMAN THAT INSTITUTED THIS CAP, IS HE A 

QUALCOMM EMPLOYEE OR SOME OTHER COMPANY? 

A. NO. HE WAS FROM DOCOMO, THE JAPANESE OPERATOR. 

Q. SO, MR. CASACCIA, IS APPROVED CONTRIBUTION COUNTING A 

RELIABLE METRIC TO MEASURE A COMPANY'S PATENT PORTFOLIO 

STRENGTH? 

A. NO. APPROVED CONTRIBUTION COUNTING IS NOT A RELIABLE 

MEASURE -- METHOD TO MEASURE ANYTHING AND THAT IS BECAUSE IT 

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CASACCIA CROSS BY MR. MERBER

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1650

DOES NOT COUNT THE FUNDAMENTAL CONTRIBUTIONS THAT ARE MADE 

DURING THE SUBSTANTIVE WORK PHASE. 

IT DOES COUNT THE SMALL BUG FIXES AND EDITORIAL 

CORRECTIONS THAT ARE MADE DURING THE CHANGE CONTROL PHASE, AND 

ALSO IT HAS BEEN REGULARLY MANIPULATED BY CERTAIN COMPANIES FOR 

SEVERAL YEARS. 

THERE WOULD ALSO BE OTHER REASONS, AS I ALLUDED TO 

EARLIER, BUT THOSE ARE THE THREE MAIN ONES. 

MR. COLLIER: THANK YOU, YOUR HONOR. I'LL PASS THE 

WITNESS. 

THE COURT: OKAY. IT'S 10:34. 

LET'S GO AHEAD AND TAKE OUR BREAK THIS MORNING. LET'S 

TAKE A 15 MINUTE BREAK, AND THEN WE'LL CONCLUDE FOR LUNCH AT 

NOON. 

OKAY. THANK YOU. 

(RECESS FROM 10:35 A.M. UNTIL 10:48 A.M.) 

THE COURT: OKAY. ALL RIGHT. WELCOME BACK. PLEASE 

TAKE A SEAT. 

10:49. GO AHEAD, PLEASE. 

CROSS-EXAMINATION

BY MR. MERBER:

Q. GOOD MORNING, MR. CASACCIA. 

A. GOOD MORNING.

Q. MR. CASACCIA, YOU'RE NOT INVOLVED IN QUALCOMM'S LICENSING 

BUSINESS, ARE YOU? 

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1651

A. NO, I'M NOT. 

Q. AND YOU'RE NOT AWARE OF WHETHER QUALCOMM HAS EVER SIGNED A 

CONTRACT AGREEING TO BASE ITS ROYALTY REVENUE ON A MEASURE OF 

APPROVED CONTRIBUTIONS; RIGHT? 

A. NO, I'VE NEVER SEEN QUALCOMM -- I HAVE NEVER SEEN ANY 

QUALCOMM LICENSING CONTRACT. 

Q. AND YOU'RE NOT OFFERING ANY OPINION ABOUT THE PROPER 

METHOD OF VALUING A STANDARD ESSENTIAL PATENT PORTFOLIO; 

CORRECT? 

A. CORRECT. 

Q. AND YOU'RE NOT AN EXPERT IN PATENT VALUATION; RIGHT? 

A. CORRECT. 

Q. AND YOU'RE ALSO NOT INVOLVED IN VALUING QUALCOMM'S 

CELLULAR STANDARD ESSENTIAL PATENT PORTFOLIO; RIGHT? 

A. CORRECT. 

Q. AND YOU DON'T KNOW HOW QUALCOMM'S CELLULAR STANDARD 

ESSENTIAL PATENT PORTFOLIO COMPARES TO ANYONE ELSE'S, DO YOU? 

A. CORRECT. 

Q. YOU TESTIFIED THAT YOU THINK CONTRIBUTION COUNTING IS A 

FLAWED IDEA BECAUSE SOME CONTRIBUTIONS DON'T REFLECT INNOVATIVE 

IDEAS. IS THAT RIGHT, IN PART? 

A. I GAVE SEVERAL REASONS.

Q. THAT WAS ONE OF THEM? 

A. I WAS TALKING ABOUT APPROVED CONTRIBUTION COUNTING. 

YOUR QUESTION WAS ABOUT CONTRIBUTION COUNTING, SO -- 

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1652

Q. SO IF LIMITED TO APPROVED CONTRIBUTIONS, THAT WAS ONE OF 

THE REASONS; CORRECT? 

A. ONE OF THE REASONS IS THAT IT DOES NOT COUNT FOR 

FUNDAMENTAL IDEAS THAT ARE ADDED TO THE STANDARD BECAUSE THEY 

NEVER GET THE ADMINISTRATIVE STATUS OF APPROVED BECAUSE THE 

3GPP ADMINISTRATIVE SYSTEM WAS NEVER SET UP TO DO ANY SORT OF 

COUNTING OF ANYTHING. 

Q. YOU WOULD AGREE THAT PARTICIPANTS OTHER THAN QUALCOMM MAKE 

QUALITY CONTRIBUTIONS TO 3GPP; CORRECT? 

A. CORRECT. 

Q. AND YOU DIDN'T CONDUCT ANY STUDIES IN FORMING YOUR 

OPINIONS IN THIS CASE, DID YOU? 

A. MY OPINION IS BASED ON MY EXPERIENCE OF ALMOST 20 YEARS 

ATTENDING 3GPP MEETINGS AND MANAGING 3GPP ENGINEERING WORK. 

Q. SO I'M NOT SURE YOU ANSWERED MY QUESTION. I WAS ASKING IF 

YOU, IN ADDITION, APART FROM YOUR EXPERIENCE, CONDUCTED ANY 

STUDIES IN FORMING YOUR OPINIONS IN THIS CASE? 

A. NO, I DID NOT BECAUSE ANYWAY I DON'T THINK ANYTHING WOULD 

CHANGE -- 

Q. OKAY. 

A. -- THE CONCLUSION. 

Q. SO, FOR EXAMPLE, YOU HAVEN'T DONE AN ANALYSIS SHOWING 

THAT, FOR EXAMPLE, NOKIA'S APPROVED CONTRIBUTIONS ARE LOWER 

QUALITY THAN QUALCOMM'S ON AVERAGE; RIGHT? 

A. I HAVE NOT DONE ANY SUCH STUDY BECAUSE ANY STUDY OF 

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1653

APPROVED CONTRIBUTION WOULD NOT, WOULD NOT MEAN ANYTHING IN MY 

OPINION. SO IT'S COUNTING APPROVED CONTRIBUTIONS HAS 

ABSOLUTELY NO MEANING WHATSOEVER COMPARING APPROVED 

CONTRIBUTION OF A VERSUS APPROVED CONTRIBUTION OF B IS 

COMPARING A USELESS FIGURE. WITH A USELESS FIGURE, IT'S NOT 

GOING TO BE A USEFUL WAY TO SPEND TIME.

Q. SO I TAKE IT YOU'VE ALSO NEVER CONDUCTED A STUDY OF ANY 

RELATIONSHIP BETWEEN A COMPANY'S APPROVED 3GPP CONTRIBUTIONS 

WITH ITS STANDARD ESSENTIAL PATENT PORTFOLIO; CORRECT? 

A. DO YOU ASK WHETHER I DID IT?

Q. YES. 

A. NO, I'VE NEVER DONE IT FOR REASONS I MENTIONED EARLIER. 

Q. AND SO BASED ON YOUR EXPERIENCE, YOU DON'T BELIEVE THERE 

IS ANY RELATIONSHIP BETWEEN A COMPANY'S APPROVED CONTRIBUTIONS 

AND ITS CELLULAR STANDARD ESSENTIAL PATENTS; RIGHT?

A. CORRECT. 

Q. OKAY. COULD YOU TURN IN THE BINDER I GAVE YOU TO CX 8262. 

THE TITLE OF THE DOCUMENT IS -- 

A. HOLD ON. SAY IT AGAIN.

Q. OF COURSE. IT'S CX 8262. 

A. OKAY. 

Q. THE TITLE OF THE DOCUMENT IS STANDARDS, SEPS, LICENSING 

AND LITIGATION IN THE ICT INDUSTRY PREPARED FOR A MEETING WITH 

THE EUROPEAN COMMISSION; RIGHT? 

A. YES. THAT'S WHAT THE TITLE SAYS, YES.

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1654

Q. BY QUALCOMM EMPLOYEES, REPRESENTATIVES I MEAN? 

A. YES. 

Q. OKAY. AND YOU DON'T HAVE ANY REASON TO DOUBT THIS WAS 

PRESENTED TO THE EUROPEAN COMMISSION, DO YOU? 

A. WELL, I WAS NOT AT THIS MEETING. MAYBE IT WAS JUST 

PREPARED FOR BACKGROUND, SO I DON'T KNOW FOR SURE THAT IT WAS 

PREPARED FOR THIS MEETING. 

MR. MERBER: OKAY. YOUR HONOR, I MOVE TO ADMIT 

CX 8262. 

MR. COLLIER: NO OBJECTION, YOUR HONOR. 

THE COURT: IT'S ADMITTED. 

(PLAINTIFF'S EXHIBIT CX 8262 WAS ADMITTED IN EVIDENCE.) 

THE COURT: GO AHEAD, PLEASE. 

BY MR. MERBER: 

Q. CAN YOU TURN TO PAGE 035 OF THE DOCUMENT? AND I'M 

REFERRING TO THE NUMBER AT THE BOTTOM THAT FOLLOWS THE CX 8262 

NUMBER. 

A. OKAY. 

Q. THIS SLIDE IS TITLED THE HANDFUL OF ACTIVE CONTRIBUTORS 

ARE THE MAJOR SEP OWNERS; AT ANY TIME? 

A. THAT'S THE TITLE.

Q. AND THE NUMBERS SHOWN IN THE WHITE BUBBLES ARE LABELED 

NUMBER OF CUMULATIVE CONTRIBUTIONS; CORRECT? 

A. YEAH, THAT'S WHAT IT SAYS.

Q. AND THE LIST OF COMPANIES IN THE TABLE ON THE LEFT IS 

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1655

TITLED TOP 10 PATENT HOLDERS; RIGHT? 

A. YEAH. 

Q. SO THIS SLIDE COMBINES INFORMATION ABOUT SEP OWNERSHIP AND 

CONTRIBUTIONS TO STANDARDS; CORRECT? 

A. IT PUTS TWO PIECES OF INFORMATION ON THE SAME SLIDE. 

Q. OKAY. YOU CAN PUT THAT ASIDE. 

COULD YOU TURN TO TAB 6336 OF YOUR BINDER. 

A. YEAH. 

Q. AND THIS IS A 2009 E-MAIL THAT YOU SENT ATTACHING A SLIDE 

DECK; CORRECT? 

A. YES. 

Q. AND YOU PREPARED THESE SLIDES TITLED STANDARDS ASK FOR 

3GPP INPUT; RIGHT? 

A. YES. 

MR. MERBER: YOUR HONOR, I MOVE TO ADMIT CX 6336. 

MR. COLLIER: NO OBJECTION. 

THE COURT: IT'S ADMITTED. 

(PLAINTIFF'S EXHIBIT CX 6336 WAS ADMITTED IN EVIDENCE.) 

THE COURT: GO AHEAD, PLEASE. 

BY MR. MERBER: 

Q. ONE OF THE RECIPIENTS OF THIS E-MAIL WAS EDWARD TIEDEMANN; 

RIGHT? 

A. YES.

Q. AND MR. TIEDEMANN WAS YOUR BOSS IN 2009; CORRECT? 

A. YES. 

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1656

Q. CAN YOU PLEASE TURN TO PAGE 8, AGAIN REFERRING TO THE 

CX PAGINATION. 

A. YES. 

Q. AND ON THIS SLIDE, YOU ASKED THE QUESTION -- YOU WROTE THE 

QUESTION, TO WHICH LEVEL IS QUALCOMM A PLAYER IN 3GPP? RIGHT? 

A. YES. 

Q. AND YOU WROTE UNDERNEATH THAT, ONE METRIC IS THE SHARE OF 

INPUT CONTRIBUTIONS; RIGHT? 

A. THAT'S WHAT THE SLIDE SAYS, YES.

Q. OKAY. AND THE TABLES UNDERNEATH THAT COUNT CONTRIBUTIONS 

AND SHARES OF CONTRIBUTIONS TO WORKING GROUPS WITHIN 3GPP; 

CORRECT? 

A. CORRECT. 

Q. AND THIS WAS A SLIDE THAT YOU WROTE AND PRESENTED TO YOUR 

BOSS? 

A. YES, I PRESENTED THIS SLIDE TO MY BOSS. 

I SHOULD NOTE, BY THE WAY, THAT THIS WAS A PERCENTAGE OF 

CONTRIBUTIONS IN GENERAL, NOT APPROVED CONTRIBUTIONS. IF WE 

LOOK AT THE OVERALL SLIDE, THIS WAS ABOUT MANPOWER. 

SO THE SLIDE WAS NOT PRESENTED ONLY TO MY BOSS, JUST TO BE 

CLEAR. THE STANDARD TASK FORCE INCLUDED OTHER ELEMENTS OF 

QUALCOMM MANAGEMENT TEAM THAT REALLY DID NOT HAVE MUCH 

EXPERIENCE IN STANDARDS, AND AS PART OF THIS SLIDE DECK, AS ONE 

CAN SEE FROM ACTUALLY GOING THROUGH THE SLIDE DECK ITSELF, I 

WAS TRYING TO GET MORE RESOURCES AND SOME CHANGES IN 

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CASACCIA CROSS BY MR. MERBER

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1657

MANAGEMENT, AND I WANTED TO PROVIDE SOME BACKGROUND TO EXPLAIN 

HOW MUCH WORK WAS ACTUALLY GOING INTO STANDARDS BECAUSE FOR 

SOME PEOPLE IN THE QUALCOMM MANAGEMENT TEAM, IT WAS NOT REALLY 

CLEAR HOW MUCH WORK STANDARDS WAS. 

Q. SO YOU PRESENTED THIS TO MORE PEOPLE THAN JUST YOUR BOSS, 

ALSO TO ADDITIONAL QUALCOMM MANAGEMENT? 

A. YES. 

Q. OKAY. COULD YOU TURN TO PAGE -- SORRY -- TO TAB CX 6138. 

AND I WOULD JUST -- WELL, ARE YOU THERE? 

A. I HAVE IT. 

Q. DO YOU HAVE IT? 

A. YEAH. 

Q. OKAY, GREAT. 

THE FIRST PAGE HAS AN E-MAIL AT THE BOTTOM THAT YOU 

DRAFTED ATTACHING SOME SLIDES; CORRECT? 

A. YES. 

MR. MERBER: YOUR HONOR, I MOVE TO ADMIT CX 6138, 

SUBJECT TO THE TOP E-MAIL BEING REDACTED AS IT IS IN THE 

WITNESS'S BINDER AT THE MOMENT PER YOUR RULING ON THE HPO. 

MR. COLLIER: NO OBJECTION, YOUR HONOR. 

THE COURT: IT'S ADMITTED. 

(PLAINTIFF'S EXHIBIT CX 6138 WAS ADMITTED IN EVIDENCE.) 

THE COURT: GO AHEAD, PLEASE. 

BY MR. MERBER: 

Q. YOU ALSO SENT THESE SLIDES TO A NUMBER OF QUALCOMM 

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CASACCIA CROSS BY MR. MERBER

UNITED STATES COURT REPORTERS

1658

EMPLOYEES, INCLUDING YOUR BOSS, ED TIEDEMANN; CORRECT? 

A. EXCUSE ME, COUNSEL. WHEN YOU SAY THESE SLIDES, TO WHAT 

ARE YOU REFERRING TO?

Q. CERTAINLY. I'M REFERRING TO THE SLIDES BEGINNING AT PAGE 

29 OF THE DECK. 

A. YES. 

Q. OKAY. 

A. I DON'T REMEMBER IF I SENT THESE SLIDES TO MY BOSS 

SPECIFICALLY, BUT I SENT IT TO SOME COLLEAGUES.

Q. AND YOUR BOSS IS CC'D IN THE E-MAIL CHAIN THAT WAS AT THE 

BEGINNING OF THE DOCUMENT; RIGHT?

A. YES. EVENTUALLY HE GOT THEM BECAUSE THEY WERE ADDED TO 

ANOTHER DECK AND EVENTUALLY HE GOT THEM.

Q. OKAY. SO YOU DRAFTED THIS SECTION OF THE SLIDES, CORRECT, 

BEGINNING AT PAGE 29? 

A. YES, I DID. 

Q. OKAY. AND IF YOU'LL TURN TO PAGE 32, YOU'LL SEE -- WELL, 

YOU WROTE A SLIDE TITLED CURRENT 3GPP LANDSCAPE; CORRECT? 

A. YES. 

Q. OKAY. AND UNDER THE PARTICIPATION BULLET YOU WROTE, "IT 

IS TEMPTING TO ASSUME THAT THE TOP 5 TECHNICAL CONTRIBUTORS TO 

3GPP COULD SPIN OFF IN A SEPARATE CONSORTIUM AND BE 

SUCCESSFUL." 

RIGHT? 

A. THAT'S WHAT IT SAYS. 

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CASACCIA REDIRECT BY MR. COLLIER

UNITED STATES COURT REPORTERS

1659

Q. AND THEN FOCUSSING ON THE NEXT MAJOR BULLET, YOU ALSO 

POINTED OUT, "HOWEVER, THE NEXT 10 WOULD BE CAPABLE TO FILL IN 

THE GAPS AND TAKE OVER." 

RIGHT? 

A. YES, THAT'S WHAT IT SAYS. 

Q. AND IN RED AT THE BOTTOM YOU ALSO WROTE, "IF THE BIG BOYS 

LEAVE 3GPP, THERE'S A LINE AT THE DOOR TO TAKE THEIR PLACE." 

RIGHT? 

A. YES, THAT'S WHAT IT SAYS. 

Q. OKAY. 

YOUR HONOR, NO FURTHER QUESTIONS. 

THE COURT: ALL RIGHT. TIME IS 11:00 O'CLOCK. 

REDIRECT EXAMINATION

BY MR. COLLIER: 

Q. MR. CASACCIA, COULD YOU TURN BACK TO CX 8262. 

THE COURT: TIME IS 11:00 O'CLOCK. 

GO AHEAD, PLEASE. 

MR. COLLIER: SORRY, YOUR HONOR. I APOLOGIZE. 

Q. CX 6282, PAGE 35. 

A. YES. 

Q. WHEN IT TALKS ABOUT CONTRIBUTIONS ON THIS PAGE, ARE THESE 

APPROVED CONTRIBUTIONS? 

A. NO, THIS DOESN'T SEEM TO BE APPROVED CONTRIBUTIONS. IN 

FACT, IT'S NOT CLEAR WHAT IT IS. IT'S NOT CLEAR WHICH WORKING 

GROUPS HAVE BEEN COUNTED. 

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CASACCIA REDIRECT BY MR. COLLIER

UNITED STATES COURT REPORTERS

1660

HE CAN -- AS I MENTIONED EARLIER IN MY TESTIMONY, THERE 

ARE 16 WORKING GROUPS IN 3GPP. SOME OF THEM ARE IMPORTANT, BUT 

DEAL WITH ASPECTS THAT ARE UNRELATED TO THE AIR INTERFACE. FOR 

EXAMPLE, THEY DEAL WITH BILLING OR CHARGING, SO HOW MUCH MONEY 

YOU HAD TO PAY ON YOUR PHONE BILL, AND CORE NETWORK ASPECTS. 

SO WE DON'T KNOW EXACTLY WHAT, WHAT IS BEING COUNTED HERE. 

IT SEEMS THAT IT IS NOT UPLOAD CONTRIBUTIONS INDEED.

Q. AND DO YOU SEE ON THE LEFT-HAND SIDE WHERE IT SAYS 

INTERDIGITAL COMMUNICATIONS AS A PATENT HOLDER? 

A. I DO.

Q. DOES IT HAVE A STAR THAT INDICATES THAT IT'S A TOP 10 

CONTRIBUTOR TO 3GPP? 

A. IT DOES NOT. IN FACT, IT DOES NOT APPEAR ON THE 

RIGHT-HAND SIDE IN THOSE BUBBLES. 

Q. WHAT ABOUT LG CORP. LISTED AS A PATENT HOLDER? 

A. ALSO THERE IS NO STAR, AND IT DOES NOT APPEAR IN THE 

BUBBLES. 

Q. WHAT ABOUT PANASONIC CORPORATION? 

A. ALSO THERE IS NO STAR, AND IT DOES NOT APPEAR IN THE 

BUBBLES. 

Q. IS THERE ANYTHING ON THIS SLIDE OR ANY OTHER SLIDE IN THE 

DECK OF CX 8262 THAT SHOWS ANY LINKAGE BETWEEN APPROVED 

CONTRIBUTIONS AND THE VALUE OF A PATENT PORTFOLIO? 

A. NO, NOTHING AT ALL.

Q. OKAY. NOW, I'D ASK YOU TO TURN WITH ME TO CX 6336, AND 

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CASACCIA REDIRECT BY MR. COLLIER

UNITED STATES COURT REPORTERS

1661

WE'LL START AT PAGE 7. 

WHAT IS PAGE 7 TRYING TO TELL YOUR MANAGEMENT? 

A. THIS IS TRYING TO SHOW WHERE THE ENGINEERS THAT WE WERE 

SENDING TO THE 3GPP TEAM AT THAT TIME, SO IN 2009, WERE COMING 

FROM, FROM THE PERSPECTIVE OF INTERNAL DEPARTMENTS. 

SO FTE MEANS FULL-TIME EQUIVALENT. IT'S JUST A WAY OF 

MEASURING WORK FORCE AND WORK ALLOCATION. 

AND SO THIS WAS SHOWING THAT AT THE TIME WE WERE SENDING 

62 PEOPLE, HERE IT SAYS HEADS, WHICH IS ANOTHER TERM TO 

INDICATE HUMAN BEINGS, 62 PEOPLE. 

AND THEN IT SAYS WHERE ARE THESE PEOPLE COMING FROM -- SO 

32 WERE COMING FROM CORPORATE R&D; 15 WERE COMING FROM QAC, 

WHICH IS THE PREDECESSOR NAME OF THE SAME DEPARTMENT I AM IN 

RIGHT NOW, THERE'S BEEN A SLIGHT CHANGE OF NAME; 12 FROM QCT; 

AND THEN 1 FROM SOME OTHER INTERNAL DEPARTMENTS THAT NOW 

DOESN'T EXIST OR CHANGED THE NAME AS WELL.

Q. SO WHAT WAS YOUR PURPOSE IN SENDING THIS SLIDE DECK TO 

YOUR MANAGEMENT? WHAT WERE YOU TRYING TO TELL THEM AND 

ACCOMPLISH? 

A. WELL, OVERALL THE PURPOSE OF THIS SLIDE DECK WAS TO GET 

SOME MORE ALLOCATION OF RESOURCES TO 3GPP IN 2009, AND ALSO TO 

PROPOSE SOME LINE MANAGEMENT CHANGES AS CAN BE SEEN FROM, I 

BELIEVE, THE SLIDE IN THE CONCLUSIONS WHERE I'M PROPOSING THAT 

CERTAIN INDIVIDUALS HOLDING CERTAIN ROLES IN THE 3GPP TEAM 

WOULD NOW REPORT DIRECTLY TO ME. 

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CASACCIA REDIRECT BY MR. COLLIER

UNITED STATES COURT REPORTERS

1662

AND THIS WAS BACKGROUND INFORMATION TO TELL MANAGEMENT 

JUST HOW MANY PEOPLE DID WE HAVE AT THAT POINT IN TIME, WHERE 

THEY WERE COMING FROM, AND SO ON.

Q. SO DOES THIS SLIDE DECK HAVE ANYTHING TO DO WITH USING 

APPROVED CONTRIBUTIONS TO VALUE A PATENT PORTFOLIO? 

A. NOTHING WHATSOEVER. 

Q. OKAY. AND AT THE END OF YOUR CROSS-EXAMINATION, THERE WAS 

A TALK ABOUT IF VARIOUS TECHNICAL CONTRIBUTORS LEFT 3GPP, 

WHETHER OTHERS COULD FILL IN THE GAPS. 

DO YOU RECALL THAT? 

A. I DO.

Q. IF QUALCOMM'S LEADERSHIP ON 3GPP ON THINGS SUCH AS 5G IS 

ERODED, ARE THERE COMPANIES WHO ARE POISED TO STEP IN AND FILL 

THAT LEADERSHIP VACUUM? 

A. YES.

Q. CAN YOU NAME ONE? 

A. THE MAIN ONE WOULD BE HUAWEI. 

MR. COLLIER: I'LL PASS THE WITNESS, YOUR HONOR. 

THE COURT: OKAY. TIME IS 11:05. DO YOU HAVE ANY 

FURTHER CROSS? 

MR. MERBER: NO FURTHER QUESTIONS, YOUR HONOR. 

THE COURT: OKAY. MAY THIS WITNESS BE EXCUSED, AND 

IS IT SUBJECT TO RECALL OR NOT SUBJECT TO RECALL? 

MR. COLLIER: I WOULD SAY NOT, YOUR HONOR. 

THE COURT: ALL RIGHT. DO YOU AGREE WITH THAT? 

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CASACCIA REDIRECT BY MR. COLLIER

UNITED STATES COURT REPORTERS

1663

MR. MERBER: NOT FOR THE FTC, YOUR HONOR. 

THE COURT: ALL RIGHT. THEN YOU HAVE COMPLETED YOUR 

TRIAL TESTIMONY AND YOU'RE FREE TO LEAVE. 

THE WITNESS: THANK YOU, YOUR HONOR. 

THE COURT: SO IF YOU WOULD, PLEASE CALL YOUR NEXT 

WITNESS. 

MR. TAFFET: YOUR HONOR, RICHARD TAFFET FROM MORGAN 

LEWIS FROM QUALCOMM. 

OUR NEXT WITNESS IS DIRK WEILER. 

THE COURT: OKAY. IF HE COULD PLEASE COME FORWARD. 

MR. TAFFET: YOUR HONOR, WE'LL HAVE SOME SMALL 

BINDERS. IF WE MAY APPROACH TO HAND THEM UP? 

THE COURT: YES, PLEASE. 

(PAUSE IN PROCEEDINGS.) 

THE CLERK: PLEASE RAISE YOUR RIGHT HAND. 

(DEFENDANT'S WITNESS, DIRK WEILER, WAS SWORN.)

THE WITNESS: YES, I DO. 

THE CLERK: THANK YOU. 

MR. TAFFET: MAY WE PRESENT ONE TO THE WITNESS? 

THE COURT: YES, PLEASE. 

THE CLERK: WOULD YOU PLEASE STATE JURY FULL NAME AND 

SPELL YOUR LAST NAME FOR THE RECORD? 

THE WITNESS: MY NAME IS DIRK WEILER. W-E-I-L-E-R.

MR. TAFFET: ARE WE READY TO PROCEED? 

THE COURT: WE'RE GOOD. ALL RIGHT. IT'S 11:06. GO 

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WEILER DIRECT BY MR. TAFFET

UNITED STATES COURT REPORTERS

1664

AHEAD, PLEASE.

DIRECT EXAMINATION

BY MR. TAFFET: 

Q. MR. WEILER, GOOD MORNING. 

A. GOOD MORNING.

Q. WOULD YOU KINDLY TELL THE COURT BY WHOM YOU ARE EMPLOYED? 

A. I'M EMPLOYED BY NOKIA.

Q. WHAT IS YOUR CURRENT POSITION? 

A. I'M THE HEAD OF STANDARDS POLICY AT NOKIA. 

Q. WHERE DO YOU MAINTAIN YOUR PRIMARY OFFICE? 

A. I'M BASED IN MUNICH IN GERMANY.

Q. AS HEAD OF NOKIA'S STANDARDS POLICY, WHAT ARE YOUR JOB 

RESPONSIBILITIES? 

A. IN THIS FUNCTION, I'M RESPONSIBLE FOR ALL OF MEMBERSHIPS 

IN STANDARDS ORGANIZATIONS WORLDWIDE AND THE RELATED POLICY 

TOPICS TO THESE MEMBERSHIPS.

Q. HOW LONG HAVE YOU BEEN EMPLOYED BY NOKIA? 

A. I HAVE BEEN EMPLOYED BY NOKIA SINCE 2013. 

Q. AND BEFORE THAT, HOW LONG WERE YOU -- HAVE YOU BEEN 

INVOLVED IN THE STANDARDS DEVELOPMENT ACTIVITIES? 

A. I'VE BEEN INVOLVED THERE FOR NEARLY THE WHOLE OF MY 

BUSINESS LIFE, STARTING BACK 30 YEARS. 

Q. SO THAT WOULD BE APPROXIMATELY 1988? 

A. THIS IS CORRECT.

Q. COULD YOU BRIEFLY DESCRIBE YOUR EXPERIENCE IN THE 

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WEILER DIRECT BY MR. TAFFET

UNITED STATES COURT REPORTERS

1665

STANDARDS DEVELOPMENT WORLD SINCE 1988? 

A. YES. IN SHORT, I STARTED IN 1988 WRITING TECHNICAL 

STANDARDS IN ETSI FOR THE SECOND GENERATION MOBILE SYSTEM, GSM. 

I CONTINUED THEN BEING RESPONSIBLE FOR SIEMENS, THE 

COMPANY SIEMENS STANDARDIZATION, THE ACTIVITIES IN ETSI AND 

OTHER STANDARDS ORGANIZATIONS. 

AND I WAS RESPONSIBLE FOR THESE ACTIVITIES WHEN THE THIRD 

GENERATION PARTNERSHIP, 3GPP, WAS CREATED IN 1998. 

AND I CONTINUED THE RESPONSIBILITY AND ACTIVE 

PARTICIPATION UNTIL NOW, BUT CHANGING FROM TECHNICAL 

STANDARDIZATION ACTIVITIES TO THE GOVERNANCE ACTIVITIES OF 

STANDARDIZATION. 

Q. NOW, AS HEAD OF NOKIA'S STANDARDS POLICY, YOU SAID YOU 

DIRECTED -- YOU DIRECT NOKIA'S PARTICIPATION IN STANDARDS 

DEVELOPMENT ORGANIZATIONS, OR IF I CAN CALL THEM SDO'S, IF 

THAT'S OKAY? 

A. YES.

Q. AND YOU DO THAT WORLDWIDE; CORRECT? 

A. THIS IS CORRECT.

Q. IN WHICH SDO'S IS NOKIA A MEMBER? 

A. NOKIA IS A MEMBER IN MORE THAN 100 SDO'S. SOME PROMINENT 

EXAMPLES ARE ETSI, 3GPP, ITU, AND MANY OTHERS. 

Q. COULD YOU BRIEFLY DESCRIBE WHAT 3GPP IS? 

A. YES, SURE. WHEN WE DECIDED THAT GSM, WHICH WAS THE 

EUROPEAN SYSTEM, SHOULD DEVELOP TO THE NEXT LEVEL ON A GLOBAL 

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WEILER DIRECT BY MR. TAFFET

UNITED STATES COURT REPORTERS

1666

BASIS, SIX REGIONAL SDO'S CREATED A PARTNERSHIP PROJECT CALLED 

THIRD GENERATION PARTNERSHIP PROJECT, AND THE ORGANIZATIONAL 

PARTNERS ARE THEN REGIONAL SDO'S FROM JAPAN, FROM KOREA, CHINA, 

INDIA, AND FROM THE U.S., WHERE ATIS IS THE SDO RELEVANT HERE.

Q. AND DOES ETSI PLAY A PARTICULAR ROLE IN 3GPP? 

A. YES. BESIDES THE FACT THAT ETSI WAS THE ORIGINAL SOURCE 

OF CREATING THE PROPOSAL OF CREATING 3GPP, ETSI ALSO HOLDS THE 

SECRETARIAT FOR 3GPP, A MAJORITY OF ALL COMPANIES WORKING IN 

3GPP IS COMING INTO 3GPP VIA THE ETSI MEMBERSHIP. 

AND ALSO, ETSI PROVIDES A REPOSITORY OF DECLARED STANDARD 

ESSENTIAL PATENTS FOR ALL OF 3GPP. 

Q. AND JUST TO BE CLEAR, DOES 3GPP PROVIDE A FORUM FOR 

DEVELOPING CELLULAR STANDARDS? 

A. YES. THIS IS THE PLACE IN THE WORLD IN THE MEANTIME, THE 

ONLY PLACE IN THE WORLD WHERE THE VAST MAJORITY OF CELLULAR 

STANDARDS IS DEVELOPED. 

Q. NOW, DOES NOKIA IMPLEMENT THE IPR POLICIES OF THE SPECIFIC 

3GPP SDO'S DIFFERENTLY? 

A. NO. NOKIA IMPLEMENTS THESE POLICIES IN A UNIFORM WAY AS 

THE WHOLE BUSINESS IS GLOBAL, 3GPP IS GLOBAL, AND, THEREFORE, 

ALSO THE IMPLEMENTATION OF THESE POLICIES HAS BEEN GLOBAL AND 

UNIFORM.

Q. AND HAS THIS PRACTICE BEEN FOLLOWED DURING THE ENTIRE TIME 

YOU HAVE BEEN EMPLOYED BY NOKIA OR INVOLVED IN STANDARDS? 

A. YES. 

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WEILER DIRECT BY MR. TAFFET

UNITED STATES COURT REPORTERS

1667

Q. NOW, IS IT IMPORTANT FOR NOKIA'S BUSINESS TO HAVE 

CONSISTENT PRACTICES UNDER ALL OF THE 3GPP SDO'S IPR POLICIES? 

A. YES. 

Q. WHY IS THAT? 

A. AS I HAVE SAID, THE -- WHEN WE -- WHEN NOKIA GIVES A -- 

THE LICENSING PROGRAM UNDER THESE SDO'S, THAT CAN ONLY BE ON A 

GLOBAL BASIS, SO THEREFORE, ADOPTING AND CHANGING THIS 

DEPENDING ON THE SDO IS NOT A SOLUTION AND NOT SOMETHING THE 

INDUSTRY IN GENERAL DOES. 

Q. NOW, YOU MENTIONED ETSI A NUMBER OF TIMES. 

HAVE YOU PARTICIPATED OR PLAYED A ROLE IN ETSI AT ALL? 

A. YES, I STARTED PARTICIPATING IN ETSI IN 1988. 

Q. COULD YOU BRIEFLY DESCRIBE WHAT YOUR HISTORY WITH ETSI HAS 

BEEN SINCE 1988? 

A. YEAH. AFTER A LONG TIME OF WRITING MYSELF TECHNICAL 

STANDARDS IN TECHNICAL WORKING GROUPS AND THEN DIRECTING MY 

DEPARTMENT'S PARTICIPATING TO THESE ACTIVITIES, I BECAME 

STRONGER INVOLVED IN ETSI GOVERNANCE STRUCTURE WITH THE 

PARTICIPATION IN THE GENERAL ASSEMBLY OF ETSI IN 2007. 

I BECAME THEN AN ETSI BOARD MEMBER IN 2008. I HAVE 

CHAIRED THE ETSI GENERAL ASSEMBLY FROM 2010 TO 2014. 

AND SINCE THEN, I'M THE CHAIRMAN OF THE ETSI BOARD. 

Q. COULD YOU BRIEFLY DESCRIBE WHAT THE RELATIONSHIP IS 

BETWEEN THE ETSI GENERAL ASSEMBLY AND THE ETSI BOARD? 

A. YES. THE ETSI GENERAL ASSEMBLY IS THE HIGHEST BODY IN 

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WEILER DIRECT BY MR. TAFFET

UNITED STATES COURT REPORTERS

1668

ETSI, THE GATHERING OF THE MORE THAN 850 MEMBERS, AND THE 

GENERAL ASSEMBLY ALSO TAKES THE FUNDAMENTAL DECISIONS FOR THE 

ORGANIZATION, INCLUDING RESPONSIBILITY FOR THE STATUTES, ROUTES 

OF PROCEDURES, INCLUDING THE IPR POLICY. 

THE BOARD IS -- HAS A DELEGATED RESPONSIBILITIES FROM THE 

GENERAL ASSEMBLY TAKING CARE OF OVERSIGHT OF THE TECHNICAL 

ORGANIZATION, AS WELL AS THE STRATEGY DEVELOPMENT FOR ETSI AND 

VARIOUS OTHER TOPICS.

Q. AND YOU'RE CURRENTLY THE CHAIRMAN OF THE ETSI BOARD? 

A. CORRECT.

Q. IS THERE A COMMITTEE WITHIN ETSI THAT IS RESPONSIBLE FOR 

THE INTELLECTUAL PROPERTY POLICY? 

A. YES. THE RESPONSIBILITY FOR THE POLICY IS WITHIN THE 

GENERAL ASSEMBLY. 

BUT AS THE GENERAL ASSEMBLY PARTICIPANTS ARE MORE FROM, 

START COMING FROM A STANDARD ORGANIZATION ONLY PERSPECTIVE, 

ETSI HAS CREATED A SPECIAL IPR SPECIAL COMMITTEE WHERE THE, 

MANY OF THE LAWYERS OF OUR MEMBERS AND OTHERS ARE COMING 

TOGETHER TO DISCUSS POTENTIAL CHANGES NEEDED FOR THE POLICY OF 

ETSI, FOR THE IPR POLICY.

Q. THAT COMMITTEE IS THE IPR SPECIAL COMMITTEE?

A. THIS IS CORRECT.

Q. HAVE YOU PARTICIPATED IN THE IPR SC AT ALL? 

A. YES, I HAVE PARTICIPATED IN THAT COMMITTEE FROM ITS 

INCEPTION IN 2007, AND I BECAME THE CHAIRMAN OF THAT COMMITTEE 

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WEILER DIRECT BY MR. TAFFET

UNITED STATES COURT REPORTERS

1669

IN 2008, AND I HAVE CHAIRED THAT COMMITTEE NOW FOR TEN YEARS 

UNTIL THE END OF LAST YEAR. 

Q. SO AS OF THIS TIME, YOU'RE NO LONGER THE CHAIR, BUT YOU 

DID CHAIR THE IPR SPECIAL COMMITTEE FOR THOSE TEN YEARS? 

A. YES. 

Q. NOW, DURING THE TIME THAT YOU WERE INVOLVED WITH THE IPR 

SPECIAL COMMITTEE, HOW WERE DECISIONS MADE IN THE COMMITTEE? 

A. THIS COMMITTEE IS AN ADVISORY COMMITTEE TO THE GENERAL 

ASSEMBLY BECAUSE THE GENERAL ASSEMBLY WANTS TO UNDERSTAND AND 

KNOW HOW THE MEMBERSHIP VIEW ON THIS TOPIC IS. 

THEREFORE, I HAVE DECIDED AND HAVE DONE THIS OVER THESE 

TEN YEARS, THAT ALL DECISIONS IN THIS COMMITTEE HAVE TO BE MADE 

BY CONSENSUS. 

Q. AND WHEN YOU USE THE WORD "CONSENSUS," WHAT DO YOU MEAN? 

A. CONSENSUS MEANS THE DECISION IS BACKED BY ALL STAKEHOLDER 

GROUPS IN THE MEMBERSHIP, SO IT'S ABSENT ANY SUSTAINED 

OPPOSITION OF ANY STAKEHOLDER GROUP IN ORDER TO MAKE SURE THAT 

EVERYBODY WHO'S CONCERNED OF SUCH DECISIONS HAVE A FAIR SAY AND 

IS ALSO AGREEABLE TO THOSE DECISIONS.

Q. DOES CONSENSUS REQUIRE UNANIMITY OF USE? 

A. NO, IT DOES NOT. SO IT CAN'T BE BLOCKED, ANY DECISION, BY 

A SINGLE COMPANY. 

Q. IS IT THE SAME AS A MAJORITY VOTE, CONSENSUS? 

A. NO, NOT AT ALL, BECAUSE WHEN YOU USE MAJORITY, SO IF YOU 

HAVE 50 PERCENT, THERE IS A VERY HIGH LIKELIHOOD THAT YOU MISS 

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WEILER DIRECT BY MR. TAFFET

UNITED STATES COURT REPORTERS

1670

OUT COMPLETE STAKEHOLDER GROUPS. 

ETSI HAS A VERY DIVERSE MEMBERSHIP WITH VERY DIVERSE 

INTERESTS. WE HAVE ALL THE BIG TECHNOLOGY COMPANIES IN THERE. 

SO MAKING SUCH DECISIONS BY A SIMPLE MAJORITY WOULD LEAVE 

OUT IMPORTANT PARTS OF OUR MEMBERS. 

Q. I'D LIKE TO NOW DIRECT YOUR ATTENTION TO THE BINDER THAT'S 

IN FRONT OF YOU, MR. WEILER. 

THERE SHOULD BE ONLY ONE DOCUMENT THERE. 

YOUR HONOR, THIS IS QX 2776, AND IT'S ALREADY ADMITTED 

INTO EVIDENCE. 

MR. WEILER, DO YOU RECOGNIZE THIS DOCUMENT? 

A. YES, I DO. THIS IS ETSI'S INTELLECTUAL PROPERTY RIGHTS 

POLICY IN ITS CURRENT VERSION. 

Q. AND HAS -- IS THERE A SPECIFIC PROVISION IN THE IPR POLICY 

THAT MOST DIRECTLY ADDRESSES FRAND LICENSING? 

A. YES. IF YOU TURN TO CLAUSE 6.1 OF THE ETSI IPR POLICY, 

THIS DESCRIBES THE PROVISIONS OF FRAND LICENSING. 

Q. AND HAS CLAUSE 6.1 REMAINED ESSENTIALLY THE SAME DURING 

THE ENTIRE TIME THAT YOU HAVE BEEN INVOLVED WITH ETSI'S 

ACTIVITIES? 

MS. GILLEN: OBJECTION, YOUR HONOR. MR. WEILER IS A 

FACT WITNESS. HE'S BEING ASKED HERE TO TESTIFY ABOUT HIS 

INTERPRETATION OF A CONTRACT PROVISION. 

MR. TAFFET: YOUR HONOR, I DID NOT ASK HIM TO 

INTERPRET IT. I ASKED HIM WHETHER IT HAS REMAINED ESSENTIALLY 

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WEILER DIRECT BY MR. TAFFET

UNITED STATES COURT REPORTERS

1671

THE SAME, WHAT IS WRITTEN IN THE POLICY, SINCE HE'S BEEN 

INVOLVED WITH ETSI, AND SPECIFICALLY THE IPR POLICY. 

THE COURT: WHAT'S YOUR RESPONSE TO THAT? 

MS. GILLEN: I BELIEVE THE PRIOR QUESTION ASKED 

MR. WEILER WHETHER, OR WHAT PROVISION, RATHER, ADDRESSED FRAND 

COMMITMENTS IN THE AGREEMENT. 

THE COURT: THE FIRST QUESTION WAS, IS THERE A 

SPECIFIC PROVISION IN THE IPR POLICY THAT MOST DIRECTLY 

ADDRESSES FRAND LICENSING? 

AND THEN MR. WEILER SAID, 6.1.

AND THEN THE QUESTION WAS, HAS 6.1 REMAINED ESSENTIALLY 

THE SAME DURING THE ENTIRE TIME THAT YOU HAVE BEEN INVOLVED 

WITH ETSI'S ACTIVITIES? 

SO YOU'RE CONCERNED THAT INTERPRETING WHAT "ESSENTIALLY 

THE SAME MEANS"? IS THAT YOUR OBJECTION? 

MS. GILLEN: YES. 

THE COURT: WELL, I ASSUME THERE'S NO OBJECTION IF IT 

JUST HAS THE LANGUAGE ITSELF, HAS THE TEXT ITSELF CHANGED, 

VERSUS AN INTERPRETATION OF -- IF THE LANGUAGE ITSELF HAS 

CHANGED, THEN HIS INTERPRETATION OF WHETHER IT'S REMAINED 

ESSENTIALLY THE SAME, I WOULD SUSTAIN THAT OBJECTION. 

SO MAYBE YOU CAN REPHRASE. 

MR. TAFFET: I CAN REPHRASE, YOUR HONOR. 

THE COURT: THANK YOU.

BY MR. TAFFET: 

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WEILER DIRECT BY MR. TAFFET

UNITED STATES COURT REPORTERS

1672

Q. MR. WEILER, HAS THE LANGUAGE OF CLAUSE 6.1 CHANGED SINCE 

THE TIME YOU HAVE BEEN INVOLVED WITH ETSI ACTIVITIES? 

A. NO. 

Q. NOW, HOW DOES NOKIA IMPLEMENT SECTION 6.1? 

A. NOKIA IS IMPLEMENTING ITS OBLIGATION UNDER 6.1 BY 

LICENSING ITS PATENTS ON THE DEVICE LEVEL. 

Q. AND HAS THIS BEEN THE PRACTICE DURING THE ENTIRE TIME 

YOU'VE BEEN EMPLOYED BY NOKIA? 

A. YES. 

Q. WAS IT ALSO THE CASE DURING THE TIME THAT YOU WERE 

EMPLOYED BY SIEMENS, THAT THEY DID THE SAME PRACTICE? 

A. YES. 

Q. AND DID THAT PRACTICE CONTINUE DURING THE TIME YOU WERE 

EMPLOYED BY THE NOKIA/SIEMENS ENTITY THAT WAS FORMED? 

A. ALSO IN -- ALSO YES. 

Q. NOW, BASED ON YOUR INVOLVEMENT IN THE ETSI IPR SPECIAL 

COMMITTEE, HOW DO THE MEMBERS OF ETSI IMPLEMENT CLAUSE 6.1. 

MS. GILLEN: OBJECTION. HEARSAY TO THE EXTENT HE'S 

ASKING ABOUT THE OTHER MEMBERS OF ETSI'S IMPLEMENTATION OF THE 

POLICY. 

MR. TAFFET: YOUR HONOR, WITH RESPECT, THIS IS NOT 

HEARSAY. THIS IS KNOWLEDGE, PARTICULARIZED KNOWLEDGE THAT THIS 

WITNESS HAS BY VIRTUE OF HIS INVOLVEMENT IN THE BUSINESS OF 

NOKIA, HIS PARTICIPATION IN CHAIRING THE ETSI IPR SPECIAL 

COMMITTEE, AND -- 

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WEILER DIRECT BY MR. TAFFET

UNITED STATES COURT REPORTERS

1673

THE COURT: I'M GOING TO SUSTAIN THE OBJECTION. WHY 

DON'T YOU LAY THE FOUNDATION OF HIS KNOWLEDGE. 

MR. TAFFET: OKAY. FAIR ENOUGH. 

THE COURT: UM-HUM.

BY MR. TAFFET: 

Q. DO YOU HAVE AN UNDERSTANDING, MR. WEILER, OF HOW OTHER 

MEMBERS OF ETSI IMPLEMENT CLAUSE 6.1? 

A. DURING MY TIME AS CHAIRMAN OF THIS COMMITTEE, WE HAVE 

DISCUSSED THE VARIOUS ELEMENTS OF FRAND AND, AS I HAVE SAID, IN 

THIS COMMITTEE, ALL MEMBERS OF ETSI WITH ANY INTEREST IN 

LICENSING HAVE BEEN THERE AND IN DETAIL EXPLAINED OVER THESE 

TEN YEARS ALSO HOW THEY DO THE LICENSING. 

AND AS WELL DURING THIS TIME, I HAVE BEEN PARTICIPATING TO 

NUMEROUS CONFERENCES WHERE MANY MEMBER COMPANIES IN DETAIL HAVE 

EXPLAINED THEIR LICENSING PRACTICE. 

SO I'M VERY WELL AWARE OF HOW MEMBERS, ETSI MEMBERS ARE 

IMPLEMENTING THEIR LICENSING OBLIGATION. 

Q. AND HOW DO THE ETSI MEMBERS IMPLEMENT 6.1?

A. THEY ALL --

MS. GILLEN: EXCUSE ME. OBJECTION, YOUR HONOR. TO 

THE EXTENT MR. WEILER IS SPEAKING ABOUT HOW OTHER COMPANIES 

IMPLEMENT THEIR ETSI OBLIGATIONS, THAT'S HEARSAY. 

THE COURT: SUSTAINED.

BY MR. TAFFET: 

Q. WELL, DO YOU HAVE AN UNDERSTANDING, SIR, OF HOW THE OTHER 

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WEILER DIRECT BY MR. TAFFET

UNITED STATES COURT REPORTERS

1674

ETSI MEMBERS IMPLEMENT 6.1 BASED UPON THE FOUNDATION THAT YOU 

HAVE JUST LAID? 

A. IT IS MY UNDERSTANDING FROM ALL THIS DISCUSSION AT 

PRESENTATIONS THAT I HAVE HEARD THAT THEY ALL IMPLEMENT THE 

POLICY BY LICENSING ON THE DEVICE LEVEL. 

Q. AND LET ME ASK YOU TO JUST CLARIFY. WHEN YOU SAY "DEVICE 

LEVEL," WHAT DO YOU MEAN? 

A. THE ETSI IPR POLICY REQUIRES YOU IN 6.1 TO GIVE LICENSES 

FOR EQUIPMENT, AND EQUIPMENT IS DEFINED IN ETSI'S IPR POLICY 

UNDER CLAUSE 15, AND IN THIS CLAUSE 15, YOU'LL FIND THE 

DEFINITION OF EQUIPMENT UNDER NUMBER 4. AND THAT SAYS, 

"'EQUIPMENT' SHALL MEAN ANY SYSTEM OR DEVICE FULLY CONFORMING 

TO A STANDARD." 

AND WHAT -- WHAT IS MY UNDERSTANDING OF THE INDUSTRY 

PRACTICE IS THAT IN THE CASE OF THE CELLULAR BUSINESS, THIS 

MEANS THAT THESE COMPANIES LICENSE, FOR EXAMPLE, THE HANDSET 

AND NOT ANY SUBPART OF THIS HANDSET. 

Q. OKAY. NOW, BASED ON YOUR KNOWLEDGE AND EXPERIENCE IN 

WORKING IN STANDARDS, CHAIRING AND PARTICIPATING IN THE ETSI 

IPR SPECIAL COMMITTEE, DO YOU HAVE AN UNDERSTANDING WHETHER 

WHAT YOU DESCRIBED AS DEVICE LEVEL LICENSING IS CONSISTENT WITH 

THE OBJECTIVES OF THE ETSI POLICY? 

MS. GILLEN: OBJECTION, YOUR HONOR. MR. WEILER HAS 

NOT BEEN DISCLOSED AS AN EXPERT. QUALCOMM HAS DISCLOSED TWO 

OTHER EXPERTS ON THIS TOPIC. HE IS A FACT WITNESS AND SHOULD 

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WEILER DIRECT BY MR. TAFFET

UNITED STATES COURT REPORTERS

1675

NOT BE TESTIFYING ABOUT HIS INTERPRETATION OF THE ETSI IPR 

POLICY. 

MR. TAFFET: YOUR HONOR, AGAIN, CONSISTENT WITH YOUR 

RULING, IT'S DOCKET NUMBER 973, THE KNOWLEDGE THAT MR. WEILER 

IS PROVIDING RIGHT NOW IS SIMPLY BY VIRTUE OF HIS ACTIVITIES 

WITHIN ETSI, WITHIN HIS EMPLOYMENT BY NOKIA, AND BEFORE THAT 

NOKIA SIEMENS, AND BEFORE THAT SIEMENS FOR THE PAST 30 YEARS. 

AND AS YOUR HONOR HELD IN DENYING THE FTC'S MOTION IN 

LIMINE NUMBER 1, THAT THAT IS PROPER LAY TESTIMONY. 

THE COURT: I DON'T THINK THE RULING WAS SPECIFIC TO 

HIM, RIGHT?

MR. TAFFET: NO, NO. 

THE COURT: IT WAS MORE ABOUT PATENT VALUATION, IF I 

REMEMBER CORRECTLY. 

MR. TAFFET: THAT CONCERNED PATENT VALUATION, BUT 

YOUR HONOR CITED THE AUTHORITY THAT IS IN THE NORTHERN 

DISTRICT, THIS COURT, THAT SPECIFICALLY ADOPTS THE POSITION 

THAT SUCH OPINION TESTIMONY IS ADMITTED NOT BECAUSE OF 

EXPERIENCE, TRAINING, OR SPECIALIZED KNOWLEDGE WITHIN THE REALM 

OF AN EXPERT, BUT BECAUSE THE PARTICULARIZED KNOWLEDGE THAT THE 

WITNESS HAS BY VIRTUE OF HIS OR HER POSITION IN THE BUSINESS. 

AND PERHAPS I COULD LAY THE FOUNDATION BETTER, BUT I 

THOUGHT I LAID IT OUT, THAT IT WAS PURELY BASED UPON HIS 

EXPERIENCE IN THE BUSINESS THAT WE'RE SEEKING MR. WEILER'S 

UNDERSTANDING. 

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WEILER DIRECT BY MR. TAFFET

UNITED STATES COURT REPORTERS

1676

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

MR. TAFFET: CERTAINLY. 

(PAUSE IN PROCEEDINGS.) 

THE COURT: WHO ARE THE EXPERTS WHO ARE GOING TO 

TESTIFY ON THIS TOPIC? 

MS. GILLEN: YOUR HONOR, I BELIEVE COUNSEL FOR 

QUALCOMM HAD PREVIOUSLY DISCLOSED DR. HUBER TO TESTIFY ON THIS 

TOPIC, AND WE HEARD FROM THEM ON JANUARY 14TH THAT HE WOULD NO 

LONGER BE TESTIFYING ON THE TOPIC. 

THE COURT: BUT YOU SAID THERE WERE TWO EXPERTS. 

MS. GILLEN: I BELIEVE THE OTHER WAS QUALCOMM'S 

EXPERT ON FRENCH LAW, DR. FAVARQUE-COSSOS. I'LL SPELL IT. 

F-A-V-A-R-Q-U-E - C-O-S-S-O-S. 

THE COURT: THE ONE WHO BECAME A JUDGE? 

MS. GILLEN: CORRECT. 

THE COURT: AND SHE'S NO LONG TESTIFYING? 

MR. TAFFET: SHE'S NOT ABLE TO, YOUR HONOR. 

THE COURT: I SEE. SO NOW THIS HAS TO COME IN 

THROUGH THIS WITNESS. IS THAT THE POINT? 

MR. TAFFET: WELL, WE'RE OFFERING IT THROUGH THIS 

WITNESS AS A PERCIPIENT WITNESS, NOT AS AN EXPERT, BASED UPON 

HIS PARTICULARIZED KNOWLEDGE BY VIRTUE OF HIS BUSINESS 

ACTIVITIES. 

MS. GILLEN: MAY I RESPOND, YOUR HONOR? 

THE COURT: GO AHEAD, PLEASE. 

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WEILER DIRECT BY MR. TAFFET

UNITED STATES COURT REPORTERS

1677

MS. GILLEN: THE FTC WOULD NOT OBJECT TO MR. WEILER 

TESTIFYING ABOUT HIS PERSONAL EXPERIENCE. BUT IT APPEARS HIS 

TESTIMONY, AT LEAST SO FAR, HAS BEEN PRIMARILY BASED ON HIS 

DISCUSSIONS WITH OTHERS AND WHAT HE'S HEARD FROM OTHER INDUSTRY 

PARTICIPANTS. 

MR. TAFFET: WELL, THAT'S HIS PERSONAL EXPERIENCE, 

YOUR HONOR. I DON'T KNOW HOW YOU TAKE THAT AWAY FROM WHAT A 

HUMAN BEING DOES. 

MS. GILLEN: AND OUR POSITION IS THAT'S HEARSAY. 

THE COURT: WELL, I SUSTAINED THE OBJECTION. 

EVERYTHING HE SAID WAS, I HEARD IN DISCUSSIONS WHERE THEY TOLD 

ME AND PRESENTATIONS AND THEY TOLD ME, THEY TOLD ME. THAT WAS 

THE BASIS OF HIS KNOWLEDGE OF WHAT OTHER COMPANIES ARE DOING IN 

TERMS OF THEIR LICENSING PRACTICES. 

MR. TAFFET: MY QUESTION, THOUGH, IS WHAT IS HIS 

UNDERSTANDING, YOUR HONOR, AND WHETHER -- YOU KNOW, THAT WOULD 

NOT BE HEARSAY. WE DON'T HAVE TO -- WE ARE NOT OFFERING IT FOR 

THE TRUTH OF WHAT THE OTHER COMPANIES ARE ACTUALLY DOING, BUT 

IT'S HIS UNDERSTANDING AS THE CHAIR, OR THE FORMER CHAIR AT 

THIS POINT, OF THE SPECIAL COMMITTEE AND AS A MEMBER OF THE 

INDUSTRY IN THE STANDARDS DEVELOPMENT WORLD. 

THE COURT: WELL, I GUESS I'M JUST -- YOU PREVIOUSLY 

HAD TWO EXPERTS TO OPINE ON WHETHER DEVICE LEVEL LICENSING IS 

CONSISTENT WITH THE OBJECTIVES OF THE ETSI POLICY. THAT'S THE 

QUESTION THAT'S PENDING. 

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WEILER DIRECT BY MR. TAFFET

UNITED STATES COURT REPORTERS

1678

SO YOU PREVIOUSLY HAD TWO EXPERTS TO TESTIFY ON THAT 

QUESTION. THOSE TWO WILL NOT TESTIFY. SO NOW YOU WANT THIS 

FACT WITNESS TO PROVIDE THIS INFORMATION? 

MR. TAFFET: FROM HIS UNDERSTANDING, YES. 

THE COURT: ALL RIGHT. I'LL OVERRULE THE OBJECTION 

AND ALLOW THE TESTIMONY. 

GO AHEAD, PLEASE.

BY MR. TAFFET: 

Q. LET ME RESTATE THE QUESTION. 

A. THANK YOU.

Q. BASED UPON YOUR UNDERSTANDING, WHICH IS BECAUSE OF YOUR 

EXPERIENCE, ET CETERA, DOES DEVICE LEVEL LICENSING -- IS DEVICE 

LEVEL LICENSING CONSISTENT WITH THE OBJECTIVES OF 6.1? 

THE COURT: CAN I ASK YOU A QUESTION? I'M NOT CLEAR 

ON WHAT THE BASIS OF HIS UNDERSTANDING IS. IS IT JUST WHAT 

HE'S HEARD OTHER COMPANIES SAY AT THESE MEETINGS AND DURING 

THEIR PRESENTATIONS? IS THAT THE -- THAT'S THE BASIS OF HIS 

UNDERSTANDING OF WHAT THEY DO. SO WHAT'S THE BASIS OF HIS 

UNDERSTANDING OF WHETHER DEVICE LEVEL LICENSING IS CONSISTENT 

WITH THE OBJECTIVES OF THE ETSI POLICY? BECAUSE THAT MIGHT BE 

DIFFERENT THAN JUST WHAT HE'S HEARD -- 

MR. TAFFET: IT -- 

THE COURT: -- OTHER COMPANY'S PRACTICES ARE. 

MR. TAFFET: SORRY TO INTERRUPT, YOUR HONOR. BUT I 

BELIEVE IT IS, BECAUSE I THINK IT'S ALSO BASED UPON HIS 30-PLUS 

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WEILER DIRECT BY MR. TAFFET

UNITED STATES COURT REPORTERS

1679

YEARS OF EXPERIENCE IN THE INDUSTRY, THE FACT THAT HE WAS 

CHAIRING -- 

THE COURT: WELL, I DON'T WANT YOU TO TESTIFY. WHY 

DON'T YOU ASK HIM WHAT IS THE BASIS OF HIS UNDERSTANDING -- 

MR. TAFFET: SURE. 

THE COURT: -- OF WHETHER DEVICE LEVEL LICENSING IS 

CONSISTENT WITH THE OBJECTIVES OF THE ETSI POLICY. 

IF IT'S JUST THAT HE'S HEARD OTHER COMPANIES SAY THAT, 

THEN I'D JUST LIKE TO KNOW WHAT THE BASIS OF HIS UNDERSTANDING 

IS. 

MR. TAFFET: SURE, ABSOLUTELY.

Q. MR. WEILER, WHAT IS THE BASIS OF YOUR UNDERSTANDING 

WHETHER DEVICE LEVEL LICENSING IS CONSISTENT WITH THE 

OBJECTIVES OF CLAUSE 6.1? 

A. MAY I TURN FIRST TO THE OBJECTIVES? ETSI IS IN THE 

COMFORTABLE POSITION TO HAVE A POLICY WHICH IS NOT ONLY THE 

LEGAL TEXT, BUT ALSO GIVING THE REASON WHY, WHAT ARE THESE 

POLICY OBJECTIVES. 

AND THIS IS CONTAINED IN CLAUSE 3 OF THE ETSI IPR POLICY. 

AND THESE OBJECTIVES SAY THAT ETSI WANTS THE MOST SUITABLE 

TECHNOLOGY TO BE IMPLEMENTED IN THIS CONDUCT. THEY WANT THESE 

TECHNOLOGIES TO BE, AND THESE STANDARDS TO BE ABLE TO BE 

IMPLEMENTED BY EVERYBODY AND NOT BE BLOCKED BY ANY PATENT WHICH 

IS NOT AVAILABLE. 

BUT AT THE SAME TIME, ETSI'S OBJECTIVES IN 3.2 ALSO VERY 

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WEILER DIRECT BY MR. TAFFET

UNITED STATES COURT REPORTERS

1680

EXPLICITLY SAY THAT THE IPR HOLDERS SHOULD BE FAIRLY REWARDED 

FOR THEIR WILLINGNESS TO CONTRIBUTE THEIR TECHNOLOGY INTO THE 

STANDARD. 

AND THESE THREE ELEMENTS -- SO BEST TECHNOLOGY, 

AVAILABILITY TO EVERYBODY FOR IMPLEMENTATION OF THIS, AND 

THIRDLY, THE FAIR REWARD -- IS THEN IMPLEMENTED IN CLAUSE 6.1 

WHERE YOU ARE ASKED TO GIVE LICENSES ON FRAND TERMS TO AT LEAST 

TO THE EQUIPMENT DEVICE LEVEL. 

AND, THEREFORE, IN ORDER TO ACHIEVE THE OBJECTIVE TO GET A 

FAIR REWARD TO OBLIGE THE PATENT HOLDER TO LICENSE ON FAIR AND 

NON-DISCRIMINATORY TERMS, YOU HAVE TO DESIGN A LICENSING 

PROGRAM WHICH FULFILLS THIS OBLIGATION, AND IT IS OBVIOUS THAT 

EVERYBODY CAN IMPLEMENT A STANDARD AND CONTRIBUTE COMPONENTS OF 

THE STANDARD INTO A DEVICE AND YOU THEN LICENSE THE DEVICE 

LEVEL ONLY, AND, THEREFORE, ALL THE IMPLEMENTATION GOING INTO 

THIS DEVICE IS LICENSED. 

AND THIS IS WHY THIS IS FULLY IN LINE WITH THE POLICY 

OBJECTIVES OF ETSI.

Q. HAS THAT BEEN NOKIA'S UNDERSTANDING SINCE YOU'VE BEEN 

EMPLOYED BY NOKIA? 

A. YES.

Q. AND WAS IT THE UNDERSTANDING OF SIEMENS WHEN YOU WERE 

EMPLOYED BY SIEMENS? 

A. YES.

Q. AND IN THE ETSI IPR SPECIAL COMMITTEE, HAS ANYONE OBJECTED 

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WEILER DIRECT BY MR. TAFFET

UNITED STATES COURT REPORTERS

1681

THAT DEVICE LEVEL LICENSING IS CONTRARY TO 6.1? 

A. THERE WAS NO SINGLE CONTRIBUTION COMING INTO THE ETSI IPR 

COMMITTEE ASKING, ARGUING THAT THIS WOULD BE INCONSISTENT. 

Q. NOW, HAVE PROPOSALS BEEN MADE TO ETSI'S IPR SPECIAL 

COMMITTEE TO MODIFY CLAUSE 6.1 TO REQUIRE COMPONENT LEVEL 

LICENSING? 

A. NO. 

Q. AND HAS ANYONE STATED IN THE SPECIAL COMMITTEE THAT BY 

LICENSING AT THE DEVICE LEVEL, THAT A FRAND COMMITMENT IS 

VIOLATED? 

A. NO. 

Q. NOW, CLAUSE 6.1 ALSO STATES THAT THE FRAND UNDERTAKING, 

QUOTE, "MAY BE SUBJECT TO THE CONDITION THAT THOSE WHO SEEK 

LICENSES AGREE TO RECIPROCATE." 

DO YOU SEE THAT? 

A. YES.

Q. WHAT DOES THAT MEAN? 

A. THIS MEANS WHEN YOU ARE LICENSING YOUR PATENTS, YOU CAN 

REQUIRE THE LICENSOR IN THAT CASE TO ALSO LICENSE THEIR PATENTS 

BACK TO YOU. 

AND THIS IS TYPICALLY IMPLEMENTED BY CROSS-LICENSING. 

Q. NOW, LET ME ASK YOU, MR. WEILER, HAVE PROPOSALS BEEN MADE 

IN THE IPR SPECIAL COMMITTEE TO CHANGE CLAUSE 6 .1 SO FRAND IS 

MORE SPECIFICALLY DEFINED? 

A. YES. 

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WEILER DIRECT BY MR. TAFFET

UNITED STATES COURT REPORTERS

1682

Q. WHEN WERE SUCH PROPOSALS MADE AND WHAT WERE THE 

CIRCUMSTANCES? 

A. IN THE END OF 2011, ETSI RECEIVED TWO LETTERS FROM APPLE 

AND BROADCOM REQUESTING ETSI TO DISCUSS A CHANGE OF ITS IPR 

POLICY TO BETTER DEFINE FRAND. 

Q. AND AS CHAIR OF THIS COMMITTEE, IT IS MY OBLIGATION TO SEE 

WHETHER I CALL FOR MEETING OF THIS COMMITTEE AND DISCUSS SUCH 

TOPICS, AND BASED ON MY KNOWLEDGE OF THE INDUSTRY DISCUSSIONS, 

I AGREED TO CALL THE COMMITTEE AND -- WITH THE QUESTION, SHOULD 

ETSI DISCUSS POTENTIAL CLARIFICATIONS, WHAT FRAND MEANS? 

AND SO WE HAVE DISCUSSED THIS IN ETSI DURING THE COURSE OF 

THREE YEARS. 

Q. NOW, WAS ONE OF THE PROPOSALS THAT WAS MADE TO DEFINE A 

COMMON ROYALTY BASE FOR CALCULATING A FRAND ROYALTY? 

A. YES. 

Q. WHAT WAS THAT PROPOSAL? 

A. THE PROPOSAL WHICH WAS SUBMITTED BY VARIOUS COMPANIES, 

INCLUDING APPLE, BROADCOM, CISCO, INTEL AND MAYBE OTHERS, THIS 

PROPOSAL -- SO THIS CONTRIBUTION PROPOSED TO DEFINE THE ROYALTY 

BASE BASED ON THE SMALLEST SALEABLE PATENT PRACTICING UNIT, OR 

SSPPU. 

Q. AND WHAT WAS THE OUTCOME OF THAT PROPOSAL? 

A. THIS PROPOSAL HAS BEEN EXTENSIVELY DISCUSSED IN THAT 

COMMITTEE, AND THERE WAS NO CONSENSUS TO CHANGE THE ETSI IPR 

POLICY TO INCLUDE ANY SUCH PROVISION. 

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WEILER DIRECT BY MR. TAFFET

UNITED STATES COURT REPORTERS

1683

Q. WERE OTHER PROPOSALS MADE TO THE IPR SPECIAL COMMITTEE TO 

DEFINE FRAND AS BEING BASED ON AN AGGREGATE ROYALTY OR 

PRINCIPLES OF PROPORTIONALITY? 

A. ALSO SUCH A PROPOSAL HAS BEEN MADE TO ETSI AND, AGAIN, 

THIS PROPOSAL WAS INTENSIVELY DISCUSSED. 

BUT FINALLY, THERE WAS NO CONCLUSION AND NO CONSENSUS 

AGREEMENT TO IMPLEMENT ANY OF SUCH PROPOSAL INTO THE ETSI IPR 

POLICY. 

Q. OKAY. NOW, HAVE REPRESENTATIVES OF THE UNITED STATES 

ANTITRUST AGENCIES PARTICIPATED IN ETSI'S IPR SPECIAL 

COMMITTEE? 

A. I HAVE TRIED TO HAVE AN ALL INCLUSIVE DISCUSSION IN THIS 

COMMITTEE, SO WHEN -- ESPECIALLY WHEN WE STARTED DISCUSSING 

WHETHER FRAND NEEDS TO BE FURTHER DEFINED, I HAD INVITED 

REGULATORS FROM JAPAN, FROM KOREA AND CHINA, AND THEY ALL WERE 

COMING AT TIMES. 

AND I ALSO HAVE INVITED REPRESENTATIVES FROM THE U.S. 

FEDERAL TRADE COMMISSION AND THE DEPARTMENT OF JUSTICE, AND 

BOTH -- SO THE FEDERAL TRADE COMMISSION, WITH PAT ROACH, AND 

THE DEPARTMENT OF JUSTICE WITH PAUL O'DONNELL, HAVE REGULARLY 

PARTICIPATED TO THESE MEETINGS. 

Q. AND WERE THESE REPRESENTATIVES FREE TO MAKE COMMENTS OR 

PROPOSALS TO MODIFY THE ETSI IPR POLICY? 

A. YES. 

Q. AND DID THEY COMMENT ON THE PROPOSALS YOU HAD JUST 

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WEILER DIRECT BY MR. TAFFET

UNITED STATES COURT REPORTERS

1684

DESCRIBED? 

MS. GILLEN: OBJECTION. HEARSAY. 

THE COURT: SUSTAINED. 

MR. TAFFET: WELL, YOUR HONOR, I WOULD SUGGEST THE 

FACT OF THEM MAKING THE COMMENT IS A VERBAL ACT. IT IS NOT 

HEARSAY, THAT THE SIGNIFICANCE OF THE STATEMENT LIES SOLELY OF 

THE FACT THAT THE STATEMENT WAS MADE OR WAS NOT MADE, AND, 

THEREFORE, IT DOES NOT FALL WITHIN THE HEARSAY EXCEPTION. IT'S 

NOT HEARSAY. 

THE COURT: ALL RIGHT. AS LONG AS YOU DON'T SAY WHAT 

THEY COMMENTED, YOU CAN ANSWER THE QUESTION. 

GO AHEAD. OVERRULED. 

THE WITNESS: OKAY.

BY MR. TAFFET: 

Q. DID THEY COMMENT ON THE PROPOSALS YOU JUST DESCRIBED? 

A. YES, THEY COMMENTED ON THE PROPOSALS DESCRIBED, AND THOSE 

COMMENTS HAVE BEEN CAPTURED IN THE RELEVANT MEETING REPORTS OF 

THESE COMMITTEES.

Q. AND HAVE THE MEETING REPORTS THAT YOU JUST IDENTIFIED 

RECORDED ANY COMMENTS, WHETHER BY THE U.S. ANTITRUST AGENCIES 

OR ANYONE ELSE, CONCERNING A REQUEST OR A PROPOSAL TO DEFINE 

FRAND AS REQUIRING COMPONENT LEVEL LICENSING? 

A. THIS TOPIC HAS NOT BEEN DISCUSSED IN ETSI. 

MR. TAFFET: THANK YOU, MR. WEILER. 

I PASS THE WITNESS, YOUR HONOR. 

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WEILER CROSS BY MS. GILLEN

UNITED STATES COURT REPORTERS

1685

THE COURT: OKAY. TIME IS 11:41. 

(PAUSE IN PROCEEDINGS.) 

THE COURT: ARE YOU READY? 

MS. GILLEN: YES. 

THE COURT: OKAY. 11:41. GO AHEAD, PLEASE.

CROSS-EXAMINATION

BY MS. GILLEN: 

Q. MR. WEILER, YOU TESTIFIED EARLIER THAT YOU'RE EMPLOYED BY 

NOKIA; CORRECT? 

A. YES.

Q. AND YOU WERE DESIGNATED AS NOKIA'S CORPORATE 

REPRESENTATIVE TO TESTIFY AT A DEPOSITION IN THIS CASE ON 

TOPICS RELATING TO NOKIA'S UNDERSTANDING OF THE ETSI IPR 

POLICY; IS THAT RIGHT? 

A. THIS IS CORRECT.

Q. AND NOKIA IS A LICENSOR; RIGHT? 

A. NOKIA IS BOTH LICENSEE AND A LICENSOR. 

Q. BUT YOU'D CONSIDER NOKIA A NET LICENSOR; CORRECT? 

A. I DON'T KNOW BECAUSE I'M NOT INVOLVED IN THE DETAILS OF 

LICENSING ACTIVITIES OF NOKIA. 

Q. ARE YOU AWARE THAT NOKIA LICENSES ITS STANDARD ESSENTIAL 

PATENTS TO OTHERS? 

A. I'M AWARE THAT NOKIA LICENSES STANDARD ESSENTIAL PATENTS 

TO OTHERS, YES. 

Q. AND IS IT MORE PROFITABLE FOR NOKIA TO LICENSE DEVICE 

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WEILER CROSS BY MS. GILLEN

UNITED STATES COURT REPORTERS

1686

MAKERS THAN COMPONENT MANUFACTURERS? 

MR. TAFFET: OBJECTION. LACKS FOUNDATION, YOUR 

HONOR. 

THE COURT: IF YOU KNOW, YOU MAY ANSWER. GO AHEAD. 

OVERRULED. 

THE WITNESS: AS I'M NOT INVOLVED IN THE LICENSING 

ACTIVITIES OF MY COMPANY, I CANNOT ANSWER THE SPECIFIC QUESTION 

ABOUT LICENSING ACTIVITIES AS SUCH.

BY MS. GILLEN: 

Q. YOU WOULD AGREE THAT UNDER THE OBJECTIVES OF THE ETSI IPR 

POLICY, IT WOULD NOT MAKE SENSE FOR ONE PATENT HOLDER TO CHARGE 

SUBSTANTIALLY MORE ROYALTIES THAN ANOTHER PATENT HOLDER WHO'S 

MADE A SIMILAR AMOUNT OF CONTRIBUTIONS; IS THAT RIGHT? 

A. WELL, THESE ARE VERY SPECIFIC COMMERCIAL TERMS BETWEEN THE 

PARTIES, AND ETSI STATES VERY CLEARLY THAT ETSI STAYS OUT OF 

THESE DETAILED COMMERCIAL TERMS. 

AND AS MY BASIS OF KNOWLEDGE IS WITH REGARD TO STANDARDS 

AND THE INTERFACE, BUT NOT TO THE SPECIFIC ECONOMIC QUESTIONS 

AND COMMERCIAL TERMS OF SPECIFIC PATENT LICENSES. 

I DON'T HAVE A RELEVANT OPINION ON THAT. 

Q. SO AT YOUR DEPOSITION, ON PAGE 145, LINES 9 THROUGH 19, 

YOU TESTIFIED THAT THE ETSI IPR POLICY OBJECTIVES SAY THERE 

SHOULD BE FAIR REWARD TO THE CONTRIBUTOR OF TECHNOLOGY. IF 

THERE'S A GENERAL AGREEMENT THAT THE OVERALL COSTS FOR PATENTS 

CANNOT BE INCREASED UNLIMITED, AND FOR EACH OF THE PATENT 

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WEILER CROSS BY MS. GILLEN

UNITED STATES COURT REPORTERS

1687

HOLDERS, THIS POLICY OBJECTIVE IS TRUE, IN A CONTEXT WHERE YOU 

HAVE MANY PATENTS, THERE CANNOT BE ONE PATENT HOLDER WHO 

CHARGES WAY MORE THAN ANYBODY ELSE WHO HAS A SIMILAR AMOUNT OF 

CONTRIBUTION GIVEN. 

DO YOU STAND BY THAT TESTIMONY? 

A. YES.

Q. DOES NOKIA OFFER ITS 3GPP REPRESENTATIVES FINANCIAL 

INCENTIVES DESIGNED TO INCREASE THE NUMBER OF APPROVED 

CONTRIBUTIONS? 

A. TO THE BEST OF MY KNOWLEDGE, WE ARE NOT OFFERING FINANCIAL 

INCENTIVES FOR INCREASING THE NUMBER OF CONTRIBUTIONS. 

Q. YOU TESTIFIED EARLIER THAT WITH RESPECT TO MAKING 

DECISIONS WITHIN ETSI, ALL DECISIONS ARE USUALLY MADE BY 

CONSENSUS; IS THAT RIGHT? 

A. THIS IS CORRECT.

Q. AND YOU TESTIFIED THAT CONSENSUS IS THE ABSENCE OF A 

SUSTAINED OBJECTION OF A MATERIALLY INVOLVED STAKEHOLDER GROUP; 

IS THAT RIGHT? 

A. YES.

Q. AND NOKIA IS A MATERIALLY INVOLVED STAKEHOLDER GROUP; 

RIGHT? 

A. NO. NOKIA IS A PART OF A STAKEHOLDER GROUP. BUT NOKIA 

ALONE IS A SINGLE COMPANY AND NOT A COMPLETE STAKEHOLDER GROUP.

Q. AND IS QUALCOMM A MATERIALLY INVOLVED STAKEHOLDER GROUP? 

A. AGAIN, QUALCOMM IS ONE COMPANY. AND SO THIS IS THE 

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WEILER CROSS BY MS. GILLEN

UNITED STATES COURT REPORTERS

1688

DIFFERENCE BETWEEN UNANIMITY AND TALKING ABOUT MATERIALLY 

INVOLVED STAKEHOLDER GROUPS. 

SO YOU CAN SAY, FOR EXAMPLE, NOKIA AND ERICSSON AND HUAWEI 

ARE SIMILAR COMPANIES WHO HAVE SIMILAR INTERESTS, AND IF ALL 

THREE COMPANIES IN THIS EXAMPLE WOULD STRONGLY OBJECT TO 

SOMETHING, THEN I WOULD SAY I CANNOT DEFINE HERE CONSENSUS 

BECAUSE THIS IS A CLEAR GROUP OF STAKEHOLDERS WHO WOULD NOT 

AGREE TO THAT. 

Q. AND YOU TESTIFIED THAT YOU'VE NEVER BEEN INVOLVED IN ANY 

LICENSING DISCUSSIONS AT NOKIA; RIGHT? 

A. THIS IS CORRECT, YES. 

Q. ARE YOU AWARE THAT SIEMENS HAD A CHIP LEVEL LICENSE FROM 

QUALCOMM IN 2000? 

A. NO. 

Q. AND SO YOU'RE NOT AWARE WHETHER NOKIA HAS EVER GRANTED ANY 

EXHAUSTIVE CHIP LEVEL LICENSES TO QUALCOMM? 

A. I'M NOT AWARE OF SPECIFIC LICENSES FROM -- INSIDE OF 

NOKIA, NO. 

Q. YOU TESTIFIED EARLIER THAT NOKIA IMPLEMENTS LICENSING 

PRACTICES CONSISTENTLY WORLDWIDE; RIGHT? 

A. THIS IS AT LEAST FROM WHAT I HEAR, MY UNDERSTANDING. 

Q. AND ATIS AND TIA HAVE DIFFERENT IPR POLICIES THAN ETSI; 

ISN'T THAT RIGHT? 

A. WELL, ETSI, TIA, AND ATIS ARE ALL MEMBERS OF -- SO ATIS 

AND ETSI ARE FROM 3GPP, AND ATIS, TIA, AND ETSI ARE MEMBERS OF 

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WEILER CROSS BY MS. GILLEN

UNITED STATES COURT REPORTERS

1689

ONEM2M. 

AND THOSE ORGANIZATIONS HAVE PROVISIONS WHICH SAY THAT THE 

PATENT POLICIES OF THE ORGANIZATIONAL PARTNERS, SO IN THIS CASE 

IN 3GPP CASE ATIS AND ETSI, NEED TO BE COMPATIBLE. 

AND SO ON A LEVEL WHICH GOES NOT MAYBE INTO VERY SPECIFIC 

LEGAL DETAILS, WHICH I'M NOT QUALIFIED TO ANSWER HERE, BUT 

THERE IS -- IT IS CLEAR THAT AS THEY ARE BOTH MEMBERS AND IT 

HAS BEEN ANALYZED THAT THEY ARE COMPATIBLE. 

Q. AND IS IT YOUR POSITION THAT THE ETSI IPR POLICY SHOULD 

TRUMP TIA'S POLICY IF THOSE POLICIES ARE DIFFERENT? 

A. IF THERE WOULD BE AN IDENTIFICATION OF DIFFERENCES OF 

THESE POLICIES, THEN IT WOULD NEED A DISCUSSION IN 3GPP TO SEE 

WHAT -- WHETHER THOSE DIFFERENCES ARE SO MATERIAL THAT EITHER 

OF THE ORGANIZATIONS, OR THOSE WHO ARE CHANGING SOMETHING IN 

COMPARISON TO THE OTHERS WOULD HAVE TO LEAVE. 

Q. AND YOU'VE NEVER HELD ANY POSITIONS WITH TIA OR ATIS, HAVE 

YOU? 

A. I'VE NEVER HELD ANY POSITION IN ATIS OR TIA. 

MS. GILLEN: I HAVE NO FURTHER QUESTIONS. 

THE COURT: OKAY. TIME IS 11:48. 

ANY REDIRECT? 

MR. TAFFET: NO, YOUR HONOR. 

THE COURT: OKAY. MAY THIS WITNESS BE EXCUSED 

SUBJECT TO RECALL OR NOT SUBJECT TO RECALL? 

MS. GILLEN: NOT SUBJECT TO RECALL FROM OUR 

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UNITED STATES COURT REPORTERS

1690

PERSPECTIVE. 

MR. TAFFET: NOT SUBJECT TO RECALL. 

THE COURT: OKAY. THEN YOU HAVE COMPLETED YOUR TRIAL 

TESTIMONY, AND YOU'RE FREE TO LEAVE. 

ALL RIGHT. YOUR NEXT WITNESS IS A VIDEO; IS THAT CORRECT? 

MR. VAN NEST: THAT'S RIGHT, YOUR HONOR. WE JUST 

HAVE A FEW MINUTES, A SHORT VIDEO THAT MR. PETERSON WILL 

INTRODUCE. 

THE COURT: OKAY. 

MR. PETERSON: YOUR HONOR, QUALCOMM WILL NOW PLAY THE 

VIDEO DEPOSITION OF MARVIN BLECKER FORMERLY OF QUALCOMM. 

THE COURT: YOU KNOW, TO BE FAIR, WHEN FTC WAS DOING 

ITS LONG INTRODUCTIONS OF VIDEOS ON THE FIRST DAY, I COUNTED 

ALL OF THAT TIME. 

SO IF YOU'RE GOING TO DO A LONG EXPLANATION OF WHICH 

EXHIBITS ARE GOING TO COME UP AND NOT BE INTRODUCED, THEN I'M 

GOING TO HAVE TO CHARGE YOU TIME. 

SO -- 

MR. PETERSON: YOUR HONOR, I WAS JUST MERELY GOING TO 

HIGHLIGHT WHETHER THE TESTIMONY WAS SEALED OR NOT, AND QUALCOMM 

IS NOT OFFERING ANY EXHIBITS INTO EVIDENCE WITH THIS WITNESS. 

THE COURT: ALL RIGHT. LET'S GO. 11:49. 

MR. PETERSON: NO PORTION OF MR. BLECKER'S TESTIMONY 

IS SEALED, AND QUALCOMM IS NOT OFFERING ANY EXHIBITS, ALTHOUGH 

CX 8286, WHICH WAS PREVIOUSLY INTRODUCED BY THE FTC, IS 

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BLECKER DEPOSITION

UNITED STATES COURT REPORTERS

1691

MENTIONED IN THE TESTIMONY. 

THE COURT: ALL RIGHT. ALL THAT WAS CHARGED TO YOUR 

TIME. 

GO AHEAD, PLEASE. 

(THE VIDEOTAPED DEPOSITION OF MARVIN BLECKER WAS PLAYED IN 

OPEN COURT OFF THE RECORD.)

THE COURT: TIME IS 11:54. 

ALL RIGHT. CALL YOUR NEXT WITNESS, PLEASE. 

MR. VAN NEST: YOUR HONOR, WE HAD SCHEDULED 

DR. CHIPTY TO COME RIGHT AT 1:00. WE HAVE ANOTHER SHORT VIDEO 

THAT'S ON TODAY'S LIST FROM INTEL. IT'S ABOUT FIVE MINUTES. 

WE CAN PLAY IT NOW. 

THE COURT: LET'S DO IT. 

MR. VAN NEST: THANK YOU. 

THE COURT: OKAY. 

MR. PETERSON: YOUR HONOR, QUALCOMM WILL NOW PLAY THE 

VIDEOTAPED DEPOSITION OF STEFAN WOLFF. QUALCOMM OFFERS INTO 

EVIDENCE QX 22. 

THE COURT: ALL RIGHT. 11:55. GO AHEAD, PLEASE. 

MR. PETERSON: QUALCOMM OFFERS INTO EVIDENCE QX 22. 

THE COURT: ALL RIGHT. ANY OBJECTION TO QX 22? 

MR. ANSALDO: NO OBJECTION. 

THE COURT: YOU SAID NO OBJECTION? 

MR. ANSALDO: NO OBJECTION. 

THE COURT: IT'S ADMITTED. 

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WOLFF DEPOSITION

UNITED STATES COURT REPORTERS

1692

(DEFENDANT'S EXHIBIT QX 22 WAS ADMITTED IN EVIDENCE.) 

THE COURT: GO AHEAD, PLEASE. 

(THE VIDEOTAPED DEPOSITION OF STEFAN WOLFF WAS PLAYED IN 

OPEN COURT OFF THE RECORD.)

THE COURT: TIME IS 12:00 NOON. 

LET'S GO AHEAD AND TAKE OUR ONE HOUR LUNCH BREAK UNTIL 

1:00 O'CLOCK. 

THANK YOU. WE'LL SEE YOU BACK IN AN HOUR. 

(THE LUNCH RECESS WAS TAKEN FROM 12:00 P.M. UNTIL 

1:05 P.M.) 

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CHIPTY DIRECT BY MR. EVEN

UNITED STATES COURT REPORTERS

1693

AFTERNOON SESSION

(COURT CONVENED AT 1:05 P.M.) 

THE COURT: GOOD AFTERNOON. WELCOME BACK. PLEASE 

TAKE A SEAT. 

CALL YOUR NEXT WITNESS, PLEASE. 

MR. EVEN: THANK YOU, YOUR HONOR. AT THIS TIME 

QUALCOMM CALLS DR. TASNEEM CHIPTY. 

THE CLERK: PLEASE RAISE YOUR RIGHT HAND. 

(DEFENDANT'S WITNESS, TASNEEM CHIPTY, WAS SWORN.)

THE WITNESS: YES, I DO. 

THE CLERK: THANK YOU. 

MR. EVEN: YOUR HONOR, MAY WE APPROACH WITH A BOOK? 

THE COURT: YES. GO AHEAD AND SPELL YOUR LAST NAME, 

PLEASE, FOR THE RECORD. 

THE WITNESS: SURE. IT'S CHIPTY. C-H-I-P-T-Y. 

THE COURT: TIME IS 1:05. GO AHEAD, PLEASE. 

DIRECT EXAMINATION

BY MR. EVEN: 

Q. THANK YOU. DR. CHIPTY, GOOD AFTERNOON. WHAT IS YOUR AREA 

OF EXPERTISE? 

A. GOOD AFTERNOON. MY AREAS OF EXPERTISE ARE INDUSTRIAL 

ORGANIZATION, ANTITRUST POLICY, AND ECONOMETRICS. 

Q. AND WHAT IS YOUR EDUCATIONAL BACKGROUND. 

A. WELL, I HAVE BACHELOR'S DEGREES IN MATHEMATICS AND 

ECONOMICS FROM WELLESLEY COLLEGE, AND I HAVE A PH.D. IN 

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CHIPTY DIRECT BY MR. EVEN

UNITED STATES COURT REPORTERS

1694

ECONOMICS FROM THE MASSACHUSETTS INSTITUTE OF TECHNOLOGY. 

Q. WHERE DO YOU WORK, DR. CHIPTY? 

A. I'M THE FOUNDER AND MANAGING PRINCIPAL OF MATRIX 

ECONOMICS, A CONSULTING FIRM IN BOSTON. 

Q. AND HOW LONG HAVE YOU BEEN CONSULTING ON ISSUES RELATED TO 

ANTITRUST AND ECONOMICS? 

A. ON THE ORDER OF 20 YEARS. 

Q. HAVE YOU EVER CONSULTED THE U.S. GOVERNMENT ON MATTERS 

RELATED TO ANTITRUST? 

A. YES, I HAVE, ON NUMEROUS OCCASIONS OVER THE PAST 20 YEARS, 

AS BOTH A TESTIFYING AND CONSULTING EXPERT FOR THE ANTITRUST 

DIVISION OF THE DEPARTMENT OF JUSTICE. 

Q. HAVE YOU EVER TAUGHT COURSES IN ANTITRUST? 

A. YES, I HAVE. I'VE TAUGHT INDUSTRIAL ORGANIZATION, 

REGULATORY POLICY, AND ECONOMETRICS. 

Q. HAVE YOU PUBLISHED OR SPOKEN ON MATTERS RELATED TO 

COMPETITION MATTERS? 

A. YES, I HAVE. I HAVE WRITTEN SEVERAL ARTICLES THAT HAVE 

APPEARED IN ACADEMIC JOURNALS AND BOOKS, AND I'M ALSO A 

FREQUENT SPEAKER ON ISSUES OF COMPETITION POLICY. FOR EXAMPLE, 

IN OCTOBER OF 2018, I PARTICIPATED AT THE REQUEST OF THE FTC IN 

THE FTC'S HEARINGS ON COMPETITION AND CONSUMER PROTECTION IN 

THE 21ST CENTURY ON A PANEL SPECIFICALLY FOCUSSED ON MARKET 

DEFINITION AND MARKET POWER. 

MR. EVEN: YOUR HONOR, AT THIS TIME QUALCOMM OFFERS 

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CHIPTY DIRECT BY MR. EVEN

UNITED STATES COURT REPORTERS

1695

DR. TASNEEM CHIPTY AS AN EXPERT IN INDUSTRIAL ORGANIZATION AND 

ANTITRUST ECONOMICS. 

MR. MATHESON: NO OBJECTION, YOUR HONOR. 

THE COURT: ALL RIGHT. SO CERTIFIED AS AN EXPERT IN 

INDUSTRIAL ORGANIZATION AND -- 

MR. EVEN: ANTITRUST ECONOMICS. 

THE COURT: -- ANTITRUST ECONOMICS. GO AHEAD, 

PLEASE. 

MR. EVEN: THANK YOU, YOUR HONOR.

Q. DR. CHIPTY, IF YOU'D TURN TO SLIDE ONE BEHIND TAB 1 IN 

YOUR WITNESS BOOK. 

WHAT WAS YOUR ASSIGNMENT IN THIS CASE? 

A. WELL, I WAS ASKED TO EVALUATE AND RESPOND TO 

PROFESSOR SHAPIRO'S ANALYSES AND OPINIONS WITH RESPECT TO 

MARKET DEFINITION, MARKET POWER, AND THE APPLE AGREEMENTS. 

WITH RESPECT TO THE APPLE AGREEMENTS, I EVALUATED WHETHER 

THEY HAD LEGITIMATE BUSINESS JUSTIFICATIONS AND WHETHER, IN 

FACT, THEY RESULTED IN HARM TO COMPETITION IN HIS ASSERTED 

MARKETS. 

Q. AT A VERY HIGH LEVEL, WHAT IS YOUR VIEW OF THE NATURE OF 

COMPETITION IN THE BASEBAND PROCESSORS INDUSTRY?

A. IN MY VIEW, THE MODEM CHIP INDUSTRY IS CHARACTERIZED BY 

DYNAMIC COMPETITION IN A RAPIDLY CHANGING MARKETPLACE. 

Q. AND WHAT IS DYNAMIC COMPETITION? 

A. WELL, THE TERM "DYNAMIC COMPETITION" IN THIS CASE REFERS 

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CHIPTY DIRECT BY MR. EVEN

UNITED STATES COURT REPORTERS

1696

TO THE WAYS IN WHICH COMPETITION PLAYS OUT IN INNOVATIVE 

MARKETS WHERE FIRMS ENGAGED IN REPEATED INNOVATION RACES.

Q. AND WHAT WOULD YOU EXPECT TO SEE IN MARKETS THAT ARE 

CHARACTERIZED BY DYNAMIC COMPETITION? 

A. SO IN A DYNAMICALLY COMPETITIVE ENVIRONMENT, I WOULD 

EXPECT TO SEE FIRMS ENGAGING IN CONTINUAL INNOVATION AND NEW 

PRODUCT DESIGN. 

I WOULD EXPECT THAT IN THIS TYPE OF ENVIRONMENT THERE 

WOULD BE WINNER TAKE ALL OR WINNER TAKE MOST OUTCOMES. THE 

WINNER COULD WIN LARGE MARKET SHARE. I WOULD EXPECT THAT TO BE 

ESPECIALLY TRUE IN THE CHIP INDUSTRY WHERE A HANDFUL OF LARGE 

BUYERS ACCOUNT FOR THE VAST MAJORITY OF PURCHASES. 

LOSERS CAN BE COMPETITIVELY SIGNIFICANT. LOSERS CAN HELP 

PUSH THE WINNER TO INNOVATE MORE AND LOWER PRICE TO COMPETE FOR 

BUSINESS. LOSERS CAN PLAY THIS ROLE, EVEN THOUGH THEY MAY WIN 

NO SHARE IN ANY GIVEN PERIOD. 

AND THEN THE CYCLE WOULD REPEAT. IN ESSENCE, A FIRM IS 

ONLY AS GOOD AS ITS LAST CHIP.

Q. WHAT KIND OF EVIDENCE HAVE YOU SEEN SHOWING THAT THE MODEM 

CHIP INDUSTRY IS CHARACTERIZED BY DYNAMIC COMPETITION? 

A. WELL, I HAVE LOOKED AT A VARIETY OF DIFFERENT INDICATORS, 

AND FOR STARERS, I LOOKED AT R&D SPENT. 

Q. SO TURN TO SLIDE 2, PLEASE. AND WHAT ARE YOU SHOWING US 

ON THIS SLIDE? 

A. YES. THIS IS A CHART THAT I PREPARED THAT DESCRIBES QCT'S 

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CHIPTY DIRECT BY MR. EVEN

UNITED STATES COURT REPORTERS

1697

R&D SPEND ON MODEM CHIP DEVELOPMENT. WHAT IT DESCRIBES IS 

INVESTMENTS BY YEAR FROM 2003 TO 2017, AND WHAT YOU CAN SEE 

OVER THIS PERIOD IS THAT QUALCOMM HAS INVESTED SIGNIFICANTLY 

LARGER AMS IN MODEM CHIP DEVELOPMENT OVER THIS PERIOD, 

INCLUDING OVER THE YEARS OF THE APPLE AGREEMENTS. 

YOU CAN SEE THAT IN 2003, QUALCOMM SPENT ON THE ORDER OF 

$500 MILLION IN CHIP DEVELOPMENT, AND BY 2017, THAT AMOUNT IS 

APPROXIMATELY $4 BILLION. 

Q. LET'S TURN TO SLIDE 3. 

AND THIS SLIDE HAS BEEN SEALED, YOUR HONOR. 

SO, DR. CHIPTY, PLEASE DON'T MENTION ANY OF THE NUMBERS ON 

THIS SLIDE, BUT IF YOU CAN DESCRIBE, WHAT IS THIS SLIDE SHOWING 

US? 

A. SURE. THIS SLIDE GIVES US A DIFFERENT WINDOW INTO THE 

SAME MECHANISM, THE R&D SPENT. THIS IS A COMPARISON PREPARED 

BY BAIN FOR INTEL. IT'S A SIDE-BY-SIDE COMPARISON OF QUALCOMM, 

MEDIATEK, AND INTEL CHIP MODEMS SPENT IN 2014. AND WHAT YOU 

CAN SEE IS THAT EACH OF THE CHIP MAKERS INVESTS SIGNIFICANTLY 

LARGER AMOUNTS -- EXCUSE ME. EACH OF THE CHIP MAKERS INVEST 

LARGE AMOUNTS. THIS IS A STATIC PICTURE. THOUGH NOT ALL ARE 

AS EQUALLY PRODUCTIVE. 

MR. MATHESON: YOUR HONOR, I OBJECT. SHE'S OBVIOUSLY 

INTENDING TO EXPLAIN THE HEARSAY EVIDENCE UPON WHICH SHE HAS 

RELIED. THIS DOCUMENT IS HEARSAY, AND SHE'S JUST RELAYING ITS 

CONTENTS INTO THE RECORD. SHE'S NOT OFFERING AN ANALYSIS OF 

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CHIPTY DIRECT BY MR. EVEN

UNITED STATES COURT REPORTERS

1698

THE INFORMATION THAT APPEARS HERE. THIS DOCUMENT HAS BEEN 

ADMITTED, BUT NOT FOR THE TRUTH OF THE MATTERS ASSERTED. 

THE COURT: GIVE ME A MINUTE, PLEASE. 

(PAUSE IN PROCEEDINGS.) 

THE COURT: WHAT'S YOUR RESPONSE? 

MR. EVEN: YOUR HONOR, I BELIEVE THE QUESTION WAS 

WHAT TYPE OF EVIDENCE SHE HAS CONSIDERED THAT AN EXPERT CAN 

RELY ON, CAN RELY ON HEARSAY TO REACH THE CONCLUSION THAT SHE 

EXPLAINED. HER CONCLUSION IS THAT THIS MARKET IS CHARACTERIZED 

BY DYNAMIC COMPETITION, AND SHE'S GOING THROUGH A FEW PIECES, 

EXAMPLES OF THIS KIND OF EVIDENCE THAT SHE'S CONSIDERED. 

THE COURT: YOUR QUESTION WAS, WHAT IS THE SLIDE 

SHOWING US? 

MR. EVEN: I THINK MY -- 

THE COURT: THAT WAS YOUR QUESTION. 

MR. EVEN: I THINK, YOUR HONOR, MY INITIAL QUESTION 

WAS WHAT KIND OF EVIDENCE HAVE YOU CONSIDERED TO REACH THE 

CONCLUSION ABOUT DYNAMIC COMPETITION, AND DR. CHIPTY TESTIFIED 

THAT SHE'S LOOKED AT R&D, AND THIS IS ONE OF THREE SLIDES THAT 

GO TO THAT. THAT IS THE KIND OF EVIDENCE THAT SHE HAS 

CONSIDERED. 

THE COURT: WELL, THIS WAS YOUR QUESTION. "LET'S 

TURN TO SLIDE 3. AND THIS SLIDE HAS BEEN SEALED, YOUR HONOR. 

SO, DR. CHIPTY, PLEASE DON'T MENTION ANY OF THE NUMBERS ON THIS 

SLIDE, BUT IF YOU CAN DESCRIBE WHAT THIS SLIDE IS SHOWING US." 

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CHIPTY DIRECT BY MR. EVEN

UNITED STATES COURT REPORTERS

1699

THAT WAS THE QUESTION. HER ANSWER WAS, "SURE, THIS SLIDE 

GIVES US A DIFFERENT WINDOW," ET CETERA. 

MR. EVEN: YOUR HONOR, THIS IS A SLIDE THAT 

DR. CHIPTY HAS PREPARED TO SHOW THIS, AND I CAN LAY A 

FOUNDATION IF YOUR HONOR WOULD LIKE TO. 

THE COURT: WELL, I GUESS I'M UNCLEAR. WHAT'S YOUR 

RESPONSE? YOU'RE JUST SAYING THAT THIS WAS ADMITTED NOT FOR 

ITS TRUTH, AND THEN SHE'S JUST READING IT NOW INTO THE RECORD. 

MR. MATHESON: THAT'S CORRECT. AND THE QUESTION IS 

NOT OBJECTIONABLE IF IT'S WHAT CONCLUSIONS HAVE YOU DRAWN. IF 

SHE SIMPLY SAYS HERE'S WHAT'S WRITTEN ON THE SLIDE, I THINK 

THAT'S AN ATTEMPT TO ACT AS A CONDUIT FOR HEARSAY. 

THE COURT: I'M GOING TO SUSTAIN THE OBJECTION. THE 

QUESTION IS, "WHAT IS THE SLIDE SHOWING US?" SO WHY DON'T YOU 

ASK A DIFFERENT QUESTION, PLEASE. THANK YOU. 

MR. EVEN: SURE, YOUR HONOR. 

Q. DR. CHIPTY, IS THIS SLIDE ONE OF THE PIECES OF EVIDENCE 

THAT YOU HAVE CONSIDERED IN FORMING YOUR OPINION WITH RESPECT 

TO DYNAMIC COMPETITION? 

A. YES, IT IS. THIS SLIDE PRESENTS, LIKE I SAID, A 

SIDE-BY-SIDE COMPARISON OF THREE OF THE CHIP MAKERS IN THIS 

MARKETPLACE, AND IT VERY MUCH CORROBORATES SOME OF THE OTHER 

EVIDENCE THAT I'VE SEEN ON R&D SPEND BY THE MAJOR CHIP MAKERS.

Q. AND WHAT ABOUT THIS SLIDE SUPPORTS YOUR CONCLUSION THAT 

THIS MARKET IS CHARACTERIZED BY DYNAMIC COMPETITION? 

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1700

A. WELL, IT SHOWS THAT, IN FACT, TWO OF THE THREE CHIP 

MAKERS, WHICH WOULD BE INTEL AND MEDIATEK -- AND THIS DOCUMENT 

IS FROM 2014 -- THIS IS A TIME PERIOD WHEN TWO OF THE THREE 

CHIP MAKERS WEREN'T ACTIVELY SELLING CHIPS IN 

PROFESSOR SHAPIRO'S ASSERTED MARKETS. 

AND, IN FACT, WE SEE THEM ENGAGING IN R&D AT THE LEVEL OF 

QUALCOMM BY THIS COMPARISON, AND I FIND THAT TO BE 

COMPETITIVELY SIGNIFICANT. 

Q. HAVE YOU LOOKED AT OTHER ASPECTS OF R&D TO REACH YOUR 

CONCLUSION ABOUT DYNAMIC COMPETITION? 

A. YES, I HAVE. IN FACT, IF WE TURN TO THE NEXT SLIDE -- 

Q. LET'S TURN TO THAT SLIDE. 

A. THIS SLIDE DESCRIBES FIRM-WIDE R&D SPENT, AGAIN, BY 

QUALCOMM, INTEL, AND MEDIATEK. BUT NOW IT ALSO SHOWS SAMSUNG 

AND HUAWEI. 

AND WHAT WE SEE IN THIS SLIDE IS THAT ALL FIVE MAJOR CHIP 

MAKERS ARE ENGAGED IN A VARIETY OF R&D INITIATIVES, AND THEY 

ALL HAVE ACCESS TO THAT CAPITAL TO LET THEM ENGAGE. 

Q. OTHER THAN LOOKING AT THE R&D SPENT, HAVE YOU LOOKED AT 

OTHER INDICATORS THAT LED YOU TO THE CONCLUSION THAT THIS 

INDUSTRY IS CHARACTERIZED BY DYNAMIC COMPETITION? 

A. YES, I HAVE. I'VE ALSO LOOKED AT THE OUTPUT OF THIS 

INNOVATION SPEND.

Q. AND HAVE YOU PREPARED A SLIDE ON THAT?

A. YES, I HAVE. THE NEXT SLIDE PRESENTS A SUMMARY OF SOME OF 

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1701

THAT EVIDENCE. 

SO WHAT THIS SLIDE SHOWS, IN FACT, I'VE SELECTED A HANDFUL 

OF TECHNOLOGICAL FEATURES THAT ARE EMBODIED IN SOME OF THE, 

WHAT I'LL CALL, LATEST AND GREATEST CHIPS RELEASED BY QUALCOMM 

AND ITS RIVALS OVER THE PERIOD 2013 TO 2018. 

AND WHAT YOU CAN SEE, IF YOU LOOK AT THE DIFFERENT 

DIMENSIONS, IS THAT, IN FACT, EACH OF THESE CHIP MAKERS IS 

RELEASING INCREASINGLY ADVANCED CHIPS OVER THE TIME PERIOD. SO 

I'LL GIVE YOU A COUPLE OF EXAMPLES. 

FOR EXAMPLE, IF YOU LOOK AT LTE'S CDMA MULTIMODE 

CAPABILITY, YOU'LL SEE THAT BEGINNING IN 2015 MEDIATEK RELEASED 

ITS FIRST LTE CDMA MULTIMODE CHIP, AND THEN SOON THEREAFTER WE 

SEE HISILICON, SAMSUNG, INTEL DOING THE SAME. THAT'S ONE 

DIMENSION. 

ANOTHER DIMENSION, IF YOU LOOK AT THE MAXIMUM DOWNLINK 

SPEED ACROSS THE DIFFERENT CHIP MAKERS OVER TIME, WHAT YOU SEE 

IS AN ACROSS-THE-BOARD INCREASE IN MAXIMUM DOWNLINK SPEED. 

SO, IN FACT, THE NEXT SLIDE -- 

Q. LET'S GO TO THE NEXT SLIDE. 

A. THIS SLIDE HERE SHOWS THAT SAME INFORMATION IN I THINK A 

MORE DIGESTIVE WAY. WHAT IT SHOWS YOU IS THE PERCENT INCREASE 

IN MAXIMUM DOWNLINK SPEED FROM THE FIRST TO THE LAST CHIP 

AVAILABLE FOR EACH OF THE CHIP MAKERS OVER THIS TIME PERIOD. 

AND WHAT YOU CAN SEE IS THAT, AS I SAID, THERE'S BEEN AN 

ACROSS-THE-BOARD INCREASE IN MAXIMUM DOWNLINK SPEED. 

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1702

Q. HAVE YOU SEEN EVIDENCE THAT QUALCOMM RESPONDS TO 

COMPETITION INNOVATION? 

A. YES, I HAVE. IN FACT, I'VE SEEN EVIDENCE IN THE ORDINARY 

COURSE, AND I'VE ALSO HEARD IT IN THE TESTIMONY, THAT QUALCOMM 

RESPONDS IN PART TO COMPETITION BY ADAPTING AND INTENSIFYING 

ITS R&D EFFORTS.

Q. SO LET'S GO TO SLIDE 7. 

AND WHAT ABOUT THIS SLIDE INFORMS YOUR JUDGMENT THAT 

YOU'RE LOOKING AT AN INDUSTRY THAT'S CHARACTERIZED BY DYNAMIC 

COMPETITION? 

A. WELL, THIS IS AN ORDINARY COURSE DOCUMENT FROM QUALCOMM. 

IT'S A 2011 DOCUMENT IN THE EARLY DAYS OF LTE, AND WHAT IT'S 

DESCRIBING IS, IN FACT, HOW QUALCOMM RESPONDS TO COMPETITION ON 

THE R&D FRONT. 

SO THE LEFT PAGE OF THIS SLIDE SUMMARIZES SOME OF THE 

COMPETITIVE THREATS THAT QUALCOMM FACED AT THE TIME, AT LEAST 

IT BELIEVED THAT IT FACED AT THE TIME. 

AND THE RIGHT SLIDE DESCRIBES THE STRATEGIC RESPONSES IT 

FORMULATED IN THE FACE OF THIS COMPETITION. 

AND AS YOU CAN SEE FROM THIS SLIDE, QUALCOMM RESPONDED BY 

TAILORING ITS R&D IN AREAS WHERE IT THOUGHT THAT IT WAS 

TRAILING ITS COMPETITION. 

Q. LET'S TURN TO TALK ABOUT THE MARKETS THAT 

PROFESSOR SHAPIRO HAS IDENTIFIED HERE. 

WHAT CONCLUSION -- LET'S START WITH PREMIUM LTE. WHAT 

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1703

CONCLUSION HAVE YOU REACHED WITH RESPECT TO THE ASSERTED 

PREMIUM LTE BASEBAND MARKET? 

A. WELL, TO BEGIN, I THINK THAT PROFESSOR SHAPIRO HAS NOT 

APPROPRIATELY ACCOUNTED FOR THIS DYNAMIC COMPETITION THAT WE'VE 

JUST TALKED ABOUT. 

AND AS A RESULT, HE'S INCORRECTLY EXCLUDED FROM HIS MARKET 

CHIPS THAT COMPETE WITH OTHER CHIPS THAT HE HAS INCLUDED IN HIS 

MARKET. 

Q. WHAT IS INCLUDED IN PROFESSOR SHAPIRO'S ASSERTED PREMIUM 

LTE MODEM CHIP MARKET? 

A. SO PROFESSOR SHAPIRO INCLUDES IN HIS MARKET LTE CHIPS THAT 

APPEAR IN OEM HANDSETS THAT COST MORE THAN $300 BEFORE 2013 AND 

MORE THAN $400 AFTER 2013. 

Q. AND TO YOUR UNDERSTANDING, WHY DOES PROFESSOR SHAPIRO 

FOCUS ON HANDSET SALES AS OPPOSED TO CHIPSET PERFORMANCE OR 

CHIPSET PRICE? 

A. WELL, I THINK PROFESSOR SHAPIRO IS TRYING TO TAKE A 

SHORTCUT. HE'S USING THE PRICE OF THE HANDSETS AS A PROXY FOR 

THE QUALITY AND PRICE OF THE CHIP. SO IT'S HIS VIEW IF A CHIP 

SHOWS UP IN AN EXPENSIVE PHONE, IT'S LIKELY TO BE AN EXPENSIVE, 

HIGH QUALITY CHIP THAT CONTAINS THE LATEST AND GREATEST 

TECHNOLOGY. 

Q. LET'S LOOK AT THE NEXT SLIDE. AND WHAT ARE YOU SHOWING 

ABOUT DYNAMIC COMPETITION AND MARKET DEFINITION IN THIS SLIDE? 

A. WELL, SO THIS IS AN ATTEMPT TO ILLUSTRATE THE WAY 

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1704

COMPETITION PLAYS OUT, WITH THE SPECIFIC EXAMPLE IN THE CONTEXT 

OF THE WAYS IN WHICH COMPETITION WOULD HAVE PLAYED OUT IN THE 

RACE FOR THE 2015 SOCKETS. 

SO FOR A CHIP TO APPEAR IN THE 2015 SOCKETS, THE R&D FOR 

THOSE PRODUCTS WOULD HAVE BEGUN YEARS IN ADVANCE. SO ON THE 

ORDER OF 2012, 2013, 2014, THAT'S WHEN THE R&D WOULD HAVE TAKEN 

PLACE. 

SO THINK OF THE ARROWS AS DEPICTING THAT RACE. 

AND THEN ON THE ORDER OF ONE TO TWO YEARS BEFORE HANDSET 

LAUNCH, THE OEM WOULD HAVE THEN SELECTED THE CHIP TO 

INCORPORATE INTO THEIR PHONES. SO I DESCRIBE THAT AS THE CHIP 

SELECTION PERIOD. ALL OF THIS HAPPENS BEFORE HANDSETS ARE 

LAUNCHED. 

AND THEN HANDSETS ARE LAUNCHED AND SALES REALIZED. 

PROFESSOR SHAPIRO WOULD FOCUS HIS EXERCISE OF MARKET 

DEFINITION BY LOOKING AT THE PHONES THAT ARE ACTUALLY LAUNCHED 

INSTEAD OF ON THE COMPETITION THAT PLAYED OUT BEFORE THAT. 

Q. CAN YOU GIVE ME AN EXAMPLE OF COMPETITION IN THE CHIP 

SELECTION PERIOD THAT'S MARKED YELLOW HERE ON THE SLIDE THAT IS 

NOT REFLECTED IN THE MARKET SHARES AND THEN THE MARKET 

DEFINITION? 

A. YES, I'LL GIVE YOU AN EXAMPLE INVOLVING MEDIATEK. IN 

FACT, IT'S AN EXAMPLE THAT PROFESSOR SHAPIRO HIMSELF 

HIGHLIGHTED AT ONE POINT, AND WHAT THIS IS IS AN INSTANCE IN 

WHICH QUALCOMM, DURING THE CHIP SELECTION PERIOD, LOWERED PRICE 

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1705

BY A SIGNIFICANT AMOUNT IN RESPONSE TO A SPECIFIC MEDIATEK 

CHIP. BUT THAT CHIP WAS NOT INCLUDED IN PROFESSOR SHAPIRO'S 

MARKET. 

Q. SO IF YOU TURN TO TAB 8, AND THAT'S CX 7591-11. 

AND THIS DOCUMENT WAS PREVIOUSLY ADMITTED, YOUR HONOR. 

A. OKAY. 

Q. AND WHAT DO YOU SEE ON THIS SLIDE THAT IS RELATED TO YOUR 

ASSESSMENT THAT PROFESSOR SHAPIRO DOES NOT INCLUDE ALL THE 

RELEVANT COMPETITIVE CHIPS IN THE MARKET? 

A. WELL, THIS IS, IN FACT, THE ILLUSTRATION OF THAT MEDIATEK 

CHIP I WAS JUST DESCRIBING. 

IF YOU SEE IN THE MIDDLE OF THE PAGE, THERE'S THE MSM 

8916. THIS IS A QUALCOMM CHIP THAT PROFESSOR SHAPIRO INCLUDES 

IN HIS PREMIUM MARKET. 

AND WHAT THIS CHART IS SHOWING YOU IS THAT QUALCOMM 

PLANNED TO LOWER ITS PRICE IN RESPONSE TO COMPETITION FROM A 

MEDIATEK CHIP, THE MTK 6735. BUT IT'S THIS MEDIATEK CHIP THAT 

DOESN'T APPEAR IN PROFESSOR SHAPIRO'S MARKET. 

Q. HAVE YOU SEEN OTHER EXAMPLES LIKE THIS ONE IN THE RECORD? 

A. YES, I HAVE. IN FACT, I JUST SHOWED YOU THE QUALCOMM 2011 

DOCUMENT THAT DESCRIBED THE COMPETITIVE THREATS QUALCOMM FACED 

AS OF -- IN THE EARLY DAYS OF LTE. 

AND WHAT I SHOWED YOU THERE IS QUALCOMM FELT COMPETITIVE 

PRESSURE FROM SEVERAL CHIP MAKERS, SOME OF WHOM NEVER APPEARED 

IN HANDSETS IN PROFESSOR SHAPIRO'S ANALYSIS. 

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1706

Q. IS YOUR CRITIQUE JUST QUIBBLING AROUND THE EDGES THAT 

PROFESSOR SHAPIRO LEFT OUT ONE OR TWO CHIPS OR THAT HIS 

THRESHOLD SHOULD HAVE BEEN AT $380 INSTEAD OF $400? OR IS 

THERE SOMETHING MORE FUNDAMENTAL GOING ON HERE? 

MR. MATHESON: OBJECTION. LEADING, YOUR HONOR. 

THE COURT: SUSTAINED. 

THE WITNESS: I'M NOT -- 

THE COURT: YOU CAN'T ANSWER THE QUESTION IF I 

SUSTAIN THE OBJECTION. PLEASE WAIT FOR THE NEXT QUESTION. 

THANK YOU.

MR. EVEN: DR. CHIPTY -- I'LL REPHRASE THE QUESTION, 

YOUR HONOR.

Q. DR. CHIPTY, WHAT IS THE GIST OF YOUR CRITIQUE OF 

PROFESSOR SHAPIRO'S APPROACH? 

A. WELL, IN MY VIEW, A CENTRAL ASPECT OF THE ANTITRUST 

ANALYSIS IS IDENTIFYING THE COMPETITIVELY RELEVANT PRODUCTS. 

I'VE JUST EXPLAINED TO YOU THAT IN A NUMBER OF INSTANCES 

THAT ARE VISIBLE AND LIKELY SOME THAT ARE NOT VISIBLE, 

PROFESSOR SHAPIRO'S APPROACH HAS HAD THE EFFECT OF EXCLUDING 

COMPETITIVELY RELEVANT CHIPS FROM HIS ANALYSIS. 

SO IN MY VIEW, HE HAS NOT DONE THE WORK TO IDENTIFY AN 

ECONOMICALLY COHERENT ANTITRUST MARKET. 

Q. WHAT WORK WOULD YOU HAVE EXPECTED PROFESSOR SHAPIRO TO DO 

TO COME UP WITH A COHERENT MARKET IN A DYNAMICALLY COMPETITIVE 

MARKET? 

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1707

A. I WOULD HAVE EXPECTED HIM TO LOOK AT WHAT ACTUALLY 

HAPPENED DURING THE INNOVATION RACE AND THE CHIP SELECTION 

PERIOD, AND I WOULD HAVE EXPECTED HIM TO INCORPORATE THOSE 

INSIGHTS INTO HIS MARKET DEFINITION ANALYSIS. 

INSTEAD HE RELIES ON, LIKE I SAID, THE SHORTCUT OF 

IDENTIFYING RELEVANT PRODUCTS BY LOOKING AT HANDSET PRICES.

Q. HAVE YOU SEEN AN ECONOMIST EVER DO THIS KIND OF WORK? 

A. I, MYSELF, HAVE DONE IT. OTHERS HAVE DONE IT. WE ADAPT 

OUR METHODS TO THE STYLIZED CIRCUMSTANCES OF THE INDUSTRY WE'RE 

ANALYZING. 

I, MYSELF, HAVE RECENTLY DONE THIS ON A CASE FOR THE 

DEPARTMENT OF JUSTICE IN THE ANTITRUST DIVISION. 

Q. AND WHAT KIND OF WORK HAVE YOU DONE IN THIS CASE FOR THE 

D.O.J.? 

A. WELL, IN THE CASE THAT I HAVE IN MIND, I WAS LOOKING AT 

COMPETITIVE EFFECTS IN THE INNOVATION MARKET, AND TO STUDY 

THOSE EFFECTS, I LOOKED AT THE BACK AND FORTH BETWEEN THE 

INNOVATORS TO SEE IF, IN FACT, THERE WAS A COMPETITIVE 

INTERACTION BETWEEN THEM AND HOW THAT PROCESS WOULD PLAY OUT. 

I DID NOT LOOK AT WHAT HAPPENED AFTER THE FACT, OR AT 

LEAST I DID -- THAT WASN'T THE PRINCIPAL APPROACH THAT I TOOK. 

MR. MATHESON: I OBJECT, YOUR HONOR. I'M NOT SURE IF 

THIS HAS BEEN DISCLOSED, THIS ANALYSIS THAT SHE'S DISCUSSING, 

BUT I DID NOT LOCATE IT IN THE MATERIALS RELIED UPON. I THINK 

IF IT'S OUTSIDE THE SCOPE OF THE REPORT, SHE SHOULD NOT BE 

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1708

DRAWING ANALOGIES TO NON-DISCLOSED ANALYSIS. 

WAS THIS DISCLOSED IN THE REPORT ANYWHERE? 

MR. EVEN: THE EXAMPLE ITSELF WAS NOT DISCLOSED, YOUR 

HONOR, BUT THIS IS AN EXAMPLE OF THE TYPE OF WORK. I THINK THE 

TYPE OF WORK CERTAINLY HAS BEEN DISCLOSED IN THE REPORT, AND 

WHAT THE FLAWS SHE BELIEVES ARE IN PROFESSOR SHAPIRO'S WORK. 

MR. MATHESON: SHE'S CERTAINLY ALLOWED TO CRITIQUE 

DR. SHAPIRO. BUT I CAN'T RESPOND TO HER CLAIM THAT SHE HAS 

DONE A DIFFERENT ANALYSIS IF I'VE NEVER SEEN IT AND IT'S NEVER 

BEEN DISCLOSED. 

THE COURT: WHAT'S YOUR RESPONSE TO THAT? 

MR. EVEN: I THINK THAT AN EXPERT IS ALLOWED TO TALK 

ABOUT THE KIND OF WORK THAT SHOULD BE DONE AND CAN TALK AS TO 

HER EXPERIENCE. I THINK THE CRITIQUE ITSELF, THAT'S THE 

OPINION OF WHAT SHOULD HAVE BEEN DONE, WAS DISCLOSED. 

THE COURT: CAN I SEE THE RELEVANT PARAGRAPH IN HER 

EXPERT REPORT THAT DISCLOSES ANYTHING ALONG THESE LINES? 

WHAT'S THE PARAGRAPH? 

(PAUSE IN PROCEEDINGS.) 

MR. EVEN: SO, YOUR HONOR, THE MOST RELEVANT ONE I 

CAN COME UP WITH RIGHT NOW IS AT 140. 

THE COURT: OKAY. 

(PAUSE IN PROCEEDINGS.) 

THE COURT: WHAT'S YOUR VIEW ON THAT? I DON'T THINK 

IT DISCLOSES THIS, BUT YOU ALL ARE MORE FAMILIAR WITH THIS 

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1709

TOPIC THAN I AM. 

MR. MATHESON: YOUR HONOR, THIS DOES NOT DISCUSS 

ANYTHING OTHER THAN THE HORIZONTAL MERGER GUIDELINES. IT DOES 

NOT DISCUSS THE APPROACH AN ECONOMIST SHOULD TAKE WHEN 

ANALYZING A DYNAMIC MARKET SUCH AS SHE'S DESCRIBED, AND IT DOES 

NOT DISCLOSE ANY ANALYSIS THAT SHE HAS EVER DONE. THESE ARE 

GENERIC STATEMENTS ABOUT WHAT THE HORIZONTAL MERGER GUIDELINES 

SAY. 

MR. EVEN: I THINK 140 THROUGH 142 DISCLOSES THE KIND 

OF THINGS THAT SHE WOULD EXPECT AN EXPERT TO DO, YOUR HONOR. 

BUT THE SPECIFIC EXAMPLE IS NOT DISCLOSED. 

THE COURT: WHAT IS THE SPECIFIC -- I DON'T SEE IT IN 

HERE, 140 TO 142. BUT WHAT IS THE SPECIFIC THING THAT YOU'RE 

OBJECTING TO, MR. MATHESON? 

MR. MATHESON: THE FACT THAT SHE HAS STATED THAT 

DR. SHAPIRO SHOULD HAVE DONE AN ANALYSIS LIKE THE ONE THAT SHE 

HAS DONE. 

IF WE DON'T KNOW THE ONE SHE'S DONE, WE'VE NEVER BEEN ABLE 

TO INVESTIGATE IT OR ASK HER ANY QUESTIONS ABOUT IT AT HER 

DEPOSITION, HOW CAN WE POSSIBLY DEMONSTRATE ANY SHORTCOMINGS IN 

THE ANALYSIS THAT SHE CLAIMED TO HAVE PERFORMED AT SOME POINT 

IN TIME AND ANY SIMILARITIES BETWEEN THAT ANALYSIS AND 

DR. SHAPIRO'S? 

FOR ALL WE KNOW, THE ANALYSES ARE REMARKABLY SIMILAR, AND 

WE'D BE ABLE TO DEMONSTRATE THAT ON CROSS-EXAMINATION IF THEY 

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1710

HAD BEEN DISCLOSED. 

MR. EVEN: YOUR HONOR, I THINK WHAT SHE TESTIFIED TO 

WAS SPECIFICALLY WHAT 140 TO 142 BUILDS UP TO, AND THEN IN 143 

AND BELOW, SHE TESTIFIED THAT WHAT PROFESSOR SHAPIRO SHOULD 

HAVE DONE WAS LOOK AT THE EX ANTE COMPETITION BEFORE HE REACHES 

HIS MARKET SHARES, LOOKS AT THAT, THAT THAT IS THE KIND OF WORK 

THAT AN ECONOMIST SHOULD HAVE DONE, AND THAT IS WHAT SHE WOULD 

HAVE EXPECTED. 

THE ONLY EXTENSION BEYOND THAT IS TO SAY I'VE DONE IT IN 

THIS PARTICULAR CASE. I DON'T SEE HOW THAT GOES BEYOND THE 

SCOPE. 

THE COURT: THE OBJECTION IS SUSTAINED. THAT'S 

STRICKEN. 

BY MR. EVEN:

Q. PROFESSOR SHAPIRO TESTIFIED THAT HE JUST FOLLOWED WHAT 

QUALCOMM DOES IN ITS INTERNAL DOCUMENTS BY LOOKING AT HANDSET 

PRICES. 

WHAT'S YOUR VIEW OF THAT? 

A. I DON'T AGREE WITH THAT. I THINK THAT QUALCOMM, WHEN I 

LOOK AT THE RECORD, QUALCOMM ACTUALLY ASSESSES ITS COMPETITORS' 

CAPABILITIES IN A VARIETY OF DIFFERENT WAYS, NOT SIMPLY BY 

LOOKING AT HANDSET PRICES, WHEN BIDDING ON SOCKETS FOR THE 

FUTURE, IN ADDITION TO ASSESSING COMPETITOR CAPABILITIES, 

QUALCOMM ALSO FACTORS IN CUSTOMER REQUIREMENTS AND THEN 

ASSESSES ITS OWN VALUE PROPOSITION IN THE FACE OF THE 

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1711

COMPETITION AND BELIEVES IT FACES. SO I THINK QUALCOMM DOES A 

LOT MORE THAN LOOK AT HANDSET PRICES.

Q. ARE YOU AWARE OF TESTIMONY BY OEM'S THAT THEY NEED 

QUALCOMM'S PREMIUM CHIPS FOR THEIR PREMIUM PHONES? 

A. I UNDERSTAND THAT THEY'VE SAID THAT AND THAT 

PROFESSOR SHAPIRO RELIES ON THAT. 

BUT HERE'S WHAT I SEE WHEN I LOOK AT THAT TESTIMONY AND 

SOME OF THE UNDERLYING EVIDENCE. 

THE FIRST IS THAT I FIND THAT THE DIFFERENT OEM'S USE THE 

TERM "PREMIUM" TO MEAN DIFFERENT THINGS, AND ONE HAS TO 

RECONCILE THOSE DIFFERENCES IN ORDER TO RELY ON THAT TERM. 

AND THE SECOND THING IS THAT WHEN I LOOK AT THE ACTUAL 

HANDSETS THAT PROFESSOR SHAPIRO FLAGS USING HIS METHOD BASED ON 

HANDSET PRICES, WHAT I SEE IS THAT EXPENSIVE HANDSETS OFTEN 

CONTAIN A VARIETY OF CHIPSETS. IN PARTICULAR, I SEE SOME OF 

THE EXPENSIVE HANDSETS IN PROFESSOR SHAPIRO'S MARKET ACTUALLY 

CONTAIN WHAT QUALCOMM WOULD DESCRIBE AS NON-PREMIUM HANDSETS. 

SO ALL OF THIS LEADS ME TO BE CAUTIOUS TO USE THE KIND OF 

EVIDENCE THAT RELIES ON THE USE OF THE TERM "PREMIUM." 

Q. LET'S TURN TO MARKET POWER IN THE ASSERTED PREMIUM LTE 

MARKET. 

WHAT ARE YOUR MAIN CONCLUSIONS WITH RESPECT TO QUALCOMM'S 

MARKET POWER? 

A. SO IT'S MY VIEW THAT PROFESSOR SHAPIRO HAS OVERSTATED 

QUALCOMM'S MARKET POWER. QUALCOMM HAS CERTAINLY BEEN THE 

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1712

WINNER OF MANY INNOVATION RACES OVER TIME. 

BUT I HAVE NOT SEEN THE EVIDENCE THAT WOULD BE REQUIRED IN 

THAT I HAVE NOT SEEN EVIDENCE OF CONSISTENT AND UNCONSTRAINED 

MARKET POWER OF THE TYPE THAT WOULD BE REQUIRED TO SUSTAIN THE 

ALLEGED CONDUCT IN THIS CASE. 

IN OTHER WORDS, IT'S MY VIEW THAT QUALCOMM DOESN'T HAVE 

SUFFICIENT MARKET POWER TO COERCE OEM'S INTO ONEROUS BUSINESS 

TERMS THAT WOULD ROB THEM OF BILLIONS OF DOLLARS. 

Q. LET'S TURN BACK TO SLIDE 8, IF WE MAY. 

AND WHAT ARE YOU SHOWING IN THIS SLIDE WITH RESPECT TO 

DYNAMIC COMPETITION THAT SHOWS YOUR DISAGREEMENT WITH 

PROFESSOR SHAPIRO'S APPROACH TO ANALYZING MARKET POWER? 

A. SURE. THIS SLIDE WAS THE SLIDE THAT I USED TO JUST 

DESCRIBE HOW COMPETITION PLAYS OUT BEFORE HANDSET LAUNCH 

ACTUALLY OCCURS. 

NOW, PROFESSOR SHAPIRO'S METHOD OF ASSESSING MARKET POWER 

BEGINS WITH MARKET SHARE. SO HE'S TRYING TO INFER MARKET POWER 

FROM MARKET SHARES, BUT THE FACT IS THAT COMPETITION PLAYS OUT 

BEFORE HANDSETS ARE EVER LAUNCHED. 

IN FACT, DURING THE CHIP SELECTION PROCESS, QUALCOMM FACES 

COMPETITION FROM RIVALS, AS WELL AS FROM ITS LARGE STRATEGIC 

BUYERS. IT FACES COMPETITIVE PRESSURE FROM ITS BUYERS. 

SO PROFESSOR SHAPIRO WOULD INFER MARKET POWER FROM MARKET 

SHARES, AND YET A LOT OF THE ACTION TAKES PLACE BEFOREHAND AND 

NEVER APPEARS IN HANDSETS AND IN THE SHARES. 

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1713

Q. CAN YOU GIVE US AN EXAMPLE OF A COMPETITIVE SITUATION THAT 

IS NOT APPROPRIATELY CAPTURED BY THE MARKET SHARES THAT 

PROFESSOR SHAPIRO LOOKED AT? 

A. SURE. I'LL GIVE YOU A PROMINENT EXAMPLE. THE EXAMPLE IS 

OF INTEL. 

THE EVIDENCE SHOWS THAT INTEL PLAYED A COMPETITIVELY 

SIGNIFICANT ROLE FROM 2012 TO 2015 BY CAUSING QUALCOMM TO GIVE 

APPLE HUNDREDS OF MILLIONS IN DISCOUNTS IN RESPONSE TO AN INTEL 

CHIP. 

YET, THAT CHIP, IF YOU LOOK AT THE 2015 SHARE CHART, HAS A 

DE MINIMIS PRESENCE. 

Q. SO IT DOES HAVE A DE MINIMIS PRESENCE, BUT IT IS ON THE 

SHARE CHART. SO WHAT'S WRONG WITH THAT APPROACH? 

A. WELL, IF YOU -- IF YOU WERE TO JUST LOOK AT THE SHARES IN 

2015, THE SHARES WOULD GIVE THE IMPRESSION THAT INTEL DID NOT 

HAVE A SIGNIFICANT COMPETITIVE PRESENCE IN THIS MARKETPLACE, 

AND YET, WE KNOW FROM THE DIRECT EVIDENCE THAT, IN FACT, 

QUALCOMM GAVE APPLE SIGNIFICANT DISCOUNTS BECAUSE OF AN INTEL 

CHIP. 

SO I THINK THIS HIGHLIGHTS THE PROBLEM WITH RELYING ON 

EX-POST SHARES TO UNDERSTAND HOW COMPETITION PLAYED OUT 

BEFOREHAND. 

Q. YOU MENTIONED A COUPLE OF TIMES THAT INTEL WAS 

COMPETITIVELY SIGNIFICANT. DOES THAT MEAN THAT INTEL COULD 

HAVE WON THE INNOVATION RACE FOR THE 2015 SOCKET IN APPLE? 

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A. WELL, WHAT I MEAN BY THAT IS THAT QUALCOMM FELT 

COMPETITIVE PRESSURE FROM INTEL DURING THIS TIME PERIOD, AND 

FOR THAT REASON, IT INNOVATED MORE AND IT GAVE PRICE DISCOUNTS. 

THAT'S NOT TO SAY THAT INTEL WOULD HAVE ACTUALLY WON THE 

SOCKET FOR 2015. THOSE ARE TWO SEPARATE THINGS. 

Q. I SEE THAT THIS SLIDE ENDS IN 2016. WHAT'S HAPPENED IN 

THE MARKETPLACE SINCE 2016? 

AND I URGE YOU TO STOP AT MARCH OF 2018, PLEASE. 

A. SO, IN FACT, PROFESSOR SHAPIRO'S ANALYSIS OF MARKET POWER 

ENDS IN 2016. BUT THE FACT IS THAT THERE HAVE BEEN SOME 

SIGNIFICANT COMPETITIVE EVENTS THAT HAVE TAKEN PLACE SINCE AND 

HAVE AFFECTED COMPETITIVE DYNAMICS OUT THROUGH EARLY 2018. 

ONE OF THESE EVENTS IS SIMPLY THAT QUALCOMM LOST THE APPLE 

ACCOUNT. THAT'S A SIGNIFICANT EVENT IN MY VIEW. 

Q. HAVE YOU PREPARED A SLIDE ABOUT THAT? 

A. I HAVE. 

Q. SO LET'S TURN TO THAT SLIDE, AND THAT'S SLIDE 10. 

A. SO WHAT THIS CHART SHOWS IS QUALCOMM'S SHARE OF THE BIG 

THREE, MEANING APPLE, SAMSUNG, AND HUAWEI, AS OF EARLY 2018. 

IT'S SHOWING YOU SOMETHING ABOUT WHERE EACH OF THESE OEM'S 

SOURCES THEIR PREMIUM SOCKETS IN 2018. 

SO WHAT I JUST DESCRIBED, APPLE -- EXCUSE ME, QUALCOMM 

LOST THE APPLE ACCOUNT AS OF EARLY 2018. THAT MEANS AS OF 

EARLY 2018, QUALCOMM WOULD HAVE EXPECTED TO HAVE ZERO SHARE OF 

APPLE'S 2018 SOCKETS. 

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1715

THE SECOND SIGNIFICANT EVENT THAT THIS CHART HIGHLIGHTS IS 

THE FACT THAT SAMSUNG AND HUAWEI HAVE MOVED INCREASINGLY TO 

SELF-SUPPLY, AND WHAT THAT MEANS IS THAT AS OF 2018, QUALCOMM 

HAD ONLY ABOUT A 35 PERCENT SHARE OF THE SAMSUNG SOCKETS AND, 

IN FACT, QUALCOMM HAD NO PIECE OF THE HUAWEI PREMIUM SOCKETS. 

NOW, THESE THREE OEM'S, APPLE, SAMSUNG, AND HUAWEI, 

TOGETHER ACCOUNT FOR ABOUT 90 PERCENT OF PREMIUM SOCKETS. 

THE COURT: I'M SORRY TO INTERRUPT YOU, BUT CAN WE 

ASSIGN A QDX NUMBER TO DR. CHIPTY'S DEMONSTRATIVES? AND I'D 

LIKE THESE LODGED FOR PURPOSES OF THE RECORD WITH THE OTHER 

DEMONSTRATIVES. 

MR. EVEN: YES, YOUR HONOR. 

THE COURT: WHAT'S YOUR NEXT QDX NUMBER? 

MR. EVEN: I BELIEVE, YOUR HONOR, THAT IT HAS BEEN 

ASSIGNED QDX 9349, AND WE WILL OR HAVE LODGED THEM. WE WILL 

LODGE IT. 

THE COURT: OKAY, GREAT. THANK YOU. GO AHEAD. 

SORRY FOR THE INTERRUPTION. 

MR. MATHESON: YOUR HONOR, I OBJECT. THERE'S BEEN NO 

ANALYSIS DISCLOSED OF WHAT CONSTITUTES A PREMIUM SOCKET AND 

WHAT DOES NOT. I DO NOT THINK IT'S APPROPRIATE FOR HER TO SAY 

THAT THESE THREE ACCOUNT FOR 90 PERCENT OF PREMIUM SOCKS WHEN 

HER OPINION ON WHAT IS A PREMIUM SOCKET AND WHAT IS NOT IS NOT 

DISCLOSED IN HER REPORT. 

THE COURT: WHAT'S YOUR RESPONSE TO THAT? IS THERE A 

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1716

DISCLOSURE OF THAT IN THE REPORT? 

MR. EVEN: I THINK, YOUR HONOR, THAT -- I THINK, YOUR 

HONOR, THAT WHAT DR. CHIPTY'S RELYING HERE IS ON TESTIMONY AND 

ON THE MARKETS DISCLOSED BY PROFESSOR SHAPIRO. BUT I CAN ASK 

HER AND SHE CAN ANSWER THAT, IF THAT'S HELPFUL. 

THE COURT: PLEASE, GO AHEAD. THANK YOU. 

BY MR. EVEN:

Q. DR. CHIPTY, YOU MENTIONED THE PERCENTAGE OF THE, OF 

PREMIUM HANDSETS. WHAT ARE YOU REFERRING TO WHEN YOU SAY 

PREMIUM HANDSETS IN THIS SLIDE? 

A. WELL, IN THIS PARTICULAR SLIDE, THE NUMBERS THEMSELVES ARE 

CALCULATED -- THE NUMBERS SHOWN WERE TESTIFIED TO BY MR. WYATT 

OF QUALCOMM IN HIS TRIAL TESTIMONY. 

THERE ARE -- THERE ARE SIMILAR PIECES OF INFORMATION 

THROUGHOUT MY REPORT WHICH ARE NOT PRESENTED IN SLIDES LIKE 

THIS. 

THANK YOU. REGARDING -- 

THE COURT: THE OBJECTION'S OVERRULED. 

BY MR. EVEN:

Q. -- YOUR LAST POINT ABOUT SELF-SUPPLY, WE HEARD TESTIMONY 

FROM MS. EVANS WHERE SHE SUGGESTED THAT MAYBE SAMSUNG AND 

HUAWEI ARE NOT VERY IMPORTANT BECAUSE QUALCOMM AND INTEL ARE 

THE ONLY TRUE COMPETITORS IN THE MERCHANT MARKET FOR PREMIUM 

CHIPS. 

WHAT'S YOUR VIEW ON THAT? 

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A. WELL, I DON'T AGREE WITH THAT CHARACTERIZATION FOR A FEW 

REASONS. 

FIRST OF ALL, IF WE LOOK AT MEDIATEK, MEDIATEK, BY 

PROFESSOR SHAPIRO'S OWN CALCULATION, HAS ABOUT A 25 PERCENT 

SHARE BY 2016 IN HIS PREMIUM LTE MARKET. 

SO CERTAINLY HE AND I AGREE THAT MEDIATEK IS AN IMPORTANT 

PLAYER TODAY IN, OR AS OF 2018, IN THE PREMIUM MARKET AS HE 

WOULD DEFINE IT. 

IN ADDITION, I'VE ALSO SEEN EVIDENCE IN THE RECORD THAT 

SAMSUNG IS COMPETING FOR THIRD PARTY BUSINESS, AND I AGAIN 

THINK THAT PROFESSOR SHAPIRO WOULD AGREE WITH ME ON THAT. 

AND THEN FINALLY, EVEN IF SAMSUNG AND HUAWEI DON'T COMPETE 

IN THE MERCHANT MARKET -- WHICH I DON'T BELIEVE TO BE TRUE FOR 

SAMSUNG AT LEAST -- I WOULD STILL SAY THAT THEIR SELF-SUPPLY IS 

COMPETITIVELY SIGNIFICANT BECAUSE, IN FACT, THE TWO ARE TWO OF 

THE THREE BIG BUYERS IN PROFESSOR SHAPIRO'S PREMIUM MARKET. 

Q. WHAT IMPLICATION DOES ALL OF THIS HAVE FOR 

PROFESSOR SHAPIRO'S INTERPRETATION OF MARKET SHARES AND AN 

INFERENCE OF MARKET POWER? 

A. I THINK THAT PROFESSOR SHAPIRO'S RELIANCE ON 

CONTEMPORANEOUS MARKET SHARES, AS AN INDICATOR FOR MARKET POWER 

IN A PARTICULAR YEAR, IS CHALLENGING FOR HIM BECAUSE, IN FACT, 

THE SHARES THEMSELVES REFLECT THE COMPETITIVE EVENTS AND EVEN 

THEN ONLY THE WINNERS, THE IMPORTANCE OF THE WINNERS OF 

COMPETITIVE EVENTS FROM PRIOR YEARS. 

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1718

SO, FOR EXAMPLE, THE 2016 SHARES WOULD LIKELY REFLECT 

WINNERS FROM INNOVATION RACES IN THE CHIP SELECTION PERIOD FROM 

SOMETHING EVEN AS FAR BACK AS 2013 AND 2014. 

IN MY VIEW, THESE SHARES DO NOT PROVIDE A COMPLETE PICTURE 

OF COMPETITIVE SIGNIFICANCE AND MARKET POWER IN 2016. 

Q. LET'S TRY AND SEE WHAT WE CAN LEARN FROM MARKET SHARES 

NONETHELESS. 

SO IF YOU TURN TO SLIDE 11. 

AND WHAT DOES SLIDE 11 REPRESENT? 

A. SO SLIDE 11, THIS DESCRIBES MARKET SHARES, OR SHARES IN 

PROFESSOR SHAPIRO'S PREMIUM MARKET. THESE ARE ESSENTIALLY 

PROFESSOR SHAPIRO'S CALCULATIONS WITH TWO CHANGES. 

FIRST, I'VE ADDED HISILICON. ITS PRESENCE IS SHOWN WITH 

THE YELLOW SLICE BEGINNING IN 2015. PROFESSOR SHAPIRO DID NOT 

ILLUSTRATE HISILICON IN HIS SHARE CHART, SO I'VE ADDED THIS ON. 

AND ALSO, HE STOPS HIS ANALYSIS IN 2016, AND I'VE EXTENDED 

IT FURTHER OUT TO 2017 TO CAPTURE SOME OF THE EFFECTS OF THE 

COMPETITIVE EVENTS I'VE DESCRIBED. 

Q. WHAT, IF ANYTHING, CAN WE LEARN FROM THE TREND IN 

QUALCOMM'S SHARES DEPICTED ON THIS SLIDE? 

A. WELL, WHAT I SEE WHEN I LOOK AT THE TRENDS IS THAT 

QUALCOMM IS LOSING SHARE. I SEE ENTRANTS, I SEE INTEL, 

MEDIATEK, SAMSUNG, HUAWEI GAINING SHARE, AND THE SHARE GAIN IS 

COMING AT QUALCOMM'S EXPENSE. 

FROM 2014 TO 2017, I SEE QUALCOMM HAS LOST 50 SHARE 

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1719

POINTS. 

THE COURT: CAN I ASK YOU A QUESTION? THIS 2014, IS 

THE TOP ORANGE OR IS THAT YELLOW? I COULDN'T TELL. 

THE WITNESS: GIVE ME ONE SECOND, YOUR HONOR. 

THANK YOU. IT'S YELLOW. IT'S ACTUALLY A SLIVER OF 

HISILICON COMING IN. 

MR. EVEN: MAY I PROCEED, YOUR HONOR? 

THE COURT: GO AHEAD. I THOUGHT SHE SAID HISILICON 

CAME IN IN 2015. 

THE WITNESS: I DID, YOUR HONOR, FROM LOOKING AT THE 

CHART QUICKLY. BUT MY EYE WAS NOT PICKING UP THE YELLOW SLIVER 

UNTIL WE ZOOMED IN. 

THE COURT: OKAY. GO AHEAD, PLEASE. 

BY MR. EVEN:

Q. LET'S TURN TO CDMA. WHAT IS YOUR MAIN OBSERVATION ABOUT 

THE CDMA MARKET? 

A. WELL, I THINK THAT THE CDMA MARKET UP UNTIL 2016 WAS 

RELATIVELY STAGNANT, AND SINCE 2016, WE'VE SEEN SOME 

SIGNIFICANT CHANGES IN THE COMPETITIVE LANDSCAPE. 

Q. AND WHAT CHANGES HAVE YOU IDENTIFIED IN THE COMPETITIVE 

LANDSCAPE SINCE 2016? 

A. PROBABLY THE MOST SIGNIFICANT CHANGE BEGINS WITH THE 

INCREASED DEMAND FOR CDMA BECAUSE OF THE RISE OF SIX MODE IN 

CHINA. 

Q. AND WHAT DO YOU MEAN BY THE RISE OF SIX MODE? 

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1720

A. WELL, IN 2016 THE CHINESE GOVERNMENT IMPLEMENTED A 

NATIONAL STANDARD FOR HANDSETS TO EMBODY SIX COMMUNICATION 

STANDARDS, INCLUDING CDMA. 

Q. AND HAVE YOU STUDIED THE EFFECTS OF THIS RISE OF SIX MODE? 

A. YES, I HAVE. 

Q. SO LET'S GO TO THE NEXT SLIDE. 

AND WHAT ARE YOU SHOWING ON THIS SLIDE? 

A. WELL, THIS SLIDE IS SHOWING WHAT'S ACTUALLY HAPPENING ON 

THE GROUND, OR IN CHINA. IT'S DESCRIBING THE PERIOD OF TIME OF 

PHONES SOLD IN CHINA THAT ARE CDMA ENABLED. 

IT SHOWS YOU THIS NUMBER FOR 2004 TO 2017, AND AS YOU CAN 

SEE, FROM 2004 TO ABOUT 2014, THAT NUMBER, THAT PERIOD OF TIME 

OF PHONES THAT ARE CDMA ENABLED IN CHINA REMAINS RELATIVELY 

STABLE. 

IT BEGINS TO SPIKE IN 2015, AND BY 2017, 90 PERCENT OF THE 

PHONES SOLD IN CHINA ARE CDMA ENABLED. 

Q. IF YOU TURN TO TAB 2, THAT'S QX 9331, AND THIS IS A 

DOCUMENT THAT'S BEEN SEALED, YOUR HONOR. I'M ONLY GOING TO 

SPEAK TO DR. CHIPTY ABOUT PORTIONS THAT HAVE NOT BEEN SEALED. 

AND IF YOU TURN TO PAGES 1 AND 2 OF THE ENGLISH 

TRANSLATION, WHAT IS THAT DOCUMENT SHOWING YOU RELATED TO YOUR 

OPINION ABOUT THE ENTRY INTO THE CDMA MARKET? 

A. WELL, SO THIS IS A MEMORANDUM, AN INTERNAL MEMORANDUM AT 

SAMSUNG CIRCA MARCH 2016. 

AND I SEE SEVERAL PIECES OF INFORMATION HERE THAT ARE 

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1721

RELEVANT TO MY OPINION ON CDMA. 

FIRST OF ALL, I SEE THAT -- 

THE COURT: CAN I INTERRUPT YOU A SECOND? HAS THIS 

BEEN ADMITTED? 

MR. EVEN: THIS HAS NOT BEEN ADMITTED, YOUR HONOR. 

THE COURT: OKAY. I PREFER THAT DOCUMENTS BE 

ADMITTED BEFORE THERE'S TESTIMONY ABOUT THEIR CONTENTS. SO 

WOULD YOU LIKE TO ADMIT THIS ONE? 

MR. EVEN: I'M HAPPY TO ADMIT IT FOR THE PURPOSES OF 

DR. CHIPTY'S RELIANCE ON IT. 

THE COURT: OKAY. ANY OBJECTION? 

MR. MATHESON: I'M NOT SURE WHAT THAT MEANS, YOUR 

HONOR. FOR PURPOSES OF DR. CHIPTY'S RELIANCE UPON IT? THIS 

WAS DONE WITH DR. LASINSKI, OR MR. LASINSKI WHEN IT WAS A 

STATEMENT OF A PARTY OPPONENT, WHICH IS NOT HEARSAY. 

THIS DOCUMENT IS HEARSAY, AND IT'S NOT CLEAR WHY WE WOULD 

NEED TO ADMIT THIS DOCUMENT IN ORDER TO DEMONSTRATE SHE RELIED 

ON THIS PARTICULAR DOCUMENT. IT DOES NOT SEEM TO BE RELEVANT. 

SHE SHOULD BE ABLE TO EXPLAIN THE CONCLUSIONS SHE HAS DRAWN 

FROM THE EVIDENCE THAT SHE HAS REVIEWED WITHOUT SIMPLY RELAYING 

HEARSAY INTO THE RECORD. 

THE COURT: THIS IS THE SAME PROBLEM WE HAD BEFORE. 

MR. EVEN: I'M HAPPY TO JUST ADMIT IT. 

THE COURT: WHY CAN'T SHE JUST SAY WHAT HER 

CONCLUSION IS WITHOUT READING IT INTO THE RECORD? OR WE CAN 

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JUST ADMIT IT. I -- YOU'RE SAYING IT'S HEARSAY? 

MR. EVEN: I'M HAPPY TO ADMIT IT INTO THE RECORD SO 

IT'S ON THE RECORD THAT THIS IS A DOCUMENT SHE HAS LOOKED AT. 

THE COURT: BUT YOU WERE PLANNING TO HAVE HER READ IT 

INTO THE TRANSCRIPT WHEN IT HASN'T BEEN ADMITTED. I HAVE A 

PROBLEM WITH THAT. 

MR. EVEN: SHE'S NOT READING IT. SHE'S EXPLAINING 

WHAT IT IS AND HOW IT SUPPORTS HER OPINION AS TO WHAT HAPPENED 

IN -- WHAT'S SPURRED THE ENTRY IN 2015 AND 2016 INTO CDMA. 

THE COURT: BUT IF IT'S HEARSAY, I MEAN, I GUESS 

EXPERTS CAN RELY ON HEARSAY. SO WHAT'S THE PROBLEM WITH THAT, 

MR. MATHESON? 

MR. MATHESON: THERE'S ABSOLUTELY NO PROBLEM WITH HER 

OFFERING TESTIMONY ABOUT THE CONCLUSIONS SHE DREW OR EXPLAINING 

WHAT SHE REVIEWED. I JUST DON'T KNOW WHY SHE NEEDS TO EXPLAIN 

THE WORDS, OR WHY WE NEED THE WORDS OF THIS DOCUMENT IN THE 

RECORD IN ORDER FOR HER TO EXPLAIN HER CONCLUSIONS. IF SHE'S 

GOING TO EXPLAIN HER CONCLUSIONS, WHY DO WE NEED THE DOCUMENT 

IN THE RECORD? 

MR. EVEN: SO I'M PERFECTLY HAPPY TO DO WHATEVER YOUR 

HONOR PREFERS. I THINK IT MAY BE HELPFUL FOR SOMEBODY LATER ON 

TO SEE WHAT IT IS EXACTLY THAT WAS SHOWN TO DR. CHIPTY SO THAT 

SHE -- THAT PEOPLE UNDERSTAND WHAT IT IS THAT SHE RELIED ON. 

THE COURT: SO WHAT'S THE BASIS FOR THIS BEING 

ADMITTED? IT'S NOT AN ADMISSION OF A PARTY OPPONENT. IT'S NOT 

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A BUSINESS RECORD. YOU HAVEN'T ESTABLISHED IT'S A BUSINESS 

RECORD. SO WHAT'S THE HEARSAY EXCEPTION THEN TO GET IT IN? 

MR. EVEN: I'M NOT OFFERING IT AS A HEARSAY 

EXCEPTION. AS YOUR HONOR STATED, DR. CHIPTY IS PERFECTLY 

ENTITLED TO RELY ON HEARSAY TO FORM HER OPINIONS. SHE'S 

EXPLAINING HOW THIS DOCUMENT IS RELEVANT TO HER OPINIONS. SHE 

CAN DO THAT WITH THE DOCUMENT BEING ADMITTED OR NOT BEING 

ADMITTED, EITHER WAY IS FINE. 

I DO THINK THAT THERE IS SOME HOUSEKEEPING ADVANTAGE IN 

HAVING THE DOCUMENT IN THE RECORD SO IF SOMEBODY EVER LOOKS AT 

IT, THEY CAN UNDERSTAND WHAT IT IS THAT SHE LOOKED AT. BUT I'M 

PERFECTLY HAPPY NOT TO DO IT IF YOUR HONOR THINKS THAT'S 

IMPROPER. 

WE HAVE DONE IT WITH, WITH MR. LASINSKI, AS MR. MATHESON 

MENTIONED. I DON'T THINK THAT IT WAS ENTERED INTO EVIDENCE AT 

THE TIME AS AN EXCEPTION TO HEARSAY OR ANYTHING LIKE THAT. 

I THINK IT WAS ENTERED FOR THE VERY SAME HOUSEKEEPING 

PROCESS THAT I'M TALKING ABOUT, JUST SHOWING WHAT IT IS THAT 

THE EXPERT ACTUALLY LOOKED AT OR DESCRIBED IN HIS TESTIMONY. 

MR. BORNSTEIN IS HERE AND HE CAN CORRECT ME IF I'M WRONG. 

THE COURT: I'M SORRY. YOU'RE SAYING WE ADMITTED 

INADMISSIBLE DOCUMENTS DURING MR. LASINSKI'S TESTIMONY? WHAT 

EXHIBIT WAS THAT? 

MR. EVEN: I'M SAYING -- I DON'T HAVE THE NUMBER WITH 

ME, BUT I DO BELIEVE THAT YOUR HONOR SUGGESTED AT THE TIME, AND 

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1724

I THINK BOTH PARTIES SAID THAT IT'S FINE TO ADMIT IT FOR THE 

LIMITED PURPOSE OF SHOWING WHAT IS THE DOCUMENT THAT THE EXPERT 

RELIED UPON. 

THE COURT: AND WHAT WAS THE NUMBER FOR THAT? 

MR. EVEN: WE'LL TRY AND FIND THAT OUT. 

MR. MATHESON: YOUR HONOR, I DON'T WANT TO WASTE 

TIME. THE ONE WE LIMITED WITH MR. LASINSKI WAS ADMITTED FOR A 

SPECIFIC PURPOSE, WHICH WAS TO DEMONSTRATE THAT THE STUDIES ON 

WHICH HE RELIED WERE THE SAME STUDIES THAT QUALCOMM HAD ITSELF 

STUDIED OF OTHER PARTIES, AND IT WAS A STATEMENT OF A PARTY 

OPPONENT. WE DID NOT SEEK TO ADMIT IT FOR THE TRUTH. 

BUT IF WE'RE NOT GOING TO ADMIT IT NOT FOR THE TRUTH, I 

SUPPOSE WE CAN MOVE PAST IT. I WANT IT TO BE CLEAR THIS IS 

HEARSAY, SHE SHOULD NOT READ IT INTO THE RECORD. BUT I WILL 

WITHDRAW THE OBJECTION, YOUR HONOR. 

MR. EVEN: I'M HAPPY TO MOVE ON, YOUR HONOR. 

THE COURT: ALL RIGHT. WHY DON'T YOU MOVE ON. I'M 

NOT GOING TO ADMIT THIS DOCUMENT. 

GO AHEAD, PLEASE. 

MR. EVEN: OKAY. 

Q. DR. CHIPTY, CAN YOU JUST EXPLAIN HOW THIS DOCUMENT IS 

RELEVANT TO YOUR OPINION ABOUT ENTRY IN CHINA? 

A. SURE. I CAN DO THAT, I THINK, VERY EASILY. 

SO I ALREADY JUST DESCRIBED TO YOU THAT EMPIRICALLY WHAT I 

SEE IS AN INCREASE IN THE PERCENT OF PHONES SOLD IN CHINA THAT 

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1725

ARE CDMA. SO I WAS LOOKING AT THE RECORD FOR EVIDENCE, AND I 

HAVE ADDITIONAL EVIDENCE THAT I RELIED ON, SOME OF WHICH I'M 

PREPARED TO SHARE TODAY. 

BUT IN THIS PARTICULAR INSTANCE, I FOUND IT INSTRUCTIVE 

THAT THERE WAS AN INTERNAL MEMORANDUM AT SAMSUNG DISCUSSING 

EXACTLY THE STRATEGY TO ENTER CDMA, AND I FOUND THAT TO BE 

RELEVANT. 

AND WHEN I LOOK AT THIS DOCUMENT, I SEE THE ECONOMICS THAT 

I WOULD HAVE EXPECTED PLAYING OUT BECAUSE THE RECOGNITION THAT, 

IN FACT, DEMAND IN CHINA FOR CDMA IS INCREASING, THAT WAS 

CONSISTENT WITH WHAT I SAW EMPIRICALLY. 

I ALSO SAW THAT SAMSUNG HAD RECOGNIZED THAT ITS 

COMPETITORS WERE PUTTING INTO PLAN STRATEGIES TO MEET THAT 

CHINA MARKET DEMAND. 

AND THEN FINALLY, I SEE IN THIS PIECE OF EVIDENCE, AS WELL 

AS OTHERS, THAT, IN FACT, SAMSUNG ITSELF IS GEARING UP TO ENTER 

CDMA TO MEET THE CHINA DEMAND.

Q. WHAT DO YOU LEARN FROM ALL THIS ABOUT ENTRY, ABOUT ENTRY 

INTO THE CDMA MARKET? 

A. WELL, I SEE THAT RAPID ENTRY IS POSSIBLE. NOT ONLY IS IT 

POSSIBLE, IT ACTUALLY HAPPENED. 

I SEE THE DIFFERENT WAYS IN WHICH COMPETITORS ENTERED. 

FOR EXAMPLE, I SEE THAT INTEL BOUGHT VIA FOR A FRACTION OF WHAT 

IT SPENDS ANNUALLY ON CHIP DEVELOPMENT. 

I SEE THAT MEDIATEK PURCHASED DESIGN FOR CDMA FROM VIA. 

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1726

AND I ALSO SEE THAT SAMSUNG AND HUAWEI ENTERED WITH THEIR 

OWN INTERNAL SOLUTION WITHIN TWO YEARS OF THE CHINA 

ANNOUNCEMENT.

Q. AND WHAT DOES THIS TEACH YOU ABOUT, OR WHAT CONCLUSIONS DO 

YOU DRAW FROM THAT, ABOUT THE LEVEL OF QUALCOMM'S MARKET POWER 

IN CDMA PRIOR TO 2015? 

A. WELL, I DRAW -- I DRAW TWO DIFFERENT RELATED CONCLUSIONS. 

THE FIRST IS THAT PRIOR TO 2015, QUALCOMM WAS DISCIPLINED BY 

THE THREAT OF ENTRY. IN SOME SENSE, ITS POWER WAS CONSTRAINED 

BY THE THREAT OF ENTRY IN CDMA, THOUGH THERE WAS NOT ACTUALLY 

ENTRY UNTIL 2015. 

AND I ALSO -- I ALSO CONCLUDE FROM THIS THAT, IN FACT, THE 

REASON THERE WAS NO ENTRY PRIOR TO 2015 WAS BECAUSE OF THE 

DECLINE OR THE STAGNATION, IF YOU WILL, IN DEMAND FOR CDMA. 

AND, IN FACT, THE REASON FOR A LACK OF ENTRY PRIOR TO 2015 

WAS NOT THE BARRIERS TO ENTRY THAT PROFESSOR SHAPIRO DESCRIBES. 

Q. PUTTING ASIDE THE THREAT OF ENTRY, WERE THERE OTHER WAYS 

THAT QUALCOMM'S MARKET POWER IN CDMA WAS CONSTRAINED? 

A. YES. THERE'S ALSO THE FACT THAT QUALCOMM'S LARGE BUYERS 

PURCHASED MORE THAN CDMA. IN FACT, MANY OF QUALCOMM'S 

CUSTOMERS PURCHASED WCDMA CHIPS, WHICH THEY THEN USED AS PART 

OF A LARGER NEGOTIATION STRATEGY TO DISCIPLINE QUALCOMM'S CDMA 

PRICES. 

Q. SO IF YOU TURN TO TAB 5, AND SLIDE 9, THIS IS A SLIDE 

PREPARED BY PROFESSOR SHAPIRO. 

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WHAT DOES THIS SLIDE SHOW YOU -- 

A. WELL, THIS IS -- 

Q. -- ABOUT THE ABILITY OF LARGE BUYERS TO CONSTRAIN 

QUALCOMM? 

A. SO THIS IS FIGURE 6 FROM PROFESSOR SHAPIRO'S REBUTTAL 

REPORT, AND WHAT IT'S DESCRIBING IS THE LEVEL AND THE 

COMPOSITION OF HANDSETS SOLD WORLDWIDE, AND IT'S DESCRIBING THE 

COMPETITION BETWEEN CDMA AND NON-CDMA. OF COURSE, WCDMA IS 

INCLUDED IN NON-CDMA. 

AND WHAT YOU SEE IS THAT THE BULK OF PURCHASES, OR 

HANDSETS, IN THE WORLD ARE OF NON-CDMA HANDSETS, AND THAT CDMA 

CONSTITUTES A RELATIVELY STABLE NICHE MARKET. 

Q. AND HAVE YOU SEEN EVIDENCE OF THIS ABILITY TO LEVERAGE 

NON-CDMA TO CONSTRAIN CDMA PRICES PLAY OUT IN THE EVIDENCE? 

A. YES, I HAVE. IN FACT, I'VE LOOKED BOTH FOR EVIDENCE IN 

THE RECORD THAT QUALCOMM'S BUYERS USE THEIR PURCHASES OF 

NON-CDMA CHIPS TO CONSTRAIN CDMA, AND I'VE ALSO EVALUATED FOR 

EACH OF QUALCOMM'S LARGE CUSTOMERS, FOR NINE OF THEIR TOP TEN, 

APPLE BEING THE TENTH AND WE'LL DISCUSS APPLE SEPARATELY, BUT 

I'VE LOOKED AT EVIDENCE AS TO WHETHER QUALCOMM'S BIG CUSTOMERS 

ACTUALLY HAVE SIGNIFICANT PURCHASES OF NON-CDMA TO ENGAGE IN 

THIS TYPE OF STRATEGY. 

AND I -- SO THIS IS WHAT I EXPLORED, AND I FOUND EVIDENCE 

TO SUPPORT THE THEORY. 

Q. LET'S MOVE ON TO THE APPLE AGREEMENTS. 

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1728

AND IF YOU'LL GO TO SLIDE 14, WHICH DESCRIBES THE APPLE 

AGREEMENTS AT ISSUE. 

BEFORE WE GO INTO THIS SLIDE, AT A HIGH LEVEL, WHAT 

CONCLUSIONS HAVE YOU REACHED REGARDING THE APPLE AGREEMENTS? 

A. SO IT'S MY OPINION THAT THE APPLE AGREEMENTS HAD 

LEGITIMATE BUSINESS JUSTIFICATIONS, AND ALSO THAT THEY DID NOT 

CONSTITUTE ANTICOMPETITIVE EXCLUSIVE CONTRACTS. 

Q. TURNING TO THE SLIDE -- AND THIS SLIDE HAS BEEN SEALED, 

YOUR HONOR -- CAN YOU BRIEFLY EXPLAIN TO THE COURT HOW THE 

PAYMENTS UNDER THE AMENDED TRANSITION AGREEMENTS WORKED? 

A. SURE. THE AMENDED TRANSITION AGREEMENT IS DESCRIBED IN 

THE MIDDLE PANEL OF THIS SLIDE, AND WHAT YOU CAN SEE IS THAT, 

IN FACT, THERE WERE TWO PAYMENT STREAMS. ONE IS CALLED THE 

MARKETING FUND, AND ONE IS CALLED THE VARIABLE INCENTIVE FUND. 

THE PAYMENTS UNDER THIS AGREEMENT BEGAN TO ACCRUE FROM 

QUALCOMM TO APPLE BEGINNING IN JANUARY 2013, AND THE PAYMENTS 

CONTINUED UNTIL THE END OF 2016. 

YOU CAN SEE JUST FROM THE, THE NUMBERS AND THE WAY THEY 

APPEAR THAT THE MARKETING FUND WAS TIED TO A FORMULA. IN FACT, 

IT WAS TIED TO THE SALE OF CHIPS, INCLUDING CHIPS USED IN 

LEGACY DEVICES. 

AND THE VARIABLE INCENTIVE FUND WAS PRESENTED AS A LUMP 

SUM, WHICH IS WHY IT SHOWS UP IN THESE ROUND NUMBERS.

Q. HOW WOULD YOU CHARACTERIZE THIS AGREEMENT? 

A. I HAVE DESCRIBED THESE AGREEMENTS AS INCENTIVE AGREEMENTS 

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1729

BECAUSE THESE PAYMENTS WERE MADE TO INCENT APPLE TO BRING TO 

QUALCOMM THE BUSINESS FOR ITS 2014, 2015, AND 2016 SOCKETS. 

Q. TURNING TO YOUR CONCLUSIONS, WHAT WERE THE BUSINESS 

JUSTIFICATIONS FOR THE STRUCTURE OF THE ATA, AMENDED TRANSITION 

AGREEMENT? 

A. SO I HAVE REVIEWED THE EVIDENCE I'VE DESCRIBED. THE 

BUSINESS JUSTIFICATIONS FALL INTO TWO BROAD CATEGORIES. 

THE FIRST HAS TO DO WITH THE FACT THAT APPLE DEMANDED, AND 

QUALCOMM AGREED TO PAY, LARGE SUMS UPFRONT IN ADVANCE OF 

RECEIVING THE SOCKETS THAT THESE PAYMENTS WERE DESIGNED TO WIN, 

THE '14, '15, AND '16 SOCKETS. I THINK THAT PRESENTED A 

BUSINESS RISK. 

AND, SECOND, THE FACT IS THAT APPLE BUYS THIN MODEMS, AND 

IN ORDER FOR QUALCOMM TO SERVE APPLE'S DEMAND, IT WOULD HAVE 

HAD TO, AND IN FACT IT DID, ENGAGE IN SIGNIFICANTLY MORE R&D 

AND DEVELOPMENT OF THIN MODEMS THAN IT WOULD HAVE OTHERWISE. 

Q. SO LET'S TAKE THOSE QUICKLY ONE AT A TIME. 

FIRST OF ALL, IF YOU CAN LOOK AT THE SLIDE AND EXPLAIN WHY 

YOU BELIEVE THAT QUALCOMM FACED A BUSINESS RISK OF HAVING 

PAYMENTS THAT ARE FRONT LOADED? 

A. SURE. I THINK YOU CAN SEE THE FRONT LOADED NATURE OF THIS 

STRUCTURE BY LOOKING AT THE FIRST OF THE TWO COLUMNS, THE 

MARKETING FUND COLUMN. 

LIKE I SAID, THE PAYMENTS BEGAN TO ACCRUE IN JANUARY OF 

2013. BUT THE PAYMENTS WERE DESIGNED TO INCENT SALES FOR '14, 

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1730

'15, AND '16 SOCKETS. 

SO BY THE TIME JANUARY 1ST CAME AROUND, APPLE BEGAN TO 

ACCRUE, AND, IN FACT, THE FIRST NUMBER IN THAT MARKETING FUND 

COLUMN DESCRIBES THE MONIES THAT WERE OWED BY QUALCOMM TO APPLE 

UNDER THE TERMS OF THE AGREEMENT, AND YET, AT THAT TIME 

QUALCOMM WOULD NOT HAVE KNOWN AND DID NOT KNOW WHETHER OR NOT 

IT WOULD HAVE WON THE 2014 SOCKETS. 

BY THE TIME 2013 AND 2014 ARE OVER, QUALCOMM'S PAID TO 

APPLE, OR OWES APPLE, IT HAS ACCRUED TO APPLE, SUBSTANTIALLY 

LARGER SUM IN TOTAL. AND, IN FACT, AT THE TIME THESE PAYMENTS 

HAD ALREADY ACCRUED, QUALCOMM WOULD NOT HAVE KNOWN WHETHER AND 

IF IT WOULD WIN THE '15 SOCKETS WHICH, AGAIN, THE MONIES WERE 

DESIGNED TO INCENT. 

Q. TURNING TO THE SECOND BUSINESS RISK YOU MENTIONED, AND IF 

YOU CAN TURN TO SLIDE 15, AND HOW DOES THIS SLIDE INFORM YOUR 

ASSESSMENT ABOUT THE BUSINESS RISK RELATED TO INVESTMENT IN 

APPLE CHIPS? 

A. WELL, AS I SAID, APPLE BUYS THIN MODEMS FROM QUALCOMM. 

AND SO WHAT THIS SLIDE DESCRIBES IS THE, IS THE PURCHASING OF 

CHIPS BY QUALCOMM'S HANDSET OEM'S OVER TIME FROM 2010 TO 2017. 

SO IT SHOWS YOU BY CUSTOMER WHAT THEY'RE BUYING FROM 

QUALCOMM, AND THE GREEN IS DESCRIBING SOC'S, AND THE ORANGE IS 

DESCRIBING THIN MODEMS. AND AS I SAID, UNLIKE OTHER OEM'S, 

APPLE BUYS THIN MODEMS. 

AND, IN FACT, QUALCOMM'S SALES OF THIN MODEMS ARE HIGHLY 

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1731

CONCENTRATED IN APPLE. 

Q. TURNING TO THE COMPETITIVE EFFECTS OF THE ATA. IN YOUR 

VIEW, DID QUALCOMM SACRIFICE PROFITS UNDER THE ATA? 

A. NO, I DON'T THINK QUALCOMM SACRIFICED PROFITS. 

Q. SO IF YOU TURN TO TAB 6, THAT'S JX 0086 AT DASH 007 -- AND 

THIS SLIDE HAS BEEN -- THIS DOCUMENT HAS BEEN PREVIOUSLY 

SEALED, YOUR HONOR. 

THIS SLIDE WAS SHOWN TO PROFESSOR SHAPIRO. 

CAN YOU EXPLAIN WHY PROFESSOR SHAPIRO CONCLUDED THAT 

QUALCOMM DID SACRIFICE PROFITS? 

A. YES. WHAT THIS SLIDE SHOWS YOU IS AN INTERNAL QUALCOMM 

CALCULATION VALUING THE ATA. IN FACT, IT'S VALUING WHAT IT'S 

CALLING THE MAVERICK DEAL. 

AND WHAT IT COMPARES THE VALUE OF THE DEAL TO IS WHAT 

THEY'RE CALLING THE NO DEAL SCENARIO. 

AND IF YOU LOOK, BY QUALCOMM'S OWN CALCULATION, WHAT IT 

DID TO ASSESS THE PROFITABILITY OF THE DEAL WAS TO COMPARE THE 

INCENTIVES THAT IT WOULD PAY TO APPLE UNDER THE DEAL TO ALL OF 

THE MARGINS THAT WOULD -- THAT IT WOULD EARN ACROSS THE FOUR 

YEARS OF THE AGREEMENT, OR AT LEAST FOR THE ATA, BUT THIS IS A 

LONGER PERIOD, IT'S LOOKING AT BOTH DEALS. 

IT COMPARED THE INCENTIVE PAYMENTS TO THE MARGINS AT PLAY, 

AND WHAT IT FOUND IS THAT, IN FACT, THE DEAL WAS PROFITABLE. 

YOU CAN SEE HOW PROFITABLE BY LOOKING AT THE NUMBER IN THE 

DIRECT MARGIN ROW IN THE TOTALS COLUMN. SO THAT'S, THAT'S WHAT 

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1732

QUALCOMM THOUGHT THE DEAL WOULD BE WORTH BASED ON ITS PROFIT 

ANALYSIS. 

AND CONTRAST THAT WITH WHAT QUALCOMM THOUGHT THEY WOULD 

EARN FROM THE APPLE RELATIONSHIP WITHOUT THE DEAL. 

NOW, WITHOUT THE DEAL, THEY WOULD STILL MAKE SOME SALES, 

BUT THEY WOULD MAKE FEWER SALES. SO YOU CAN SEE THE DIRECT 

MARGINS IN THE NO DEAL SCENARIO, ALSO A BIG NUMBER, BUT 

NONETHELESS, A SUBSTANTIALLY SMALLER NUMBER THAN THE DEAL 

SCENARIO. 

SO THIS IS WHAT QUALCOMM THOUGHT. QUALCOMM THOUGHT THAT 

THE DEAL WAS PROFITABLE. 

NOW, WHAT PROFESSOR SHAPIRO DOES, BY LOOKING AT THIS SAME 

SET OF FACTS, IS HE DOES HIS OWN PROFIT MATH. AND WHAT HE DOES 

IS HE COMPARES THE -- OR HE SIDE BY SIDES, HE DOES, IN HIS 

PROFIT ANALYSIS, HE LOADS FOUR YEARS OF INCENTIVE PAYMENTS THAT 

WERE DESIGNED TO WIN PRODUCT OVER MULTIPLE YEARS AGAINST A 

HANDFUL OF APPLE PRODUCTS. IN FACT, HE PUTS FOUR YEARS OF 

PAYMENTS AGAINST MARGINS EARNED ON JUST THE APPLE IPADS. 

Q. AND WHY WOULD AN ANTITRUST ECONOMIST LOAD FOUR YEARS OF 

INCENTIVES PAID ON MULTIPLE PRODUCTS ONTO THE FOUR IPADS AT 

ISSUE, OR FIVE IPADS? 

A. WELL, THE QUESTION BECOMES -- ONE WOULD DO THAT, AN 

ANTITRUST ECONOMIST WOULD DO THAT IF ONE WERE TO THINK THAT IT 

WAS ONLY THOSE PRODUCTS THAT WERE CONTESTABLE. 

Q. AND WHAT DO YOU MEAN BY "CONTESTABLE"? 

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1733

A. SO WHAT I MEAN BY CONTESTABLE IN THIS CASE ARE THE 

PRODUCTS THAT QUALCOMM THOUGHT THAT INTEL MIGHT WIN AT THE TIME 

FROM THE PERSPECTIVE OF SORT OF THE EVE OF THE NEGOTIATION, OR 

THE SIGNING OF THE AGREEMENT ITSELF. 

Q. HAVE YOU RUN A PROFIT SACRIFICE TEST OF YOUR OWN? 

A. YES, I HAVE. 

Q. AND HOW DID YOU GO ABOUT IT? 

A. WELL, I WENT ABOUT IT IN THE SPIRIT, IN A VERY SIMILAR 

WAY. I DID MY OWN PROFIT MATH. I COMPARED THE FOUR YEARS OF 

INCENTIVE PAYMENTS AGAINST THE MARGINS THAT QUALCOMM EXPECTED 

TO WIN, OR HOPED TO WIN BECAUSE OF THE TERMS OF THE AGREEMENT, 

IN THE FACE OF THE COMPETITION IT FACED AT THE TIME. 

SO IN MANY WAYS IT'S VERY SIMILAR TO PROFESSOR SHAPIRO'S. 

THE DIFFERENCE IN OUR ANALYSES REALLY HINGES ON WHAT'S 

CONTESTABLE. 

Q. AND WHAT IN YOUR VIEW IS CONTESTABLE HERE? 

A. SO IN MY VIEW, THERE WAS MORE THAN IPAD VOLUME AT PLAY. 

IN MY VIEW, THE IPHONES, SEVERAL OF THE IPHONES WERE ALSO 

CONTESTABLE. 

SO I GO THROUGH THEM ONE AT A TIME. THE FACT IS THAT MOST 

OF THE IPADS IN 2014 AND MOST OF THE IPHONES IN 2014 WERE 

CONTESTABLE, AND I SAY THIS BECAUSE THERE'S EVIDENCE IN THE 

RECORD THAT QUALCOMM THOUGHT THAT INTEL WAS PREPARED TO COMPETE 

FOR THE MAV 10 LOW, AND THAT'S WHAT ACCOUNTS FOR MOST OF THE 

2014 SOCKETS.

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1734

Q. SO CAN YOU SHOW US, PLEASE, WHERE ON THIS SLIDE THAT YOU 

SAID WAS PRESENTED TO THE BOARD, YOU CAN SEE THAT QUALCOMM 

BELIEVED THAT INTEL COULD WIN LARGER VOLUMES THAN JUST THE 

IPAD? 

A. YEAH.

MR. MATHESON: OBJECTION. LEADING, YOUR HONOR. 

THE COURT: SUSTAINED. 

BY MR. EVEN:

Q. YOU'VE MENTIONED YOUR CONCLUSION OF CONTESTABILITY. CAN 

YOU SHOW US WHAT ON THIS SLIDE, IF ANYTHING, SUPPORTS THAT 

CONCLUSION? 

A. YES. I THINK THERE ARE A NUMBER OF SORT OF SUPPORTING 

PIECES OF FACTS ON THESE SLIDES TO SUPPORT MY OPINIONS ON 

CONTESTABILITY FOR 2014, BUT ALSO FOR '15 AND '16. 

SO I JUST DESCRIBED TO YOU SOME QUALITATIVE EVIDENCE ON 

THE MAV 10 LOW, AND I THINK YOU CAN SEE THAT DIRECTLY ON THIS, 

ON THIS SLIDE THAT DESCRIBES THESE INTERNAL QUALCOMM 

CALCULATIONS. 

SO FOR 2014, I FOUND IT INSTRUCTIVE TO LOOK AT THE TOTAL 

UNITS ROW IN THE FISCAL YEAR 2014 COLUMN. 

IF YOU LOOK AT THE DEAL SCENARIO, YOU SEE EXACTLY HOW MANY 

UNITS QUALCOMM EXPECTED IT WOULD WIN UNDER THE DEAL. 

AND THEN YOU CAN CONTRAST THAT WITH THE NUMBER OF UNITS IT 

THOUGHT IT WOULD WIN WITH NO DEAL. 

SO SAME 2014, 2014 COMPARISON, DEAL, NO DEAL. 

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1735

THE DIFFERENCE IS QUITE SIGNIFICANT, AND THAT DIFFERENCE 

CANNOT BE ACCOUNTED FOR BY IPADS ALONE. THAT'S IPHONE VOLUME 

THEY THOUGHT THEY WOULD LOSE IN 2014.

Q. HAVE YOU SEEN ANY EVIDENCE THAT LED YOU TO -- OR THAT LED 

SUPPORT TO THE NOTION THAT ONLY IPADS WERE CONTESTABLE? 

A. NO. I'VE SEEN SIGNIFICANT EVIDENCE THAT, IN FACT, IPHONES 

WERE AT RISK. QUALCOMM FEARED THAT IF THEY GAVE THE INCENTIVE 

PAYMENTS, THEY BELIEVED THAT, IN FACT, INTEL HAD A GOOD SHOT AT 

WINNING IPHONE VOLUME.

Q. WHAT WERE THE RESULTS OF YOUR PROFIT SACRIFICE TEST? 

A. I FOUND THAT GIVEN THE SET OF CONTESTABLE PRODUCTS THAT 

I'VE LAID OUT IN MY REPORT, THAT, IN FACT, THE AMENDED 

TRANSITION AGREEMENT DID NOT REQUIRE PROFIT SACRIFICE. 

Q. AND WHAT DOES THAT MEAN, THAT IT DID NOT REQUIRE PROFIT 

SACRIFICE? 

A. WELL, WHAT I MEAN BY THAT TERM IS THAT AN EQUALLY 

EFFICIENT RIVAL, THAT IS, A FIRM THAT HAD THE COST STRUCTURE 

AND THE CAPABILITY OF QUALCOMM, WOULD BE ABLE TO COME IN AND 

COMPETE FOR APPLE'S BUSINESS UNDER THE SAME TERMS OF THE 

AMENDED TRANSITION AGREEMENT. THEY WOULD -- THAT AN EQUALLY 

EFFICIENT RIVAL, I SHOULD SAY, WOULD FIND IT PROFITABLE TO DO 

SO.

Q. CAN YOU EXPLAIN WHY YOU'RE FOCUSSING ON WHAT QUALCOMM 

BELIEVED IS CONTESTABLE BACK IN 2013 AND NOT WHAT WE KNOW TODAY 

THAT INTEL COULD OR COULD NOT HAVE WON? 

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1736

A. YES. I FOCUSSED ON WHAT I CALL THE EXPECTATIONS ON THE 

EVE OF THE AGREEMENT BECAUSE THAT'S THE RELEVANT TIMEFRAME. 

ALTHOUGH THE WAY ECONOMISTS GO ABOUT THINKING ABOUT 

CONTESTABILITY IS FROM THE PERSPECTIVE OF WHAT WAS EXPECTED 

WHEN THE DEAL TERMS WERE DESIGNED, NOT WHAT ACTUALLY HAPPENED, 

BECAUSE SOMETIMES WHAT ACTUALLY HAPPENS, IT HAS NOTHING TO DO 

WITH WHAT WAS KNOWN AND KNOWABLE AT THE TIME. 

Q. WHAT PORTION OF MARKET WAS FORECLOSED IN ORDER TO ACCEPT 

PROFESSOR SHAPIRO'S CLAIM THAT ONLY IPADS WERE CONTESTABLE? 

A. WELL, THE APPLE IPADS ACCOUNT FOR ABOUT 5 PERCENT OF APPLE 

VOLUME, SO THAT WOULD BE ABOUT 5 PERCENT MEASURED THAT WAY. 

BUT THE APPLE IPADS CONSTITUTED A MUCH SMALLER SHARE OF SOCKETS 

IN PROFESSOR SHAPIRO'S LARGER MARKET.

Q. THANK YOU. IF WE CAN TURN TO SLIDE 17. 

AND, DR. CHIPTY, CAN YOU BRIEFLY EXPLAIN THE SUMMARY OF 

YOUR CONCLUSIONS? 

A. SURE. AS I HAVE DESCRIBED ALONG THE WAY, I'VE REACHED A 

SERIES OF RELATED CONCLUSIONS. 

THE FIRST OF THESE IS THAT THE MODEM CHIP INDUSTRY IS 

CHARACTERIZED BY DYNAMIC COMPETITION. 

IT'S MY VIEW THAT PROFESSOR SHAPIRO HAS NOT APPROPRIATELY 

INCORPORATED THIS FACT INTO HIS ANALYSIS OF MARKET DEFINITION 

OR MARKET POWER. 

AS A RESULT, HE'S FAILED TO ESTABLISH HIS PREMIUM LTE 

MARKET. 

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1737

IN MY VIEW, PROFESSOR SHAPIRO HAS OVERSTATED QUALCOMM'S 

MARKET POWER. I, IN FACT, DON'T THINK THE EVIDENCE SUPPORTS A 

CONCLUSION THAT IT HAS SUSTAINED MARKET POWER SUFFICIENT FOR 

QUALCOMM TO HAVE ENGAGED IN THE ALLEGED CONDUCT. 

IT'S ALSO MY VIEW THAT THE APPLE AGREEMENTS WERE SUPPORTED 

BY LEGITIMATE BUSINESS JUSTIFICATIONS AND THAT THEY ARE NOT 

ANTICOMPETITIVE EXCLUSIVE CONTRACTS. 

MR. EVEN: THANK YOU. NO FURTHER QUESTIONS. 

THE COURT: OKAY. TIME IS 2:10. 

WE NORMALLY TAKE OUR BREAK AT 2:15, BUT WHY DON'T WE GO 

FOR TEN MINUTES, AND WE'LL TAKE A BREAK FROM 2:20 TO 2:30. 

OKAY? 

MR. MATHESON: THANK YOU, YOUR HONOR. 

THE COURT: GO AHEAD, PLEASE -- OR TELL ME WHEN 

YOU'RE READY. 

(PAUSE IN PROCEEDINGS.) 

MR. MATHESON: MAY HE APPROACH, YOUR HONOR? 

THE COURT: YES, PLEASE. 

MR. MATHESON: WITNESS BINDER, DEPOSITION, AND HER 

EXPERT REPORT AS WELL IN SEPARATE BINDERS (HANDING). I'M READY 

ANY TIME, YOUR HONOR. 

THE COURT: ALL RIGHT. 2:11. GO AHEAD, PLEASE.

/ / /

/ / / 

/ / /

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1738

CROSS-EXAMINATION

BY MR. MATHESON: 

Q. DR. CHIPTY, YOU WERE NOT ASKED TO OPINE ON QUALCOMM'S 

LICENSING CONDUCT; IS THAT RIGHT? 

A. THAT'S CORRECT. I -- AND I HAVE NOT, EXCEPT TO THE EXTENT 

THE CHIP INDUSTRY TOUCHES SOME OF THE LICENSING ISSUES. 

Q. WELL, YOU WERE ASKED THE QUESTION AT YOUR DEPOSITION, SO 

YOU WERE NOT ASKED TO OPINE ON QUALCOMM'S LICENSING CONDUCT; IS 

THAT CORRECT? 

AND YOUR RESPONSE WAS, THAT'S CORRECT. 

RIGHT? 

A. THAT IS CORRECT.

Q. THANK YOU. 

A. AND I GAVE THE SAME ANSWER BEFORE.

Q. YOU ARE NOT OFFERING ANY OPINION REGARDING WHETHER 

QUALCOMM'S REFUSAL TO LICENSE COMPETITORS HAS IMPACTED THOSE 

COMPETITORS' ABILITY TO SELL MODEM CHIPS; CORRECT? 

A. AGAIN, SAME ANSWER. YES, TO THE EXTENT I HAVE STUDIED HOW 

COMPETITION HAS PLAYED OUT IN GENERAL.

Q. BUT YOU HAVE NOT CONDUCTED ANY ANALYSIS REGARDING WHETHER 

QUALCOMM'S REFUSAL TO LICENSE COMPETITORS SPECIFICALLY HAS 

IMPACTED THOSE COMPETITORS' ABILITY TO SELL MODEM CHIPS; RIGHT? 

A. THAT'S CORRECT.

Q. YOU DID NOT DO ANY ANALYSIS OF QUALCOMM'S NO LICENSE, NO 

CHIPS POLICIES IMPACT ON OEM'S; RIGHT? 

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A. WELL, AGAIN, EXCEPT -- WITH THE EXCEPTION THAT I HAVE 

STUDIED EXTENSIVELY HOW COMPETITION HAS PLAYED OUT IN THE CHIP 

MARKET.

Q. NOW, YOU WOULD AGREE THAT A FIRM CAN HAVE MARKET POWER, 

WHETHER THAT POWER WAS ACQUIRED THROUGH ANTICOMPETITIVE MEANS 

OR PROCEED COMPETITIVE MEANS; RIGHT? 

A. YES, I DO. I AGREE WITH THAT. 

Q. AND YOU WOULD AGREE THAT ONCE A FIRM HAS MARKET POWER, THE 

ASSESSMENT OF THE COMPETITIVE EFFECTS OF THAT FIRM'S CONDUCT 

DOESN'T DEPEND ON WHETHER THAT FIRM'S MARKET POWER WAS 

INITIALLY ACQUIRED THROUGH ANTICOMPETITIVE MEANS OR 

PROCOMPETITIVE MEANS; RIGHT? 

A. THAT'S CORRECT. THAT'S CORRECT. I WOULD SAY THE QUESTION 

IS, DO THEY HAVE SUFFICIENT POWER. BUT OTHERWISE I AGREE WITH 

YOU. 

Q. NOW, YOU WOULD AGREE THAT THERE HAVE BEEN INSTANCES IN 

WHICH QUALCOMM HAD SOME DEGREE OF WHAT YOU HAVE REFERRED TO AS 

EARNED MARKET POWER; IS THAT RIGHT? 

A. YES, YES. I AGREE. I THINK FROM TIME TO TIME QUALCOMM 

WAS FIRST TO MARKET, SO IT DID. 

Q. THEY WERE FIRST TO MARKET IN CDMA CAPABLE CHIPSETS? 

A. YES. 

Q. THEY WERE ALSO FIRST TO MARKET WITH LTE CHIPSETS AT SOME 

POINT; RIGHT? 

A. YES, I BELIEVE SO. 

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1740

Q. AND YOU WOULD AGREE THAT THEY HAD SOME DEGREE OF EARNED 

MARKET POWER IN LTE CHIPS AT VARIOUS POINTS IN TIME; RIGHT? 

A. YES. I AGREE WITH THAT. BUT, AGAIN, I -- MY QUESTION IS 

NOT WHETHER THEY HAD POWER, BUT WHETHER THEY HAD SUFFICIENT 

POWER FOR THE PURPOSES AT HAND.

Q. NOW, YOU WOULD AGREE WITH DR. SHAPIRO THAT THE 

HYPOTHETICAL MONOPOLIST TEST IS AN APPROPRIATE METHOD FOR 

IDENTIFYING A RELEVANT PRODUCT MARKET; RIGHT? 

A. YES, I DO BELIEVE THAT THE HYPOTHETICAL MONOPOLIST TEST SO 

REASONABLE FRAMEWORK WITHIN WHICH TO GO ABOUT DEFINING A 

MARKET.

Q. AND YOU DID NOT RUN ANY FORMAL IMPLEMENTATION OF THE 

HYPOTHETICAL MONOPOLIST TEST ON WHAT YOU TESTIFIED EARLIER WERE 

PREMIUM SOCKETS; RIGHT? 

A. SO I DID NOT RUN A FORMAL TEST. HOWEVER, I DID LOOK AT 

PROFESSOR SHAPIRO'S WORK AND ASSESS IT UNDER THE QUESTIONS THAT 

WE WOULD ASK TO ASSESS THE VALIDITY OF AN ANTITRUST MARKET.

Q. THANK YOU, DR. CHIPTY. WE ARE ON A CLOCK. I'D APPRECIATE 

IT IF YOU'D FOCUS ON MY QUESTION. 

MY QUESTION WAS, YOU DID NOT IMPLEMENT THE HYPOTHETICAL 

MONOPOLIST TEST ON WHAT YOU REFER TO AS PREMIUM SOCKETS DURING 

YOUR TESTIMONY EARLIER; IS THAT CORRECT? 

A. I DID NOT IMPLEMENT THAT TEST. I'M USING THE TERM -- 

Q. YOU SAID THAT APPLE, HUAWEI, AND SAMSUNG HAVE 90 PERCENT 

OF THE PREMIUM SOCKETS DURING YOUR DIRECT EXAM; RIGHT?

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1741

A. THAT'S CORRECT.

Q. YOU DID NOT DISCLOSE ANY DEFINITION OF PREMIUM SOCKETS IN 

YOUR EXPERT REPORT, DID YOU? 

A. WELL, IN MY EXPERT REPORT, I WAS EVALUATING 

PROFESSOR SHAPIRO'S, AND IN THE DEMONSTRATIVE I WAS DESCRIBING 

IT THE WAY MR. WYATT DID IN HIS TESTIMONY.

Q. AND MY QUESTION AGAIN, DR. CHIPTY, WHICH I'D APPRECIATE IT 

IF YOU'D ANSWER, YOU DID NOT DISCLOSE ANY DEFINITION OF PREMIUM 

SOCKETS ANYWHERE IN YOUR EXPERT REPORT; ISN'T THAT RIGHT? 

A. I DID NOT DO AN AFFIRMATIVE DEFINITION, YOU'RE RIGHT.

Q. YOU DID NOT ACTUALLY IMPLEMENT THE HYPOTHETICAL MONOPOLIST 

TEST ON THE SALES DATA AVAILABLE TO YOU IN AN EFFORT TO 

DETERMINE WHETHER MARKET POWER EXISTED IN WHAT YOU REFER TO AS 

PREMIUM SOCKETS; RIGHT? 

A. I DID NOT TAKE ON AN AFFIRMATIVE EXERCISE OF THAT. 

Q. AND YOU DIDN'T IMPLEMENT THE HYPOTHETICAL MONOPOLIST TEST 

ON THE SALES DATA AVAILABLE TO YOU IN AN EFFORT TO DETERMINE 

WHETHER OR NOT A MARKET FOR CDMA CHIPSETS ACTUALLY EXISTS; 

RIGHT? 

A. WELL, BECAUSE I DIDN'T THINK THAT WAS THE RIGHT WAY TO 

ASSESS COMPETITIVE EFFECTS IN THIS MARKET LOOKING AT THE SALES 

DATA.

Q. OKAY. SO THE ANSWER TO MY QUESTION IS, IS IT A TRUE 

STATEMENT THAT YOU DID NOT ACTUALLY IMPLEMENT THE HYPOTHETICAL 

MONOPOLIST TEST ON THE SALES DATA YOU HAD AVAILABLE IN ORDER TO 

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CHIPTY CROSS BY MR. MATHESON

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1742

DETERMINE WHETHER A MARKET EXISTS FOR CDMA CHIPSETS; RIGHT? 

A. THAT'S CORRECT, FOR THE ZONES I'VE EXPLAINED.

Q. AND, IN FACT, YOU'RE NOT OFFERING THE COURT ANY OPINION, 

ONE WAY OR THE OTHER, AS TO WHETHER OR NOT THERE IS A MARKET 

FOR CDMA CHIPSETS; IS THAT RIGHT? 

A. THAT'S CORRECT.

Q. AND YOU'RE NOT OFFERING THE COURT ANY OPINION, ONE WAY OR 

THE OTHER, AS TO WHETHER THERE IS A MARKET FOR PREMIUM LTE 

CHIPSETS; RIGHT? 

A. WELL, WHAT I'VE SAID IS THAT I DON'T AGREE WITH 

PROFESSOR SHAPIRO'S MARKET. BUT I HAVE NOT OFFERED AN 

AFFIRMATIVE ALTERNATIVE. 

Q. IN FACT, YOU AGREE THERE MAY BE A MARKET FOR PREMIUM LTE 

CHIPSETS; RIGHT? 

A. THAT'S CORRECT. NOTIONALLY. I DON'T KNOW WHERE THE LINE 

IS. BUT I THINK IT'S BROADER THAN PROFESSOR SHAPIRO HAS DRAWN 

IT.

Q. NOW, YOU'VE SEEN RECORD EVIDENCE THAT QUALCOMM SOLD A VERY 

HIGH PROPORTION OF ALL THE CDMA CAPABLE MODEM CHIPS THAT WERE 

SOLD WORLDWIDE BETWEEN 2006 AND 2016; RIGHT? 

A. IT DID SELL A HIGH SHARE, THOUGH THE SHARE HAS BEEN 

DECLINING OVER TIME.

Q. OKAY. WELL, YOU'VE SEEN BETWEEN 2006 AND 2016 EVIDENCE 

THAT QUALCOMM SOLD 95 PERCENT OF THE CDMA CAPABLE MODEM 

CHIPSETS SOLD DURING THAT PERIOD OF TIME; IS THAT RIGHT? 

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CHIPTY CROSS BY MR. MATHESON

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1743

A. I'M NOT SURE WHAT YOU'RE REFERRING TO. I -- I'M NOT -- 

I'M NOT AWARE OF THAT NUMBER. 

Q. KEN, CAN WE GET DR. SHAPIRO'S EXPERT REPORT, NUMBER 13. 

MR. KOTARSKI: IS THIS ONE UNDER SEAL? I'M NOT SURE. 

MR. MATHESON: THIS IS NOT UNDER SEAL AS FAR AS I 

KNOW. EXPERT REPORT, EXHIBIT 13. 

MR. KOTARSKI: I'M SORRY? 

MR. MATHESON: I THINK IT'S THE EXPERT REPORT, 

EXHIBIT 13. OH, DIFFERENT ONE. WE CAN USE THAT ONE. 

Q. LET'S LOOK AT CDMA REVENUES AND SHARES THAT DR. SHAPIRO 

PRESENTED. 

THIS IS WHAT I HAD IN MIND. 

SO THIS IS DR. SHAPIRO'S PRESENTATION CALLED MARKET SHARES 

IN CDMA CAPABLE MODEM CHIPS BETWEEN 2006 AND 2016; RIGHT? 

A. IT'S ACTUALLY ONE OF HIS CALCULATIONS. HIS OTHER ONE IS 

QUITE DIFFERENT FROM THIS ONE.

Q. THIS ONE IS BASED ON QUALCOMM'S OWN INTERNAL DATA; RIGHT? 

A. YES, IT IS. 

Q. NOW, HE ALSO CALCULATED QUALCOMM'S SHARE BETWEEN 2006 AND 

2016 BY REVENUE; RIGHT? AND THOSE NUMBERS ARE LOWER AS YOU 

JUST REFERRED TO? 

A. THAT'S CORRECT. 

Q. OKAY. SO QUALCOMM'S INTERNAL DATA SHOWS THAT IT HAD A 

SHARE OF 92 PERCENT OR MORE IN EVERY YEAR BETWEEN 2006 AND 

2016; RIGHT? 

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CHIPTY CROSS BY MR. MATHESON

UNITED STATES COURT REPORTERS

1744

A. THAT IS WHAT THIS DATA SHOWS. BUT AS I'VE EXPLAINED, 

THERE ARE SOME ISSUES WITH THE USE OF THESE DATA.

Q. OKAY. CAN WE HAVE SHAPIRO REPORT, FIGURE 27, WHICH I 

THINK YOU PUT UP EARLIER, KEN, WITH THE REVENUE DATA. 

NOW, LET'S FOCUS ON CALENDAR YEAR 2008. THIS IS 

DR. SHAPIRO'S PRESENTATION OF CDMA REVENUE AND SHARES BETWEEN 

2008 AND 2016; RIGHT? 

A. THAT'S CORRECT.

Q. YOU DID NOT RUN A CALCULATION YOURSELF OF CDMA REVENUES 

AND SHARES AND DISCLOSE IT IN YOUR REPORT THAT'S DIFFERENT THAN 

THIS; RIGHT? 

A. THAT'S CORRECT. 

Q. NOW, ARE YOU OFFERING THE OPINION THAT IN CALENDAR YEAR 

2008, IF QUALCOMM HAD REFUSED TO SUPPLY MODEM CHIPS TO AN OEM 

WHO WANTED TO MAKE A CDMA COMPLIANT HANDSET, THAT THAT OEM 

COULD HAVE EASILY SOURCED ITS CDMA COMPLIANT CHIPS FROM A 

SUPPLIER OTHER THAN QUALCOMM? 

A. NO. NO, I'M NOT SAYING THAT. 

WHAT I HAVE SAID, BASED ON THE CHINA EXPERIMENT, IS THAT 

RAPID ENTRY WAS POSSIBLE AND, IN FACT, COULD HAVE HAPPENED. 

Q. WELL, RAPID ENTRY IN THE YEAR 2016 DIDN'T DO MUCH GOOD TO 

AN OEM WHO, IN 2008, WANTED TO LAUNCH A CDMA COMPATIBLE 

HANDSET; RIGHT? 

A. WELL -- 

Q. SO IN 2008, IT WOULD BE TRUE THAT IF THAT OEM COULD NOT 

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CHIPTY CROSS BY MR. MATHESON

UNITED STATES COURT REPORTERS

1745

EASILY SUBSTITUTE AWAY FROM QUALCOMM'S CHIPS, QUALCOMM HAD A 

LOT OF LEVERAGE OVER THAT OEM; ISN'T THAT RIGHT? 

A. WELL, CERTAINLY AT THAT TIME THERE WAS NO OTHER 

SUBSTITUTE. BUT MY POINT IS THAT THERE WERE -- THE BARRIERS TO 

ENTRY ARE NOT NECESSARILY AS HIGH AS MIGHT SEEM. 

THE COURT: I'M SORRY TO INTERRUPT. IT'S 2:20. I'D 

LIKE US TO TAKE A TEN MINUTE BREAK TO 2:30. 

MR. MATHESON: THANK YOU, YOUR HONOR. 

THE COURT: YOU MAY STEP DOWN DURING THE BREAK. 

THE WITNESS: THANK YOU. 

(RECESS FROM 2:20 P.M. UNTIL 2:31 P.M.) 

THE COURT: WELCOME COME BACK. PLEASE TAKE A SEAT. 

TIME IS 2:31. GO AHEAD, PLEASE. 

MR. MATHESON: THANK YOU, YOUR HONOR. 

Q. DR. CHIPTY, YOU WOULD AGREE THAT QUALCOMM HAS HISTORICALLY 

CHARGED HIGHER PRICES FOR ITS CHIPS THAT PROVIDE CDMA 

CAPABILITY AS OPPOSED TO ITS CHIPS THAT PROVIDE UMTS 

CAPABILITY, BUT NOT CDMA CAPABILITY; RIGHT?

A. YES, I'D AGREE WITH THAT. 

Q. AND TO SOME OEM'S, QUALCOMM CHARGED PRICES THAT WERE 30 

PERCENT HIGHER FOR CDMA CAPABLE CHIPS THAN IT CHARGED FOR 

EQUIVALENT CHIPS THAT PROVIDED UMTS CAPABILITY, BUT NOT CDMA 

CAPABILITY; RIGHT? 

A. SO I'M NOT -- I'M NOT EXACTLY SURE OF THAT EXAMPLE, SO I 

DON'T KNOW SPECIFICALLY. 

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CHIPTY CROSS BY MR. MATHESON

UNITED STATES COURT REPORTERS

1746

I DO KNOW QUALITATIVELY THEY HAVE CHARGED HIGHER.

Q. SO YOUR NOT FAMILIAR WITH EVIDENCE IN THE RECORD THAT 

DEMONSTRATES THAT QUALCOMM CHARGED PRICES TO OEM'S THAT WERE 30 

PERCENT HIGHER FOR CDMA CAPABLE CHIPS AS OPPOSED TO CHIPS THAT 

PROVIDE UMTS CAPABILITY, BUT NOT CDMA CAPABILITY; IS THAT 

RIGHT? 

A. I'M NOT -- I'M SAYING I DON'T RECALL THE NUMBER 30 PERCENT 

RIGHT NOW. 

Q. TURN IN YOUR BINDER, IT SAYS WITNESS BINDER ON IT, THERE'S 

A TAB LABELED JX 0107. 

A. OKAY.

Q. PORTIONS OF THIS DOCUMENT HAVE BEEN SEALED. 

YOUR HONOR, I'D LIKE TO MOVE TO ADMIT JX 0107. 

THE COURT: ANY OBJECTION? 

MR. EVEN: NOT WITH JX, YOUR HONOR. 

THE COURT: IT'S ADMITTED. 

(JOINT EXHIBIT JX 0107 WAS ADMITTED IN EVIDENCE.) 

THE COURT: GO AHEAD, PLEASE. 

BY MR. MATHESON: 

Q. CAN YOU DIRECT YOUR ATTENTION, DR. CHIPTY -- AND WE'LL PUT 

IT UP ON THE MONITOR, JX 0107-013. 

DO YOU SEE THAT, DR. CHIPTY? 

A. YES, I DO.

Q. NOW, IT'S FAIR TO STATE THAT THIS DEMONSTRATES THAT 

QUALCOMM CHARGED PRICES TO AN OEM THAT WERE 30 PERCENT HIGHER 

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CHIPTY CROSS BY MR. MATHESON

UNITED STATES COURT REPORTERS

1747

WITH RESPECT TO THE SKUS INDICATED ON THIS PAGE FOR CDMA 

CAPABLE CHIPS THAN FOR EQUIVALENT NON-CDMA CAPABLE CHIPS THAT 

PROVIDED UMTS FUNCTIONALITY; RIGHT? 

I MEAN, JUST AT A GLANCE YOU CAN COMPARE THE NUMBERS IN 

THE CENTER COLUMN AND THE NUMBERS IN THE RIGHT COLUMN, AND THE 

CDMA ENABLED ONES ARE 30 PERCENT HIGHER THAN THE NON-CDMA; 

RIGHT?

A. YES, THAT'S WHAT I SEE AT A GLANCE. I JUST DON'T KNOW 

WHAT THE REST OF THE PAGES SAY AND IF THERE ARE OTHER FINANCIAL 

TERMS GOING BACK AND FORTH. 

I CAN'T SPEAK TO THAT. 

Q. OKAY. THANK YOU. 

NOW, WHEN A FIRM SELLS TWO PRODUCTS AND IT INCURS SIMILAR 

COSTS, THE ABILITY TO CHARGE A MEANINGFULLY HIGHER PRICE FOR 

ONE PRODUCT IS CONSISTENT WITH THE EXISTENCE OF SUBSTANTIAL 

MARKET POWER. WOULDN'T YOU AGREE WITH THAT? 

A. WELL, I DON'T KNOW THAT I WOULD DESCRIBE IT AS 

SUBSTANTIAL. YOU'D HAVE TO SHOW ME SPECIFIC PRICE DIFFERENCES 

FOR EXACTLY THE SAME COSTS, I SHOULD SAY.

Q. LET'S LOOK AT THIS PAGE OF JX 0107. THIS PRICE DIFFERENCE 

OF 30 PERCENT, IF THERE IS NO MEANINGFUL COST DIFFERENCE, 

BETWEEN ENABLED AND NON-CDMA ENABLED, IS CONSISTENT WITH THE 

EXISTENCE OF SUBSTANTIAL MARKET POWER; ISN'T THAT RIGHT? 

A. WELL, I'M HAVING A HARD TIME AGREEING WITH YOU BECAUSE I 

THINK THERE ARE COSTS TO CREATING CDMA CAPABILITY, AND THOSE 

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CHIPTY CROSS BY MR. MATHESON

UNITED STATES COURT REPORTERS

1748

COSTS ARE LOADED ON TO CDMA PRICES. SO I DON'T ACCEPT THE 

PREMISE THAT THE COSTS ARE THE SAME. 

Q. WELL, YOU WOULD AGREE THAT QUALCOMM'S HISTORICAL PREMIUMS 

FOR CDMA HAS NOT BEEN BASED ON THE COST OF CDMA, BUT INSTEAD ON 

THE VALUE QUALCOMM'S CUSTOMERS PLACE ON CDMA CAPABILITY; RIGHT? 

A. SO I AGREE THERE ARE VALUE DIFFERENCES BUT THERE ARE ALSO 

COST DIFFERENCES. AS AN ECONOMIST, I LOOK AT BOTH.

Q. YOU WERE HERE IN THE COURTROOM WHEN MR. AMON TESTIFIED; 

RIGHT? 

A. I WAS. 

Q. AND YOU WERE HERE IN THE COURTROOM WHEN MR. AMON CONFIRMED 

THAT QUALCOMM HISTORICALLY BASED CDMA CHIPS BASED NOT ON THE 

COST, BUT INSTEAD BASED ON THE VALUE THAT CUSTOMERS PLACE ON 

THOSE CHIPS. YOU WERE HERE WHEN HE SAID THAT; RIGHT? 

A. I WAS HERE WHEN HE SAID THAT. 

Q. SO IF MR. AMON, THE PRESIDENT OF QCT, IS RIGHT, THEN THERE 

IS NOT -- THEN THE PRICE PREMIUM FOR CDMA IS NOT DRIVEN BY 

COST, IT'S DRIVEN BY THE VALUE THAT CUSTOMERS PLACE ON 

QUALCOMM'S CDMA CAPABILITY; RIGHT? 

A. I KNOW HE SAID THAT. I'M JUST SAYING THERE'S ALSO A COST 

DIFFERENCE, AND I WOULD FACTOR THAT IN. 

Q. YOU'D AGREE THAT A FIRM'S ABILITY TO INFLUENCE THE PRICE 

AT WHICH IT SELLS ITS PRODUCTS CAN BE AN INDICATION OF MARKET 

POWER; RIGHT? 

A. IT CAN BE. 

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CHIPTY CROSS BY MR. MATHESON

UNITED STATES COURT REPORTERS

1749

Q. NOW, YOU DISCUSSED EARLIER RECORD EVIDENCE THAT 

DR. SHAPIRO RELIED ON REGARDING THE DEFINITION OF PREMIUM LTE 

CHIPS, AND HE REFERRED TO CERTAIN INTERNAL QUALCOMM PRICE 

CUTOFFS FOR PREMIUM. 

A. YES, HE DID. 

Q. AND SLIDE 11 OF YOUR DEMONSTRATIVES INDICATES HIS 

CALCULATIONS OF MARKET SHARE USING THE PRICE CUTOFFS THAT 

DEFINE PREMIUM AT VARIOUS POINTS IN TIME; RIGHT? 

A. THAT'S CORRECT. 

Q. NOW, YOU'D AGREE THAT IN 2012, THESE ARE YOUR CORRECTIONS 

TO DR. SHAPIRO'S CALCULATIONS; RIGHT? 

A. YES, THAT'S CORRECT.

Q. AND YOU'D AGREE THAT IN 2012, QUALCOMM SOLD A VERY HIGH 

PROPORTION OF ALL THE LTE CAPABLE MODEM CHIPS THAT ARE USED IN 

HANDSETS THAT COST MORE THAN $300; RIGHT? 

A. YES, THAT'S WHAT HE CALCULATED.

Q. WELL, DO YOU AGREE THAT STATEMENT IS TRUE? IT'S A TRUE 

STATEMENT THAT IN 2012 QUALCOMM SOLD A VERY HIGH PROPORTION OF 

ALL LTE CAPABLE MODEM CHIPS USED IN HANDSETS THAT COST MORE 

THAN $300? 

A. YES, I, I THINK THE NUMBERS ARE PROBABLY ACCURATE FOR THAT 

PURPOSE, YEAH. 

Q. NOW, LET'S FOCUS ON CALENDAR YEAR 2013. AT THAT POINT IN 

TIME, PROFESSOR SHAPIRO USES A CUTOFF OF A $400 SELLING PRICE 

FOR HANDSETS TO DEFINE PREMIUM LTE; RIGHT? 

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UNITED STATES COURT REPORTERS

1750

A. THAT'S CORRECT. 

Q. ARE YOU OFFERING THE OPINION THAT IN CALENDAR YEAR -- THAT 

AN OEM WHO WANTED TO LAUNCH IN CALENDAR YEAR 2014 AN LTE 

CAPABLE PHONE COULD HAVE EASILY SWITCHED FROM QUALCOMM TO AN 

ALTERNATIVE SUPPLIER OF LTE MODEM CHIPS FOR A HIGH-END HANDSET 

THAT COST MORE THAN $400? 

A. SO I DO THINK THERE'S EVIDENCE IN THE RECORD THAT SOME 

HIGH-END OEM'S LOOKED AT OTHER ALTERNATIVES DURING THIS TIME 

PERIOD AND THAT THOSE ALTERNATIVES HAD COMPETITIVE SIGNIFICANCE 

ON QUALCOMM'S PRICING. 

Q. SO THE COMPETITIVE ALTERNATIVES HAD SIGNIFICANCE. MY 

QUESTION WAS, COULD THE OEM EASILY SWITCH TO A PROVIDER OTHER 

THAN QUALCOMM IN CALENDAR YEAR 2013? 

A. SO I'M NOT SURE HOW TO ANSWER THAT QUESTION BECAUSE IF, IN 

FACT, THE OEM HAD SELECTED A DIFFERENT SUPPLIER, THEY MIGHT 

HAVE BEEN READY BY 2014 TO DO SO. 

Q. OKAY. SO YOU'RE NOT OFFERING THE OPINION -- IT'S FAIR TO 

SAY THAT IF YOU'RE HAVING TROUBLE ANSWERING THE QUESTION, 

YOU'RE NOT TELLING THE COURT THAT AN OEM WHO WANTED TO LAUNCH 

AN LTE CAPABLE HANDSET IN CALENDAR YEAR 2013 COULD HAVE EASILY 

SELECTED A SUPPLIER OTHER THAN QUALCOMM? IS THAT FAIR? 

A. I THINK THAT'S FAIR. 

Q. WE CAN TAKE THAT ONE DOWN, KEN. 

CAN WE TAKE A LOOK AT SLIDE 17 IN QUALCOMM'S OPENING 

SLIDES? KEN, 17. 

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CHIPTY CROSS BY MR. MATHESON

UNITED STATES COURT REPORTERS

1751

AND THIS SHOWS THE ANNUAL FIRM-WIDE INVESTMENT R&D. 

THAT'S 18. THERE WE GO. 

THE ANNUAL FIRM-WIDE INVESTMENT R&D THAT YOU DISCUSSED 

WITH THE COURT TODAY? 

A. THAT'S RIGHT.

Q. YOU DID NOT ISOLATE THE PORTION OF THE R&D FIGURE FOR 

SAMSUNG THAT WAS UNDERTAKEN SPECIFICALLY FOR MODEM DEVELOPMENT, 

DID YOU? 

A. NO, I DIDN'T BECAUSE ALL OF THAT WAS AVAILABLE FOR THE R&D 

DOLLARS FOR SAMSUNG WAS FIRM WIDE. 

Q. SAMSUNG MAKES A LOT OF WASHING MACHINES; RIGHT? 

A. I -- I DON'T KNOW. I KNOW IT DOES OTHER R&D OTHER THAN 

CHIP DEVELOPMENT, AND THAT'S WHY I ALSO LOOKED AT THE OUTPUT OF 

THEIR R&D. 

Q. BUT YOU DIDN'T INVESTIGATE HOW MUCH OF THE SAMSUNG BARS 

WENT FOR WASHING MACHINES OR REFRIGERATORS OR ICE MAKERS AND 

HOW MUCH WENT FOR MODEM R&D DEVELOPMENT IN ANY OF THESE YEARS, 

DID YOU? 

A. NO, I DIDN'T DO THAT HERE. BUT I DID GO ON TO STUDY THE 

OUTPUT OF THE R&D SPENT ON CHIP DEVELOPMENT. 

Q. BUT THE ONLY -- YOU WERE HERE WHEN DR. THOMPSON TESTIFIED 

THAT QUALCOMM MAKES R&D INVESTMENTS BASED ON THE SIZE OF THE 

OPPORTUNITY THEY PERCEIVE; RIGHT? 

A. THAT'S CORRECT. 

Q. YOU CAN TAKE THAT DOWN, KEN. 

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UNITED STATES COURT REPORTERS

1752

NOW, AS AN ECONOMIST IT MAKES SENSE THAT FIRMS MAKE R&D 

INVESTMENTS BASED ON THE SIZE OF THE PROFIT OPPORTUNITY THEY 

PERCEIVE; RIGHT? 

A. YES, GENERALLY SPEAKING, THAT MAKES SENSE.

Q. NOW, YOUR REPORT STATES THAT QUALCOMM USES A PAYBACK RATIO 

THAT COMPARES THE ANTICIPATED GROSS MARGIN OF A PRODUCT TO THE 

PRODUCT'S R&D COST WHEN IT'S DECIDING WHETHER IT'S GOING TO 

MAKE AN R&D INVESTMENT; RIGHT? 

A. YES, THAT'S GENERALLY MY UNDERSTANDING. 

Q. AND YOUR REPORT STATES THAT QUALCOMM HAS A TARGET PAYBACK 

RATIO OF 3? 

A. YES. I UNDERSTAND THAT'S THE TARGET AND CAN SOMETIMES BE 

HIGHER AND SOMETIMES LOWER. BUT THAT'S THE TARGET. 

Q. CAN WE PUT UP EXHIBIT 35 OF DR. CHIPTY'S REPORT. YOU CAN 

REFER TO IT, MA'AM. IT'S IN YOUR -- YOU HAVE A BINDER WITH 

YOUR REPORT IN IT. IT'S AT PAGE 167 IF YOU WOULD LIKE TO LOOK. 

A. OKAY. THANK YOU. 

Q. NOW, THIS DISPLAYS THE PAYBACK RATIO ON THE Y AXIS THAT 

QUALCOMM ACTUALLY RECEIVED FOR THREE THIN MODEM PRODUCTS THAT 

IT SOLD; RIGHT? 

A. THAT'S CORRECT. 

Q. AND LOOKING AT THE BAR ON THE LEFT, QUALCOMM WOULD HAVE 

HIT ITS TARGET PAYBACK RATIO OF 3 FOR THE MDM 9X15, WHAT'S 

REFERRED TO AS SHELBY, WITHOUT MAKING ANY SALES OF THIN MODEMS 

TO APPLE; RIGHT? 

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CHIPTY CROSS BY MR. MATHESON

UNITED STATES COURT REPORTERS

1753

A. THAT'S CORRECT. 

Q. IN FACT, QUALCOMM SOLD ENOUGH OF THE SHELBY THIN MODEMS TO 

CUSTOMERS OTHER THAN APPLE TO RECOGNIZE A PAYBACK RATIO OF 8.2; 

RIGHT? 

A. THAT'S CORRECT. 

Q. AND FOR THE ELAN PRODUCT THAT'S DISPLAYED IN THE MIDDLE 

BAR, THAT INCLUDED THE MDM 9X25; RIGHT? 

A. YES, THAT'S WHAT IT'S FOR.

Q. AND QUALCOMM'S SALES OF THIN MODEMS TO CUSTOMERS OTHER 

THAN APPLE WOULD HAVE RESULTED IN A PAYBACK RATIO OF A LITTLE 

BIT MORE THAN 1; RIGHT? 

A. YES, THAT'S WHAT I CALCULATED. 

Q. SO QUALCOMM NEEDED TO SELL SOME 9X25 CHIPSETS TO APPLE TO 

MEET ITS TARGET PAYBACK RATIO OF 3, BUT QUALCOMM DIDN'T NEED TO 

SELL ALL OF THE CHIPS IT ACTUALLY SOLD TO APPLE IN ORDER TO 

RECOGNIZE THAT PAYBACK RATIO; ISN'T THAT TRUE? 

A. YES. THAT'S HOW THE MATH WORKING OUT AFTER THE FACT.

Q. AND THE SAME IS TRUE FOR THE MDM 9X35. QUALCOMM WOULD 

HAVE HIT ITS PAYBACK RATIO OF 3 EVEN IF APPLE HAD ONLY SOURCED 

HALF OF THE CHIPSETS FROM QUALCOMM THAT APPLE ACTUALLY ENDED UP 

PURCHASING; RIGHT? 

A. THAT'S CORRECT. THAT'S HOW IT WORKED OUT AFTER THE FACT. 

Q. NOW, ONE OF THE REASONS THAT YOU UNDERTOOK THE PAYBACK 

RATIO ANALYSIS WAS TO REPLICATE THE ANALYSIS THAT QUALCOMM 

PERFORMS IN THE ORDINARY COURSE OF MAKING INVESTMENT DECISIONS; 

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UNITED STATES COURT REPORTERS

1754

RIGHT? 

A. THAT'S CORRECT.

Q. AND IT'S BEST PRACTICE TO REPLICATE QUALCOMM'S ORDINARY 

COURSE ANALYSIS; RIGHT? 

A. WELL, YES. I TRIED TO REPLICATE THE SPIRIT OF THEIR 

CALCULATION, THOUGH THIS WAS MY CALCULATION. 

Q. BECAUSE YOUR CALCULATION LOOKS AT THE ACTUAL TOTAL DIRECT 

MARGIN QUALCOMM RECEIVED, BUT IN THE ORDINARY COURSE, WHEN 

QUALCOMM IS MAKING AN R&D INVESTMENT DECISION, THEY HAVE TO 

LOOK AT THEIR PROJECTED MARGINS BEFORE THE DECISION IS MADE; 

RIGHT? 

A. YES. SOMETIMES THEY DO THAT, AND SOMETIMES THEY DO ASSESS 

AFTER THE FACT. BUT YES, THEY DO BOTH I THINK. 

Q. NOW, YOU WOULD AGREE THAT EXCLUSIVE DEALING ARRANGEMENTS 

CAN BE ANTICOMPETITIVE IN SOME CIRCUMSTANCES; RIGHT? 

A. I WOULD AGREE WITH THAT.

Q. AND IN SOME CIRCUMSTANCES, AN EXCLUSIVE DEALING 

ARRANGEMENT CAN PRODUCE ANTICOMPETITIVE EFFECTS BY DENYING 

RIVALS SUFFICIENT SCALE TO SUSTAIN THEMSELVES IN THE 

MARKETPLACE; IS THAT RIGHT? 

A. IT'S POSSIBLE IN PRINCIPLE, YES. 

Q. NOW, ON PAGE 224 OF YOUR REPORT YOU STATE THAT APPLE IS 

THE ONLY PURCHASER OF THIN MODEMS FOR HANDSET USE; RIGHT? 

A. THAT'S -- LET ME JUST MAKE SURE I SAY THAT. WOULD YOU 

POINT ME TO SOMETHING.

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1755

Q. IT'S PAGE 224, MA'AM, RIGHT AFTER ARABIC NUMERAL 3 IN THE 

MIDDLE OF PAGE IN ITALICS. IT READS, "AS APPLE IS THE ONLY 

PURCHASER OF THIN MODEMS FOR HANDSET USE, THEN BY 

PROFESSOR SHAPIRO'S OWN LOGIC, THE AT-ISSUE AGREEMENTS COULD 

NOT HAVE HARMED COMPETITION IN THE RELEVANT MARKET." 

A. YES, I SEE THAT.

Q. IT'S AN INCORRECT STATEMENT TO SAY THAT APPLE IS THE ONLY 

PURCHASER OF THIN MODEMS FOR HANDSET USE, ISN'T IT? 

A. WELL, APPLE WAS THE PRIMARY PURCHASER FOR HANDSET USE, AND 

IN FACT THERE WAS SOME SAMSUNG USE OF THIN MODES. BUT AS I 

UNDERSTAND IT, THAT WAS NOT ANTICIPATED. THAT WAS 

OPPORTUNISTIC. 

Q. OKAY. SO IT'S INCORRECT IF ANYBODY WERE TO SAY THAT APPLE 

WAS THE ONLY PURCHASER OF THIN MODEMS. THAT PERSON WOULD BE 

WRONG? IS THAT A FAIR STATEMENT? 

A. SO AS IT HAPPENS, SAMSUNG PURCHASED SOME THIN MODEMS FOR 

ONE OF THE CHIPS AND THAT DID HAPPEN. 

BUT IN SUBSEQUENT YEARS, IN FACT, APPLE WAS THE ONLY 

PURCHASER BY AND LARGE, AND IT WAS PRIMARILY THE PURCHASER 

THROUGHOUT THE PERIOD. 

Q. OKAY. SO THEY WERE THE PRIMARY PURCHASER, BUT THEY 

CERTAINLY WERE NOT THE ONLY PURCHASER OF THIN MODEMS FOR 

HANDSET USE. WE CAN AGREE ON THAT; RIGHT? 

A. YES, AS IT HAPPENED AFTER THE FACT, THAT'S CORRECT.

Q. NOW, IN FACT, YOU'VE SEEN COMPETITIVELY SIGNIFICANT 

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CHIPTY CROSS BY MR. MATHESON

UNITED STATES COURT REPORTERS

1756

INSTANCES IN WHICH QUALCOMM'S RIVALS HAVE OFFERED THIN MODEMS 

IN COMPETITION WITH QUALCOMM TO CUSTOMERS OTHER THAN APPLE; 

ISN'T THAT RIGHT? 

A. I THINK THAT'S RIGHT IN RECENT YEARS, YES.

Q. WELL, CERTAINLY AS FAR BACK AS 2013 AND 2014 THIS WAS 

HAPPENING; RIGHT? 

A. I'M NOT SURE WHAT YOU HAVE IN MIND. COULD YOU DESCRIBE TO 

ME WHICH CHIP MAKER YOU'RE THINKING OF. 

Q. MY QUESTION IS WHAT YOU KNOW ABOUT THIN MODEM COMPETITION 

FOR OEM BUSINESS OTHER THAN APPLE. IS IT A TRUE STATEMENT THAT 

YOU HAVE OBSERVED COMPETITIVELY SIGNIFICANT INSTANCES IN WHICH 

QUALCOMM HAS BEEN FORCED TO COMPETE WITH RIVAL THIN MODEM 

SOLUTIONS AT OEM'S OTHER THAN APPLE? 

A. SO I, I AM AWARE OF, JUST SITTING HERE, AN EXAMPLE WHERE 

QUALCOMM LOWERED PRICE AT SAMSUNG BECAUSE OF INTEL. SO, YES, 

I'M AWARE OF THAT. SO IT HAS HAPPENED.

Q. AND THAT WAS A THIN MODEM PRODUCT IN 2013 AND 2014; RIGHT? 

A. I'M NOT SURE OF THE TIMEFRAME, BUT IT MAY WELL HAVE BEEN. 

Q. PLEASE TAKE A LOOK AT SLIDE 9 OF THE DEMONSTRATIVES. 

A. UM-HUM. 

Q. THE TOP LEFT BOX, WHICH YOU DID NOT DISPLAY TO THE COURT 

TODAY, BUT WAS IN THE DISCLOSED DEMONSTRATIVES, DISCUSSES IN 

THE 2013, 2014 TIMEFRAME, SAMSUNG PLANNED TO USE MULTI SOURCING 

FROM INTEL, BROADCOM, AND SAMSUNG'S INTERNAL MODEM CHIP 

BUSINESS TO SECURE PRICE COMPETITIVENESS. 

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CHIPTY CROSS BY MR. MATHESON

UNITED STATES COURT REPORTERS

1757

NOW, THE INTEL MODEM AT ISSUE WAS A THIN MODEM; RIGHT? 

A. YES, I BELIEVE SO.

Q. THAT WAS THE XMM 7260; RIGHT? 

A. IT MAY HAVE BEEN. 

Q. AND SAMSUNG ACTUALLY LAUNCHED A PRODUCT WITH THE XMM 7260 

IN IT; RIGHT? 

A. IT MAY HAVE. I DON'T RECALL EXACTLY. BUT I KNOW THAT 

IT'S POSSIBLE. 

Q. NOW, LET'S PUT UP SLIDE 15 FROM YOUR DEMONSTRATIVES. 

NOW, THIS DISPLAYS THIN MODEM PURCHASES FROM QUALCOMM; 

RIGHT? 

A. THAT'S CORRECT. 

Q. AND THIS SHOWS THAT SOME COMPANIES, OTHER THAN APPLE, 

PURCHASED THIN MODEMS FROM QUALCOMM FOR USE IN HANDSETS; RIGHT? 

A. THAT'S CORRECT. 

Q. YOU'RE NOT DISPLAYING ANY INFORMATION REGARDING ANY OEM'S 

PURCHASES OF THIN MODEMS FROM ANYONE OTHER THAN QUALCOMM ON 

THIS SLIDE; RIGHT? 

A. THIS IS CORRECT. THIS IS FROM QUALCOMM'S PERSPECTIVE. 

Q. YOU HAD THAT INFORMATION AVAILABLE TO YOU AND YOU DID NOT 

ANALYZE IT; IS THAT RIGHT? 

A. I THOUGHT THIS WAS SUFFICIENT FOR MY ANALYSIS OF WHETHER 

QUALCOMM WOULD HAVE ENGAGED IN THE R&D. SO, NO, I DIDN'T LOOK 

ANY FURTHER.

Q. HOW MANY THIN MODEMS DID SAMSUNG PURCHASE FROM ANYONE 

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CHIPTY CROSS BY MR. MATHESON

UNITED STATES COURT REPORTERS

1758

OTHER THAN QUALCOMM DURING THE PERIOD YOU'VE DISPLAYED ON THIS 

SLIDE? 

A. I, I DON'T KNOW THE ANSWER TO THAT QUESTION. 

Q. IS IT MORE THAN 200 MILLION? 

A. I WOULDN'T KNOW THAT SITTING HERE.

Q. THAT WAS NOT INFORMATION YOU NEEDED IN ORDER TO PRESENT 

THIS SLIDE AND DRAW A CONCLUSION REGARDING THE AVAILABLE MARKET 

OPPORTUNITY IN THIN MODEMS? IS THAT YOUR TESTIMONY? 

A. NO. WHAT I'M EXPLAINING TO YOU IS THAT I WAS LOOKING AT 

THE DISTRIBUTION OF PURCHASES FOR QUALCOMM AS PART OF MY WORK 

TO SEE IF, IN FACT, THEY WOULD BE ABLE TO RECOVER THEIR 

INVESTMENTS ON THE SALE OF THIN MODEMS FROM OTHER CUSTOMERS. 

AND, IN FACT, QUALCOMM'S CUSTOMERS PRIMARILY BUY SOC'S AND 

THAT'S WHAT THIS SLIDE TELLS ME.

Q. BUT YOUR VIEW THAT APPLE IS EITHER THE DOMINANT OR THE 

SOLE PURCHASER OF THIN MODEMS IS ALSO ONE REASON YOU SAID 

PROFESSOR SHAPIRO WAS WRONG ABOUT THE ANTICOMPETITIVE EFFECTS 

OF THE EXCLUSIVE DEALING ARRANGEMENT BETWEEN QUALCOMM AND 

APPLE; RIGHT? 

A. YES, AND I REACHED THAT NOT FROM A DATA EXERCISE ANALYSIS, 

BUT FROM OTHER QUALITATIVE EVIDENCE IN THE RECORD AND 

TESTIMONY.

Q. SO YOU WERE ABLE TO REACH THAT CONCLUSION, THAT THE THIN 

MODEM MARKET OPPORTUNITY WAS SO CONCENTRATED IN APPLE THAT 

QUALCOMM'S EXCLUSIVE DEALING ARRANGEMENT WITH APPLE COULD NOT 

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CHIPTY CROSS BY MR. MATHESON

UNITED STATES COURT REPORTERS

1759

HAVE HAD ANTICOMPETITIVE EFFECTS WITHOUT EVER LOOKING AT HOW 

MANY MODEMS SAMSUNG PURCHASED FROM COMPANIES OTHER THAN 

QUALCOMM; RIGHT? 

A. YES, I BELIEVE THE EVIDENCE IS THAT APPLE IS UNLIKE OTHER 

OEM'S AND USES THIN MODEMS FOR ITS HANDSETS AND THAT'S WHAT I 

BELIEVE THE RECORD SHOWS. 

Q. OKAY. CAN WE TAKE A LOOK AT SLIDE -- YOUR 

DEMONSTRATIVE -- WHICH ONE IS IT, 5? -- WHICH IS THE TABLE IN 

WHICH YOU DISPLAYED VARIOUS CHIPSETS. 

A. YES.

Q. NOW, YOU SAID EARLIER TODAY THAT INTEL HAD A COMPETITIVELY 

SIGNIFICANT ROLE FROM 2012 TO 2015; RIGHT? 

A. THAT'S CORRECT. 

Q. IN 2014 IT OFFERS AN XMM 7260 AS WHAT YOU CALL THE LATEST 

AND GREATEST CHIP THAT WAS SHIPPED IN A HANDSET THAT YEAR; 

RIGHT? 

A. THAT'S CORRECT. 

Q. AND THAT'S A THIN MODEM? 

A. THAT'S CORRECT. 

Q. LOOKING DOWN AT THE SAMSUNG ROW, IN 2015, AN EXYNOS MODEM 

333 MUST HAVE BEEN SHIPPED IN A HANDSET IN 2015; RIGHT? 

A. THAT'S CORRECT. IT WAS PROBABLY USED BY SAMSUNG FOR ITS 

OWN PURPOSES. 

Q. AND THAT'S ALSO A THIN MODEM, ISN'T IT? 

A. I'M NOT ENTIRELY CERTAIN SITTING HERE RIGHT NOW, BUT IT 

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CHIPTY CROSS BY MR. MATHESON

UNITED STATES COURT REPORTERS

1760

MAYBE. I'M NOT SURE. COULD YOU SHOW ME SOMETHING THAT 

DESCRIBES IT?

Q. YOU HAVE NO IDEA HOW MANY EXYNOS MODEM 333 THIN MODEMS 

WERE SOLD IN 2015 FOR THE SAMSUNG GALAXY S6 AND THE GALAXY S6 

EDGE, DO YOU? 

A. NO, I DON'T KNOW SPECIFICALLY.

Q. AND THE EXYNOS MODEM 303, WHICH SAMSUNG SHIPPED IN A 

HANDSET IN 2014, IS ALSO A THIN MODEM; RIGHT? 

A. I'M SORRY, WHICH ONE? 

Q. THE EXYNOS MODEM 303 INDICATED ON YOUR CHART AS THE LATEST 

AND GREATEST SHIPPED IN A HANDSET IN 2014, THAT'S A THIN MODEM, 

TOO, ISN'T IT? 

A. I'M NOT CERTAIN, BUT I DO KNOW AND I SHOWED YOU THAT 

SAMSUNG HAS USED A FUSION SOLUTION, WHICH INVOLVES A THIN 

MODEM, AND YOU CAN SEE IT EVEN FROM THEIR PURCHASES FROM 

QUALCOMM. 

Q. WELL, LET'S TAKE A LOOK AT THE SLIDE YOU PUT UP FOR THE 

INNOVATION RACE FOR THE 2015 SOCKETS. IT'S SLIDE 8 OF YOUR 

DEMONSTRATIVE. 

WHEN YOU'RE DESCRIBING THIS INNOVATION RACE, THE SAMSUNG 

PRODUCT AT ISSUE IS A THIN MODEM, ISN'T IT? THAT'S THE EXYNOS 

333; RIGHT? 

A. I CAN'T SAY SITTING HERE THAT THAT'S THE ONLY PRODUCT THAT 

SHOWS UP IN THE SAMSUNG SALES OF 6.8 PERCENT THAT YEAR.

Q. WELL, IT WAS THE LATEST AND GREATEST THAT SAMSUNG SHIPPED 

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CHIPTY CROSS BY MR. MATHESON

UNITED STATES COURT REPORTERS

1761

IN 2015, RIGHT, ACCORDING TO THE DEMONSTRATIVE WE JUST LOOKED 

AT, DEMONSTRATIVE 15? 

A. UM -- 

Q. DEMONSTRATIVE 5? 

A. NO, I DON'T THINK THAT'S ACCURATE. WHAT THE 2015 BAR 

SHOWS YOU ARE PROFESSOR SHAPIRO'S SHARE CALCULATIONS, AND AS WE 

KNOW, EXPENSIVE HANDSETS THAT HE FLAGS DON'T ALWAYS HAVE THE 

LATEST AND GREATEST CHIPS IN THEM. SO I CAN'T BE CERTAIN 

THAT -- 

Q. WELL, THE SAMSUNG GALAXY S6 LAUNCHED IN 2015; RIGHT? 

A. RIGHT. 

Q. AND IT HAD THE EXYNOS MODEM 333 IN IT, AND IT WAS 

SAMSUNG'S PREMIER FLAGSHIP PHONE; RIGHT? 

A. I UNDERSTAND ALL OF THAT, EXCEPT WHAT I'M TELLING YOU IS 

THAT THE 2015 PHONES CONTAIN A VARIETY OF CHIPSETS, NOT ALL 

RELEASED IN 2015, AND THEY ALSO REFLECT THE SALES OF LEGACY 

PHONES. 

SO I CAN'T -- I CAN'T TELL YOU WHAT SHARE OF THAT 6.8 IS 

FROM THE THEN NEW SAMSUNG CHIP. 

Q. SO YOU HAVE NO IDEA WHAT SHARE IS FROM THE SAMSUNG THIN 

MODEM, AND YET YOU WERE ABLE TO EXPRESS THE VIEW, IN YOUR 

REPORT, THAT ONE OF THE REASONS PROFESSOR SHAPIRO WAS WRONG 

ABOUT THE EFFECTS OF APPLE'S EXCLUSIVE DEALING ARRANGEMENT WITH 

QUALCOMM IS THE LIMITED SIZE OF THE THIN MODEM MARKET 

OPPORTUNITY OUTSIDE OF APPLE; ISN'T THAT RIGHT? 

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CHIPTY CROSS BY MR. MATHESON

UNITED STATES COURT REPORTERS

1762

A. I THINK THERE'S A LOT OF QUALITATIVE EVIDENCE THAT GOES TO 

THAT. 

Q. CAN WE PUT UP SLIDE 18 FROM MR. VAN NEST'S OPENING. 

NOW, THIS DOESN'T DISPLAY MARKET SHARES -- STRIKE THAT. 

YOU NEVER DISCLOSED ANY CALCULATION IN YOUR REPORT THAT 

INTEL HAD 100 PERCENT MARKET SHARE AT APPLE AT ANY POINT IN 

TIME, DID YOU? 

A. WHAT I DO KNOW IS THAT AS OF EARLY 2018, QUALCOMM LOST THE 

APPLE ACCOUNT. SO WHAT THIS SLIDE IS TRYING TO DEPICT, BASED 

ON THAT INFORMATION, IS THAT TODAY, OR AT LEAST AS OF EARLY 

2018, QUALCOMM'S EXPECTATION WAS ZERO SHARE OF THOSE DEVICES.

Q. WELL, QUALCOMM HAS CHIPS THAT GO IN THE IPHONE 7; RIGHT?

A. THAT'S CORRECT.

Q. APPLE SOLD A LOT OF IPHONE 7S IN CALENDAR YEAR 2018, 

DIDN'T IT? 

A. I DON'T KNOW HOW MANY. BUT, YES, IT SOLD IPHONE 7'S IN 

'18.

Q. QUALCOMM CHIPS ALSO GO INTO VARIATIONS OF THE IPHONE 8; 

RIGHT? 

A. I'M SORRY. COULD YOU ASK IT AGAIN? GOOD. 

Q. QUALCOMM'S MODEM CHIPS ALSO SHIP IN CDMA CAPABLE VERSIONS 

OF THE IPHONE 8; RIGHT? 

A. THAT'S CORRECT.

Q. AND APPLE SOLD THE IPHONE 8 THROUGHOUT CALENDAR YEAR 2018; 

RIGHT? 

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CHIPTY CROSS BY MR. MATHESON

UNITED STATES COURT REPORTERS

1763

A. THAT'S CORRECT.

Q. AND, IN FACT, THEY DIDN'T LAUNCH -- OR THE IPHONE 8 AS 

APPLE'S LATEST AND GREATEST HANDSET UP UNTIL THE END OF 

SEPTEMBER OF 2018; RIGHT? 

A. THAT'S CORRECT. 

Q. NOW, LET'S TAKE A LOOK AT THE SAMSUNG -- SO THE BOTTOM OF 

THIS SLIDE SAYS THIS IS -- ADDRESSES INFORMATION IN THE 

REBUTTAL REPORT OF DR. TASNEEM CHIPTY JUNE 28TH, BETWEEN 18, 

EXHIBITS 31 A AND B. 

THOSE EXHIBITS DON'T CONTAIN ANY INFORMATION WHATSOEVER 

ABOUT APPLE'S PURCHASES FROM INTEL OR FROM QUALCOMM, DO THEY? 

A. I'M SORRY. COULD I JUST GO TO THOSE EXHIBITS?

Q. SURE THING. YOU CAN FIND EXHIBIT 31A AT PAGE 144 AND 

EXHIBIT 31B AT PAGE 146 OF YOUR REPORT. 

IT'S UP THERE ON THE SCREEN IF YOU NEED TO TAKE A LOOK. 

ONE RELATES TO SAMSUNG, AND THE OTHER RELATES TO HUAWEI. THESE 

DON'T CONTAIN ANY INFORMATION ABOUT APPLE PURCHASES, DO THEY? 

A. NO. THIS, THIS SLIDE HERE IS SHOWING YOU SAMSUNG, SO YOU 

SEE THE 38 PERCENT. THAT SHOWS UP ON THE SLIDE THAT WE WERE 

JUST LOOKING AT.

Q. AND IN THIS SLIDE, THIS INDICATES THAT SAMSUNG PURCHASED 

79 PERCENT, OR MORE, OF ITS LTE MODEM CHIPSETS FROM QUALCOMM IN 

2012 AND IN 2013 AND IN 2014; RIGHT? 

A. I'M SORRY. COULD YOU SAY THAT AGAIN?

Q. THIS SLIDE SHOWS THAT SAMSUNG PURCHASED 79 PERCENT OR MORE 

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CHIPTY CROSS BY MR. MATHESON

UNITED STATES COURT REPORTERS

1764

OF ITS LTE ENABLING MODEM CHIPSETS FROM QUALCOMM FOR USE IN 

HANDSETS IN EACH OF THE YEARS 2012, 2013, AND 2014; RIGHT? 

A. YES, THAT'S WHAT IT SHOWS.

Q. AND IT SHOWS THAT IN 2015 AND 2016, QUALCOMM -- I MEAN 

SAMSUNG PURCHASED FROM QUALCOMM MORE THAN HALF OF ITS LTE 

ENABLING MODEM CHIPSETS FOR HANDSETS; RIGHT? 

A. YES. 

Q. CAN WE TAKE A LOOK AT THE SLIDE THAT WAS SHOWN IN OPENING 

AGAIN, PLEASE, KEN. 

SO THE SLIDE THAT WAS SHOWN IN OPENING ONLY DEPICTS 

INFORMATION RELATED TO 2017; RIGHT? IT COMPLETELY IGNORES 

SAMSUNG'S PURCHASES FROM QUALCOMM IN 2012 AND 2013 AND 2014 AND 

2015 AND 2016; RIGHT? 

A. THAT'S CORRECT. IT WAS A SNAPSHOT AS OF THE BEST 

AVAILABLE INFORMATION GOING INTO EARLY 2018.

Q. AND YOU'VE SEEN RECORD EVIDENCE THAT IN 2017 QUALCOMM 

BELIEVED THAT ONLY INTEL WAS ABLE TO PROVIDE ANY PRODUCT 

SUITABLE FOR THE PREMIUM TIER; RIGHT? 

A. I'M SORRY. ASK IT AGAIN.

Q. YOU HAVE SEEN RECORD EVIDENCE THAT AS OF 2017, QUALCOMM 

HAD CONCLUDED THAT NO RIVAL MERCHANT SUPPLIERS OF CHIPS COULD 

PROVIDE PRODUCTS FOR THE PREMIUM TIER; RIGHT? 

A. NO, I'M NOT SURE WHAT YOU'RE REFERRING TO. IF YOU COULD 

SHOW IT TO ME.

Q. COULD WE HAVE CX 8191-089, KEN. 

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CHIPTY REDIRECT BY MR. EVEN

UNITED STATES COURT REPORTERS

1765

MR. KOTARSKI: IS THAT IN EVIDENCE? 

MR. MATHESON: IT IS. 

Q. YOU WERE IN THE COURTROOM WHEN MR. MOLLENKOPF TESTIFIED; 

RIGHT? 

A. NO, I WASN'T.

Q. WELL, THIS SLIDE WAS SHOWN DURING MR. MOLLENKOPF'S 

TESTIMONY. THIS SLIDE INDICATES THAT WHEN THIS PRESENTATION 

WAS CREATED, WHICH WAS JULY 2017, QUALCOMM HAD CONCLUDED THAT 

THE ONLY MERCHANT SUPPLIER OF CHIPSETS ABLE TO SATISFY THE 

PREMIUM TIER, OTHER THAN QUALCOMM, WAS INTEL; RIGHT? 

A. I'M SORRY. I CAN'T SPEAK TO THIS, THIS QUICKLY. I WOULD 

NEED TO LOOK AT IT A LITTLE MORE CAREFULLY. 

MR. MATHESON: THANK YOU VERY MUCH. NO FURTHER 

QUESTIONS. 

THE COURT: OKAY. TIME IS 3:00 O'CLOCK. 

MR. EVEN: MAY I, YOUR HONOR. 

THE COURT: YES, YOU MAY. IT'S 3:01. 

REDIRECT EXAMINATION

BY MR. EVEN: 

Q. THANK YOU. DR. CHIPTY, THE LATEST AND GREATEST CHIPS 

SHIPPED TODAY BY MEDIATEK, ARE THOSE SOC'S OR THIN MODEMS? 

A. I THINK THEY'RE SOC'S.

Q. AND BY SAMSUNG? 

A. I THINK THEY'RE SOC'S.

Q. AND BY HUAWEI? 

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CHIPTY REDIRECT BY MR. EVEN

UNITED STATES COURT REPORTERS

1766

A. SOC'S.

Q. AND BY QUALCOMM? 

A. WELL, TO MY KNOWLEDGE, EXCEPT FOR THE APPLE ACCOUNT AND, 

YOU KNOW, A HANDFUL OF OTHER NON-HANDSET USES, SOC'S.

Q. AND HAS INTEL BEEN ABLE TO GAIN A FOOTHOLD IN ANY OTHER 

OEM WITH ITS THIN MODEMS OTHER THAN APPLE? 

A. NO, TO MY KNOWLEDGE NOT. INTEL HAS BEEN SUPPLYING APPLE 

FOR TWO AND A HALF YEARS, AND TO MY KNOWLEDGE, IT HAS NOT 

SUCCEEDED AT WINNING ANOTHER HANDSET, SIGNIFICANT HANDSET OEM 

ACCOUNT. 

Q. MR. MATHESON SHOWED YOU SOME SLIDES ABOUT PAYBACK RATIO, 

AND YOU SAID THAT THAT REFLECTS SOMETHING AFTER THE FACT. 

WHAT WAS THE PAYBACK ANALYSIS BEFORE THE FACT, BEFORE 

QUALCOMM, IN FACT, DECIDED TO ENGAGE WITH APPLE? 

A. WELL, THE FACT IS THAT SAMSUNG ENDED UP PURCHASING THIN 

MODEMS FOR ONE OF THE CHIPSETS THAT I WAS SHOWING ON THE SLIDE, 

AND THOSE ARE CHIPSETS THAT, IN FACT, I UNDERSTAND FROM 

DR. THOMPSON'S TESTIMONY THAT QUALCOMM DIDN'T ANTICIPATE 

SHIPPING. 

SO, IN FACT, IF WE TOOK THOSE THIN MODEMS FOR SAMSUNG 

FUSION SALES OUT OF THE EQUATION, YOU'D GET A LOWER PAYBACK 

RATIO. 

AND IN FACT, THE FIRST OF THE THREE CHIPS THAT I 

EVALUATED, THE 9X15, THAT IS THE CHIP THAT WOULD HAVE LIKELY 

LIVED FOR MULTIPLE CYCLES BECAUSE, IN FACT, WHAT I UNDERSTAND 

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UNITED STATES COURT REPORTERS

1767

FROM MR. THOMPSON, DR. THOMPSON, IS THAT WHAT QUALCOMM WOULD 

HAVE DONE IS SLOWED ITS CADENCE FROM ONE A YEAR TO ONE EVERY 

THREE YEARS. 

SO IT'S NOT THAT THEY WOULD HAVE FOUND THE LINE 

UNPROFITABLE. IT'S JUST THEY WOULD HAVE INVESTED LESS, AND 

THAT'S WHAT I THINK THE CHART SHOWS.

Q. MR. MATHESON ASKED YOU ABOUT FIRM-WIDE R&D AND WHY YOU 

HAVEN'T LOOKED AT SAMSUNG AND HUAWEI. YOU SAID YOU LOOKED AT 

THE OUTPUT. 

WHAT HAVE YOU SEEN ABOUT THE OUTPUT OF R&D AT SAMSUNG AND 

HUAWEI? 

A. WELL, I THINK I SHOWED YOU THAT, IN FACT, EACH OF THEM HAS 

BEEN RELEASING INCREASINGLY ADVANCED CHIPS AND BOTH HAVE COME 

OUT IN RECENT YEARS WITH AN LTE CDMA MULTIMODE CHIP.

Q. THANK YOU. IF YOU TURN TO PARAGRAPH 290 OF YOUR REPORT. 

DO YOU SEE IT? 

A. OKAY. I DO ON THE SCREEN. 

Q. OKAY. WHAT DOES THIS PARAGRAPH, IN THE THIRD SENTENCE, 

TELL YOU ABOUT APPLE'S PLANS FOR 2018 IPHONE? 

A. YES. SO THANK YOU. I COULDN'T FIND IT WHEN WE WERE 

LOOKING AT THE SHARE CHARTS. BUT THIS IS SOMETHING THAT I KNEW 

AT THE TIME THAT I WROTE MY REPORT THAT, IN FACT, APPLE 

EXPECTED, AND I KNOW THIS FROM, FROM TESTIMONY FROM APPLE'S 

MR. SCHAFER THAT, IN FACT, APPLE INTENDED TO SINGLE SOURCE IN 

2018. 

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CHIPTY REDIRECT BY MR. EVEN

UNITED STATES COURT REPORTERS

1768

MR. EVEN: THANK YOU, DR. CHIPTY. 

NO FURTHER QUESTIONS, YOUR HONOR. 

THE COURT: WAIT. I HAD A QUESTION. I WANT TO 

KNOW -- CAN YOU PUT UP THE VAN NEST OPENING SLIDE. HOW DOES 

THAT COME FROM EXHIBIT 31A AND B OF DR. CHIPTY'S REBUTTAL 

REPORT? I DON'T SEE THAT. 

MR. EVEN: YOUR HONOR, I BELIEVE THAT -- 

THE COURT: CAN WE PULL THAT UP, PLEASE. 

MR. EVEN: SURE. 

THE COURT: YEAH. I -- 31A AND 31B. 

MR. EVEN: YES, I BELIEVE 31A AND 31B SPEAK TO THE 

TWO SAMSUNG AND HUAWEI PIE CHARTS, NOT TO THE APPLE ONE. 

THE COURT: OKAY. BUT YOU'RE -- I THINK HE TESTIFIED 

THAT -- OR DURING THE OPENING, HE SAID THAT WAS 2018. 

OTHERWISE -- I GUESS I'M JUST UNCLEAR BECAUSE THESE CHARTS ARE 

2013 TO 2017, OR 2012 THROUGH 2017. 

MR. EVEN: I DON'T KNOW -- 

MR. VAN NEST: I'LL HAVE TO CHECK THE TRANSCRIPT, 

YOUR HONOR, BUT IT WAS INTENDED TO REFLECT THE CURRENT STATE OF 

PLAY. 

AND IF YOU LOOK AT DR. CHIPTY'S REPORT, THE SAMSUNG AND 

HUAWEI NUMBERS ARE FROM 2017, WHICH WAS, I THINK, THE MOST 

CURRENT WE HAD, AND THE INTEL NUMBER I WAS ANTICIPATING WHAT 

WE'VE PROVEN, WHICH IS THAT THEY -- THEY'RE SHIPPING ALL NEW 

PRODUCTS WITH 100 PERCENT NOW. 

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CHIPTY REDIRECT BY MR. EVEN

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1769

I CAN GO BACK AND CHECK THE OPENING, BUT -- 

THE COURT: I AM GOING TO CHECK IT MYSELF, BECAUSE 

I'M PRETTY SURE YOU SAID THAT WAS 2018, AND THESE CHARTS ONLY 

GO THROUGH 2017. SO I'M WONDERING WHY THAT'S THE CITATION FOR 

THAT. 

MR. EVEN: I THINK THE TREND IS PRETTY CLEAR IN THE 

CHARTS, YOUR HONOR. SO I THINK IF WE MISREPRESENTED IT, IT WAS 

2017, 2018 BY MISTAKE, WE PROBABLY SHOT OUR OWN FOOT. 

THE COURT: ALL RIGHT. IT'S 3:06. 

MR. VAN NEST: THE NUMBERS ARE CORRECT. 

THE COURT: WELL, THEY DON'T TAKE INTO ACCOUNT THE 

LEGACY QUALCOMM CHIPS THAT QUALCOMM IS STILL SELLING TO INTEL. 

THERE'S BEEN A LOT OF TESTIMONY AS TO THAT. SO IT'S NOT 100 

PERCENT, RIGHT. 

MR. VAN NEST: I THINK THEY DO, YOUR HONOR. FOR 

SAMSUNG AND HUAWEI THEY DO AS OF 2017. 

THE COURT: BUT NOT FOR APPLE. 

MR. VAN NEST: FOR APPLE, THOSE REFLECT -- 

THE COURT: SO IT'S MISLEADING IN THAT REGARD AND I 

AM SAYING THAT THERE'S ZERO QUALCOMM SHARE EVEN IN 2018. 

MR. VAN NEST: I DON'T KNOW -- SO I'LL GO BACK AND 

CHECK, BUT I THINK WE WERE PRETTY CLEAR AS TO WHAT IS THE 

INTENT ABOUT THE 100 PERCENT ON APPLE, THAT THAT IS MEANING 

THAT WE LOST THE SOCKET FOR 2018 SPECIFICALLY. 

THE COURT: WELL, I DON'T LIKE IT WHEN DEMONSTRATIVES 

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CHIPTY RECROSS BY MR. MATHESON

UNITED STATES COURT REPORTERS

1770

ARE BEING SHOWN TO ME CITING EXHIBITS AND THE EXHIBITS DON'T 

REALLY BACK THAT UP. IT MAKES ME THEN FEEL, WHAT ELSE IS BEING 

SAID THAT MAY NOT BE BACKED UP BY UNCITED SOURCES? 

MR. VAN NEST: I'LL TAKE A LOOK, YOUR HONOR, WHAT I 

SAID IN THE OPENING. 

THE COURT: WELL, I SEE WHAT IT SAYS. IT SAYS 31A 

EXAMINE 31B. 

ANYWAY. ALL RIGHT. DO YOU HAVE ANY RECROSS OR NOT? 

MR. MATHESON: I DO, YOUR HONOR. 

THE COURT: YOU DO. 

MR. MATHESON: I DO, YOUR HONOR. 

THE COURT: ALL RIGHT. GO AHEAD. IT'S 3:07. 

RECROSS-EXAMINATION

BY MR. MATHESON: 

Q. YOU WERE ASKED ABOUT THE ANALYSIS OF THE ELAN MODEM, OR 

YOU WERE ASKED ABOUT THE PAYBACK RATIO ANALYSIS THAT OCCURRED 

PRIOR RATHER THAN MOST HOC; RIGHT? MR. EVEN JUST ASKED YOU 

ABOUT WHAT ANALYSIS DID QUALCOMM DO OF THE APPLE OPPORTUNITY 

BEFORE THEY ACTUALLY INVESTED? 

A. I DON'T THINK THAT WAS THE EXACT QUESTION. BUT HE DID ASK 

ME WHAT SALES DID QUALCOMM MAKE THAT IT WOULD NOT HAVE EXPECTED 

TO MAKE. 

Q. I THINK HE ASKED YOU IF YOU HAD ANALYZED THE PAYBACK RATIO 

ANALYSIS UNDERTAKEN PRIOR TO THE INVESTMENT IN THE PRODUCTS FOR 

APPLE. IS THAT A FAIR CHARACTERIZATION? 

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CHIPTY RECROSS BY MR. MATHESON

UNITED STATES COURT REPORTERS

1771

A. IT'S NOT HOW I TOOK HIS QUESTION. BUT I -- I CAN TRY TO 

ANSWER YOUR QUESTION NONETHELESS. 

Q. OKAY. WELL, MY QUESTION IS, ISN'T IT THE CASE THAT PRIOR 

TO THE ELAN MDM 9X25, QUALCOMM PROJECTED IT WOULD SELL MORE 

UNITS OF THE MDM 9X25 TO PURCHASERS OTHER THAN APPLE THAN IT 

WOULD SELL TO APPLE? 

A. SO I HAVE SEEN SOME EVIDENCE THAT, IN FACT, PRIOR TO THAT 

YEAR, QUALCOMM HAD SOME PROJECTIONS FOR USE OF THIN MODEMS IN 

DATA CARDS, BUT THAT THOSE PROJECTIONS DID NOT MATERIALIZE AND, 

IN FACT, DID NOT MATERIALIZE AS QUICKLY AS BEFORE THOSE 

SIGNIFICANT INVESTMENTS WERE MADE. 

THAT'S MY UNDERSTANDING. 

Q. OKAY. BUT YOU AGREE THAT PRIOR TO INVESTING IN THE ELAN 

MDM 9X25 MODEM PROJECT THAT WAS ULTIMATELY SOLD TO APPLE, 

QUALCOMM PROJECTED THAT IT WOULD SELL MORE UNITS OF THE MDM 

9X25 TO PURCHASERS OTHER THAN APPLE THAN IT WOULD SELL TO APPLE 

ITSELF; ISN'T THAT RIGHT? 

A. NO, I'M NOT CERTAIN THAT THAT'S RIGHT. I DON'T RECALL THE 

TIMING OF THOSE PROJECTIONS. 

Q. COULD YOU TAKE A LOOK AT CX 6334 IN YOUR BINDER, PAGE DASH 

024. 

A. I'M SORRY. THE WITNESS BINDER, IS THAT THE ONE?

Q. YES, THE WITNESS BINDER. 

A. OKAY. AND COULD YOU SAY THE NUMBER AGAIN?

Q. CX 6334-024. 

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CHIPTY RECROSS BY MR. MATHESON

UNITED STATES COURT REPORTERS

1772

NOW, DR. THOMPSON TESTIFIED THAT THIS PRESENTATION -- 

A. I'M SORRY. CX -- 

Q. -- WAS THE APPROVAL OF THE PLAN FOR THE ELAN PROJECT; 

RIGHT? 

A. GIVE ME ONE SECOND, PLEASE. 

Q. CAN WE BLOW THAT UP, KEN, THE DATACARD MARKET PART. 

NOW, THE TURQUOISE BARS ON THE PAGE CX 334-024, INDICATE 

APPLE'S PROJECTIONS FOR HOW MANY MDM 9X25 MODEMS THEY WERE 

GOING TO SELL TO THE DATACARD MARKET AND HOW MANY THEY WERE 

GOING TO SELL TO THE HANDSET MARKET; RIGHT? 

A. YES, I SEE THAT.

Q. AND IN EACH OF THE YEARS -- WELL, IN 2013 THEY THOUGHT 

THEY WOULD SELL 10 MILLION; 2014, THEY THOUGHT THEY WOULD SELL 

64 MILLION; AND 2015, THEY THOUGHT THEY WOULD SELL 28 MILLION 

MDM 9X25 MODEMS TO THE DATACARD MARKET; RIGHT? 

A. THAT'S WHAT THIS CHART SAYS. BUT IF I LOOK AT THE FRONT 

OF THE DOCUMENT, IT LOOKS TO BE FROM 2011, THE PROJECTION.

Q. WELL, THIS IS THE PROJECTION THAT -- YOU WERE IN THE 

COURTROOM WHEN DR. THOMPSON TESTIFIED THAT THIS IS THE DOCUMENT 

THAT IS THE APPROVAL OF THE PLAN FOR THE ELAN PROJECT. DON'T 

YOU REMEMBER THAT? 

A. I DO RECALL YOU SHOWING HIM THIS DOCUMENT, AND ALL I'M 

SAYING IS IT'S FROM 2011 AND THIS 9X25 CHIP WENT -- CAME OUT IN 

2014 AND IT'S UNCLEAR -- 

Q. CAN YOU PUT UP THE TRANSCRIPT, 1386 TO 1387. THERE'S A 

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CHIPTY FURTHER REDIRECT BY MR. EVEN

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QUESTION AND ANSWER IN THE TRANSCRIPT ADDRESSED TO DR. THOMPSON 

WHILE YOU WERE IN THE COURTROOM. 

"AND, DR. THOMPSON, THIS IS THE PRODUCT COUNCIL 

PRESENTATION FOR THE ELAN CHIPSET?

"YES.

"ELAN WAS A THIN MODEM? 

"YES. 

"AND THE PRODUCT COUNCIL APPROVAL REPRESENTS FINAL 

APPROVAL FOR A MODEM CHIP? 

"IT'S THE APPROVAL OF THE PLAN." 

THIS IS THE DOCUMENT THAT APPROVED THE ELAN MDM 9X25 MODEM 

CHIP; RIGHT? 

A. YES, I SEE ALL OF THAT, AND I'M -- WHAT I'M TRYING TO 

EXPLAIN TO YOU IS THAT THIS IS A 2011 EVENT WHICH WOULD HAVE 

PRE-DATED WHEN SIGNIFICANT WORK ON THE 9X25 ACTUALLY TOOK 

PLACE. 

MR. MATHESON: THANK YOU VERY MUCH. 

THE COURT: OKAY. TIME IS 3:12. 

MR. EVEN: ONE MORE QUESTION, IF I MAY, YOUR HONOR. 

THE COURT: GO AHEAD, PLEASE. 

FURTHER REDIRECT EXAMINATION

BY MR. EVEN: 

Q. DR. CHIPTY, ARE YOU AWARE OF A QUALCOMM ANALYSIS SHOWING 

HOW MUCH INCREMENTAL SALES TO DONGLES AND OTHER USERS IN 9X25 

WOULD BRING QUALCOMM OVER THE 9X15 THAT QUALCOMM ALREADY WAS 

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CHIPTY FURTHER REDIRECT BY MR. EVEN

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1774

WORKING ON? 

A. YES, I HAVE SEEN NUMBERS LIKE THAT. 

Q. AND WHAT DID THOSE SHOW? 

A. FROM MEMORY, WHAT I RECALL, AND IT'S CONSISTENT WITH MY 

UNDERSTANDING OF THE BUSINESS MODEL, IS THAT IF THEY HAD NOT 

MADE THE 9X25, THEY WOULD HAVE CONTINUED TO SELL THE 9X15 AND, 

IN FACT, THE PROJECTIONS SHOW THAT THE BULK OF THE SALES WERE 

FOR THE OLDER CHIP FOR THE DATACARD USE. 

MR. EVEN: THANK YOU. NO FURTHER QUESTIONS. 

THE COURT: OKAY. TIME IS 3:13. IS THERE ANY 

FURTHER QUESTIONS FOR DR. CHIPTY? 

MR. MATHESON: NONE, YOUR HONOR. 

THE COURT: ALL RIGHT. MAY THIS WITNESS BE EXCUSED 

SUBJECT TO RECALL OR NOT SUBJECT TO RECALL? AND I FORGOT TO 

ASK THAT ABOUT MR. BLECKER AND MR. WOLFF. WHAT'S YOUR VIEW AS 

TO ALL THREE WITNESSES? 

MR. EVEN: I THINK I CAN SAY FOR ALL THREE, NOT 

SUBJECT TO RECALL. 

THE COURT: OKAY. WHAT DO YOU THINK? 

MR. MATHESON: FOR DR. CHIPTY, NOT SUBJECT TO RECALL. 

FOR MR. BLECKER, IT'S POSSIBLE WE'LL PLAY MORE IN 

REBUTTAL CASE. SO I SUPPOSE THAT'S TECHNICALLY SUBJECT TO 

RECALL. 

THE COURT: OKAY. WHAT ABOUT MR. WOLFF? 

MR. MATHESON: SAME. 

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UNITED STATES COURT REPORTERS

1775

THE COURT: OKAY. SO THEY'RE BOTH YESES AND 

DR. CHIPTY IS A NO. 

ALL RIGHT. THEN YOU HAVE COMPLETED YOUR TRIAL TESTIMONY 

AND YOU ARE FREE TO LEAVE. 

CALL YOUR NEXT WITNESS, PLEASE. 

MR. SHACHAM: GOOD AFTERNOON, YOUR HONOR. 

MATAN SHACHAM FOR QUALCOMM. AND QUALCOMM CALLS DR. TED SNYDER. 

MAY I APPROACH, YOUR HONOR? 

THE COURT: PLEASE. 

MR. SHACHAM: THESE ARE COPIES OF THE DEMONSTRATIVES 

FOR YOUR HONOR. 

THE COURT: OKAY. THANK YOU.

THE CLERK: WOULD YOU PLEASE RAISE YOUR RIGHT HAND. 

(DEFENDANT'S WITNESS, EDWARD SNYDER, WAS SWORN.)

THE WITNESS: I DO. 

THE CLERK: THANK YOU. PLEASE BE SEATED.

MR. SHACHAM: YOUR HONOR, I ALSO HAVE A COPY OF 

PROFESSOR SNYDER'S EXPERT REPORT IF YOU WOULD LIKE. 

THE COURT: YES, PLEASE. 

MR. SHACHAM: MAY I APPROACH, YOUR HONOR? 

THE COURT: THANK YOU. YES, PLEASE. 

THE CLERK: PLEASE STATE YOUR FULL NAME AND SPELL 

YOUR LAST NAME FOR THE RECORD. 

THE WITNESS: MY NAME IS EDWARD ADAMS SNYDER. 

S-N-Y-D-E-R. 

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SNYDER DIRECT BY MR. SHACHAM

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1776

THE COURT: ALL RIGHT. ARE YOU READY? 

MR. SHACHAM: YES, YOUR HONOR. 

THE COURT: OKAY. GO AHEAD, PLEASE. WE'LL TAKE A 

BREAK AT 3:30 FOR TEN MINUTES. IT'S NOW 3:15, SO YOU'VE GOT 

ABOUT 15 MINUTES. GO AHEAD, PLEASE. 

DIRECT EXAMINATION

BY MR. SHACHAM:

Q. GOOD AFTERNOON, PROFESSOR SNYDER. 

A. GOOD AFTERNOON.

Q. WHAT IS YOUR CURRENT POSITION? 

A. I AM DEAN OF THE YALE SCHOOL OF MANAGEMENT WHERE I'M A 

PROFESSOR OF ECONOMICS AND MANAGEMENT. 

Q. HOW LONG HAVE YOU BEEN AT YALE? 

A. SINCE 2011. 

Q. WHAT POSITION DID YOU HOLD BEFORE THAT? 

A. I WAS DEAN OF THE UNIVERSITY OF CHICAGO'S BOOTH SCHOOL OF 

BUSINESS WHERE I WAS ALSO A PROFESSOR OF ECONOMICS. 

Q. WHERE DID YOU START YOUR PROFESSIONAL CAREER? 

A. AT THE U.S. DEPARTMENT OF JUSTICE AT THE ANTITRUST 

DIVISION WHERE I WORKED FOR SEVEN YEARS. 

Q. WHERE DID YOU DO YOUR GRADUATE STUDIES? 

A. AT THE UNIVERSITY OF CHICAGO WHERE I EARNED BY PH.D. IN 

ECONOMICS AND A MASTER'S DEGREE IN PUBLIC POLICY.

Q. WHAT IS YOUR AREA OF EXPERTISE AS AN ECONOMIST? 

A. MY AREA OF EXPERTISE IS INDUSTRIAL ORGANIZATION, OR IO. 

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SNYDER DIRECT BY MR. SHACHAM

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1777

Q. WHAT IS INDUSTRIAL ORGANIZATION? 

A. THAT'S THE SUBFIELD OF ECONOMICS THAT DEALS MOST DIRECTLY 

WITH COMPETITION AMONG VARIOUS FIRMS AND ALSO EVALUATES 

OUTCOMES IN VARIOUS MARKETS AND INDUSTRIES.

Q. CAN YOU GIVE US A SENSE FOR WHAT SORT OF PROBLEMS PEOPLE 

IN YOUR FIELD TRY TO SOLVE? 

A. WELL, OUTCOMES IN MARKETS ARE DIFFERENT ACROSS INDUSTRIES, 

AND THE PURPOSE OF IO IN MANY RESPECTS IS TO UNDERSTAND THOSE 

REAL WORLD OUTCOMES AND DIFFERENCES ACROSS THE INDUSTRIES.

Q. AND WHAT TOOLS DO PEOPLE IN YOUR FIELD USE IN THIS SORT OF 

WORK? 

A. WELL, THE IO TOOLBOX INCLUDES CONCEPTS LIKE THE CONCEPT OF 

ECONOMIES OF SCALE. IT ALSO INCLUDES SO-CALLED NEOCLASSICAL 

CONCEPTS, LIKE THE IMPORTANCE OF, WELL, WHEN FIRMS INVEST, 

THOSE INVESTMENTS MAY BE SPECIFIC TO CERTAIN USES. THAT'S 

CALLED AS SET SPECIFICITY.

IO ECONOMISTS ALSO CONDUCT EMPIRICAL ANALYSES, 

REGRESSIONS, ECONOMETRICS AND SO FORTH. THEY ALSO DO CASE 

STUDIES, LIKE THE KIND OF WORK THAT I'VE DONE HERE. 

Q. HAVE YOU PUBLISHED IN THE FIELD? 

A. YES, I'VE PUBLISHED EXTENSIVELY IN IO AND IN ANTITRUST.

Q. HAVE YOU TESTIFIED BEFORE AS AN EXPERT? 

A. YES, I HAVE, ABOUT 12 TIMES IN COURT. 

MR. SHACHAM: YOUR HONOR, QUALCOMM OFFERS PROFESSOR 

SNYDER AS AN EXPERT IN INDUSTRIAL ORGANIZATION AND ANTITRUST 

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1778

ECONOMICS. 

MS. IKEDA: NO OBJECTION. 

THE COURT: ALL RIGHT. SO CERTIFIED. GO AHEAD, 

PLEASE. 

BY MR. SHACHAM:

Q. PROFESSOR SNYDER, WHAT WERE YOU ASKED TO DO IN THIS CASE? 

A. I WAS ASKED TO ASSESS THE FTC'S CLAIM THAT QUALCOMM'S 

ALLEGED CONDUCT CAUSED ANTICOMPETITIVE HARMS IN THE MODEM CHIP 

INDUSTRY.

Q. WERE YOU ALSO ASKED TO EVALUATE THE OPINION OF ANY OF THE 

FTC'S EXPERTS AS PART OF YOUR ASSIGNMENT? 

A. YES. I WAS ASKED TO EVALUATE PROFESSOR SHAPIRO'S OPINIONS 

TO THE EFFECT THAT QUALCOMM'S ALLEGED CONDUCT DID CAUSE 

ANTICOMPETITIVE HARMS IN THE INDUSTRY. 

Q. AT A HIGH LEVEL, WHAT CONCLUSIONS DID YOU REACH? 

A. I CONCLUDED THAT THE EVIDENCE DOES NOT SUPPORT THE CLAIM 

THAT QUALCOMM'S ALLEGED CONDUCT CAUSED ANTICOMPETITIVE HARMS IN 

THE INDUSTRY. 

CONTRARY TO THE FTC'S CLAIM, REAL WORLD OUTCOMES IN THE 

INDUSTRY ARE FULLY AND CONSISTENTLY EXPLAINED BY INDEPENDENT 

FACTORS. 

MOREOVER, WHEN YOU LOOK AT THE OVERALL PERFORMANCE OF 

INDUSTRY, YOU SEE CONFIRMING EVIDENCE OF THE LACK OF 

ANTICOMPETITIVE HARM. 

Q. WHAT DO YOU MEAN WHEN YOU SAY THAT THERE ARE INDEPENDENT 

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1779

INDUSTRY FACTORS? 

A. I MEAN THAT THERE ARE INDUSTRY-WIDE FACTORS AND FIRM LEVEL 

FACTORS THAT ARE INDEPENDENT OF THE ALLEGED CONDUCT BY 

QUALCOMM, AND THOSE EXERT A STRONG INFLUENCE ON THE OVERALL 

INDUSTRY, AS WELL AS THE SUCCESS AND FAILURE OF INDIVIDUAL 

FIRMS.

Q. HOW DID YOU IDENTIFY THOSE FACTORS? 

A. BY APPLYING IO PRINCIPLES TO THE INDUSTRY. 

Q. WHAT DO YOU MEAN WHEN YOU SAY THAT THESE INDEPENDENT 

INDUSTRY FACTORS EXPLAIN INDUSTRY OUTCOMES? 

A. WELL, FIRST OF ALL, OUTCOMES. THIS IS AN INDUSTRY THAT 

FEATURES A LOT OF REAL WORLD OUTCOMES. IF YOU LOOK AT WHO'S IN 

THE TOP 5 AMONG SUPPLIERS OF MODEM CHIPS, THAT CHANGES YEAR TO 

YEAR. 

YOU ALSO SEE OUTCOMES IN TERMS OF GAINING BUSINESS AND 

LOSING BUSINESS. 

SO THERE ARE -- I'M TALKING ABOUT REAL WORLD OUTCOMES, 

WHAT ACTUALLY IS HAPPENING AT THE FIRM LEVEL. 

AND THEN IN TERMS OF EXPLAINING THESE INDEPENDENT INDUSTRY 

FACTORS EXPLAIN THOSE OUTCOMES FULLY AND CONSISTENTLY. 

Q. WHY IS THAT IMPORTANT? 

A. WELL, IT'S IMPORTANT IF -- IF THE CONCLUSION IS RIGHT, 

THEN INDEPENDENT FACTORS EXPLAIN WHAT'S HAPPENING IN THE REAL 

WORLD, AS OPPOSED TO THE FTC'S CLAIMS ABOUT QUALCOMM'S ALLEGED 

CONDUCT. 

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1780

Q. YOU ALSO MENTIONED THAT INDUSTRY PERFORMANCE CONTRADICTS 

THE FTC'S CLAIM OF ANTICOMPETITIVE EFFECT. WHAT DO YOU MEAN BY 

THAT AT A HIGH LEVEL? 

A. WELL, AT A HIGH LEVEL, THE FTC'S CLAIM WOULD PREDICT THAT 

OVERALL INDUSTRY PERFORMANCE WOULD BE IMPAIRED OVER TIME, THAT 

THERE WOULD BE CERTAIN HALL MARKS OF IMPAIRED COMPETITION. 

I DIDN'T FIND THAT. TO THE CONTRARY. WHEN I LOOK AT KEY 

FACTORS IN THE INDUSTRY, THEY SHOW IMPRESSIVE PERFORMANCE. 

Q. WERE YOU HERE LAST WEEK WHEN PROFESSOR SHAPIRO TESTIFIED 

FOR THE FTC? 

A. YES. 

Q. AND BASED ON THE WORK THAT YOU DID, DO YOU AGREE WITH 

PROFESSOR SHAPIRO'S OPINION THAT QUALCOMM'S ALLEGED CONDUCT 

CAUSED ANTICOMPETITIVE EFFECTS IN THE MODEM CHIP INDUSTRY? 

A. NO. I DISAGREE WITH HIS CONCLUSION, AND, MOREOVER, HIS 

METHODOLOGY IS FUNDAMENTALLY FLAWED. 

Q. AT A HIGH LEVEL, WHY DO YOU BELIEVE THAT 

PROFESSOR SHAPIRO'S METHODOLOGY IS FUNDAMENTALLY FLAWED? 

A. WELL, PROFESSOR SHAPIRO WAS ABOUT THEORY. HE EXPLAINED, 

FOR EXAMPLE, AT A CONCEPTUAL LEVEL THE IDEA OF A COUNTER 

FACTUAL, A WORLD WITHOUT THE ALLEGED CONDUCT. 

BUT HE DIDN'T THEN GO TO THE NEXT STEP OF DEVELOPING THAT 

COUNTER FACTUAL IN WHICH INDEPENDENT FACTORS WOULD HAVE EXERTED 

INFLUENCE ON OUTCOMES. 

RELATED, HE DIDN'T IDENTIFY ANY REAL WORLD OUTCOMES THAT 

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1781

WOULD BE DIFFERENT IN THE COUNTER FACTUAL. 

SO WITH THAT APPROACH, HE'S LEFT WITH SIMPLY THE CLAIM 

THAT, FROM HIS THEORY, THAT INEVITABLE COMPETITIVE HARMS MUST 

FOLLOW. 

Q. LET'S START WITH THE FIRST PART OF YOUR ANALYSIS. 

HOW DID YOU START THE PROCESS OF IDENTIFYING INDUSTRY 

FACTORS? 

A. I CAN GO INTO MORE DETAIL, BUT WHEN AN IO ECONOMIST LOOKS 

AT AN INDUSTRY, YOU LOOK TO APPLY IO PRINCIPLES TO IDENTIFY 

WHAT INFLUENCE THEY HAVE ON THE INDUSTRY AS A WHOLE AND ON 

INDIVIDUAL FIRMS. THAT'S WHAT I DID. 

Q. WHAT -- 

A. AGAIN, I -- PARDON ME. 

AGAIN, I FOCUSSED ON OUTCOMES WHEN I STARTED THE ANALYSIS, 

AS I MENTIONED EARLIER, THESE ARE REAL WORLD OUTCOMES. THERE 

ARE ADVERSE OUTCOMES FOR FIRMS, SUCH AS LOSS OF BUSINESS AND 

EXIT, AND THERE ARE POSITIVE OUTCOMES IN TERMS OF GAINING 

BUSINESS AND ENTRY IN PRODUCT DEVELOPMENT.

Q. WHAT ARE SOME EXAMPLES OF THE IO PRINCIPLES THAT YOU 

LOOKED AT FOR STARTERS? 

A. I MENTIONED EARLIER ECONOMIES OF SCALE. THAT'S CLOSELY 

RELATED TO R&D INTENSITY. 

ANOTHER ONE IS ECONOMIES OF SCOPE IN TERMS OF PRODUCTION. 

Q. AND WHAT INSIGHTS DID YOU DRAW FROM YOUR REVIEW OF THOSE 

PRINCIPLES? 

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SNYDER DIRECT BY MR. SHACHAM

UNITED STATES COURT REPORTERS

1782

A. WELL, IN THIS INDUSTRY, WE EXPECT TO SEE A RELATIVELY 

SMALL NUMBER OF FIRMS OPERATING, ESPECIALLY AT THE LEADING EDGE 

WHERE R&D INTENSITY IS GREATER. 

IN ADDITION, BECAUSE OF THE FACT THAT MANY OF THOSE 

EFFORTS ARE SPECIFIC TO PARTICULAR USES, ASSET SPECIFIC 

INVESTMENTS, WE'LL ALSO SEE CONSIDERABLE VERTICAL INTEGRATION 

IN THIS INDUSTRY. 

Q. IS THAT SOMETHING THAT YOU AND PROFESSOR SHAPIRO AGREE ON? 

A. I -- I THINK SO IN TERMS OF THE OVERALL NUMBER OF FIRMS AT 

LEAST. 

Q. AS PART OF THIS INDUSTRY WIDE ANALYSIS, DID YOU ALSO LOOK 

AT THE RELATIONSHIP BETWEEN MODEM CHIP SUPPLIERS AND OEM'S? 

A. YES. I STUDIED THE MATCHINGS BETWEEN OEM'S AND THEIR 

SUPPLIERS, HOW THEY COLLABORATE, AND WHETHER OEM'S DECIDE TO 

SOURCE THEIR CHIPS INTERNALLY, AND IF EXTERNALLY, WHETHER THEY 

DO MULTI SOURCING, MEANING SOURCE FROM MORE THAN ONE SUPPLIER. 

Q. WHAT ARE SOME OF THE INSIGHTS YOU DREW FROM THAT? 

A. WHAT WE WOULD EXPECT TO SEE, GIVEN THE INTENSITY OF THE 

R&D EFFORTS, WE'D SEE -- WE EXPECT TO SEE OEM'S CHOOSING A 

RELATIVELY SMALL NUMBER OF SUPPLIERS, ESPECIALLY FOR LEADING 

EDGE PRODUCTS. 

APPLE IS A GOOD EXAMPLE OF THAT. THEY TEND TO RELY ON ONE 

OR TWO OEM'S, MODEM CHIP SUPPLIERS, AND WHEN IT COMES TO THEIR 

APPLICATION PROCESSORS, THEY SOURCE THAT INTERNALLY. 

Q. WHAT DID YOU FIND THERE WAS DISTINCTIVE ABOUT HOW THE 

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MODEM CHIP INDUSTRY IS ORGANIZED? 

A. THIS IS A DISTINCTIVE INDUSTRY IN THAT WE HAVE WHAT I CALL 

OVERLAPPING PRODUCT GENERATIONS. EACH GENERATION OF PRODUCTS 

REPRESENTS A MAJOR ADVANCE IN TERMS OF TECHNOLOGY AND 

PERFORMANCE, AND THE GENERATIONS OVERLAP SO THAT OEM CUSTOMERS 

HAVE TO DECIDE, FOR EXAMPLE, WHAT PRODUCTS TO OFFER AND ON WHAT 

TIMELINES. 

Q. HOW ARE THESE DISTINCT FEATURES IMPORTANT? 

A. WELL, THEY'RE VERY IMPORTANT ON THE SUPPLY SLIDE FOR 

QUALCOMM AND THEIR RIVALS. THEY HAVE TO DECIDE NOT ONLY TO 

INVEST, THEY HAVE TO DECIDE WHETHER TO INVEST AT THE LEADING 

EDGE, AND IF SO, WHERE -- WHAT TECHNOLOGIES SHOULD THEY TARGET. 

THEY HAVE TO DECIDE HOW MUCH WEIGHT TO GIVE TO WHAT'S 

REFERRED TO AS BACKWARD COMPATIBILITY, WHICH IMPLICATES WHETHER 

THEY OFFER PRODUCTS THAT ARE MULTIMODE AND THEREBY CARRY 

FORWARD VARIOUS TECHNOLOGIES FOR THEIR CONSUMERS. 

THEY HAVE TO OPTIMIZE AMONG PERFORMANCE FEATURES LIKE 

SIZE, SPEED, POWER CONSUMPTION. 

THEY ALSO HAVE TO DECIDE HOW THEIR PRODUCTS WILL INTEGRATE 

INTO THE OEM'S DEVICES. WILL THEY BE, FOR EXAMPLE, THIN MODEM? 

WILL THEY BE SYSTEM ON A CHIP?

Q. GIVEN THESE DECISIONS, DID YOU LOOK FOR THE FIRM LEVEL 

FACTORS THAT INFLUENCE SUCCESSES AND FAILURES?

A. I DID. 

Q. WHAT FIRM LEVEL FACTORS DID YOU DETERMINE TO BE MOST 

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IMPORTANT IN EXPLAINING WHY MODEM CHIP SUPPLIERS SUCCEED OR 

FAIL? 

A. FORESIGHT, INVESTMENT, AND EXECUTION. 

Q. LET'S START WITH THE FIRST OF THOSE FACTORS YOU 

IDENTIFIED. 

WHAT IS FORESIGHT? 

A. WELL, IN THE CONTEXT OF AN INNOVATIVE INDUSTRY ESPECIALLY, 

FORESIGHT REFERS SIMPLY TO THE IMPORTANCE OF MATCHING FUTURE 

CUSTOMERS WITH PRODUCTS. 

Q. WHY IS FORESIGHT IMPORTANT IN THIS INDUSTRY? 

A. IT'S IMPORTANT BECAUSE THE DEVELOPMENT PROCESS FOR MODEM 

CHIPS IS LENGTHY. THOSE EFFORTS ARE MADE IN THE CONTEXT OF 

UNCERTAINTY ABOUT TECHNOLOGY AND IN THE CONTEXT OF ADVANCED, 

SUBSTANTIAL ADVANCES IN TECHNOLOGY. 

Q. CAN YOU GIVE US AN EXAMPLE OF FORESIGHT BEING IMPORTANT? 

A. I CAN. I CAN GIVE A POSITIVE EXAMPLE. QUALCOMM HAD GOOD 

FORESIGHT ABOUT THE LONGEVITY AND IMPORTANCE OF CDMA. ON THE 

NOT-POSITIVE FRONT, INFINEON, DESPITE HAVING THE INCUMBENCY 

ADVANTAGES OF SOURCING TO APPLE, DIDN'T EXERCISE GOOD FORESIGHT 

ABOUT THE NEED TO KEEP UP WITH THEIR DEMANDS. 

Q. WHAT ABOUT INVESTMENT? WHAT DOES THAT MEAN IN THIS 

CONTEXT AND WHY IS IT IMPORTANT? 

A. IT'S IMPORTANT IN THIS CONTEXT BECAUSE THE INVESTMENT, AS 

IS WELL KNOWN, IS INTENSIVE. BUT IT GOES BEYOND THAT. IT GOES 

INTO THE QUESTION OF WHETHER FIRMS INVEST EFFICIENTLY. 

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Q. WHY DO YOU EMPHASIZE MAKING INVESTMENTS EFFICIENTLY RATHER 

THAN JUST THE AMOUNT INVESTED?

A. WELL, YOU CAN LOOK AT THE NUMBERS, WHICH I'VE DONE. YOU 

SEE THE INTENSITY OF R&D EFFORTS AS A PERCENT OF REVENUE. YOU 

SEE THE ABSOLUTE AMOUNTS. 

BUT THOSE NUMBERS DON'T TELL THE WHOLE STORY. FIRMS 

DIFFER IN HOW EFFICIENT THEY ARE IN TERMS OF THEIR INVESTMENTS. 

THOSE DIFFERENCES ARE RELATED TO HOW THEY ORGANIZATION THOSE 

INVESTMENTS AND WHETHER, FOR EXAMPLE, WHEN THEY'RE OFF PATH, 

THEY CORRECT QUICKLY AND PIVOT.

Q. WHAT'S AN EXAMPLE OF AN INVESTMENT EFFICIENCY BEING 

IMPORTANT? 

A. INTEL. THEY INVESTED HEAVILY, BUT INEFFICIENTLY.

Q. DOES STRATEGY ALSO AFFECT A FIRM'S INVESTMENTS? 

A. YES. SOME FIRMS DECIDE TO INVEST AWAY FROM THE LEADING 

EDGE. THEY'RE SO-CALLED FAST FOLLOWERS.

Q. WHAT'S AN EXAMPLE OF THAT SORT OF INVESTMENT STRATEGY 

CHOICE? 

A. WELL, INFINEON I MENTIONED EARLIER. ANOTHER IS VIA 

TELECOM. BOTH HAD FAST FOLLOWER STRATEGIES. BOTH HAD 

ENTERPRISE POLICIES THAT LIMITED THEIR R&D INVESTMENTS. 

Q. WHAT DOES EXECUTION MEAN? 

A. EXECUTION MEANS THAT IN THIS CONTEXT, WE HAVE THE PROCESS 

OF FIRMS DEVELOPING THEIR PRODUCTS, AND ALONG THE WAY THEY 

ENCOUNTER ISSUES, AND THEY HAVE TO IDENTIFY THOSE ISSUES THAT 

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ARE TECHNICAL AND DESIGN RELATED AND THEY HAVE TO RESOLVE THEM. 

SOME FIRMS SIMPLY ARE BETTER AT THAT THAN OTHERS. 

AND THEN EXECUTION ALSO GETS TO THE ISSUE OF ACTUALLY 

SUPPLYING THE PRODUCT IN VOLUMES AND IN TERMS OF QUALITY. 

Q. WHAT IS AN EXAMPLE OF THE IMPORTANCE OF EXECUTION IN THIS 

INDUSTRY? 

A. A GOOD EXAMPLE, A NEGATIVE EXAMPLE, IS ST-ERICSSON. THEY 

WERE PLAGUED BY EXECUTION PROBLEMS. 

AND YOU ALSO SEE THE IMPORTANCE OF EXECUTION FROM THE 

POINT OF VIEW OF OEM'S. OEM'S NEED TO PROTECT THEMSELVES 

AGAINST EXECUTION PROBLEMS, AND YOU SEE THAT WITH APPLE, 

ESPECIALLY WITH THEIR HIGH STAKES ROLLOUTS OF LIMITED NUMBER OF 

PRODUCTS, THEY HAVE VERY STRICT REQUIREMENTS AND TIMELINES TO 

PROTECT AGAINST EXECUTION PROBLEMS. 

Q. DO YOU BELIEVE THAT THESE THREE INDUSTRY FACTORS THAT 

YOU'VE IDENTIFIED, INVESTMENT, EXECUTION, AND FORESIGHT, ARE 

INDEPENDENT OF THE ALLEGED CONDUCT IN THIS CASE? 

A. I DO. WHEN YOU LOOK AT THE, AT THE INDUSTRY FROM THE 

ONSET, OVER TIME, ACROSS FIRMS, YOU SEE THAT THESE FACTORS 

EXERT A STRONG INFLUENCE. 

THEY ALSO EXERT A STRONG INFLUENCE IN OTHER INNOVATIVE 

INDUSTRIES. SO INVESTMENT, FORESIGHT, EXECUTION ARE IMPORTANT 

THERE AS WELL. 

AND MOREOVER, I HAVEN'T SEEN ANY EVIDENCE THAT WOULD 

INDICATE THAT THESE FACTORS ARE NOT INDEPENDENT IN THIS 

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CONTEXT. 

Q. PROFESSOR SNYDER, LET'S TURN NOW TO THE NEXT STEP OF YOUR 

ANALYSIS. 

WHAT DID YOU DO AFTER YOU IDENTIFIED THE RELEVANT INDUSTRY 

FACTORS? 

A. WELL, THEN I, I CONDUCTED IN-DEPTH STUDIES OF ALL THE 

MAJOR MODEM CHIP SUPPLIERS SINCE 2002. I MENTIONED THE 

TURNOVER IN THE TOP 5. SO THAT ENDED UP INVOLVING 14 DIFFERENT 

CASE STUDIES. 

AGAIN, I FOCUSSED ON REAL WORLD OUTCOMES, POSITIVE AND 

NEGATIVE. 

Q. WHY DID YOU PERFORM THESE IN-DEPTH CASE STUDIES? 

A. WELL, ONE PURPOSE WAS TO SEE WHETHER THERE WERE THESE REAL 

WORLD OUTCOMES INVOLVING THE FIRMS THAT WERE EXPLAINED BY 

INDEPENDENT FACTORS. 

A RELATED PURPOSE WAS TO IDENTIFY OUTCOMES THAT 

POTENTIALLY WERE NOT EXPLAINED BY THESE INDEPENDENT, REAL WORLD 

FACTORS.

Q. IN PERFORMING THIS ANALYSIS, DID YOU IGNORE THE ALLEGED 

CONDUCT? 

A. NO, I DID NOT IGNORE THE ALLEGED CONDUCT. IT WASN'T MY 

ASSIGNMENT TO EVALUATE WHETHER THE CONDUCT OCCURRED. BUT I 

FOCUSSED ON CAUSALITY IN TERMS OF WHETHER THE ALLEGED CONDUCT 

AFFECTED OUTCOMES.

Q. AND SO HOW DID YOU ACCOUNT FOR THE ALLEGED CONDUCT IN YOUR 

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1788

ANALYSIS? 

A. WELL, AS I JUST EXPLAINED, WHEN I WENT THROUGH THE 

SYSTEMATIC RECORD INVOLVING THESE 14 FIRMS, I FOCUSSED ON WERE 

THERE OUTCOMES THAT WERE NOT EXPLAINED BY INDEPENDENT INDUSTRY 

FACTORS? 

IF I HAD ENCOUNTERED THOSE, THEN I WOULD HAVE GONE TO THE 

NEXT STEP TO EVALUATE WHETHER THE FTC'S CLAIMS ABOUT QUALCOMM'S 

CONDUCT EXPLAINED THOSE DISCREPANCIES, IF YOU WILL. 

BUT IMPORTANTLY, I DIDN'T FIND ANY REAL WORLD OUTCOMES OF 

THAT TYPE. 

Q. DID YOU STUDY INTEL AS ONE OF YOUR CASE STUDIES?

A. I DID. 

Q. WHAT DID YOU UNDERSTAND INTEL'S EXPERIENCE IN THE MODEM 

CHIP INDUSTRY TO BE, AT A HIGH LEVEL? 

A. AT A HIGH LEVEL, OF COURSE, INTEL IS AN ICONIC, LARGE 

FIRM, SUCCESSFUL IN MANY INDUSTRIES. 

BUT WHEN IT COMES TO THE MODEM CHIP INDUSTRY, IT'S BEEN IN 

AND OUT OF THE INDUSTRY. IT LEFT THE INDUSTRY WITH ITS SALE OF 

ITS SYSTEM ON A CHIP BUSINESS TO MARVEL. I THINK IT WAS IN 

2006. 

IT RE-ENTERED THE BUSINESS WITH ITS ACQUISITION OF 

INFINEON'S WIRELESS DIVISION IN 2011. 

IT MADE ANOTHER MAJOR ACQUISITION OF CAPABILITIES IN 2015 

WITH RESPECT TO CDMA. 

AND IT -- IT'S HAD THAT APPROACH TO THE INDUSTRY. 

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OF COURSE RECENTLY, AT A HIGH LEVEL, INTEL HAS 

SUCCESSFULLY INVESTED AND APPROVED THEIR EXECUTION AND THEY'VE 

HAD SUCCESS WITH APPLE.

Q. WITH THAT HISTORY IN MIND, DID YOU ANALYZE HOW INTEL 

PERFORMED WITH RESPECT TO THE THREE INDUSTRY FACTORS THAT YOU 

IDENTIFIED? 

A. YES. MY EVALUATION OF INTEL IS THAT THEY EXHIBITED, I 

WOULD SAY, POOR FORESIGHT ABOUT THE INDUSTRY, THEY INVESTED 

INEFFICIENTLY, AND THEY ENCOUNTERED EXECUTION PROBLEMS. 

THE COURT: I'M SORRY TO INTERRUPT. IT'S 3:35. 

LET'S GO AHEAD AND TAKE OUR TEN MINUTE BREAK NOW, PLEASE. 

AND YOU CAN STEP DOWN DURING THE BREAK. 

THE WITNESS: THANK YOU. 

MR. SHACHAM: THANK YOU, YOUR HONOR. 

THE COURT: WE'RE IN RECESS, SO GO AHEAD, PLEASE. 

(RECESS FROM 3:36 P.M. UNTIL 3:45 P.M.) 

THE COURT: OKAY. GOOD AFTERNOON. WELCOME BACK. 

PLEASE TAKE A SEAT. 

OKAY. TIME IS 3:46. GO AHEAD, PLEASE. 

BY MR. SHACHAM:

Q. WELCOME BACK, PROFESSOR SNYDER. 

A. THANK YOU. 

Q. BEFORE THE BREAK, WE WERE TALKING ABOUT INTEL'S 

PERFORMANCE UNDER THE THREE INDUSTRY FACTORS THAT YOU 

IDENTIFIED. 

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LET'S START WITH THAT FIRST FACTOR NOW. WHAT DO YOU MEAN 

WHEN YOU SAID THAT INTEL HAD POOR FORESIGHT? 

A. THEY EXERCISED POOR FORESIGHT. I CAN GIVE AN EXAMPLE. 

INTEL WAS ON PATH IN TERMS OF HOW THE INDUSTRY WAS 

APPROACHING DEVELOPMENT OF APPLICATION PROCESSORS. THEY WERE 

USING THE SO-CALLED ARM ARCHITECTURE. 

BUT THEY DECIDED TO DITCH THAT EFFORT AND GO WITH AN 

APPROACH THAT WOULD INVOLVE MIGRATING THEIR X86 ARCHITECTURE, 

VERY SUCCESSFUL IN PERSONAL COMPUTERS, TO THE SPACE. 

THAT WAS ENCOUNTERED BY A LOT OF NEGATIVE RESPONSE FROM 

OEM'S, BUT THEY CONTINUED ON THE PATH AND EVENTUALLY THE WHOLE 

ENTERPRISE OF INTEGRATION OF THE X86 APPLICATION PROCESSOR WITH 

MODEMS, THEY JUST DROPPED THAT. 

Q. ARE THERE OTHER EXAMPLES OF FLAWED FORESIGHT BY INTEL? 

A. YES, WITH RESPECT TO CDMA. 

AS EARLY AS 2011, INDIVIDUALS INSIDE INTEL'S SENIOR RANKS 

RECOGNIZED THE NEED FOR CDMA, BUT THEY DIDN'T ACQUIRE CDMA 

CAPABILITY UNTIL 2015. 

I SHOULD MENTION THAT THEY WEREN'T THE ONLY ONE TO MAKE 

THIS FORESIGHT MISTAKE, BUT THEIRS WAS WORSE WITH, FOR EXAMPLE, 

MEDIATEK, WHICH ACTED EARLIER.

Q. HOW ABOUT THE INVESTMENT FACTOR? 

A. IN TERMS OF INVESTMENT, AS I SAID, INTEL INVESTED VERY 

HEAVILY, BUT INEFFICIENTLY. A GOOD EXAMPLE IS THEIR 

ACQUISITION OF INFINEON. IT WAS AN EXPENSIVE ACQUISITION, BUT 

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EVEN AFTER THEY MADE THE ACQUISITION, GIVEN THAT INFINEON WAS 

TWO YEARS BEHIND QUALCOMM, THEY HAD TO INVEST A LOT MORE 

INTERNALLY. 

Q. WHERE ELSE DO YOU SEE EVIDENCE OF INTEL'S INVESTMENT 

INEFFICIENCY? 

A. WELL, YOU SEE IT IN TERMS OF HOW MUCH PRODUCT DEVELOPMENT 

THEY'RE SUCCESSFUL WITH, THE NUMBER, SO-CALLED, OF SKU'S. THEY 

HAVE FEWER THAN OTHER FIRMS WHO INVEST COMPARABLY. 

THEY ALSO ARE NOT AS EFFICIENT IN REUSING THEIR SO-CALLED 

I.P. ACROSS PRODUCTS. 

Q. HOW ABOUT THAT FINAL FACTOR, WHAT DO YOU MEAN WHEN YOU 

SAID INTEL HAD EXECUTION PROBLEMS? 

A. WELL, I GO BACK TO THE X86 ARCHITECTURE EXAMPLE. AFTER 

THEY DEVELOPED THE APPLICATION PROCESSOR USING THAT TECHNOLOGY, 

THEY HAD TROUBLE INTEGRATING IT WITH THE THIN MODEMS TO PRODUCE 

A SYSTEM ON A CHIP. 

WHY? BECAUSE THE TWO PRODUCTS WERE A DIFFERENT DESIGN. 

Q. IS IT YOUR OPINION THAT THE OUTCOMES YOU OBSERVED FOR 

INTEL ARE FULLY EXPLAINED BY THESE INDUSTRY FACTORS? 

A. YES. 

Q. WHY IS THAT? 

A. WELL, WHEN YOU LOOK AT THE OVERALL PERFORMANCE OF INTEL, 

THEY HAD THEIR FLAWED EXECUTION, INEFFICIENT INVESTMENT, THEIR 

LACK OF GOOD FORESIGHT MATCHES UP VERY WELL WITH THE FIRM THAT 

DIDN'T DO WELL VERY -- DIDN'T DO, EXCUSE ME, VERY WELL IN THE 

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INDUSTRY UNTIL RECENTLY WHEN THEY CONTINUED WITH THEIR 

INVESTMENTS AND IMPROVED THEIR ACQUISITION STRATEGIES AND THEN 

GOT TO IMPROVED PERFORMANCE.

Q. CAN YOU REVIEW THE TESTIMONY THAT MS. EVANS FROM INTEL 

GAVE IN THIS TRIAL? 

A. I DID. 

Q. AND DID THAT TESTIMONY CHANGE YOUR OPINION IN ANY WAY? 

A. NO. IT MATCHES UP VERY WELL. SHE TESTIFIED THAT POST 

ACQUISITION OF INFINEON, INTEL WAS TWO YEARS BEHIND. 

SHE TESTIFIED THAT WHILE THERE WAS THE DEBATE THAT STARTED 

IN 2011 ABOUT CDMA, THEY DIDN'T ACQUIRE THE CAPABILITY UNTIL 

2015. 

AND SHE CONFIRMED THAT INTEL ABANDONED THEIR SYSTEM ON A 

CHIP APPROACH INVOLVING THE X86 ARCHITECTURE AND THAT THEY'RE 

NO LONGER INTERESTED IN THE MOBILE PHONE BUSINESS, EXCEPT FOR 

APPLE. 

Q. IS MEDIATEK ANOTHER ONE OF THE COMPANIES THAT YOU ANALYZED 

AS PART OF YOUR CASE STUDY? 

A. YES. 

Q. AND CAN YOU SUMMARIZE AT A HIGH LEVEL WHAT YOU UNDERSTAND 

MEDIATEK'S EXPERIENCE TO BE IN THE MODEM CHIP INDUSTRY? 

A. THE BIG PICTURE ON MEDIATEK IS THEY ARE A VERY SUCCESSFUL 

FIRM. THEY GOT IN RELATIVELY LATE WITH WCDMA CHIPS. THEY'VE 

PURSUED EFFICIENTLY A SO-CALLED FAST FOLLOWER STRATEGY. 

OVER TIME, THEY'VE MOVED CLOSER TO THE LEADING EDGE. 

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THEY'VE INVESTED WELL. THEY'VE EXECUTED WELL, AND NOW THEY'RE 

THE NUMBER TWO SUPPLIER IN THE WORLD.

Q. WHAT DID YOU OBSERVE WITH RESPECT TO MEDIATEK'S FORESIGHT? 

A. THEY'VE HAD GOOD FORESIGHT. ONE EXAMPLE IS THAT THEY 

RECOGNIZED THAT THERE WERE POTENTIAL OEM'S WHOM THEY COULD 

DEVELOP AND GROW THOSE CUSTOMERS' BUSINESSES BY OFFERING THEM 

SOFTWARE SUPPORT AND SO-CALLED REFERENCE DESIGNS. 

THEY ALSO APPRECIATED THE INTEREST IN HAVING HIGHER END 

FEATURES MOVE QUICKLY TO LOWER END DEVICES. 

SO THOSE ARE EXAMPLES OF MEDIATEK'S GOOD FORESIGHT.

Q. WHAT DID YOU OBSERVE WITH RESPECT TO MEDIATEK'S 

INVESTMENT? 

A. THEY'VE INVESTED CONSISTENTLY. IN FACT, THE RECORD SHOWS 

THAT THEY INCREASED THEIR R&D SPEND OVER TIME AS A PERCENT OF 

REVENUE, AND THEY'VE TARGETED ACQUISITIONS CAREFULLY TO BOLSTER 

THEIR TECHNOLOGY. OVERALL, THEY'VE INVESTED EFFICIENTLY.

Q. WHAT DID YOU OBSERVE WITH RESPECT TO MEDIATEK'S EXECUTION? 

A. THEY, THEY HAD PROBLEMS, NOT SURPRISING GIVEN A RELATIVELY 

LATE ENTRANT, WHEN THEY FIRST ATTEMPTED TO DEVELOP WCDMA CHIPS. 

BUT SINCE THEN, THEY'VE HAD VERY GOOD EXECUTION AS THEY'VE 

DEVELOPED NEW PRODUCTS. 

Q. AND SO WHAT IS YOUR CONCLUSION ABOUT THE RELATIONSHIP 

BETWEEN THESE INDUSTRY FACTORS AND THE OUTCOME THAT YOU 

OBSERVED FOR MEDIATEK? 

A. MEDIATEK'S STRONG PERFORMANCE IS FULLY EXPLAINED BY WHAT 

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THEY'VE DONE IN TERMS OF FORESIGHT, INVESTMENT, AND EXECUTION. 

Q. DID YOU REVIEW THE TRIAL TESTIMONY OFFERED BY MR. MOYNIHAN 

FROM MEDIATEK? 

A. I DID. 

Q. AND DID MR. MOYNIHAN'S TESTIMONY AT THIS TRIAL CHANGE YOUR 

OPINION IN ANY WAY? 

A. NO. HE TESTIFIED ABOUT THE EXECUTION ISSUES WITH RESPECT 

TO THAT SPECIFIC WCDMA PRODUCT, THE SO-CALLED 6268 CHIP. 

HE ALSO TESTIFIED THAT MEDIATEK IS INDEED THE NUMBER TWO 

SUPPLIER IN THE WORLD. 

Q. IS BROADCOM ONE OF THE COMPANIES THAT YOU LOOKED AT IN 

YOUR CASE STUDIES? 

A. YES. 

Q. AND WHAT IS THE OUTCOME THAT YOU OBSERVED FOR BROADCOM? 

A. THE OUTCOME FOR BROADCOM IS EXIT. THEY HAD SUCCESS EARLY 

IN THE -- IN THE EARLY PART OF THE CENTURY. THEY HAD SALES 

THAT CONTINUED RELATIVELY WELL. 

BUT IN AROUND 2011, THEIR SALES STARTED TO DROP OFF 

DRAMATICALLY. IN 2014, THEY HAD SALES OF LESS THAN 1 MILLION 

CHIPS ANNUALLY. THEY BECAME NOT ECONOMICALLY VIABLE AND THEN 

EXITED. 

Q. DO YOU BELIEVE THAT BROADCOM'S EXIT FROM THE MODEM CHIP 

INDUSTRY IS EXPLAINED BY THE INDUSTRY FACTORS? 

A. NO QUESTION. BROADCOM HAD POOR FORESIGHT, THEY INVESTED 

INEFFICIENTLY, AND THEY HAD EXECUTION PROBLEMS. 

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Q. SO LET'S TAKE THOSE STEP BY STEP. 

STARTING WITH FORESIGHT, WHAT DO YOU MEAN THAT BROADCOM 

HAD POOR FORESIGHT? 

A. BROADCOM HAD A GOOD POSITION IN THE INDUSTRY IN THE FIRST 

PART OF THE CENTURY. BUT THEY SIMPLY DIDN'T APPRECIATE HOW 

FAST THE INDUSTRY WAS MOVING AND WAS GOING TO MOVE. 

SO, FOR EXAMPLE, THEY DECIDED TO FOCUS ON A TECHNOLOGY 

STANDARD CALLED 2G EDGE, AND THAT WAS SORT OF A 2 AND A HALF G, 

BUT THE INDUSTRY HAD ALREADY MOVED TO 3G AND WAS GETTING READY 

TO MAKE MOVES TOWARDS 4G. 

SO THEIR FORESIGHT ON THE PACE OF CHANGE IN THE INDUSTRY 

WAS NOT GOOD. 

Q. HOW ABOUT INVESTMENT? 

A. BROADCOM, AS I RECALL, HAD FOUR MAJOR ACQUISITIONS, SO 

THEY FOCUSSED MORE ON EXTERNAL INVESTMENTS. 

THEY DIDN'T DO WELL WITH THOSE. THEY MADE TWO INVESTMENTS 

JUST FOR LTE, TWO ACQUISITIONS THAT IS, AND DESPITE THAT, THEY 

WERE STILL BEHIND WITH LTE. 

Q. AND THEN HOW ABOUT EXECUTION FOR BROADCOM? 

A. BROADCOM WAS NOT GOOD AT EXECUTION STARTING AROUND 2009. 

THEIR PRODUCTS WERE DEFICIENT IN TERMS OF VARIOUS IMPORTANT 

TECHNICAL FEATURES, THEY LACKED FUNCTIONS ALTOGETHER, SUCH AS 

CARRIER AGGREGATION. THEY WERE SLOW. 

WHEN THEY DID BRING THEIR PRODUCTS TO MARKET, THEY WERE 

RELATIVELY EXPENSIVE. 

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UNITED STATES COURT REPORTERS

1796

MY READING OF THE MARKET WAS THAT THEY EXPECTED PRICES TO 

BE HIGHER THAN THEY WERE WHEN THEY ACTUALLY GOT THE PRODUCTS 

EXECUTED AND READY FOR MARKET.

Q. HAVE YOU REVIEWED THE TESTIMONY OFFERED BY VIDEO IN THIS 

TRIAL FROM MR. MCGREGOR OF BROADCOM? 

A. YES. 

Q. AND DID THAT TESTIMONY CHANGE YOUR CONCLUSIONS REGARDING 

BROADCOM IN ANY WAY? 

A. NO. HE EXPLAINED THAT BROADCOM'S BUSINESS HAD BECOME NOT 

ECONOMICALLY VIABLE, AND CONSISTENT WITH MY ANALYSIS, THERE 

WERE A HOST OF REASONS, INDEPENDENT OF QUALCOMM'S CONDUCT, FOR 

THAT STATUS OF THEIR BUSINESS BEING NOT ECONOMICALLY VIABLE.

Q. LET ME TURN YOUR ATTENTION NOW TO THE OTHER 11 CASE 

STUDIES THAT YOU DID BEYOND THE 3 THAT WE JUST DISCUSSED NOW. 

IN ANY OF THESE CASE STUDIES, DID YOU FIND THAT INDUSTRY 

FACTORS FAILED TO EXPLAIN THE OUTCOMES THAT YOU OBSERVED? 

A. NO. TO THE CONTRARY. WHEN YOU LOOK OVER TIME ACROSS 

FIRMS, INDEPENDENT INDUSTRY FACTORS EXPLAIN WHAT HAPPENED AT 

THE FIRM LEVEL.

Q. AND WHAT DOES THAT RESULT TELL YOU AS AN IO ECONOMIST? 

A. IT'S VERY IMPORTANT. IT'S SIMPLY THAT INDEPENDENT FACTORS 

EXPLAIN THE REAL WORLD, THEY EXPLAIN WHAT HAPPENED IN THE 

INDUSTRY. 

Q. AND WHAT DOES THAT TELL YOU WITH RESPECT TO THE FTC'S 

CLAIM OF ANTICOMPETITIVE EFFECT? 

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UNITED STATES COURT REPORTERS

1797

A. IT'S THAT THESE INDEPENDENT FACTORS ARE THE THINGS THAT 

INFLUENCE REAL WORLD OUTCOMES, NOT THE FTC'S ALLEGATIONS WITH 

RESPECT TO QUALCOMM'S CONDUCT. 

Q. LET'S DISCUSS NOW THE FINAL PART OF YOUR ANALYSIS, WHICH 

WAS TO EXAMINE INDUSTRY PERFORMANCE. 

WHAT WERE THE MEASURES OF INDUSTRY PERFORMANCE THAT YOU 

LOOKED AT? 

A. I LOOKED AT PACE OF INNOVATION AND R&D, PRICES, AND 

CONSUMER SURPLUS. 

Q. SO STARTING WITH THAT FIRST MEASURE, WHAT DID YOU OBSERVE 

WITH RESPECT TO THE PACE OF INNOVATION IN THIS INDUSTRY? 

A. WELL, VERY SIMPLY, IT'S RAPID. 

Q. IN EVALUATING THE PACE OF INNOVATION, DID YOU EXAMINE R&D 

EXPENDITURE IN THE INDUSTRY?

A. I DID. I EVALUATED R&D EXPENDITURES OF FIRMS IN THE 

INDUSTRY OVER TIME. 

Q. AND WHAT DID YOU OBSERVE ABOUT THAT R&D SPENT? 

A. WELL, IF YOU LOOK AT FIRMS IN THE INDUSTRY AS A WHOLE, 

THEY AVERAGE 23 PERCENT R&D RELATIVE TO REVENUE. JUST BY 

COMPARISON, PHARMA IS BELOW THAT. THE ONLY INDUSTRY THAT I'M 

AWARE OF THAT IS ABOVE THAT IS BIOTECH. 

SO THIS IS AN INDUSTRY THAT INVESTS HEAVILY IN R&D. 

Q. AND IS THAT HIGH R&D SPENDING DRIVEN BY JUST ONE OR TWO 

COMPANIES? 

A. NO, IT'S NOT. IT'S -- IT'S INDUSTRY WIDE. 

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SNYDER DIRECT BY MR. SHACHAM

UNITED STATES COURT REPORTERS

1798

Q. LET'S TAKE A LOOK AT THE FIRST SLIDE IN YOUR 

DEMONSTRATIVES. 

AND, YOUR HONOR, THESE HAVE BEEN STAMPED QDX 9348 AND 

THEY'RE IN YOUR BINDER. 

PROFESSOR SNYDER, DOES THIS SLIDE ILLUSTRATE THE POINT YOU 

WERE JUST MAKING ABOUT R&D SPENDING IN THE INDUSTRY? 

A. YES. THIS IS A CHART FROM MY REPORT THAT SHOWS FIRM-WIDE 

R&D SPENDING AS A PERCENT OF REVENUE FOR TEN FIRMS, AND THE 

FIRMS DIFFER, BUT MOST OF THE FIRMS ARE SPENDING BETWEEN 10 AND 

30 PERCENT OF REVENUE ON R&D. 

YOU CAN ALSO IDENTIFY INDIVIDUAL FIRMS. FOR EXAMPLE, 

MEDIATEK IS IN ORANGE. IN 2005, THEY STARTED OUT AT SLIGHTLY 

BELOW 15 PERCENT OF R&D SPENDING AS RELATIVE TO REVENUE. AND 

THEN AT THE END OF THE TIME SERIES IN 2017, THEY WERE UP TO 

NEARLY 25 PERCENT. 

Q. ARE THE COMPANIES THAT ARE LOWER DOWN ON THIS CHART, SO 

SAMSUNG AND HUAWEI AND INTEL, ARE THOSE COMPANIES SPENDING LESS 

MONEY OVERALL THAN THE ONES THAT ARE HIGHER UP ON THE CHART? 

A. NO, NOT OVERALL, BECAUSE THIS IS A SPEND AS A PERCENT OF 

REVENUE. THEIR REVENUES ARE HUGE. SO WHEN YOU ACTUALLY LOOK 

AT THE DATA IN TOTAL SPEND, THEIR NUMBERS PUT THEM AT THE VERY 

TOP OF THE INDUSTRY, NUMBER 1, 2, AND 3.

Q. IN EVALUATING THE PACE OF INNOVATION IN THE INDUSTRY, DID 

YOU ALSO LOOK AT IMPROVEMENTS IN MODEM CHIP QUALITY? 

A. I DID. 

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UNITED STATES COURT REPORTERS

1799

Q. AND WHAT DID YOU SEE ABOUT MODEM CHIP QUALITY? WHAT DID 

YOU OBSERVE ABOUT THAT? 

A. WELL, ONE IMPORTANT PERFORMANCE INDICATOR IS THE INCREASE 

IN SPEEDS FOR MODEM CHIPS, BOTH UPLINK AND DOWNLINK SPEEDS. 

Q. AND WHAT DID YOU OBSERVE ABOUT THOSE UPLINK AND DOWNLINK 

SPEEDS? 

A. THAT THEY'VE, THEY'VE INCREASED DRAMATICALLY. 

Q. AND IS THAT A MEASURE OF MODEM CHIP QUALITY? 

A. IT IS BECAUSE THE FASTER SPEEDS MEAN THAT YOU CAN DO MORE 

WITH THE DEVICES IN TERMS OF VIDEO STREAMING, REALTIME MAPS, ET 

CETERA. 

Q. SO LET'S LOOK AT THE NEXT SLIDE IN YOUR DEMONSTRATIVES. 

PROFESSOR SNYDER, DOES THIS SLIDE ILLUSTRATE THE POINT THAT YOU 

WERE JUST MAKING ABOUT INCREASING TRANSMISSION SPEEDS? 

A. YES. THIS IS ANOTHER CHART FROM MY REPORT. IT SHOWS THE 

DRAMATIC INCREASE IN THE SPEEDS OVER TIME. 

IO ECONOMISTS DON'T OFTENTIMES SEE CHARTS THAT LOOK LIKE 

THIS IN TERMS OF PERFORMANCE. 

Q. DID YOU ALSO OBSERVE IMPROVEMENTS TO AP FUNCTIONALITY? 

A. YES. AP FUNCTION DOUBLED IN TERMS OF SPEED OVER THE LAST, 

AS I RECALL, SIX YEARS. 

Q. WHAT HAS BEEN THE RESULT OF THESE IMPROVEMENTS IN MODEM 

AND AP TECHNOLOGY? 

A. WELL, IT'S MADE THE DEVICES MORE USEFUL AND AS A RESULT, 

USAGE HAS GONE UP. 

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SNYDER DIRECT BY MR. SHACHAM

UNITED STATES COURT REPORTERS

1800

Q. LET'S LOOK AT NOW THE NEXT SLIDE IN YOUR DEMONSTRATIVES. 

DOES THIS SLIDE ILLUSTRATE THE INCREASED USAGE THAT YOU WERE 

REFERRING TO? 

A. YES. THIS IS, AS THE TITLE INDICATES, ANNUAL MOBILE DATA 

TRAFFIC, AND FROM THE TIME PERIOD 2011 TO 2016, THAT'S 

INCREASED BY A FACTOR OF 14. 

Q. CAN YOU TELL US NOW ABOUT THE SECOND MEASURE OF INDUSTRY 

WIDE PERFORMANCE YOU LOOKED AT, WHICH IS PRICING? 

A. YES. PRICES FALL ONCE YOU LOOK AT WHAT'S HAPPENING WITH 

PRODUCTS FOR A GIVEN GENERATION OVER TIME. 

Q. AND WHEN YOU'RE REFERRING TO PRICES HERE, ARE YOU 

REFERRING TO THE MODEM CHIP PRICES OR THE END USER DEVICE 

PRICES? 

A. THE MODEM CHIP PRICES. 

Q. SO LET'S TAKE A LOOK NOW AT THE LAST SLIDE IN YOUR 

DEMONSTRATIVES. DOES THIS SLIDE ILLUSTRATE YOUR POINT ABOUT 

FALLING MODEM CHIP PRICES? 

A. YES. THESE ARE PRICES FOR DIFFERENT GENERATIONS OF MODEM 

CHIPS, BUT YOU CAN SEE THAT AFTER THEIR INTRODUCTION, AVERAGE 

PRICES TEND TO FALL. 

IF YOU LOOK AT LTE AT THE END, THEIR AVERAGE -- THE 

AVERAGE PRICES FOR THOSE CHIPS ARE ABOUT AT THE SAME LEVEL AS 3 

CHIP -- EXCUSE ME -- 3G CHIPS BACK IN 2008. 

Q. YOU SAID THAT THE THIRD MEASURE OF INDUSTRY PERFORMANCE 

THAT YOU LOOKED AT IS CONSUMER SURPLUS. 

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SNYDER DIRECT BY MR. SHACHAM

UNITED STATES COURT REPORTERS

1801

WHAT IS CONSUMER SURPLUS? 

A. THAT'S A STANDARD ECONOMICS CONCEPT. IT'S THE DIFFERENCE 

BETWEEN WHAT CONSUMERS ARE WILLING TO PAY FOR A PRODUCT OR 

SERVICE AND WHAT THEY ACTUALLY PAY. 

Q. WHAT DID YOU OBSERVE ABOUT CONSUMER SURPLUS FOR CELLULAR 

DEVICES? 

A. IT'S STAGGERING. IT'S GROWN. IF YOU JUST LOOK AT THE 

U.S., RECENT ESTIMATES PUT U.S. CONSUMER SURPLUS AT 1.5 

TRILLION. 

Q. THAT'S TRILLION WITH A "T"? 

A. TRILLION DOLLARS WITH A "T."

Q. SO HOW DO THESE HIGH MEASURES OF INDUSTRY PERFORMANCE -- 

WHAT DO THESE HIGH MEASURES OF INDUSTRY PERFORMANCE TELL YOU IN 

THE CONTEXT OF YOUR STUDY? 

A. WELL, I LOOKED AT INDUSTRY PERFORMANCE TO CONFIRM MY 

CONCLUSION ABOUT THE LACK OF REAL WORLD EFFECTS ON PARTICULAR 

FIRMS. AND WHEN YOU LOOK AT INDUSTRY PERFORMANCE AND YOU THINK 

ABOUT THE ALLEGED CONDUCT, WHICH I UNDERSTAND THEIR CLAIMS THAT 

IT'S BEEN IN PLACE FOR A LONG PERIOD OF TIME, THEN IF YOU 

FOLLOW THE LOGIC OF THE FTC'S CLAIM, THEN YOU WOULD SEE OVERALL 

IMPAIRED PERFORMANCE IN THE INDUSTRY. 

I FOUND JUST THE OPPOSITE. IT'S AN UNDERSTATEMENT TO SAY 

THAT THIS IS AN INDUSTRY THAT DOESN'T SHOW THOSE SIGNS OF 

IMPAIRMENT. 

Q. PROFESSOR SNYDER, HOW DO YOU CHARACTERIZE THE DIFFERENCES 

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SNYDER DIRECT BY MR. SHACHAM

UNITED STATES COURT REPORTERS

1802

BETWEEN THE APPROACH THAT YOU TOOK AND THE APPROACH THAT 

PROFESSOR SHAPIRO TOOK? 

A. THE APPROACHES ARE VERY DIFFERENT. MY APPROACH IS TO 

CONDUCT AN EMPIRICAL ANALYSIS INFORMED BY INDUSTRIAL 

ORGANIZATION PRINCIPLES, INFORMED BY AN UNDERSTANDING OF WHAT 

FACTORS INFLUENCE FIRM LEVEL SUCCESS, OR FAILURE, IN THESE 

KINDS OF INDUSTRIES, AND IN THIS INDUSTRY IN PARTICULAR, AND 

ALSO GROUNDED IN SOCIAL SCIENCE PRINCIPLES WHERE THE OBJECTIVE 

IS TO DETERMINE CAUSALITY, TO ESTABLISH CAUSALITY. 

PROFESSOR SHAPIRO'S APPROACH IS PURELY THEORETICAL. 

Q. WHAT DO YOU MEAN BY THAT? 

A. LET ME GO BACK TO THE POINT ABOUT THE COUNTER FACTUAL 

WORLD. 

HE EXPLAINED THE CONCEPT OF A COUNTER FACTUAL WORLD, BUT 

HE DIDN'T DEVELOP WHAT INDUSTRY FACTORS WOULD BE PRESENT IN 

THAT COUNSELLOR FACTUAL WORLD. HE DIDN'T IDENTIFY OUTCOMES 

THAT WOULD BE DIFFERENT FROM THE REAL WORLD OUTCOMES THAT WE 

OBSERVE. 

IN THE END, WHAT HE'S GOT IS SIMPLY A THEORETICAL CLAIM 

THAT ANTICOMPETITIVE HARMS MUST INEVITABLY FOLLOW FROM THE 

ALLEGED CONDUCT. 

Q. AND WHAT'S YOUR REACTION TO THAT? 

A. I AM -- I AM TAKEN ABACK. THIS IS -- THIS IS AN INDUSTRY 

SETTING WHERE AN IO ECONOMIST CAN APPLY IO PRINCIPLES TO 

EVALUATE WHAT'S HAPPENING IN THE INDUSTRY. 

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SNYDER DIRECT BY MR. SHACHAM

UNITED STATES COURT REPORTERS

1803

IN THIS INDUSTRY, WE HAVE A LOT OF REAL WORLD OUTCOMES TO 

OBSERVE. AS I MENTIONED, THE TOP 5 CHANGE WITH GREAT 

FREQUENCY. 

SO HERE'S A SITUATION WHERE YOU CAN APPLY IO PRINCIPLES, 

YOU HAVE A LOT OF DATA. MOST ECONOMISTS WOULD SAY, THIS IS 

GREAT, LET'S ENGAGE THE DATA. 

BUT PROFESSOR SHAPIRO SAID, IN EFFECT, IT'S TOO 

COMPLICATED. 

Q. DO YOU THINK THAT THE DIFFERENCES IN APPROACH EXPLAIN THE 

DIFFERENT CONCLUSIONS THAT YOU AND PROFESSOR SHAPIRO REACHED? 

A. YES. IF YOU JUST RELY ON THEORY, OFTENTIMES YOU GET THE 

WRONG ANSWER WITH RESPECT TO THE REAL WORLD. 

Q. CAN YOU PROVIDE AN EXAMPLE TO ILLUSTRATE THIS PROBLEM IN 

PROFESSOR SHAPIRO'S METHODOLOGY? 

A. YES. I MEAN, HIS THEORY IS THAT QUALCOMM'S CONDUCT 

REDUCED INVESTMENT BY VARIOUS FIRMS. BUT HE DIDN'T IDENTIFY 

ANY OUTCOMES THAT WOULD ESTABLISH THAT AS A RESULT. 

Q. AND HAVE YOU IDENTIFIED ANY ALTERNATIVE EXPLANATIONS FOR 

WHY A COMPANY IN THIS INDUSTRY MAY HAVE SPENT LESS ON R&D THAN 

ANOTHER COMPANY? 

A. YES. AS I INDICATED, SOME FIRMS ARE FAST FOLLOWERS AND 

THEY HAVE POLICIES THAT LIMIT THEIR INVESTMENTS AWAY FROM THE 

SO-CALLED LEADING EDGE. THAT'S INDEPENDENT OF ALLEGED CONDUCT. 

Q. DO YOU SEE A SIMILAR FLAW WITH PROFESSOR SHAPIRO'S CLAIMS 

ABOUT REDUCED MARGINS? 

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SNYDER DIRECT BY MR. SHACHAM

UNITED STATES COURT REPORTERS

1804

A. I DO. MARGINS ARE IMPORTANT IN BUSINESS, OF COURSE. BUT 

MARGINS VARY ACROSS PRODUCTS, ACROSS FIRMS, ACROSS TIME. 

SO THERE ARE A LOT OF INDEPENDENT FACTORS THAT INFLUENCE 

MARGINS. 

PROFESSOR SHAPIRO HASN'T IDENTIFIED ANYTHING THAT WOULD BE 

DIFFERENT SPECIFICALLY IN THIS COUNTER FACTUAL WORLD FROM 

WHAT'S OBSERVED IN THE REAL WORLD. 

Q. AND DID YOU IDENTIFY ANY EXPLANATIONS FOR WHY ONE CHIP 

MAKER'S MARGINS MIGHT BE LOWER THAN ANOTHER'S? 

A. WELL, GO BACK TO ONE OF THE IMPORTANT FACTORS THAT I 

IDENTIFIED, INVESTMENT AND INVESTMENT EFFICIENCY. 

IF FIRMS ARE MORE EFFICIENT WITH INVESTMENT, THEN THEY'RE 

GOING TO HAVE GREATER MARGINS. IF THEY'RE LESS EFFICIENT WITH 

INVESTMENT, THEY'RE GOING TO HAVE LOWER MARGINS. 

MR. SHACHAM: THANK YOU, PROFESSOR SNYDER. 

THE COURT: OKAY. TIME IS 4:09. 

(PAUSE IN PROCEEDINGS.) 

MS. IKEDA: YOUR HONOR, MAY WE APPROACH WITH SOME 

BINDERS? 

THE COURT: YES. DOES SOMEBODY NEED ANY WATER, THE 

PERSON WHO'S COUGHING? DO YOU NEED ANY WATER? WOULD YOU LIKE 

WATER? 

MR. KOTARSKI: NO, I'M OKAY. THANK YOU. 

THE COURT: OKAY. BECAUSE WE CAN GIVE YOU SOME WATER 

OR ACTUALLY, GIVE HIM COUGH DROPS. 

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SNYDER CROSS BY MS. IKEDA

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1805

(PAUSE IN PROCEEDINGS.) 

THE COURT: OKAY. LET ME KNOW WHEN YOU'RE READY. 

MS. IKEDA: I'M READY. 

THE COURT: OKAY. 4:10. GO AHEAD, PLEASE. 

CROSS-EXAMINATION

BY MS. IKEDA: 

Q. GOOD AFTERNOON, SIR. 

A. GOOD AFTERNOON. 

Q. YOU'RE NOT AN EXPERT IN CELLULAR TECHNOLOGY, ARE YOU? 

A. I'M NOT.

Q. AND YOU'RE NOT AN EXPERT IN THE MODEM CHIP INDUSTRY; 

CORRECT? 

A. I'M NOT. I APPLIED IO PRINCIPLES TO THE INDUSTRY, BUT I'M 

NOT AN EXPERT.

Q. AND YOU APPROACHED YOUR ASSIGNMENT IN THIS CASE BY 

INTRODUCING TWO HYPOTHESES; IS THAT RIGHT? 

A. YES. 

Q. AND ONE OF THOSE IS CALLED WHAT YOU TERMED THE PLAINTIFF'S 

HYPOTHESIS? 

A. YES, THAT'S -- 

Q. AND THE OTHER -- OH, SORRY. 

A. THAT'S THE HYPOTHESIS THAT QUALCOMM'S ALLEGED CONDUCT 

CAUSED INDUSTRY OUTCOMES. 

Q. AND THE OTHER HYPOTHESIS IS WHAT YOU CALLED THE INDUSTRY 

FACTORS HYPOTHESIS; CORRECT? 

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1806

A. YES, THAT'S THE OBSERVED REAL WORLD OUTCOMES ARE EXPLAINED 

FULLY BY INDEPENDENT FACTORS.

Q. AND MORE SPECIFICALLY, UNDER THE INDUSTRY FACTORS 

HYPOTHESIS, THE SUCCESS AND FAILURE OF MODEM CHIP SUPPLIERS 

DEPENDS ON THREE FIRM LEVEL FACTORS; RIGHT?

A. YES.

Q. AND THAT'S FORESIGHT, INVESTMENT EFFICIENCY, AND 

EXECUTION; RIGHT? 

A. YES. 

Q. NOW, YOUR INDUSTRY FACTORS HYPOTHESIS AND THE PLAINTIFF'S 

HYPOTHESIS ARE NOT MUTUALLY EXCLUSIVE; CORRECT? 

A. NOT AT THE OUTSET, NO. 

Q. SO THE CONCLUSION THAT AN INDUSTRY SHOWED SIGNS OF MARKET 

PARTICIPANT'S POOR FORESIGHT ISN'T INCOMPATIBLE WITH A 

CONCLUSION THAT THE INDUSTRY ALSO SHOWED SIGNS OF A DOMINANT 

FIRM'S ANTICOMPETITIVE CONDUCT; CORRECT? 

A. THAT'S CORRECT. AS I APPROACHED MY WORK, I EXPLAINED THAT 

I EVALUATED REAL WORLD INCOMES -- EXCUSE ME -- OUTCOMES TO SEE 

IF, IN FACT, THOSE OUTCOMES WERE EXPLAINED BY INDUSTRY FACTORS 

OR WERE NOT EXPLAINED BY INDUSTRY FACTORS, IN WHICH CASE THEN I 

WOULD TURN TO THE ALLEGED CONDUCT FOR A POTENTIAL EXPLANATION. 

Q. OKAY. AND THE CONCLUSION THAT THE INDUSTRY SHOWED SIGNS 

OF POOR INVESTMENT DECISIONS ISN'T INCOMPATIBLE WITH THE 

CONCLUSION THAT THE INDUSTRY ALSO SHOWED SIGNS OF A DOMINANT 

FIRM'S ANTICOMPETITIVE CONDUCT; CORRECT? 

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1807

A. I JUST WANT TO MAKE SURE. I'M NOT SAYING THAT THE 

INDUSTRY SHOWED POOR INVESTMENT DECISIONS. I'M SAYING IT 

DIFFERED ACROSS FIRMS. 

Q. SURE. I'M JUST SPEAKING THEORETICALLY RIGHT NOW JUST TO 

UNDERSTAND YOUR POSITION. 

SO THE CONCLUSION THAT AN INDUSTRY SHOWED SIGNS OF POOR 

INVESTMENT DECISIONS ISN'T COMPATIBLE WITH A CONCLUSION THAT 

THE INDUSTRY ALSO SHOWED SIGNS OF A DOMINANT FIRM'S 

ANTICOMPETITIVE CONDUCT; RIGHT? 

A. I'M NOT SURE WHAT ELSE TO ADD. I -- I DIDN'T CHARACTERIZE 

OVERALL INDUSTRY INVESTMENT DECISIONS. I DID IT FIRM BY FIRM. 

Q. I'M NOT ASKING WHAT YOU DID RIGHT NOW. I'M ASKING SIMPLY 

WHETHER THESE TWO CONCLUSIONS ARE INCOMPATIBLE? 

A. I WOULD SAY THEY'RE NOT WITHOUT, YOU KNOW --

Q. THANK YOU? 

A. -- DOING THE ANALYSIS. 

Q. AND THE CONCLUSION THAT THE INDUSTRY SHOWED SIGNS OF POOR 

EXECUTION BY FIRMS ISN'T INCOMPATIBLE WITH THE CONCLUSION THAT 

THE INDUSTRY ALSO SHOWED SIGNS OF A DOMINANT FIRM'S 

ANTICOMPETITIVE CONDUCT; CORRECT?

A. IT'S BASICALLY THE SAME ANSWER. I DIDN'T ANALYZE THIS ON 

AVERAGE. I DID IT BY FIRM. 

Q. SURE. SO THAT ANSWER IS NO? 

A. EXCUSE ME. I'M JUST GOING TO GET TO THE BOTTOM LINE. AND 

IT'S NOT THE CASE THAT SOMEHOW OVERALL OR AGGREGATE EXECUTION 

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1808

COULD BE DIFFERENT. 

Q. NOW, YOUR CONCLUSION IN THIS CASE IS THAT EVERY MODEM CHIP 

SUPPLIER'S OUTCOME THAT YOU LOOKED AT WAS EXPLAINED BY THE 

INDUSTRY FACTORS; CORRECT? 

A. YES. I FOUND A CLEAR, COMPELLING EXPLANATION FOR REAL 

WORLD OUTCOMES BASED ON THESE FACTORS. 

Q. AND YOU DIDN'T GET TO THAT STEP OF EVALUATING PLAINTIFF'S 

HYPOTHESIS AND LOOKING AT IF I REMEMBER OUTCOMES IN THE ABSENCE 

OF QUALCOMM'S CONDUCT; CORRECT?

A. I THINK I TESTIFIED, IF I HAD FOUND OUTCOMES THAT WERE 

INCONSISTENT WITH THE EXPLANATIONS THAT WERE POTENTIALLY 

AVAILABLE BY INDEPENDENT FACTORS, THAT I WOULD HAVE GOTTEN TO 

THAT STEP. 

BUT I DIDN'T SEE SUCH REAL WORLD OUTCOMES. 

Q. SO YOU DIDN'T GET TO THAT STEP OF EVALUATING PLAINTIFF'S 

HYPOTHESIS; CORRECT? 

A. WELL, IF PROFESSOR SHAPIRO HAD ESTABLISHED THAT THE 

OUTCOMES IN THE REAL WORLD WERE DIFFERENT, OR IF I HAD FOUND 

THEM, THEN I WOULD HAVE GOTTEN TO THAT STEP.

Q. SO YOU DIDN'T GET TO THAT STEP? 

A. I DIDN'T GET TO THAT STEP BECAUSE I DID NOT FIND REAL 

WORLD OUTCOMES THAT WERE NOT FULLY EXPLAINED, COMPELLINGLY 

EXPLAINED BY INDEPENDENT FACTORS.

Q. AND YOU'D AGREE THAT ANTICOMPETITIVE CONDUCT BY A DOMINANT 

FIRM CAN AFFECT ITS RIVALS' INVESTMENT DECISIONS; RIGHT? 

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1809

A. YES, AT A THEORETICAL LEVEL, THAT'S CERTAINLY TRUE.

Q. AND YOU'D ALSO AGREE THAT ANTICOMPETITIVE CONDUCT BY A 

DOMINANT FIRM CAN AFFECT ITS RIVALS' FORESIGHT? 

A. WELL, I THINK YOU'RE ASKING ME IF THE FACTORS, SUCH AS 

FORESIGHT, ARE INDEPENDENT, AND I EXPLAINED WHY I FOUND THAT 

NOT TO BE AN ISSUE IN MY ANALYSIS. 

I EVALUATED THE INDUSTRY OVER A LONG HISTORY ACROSS FIRMS, 

AND I FOUND THIS TO BE INDEPENDENT. 

YOU'RE ASKING ME IF IT'S THEORETICALLY POSSIBLE, YES.

Q. OKAY. AND YOU'D ALSO AGREE, THEORETICALLY, THAT 

ANTICOMPETITIVE CONDUCT BY A DOMINANT FIRM CAN AFFECT ITS 

RIVALS' EXECUTION; CORRECT? 

A. BASICALLY THE SAME ANSWER. THEORETICALLY IT'S POSSIBLE. 

I DIDN'T FIND THAT HERE. THERE WERE CLEAR EXECUTION, 

FORESIGHT, INVESTMENT INEFFICIENCIES INDEPENDENT OF THE 

CONDUCT. 

Q. OKAY. SO, IN FACT, THERE'S A BODY OF ECONOMIC LITERATURE 

THAT DISCUSSES THE ANTICOMPETITIVE EFFECTS THAT A DOMINANT 

FIRM'S CONDUCT CAN HAVE ON ITS RIVALS' INVESTMENT DECISIONS; 

RIGHT? 

A. THERE IS SOME LITERATURE ON THIS. I DON'T KNOW THAT I 

WOULD CHARACTERIZE IT AS A BODY, BUT I AGREE THERE'S LITERATURE 

ON THESE QUESTIONS.

Q. AND THE LITERATURE ALSO DISCUSSES THE POTENTIAL 

ANTICOMPETITIVE EFFECTS THAT A DOMINANT FIRM'S CONDUCT CAN HAVE 

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UNITED STATES COURT REPORTERS

1810

ON ITS RIVALS' ABILITY TO REACH SCALE; CORRECT? 

A. YES, THERE ARE THESE KINDS OF THEORETICAL PAPERS THAT 

INVESTIGATE -- EXCUSE ME, THAT INVESTIGATE THOSE ISSUES.

Q. YOU'D AGREE THERE'S ALSO ECONOMIC LITERATURE DESCRIBING 

HOW ANTICOMPETITIVE CONDUCT CAN CAUSE ITS RIVALS TO FAIL; 

CORRECT? 

A. YES, THERE'S A LOT OF THEORY ABOUT THIS. 

Q. NOW, YOU STATED EARLIER THAT YOU BELIEVED THAT THE 

FORESIGHT, INVESTMENT EFFICIENCY, AND EXECUTION OF QUALCOMM'S 

RIVALS WOULD NOT BE INFLUENCED BY QUALCOMM'S CONDUCT; IS THAT 

RIGHT? 

A. BASED ON THE ANALYSIS THAT I DID, THAT'S CORRECT. I - I 

EVALUATED THAT ISSUE AND FOUND THAT THESE ARE INDEPENDENT 

FACTORS.

Q. AND YOU HAVE NO OPINION ON HOW YOUR ANALYSIS WOULD CHANGE 

IF QUALCOMM'S CONDUCT DID, IN FACT, AFFECT ITS RIVALS' 

FORESIGHT, INVESTMENT EFFICIENCY, AND EXECUTION; CORRECT? 

A. WELL, I DON'T HAVE AN OPINION BECAUSE I DON'T THINK ANYONE 

HAS IDENTIFIED HOW THESE FACTORS ARE SO-CALLED TAINTED. 

Q. YOU DON'T HAVE AN OPINION ON HOW YOUR ANALYSIS WOULD 

CHANGE IF QUALCOMM'S CONDUCT AFFECTED ITS RIVALS' FORESIGHT, 

INVESTMENT EFFICIENCY, AND EXECUTION; CORRECT? 

A. WELL, ESSENTIALLY IT'S TWO PARTS. ONE, MY ANALYSIS SHOWS 

THAT THEY WERE INDEPENDENT; AND, SECONDLY, I HAVEN'T FOUND ANY 

EVIDENCE TO THE CONTRARY. 

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1811

SO OF COURSE -- THIS IS NOT RELEVANT TO MY ANALYSIS GIVEN 

THOSE TWO THINGS. 

Q. I'M SIMPLY ASKING WHETHER YOU HAVE AN OPINION ON THIS. 

A. I DON'T WANT TO DELAY THINGS. I DIDN'T FIND THESE FACTORS 

TO BE ANYTHING BUT INDEPENDENT. I'M NOT AWARE THAT ANYONE HAS 

EXPLAINED HOW THEY'RE TAINTED OR NOT INDEPENDENT. 

IF I HAD, I WOULD HAVE EVALUATED THAT AS PART OF MY 

ANALYSIS. 

Q. SO COULD YOU PLEASE TURN TO YOUR DEPOSITION, PAGE 70, LINE 

23. IT'S ALSO UP ON THE SCREEN IF THAT'S HELPFUL. 

A. OH, THANK YOU. 

Q. SIR, YOU WERE ASKED AT LINE 23, "IF IT WERE THE CASE THAT 

JUST TAKE AS A GIVEN THAT QUALCOMM'S CONDUCT DID EFFECT MODEM 

CHIP SUPPLIERS, FORESIGHT, THEIR OWN VESTMENT DECISIONS AND 

THEIR EXECUTION, HOW, IF AT ALL, WOULD THAT CHANGE YOUR 

ANALYSIS. 

AND YOU ANSWERED, "I DON'T HAVE AN OPINION ABOUT THAT." 

CORRECT? 

A. YES, GIVEN THAT I HAVEN'T SEEN ANY EVIDENCE THAT WOULD 

INDICATE -- 

Q. RIGHT? 

A. -- THE NATURE OF THAT RELATIONSHIP.

Q. SURE. AND YOU DIDN'T ANALYZE THAT POSSIBILITY BECAUSE YOU 

HAVEN'T SEEN ANY CLAIM BY THE FTC, OR TESTIMONY FROM 

PROFESSOR SHAPIRO, ABOUT THAT RELATIONSHIP, OR POTENTIAL 

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1812

RELATIONSHIP; CORRECT? 

A. THAT'S WHAT I STATED AND I STAND BY IT, YES. 

Q. YOU ALSO STATED THAT YOU WOULDN'T RULE OUT THE POSSIBILITY 

THAT QUALCOMM'S CONDUCT AFFECTED ITS RIVALS' FORESIGHT, 

INVESTMENTS, AND EXECUTION; CORRECT? 

A. THAT'S CORRECT. I WOULDN'T RULE THAT OUT. IT'S A 

THEORETICAL POSSIBILITY. I DIDN'T FIND IT. 

Q. NOW, IN ADDITION TO ANALYZING INDIVIDUAL MODEM CHIP 

SUPPLIER PERFORMANCE, YOU ALSO ANALYZED OVERALL INDUSTRY 

PERFORMANCE; CORRECT? 

A. YES.

Q. AND WHAT YOUR ANALYSIS SHOWS THERE IS THAT THERE'S NO 

OBVIOUS BASIS FOR SAYING THAT INDUSTRY PERFORMANCE WAS 

IMPAIRED; CORRECT? 

A. CORRECT. 

Q. AND YOUR ANALYSIS DOESN'T ADDRESS WHETHER INDUSTRY 

PERFORMANCE COULD HAVE BEEN BETTER; CORRECT? 

A. THAT'S RIGHT. IT'S HARD TO IMAGINE IT COULD BE BETTER. 

BUT ANYTHING IS POSSIBLE. 

Q. SO, FOR EXAMPLE, YOU POINTED EARLIER TO INCREASING 

DOWNLINK AND UPLINK SPEEDS OVER TIME AND YOU POINTED TO THAT AS 

EVIDENCE AGAINST THE IMPLICATION THAT QUALCOMM'S ALLEGED 

EXCLUSIONARY CONDUCT HAS IMPAIRED INDUSTRY PERFORMANCE; 

CORRECT? 

A. YES. 

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1813

Q. BUT YOU DIDN'T ANALYZE WHETHER DOWNLINK AND UPLINK SPEEDS 

COULD HAVE BEEN BETTER IN THE ABSENCE OF QUALCOMM'S CONDUCT, 

DID YOU? 

A. THAT'S CORRECT, NOR DID, OF COURSE, PROFESSOR SHAPIRO. 

Q. SURE. 

A. THIS WAS A CONFIRMING TEST.

Q. OKAY. AND YOU ALSO POINT TO THE FACT THAT CHIP PRICES 

HAVE CONTINUED TO DECLINE AS EVIDENCE AGAINST THE IMPLICATION 

THAT QUALCOMM'S CONDUCT IMPAIRED INDUSTRY PERFORMANCE; CORRECT? 

A. CORRECT. 

Q. BUT YOU DIDN'T ANALYZE WHETHER PRICES WOULD HAVE COME DOWN 

EVEN MORE IN THE ABSENCE OF QUALCOMM'S CONDUCT; CORRECT? 

A. ANYTHING IS POSSIBLE. I DIDN'T ANALYZE THAT. THIS WAS A 

CONFIRMING TEST. 

MS. IKEDA: NO FURTHER QUESTIONS. THANK YOU. 

THE COURT: ALL RIGHT. THE TIME IS 4:20. 

MR. SHACHAM: NO FURTHER QUESTIONS, YOUR HONOR. 

THE COURT: ALL RIGHT. MAY THIS WITNESS BE EXCUSED 

SUBJECT TO RECALL OR NOT SUBJECT TO RECALL? 

MR. SHACHAM: NOT SUBJECT TO RECALL, YOUR HONOR. 

THE COURT: WHAT DO YOU THINK? 

MS. IKEDA: NO. 

MS. MILICI: NOT FOR THE FTC. 

THE COURT: ALL RIGHT. THEN YOU HAVE COMPLETED YOUR 

TRIAL TESTIMONY, AND YOU ARE FREE TO LEAVE. 

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UNITED STATES COURT REPORTERS

1814

THE WITNESS: THANK YOU, YOUR HONOR. 

THE COURT: CALL YOUR NEXT WITNESS, PLEASE. YOU HAVE 

TEN MINUTES. 

MR. BYARS: BRENT BYARS FOR QUALCOMM. WE HAVE AN 

EIGHT MINUTE DEPOSITION VIDEO BY THOMAS LINDNER, AND I'D LIKE 

TO OFFER DOCUMENTS INTO EVIDENCE IF YOU COULD START MY TIME. 

THE COURT: OKAY. TIME IS 4:21. GO AHEAD, PLEASE. 

MR. BYARS: I OFFER QX 110 AND QX 113. 

THE COURT: ALL RIGHT. ANY OBJECTION? WAS THERE ANY 

OBJECTION? WHOSE WITNESS IS THIS? 

MS. MILICI: WE DON'T KNOW HE WAS COMING UP NEXT. 

WE'RE JUST -- I DON'T THINK WE HAVE ANY OBJECTION. 

MR. MATHESON: NO OBJECTION. 

MS. MILICI: NO OBJECTION. 

THE COURT: OKAY. THEN THOSE ARE ADMITTED. ARE YOU 

GUYS GOING OUT OF ORDER AGAIN? WHO'S YOUR NEXT WITNESS? 

MR. BYARS: THIS IS NEXT ON THE LIST. 

MR. VAN NEST: THIS IS THE LIST WE PUBLISHED AND YOUR 

HONOR HAS. 

THE COURT: OKAY. SO IT WAS ONLY MR. WOLFF THAT WAS 

OUT OF ORDER AND THAT'S BECAUSE OF TIME SITUATION. 

ALL RIGHT. LET'S GO AHEAD, PLEASE. THEY'RE BOTH 

ADMITTED. 

(DEFENDANT'S EXHIBITS QX 110 AND QX 113 WERE ADMITTED IN 

EVIDENCE.) 

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LINDNER DEPOSITION

UNITED STATES COURT REPORTERS

1815

(THE VIDEOTAPED DEPOSITION OF THOMAS LINDNER WAS PLAYED IN 

OPEN COURT OFF THE RECORD.)

THE COURT: OKAY. TIME IS 4:30. 

OKAY. SO I THINK THIS IS THE END FOR TODAY. 

LET ME GIVE YOU YOUR TIME, PLEASE. 

(PAUSE IN PROCEEDINGS.) 

THE COURT: OKAY. SO FOR QUALCOMM TODAY HAS USED 4 

HOURS AND 22 MINUTES. SO WITH THE TIME THAT WAS PREVIOUSLY 

USED, THAT WILL BE 21 HOURS AND 11 MINUTES. 

ANYONE WANT TO JUST DOUBLE-CHECK THAT? IF IT WAS 16 HOURS 

AND 49 MINUTES ON FRIDAY, 21 AND 11. 

AND THEN TODAY FTC USED 1 HOUR AND 21 MINUTES. SO YOU 

WERE AT 21 AND 19 MINUTES ON FRIDAY, SO THAT WOULD BE 22 HOURS 

AND 40 MINUTES. LET ME JUST DOUBLE-CHECK THAT. I THINK THAT'S 

RIGHT, 22 HOURS AND 40 MINUTES. 

OKAY. SO IN TOTAL, WHAT, FTC HAS 2 HOURS AND 20 MINUTES? 

DOES THAT SOUND RIGHT? AND QUALCOMM HAS 3 HOURS AND 49 

MINUTES. 

DOES THAT SOUND RIGHT? 

MR. VAN NEST: YES, YOUR HONOR. 

THE COURT: OKAY. WOW. SO WE HAVE BASICALLY NOT 

VERY MUCH TIME. THAT'S EFFECTIVELY A DAY AND CHANGE. WHAT IS 

THAT, 6 HOURS AND 9 MINUTES? ALL RIGHT. WELL, WE WOULDN'T BE 

ABLE TO FINISH ON FRIDAY. 

WE HAVE SO LITTLE TIME LEFT. YOU CAN'T GET STARTED ON 

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UNITED STATES COURT REPORTERS

1816

FRIDAY? I KNOW I HAD APPROVED IT WITH THOSE CONDITIONS, THAT 

WE DO THE HPO'S ON FRIDAY, AND THE PARTIES FILE THEIR CLOSING 

ARGUMENT SLIDE OBJECTIONS ON TUESDAY MORNING. 

MS. MILICI: YOUR HONOR, I THINK THE ISSUE IS THAT 

THE WITNESSES THAT THEY HAVE COMING ON FRIDAY IS THEIR CURRENT 

HEAD OF LICENSING AND THEIR MAIN ECONOMIC EXPERT, AND SO IT'S 

HARD TO MAKE A, FOR US TO MAKE A FINAL CALL ON HOW TO USE A 

VERY LIMITED NUMBER OF MINUTES UNTIL WE'VE HEARD WHAT THAT 

TESTIMONY IS. 

THE COURT: ALL RIGHT. BUT I WOULD LIKE TO FINISH AS 

EARLY AS POSSIBLE ON MONDAY. 

MS. MILICI: UNDERSTOOD. 

THE COURT: THAT WOULD ALSO ENABLE THE PARTIES TO 

PREPARE YOUR CLOSING ARGUMENTS AND GIVE YOU MORE LEAD TIME ON 

THAT. SO DO WHAT YOU CAN SO THAT WE CONCLUDE AS EARLY AS 

POSSIBLE ON MONDAY. 

MS. MILICI: WE ABSOLUTELY WILL. 

THE COURT: OKAY. THEN I WILL NOT SEE YOU AGAIN 

UNTIL FRIDAY MORNING AT 9:00. 

MR. VAN NEST: YOUR HONOR? 

THE COURT: YES. 

MR. VAN NEST: I JUST HAVE ONE HEADS UP FOR THE COURT 

SO YOU WON'T BE SURPRISED. 

THE COURT: OKAY. 

MR. VAN NEST: YOUR HONOR RULED EARLIER THAT EVENTS 

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UNITED STATES COURT REPORTERS

1817

OCCURRING AFTER MARCH OF 2018 WOULD BE EXCLUDED AND THE 

WITNESSES HAVE STUCK TO THAT. 

WE DID HAVE THE ONE EXCEPTION FOR APPLE IPHONES LAUNCHED 

IN 2018. 

WE NEED TO FILE A PROFFER OF WHAT EVIDENCE WE WOULD HAVE 

ELICITED. WE INTEND TO DO THAT TONIGHT. IT'S RATHER SHORT. 

NONE OF IT IS UNDER SEAL. 

SO WE INTEND TO FILE THAT. IT'S SIMPLY A RECITATION OF 

EVIDENCE. WE'RE NOT ASKING FOR A RULING OR ANYTHING OF THAT 

NATURE. 

AND I DON'T BELIEVE IT'S SUBJECT TO ANY SEALING. BUT I 

DIDN'T WANT TO JUST FILE IT WITHOUT JUST ALERTING THE COURT 

THAT IT'S COMING. 

THE COURT: OKAY. 

MR. VAN NEST: IT'S SIMPLY TO MAKE SURE OUR RECORD IS 

COMPLETE. 

THE COURT: SURE. THANK YOU. 

MR. VAN NEST: THANK YOU. 

THE COURT: ALL RIGHT. IS FTC GOING TO FILE A 

RESPONSE TO THAT? 

MS. MILICI: YOUR HONOR, THIS IS LITERALLY THE FIRST 

WE'VE EVER HEARD OF THIS. 

THE COURT: OH. 

MS. MILICI: SO I DON'T KNOW WHAT THEY'RE PLANNING TO 

FILE, I DON'T KNOW HOW LONG IT IS. I DON'T KNOW WHAT IT'S 

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UNITED STATES COURT REPORTERS

1818

BASED UPON. THIS IS THE FIRST TIME WE'VE HEARD ABOUT IT 

STANDING RIGHT HERE. 

THE COURT: WHAT IS IT BASED ON SINCE THERE WASN'T 

ANY DISCOVERY? 

MR. VAN NEST: EVERYTHING HAS BEEN PRODUCED. IT'S 

PRIMARILY LICENSE AGREEMENTS THAT WERE ENTERED INTO FOR 5G 

AFTER MARCH OF 2018. THEY'VE ALL BEEN PRODUCED. IT'S SOME 

ANNOUNCEMENTS BY THE FTC AND OTHERS, OR MAYBE THE FCC. 

THE COURT: YOU KNOW WHAT? ACTUALLY, I'M NOT GOING 

TO ALLOW YOU TO FILE IT. 

MR. VAN NEST: I THINK I HAVE TO FILE IT, YOUR HONOR, 

UNDER RULE 103. I HAVE TO MAKE A RECORD OF WHAT I WOULD HAVE 

PRESENTED. YOUR HONOR EXCLUDED EVIDENCE -- 

THE COURT: NO. I THINK AS A MATTER OF LAW YOU CAN 

JUST GET ME REVERSED ON WHETHER THAT -- ANY DISCOVERY POST THE 

DISCOVERY CUTOFF SHOULD HAVE BEEN ALLOWED. 

MR. VAN NEST: WELL, NO. ACTUALLY, UNDER THE RULES 

OF EVIDENCE, YOUR HONOR, AND WE'RE HAPPY TO BRIEF THIS, BUT 

UNDER RULE 103, TO PRESERVE A CLAIM OF ERROR WHERE WE CLAIM THE 

ERROR IS EXCLUDING EVIDENCE, A PARTY MUST INFORM THE COURT OF 

ITS SUBSTANCE BY AN OFFER OF PROOF UNLESS THE SUBSTANCE WAS 

APPARENT FROM THE CONTEXT. 

SO I THINK WE HAVE TO PROVIDE AN OFFER OF PROOF. YOUR 

HONOR CAN TELL US TO DO IT IN A DIFFERENT FORM, OF COURSE. BUT 

I THINK YOU'LL SEE IT'S A VERY SHORT STATEMENT OF THE LICENSE 

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UNITED STATES COURT REPORTERS

1819

AGREEMENTS -- 

THE COURT: I'M SORRY. YOU'RE CITING FEDERAL RULE OF 

EVIDENCE 1003? 

MR. VAN NEST: NO, RULE 103. FEDERAL RULE OF 

EVIDENCE 103. 

THE COURT: OH, SORRY. I MISHEARD YOU. 

THE LICENSES WERE ALREADY PART OF THE MOTION. THEY'RE 

ALREADY PART OF THE RECORD. I'VE ALREADY RULED ON SEALING AS 

TO THOSE DOCUMENTS. THEY'RE ALSO PART OF THE RECORD. YOU 

ATTACHED THOSE TO THE MOTION REGARDING NEVO, AND THE MOTION IN 

LIMINE. SO THOSE ARE ALREADY IN THE RECORD. 

MR. VAN NEST: THERE WERE TWO OF THOSE. 

THE COURT: THAT'S CORRECT. 

MR. VAN NEST: BUT THERE ARE MANY, MANY, MANY MORE 

THAT HAVE BEEN ENTERED INTO BETWEEN THEN AND NOW. SO THE 

PRIMARY MATERIAL IN THE PROFFER IS THE ADDITIONAL LICENSE 

AGREEMENTS THAT HAVE BEEN ENTERED INTO SINCE THAT TIME. 

THERE ARE ALSO SOME ANNOUNCEMENTS ABOUT 5G -- 

THE COURT: WAIT. BUT THAT WAS BRIEFED IN THE FALL. 

SO YOU'RE SAYING ADDITIONAL AGREEMENTS SINCE THE FALL WHEN THE 

DAUBERTS AND THE MOTIONS IN LIMINE WERE BRIEFED? 

MR. VAN NEST: I THINK THESE -- I THINK THERE ARE 

SOME THAT FALL BEFORE THAT AND SOME THAT FALL AFTER THAT. 

BUT THEY ARE -- THEY ARE LICENSE AGREEMENTS, ALL OF WHICH 

WERE ENTERED INTO BEFORE -- EXCUSE ME -- AFTER MARCH OF 2018. 

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UNITED STATES COURT REPORTERS

1820

ALL THAT WAS BRIEFED IN THE FALL WERE TWO AGREEMENTS THAT 

WERE RELIED ON BY PROFESSOR NEVO, AND THOSE WERE THE SUBJECT OF 

YOUR HONOR'S ORDER. 

THESE ARE ADDITIONAL LICENSE AGREEMENTS, AND MARKET -- 

THE COURT: SO THESE ARE AGREEMENTS THAT YOUR EXPERTS 

DIDN'T EVEN RELY ON? 

MR. VAN NEST: THESE ARE -- 

THE COURT: CORRECT? 

MR. VAN NEST: BECAUSE THE REPORTS WERE FILED -- 

WELL, TWO OF THEM WERE RELIED ON BY PROFESSOR NEVO AND YOUR 

HONOR EXCLUDED THOSE. 

THE COURT: RIGHT. BUT THOSE ARE ALREADY IN THE 

RECORD. 

MR. VAN NEST: CORRECT. 

THE COURT: I THINK YOU CAN MAKE YOUR APPEAL ON THAT 

ISSUE. IT'S ALREADY PART OF THE RECORD. YOU CAN CITE THE ECF. 

I'VE ALREADY RULED ON SEALING ON THOSE TWO AGREEMENTS. 

MR. VAN NEST: THAT'S RIGHT. BUT -- 

THE COURT: I WAS EVEN SEALING THAT THERE WERE TWO, 

BUT YOU'VE MADE THAT PUBLIC, SO, OKAY, THERE WERE TWO 

AGREEMENTS THAT PROFESSOR NEVO RELIED ON, ON 5G. 

MR. VAN NEST: THAT'S RIGHT. 

THE COURT: UM-HUM. 

MR. VAN NEST: BUT I HAVE EXTENSIVE EVIDENCE OF 

LICENSING ACTIVITY IN 5G THAT HAS OCCURRED SINCE MARCH OF 2018, 

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UNITED STATES COURT REPORTERS

1821

AND IN ORDER TO PERFECT MY CLAIM OF ERROR AND PERFECT MY 

APPEAL, I HAVE TO MAKE AN OFFER OF PROOF. 

I CAN MAKE IT ORALLY, I CAN DO IT SOME OTHER WAY. BUT I 

WANTED TO GIVE THE COURT A HEADS UP. THE MOST EFFICIENT WAY TO 

DO IT IS TO FILE IT, AND, AGAIN, WE'RE NOT ASKING THE COURT TO 

MAKE ANY RULING. THE FTC CAN MAKE WHATEVER RESPONSE THEY WISH. 

BUT IT DOES CONSIST OF SOME ANNOUNCEMENTS BY COMPETITORS 

ABOUT 5G AND SOME STATEMENTS BY THE FCC ABOUT 5G. 

MS. MILICI: YOUR HONOR, THIS -- 

MR. VAN NEST: THAT'S WHAT'S IN THE PROFFER. 

MS. MILICI: THIS IS THE FIRST I'M HEARING ABOUT SOME 

OF THIS EVIDENCE AT ALL. THIS HAS BEEN BRIEFED MULTIPLE TIMES. 

THE ISSUE IS THAT THE FTC HAS NEVER HAD DISCOVERY ABOUT THESE 

MARCH 2018 FACTS. AND I THINK IT'S IMPROPER FOR THEM TO MAKE 

YET ANOTHER FILING ABOUT FACTS THAT NOW ARE FACTS THAT I'VE 

NEVER EVEN HEARD OF BEFORE. 

MR. VAN NEST: WELL, THESE LICENSE AGREEMENTS HAVE 

ALL BEEN PRODUCED, YOUR HONOR, TO THE FTC. THAT WAS OUR POINT 

EARLIER WAS THAT THEY HAVE HAD THESE, WE'VE BEEN PRODUCING THEM 

RIGHT ALONG, EVEN AFTER THE CLOSE OF DISCOVERY. 

YOU KNOW, I DON'T WANT TO REARGUE THE MOTION, BUT THEY 

HAVE BEEN ALL PRODUCED. THEY'VE HAD ALL THESE LICENSE 

AGREEMENTS. AND THE OTHER MATERIAL THAT IS IN THE PROFFER IS 

PUBLIC. 

SO I THINK -- I THINK UNDER 103, I HAVE TO MAKE A PROFFER 

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UNITED STATES COURT REPORTERS

1822

OF SOME KIND. AND IF YOUR HONOR WANTS ME TO DO IT IN A 

DIFFERENT WAY, I WILL. 

BUT WHAT I WOULD PROPOSE DOING IS FILING IT AND -- 

THE COURT: I GUESS I DON'T UNDERSTAND WHY IT'S NOT 

APPARENT FROM THE CONTEXT. 

MR. VAN NEST: IT'S NOT APPARENT FROM THE CONTEXT 

BECAUSE MANY OF THESE LICENSE AGREEMENTS HAVE BEEN ENTERED INTO 

SINCE THAT TIME. 

AND THE ANNOUNCEMENTS BY OTHER PARTICIPANTS IN 5G WERE NOT 

THE SUBJECT OF THE MOTION, AND THE ANNOUNCEMENTS BY THE FCC 

CONCERNING 5G WERE ALSO NOT RULED UPON. 

SO I DON'T THINK THAT THE MOTION FRAMED THESE ISSUES TO 

THAT DEGREE, AND I'M WORRIED THAT IF I CAN'T FILE A PROFFER, 

SOMEONE WILL ARGUE THAT I'VE WAIVED THAT CLAIM OF ERROR BECAUSE 

THE RULE REQUIRES ME TO MAKE A PROFFER. 

THE COURT: YOU KNOW WHAT? I WANT THIS BRIEFED 

BEFORE YOU FILE IT. OKAY? 

MR. VAN NEST: WE CAN DO THAT. 

THE COURT: SO WHY DON'T YOU FILE A BRIEF AND THEN 

THE FTC CAN FILE A RESPONSE. WHEN CAN YOU FILE THAT? 

MR. VAN NEST: WE'LL FILE IT THURSDAY. 

THE COURT: I'D LIKE IT SOONER BECAUSE I'D LIKE THE 

RESPONSE SOONER. WEREN'T YOU GOING TO FILE THE PROFFER 

TONIGHT? 

MR. VAN NEST: WE WERE GOING TO FILE THE PROFFER. 

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UNITED STATES COURT REPORTERS

1823

THE PROFFER IS READY TO GO. DO YOU WANT IT CLOSE OF BUSINESS 

TOMORROW? IT'S TUESDAY NIGHT. 

THE COURT: OKAY. 

MR. VAN NEST: I WAS OFFERING THURSDAY MORNING, BUT I 

THINK WE COULD GET IT IN TOMORROW EVENING BY 6:00. 

THE COURT: OKAY. THEN WHEN CAN THE FTC RESPOND? 

MS. MILICI: YOUR HONOR, WE WOULD LIKE TO HAVE UNTIL 

THE, UNTIL FRIDAY OR THE WEEKEND. THIS IS, LIKE I SAID, THIS 

IS THE FIRST TIME THEY'VE RAISED THIS. WE HAVEN'T MET AND 

CONFERRED ABOUT THIS. THEY ARE RAISING EVIDENCE THAT WAS NEVER 

ON THEIR EXHIBIT LIST, AND I DON'T KNOW WHAT IT IS. AND I 

THINK WE DESERVE A COUPLE DAYS TO RESPOND TO IT. 

MR. VAN NEST: IT ISN'T ACTUALLY -- 

THE COURT: WHY DON'T WE DO THIS? DO I HAVE TO RULE 

ON THIS BEFORE CLOSING? 

MR. VAN NEST: NO. NO. 

THE COURT: OKAY. THEN WHY DON'T WE DO THIS, YOU 

TAKE UNTIL THURSDAY? YOU WANTED UNTIL THURSDAY? 

MR. VAN NEST: I DID. 

THE COURT: WHAT IS THAT? THE 24TH? 

MR. VAN NEST: THAT'S THE 24TH. 

THE COURT: OKAY. 

AND YOU'RE GOING TO BE BRIEFING THE ISSUE OF WHETHER YOU 

NEED TO MAKE ANY FURTHER OFFER OF PROOF THAN WHAT'S ALREADY IN 

THE RECORD. 

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1824

MR. VAN NEST: YES, WHETHER WE HAVE A RIGHT TO DO 

THAT AND WHETHER WE NEED TO DO IT, THAT'S RIGHT. 

THE COURT: OKAY. NOW, WHAT DO YOU NEED? I WOULD 

LIKE -- I WOULD PREFER THAT YOU MET AND CONFERRED ON THIS. 

MS. MILICI: I WOULD HAVE AS WELL. 

THE COURT: CAN YOU MEET AND CONFER TODAY? I WANT 

LEAD TRIAL COUNSEL TO MEET AND CONFER TODAY. 

MR. VAN NEST: WE CAN PROVIDE THE PROFFER AFTER COURT 

AND MS. MILICI AND I CAN MEET AND CONFER. 

THE COURT: OKAY. DO YOU WANT UNTIL TOMORROW? WE 

HAVE -- DO YOU WANT UNTIL TOMORROW FOR THE MEET AND CONFER? 

MR. VAN NEST: SURE. 

THE COURT: WHY DON'T YOU PROVIDE THE PROFFER TODAY. 

MR. VAN NEST: WE'LL DO THAT. 

THE COURT: THIS IS THE 22ND. WOULD YOU PLEASE MEET 

AND CONFER TOMORROW, OR DO YOU NEED TO SEE THEIR -- WHY DON'T 

YOU MEET AND CONFER TOMORROW. 

MR. VAN NEST: THAT'S FINE. 

THE COURT: AND THEN QUALCOMM FILES ITS BRIEF ON THIS 

ISSUE, OR MAYBE YOU'LL REACH AN AGREEMENT, I DON'T KNOW, ON 

THURSDAY. 

AND THEN WHEN DOES THE FTC WANT TO FILE ITS RESPONSE? OR, 

I MEAN, FRANKLY, IF THIS DOESN'T HAVE TO BE FILED ON UNTIL -- 

IF THIS DOESN'T HAVE TO BE RULED ON UNTIL CLOSING, WE COULD 

EVEN DO THIS NEXT WEEK. 

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IS THERE -- I MEAN, NO ONE IS GOING TO FILE AN APPEAL. 

IT'S GOING TO TAKE ME SOME TIME TO ISSUE A RULING ON THIS. AND 

YOU MAY EVEN WIN, SO THIS MAY BE MOOTED. 

MR. VAN NEST: THAT'S RIGHT. YOUR HONOR, IT DOESN'T 

HAVE TO BE DECIDED BEFORE CLOSING. I'VE PUT THE ISSUE OUT 

THERE. WE JUST NEED TO HAVE IT DONE BEFORE THE CASE GOES UP 

FROM THE DISTRICT COURT. THAT'S ALL. 

THE COURT: OKAY. 

MR. VAN NEST: SO IT'S NOT A HOT RUSH. 

THE COURT: AND SADLY, THIS OPINION IS GOING TO TAKE 

SOME TIME. 

MR. VAN NEST: UNDERSTOOD. UNDERSTOOD. AND I 

THINK -- WHY DON'T YOU LET US MEET AND CONFER, AND WE'LL 

PROPOSE SOMETHING. IT MAY BE WE CAN REACH AGREEMENT. IT'S 

ONLY A PROFFER TO COMPLETE THE RECORD. THAT'S ALL IT IS. AND 

AS YOU POINT OUT, WE MAY NOT NEED TO DO IT AT ALL. 

THE COURT: WELL, I JUST THINK THAT YOU ALL SHOULD 

FOCUS ON THE TRIAL AND ON CLOSINGS AND NOT HAVE TO DEAL WITH 

THIS SIMULTANEOUSLY. 

MR. VAN NEST: I AGREE WITH YOU. 

THE COURT: BECAUSE IT'S GOING TO BE A LOT OF WORK 

JUST TO GET THE CLOSINGS PREPARED. 

MR. VAN NEST: AGREED. 

THE COURT: SO I'D RATHER YOU NOT HAVE TO GET 

DISTRACTED BY ALL THIS. 

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MR. VAN NEST: THAT'S FINE WITH US, YOUR HONOR. 

THANK YOU. 

MS. MILICI: YOUR HONOR -- 

MR. VAN NEST: WE'LL PROVIDE THE PROFFER TONIGHT. 

THE COURT: WHY DON'T YOU MEET AND CONFER AND COME UP 

WITH A SCHEDULE. IT SOUNDS LIKE I DON'T HAVE TO DECIDE IT BY 

TUESDAY, WHICH IS GOOD. AND THEN WHY DON'T YOU COME UP WITH A 

SCHEDULE FOR BRIEFING. 

MS. MILICI: YOUR HONOR, WE WOULD LIKE TO SEE WHAT 

THEY HAVE, BUT I AM CONCERNED THAT THEY'RE TRYING TO ADD TO THE 

TRIAL RECORD WITHOUT USING THEIR TRIAL TIME. SO I DO WANT THE 

CHANCE TO MEET AND CONFER AND TO, AND TO DECIDE A PATH FORWARD. 

BUT, YOU KNOW, I'M NOT SURE THAT WHAT THEY'RE PROPOSING IS 

APPROPRIATE. 

MR. VAN NEST: THAT'S WHAT WE'RE GOING TO DO, MEET 

AND CONFER. 

THE COURT: SO WHAT'S YOUR PROPOSAL? 

MS. MILICI: I WOULD JUST LIKE THE OPPORTUNITY TO 

MEET AND CONFER TO FURTHER UNDERSTAND WHAT THEIR PROPOSAL IS, 

WHAT KIND OF PROFFER THEY'RE GOING TO MAKE. 

AGAIN, IF THE DISCOVERY CUTOFF ISN'T, ISN'T BEING 

ENFORCED, THEN IT WOULDN'T HAVE BEEN ENFORCED FOR THE FTC, 

EITHER, AND THERE'S A WHOLE LOT OF EVIDENCE ON BOTH SIDES THAT 

COULD HAVE COME IN. 

I'M NOT SURE THAT I UNDERSTAND WHAT IT IS THAT THEY'RE 

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DOING OR WHETHER IT'S SUPPORTED BY THE RULES, AND I WOULD LIKE 

THE CHANCE TO MEET AND CONFER. 

MR. VAN NEST: WE'LL DO WHAT YOUR HONOR SUGGESTED. 

THE COURT: OKAY. 

MR. VAN NEST: WE'LL MEET AND CONFER AND PROPOSE A 

SCHEDULE AND WE SHOULDN'T NEED TO INTERFERE WITH THE CLOSINGS 

AT ALL. 

THE COURT: WOULD YOU PREFER TO TAKE CARE OF THIS 

AFTER CLOSING OR DO YOU WANT TO TAKE CARE OF IT THIS WEEK? 

MS. MILICI: I -- I'D PREFER TO TAKE CARE OF IT AFTER 

CLOSING AND IF THERE'S SOMETHING TO TAKE CARE OF, AND I WOULD 

LIKE TO MEET AND CONFER WITH IT. 

THE COURT: OKAY. WHY DON'T YOU ALL MEET AND CONFER, 

YOU ALL COME UP WITH A TIME SCHEDULE THAT WORKS FOR BOTH OF 

YOU. I WOULD PREFER THAT YOU FOCUS ON THE TRIAL AND THE 

CLOSINGS FOR NOW. I'D LIKE THAT FOR THE SAME FOR MY OWN TEAM 

AND MYSELF. AND THEN WE CAN DEAL WITH THIS LATER. IT SOUNDS 

LIKE -- 

MR. VAN NEST: THAT'S FINE. 

THE COURT: YOU'RE NOT GOING TO GET AN ORDER NEXT 

WEEK, SO DON'T WORRY ABOUT THAT. 

MR. VAN NEST: I'M NOT WORRIED. 

THE COURT: IT'S GOING TO TAKE SOME TIME. THERE'S A 

TREMENDOUS AMOUNT OF EVIDENCE TO GO THROUGH, AND SO -- 

MR. VAN NEST: UNDERSTOOD. 

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THE COURT: -- AND THE LAW IS COMPLEX. SO -- 

ALTHOUGH I LOVE TO GIVE SPEEDY ORDERS, THIS WILL NOT BE AS 

SPEEDY AS MY USUAL. SO JUST UNDERSTAND YOU'LL HAVE SOME TIME. 

MR. VAN NEST: WE UNDERSTAND. THANK YOU, YOUR HONOR. 

MS. MILICI: THANK YOU. 

MR. VAN NEST: THAT'S ALL WE HAD. 

THE COURT: ANYTHING ELSE FOR TODAY. 

MS. MILICI: ONE OTHER THING IS WE BROUGHT THE COPIES 

OF THE CD OF THE AUDIO FILE. 

THE COURT: OKAY. HAVE YOU SHOWN THEM TO -- 

MS. MILICI: I HAVE A COPY FOR THE COURT AND FOR 

OPPOSING COUNSEL. 

THE COURT: ALL RIGHT. THANK YOU. 

ALL RIGHT. THANK YOU. I WILL SEE YOU ON FRIDAY AT 9:00 

O'CLOCK. THANK YOU VERY MUCH. 

(THE EVENING RECESS WAS TAKEN AT 4:46 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 22, 2019

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