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UNITED STATES COURT REPORTERS

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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 4, 2019

VOLUME 1 

PAGES 1-159

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 

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

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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 

825 EIGHTH AVENUE 

 NEW YORK, NEW YORK 10019

ALSO PRESENT: MARK SNYDER 

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UNITED STATES COURT REPORTERS

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INDEX OF PROCEEDINGS

OPENING STATEMENT BY MS. MILICI1 P. 6

OPENING STATEMENT BY MR. VAN NEST P. 27 

INDEX OF WITNESSES

PLAINTIFF'S

ERIC REIFSCHNEIDER

VIDEOTAPED DEPOSITION P. 48

IRA BLUMBERG

VIDEOTAPED DEPOSITION P. 59

PAUL JACOBS

VIDEOTAPED DEPOSITION P. 77 

DAVID WISE

DIRECT EXAM BY MR. MATHESON P. 83

CROSS-EXAM BY MS. SESSIONS P. 112 

REDIRECT EXAM BY MR. MATHESON P. 129 

RECROSS-EXAM BY MS. SESSIONS P. 134 

NANFEN YU

VIDEOTAPED DEPOSITION P. 139 

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UNITED STATES COURT REPORTERS

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INDEX OF EXHIBITS

MARKED ADMITTED

PLAINTIFF'S

6548, 5186, 6534, 6528, 48 

5211, 5210, 6491, 

5179, 6500, 6516, 

6522, 6530, 8300, 

8297 

2093, 2079, 2120, 2121, 58

2122 

7041, 7224, 7042, 6605, 77

7279, 7234, 7035 

5248 84

6837 87

8299 90

3755 95

5417 104

7251 105

5953 106

5419 130

1000, 1006, 1009, 1101 138 

JOINT

0087 58

36, 45 76

0022, 0027, 0097, 0098 138 

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UNITED STATES COURT REPORTERS

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SAN JOSE, CALIFORNIA JANUARY 4, 2019 

P R O C E E D I N G S

(COURT CONVENED AT 9:04 A.M.) 

THE COURT: GOOD MORNING, WELCOME. PLEASE TAKE A 

SEAT. 

MR. VAN NEST: GOOD MORNING, YOUR HONOR. 

THE CLERK: CALLING CASE NUMBER 17-220, FEDERAL TRADE 

COMMISSION VERSUS QUALCOMM, INCORPORATED. 

THE COURT: OKAY. PLEASE STATE YOUR APPEARANCES. 

MS. MILICI: JENNIFER MILICI FOR THE FEDERAL TRADE 

COMMISSION. 

MR. MATHESON: DAN MATHESON FOR THE FEDERAL TRADE 

COMMISSION. 

MR. HOPKIN: NATE HOPKIN FOR THE FEDERAL TRADE 

COMMISSION. 

MR. CARSON: WES CARSON FOR THE FEDERAL TRADE 

COMMISSION. 

THE COURT: OKAY. GOOD MORNING, WELCOME. 

MR. VAN NEST: GOOD MORNING, YOUR HONOR. 

BOB VAN NEST FROM KEKER, VAN NEST & PETERS FOR QUALCOMM. 

I'M HERE WITH EUGENE PAIGE, JUSTINA SESSIONS, CHRISTINA BLAIS, 

AND IN THE FRONT ROW, MATAN SHACHAM, CODY HARRIS, AND 

KRISTIN HUCEK. 

AND OUR REPRESENTATIVE FROM QUALCOMM FOR TRIAL IS 

MARK SNYDER, YOUR HONOR, THE HEAD OF QUALCOMM'S LITIGATION, 

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OPENING STATEMENT BY MS. MILICI

UNITED STATES COURT REPORTERS

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WHO'S SITTING RIGHT HERE. 

THE COURT: OKAY. WELCOME. 

MR. BORNSTEIN: AND GOOD MORNING, YOUR HONOR. 

GARY BORNSTEIN FROM CRAVATH, ALSO FOR QUALCOMM. I'M 

JOINED BY SOME OF MY COLLEAGUES, YONATAN EVEN, AND OVER AT THE 

TABLE HERE, BRENT BYARS. 

AND DURING THE COURSE OF THE TRIAL, YOU'LL BE HEARING FROM 

A FEW OTHER FOLKS FROM CRAVATH, MR. JORDAN PETERSON, WHO'S 

SITTING IN THE GALLERY, AND THERE ARE A FEW OTHERS, 

MING-TOY TAYLOR, DEREK SUTTON, AND WAY IN THE BACK IS 

ANDREW HUYNH. 

THE COURT: ALL RIGHT. GOOD MORNING AND WELCOME. 

MR. BORNSTEIN: THANK YOU, YOUR HONOR. 

THE COURT: OKAY. SO LET'S START WITH OPENING 

STATEMENTS. EACH SIDE HAS HALF AN HOUR. SO I'M JUST GOING TO 

GO OFF OF THE CLOCK THAT'S ON THE REAL TIME TRANSCRIPT, SO IT'S 

9:06. 

ARE YOU READY, OR DO YOU WANT A LITTLE TIME TO GET 

PREPARED? 

MS. MILICI: I'M READY. 

THE COURT: ALL RIGHT. 9:06. GO AHEAD, PLEASE.

(MS. MILICI GAVE HER OPENING STATEMENT ON BEHALF OF THE 

FEDERAL TRADE COMMISSION.)

MS. MILICI: GOOD MORNING, YOUR HONOR. 

JENNIFER MILICI REPRESENTING THE FEDERAL TRADE COMMISSION. 

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OPENING STATEMENT BY MS. MILICI

UNITED STATES COURT REPORTERS

7

THIS CASE CONCERNS QUALCOMM'S LONG-STANDING CORPORATE 

POLICIES TO HARM COMPETITION AND CONSUMERS. UNDER THOSE 

POLICIES, QUALCOMM WILL NOT SELL MODEM CHIPS TO A CUSTOMER 

UNLESS THE CUSTOMER TAKES A SEPARATE LICENSE TO QUALCOMM'S 

STANDARD ESSENTIAL PATHS. 

THE EVIDENCE WILL SHOW THAT DEVICE MANUFACTURERS AGREED TO 

THE LICENSE TERMS NOT BECAUSE THE ROYALTY RATES REPRESENT THE 

FAIR VALUE OF QUALCOMM'S PATENTS, BUT BECAUSE THEY NEED ACCESS 

TO QUALCOMM'S MODEM CHIPS. 

TO BUY QUALCOMM'S MODEM CHIPS, DEVICE MANUFACTURERS HAVE 

TO AGREE TO PAY QUALCOMM'S ELEVATED ROYALTIES, WHICH ARE 

EFFECTIVELY A SURCHARGE FOR ACCESS TO QUALCOMM'S CHIPS, EVEN 

WHEN THEY USE CHIPS MADE BY QUALCOMM'S COMPETITORS. 

AS A MATTER OF TEXTBOOK ECONOMICS, IF A MONOPOLIST DEMANDS 

A SUBSTANTIAL PAYMENT EVERY TIME A CUSTOMER BUYS FROM SOMEONE 

ELSE, THAT PAYMENT HARMS COMPETITION AND CONTRIBUTES TO THE 

MAINTENANCE OF THE MONOPOLIST'S MARKET POWER. 

UNDER THE FTC ACT, THAT CONDUCT IS UNLAWFUL AND WARRANTS 

INJUNCTIVE RELIEF. 

THE FACT THAT QUALCOMM'S SURCHARGE HAPPENS TO BE 

CAMOUFLAGED IN A SEPARATE LICENSE AGREEMENT DOES NOT CHANGE THE 

HARM TO COMPETITION OR GIVE QUALCOMM A FREE PASS FROM THE LAWS 

THAT APPLY TO EVERYONE ELSE. 

WE ARE ASKING THE COURT TO ENFORCE THOSE LAWS. 

THE COURT: I'M SORRY TO INTERRUPT YOU. IT'S 9:08. 

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OPENING STATEMENT BY MS. MILICI

UNITED STATES COURT REPORTERS

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CAN EVERYONE SQUEEZE IN. I THINK WE'RE GOING TO HAVE SOME 

PEOPLE ARRIVING LATE, AND I WOULD LIKE EVERYONE TO BE ABLE TO 

HAVE A SEAT. I APOLOGIZE FOR INTERRUPTING YOU. 

CAN EVERYONE ON EVERY SIDE SQUEEZE IN? ALL RIGHT. THANK 

YOU. 

IF SOMEONE ELSE COMES IN, IF YOU WOULD ALL PLEASE -- 

UNFORTUNATELY, WE DON'T HAVE ANY EXTRA COURTROOMS BECAUSE OF 

ALL OF THE RENOVATION GOING ON IN THE BUILDING FOR THE HVAC. 

ALL RIGHT. THANK YOU. I APOLOGIZE. GO AHEAD. 

MS. MILICI: SURE. 

OKAY. THERE ARE FOUR INTERRELATED PRACTICES THAT 

REENFORCE EACH OTHER AND COLLECTIVELY ALLOW QUALCOMM TO IMPOSE 

A SURCHARGE, EXTEND ITS MONOPOLY POWER, AND HARM COMPETITION. 

FIRST IS NO LICENSE, NO CHIPS. AS THE COURT IS AWARE, 

QUALCOMM AS HAS ADMITTED ITS LONGSTANDING CORPORATE POLICY OF 

REFUSING TO SELL MODEM CHIPS TO MANUFACTURERS UNLESS THE 

MANUFACTURER TAKES A SEPARATE LICENSE. 

SECOND IS INCENTIVE PAYMENTS. THE EVIDENCE WILL SHOW THAT 

QUALCOMM HAS A PRACTICE OF OFFERING TO PAY INCENTIVES TO 

MANUFACTURES TO INDUCE THEM TO ACCEPT HIGH ROYALTIES.

THIRD IS QUALCOMM'S REFUSAL TO LICENSE RIVALS. QUALCOMM 

HAS AN ADMITTED CORPORATE POLICY OF REFUSING TO OFFER 

EXHAUSTIVE LICENSES TO ITS COMPETITORS TO MAKE AND SELL MODEM 

CHIPS. 

FINALLY, THE EVIDENCE WILL SHOW THAT QUALCOMM ENTERED DE 

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OPENING STATEMENT BY MS. MILICI

UNITED STATES COURT REPORTERS

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FACTO EXCLUSIVE DEALS WITH APPLE THAT FORECLOSED AN IMPORTANT 

POINT OF ENTRY FOR RIVALS. 

THESE FOUR PRACTICES WORK TOGETHER, AND HERE'S HOW. 

NO LICENSE, NO CHIPS WOULDN'T BE AS EFFECTIVE IF QUALCOMM 

LICENSED RIVAL CHIP MAKERS. 

BECAUSE NO LICENSE, NO CHIPS IS SO EFFECTIVE, QUALCOMM IS 

ABLE TO OBTAIN ELEVATED ROYALTIES WHICH THEN WEAKENS RIVALS. 

THE ELEVATED ROYALTIES ALLOW QUALCOMM TO OFFER INCENTIVE 

PAYMENTS AND EXCLUSIVE DEALS AS FORMS OF ROYALTY RELIEF THAT 

DISCRIMINATE AGAINST RIVALS AND INCREASE QUALCOMM'S MARKET 

POWER. 

THAT MARKET POWER ALLOWS QUALCOMM TO CONTINUE TO USE NO 

LICENSE, NO CHIPS. 

QUALCOMM'S HIGH ROYALTIES WEAKEN ITS RIVALS AND WEAKENED 

RIVALS ALLOW IT TO CONTINUE EXERCISING MARKET POWER TO OBTAIN 

HIGH ROYALTIES. 

HERE ON THIS SLIDE YOU SEE THAT QUALCOMM ADMITS ITS NO 

LICENSE, NO CHIPS POLICY. THERE IS NO DISPUTE IN THIS CASE 

ABOUT THE EXISTENCE OF THE POLICY. UNDER THAT POLICY, QUALCOMM 

REQUIRED LICENSES FOR THE PURCHASE OF CDMA CHIPS, A MARKET THAT 

THE EVIDENCE WILL SHOW THAT IT HAS DOMINATED SINCE THE 1990S, 

AND UNDER THAT POLICY, QUALCOMM REQUIRES LICENSES FOR PREMIUM 

LTE CHIPS WHEN THEY WERE INTRODUCED IN 2011 AND WHICH QUALCOMM 

HAD MONOPOLY POWER. 

ALL OF THE WITNESSES WHO WILL TESTIFY, QUALCOMM WITNESSES 

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OPENING STATEMENT BY MS. MILICI

UNITED STATES COURT REPORTERS

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AND THIRD PARTIES, WILL TESTIFY THAT QUALCOMM'S POLICY IS 

UNIQUE AMONGST COMPONENT MANUFACTURERS, AND ALSO THAT THE 

POLICY IS UNIQUE WITHIN QUALCOMM. 

QUALCOMM SELLS OTHER COMPONENTS EXHAUSTIVELY, INCLUDING 

WI-FI CHIPS. THE DIFFERENCE IS THAT IN WI-FI CHIPS, QUALCOMM 

DOES NOT HAVE MARKET POWER. 

THE LICENSES THAT QUALCOMM REQUIRES AS A CONDITION OF 

PURCHASING MODEM CHIPS IS CALLED A SUBSCRIBER UNIT LICENSE 

AGREEMENT, OR SULA. 

THESE ARE THE LICENSES THAT WE WILL SHOW ARE ILLEGAL UNDER 

THE ANTITRUST LAWS. 

NOW, QUALCOMM WITNESSES WILL CLAIM THAT NO LICENSE, NO 

CHIPS IS JUSTIFIED BY ITS NEED TO AVOID CLAIMS OF PATENT 

EXHAUSTION FOR THE MODEM CHIPS IT SELLS. IT IS NOT 

PROCOMPETITIVE TO AVOID THE DOCTRINE OF PATENT EXHAUSTION, THAT 

QUALCOMM HAS SUCCESSFULLY MANAGED TO EMPLOY A BUSINESS MODEL 

DESIGNED TO AVOID THE RULES THAT APPLY TO EVERYONE ELSE IS 

EVIDENCE OF. ITS MARKET POWER, NOT A JUSTIFICATION FOR ITS 

CONDUCT. 

AS SLIDE 5 SHOWS, THE NO LICENSE, NO CHIPS POLICY IS 

ACTUALLY WRITTEN INTO QUALCOMM'S SUPPLY AGREEMENTS. AS 

QUALCOMM SAID IN RESPONSE TO INTERROGATORIES, IT HAS THE RIGHT 

TO TERMINATE ITS COMPONENT SUPPLY AGREEMENT, WHICH IT CALLS, IS 

SOMETIMES CALLED CSA'S, IF THE BUYER STOPS COMPLYING WITH ITS 

LICENSE. 

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OPENING STATEMENT BY MS. MILICI

UNITED STATES COURT REPORTERS

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UNDER THOSE CONTRACTS, QUALCOMM ALSO HAS THE RIGHT TO 

TERMINATE SUPPLY IF THE BUYER BECOMES UNLICENSED. 

QUALCOMM STATES IN ITS TRIAL BRIEF THAT IT HAS, AND I WILL 

QUOTE HERE BECAUSE QUALCOMM WAS OBVIOUSLY VERY CAREFUL ABOUT 

THE PHRASING -- BUT IT SAYS THAT IT HAS NEVER CUT OFF 

COMMERCIAL SUPPLY OF CHIPS TO AN EXISTING CUSTOMER AND NEVER 

THREATENED TO INTERRUPT CHIP SUPPLY TO A LICENSEE IN GOOD 

STANDING JUST BECAUSE THE LICENSEE SOUGHT TO RENEGOTIATE OR 

CHALLENGE AN EXISTING OR EXPIRING AGREEMENT. 

AND I EXPECT DURING THIS TRIAL WE WILL HEAR QUALCOMM'S 

EXECUTIVES OFFER SIMILARLY CAREFULLY CRAFTED TESTIMONY ABOUT NO 

LICENSE, NO CHIPS AND HOW IT WORKS. 

BUT NO AMOUNT OF WORDSMITHING CAN CHANGE THE BOTTOM LINE: 

THAT QUALCOMM DOES NOT SELL CHIPS TO UNLICENSED CUSTOMERS, THAT 

IT HAS WRITTEN THAT POLICY INTO ITS CONTRACTS AND THREATENS 

BUYERS DURING LICENSE NEGOTIATIONS THAT IT WILL CUT OFF MODEM 

CHIP SUPPLY IF THEY DO NOT REACH AN AGREEMENT ON LICENSE TERMS. 

AND EVEN IF IT WERE TRUE THAT QUALCOMM HAD NEVER CUT OFF 

CHIP SUPPLY, THAT WOULD BE A TESTAMENT TO THE EFFECTIVENESS OF 

ITS THREATS TO DO SO, NOT EVIDENCE THAT ITS LICENSES WERE 

FAIRLY NEGOTIATED. 

SLIDE 6 IS AN ACTUAL PRESENTATION TO THE QUALCOMM BOARD 

MADE IN 2012. QUALCOMM ACKNOWLEDGED THAT IF IT CEASES SUPPLY 

OF CHIPS TO CURRENT CUSTOMERS, THEY MAY ASSERT ANTITRUST CLAIMS 

SEEKING DAMAGES, FINES, AND CONTINUED SUPPLY. 

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OPENING STATEMENT BY MS. MILICI

UNITED STATES COURT REPORTERS

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BUT THE STRATEGY RECOMMENDED BY QUALCOMM EXECUTIVES TO THE 

BOARD WAS NOT TO CEASE THE UNLAWFUL CONDUCT, BUT TO DEVELOP A 

PLAN OF COMMUNICATION/ACTION THAT MAXIMIZES OUR ABILITY TO 

DEFEND AGAINST AN ANTITRUST CLAIM WHILE CEASING SUPPLY WHEN 

NECESSARY. 

AND WITNESSES FROM MULTIPLE MAJOR MANUFACTURERS WILL 

TESTIFY DURING THE TRIAL ABOUT SPECIFIC THREATS THAT QUALCOMM 

MADE DURING LICENSE NEGOTIATIONS. AND THOSE THREATS WORKED. 

CUSTOMERS ENTERED NEW LICENSES WITH ROYALTY RATES THAT THEY 

CONSIDERED UNFAIR AFTER BEING THREATENED. 

FOR EXAMPLE, NANFEN YU OF HUAWEI WILL TESTIFY THAT 

QUALCOMM EXPRESSED, BOTH ORALLY AND IN WRITING, THAT IT WOULD 

STOP CHIP SUPPLY IF HUAWEI FAILED TO EXTEND ITS LICENSE. 

HUAWEI THEN EXTENDED ITS LICENSE ON TERMS THAT IT BELIEVED 

WERE UNREASONABLE BECAUSE, AS MS. YU WILL TESTIFY, IT NEEDED 

QUALCOMM'S CHIPS. 

MR. IRA BLUMBERG FROM LENOVO WILL LIKEWISE TESTIFY THAT 

QUALCOMM TOLD HIM THAT IF LENOVO EXERCISED ITS RIGHT TO 

TERMINATE A LICENSE WITH TERMS THAT IT CONSIDERED UNFAIR, 

QUALCOMM WOULDN'T SELL LENOVO ANY MORE MODEM CHIPS. 

AS A RESULT OF THE THREATS, LENOVO DID NOT EXERCISE ITS 

RIGHT TO TERMINATE, BUT CONTINUED OPERATING THE LICENSE THAT -- 

OPERATING UNDER THE LICENSE THAT REQUIRED IT TO PAY EXCESSIVE 

ROYALTIES TO QUALCOMM, EVEN WHEN IT USED COMPETITOR'S CHIPS. 

COMPANY AFTER COMPANY WILL TESTIFY IN THIS CASE AND WHAT 

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OPENING STATEMENT BY MS. MILICI

UNITED STATES COURT REPORTERS

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WILL BE SO STRIKING IS THAT THEY WILL ALL SAY THE SAME THING 

ABOUT QUALCOMM'S BUSINESS PRACTICES AND THE EFFECT THAT THEY 

HAD. 

IN RESPONSE, QUALCOMM WITNESSES WILL TESTIFY THAT QUALCOMM 

HAS VALUABLE PATENTS AND HAS INVENTED TECHNOLOGY THAT IS 

FUNDAMENTAL TO CELLULAR COMMUNICATIONS. 

IF THAT IS TRUE, THEN QUALCOMM SHOULD NOT BE AFRAID TO 

PROVE THE VALUE OF ITS STANDARD ESSENTIAL PATENTS IN PATENT 

LITIGATION. THE FTC DOES NOT DISPUTE THAT QUALCOMM HAS PATENTS 

OF VALUE OR THAT IT IS FREE TO SEEK REASONABLE ROYALTIES FROM 

INFRINGING MANUFACTURERS. 

BUT THIS IS AN ANTITRUST CASE ABOUT WHETHER QUALCOMM CAN 

USE A POLICY OF PRODUCT HOLDUP TO INFLATE ROYALTIES AND TO 

AVOID PATENT LITIGATION IN WHICH A DEVICE MANUFACTURER COULD 

CHALLENGE THE VALIDITY OR INFRINGEMENT OF QUALCOMM'S PATENTS 

AND THE REASONABLENESS OF ITS ROYALTY DEMANDS. 

MAKING VALUABLE TECHNOLOGY DOES NOT -- DOES NOT EXEMPT A 

COMPANY FROM THE ANTITRUST LAWS. NO ONE EVER ACCUSED MICROSOFT 

OF FAILING TO MAKE VALUABLE TECHNOLOGY. 

IN FACT, DURING THE PERIOD OF MICROSOFT'S MONOPOLIZATION 

OF THE MARKETS FOR DESKTOP OPERATING SYSTEMS, PRICES DECLINED 

AND FEATURES EXPANDED. 

THE LAW STILL APPLIED TO MICROSOFT, JUST LIKE IT STILL 

APPLIES TO QUALCOMM. 

AND SLIDE 9 IS ONE OF QUALCOMM'S INTERNAL DOCUMENTS. THIS 

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OPENING STATEMENT BY MS. MILICI

UNITED STATES COURT REPORTERS

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DOCUMENT CONFIRMS THAT QUALCOMM HAS A CORPORATE STRATEGY OF 

USING POTENTIAL PRODUCT HOLDS ON CHIP SHIPMENTS, ON CHIP 

SHIPMENTS AS STICKS AND LICENSE NEGOTIATIONS. QUALCOMM ALSO 

USES AS CARROTS PAYMENTS IN THE FORM OF STRATEGIC FUND, MDF, OR 

MARKET DEVELOPMENT FUNDS, AND CHIP REBATES TO INDUCE 

MANUFACTURERS TO SIGN LICENSES WITH HIGH ROYALTY RATES. 

THOSE FUNDS ARE OFFERED IN EXCHANGE FOR AGREEMENTS ON 

LICENSE TERMS, BUT THE PAYMENTS ACCRUE ON PURCHASES OF CHIPS 

FROM QUALCOMM. 

THE EVIDENCE WILL SHOW THAT QUALCOMM USED THE RATES THAT 

IT OBTAINED THROUGH AN APPLICATION OF BOTH CARROTS AND STICKS 

AS BENCHMARKS IN NEGOTIATIONS WITH OTHER CUSTOMERS, CLAIMING 

THESE LICENSES PROVE THE REASONABLENESS OF ITS RUNNING ROYALTY 

RATES. 

QUALCOMM HAS LONG RECOGNIZED THAT THE LEVERAGE IT HAS OVER 

DEVICE MANUFACTURERS AS A RESULT OF SELLING MUST-HAVE CHIPS 

ALLOW IT IS TO OBTAIN HIGHER ROYALTIES FOR ITS LICENSING 

BUSINESS THAN IT WOULD IF IT WAS FORCED TO NEGOTIATE ON THE 

STRENGTH OF ITS PATENTS ALONE AS EVERY OTHER LICENSOR DOES. 

AT VARIOUS POINTS IN ITS HISTORY, QUALCOMM HAS CONSIDERED 

SPLITTING ITS CHIP BUSINESS, OFTEN REFERRED TO AS QCT, FROM ITS 

LICENSING BUSINESS, REFERRED TO AS QTL. IN 2007, THE POTENTIAL 

SPINOFF OF THE CHIP BUSINESS WAS GIVEN THE CODE NAME BERLIN. 

SLIDE 10 IS AN INTERNAL DOCUMENT IN WHICH QUALCOMM 

CONSIDERED THE ARGUMENTS FOR AND AGAINST SPIN, AND ONE OF THE 

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OPENING STATEMENT BY MS. MILICI

UNITED STATES COURT REPORTERS

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RECOGNIZED ARGUMENTS AGAINST SPIN WAS THAT IT COULD HURT QTL'S 

LEVERAGE TO NEGOTIATE 3G RENEWALS AND 4G LICENSING DEALS. 

IN FACT, QUALCOMM DECIDED NOT TO GO FORWARD WITH BERLIN 

BECAUSE AS STEVE ALTMAN, THEN THE PRESIDENT OF QUALCOMM, 

EXPLAINED IN THIS E-MAIL, THE COMBINATION OF QCT GREATLY 

ENHANCES QTL'S SUCCESS. QUALCOMM ANTICIPATED THAT OEM'S WOULD 

REMAIN RELIANT ON IT FOR CONTINUED SUPPLY OF CDMA CHIPS AND, AS 

A RESULT, WOULD NEED TO MAINTAIN POSITIVE RELATIONSHIPS WITH 

QUALCOMM. BECAUSE THEY NEEDED QUALCOMM CHIPS, THEY WOULD NOT 

CHALLENGE QTL'S LICENSE DEMANDS. 

IN 2015, QUALCOMM AGAIN CONSIDERED SPLITTING QTL AND QCT 

INTO SEPARATE BUSINESSES AND NAMED IT PROJECT PHOENIX. AND, 

AGAIN, QUALCOMM DETERMINED THAT A SEPARATION FROM THE CHIP 

BUSINESS WOULD DEPRIVE QUALCOMM OF WHAT IT REFERRED TO AS ITS 

PRODUCT STICK, LEAVING IT WITH FEWER NEGOTIATING LEVERS AND 

EXPOSING QTL TO INCREASED NEGOTIATION AND PATENT LITIGATION 

FROM OEM'S. 

AND IN PROJECT PHOENIX, QUALCOMM SPECIFICALLY RECOGNIZED 

THAT SPLITTING QTL FROM QCT WOULD REDUCE QUALCOMM'S ABILITY TO 

OBTAIN THE SAME HIGH ROYALTIES IN 5G AS IT DID IN 3G AND 4G. 

QUALCOMM'S PRODUCT STICK HAS BEEN EFFECTIVE BECAUSE OF ITS 

MARKET POWER. AS QUALCOMM'S OWN DOCUMENTS SHOW, QUALCOMM HAD A 

VERY HIGH SHARE OF CDMA CAPABLE MODEM CHIPS THROUGHOUT MUCH OF 

THE RELEVANT TIME PERIOD. 

AND MARKET PARTICIPANTS WILL TESTIFY THAT THERE WERE NO 

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VIABLE COMMERCIAL ALTERNATIVES TO QUALCOMM'S CDMA CAPABLE 

CHIPS. 

QUALCOMM ALSO DOMINATED THE MARKET FOR PREMIUM LTE CHIPS 

AND DEVICE MANUFACTURERS WILL TESTIFY THAT THEY HAD NO VIABLE 

COMMERCIAL ALTERNATIVE TO QUALCOMM'S PREMIUM LTE MODEM CHIPS 

AND QUALCOMM'S DOCUMENTS AND THE RELEVANT DATA ESTABLISH 

QUALCOMM'S HIGH MARKET SHARE. 

DEVICE MANUFACTURERS WILL TESTIFY THAT THEIR DEPENDENCE 

UPON QUALCOMM FOR MODEM CHIPS GAVE QUALCOMM MUCH STRONGER 

LEVERAGE AND SKEWED PATENT LICENSE NEGOTIATION OUTCOMES. 

THE HIGHER ROYALTIES RAISED THE COST OF USING COMPETITOR 

CHIPS, DETERRING ENTRY AND INVESTMENT OF COMPETITORS. 

QUALCOMM IS COMMITTED TO LICENSE ITS STANDARD ESSENTIAL 

PATENTS ON FAIR, REASONABLE, AND NON-DISCRIMINATORY TERMS. BUT 

EVEN BEFORE DOING MARKET COMPARISON, WE KNOW THAT THE LICENSE 

RATES CHARGED BY QUALCOMM ARE TOO HIGH AND ABOVE FRAND BECAUSE 

QUALCOMM USES ITS CHIP POWER TO REQUIRE A LICENSE. 

QUALCOMM SAYS, YOU WILL PAY OUR RATES IF YOU WANT TO BUY 

OUR CHIPS. 

THE ONLY WAY TO ACHIEVE A MARKET RATE IS TO NEGOTIATE 

WITHOUT THAT THREAT. YOU CANNOT TIE A MONOPOLY IN CHIPS TO A 

ROYALTY RATE AND GET AN ACTUAL MARKET RATE. 

THE PROCESS OF TIEING THE SALE OF CHIPS TO LICENSING 

POISONS THE NEGOTIATION OF A FRAND RATE. 

NOW, WITHOUT A THREAT TO CHIP SUPPLY, A PARTY FACED WITH A 

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DEMAND FOR UNREASONABLE ROYALTIES FOR STANDARD ESSENTIAL 

PATENTS CAN CHALLENGE THAT DEMAND IN COURT, EITHER AS A 

DEFENDANT IN PATENT LITIGATION, OR A PLAINTIFF IN A FRAND 

DETERMINATION ACTION. 

QUALCOMM'S POLICIES PREVENT OEM'S FROM NEGOTIATING IN THE 

SHADOW OF THE LAW. INSTEAD, THEY NEGOTIATE IN THE SHADOW OF A 

POTENTIALLY DEVASTATING DISRUPTION IN CHIP SUPPLY. 

QUALCOMM IS ABLE TO USE ITS PRODUCT MARKET POWER TO DEMAND 

HIGH ROYALTIES BECAUSE IT REFUSES TO EXHAUSTIVELY LICENSE CHIP 

MAKERS WHO REQUEST A LICENSE, WHICH IS A VIOLATION OF ITS FRAND 

COMMITMENTS. AS MR. ABERLE TESTIFIED IN HIS DEPOSITION, SHOWN 

ON THIS SLIDE, MANY CHIP MAKERS HAVE REQUESTED EXHAUSTIVE 

LICENSES FROM QUALCOMM. 

NOW, QUALCOMM WILL PRESENT EVIDENCE PURPORTING TO 

ESTABLISH THAT REFUSING TO LICENSE CHIP MAKERS IS STANDARD 

PRACTICE IN THE INDUSTRY. 

BUT QUALCOMM HAS INSISTED ON OBTAINING EXHAUSTIVE LICENSES 

FOR ITS OWN CHIP BUSINESS FROM OTHER PATENT HOLDERS, INCLUDING 

COMPANIES WITH SIGNIFICANT SET PORTFOLIOS. 

AND QUALCOMM HAS BEEN THE DOMINANT SUPPLIER OF CHIPS FOR 

OVER A DECADE. SO, IN FACT, A SIGNIFICANT PORTION OF THE 

WORLDWIDE SALES OF MODEM CHIPS HAVE BEEN EXHAUSTIVE AS TO THE 

SEP -- AS TO THE PATENTS OF OTHER SEP HOLDERS. BUT NONE CONVEY 

QUALCOMM'S PATENT RIGHTS, AND THAT'S WHAT ALLOWS QUALCOMM TO 

CONTINUE TO USE THREATS OF PRODUCT HOLDUP TO COLLECT HIGH 

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ROYALTIES. 

QUALCOMM ALSO DETERRED ENTRY AND INVESTMENT BY MODEM CHIP 

MAKERS BY ENTERING INTO EXCLUSIVE DEALS WITH APPLE. QUALCOMM 

RECOGNIZED THAT IT FACED POTENTIAL COMPETITION FROM THE PREMIUM 

MODEMS UNDER DEVELOPMENT BY OTHER MANUFACTURERS AND DETERMINED 

THAT AN EXCLUSIVE DEAL WITH APPLE WOULD HAVE SIGNIFICANT 

STRATEGIC BENEFITS, BECAUSE WITHOUT APPLE'S BUSINESS, THERE 

WOULD NOT BE ENOUGH VOLUME FOR A COMPETITOR TO ENTER THE 

MARKET. 

QUALCOMM ENTERED AGREEMENTS WITH APPLE IN 2011 AND 2013 

THAT PROVIDED PARTIAL ROYALTY RELIEF TO APPLE ON THE CONDITION 

THAT IT AGREE TO FINANCIAL PENALTIES IF IT USED ANY 

NON-QUALCOMM CHIPS. 

THE PENALTIES WERE SUBSTANTIAL. BILLIONS OF DOLLARS WERE 

AT RISK IF APPLE USED A COMPETITOR CHIP IN A NEW PRODUCT. 

THE PURPOSE AND EFFECT OF THE CONTRACTS WAS TO EXCLUDE 

COMPETITORS FROM A SIGNIFICANT PORTION OF THE MARKET AND TO 

FORECLOSE AN IMPORTANT AVENUE OF ENTRY AND EXPANSION. 

NOW, QUALCOMM WITNESSES WILL TESTIFY THAT THE EXCLUSIVE 

AGREEMENTS HAD NO COMPETITIVE EFFECT BECAUSE NO OTHER 

MANUFACTURER WAS CAPABLE OF MEETING APPLE'S NEEDS DURING THE 

TIME OF THE EXCLUSIVITY. 

BUT QUALCOMM RELIES ON EVIDENCE FROM THE WORLD IN WHICH 

QUALCOMM HAS BEEN ENGAGING IN ANTICOMPETITIVE PRACTICES FOR 

YEARS AND YEARS. IT IGNORES THE OPPORTUNITIES THAT WOULD HAVE 

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BEEN AVAILABLE TO COMPETITORS YEARS EARLIER IF QUALCOMM HAD 

COMPETED ON THE MERITS. 

AND AS THE EVIDENCE WILL DEMONSTRATE, EVEN IN THE WORLD 

REFLECTING QUALCOMM'S EXCLUSIONARY CONDUCT, APPLE CONSIDERED 

OTHER CHIPS, INCLUDING INTEL'S CHIPS, AND EVEN WITH NO LICENSE, 

NO CHIPS, AND WITHOUT A QUALCOMM LICENSE, INTEL WAS A CAPABLE 

POTENTIAL SUPPLIER. 

BUT QUALCOMM'S EXCLUSIVE AGREEMENTS CLOSED THE DOOR ON 

APPLE'S ENGAGEMENT WITH INTEL -- WITH -- INTEL'S ENGAGEMENT 

WITH APPLE AT A KEY POINT IN TIME. 

AND IT IS TRUE THAT INTEL SUPPLIES MODEM CHIPS TO APPLE 

TODAY, BUT THE EXCLUSIVE DEALS DELAYED INTEL'S DEVELOPMENT AS A 

COMPETITOR AND THIS DELAY HAD REAL CONSEQUENCES FOR INTEL. 

QUALCOMM'S OWN DOCUMENTS ALSO ADMIT THAT IT ENTERED THE 

AGREEMENTS WITH APPLE NOT BECAUSE IT HAD NO COMPETITORS, OR 

BECAUSE IT HAD THE BEST TECHNOLOGY, BUT BECAUSE IT NEEDED TO 

STOP FUTURE COMPETITION. 

QUALCOMM WILL SHOW YOU DOCUMENTS THAT IN SOME YEARS 

COMPETITORS WERE NOT READY. THOSE DOCUMENTS ARE PART OF THE 

EVIDENCE OF QUALCOMM'S CHIPSET MARKET POWER IN THOSE YEARS. 

QUALCOMM USED THAT MARKET POWER NOT TO WIN ONE YEAR OR ONE 

PRODUCT CYCLE WITH A SOLE SOURCE CONTRACT, BUT TO COMPEL 

EXCLUSIVITY FOR MANY YEARS AND TO STOP FUTURE COMPETITION. 

NOW, WITH THIS BACKDROP IN MIND, I WOULD LIKE TO PREVIEW 

THE EVIDENCE THAT THE COURT WILL HEAR OVER THE NEXT FEW DAYS OF 

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TRIAL. 

AS THE COURT IS AWARE FROM OUR BRIEFING ON THIS ISSUE, THE 

FTC WILL UNFORTUNATELY HAVE TO PRESENT SOME TESTIMONY FROM 

FORMER QUALCOMM EXECUTIVES BY VIDEO TODAY THAT IT HAD HOPED TO 

PRESENT LIVE. 

THE COURT WILL HEAR THE VIDEOTAPED TESTIMONY OF 

ERIC REIFSCHNEIDER. MR. REIFSCHNEIDER WAS OUTSIDE COUNSEL FOR 

QUALCOMM FOR SEVERAL YEARS BEFORE SERVING AS THE GENERAL 

MANAGER OF QTL FROM 2012 TO 2016. 

THE FTC IS PLAYING MR. REIFSCHNEIDER'S VIDEO TO INTRODUCE 

IMPORTANT NEGOTIATION DOCUMENTS. THESE DOCUMENTS SHOW 

QUALCOMM'S SUPPLY THREATS AND EFFORT -- AND OFFERS OF FINANCIAL 

INDUCEMENTS. 

MR. REIFSCHNEIDER WILL TRY TO EXPLAIN AWAY THE DOCUMENTS. 

THE DOCUMENTS SPEAK FOR THEMSELVES. 

THE FTC WILL ALSO CALL BY VIDEO DR. PAUL JACOBS. 

DR. JACOBS IS QUALCOMM'S FORMER CEO AND BOARD CHAIRMAN. 

THE FTC IS PLAYING DR. JACOBS'S VIDEO IN ORDER TO 

INTRODUCE KEY DOCUMENTS REGARDING PROJECT BERLIN AND OTHER 

TOPICS. 

DR. JACOBS WILL TRY TO PUT A POSITIVE SPIN ON THE 

CONTEMPORANEOUS DOCUMENTS THAT SHOW THAT QUALCOMM KEPT THE 

COMPANY TOGETHER IN ORDER TO CONTINUE TO EXPLOIT OEMS' NEED FOR 

QUALCOMM CDMA MODEM CHIPS TO OBTAIN HIGHER ROYALTIES. 

DR. JACOBS'S SPIN IS DIFFERENT THAN WHAT THE DOCUMENTS 

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SAID AT THE TIME AND CONTRARY TO THE OTHER EVIDENCE THE COURT 

WILL HEAR. 

THE COURT WILL ALSO HEAR THE VIDEOTAPED TESTIMONY OF 

HUAWEI AND LENOVO EXECUTIVES. BOTH WITNESSES WILL TESTIFY 

ABOUT SPECIFIC THREATS MADE BY ERIC REIFSCHNEIDER AND OTHER 

QUALCOMM EXECUTIVES DURING LICENSE NEGOTIATIONS AND THE EFFECT 

OF THOSE THREATS ON NEGOTIATION OUTCOMES. 

THE FTC WILL ALSO CALL MR. DAVID WISE LIVE TODAY. 

MR. WISE IS THE SENIOR VICE PRESIDENT OF FINANCE FOR QUALCOMM. 

MR. WISE WAS INTIMATELY INVOLVED IN PROJECT PHOENIX, DURING 

WHICH QUALCOMM AGAIN CHOSE TO KEEP THE COMPANY TOGETHER TO 

ALLOW IT TO CONTINUE TO USE CHIP LEVERAGE TO OBTAIN SURCHARGES 

IN THE FORM OF UNREASONABLE ROYALTIES FROM DEVICE 

MANUFACTURERS. 

ON MONDAY, THE FTC WILL CALL THE TWO FORMER EXECUTIVES 

THAT WERE SERVED TRIAL SUBPOENAS BY MAIL PURSUANT TO THE 

COURT'S ORDER, NEITHER OF WHOM ARE AVAILABLE TODAY DUE TO 

PREEXISTING VACATION PLANS. 

THOSE EXECUTIVES ARE MR. STEVE ALTMAN, THE FORMER 

PRESIDENT AND VICE CHAIRMAN OF QUALCOMM AND THE ARCHITECTURE OF 

ITS LICENSING PROGRAM; AND MR. DEREK ABERLE, THE FORMER 

PRESIDENT OF QTL AND FORMER PRESIDENT OF QUALCOMM. 

THE FTC WILL ALSO CALL LIVE MR. FINBARR MOYNIHAN FROM 

MEDIATEK, A RIVAL CHIP MAKER. MR. MOYNIHAN WILL TESTIFY THAT 

MEDIATEK'S ABILITY TO COMPETE WAS INHIBITED BY QUALCOMM'S 

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ANTICOMPETITIVE CONDUCT. QUALCOMM INITIALLY DELAYED AND 

RESISTED MEDIATEK'S REQUEST FOR LICENSE, REFUSED TO GRANT AN 

EXHAUSTIVE LICENSE, PLACED ARTIFICIAL LIMITATIONS ON THE 

CUSTOMERS MEDIATEK COULD SERVE, AND FORECLOSED MEDIATEK FROM 

CERTAIN KEY OEM'S SELLING HANDSETS IN THE UNITED STATES. 

DESPITE HAVING SOME SUCCESS IN LOW MARGIN, LOW TIER 

PRODUCTS, MEDIATEK HAS NOT BEEN ABLE TO COMPETE IN A PREMIUM 

TIER. 

OVER THE NEXT DAYS OF TRIAL, THE FTC WILL CALL A NUMBER OF 

OTHER OEM'S AND CHIP MANUFACTURERS LIVE AND BY VIDEO. EVERY 

OEM WILL TESTIFY THAT QUALCOMM'S ROYALTY RATES ARE NOT FRAND 

AND THAT THE NEGOTIATIONS WERE SKEWED BY IMPLICIT AND EXPLICIT 

THREATS TO SUPPLY. 

EVERY RIVAL AND POTENTIAL RIVAL WILL TESTIFY THAT QUALCOMM 

REFUSED TO PROVIDE A REQUESTED EXHAUSTIVE LICENSE, AND THAT 

QUALCOMM'S CONDUCT IMPAIRED THEIR ABILITY TO COMPETE 

EFFECTIVELY. 

AFTER PRESENTING THE TESTIMONY OF FACT WITNESSES, THE FTC 

WILL CALL THREE EXPERTS IN ITS CASE-IN-CHIEF. 

MR. DONALDSON WILL TESTIFY THAT PATENT LICENSE 

NEGOTIATIONS TYPICALLY TAKE PLACE WITH AN EYE TOWARD THE 

CONTROLLING LAW ON THE REMEDIES AVAILABLE FOR PATENT 

INFRINGEMENT. WHERE STANDARD ESSENTIAL PATENTS ARE INVOLVED, 

THE ROYALTIES NEGOTIATED BY THE PARTIES SHOULD APPROXIMATE THE 

ROYALTIES THAT WOULD BE AWARDED BY A COURT SHOULD NEGOTIATIONS 

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FAIL, INCLUDING IN LIGHT OF FRAND COMMITMENTS. 

AS MR. DONALDSON WILL EXPLAIN QUALCOMM'S PRACTICES, 

INCLUDING NO LICENSE, NO CHIPS, SKEWED NEGOTIATIONS TOWARDS THE 

OUTCOMES THAT FAVOR QUALCOMM AND LEAD TO HIGHER ROYALTIES. 

MR. MICHAEL LASINSKI COMPARED THE ROYALTY RATES RECEIVED 

BY QUALCOMM TO THE FRAND RATES THAT ORDER -- THAT -- TO THE 

RANGE OF FRAND RATES THAT ORDINARILY WOULD FORM THE BOUNDARIES 

OF A NEGOTIATION. THESE ARE THE RATES THAT COULD BE CALCULATED 

USING ANY COMBINATION OF A NUMBER OF WIDELY ACCEPTED 

METHODOLOGIES AND WIDELY ACCEPTED INDICATORS OF PORTFOLIO 

STRENGTH. 

MR. LASINSKI'S EXPERT OPINION, BASED ON THESE RELIABILITY 

METHODOLOGIES, IS THAT QUALCOMM'S ROYALTY RATES ARE FAR ABOVE 

ANY INDICATORS OF FAIR AND REASONABLE RATES. 

NOW, QUALCOMM WILL ATTACK THE METHODOLOGIES USED BY 

MR. LASINSKI. BUT AS MR. LASINSKI WILL EXPLAIN, HE CALCULATED 

A RANGE OF RATES USING METHODS THAT HAVE BEEN USED BY COURTS 

WHEN DETERMINING FRAND RATES, AND BY PARTIES TO FRAND 

NEGOTIATIONS. UNDER NO COMBINATION OF ACCEPTED METHODS OR 

MEASURES ARE QUALCOMM'S ROYALTIES WITHIN THE RANGE OF RATES 

THAT A COURT WOULD CONSIDER FRAND OR THAT THE PARTIES WOULD 

ANTICIPATE IF THEY WERE NEGOTIATING IN THE SHADOW OF A JUDICIAL 

DETERMINATION. 

QUALCOMM WILL NOT PROVIDE THE COURT WITH ANY ALTERNATIVE 

ESTIMATE OF WHAT A COURT WOULD AWARD IN FRAND LITIGATION. 

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INSTEAD, QUALCOMM WILL POINT TO LICENSE AGREEMENTS THAT 

ARE NEARLY 30 YEARS OLD AS EVIDENCE OF THE REASONABLENESS OF 

ITS ROYALTY RATES. EVEN THOUGH MANY OF THE PATENTS THAT IT 

LICENSED IN THE EARLY 1990S EXPIRED A LONG TIME AGO, AND EVEN 

THOUGH QUALCOMM WITNESSES WILL TESTIFY THAT THE CELLULAR 

INDUSTRY HAS BEEN CHARACTERIZED BY RAPID CHANGE. 

IN QUALCOMM'S VIEW, THE ONLY THING THAT HASN'T CHANGED IN 

THE CELLULAR INDUSTRY IN THE LAST 30 YEARS IS THE ROYALTY RATE 

THAT IT IS ENTITLED TO CHARGE. 

BUT THE COURT WILL HEAR FROM ALL OF QUALCOMM'S LARGEST 

CUSTOMERS, INCLUDING SAMSUNG, HUAWEI, LG, LENOVO, PEGATRON, 

WISTRON AND APPLE, THAT THE ROYALTY RATES ARE NOT FRAND AND 

THAT QUALCOMM WAS ONLY ABLE TO OBTAIN THOSE RATES BY EXERCISING 

ITS CHIP LEVERAGE. 

FINALLY, THE COURT WILL HEAR TESTIMONY FROM PROFESSOR 

CARL SHAPIRO. PROFESSOR SHAPIRO HAS STUDIED ANTITRUST, 

INNOVATION, AND COMPETITIVE STRATEGY FOR OVER 30 YEARS. HE HAS 

TWICE SERVICED AS THE DEPUTY ASSISTANT ATTORNEY GENERAL FOR 

ECONOMICS IN THE ANTITRUST DIVISION. HE HAS WRITTEN NUMEROUS 

PAPERS RELATING TO THE ANTITRUST ANALYSIS OF PATENTS AND PATENT 

LICENSING, STANDARD ESSENTIAL PATENTS, AND FRAND COMMITMENTS. 

PROFESSOR SHAPIRO WILL TESTIFY THAT QUALCOMM HAS MONOPOLY 

POWER IN MARKETS FOR CDMA COMPATIBLE AND PREMIUM LTE MODEM 

CHIPS AND THAT BOTH MARKETS SATISFY THE HYPOTHETICAL MONOPOLIST 

TEST, WHICH THE PARTIES AGREE IS THE PROPER TEST TO DEFINE THE 

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ANTITRUST PRODUCT MARKET. 

PROFESSOR SHAPIRO WILL ALSO EXPLAIN HOW QUALCOMM'S CONDUCT 

HARMS COMPETITION IN MODEM CHIP MARKETS. AS PROFESSOR SHAPIRO 

WILL TESTIFY, WHEN QUALCOMM IS ABLE TO ARTIFICIALLY RAISE 

ROYALTIES ON HANDSETS USING RIVAL CHIPS, ITS CONDUCT WEAKENS 

THE COMPETITIVE STRENGTH IMPOSED BY RIVALS AND EXTENDS ITS OWN 

MONOPOLY POWER. 

AND AS PROFESSOR SHAPIRO WILL TESTIFY, WHAT QUALCOMM CALLS 

PROCOMPETITIVE JUSTIFICATIONS FOR ITS CONDUCT ARE REALLY JUST 

DIFFERENT WAYS QUALCOMM IS SAYING THAT IT IS ENTITLED TO AVOID 

THE PATENT LITIGATION SYSTEM THAT APPLIES TO EVERY OTHER 

LICENSOR. 

FOR EXAMPLE, QUALCOMM JUSTIFIES ITS CONDUCT AS NECESSARY 

TO AVOID LEGAL RISKS OF PATENT EXHAUSTION AND IMPLIED LICENSE 

CLAIMS, MEANING THAT IT RECOGNIZES THAT WITHOUT NO LICENSE, NO 

CHIPS, OEM'S WOULD BE LIKELY TO BRING LEGAL CLAIMS THAT MIGHT 

REDUCE ITS LICENSING REVENUE. 

QUALCOMM ALSO ASSERTS THAT NO LICENSE, NO CHIPS IS 

JUSTIFIED BECAUSE SOME COMPANIES DO NOT RESPECT INTELLECTUAL 

PROPERTY. 

BUT EVERY OTHER PATENT HOLDER HAS TO ADDRESS THOSE ISSUES 

IN PATENT LITIGATION. 

QUALCOMM'S SELF-HELP IS NOT PROCOMPETITIVE. 

DISSATISFACTION WITH THE LEGAL REMEDIES AVAILABLE TO PATENT 

HOLDERS DOES NOT GIVE QUALCOMM THE RIGHT TO VIOLATE THE 

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ANTITRUST LAWS. 

SO THE EVIDENCE THAT THE COURT WILL SEE OVER THE NEXT TEN 

DAYS WILL SHOW THAT QUALCOMM HAS ENGAGED IN A COURSE OF CONDUCT 

LASTING AT LEAST A DECADE THAT EXTENDED ITS MONOPOLY POWER IN 

MODEM CHIP MARKETS, HARMED COMPETITION AND CONSUMERS, AND 

VIOLATES THE FTC ACT. 

THE CONDUCT ALLEGED IN THIS CASE IS ONGOING. IT WAS NOT 

SHORT TERM OR SPORADIC. IT WAS AND IS ENTRENCHED CORPORATE 

POLICY THAT HAS NEVER BEEN DISAVOWED BY QUALCOMM. 

QUALCOMM'S INTERNAL DOCUMENTS SUGGEST ITS INTENT TO USE 

THE SAME CONDUCT TO OBTAIN THE SAME RESULTS IN 5G. 

AT THE END OF THE TRIAL, THE FTC WILL ASK THE COURT TO 

ORDER EQUITABLE RELIEF TO PREVENT QUALCOMM FROM CONTINUING TO 

ENGAGE IN ITS ANTICOMPETITIVE CONDUCT, INCLUDING BY ENJOINING 

QUALCOMM FROM NO LICENSE, NO CHIPS AND RELATED CONDUCT. THE 

ANTITRUST LAWS APPLY TO ALL COMPANIES, INCLUDING QUALCOMM. 

THANK YOU, YOUR HONOR. 

THE COURT: ALL RIGHT. TIME IS 9:37. 

MR. VAN NEST: IF I CAN HAVE A MINUTE, YOUR HONOR -- 

THE COURT: GO AHEAD, PLEASE. 

MR. VAN NEST: -- TO HAND OUT MY SLIDES? 

THE COURT: YES. 

(PAUSE IN PROCEEDINGS.) 

MR. VAN NEST: GOOD MORNING, YOUR HONOR.

THE COURT: ARE YOU READY? 

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OPENING STATEMENT BY MR. VAN NEST

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MR. VAN NEST: IT'S A PRIVILEGE TO BE HERE.

(MR. VAN NEST GAVE HIS OPENING STATEMENT ON BEHALF OF 

QUALCOMM.)

MR. VAN NEST: BOB VAN NEST ON BEHALF OF QUALCOMM. 

THE COURT: 9:38. GO AHEAD, PLEASE. 

MR. VAN NEST: QUALCOMM HAS BECOME ONE OF THE MOST 

SUCCESSFUL TECHNOLOGY COMPANIES IN THE WORLD, YOUR HONOR, 

THROUGH PIONEERING INNOVATION, SUPERIOR ENGINEERING, AND BETTER 

PRODUCTS. 

QUALCOMM STARTED OUT WITH A VERY SIMPLE FORMULA AS A 

STARTUP, FOCUS ONLY ON COMMUNICATIONS TECHNOLOGY, THAT'S WHERE 

THE NAME COMES FROM, QUALCOMM IS SHORT FOR QUALITY 

COMMUNICATIONS; INVEST HEAVILY IN BASIC R&D THAT LOOKS YEARS 

AHEAD WITHOUT ANY PROSPECT OF AN IMMEDIATE PAYOFF; DEVELOP 

ENTIRE SYSTEMS TO CARRY THE COMMUNICATIONS BUSINESS FORWARD BY 

GENERATIONS; AND THEN MAKE THAT TECHNOLOGY AVAILABLE TO THE 

INDUSTRY THROUGH LICENSING AND STANDARDS. 

SO FROM THE VERY BEGINNING, YOUR HONOR, QUALCOMM HAS 

SOUGHT TO RECOUP THE VALUE OF ITS INTELLECTUAL PROPERTY AND ITS 

RESEARCH AND DEVELOPMENT BY LICENSING THAT TECHNOLOGY TO OTHERS 

AND CHARGING A ROYALTY, NOT THROUGH PRODUCT SALES. 

AND SO THE LICENSING PROGRAM THAT'S AT ISSUE IN THIS 

TRIAL, WHICH BEGAN SOME 30 YEARS AGO, INCLUDING THE ROUGHLY 5 

PERCENT ROYALTY RATE THAT THE FTC NOW ATTACKS, THAT CAME INTO 

EXISTENCE BEFORE QUALCOMM'S TECHNOLOGY WAS IN ANY STANDARD AND 

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OPENING STATEMENT BY MR. VAN NEST

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YEARS BEFORE QUALCOMM HAD ANY CHIP BUSINESS AT ALL. 

LICENSEE, AND THERE ARE HUNDREDS OF THEM, HAVE SIGNED 

LICENSES AT THESE BASIC RATES BASED ON THE VALUE OF QUALCOMM'S 

TECHNOLOGY AND THE STRENGTH OF ITS PATENT PORTFOLIO, NOT BASED 

ON THREATS OR COERCION DURING NEGOTIATIONS. 

NOW, THE FTC IS CHALLENGING SOME OF QUALCOMM'S LICENSING 

PRACTICES THAT HAVE BEEN AROUND FOR YEARS. 

BUT THE EVIDENCE IS NOT GOING TO SUPPORT THEIR CLAIMS. 

INSTEAD, YOUR HONOR, THE EVIDENCE IS GOING TO SHOW THAT 

LICENSING PATENTS AT THE HANDSET LEVEL HAS BEEN STANDARD 

PRACTICE IN THIS INDUSTRY SINCE BEFORE QUALCOMM, AND IT IS SO 

BECAUSE THAT'S THE MOST EFFICIENT WAY TO DO IT, AND IT MAKES 

GOOD BUSINESS SENSE. 

CHIPMAKERS, LIKE INTEL, MEDIATEK, AND OTHERS, THEY HAVE 

THRIVED WITHOUT ANY LICENSE FROM QUALCOMM AND WITHOUT PAYING 

QUALCOMM ANY ROYALTIES AT ALL. 

QUALCOMM'S AGREEMENTS WITH APPLE WERE MUTUALLY BENEFICIAL 

TO BOTH COMPANIES. THEY DIDN'T HURT ANYBODY. 

AND PROBABLY MOST IMPORTANT, YOUR HONOR, NONE OF THESE 

PRACTICES HAVE HAD ANY ANTICOMPETITIVE EFFECTS IN ANY MARKET. 

IN FACT, IT IS HARD TO FIND AN INDUSTRY IN THE U.S. OR ANYWHERE 

ELSE THAT'S SEEN AS MUCH INNOVATION AND AS MUCH CHANGE, AS MUCH 

BENEFIT, AS MOBILE COMMUNICATIONS AND SMARTPHONES. THEY HAVE 

CHANGED EVERYTHING. 

AND NOT ONLY HAS INNOVATION BEEN HIGH, BUT THE 

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PARTICIPANTS IN THIS MARKET ARE ABSOLUTELY THRIVING. APPLE AND 

SAMSUNG ARE TWO OF THE MOST VALUABLE COMPANIES IN THE WORLD 

NOW. INTEL IS SUPPLYING 100 PERCENT OF THE MODEM CHIPS FOR THE 

NEW APPLE PHONES. 

CONSUMERS ARE BENEFITING, TOO. OUR SMARTPHONES GET BETTER 

AND BETTER EVERY YEAR. THE AVERAGE PRICE GOES DOWN AND CHANGE 

IS ALL THE TIME. 

SO MY MAIN POINT IS THAT THESE THEORIES ARE JUST THAT. 

THEY ARE NOT SUPPORTED BY THE EVIDENCE. 

AND I WANT TO START, YOUR HONOR, BY SHOWING WHAT EVIDENCE 

WE'RE GOING TO PRESENT THAT QUALCOMM EARNED ITS PLACE IN THE 

MARKET THROUGH INNOVATION AND BETTER PRODUCTS. 

QUALCOMM WAS FOUNDED BACK IN 1985 IN SAN DIEGO AS A 

STARTUP, AND THE PRINCIPAL FOUNDER, DR. IRWIN JACOBS, HAD BEEN 

A CELEBRATED PROFESSOR BACK AT M.I.T. HE WROTE THE TEXTBOOK ON 

MOBILE COMMUNICATIONS. 

IN THE '80S, CELLULAR TECHNOLOGY WAS BASED ON GSM -- WE'RE 

GOING TO GET THAT GLOSSARY TO YOU MONDAY -- GLOBAL SYSTEM FOR 

MOBILE COMMUNICATIONS. THAT USED TIME DIVISION MULTIPLE ACCESS 

TECHNOLOGY, TDMA. 

YOU CAN THINK OF A ROOM FULL OF 20 PEOPLE, YOUR HONOR, AND 

THEY ALL HAVE TO SPEAK ONE AT A TIME IN A DESIGNATED TIME SLOT. 

WHAT DR. JACOBS AND OTHERS CAME UP WITH WAS USING CDMA, 

CODE DIVISION MULTIPLE ACCESS, FOR MOBILE COMMUNICATIONS. THAT 

SAME ROOM OF 20 PEOPLE COULD CARRY ON MULTIPLE CONVERSATIONS AT 

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THE SAME TIME AND GET A LOT DONE. 

NOW, THIS PICTURE SHOWS SOMETHING THAT QUALCOMM HAS DONE 

OVER AND OVER. NOBODY BELIEVED THAT CDMA WOULD WORK, SO TIME 

AND AGAIN QUALCOMM HAS TO BUILD THE PROTOTYPES, BASEBAND 

STATION, HANDSET, NETWORKS, THE WHOLE SHEBANG. IN THIS 

PICTURE, THE HANDSET IS THE VAN. YOU CAN SEE INSIDE THE VAN, 

THAT'S DR. JACOBS AND SOME OF HIS COLLEAGUES. THEY ARE DRIVING 

AROUND SAN DIEGO AND MANHATTAN PROVING THAT CDMA TECHNOLOGY 

WILL WORK EVERYONE IN A BIG CITY WITH LOTS OF SKYSCRAPERS, AND 

THEY'VE DONE THAT ON THEIR OWN TIME AND TIME AGAIN. 

NOW, IT IS NOT THE CASE THAT CDMA WAS THE LAST GOOD THING 

QUALCOMM INVENTED, NOT BY A LONG SHOT. 

THEIR PORTFOLIO HAS GOTTEN MORE VALUABLE, NOT LESS, 

BECAUSE THEY ARE STILL INVENTING FUNDAMENTAL BASIC INDUSTRY 

TECHNOLOGIES LIKE THESE. YOUR HONOR WILL HEAR SOME EXAMPLES 

FROM OUR WITNESSES. 

HIGH-SPEED PACKET CHANNEL DESIGN, THAT'S THE BASIC 

TECHNOLOGY FOR HIGH SPEED DATE, WHY OUR PHONES CAN DO SO MUCH 

NOW. 

MOBILIZING OFDMA. THAT'S THE FOUNDATIONAL WAVEFORM AND 

TECHNOLOGY FOR LTE, 4G AS WE ALL KNOW IT. 

CARRIER AGGREGATION, THAT WAS A HUGE BREAKTHROUGH. IT 

ALLOWS THE CARRIERS, LIKE VERIZON AND AT&T, TO COMBINE SPECTRUM 

AND GET US MORE DATA FASTER. 

AND CELLULAR IN UNLICENSED SPECTRUM, ALSO A BIG DEAL. 

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THAT'S CARRYING US INTO 4G AND 5G BECAUSE CARRIERS CAN NOW USE 

FREE UNLICENSED SPECTRUM, AND THAT'S BROUGHT DATA RATES DOWN. 

NOW, THIS IS ONLY POSSIBLE BY SPENDING A LOT OF MONEY ON 

WHAT I'LL CALL BLUE SKY R&D. QUALCOMM HAS SPENT BILLIONS OF 

DOLLARS, YOUR HONOR, TO DEVELOP THESE TECHNOLOGIES, AND THEY 

ARE TYPICALLY THE ONE OUT IN FRONT. 

NOT ONLY HAVE THEY INVENTED THE BASIC TECHNOLOGY, THEIR 

PRODUCT BUSINESS HAS BEEN PHENOMENAL, TOO. MANY, MANY FIRSTS 

BECAUSE QUALCOMM, TIME AND AGAIN, IS THE COMPANY THAT TURNS THE 

IDEAS INTO THE PRODUCT BEFORE ANYBODY ELSE DOES. THAT IS WHY 

THEIR PEERS IN THE INDUSTRY, THE STANDARD SETTING 

ORGANIZATIONS, THAT'S THEIR PEERS, THEIR COMPETITORS, THAT'S 

WHY THEY'RE CHOOSING QUALCOMM TECHNOLOGY, BECAUSE THEY KNOW 

IT'S NOT JUST AN IDEA ON A WHITE BOARD, IT'S GOING TO BE A 

PRODUCT THAT WORKS WELL. 

AND IT ALSO EXPLAINS ANOTHER THING. WHY IS QUALCOMM WAY 

AHEAD OF EVERYBODY ELSE IN EACH GENERATION? BECAUSE THEY'RE 

THE ONES RESPONSIBLE FOR THE FUNDAMENTAL INVENTION AND THEIR 

ENGINEERS TURN IT INTO PRODUCTS FASTER THAN ANYBODY ELSE DOES. 

NOW, THEIR INVENTIONS ARE NOT LIMITED TO THE CELLULAR 

MODEM. THEY READ ALL OVER THE HANDSET. ONLY ABOUT 20 PERCENT 

OF THE PORTFOLIO IS IN CELLULAR STANDARD ESSENTIAL PATENTS, 

YOUR HONOR. AND WHAT I MEAN BY THAT IS MOST OF THESE HANDSET 

MAKERS WANT TO TAKE A FULL PORTFOLIO LICENSE, AND THEY HAVE. 

AND THAT INCLUDES STANDARD ESSENTIAL NONCELLULAR PATENTS FOR 

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THINGS LIKE YOUR AUDIO, YOUR VIDEO, YOUR GPS, AND YOUR CAMERA; 

AND NONSTANDARD ESSENTIAL PATENTS FOR THINGS LIKE YOUR TOUCH 

SCREEN, YOUR USER INTERFACE, YOUR POWER MANAGEMENT, YOUR MULTI 

MEDIA. ALL OF THESE THINGS ARE IN THE QUALCOMM PORTFOLIO WHEN 

A HANDSET MAKER TAKES A PORTFOLIO LICENSE. 

ANOTHER THING, YOUR HONOR, THAT'S CHANGED EVERYTHING. 

QUALCOMM HAS BEEN THE ONE TO TAKE ALL OF THESE TECHNOLOGIES AND 

PUT THEM ON A CHIP. THE APPLICATIONS PROCESSOR IS NOW 

SOMETHING, WITH THE MODEM, CALLED AN SOC. THAT'S BE IN OUR 

GLOSSARY SURELY MONDAY, YOUR HONOR. SOC IS SYSTEM ON A CHIP. 

SO THE MODEM CHIP, MORE AND MORE, IS BEING COMBINED WITH 

PROCESSORS TO PROVIDE ALL THIS TECHNOLOGY AT ONCE, WHICH MAKES 

IT EASIER FOR SMARTPHONE MAKERS TO ENTER THE MARKET BECAUSE 

THEY'RE DEALING WITH A SIMPLER STRUCTURE WHERE EVERYTHING IS 

PROVIDED FOR THEM. 

NOW, HERE'S A SLIDE FROM INTEL RIGHT IN THE RELEVANT TIME 

PERIOD. IT'S NOT JUST QUALCOMM BRAGGING. YOU'LL SEE PLENTY OF 

THIS, YOUR HONOR. OUR RIVALS RECOGNIZED THAT QUALCOMM HAS BEEN 

THE LEADER. THIS IS AN INTEL SLIDE FROM 2012. QUALCOMM R&D 

INVESTMENT DRIVES THE PACE OF INNOVATION, AND JUST BELOW THAT 

ON THE RIGHT, TIME TO MARKET LEADERSHIP. QUALCOMM IS IN THE 

LEAD CONSISTENTLY. 

THEY HAVE BEEN THE AGENT OF CHANGE. TO THE EXTENT THIS 

INDUSTRY HAS BEEN SUBJECT TO CHANGE, AND IT HAS, THEY'VE BEEN 

THE AGENT OF THAT. 

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NOW, HERE ARE THE WITNESSES THAT YOU'LL HEAR FROM ON 

TECHNOLOGY, YOUR HONOR, FROM QUALCOMM. IRWIN JACOBS I 

MENTIONED; JIM THOMPSON IS OUR CHIEF TECHNOLOGY OFFICER; 

DURGA MALLADI IS ONE OF OUR TOP INVENTORS AND OUR VICE 

PRESIDENT OF ENGINEERS; AND LORENZO CASACCIA IS THE ONE THAT 

DEALS WITH STANDARDS SETTING ORGANIZATIONS. 

NOW, MY SECOND POINT IS THAT THE ROYALTIES WE'RE TALKING 

ABOUT HAVE RESULTED FROM ARM'S LENGTH TRANSACTIONS AND 

NEGOTIATIONS WITH LARGE SOPHISTICATED COMPANIES, NOT THROUGH 

CHIP LEVERAGE OR PRESSURE. 

THIS PROGRAM GOES BACK TO THE '90S, AND I WANT TO START 

THERE BECAUSE AT THE VERY BEGINNING, YOUR HONOR, YEARS BEFORE 

ANY QUALCOMM TECHNOLOGY WAS IN A STANDARD, YEARS BEFORE THERE 

WAS ANY CHIP BUSINESS, QUALCOMM WENT OUT TO THE MARKET TO RAISE 

MONEY TO DO THIS INVENTIVE WORK, AND THEY WENT TO AT&T AND 

MOTOROLA AND NOKIA, AND HERE'S AN EXAMPLE OF NOKIA LICENSE. 

IT'S AT THE 5 PERCENT RATE FOR VOLUME SALES. THERE'S A CAP OF 

$35 ON THE ROYALTY. THAT CAP HAS COME DOWN OVER TIME. 

AND I WANT TO STRESS THAT THIS AGREEMENT WAS ENTERED INTO 

IN THE SHADOW OF THE LAW, AS THE FTC SAYS. THERE WASN'T A CHIP 

BUSINESS AT THE TIME. THE TECHNOLOGY HADN'T BEEN ADOPTED INTO 

A STANDARD. AND IF THESE FOLKS FELT THAT THESE RATES WERE 

UNFAIR, THEY HAD YEARS TO DEAL WITH IT. 

MY NEXT SLIDE SHOWS SOMETHING YOU'LL SEE FROM PROFESSOR 

NEVO. AVIV NEVO WAS A SENIOR ECONOMIST AT THE DEPARTMENT OF 

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JUSTICE, AND HE'S NOW AT THE UNIVERSITY OF PENNSYLVANIA. THE 

TIMELINE IS KEY, YOUR HONOR, BECAUSE YOU'LL SEE ON THE RIGHT 

QUALCOMM DIDN'T BEGIN SELLING CHIPS UNTIL '95, THAT'S ABOUT 

WHEN THE STANDARD WAS FINALLY APPROVED. BUT LOOK AT THE BIG 

NAMES TO THE LEFT OF THAT. ALL THESE FOLKS TOOK LICENSES AT OR 

ABOUT THIS RATE, NEGOTIATED AT ARM'S LENGTH. AGAIN, IF THEY 

HAD A PROBLEM, THEY HAD THE FREEDOM TO GO TO COURT. THEY WERE 

OPERATING IN THE SHADOW OF THE LAW. THERE WAS NO CHIP BUSINESS 

WHATSOEVER. 

THIS NEXT SLIDE GIVES YOU A BIGGER PICTURE FROM PROFESSOR 

NEVO OF OUR CDMA LICENSING PROGRAM. IT SHOWS TWO IMPORTANT 

THINGS. THERE ARE HUNDREDS OF LICENSEES, EACH BLUE DOT IS A 

LICENSE. THE RATES DIDN'T GO UP WHEN QUALCOMM STARTED SELLING 

CHIPS. THEY DIDN'T GO UP WHEN QUALCOMM'S TECHNOLOGY WAS IN THE 

STANDARD. THEY REMAINED THE SAME. QUALCOMM HAS HAD THE SAME 

FORMULA FOR YEARS: TAKES AN UPFRONT PAYMENT TO HELP WITH 

RESEARCH; GET A RUNNING ROYALTY. IT'S BEEN DONE IN THAT SAME 

WAY FOR YEARS AND YEARS. 

NOW, THIS NEXT SLIDE, YOUR HONOR, LOOKS SIMILAR, BUT IT 

MAKES AN ENTIRELY DIFFERENT AND A KEY POINT. THIS IS A 

DIFFERENT PRODUCT, WCDMA IS 3G TECHNOLOGY USED BY THE GSM 

SYSTEM WHEN THEY DISCOVERED THEY NEEDED SOMETHING BETTER THAN 

TDMA. THERE'S NO CLAIM THAT QUALCOMM HAS ANY MARKET POWER IN 

THIS MARKET, AT LEAST NOT BEFORE LTE CAME IN IN 2011, NO CLAIM 

BY ANYONE. 

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AND TAKE A LOOK AT THE CHART. IN A PERIOD WHEN EVERYONE 

ACKNOWLEDGES THAT THERE WAS ABSOLUTELY NO LEVERAGE, ABSOLUTELY 

NO MARKET POWER, NOT EVEN A CLAIM OF IT, THE LICENSEES ARE 

SIGNING UP AT ROUGHLY THE SAME RATES TO GET A DIFFERENT 

TECHNOLOGY. THEY ALL HAD CDMA LICENSES. THEY DIDN'T NEED 

ANYTHING ELSE FROM QUALCOMM. BUT THEY WANTED THIS TECHNOLOGY. 

WHY? THEY RECOGNIZED THE STRENGTH OF THE TECHNOLOGY AND 

THE STRENGTH OF THE PORTFOLIO. 

THIS IS THE BUT FOR WORLD THAT WE LOOK FOR IN THESE CASES. 

AND, YOUR HONOR, I WANT TO STRESS THAT IN CONTRAST TO THIS 

EVIDENCE, WHICH IS WHAT HAPPENED IN THE MARKET, THEIR ONLY 

EVIDENCE THAT QUALCOMM'S RATES ARE SUPER-FRAND, OTHER THAN THE 

COMPLAINTS FROM LICENSEES, IS FROM AN EXPERT, MICHAEL LASINSKI, 

WHO HAS A VERY SIMPLISTIC PROGRAM THAT'S NEVER BEEN USED 

OUTSIDE OF LITIGATION. HE SIMPLY SAYS THERE'S AN ARBITRARY CAP 

ON ALL SEP'S. 

THAT IS BASED ON WHAT PEOPLE OTHER THAN QUALCOMM HAVE 

SAID, AND IT'S NEVER SOMETHING QUALCOMM OR ANYBODY ELSE HAS 

ENDORSED. 

AND HE'S USING A SIMPLISTIC MODEL OF COUNTING PATENTS AND 

COUNTING CONTRIBUTIONS RATHER THAN DOING ANY ANALYSIS AT ALL OF 

THE VALUE OF THE TECHNOLOGY, WHO'S ACCEPTING IT, OR WHAT'S 

HAPPENING IN THE ACTUAL MARKET. 

NOW, I'LL SAY ONE OTHER THING ABOUT MR. LASINSKI. HE'S 

NOT HERE AS A NEUTRAL, INDEPENDENT PERSON. HE IS CONNECTED 

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CLOSELY WITH HUAWEI. HE TESTIFIES AS AN EXPERT REGULARLY FOR 

HUAWEI, ONE OF QUALCOMM'S LARGEST COMPETITORS, AND HIS COMPANY 

ADVISES HUAWEI IN LICENSING NEGOTIATIONS WITH QUALCOMM. SO 

HE'S HARDLY AN INDEPENDENT PERSON. 

NOW, QUALCOMM LICENSES AT THE HANDSET LEVEL. THIS IS 

THEIR EXPERT, YOUR HONOR, CONCEDING, AS WE SAY, THAT THIS MODEL 

HAS BEEN STANDARD IN THE INDUSTRY FOR YEARS BEFORE QUALCOMM GOT 

THERE. 

NOW, THIS IS IMPORTANT BECAUSE EVERYBODY LICENSES AT THE 

HANDSET LEVEL, EVEN PEOPLE WITH NO CHIP BUSINESS AT ALL. 

THEY'RE CLAIMING THAT QUALCOMM HAS CHOSEN THIS MODEL TO PROTECT 

ITS MONOPOLY IN CHIPS. 

WELL, NOKIA, ERICSSON, INTER DIGITAL, OTHER PARTICIPANTS 

WITHOUT ANY CHIP BUSINESS, THEY LICENSE AT THE HANDSET LEVEL. 

WHY? BECAUSE THE HANDSET LEVEL IS WHERE THE BENEFIT IS, 

IS TRANSLATING IN THIS MARKET. THAT'S WHAT PRACTICES THESE 

FULL PORTFOLIOS, AND WHEN YOU HAVE MULTIPLE, MULTIPLE COMPONENT 

MAKERS, IT'S THE MOST EFFICIENT THING TO DO. THAT'S WHY IT'S 

BEEN INDUSTRY STANDARD. 

AND IT'S ALSO THE CASE, YOUR HONOR, THAT QUALCOMM SELLS 

CHIPS ONLY TO LICENSED OEM'S. 

WHY? BECAUSE WE BEGAN AS A TECHNOLOGY COMPANY WHERE THE 

VALUE OF OUR INTELLECTUAL PROPERTY AND R&D WAS RECOUPED IN 

LICENSE AGREEMENTS, NOT THROUGH PRODUCT SALES. SO THE VALUE OF 

THE INTELLECTUAL PROPERTY IS NOT PRICED INTO THE CHIPS. 

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QUALCOMM'S GOT A SEPARATE TECHNOLOGY BUSINESS AND A SEPARATE 

CHIP BUSINESS. 

AND THIS PRACTICE HAS BEEN PROCOMPETITIVE. IT'S ALLOWED 

QUALCOMM TO RECOVER REASONABLE VALUE; IT'S ALLOWED HANDSET 

MAKERS THE FREEDOM TO CHOOSE FROM CHIP MAKERS, EVERYBODY IS 

PAYING THE SAME ROYALTY, THEY'RE ON A LEVEL PLAYING FIELD, AND 

THEY DON'T HAVE TO BUY QUALCOMM CHIPS, AND THEY DON'T PAY MORE 

OR LESS IF THEY DO. 

IT ALLOWS CHIP MAKERS TO COMPETE WITHOUT PAYING ANY MONEY 

TO QUALCOMM, SO THE CHIP MAKERS ARE, IN EFFECT, FREE RIDING. 

THEY'RE NOT TAKING A LICENSE. THEY'RE ALSO NOT PAYING ANY 

ROYALTIES. 

LET'S HAVE OUR NEXT SLIDE. YOU HEARD MUCH FROM THE FTC 

ABOUT THREATS OF CHIP SUPPLY AND THE LIKE. NONE OF THAT HAS 

HAD ANY EFFECT ON THE MARKET, EVEN IF IT HAPPENED, AND MOST OF 

IT DID NOT, AS I'LL SHOW YOU IN A MINUTE. 

FIRST OF ALL, YOUR HONOR, QUALCOMM HAS NEVER DISRUPTED 

CHIP SUPPLY IN ANY NEGOTIATION WITH ANY LICENSEE, EVER. 

WHEN LICENSEES ASK FOR IT, THEY GOT AN ASSURANCE OF 

CONTINUED SUPPLY, OFTEN IN WRITING, AND THAT PROMISE WAS KEPT 

EVERY SINGLE TIME. 

THIRD, ALL THE FOLKS WE'RE TALKING ABOUT, SAMSUNG, LENOVO, 

HUAWEI, THEY'RE LARGE, SOPHISTICATED COMPANIES THAT THROW THEIR 

OWN WEIGHT AROUND. THERE'S A BIG DIFFERENCE BETWEEN HARD 

BARGAINING AND THREATS AND COERCION. 

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LET ME GIVE TWO EXAMPLES. LET'S LOOK AT LENOVO. YOU 

HEARD SOMETHING ABOUT NANCY YU. SHE'S A LAWYER -- EXCUSE ME -- 

ABOUT IRA BLUMBERG. HE'S AN ATTORNEY AT LENOVO THAT SAYS HE 

WAS REPEATEDLY THREATENED. 

WELL, NUMBER ONE, QUALCOMM GAVE LENOVO AN EXPLICIT WRITTEN 

COMMITMENT NOT TO AFFECT SUPPLY. THAT'S WHAT'S IN THE QUOTE 

THERE AT THE BOTTOM OF THE PAGE. 

THE LENOVO REPRESENTATIVE THAT ACTUALLY ATTENDED THESE 

MEETINGS, NOT MR. BLUMBERG, HAS TESTIFIED THAT SUPPLY WAS A 

PASSING CONCERN, UNQUOTE, AND THAT AS SOON AS IT WAS RAISED, 

QUALCOMM EXPLICITLY ASSURED THEM THAT SUPPLY WOULD CONTINUE, 

AND NO SUPPLY WAS EVER INTERFERED WITH. LICENSE NEGOTIATIONS 

WENT ON FOR MONTHS. 

LET'S GO TO ANOTHER EXAMPLE, HUAWEI, THAT'S MS. YU. SHE'S 

ALSO A LAWYER. YOU'LL HEAR FROM HER ON VIDEOTAPE APPARENTLY 

TODAY. 

WELL, HUAWEI HAD AN EXTREMELY FAVORABLE LICENSE TO BEGIN 

WITH, SPONSORED, IN EFFECT, BY THE CHINESE GOVERNMENT. THEY 

DIDN'T SUFFER ANY RISK OF DISRUPTION OF SUPPLY AT ANY TIME. NO 

SUPPLY WAS INTERRUPTED, AND THEIR NEGOTIATIONS WENT ON FOR 

MONTHS. IN FACT, QUALCOMM SAID, IF YOU'RE WORRIED, LET'S JUST 

EXTEND THE AGREEMENT AND IF YOU DON'T GET TO AN AGREEMENT THAT 

YOU LIKE, I CAN TERMINATE IT. 

THEY EXTENDED THE AGREEMENT, NOBODY WAS OPERATING UNDER 

ANY PRESSURE AT ALL. 

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AND YOU'RE GOING TO HEAR ABOUT OUR LICENSING PRACTICES AT 

QUALCOMM FROM MR. GONELL, WHO WILL BE HERE NEXT WEEK; 

MIKE HARTOGS IS PROBABLY THE FOLLOWING WEEK; AND ALEX ROGERS, I 

HATE TO SAY IT, YOUR HONOR, BUT MAYBE THE WEEK AFTER THAT. 

NOW, MY THIRD MAJOR POINT IS THAT NONE OF THESE PRACTICES 

REDUCED OR FORECLOSED COMPETITION. 

IT'S VERY NOTEWORTHY, I WANT TO SPEAK ABOUT THE LEGAL 

STANDARD FOR JUST A MINUTE. 

THE FTC PERSISTS IN AN EFFORT TO LOWER THE LEGAL STANDARD 

THEY NEED TO MEET TO ESTABLISH THE VIOLATION. THEIR BRIEF 

CLAIMS THAT ALL THEY HAVE TO SHOW IS CONDUCT THAT TENDS TO 

IMPACT COMPETITION, OR REASONABLY APPEARS CAPABLE OF IT. 

THAT IS NOT THE LAW. THAT IS NOT THE STANDARD. 

LAST YEAR THE SUPREME COURT, IN A CASE SIMILAR TO OURS, 

MADE VERY CLEAR THAT A GOVERNMENT PLAINTIFF HAS TO PROVE THAT 

QUALCOMM'S CONDUCT HAS AN ANTICOMPETITIVE EFFECT ON THE MARKET, 

AND IT MUST BE SUBSTANTIAL. THAT'S THE AMERICAN EXPRESS CASE. 

THE STANDARD THEY'RE CITING TO YOU IN THEIR BRIEFS WAS 

REPEATEDLY DISCUSSED BY THE DISSENT AND REJECTED BY THE 

MAJORITY, WHICH SAID IT'S NOT ENOUGH TO SHOW TENDENCY, IT'S NOT 

ENOUGH TO SHOW A CAPABILITY. YOU MUST SHOW THAT THERE'S BEEN A 

SUBSTANTIAL ANTICOMPETITIVE EFFECT. 

THEIR EVIDENCE WON'T COME CLOSE TO THAT, AND THEIR EFFORT 

TO CONTINUE TO LOWER THE BAR SHOWS THEY KNOW IT, TOO. 

A RELATED POINT. YOUR HONOR RECOGNIZES THAT IN MOST 

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INSTANCES, THERE'S NO DUTY TO HELP YOUR COMPETITORS. YOU'VE 

IDENTIFIED TWO POSSIBLE EXCEPTIONS THAT MIGHT APPLY HERE BASED 

ON THE PLEADINGS. 

BUT, AGAIN, THE EVIDENCE WON'T SUPPORT A FINDING UNDER 

EITHER ONE. 

THERE'S NO EVIDENCE THAT QUALCOMM UNILATERALLY TERMINATED 

SOME VOLUNTARY COURSE OF DEALING. QUALCOMM HAS ALWAYS LICENSED 

AT THE HANDSET LEVEL. AND IT HAS ALWAYS SAID WE ARE NOT GOING 

TO LICENSE CHIP MAKERS EXHAUSTIVELY. THAT'S BEEN TRUE SINCE 

DAY ONE. THERE HASN'T BEEN ANY CHANGE IN CONDUCT. 

AND SECONDLY, THERE'S NO EVIDENCE THAT THIS APPROACH 

EITHER LACKS A BUSINESS PURPOSE OR HAS SOME -- SHOWS SOME 

ANTICOMPETITIVE MALICE. 

DEVICE LEVEL LICENSING IS STANDARD AND CUSTOMARY AND HAS 

BEEN AROUND FOR YEARS, EVEN BY COMPANIES WITH NO CHIP BUSINESS 

AT ALL. IT'S THE MOST EFFICIENT WAY TO LICENSE, AS YOU'RE 

GOING TO HEAR. AND, AGAIN, IT ALLOWS THE CHIP MAKERS TO USE 

QUALCOMM'S TECHNOLOGY WITHOUT PAYING A ROYALTY. 

WHAT'S THE RESULT BEEN? THE RESULT HAS BEEN VERY HARSH, 

ROUGH COMPETITION ON THE MERITS. 

THIS NEXT SLIDE I CAN'T SHOW YOUR HONOR. IT'S 17 IN YOUR 

DECK. ONE OF THE THIRD PARTIES HAS OBJECTED TO IT. BUT WHAT 

IT SHOWS FROM THEIR OWN EXPERT IS QUALCOMM'S SHARE, HOWEVER YOU 

WANT TO VALUE IT, OR EVALUATE IT, HAS FALLEN DRAMATICALLY. 

ON THE LEFT, THAT'S THE CDMA MARKET THAT DR. SHAPIRO, 

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MR. SHAPIRO DEFINES; AND ON THE RIGHT, THAT'S THE PREMIUM LTE 

MARKET. THAT'S FROM THEIR EXPERT. IT'S FALLEN. 

WHY? THREE OF QUALCOMM'S BIGGEST CUSTOMERS ARE MOVING 

AWAY FROM QUALCOMM. ON THE LEFT, INTEL IS NOW SUPPLYING 100 

PERCENT OF THE MODEMS IN THE NEW IPHONES. SAMSUNG IS SUPPLYING 

HALF OF ITS OWN CHIPS AND BUYING CHIPS FROM OTHERS. HUAWEI IS 

SUPPLYING ALMOST HALF OF ITS OWN CHIPS. 

YOUR HONOR, IN 2017, QUALCOMM SUPPLIED ONLY 34 PERCENT OF 

THE TOTAL MODEM CHIPS WORLDWIDE. 

NOW, THE FTC SAYS, WELL, THIS ISN'T BASED ON COMPETITION. 

THESE GUYS GOT THERE LATE. THEY COULDN'T GET THERE SOONER 

BECAUSE QUALCOMM'S SUPER-FRAND ROYALTIES IMPOSED A TAX THAT 

KEPT THEM FROM INNOVATING. 

THAT'S BALONEY, TOO. 

THIS NEXT SLIDE, DR. TASNEEM CHIPTY WILL PRESENT SOME 

MARKET DATA. TAKE A LOOK. THESE ARE R&D EXPENDITURES ACROSS 

THE BOARD, NOT JUST MOBILE. BUT QUALCOMM IS THE LITTLE ONE IN 

THE BLUE. INTEL AND SAMSUNG ARE THE TOWERS IN GREY AND GREEN. 

HUAWEI HAS GROWN CONSISTENTLY OVER THE YEARS. ALL THESE FOLKS 

ARE OUT SPENDING QUALCOMM, SOMETIMES THREE TO ONE. 

THE IDEA THAT THEY DIDN'T HAVE THE RESOURCES IS ABSOLUTELY 

NUTS. 

AND DR. SHAPIRO DIDN'T EVEN LOOK AT THIS. THESE FOLKS HAD 

ALL THE RESOURCES IN THE WORLD. THEY THEMSELVES LOOKED TO SEE 

WHY THEY WEREN'T DOING AS WELL. 

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THIS NEXT SLIDE IS AN INTEL SLIDE DEVELOPED FOR THEM BY 

BAIN. INTEL SAID, HOW COME WE'RE NOT DOING AS WELL AS 

QUALCOMM, EVEN THOUGH WE'RE SPENDING THE SAME MONEY? BAIN SAID 

BECAUSE YOU'RE NOT AS EFFICIENT. QUALCOMM IS LOOKING AT THE 

MOBILE MARKET AND THEIR OUTPUT IS TWO TO THREE TIMES YOURS. 

YOUR PRODUCTIVITY IS LESS THAN HALF OF WHAT QUALCOMM DOES ON 

THE SAME MONEY. 

NOW, GUESS WHAT? BASED ON THIS -- EXCUSE ME. I'M GOING 

TO STEP FORWARD JUST A BIT. 

A SIMILAR POINT ON APPLE EXCLUSIVITY, SO-CALLED. 

REMEMBER, YOUR HONOR, BEFORE THE DEAL BETWEEN QUALCOMM AND 

APPLE, APPLE WAS SINGLE SOURCING FROM INFINEON. SO THEY WERE 

SOLE SOURCING BEFORE QUALCOMM CAME ALONG. AND WHAT THEY SAID 

TO QUALCOMM WAS, WE WANT TO REPLACE INFINEON WITH YOU, YOU'RE 

BETTER, BUT GIVE US A BILLION DOLLARS TO DO IT. 

THEY WOULDN'T MAKE ANY MINIMUM GUARANTEE OF VOLUME. THEY 

HAD LOTS OF PRODUCT REQUIREMENTS. THEY EXPECTED QUALCOMM TO 

SPEND A BUNCH OF MONEY AND GIVE THEM A BILLION DOLLARS. THAT 

WAS THE DEAL. 

WE CALLED IT EXCLUSIVE, BUT APPLE ALWAYS HAD THE RIGHT TO 

SELECT A SECOND VENDOR, AND THEY DID. FINALLY, INTEL WAS READY 

TO GO AND IN 2016, INTEL BEGAN SELLING CHIPS TO APPLE DURING 

THE PERIOD OF EXCLUSIVITY. THE PENALTY WAS THE MONEY THAT YOU 

GOT, SOME OF IT, WE HAVE TO PAY BACK. 

THAT WAS MUTUALLY BENEFICIAL FOR BOTH PARTIES, AND AS 

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YOU'LL SEE IN A MINUTE, NOBODY ELSE WAS READY TO PROVIDE WHAT 

APPLE NEEDED. 

LET'S LOOK AT THE NEXT SLIDE. 

THIS IS INTEL IN 2011 EVALUATING THEIR POSITION, YOUR 

HONOR, IN THE MARKET VIS-A-VIS QUALCOMM AND ST ERICSSON. 

THEY'RE BEHIND. THERE'S A GAP. 

THIS IS INTEL RECOGNIZING THAT THEY ARE NOT KEEPING UP 

WITH QUALCOMM. AS A RESULT OF THIS RECOGNITION, INTEL DECIDED 

TO LEAVE THE CDMA MARKET AND FOCUS THEIR EFFORTS ELSEWHERE. 

THEY ACTUALLY MADE A DECISION TO DO THAT MOVE AND MOVE TO OTHER 

TECHNOLOGIES. 

SO WHAT HAPPENED NEXT? WHEN APPLE NEEDED THEM IN CDMA, 

THEY WEREN'T READY. HERE AS AN APPLE SLIDE FROM 2013. AGAIN, 

APPLE IS STILL SEARCHING FOR A SECOND SOURCE. 

APPLE DETERMINES THAT NEITHER BROADCOM NOR INTEL COULD 

COMPETE WITH EUREKA. EUREKA, YOUR HONOR, IS APPLE'S CODE FOR 

QUALCOMM. EUREKA, I'VE FOUND IT. THAT'S THEIR CODE FOR 

QUALCOMM. THEY'RE DETERMINING, INTERNALLY AT APPLE, THESE GUYS 

AREN'T READY FOR PRIME TIME, WE CAN'T DO IT. 

AND THE IDEA THAT INCENTIVE PAYMENTS ARE THE CAUSE OF THIS 

MAKES NO ECONOMIC SENSE. THE INCENTIVE PAYMENTS THAT QUALCOMM 

AGREED TO GIVE TO PEOPLE TO BUY THEIR CHIPS REDUCED THE PRICE 

THEY PAID FOR CHIPS. THAT'S PROCOMPETITIVE. 

IF QUALCOMM HAD THE MARKET POWER TO DEMAND A FIXED PRICE, 

TAKE IT OR LEAVE IT, WHY IN THE WORLD WOULD THEY PAY HUNDREDS 

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OF MILLIONS IN INCENTIVES TO INCENTIVIZE PEOPLE TO BUY THEIR 

CHIPS? 

THIS PROVES WHAT WE'RE SAYING, THAT THESE NEGOTIATIONS 

WERE AT ARM'S LENGTH ON A LEVEL PLAYING FIELD, NOT SOME SCHEME 

TO SKEW THE MARKET. 

AND MY FINAL POINT, YOUR HONOR, IS THAT THE SMARTPHONE 

INDUSTRY IS THRIVING AND HIGHLY COMPETITIVE. PRICES HAVE COME 

DOWN. I KNOW THE IPHONE IS EXPENSIVE, BUT AVERAGE PRICES HAVE 

FALLEN. 

NOTE, YOUR HONOR, THAT THE LITTLE SPIKE THERE AT THE END, 

THE HOCKEY STICK 314, THAT'S APPLE'S NEW PRICING ON THE IPHONE 

AT A TIME WHEN THEY'RE PAYING NO ROYALTIES TO QUALCOMM, NO 

ROYALTIES. THEY'VE CEASED ALL ROYALTY PAYMENTS, AND YET THE 

PRICE IS GOING UP. 

THE COST OF DATA, AS I MENTIONED EARLIER, HAS PLUMMETED, 

LARGELY DUE TO TECHNOLOGY ADVANCES BY QUALCOMM. SO THE DATA 

THAT WE PAY FOR TO THE CARRIERS, THAT'S BECOME CHEAPER AND 

CHEAPER. 

MORE COMPANIES ARE ENTERING THE MARKET. THIS IS FROM 

DR. CHIPTY'S ANALYSIS. MORE COMPANIES ARE ENTERING THE MARKET, 

INCLUDING MEDIATEK, AND MEDIATEK HAS SOME PREMIUM CHIPS, TOO. 

AND YOU CAN SEE FROM THE GREEN TILES THAT AS TIME HAS GONE 

ON, MORE AND MORE COMPANIES HAVE COME INTO THE MARKET, WHICH IS 

ANOTHER SIGN, ALONG WITH FALLING PRICES, INCREASING QUALITY, 

INCREASING COMPETITION, THE LOWER MARKET SHARE FOR QUALCOMM, 

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ALL OF THESE THINGS SHOW A HEALTHY, THRIVING, COMPETITIVE 

MARKET. 

SO BASED ON THAT, YOUR HONOR, WE DON'T BELIEVE THE FTC 

WILL BE ABLE TO SHOW A VIOLATION AT ALL. 

BUT IF YOUR HONOR CONCLUDES OTHERWISE, YOU'LL BE FACED 

WITH THE TASK OF FINDING AN APPROPRIATE REMEDY. 

THE REMEDY THEY WANT IS EXTRAORDINARY AND BROAD. THEY 

HAVEN'T DEMONSTRATED A NEED FOR IT OR EVIDENCE TO SUPPORT IT OR 

ANY PROOF THAT IT'LL IMPROVE THINGS. 

THEY WOULD REQUIRE A WHOLESALE CHANGE IN HOW LICENSING IS 

DONE IN THE MOBILE SPACE, NOT JUST BY QUALCOMM, BUT EVERYBODY 

ELSE. 

AND THERE SIMPLY WON'T BE ANY EVIDENCE THAT THIS WILL 

IMPROVE THINGS FOR INNOVATION, COMPETITION, OR THAT IT WILL 

BENEFIT CONSUMERS IN THE LEAST. 

AND SO, YOUR HONOR, WE BELIEVE THE FTC'S EVIDENCE IS GOING 

TO FALL FAR SHORT OF WHAT YOU'VE SEEN IN THE PLEADINGS AND THE 

COMPLAINT TO DATE, AND AS A RESULT OF THAT, YOU WILL NOT FIND 

ANY VIOLATION OF SECTION 5 OR THE SHERMAN ACT AT ALL. AND 

WE'RE VERY MUCH LOOKING FORWARD NOW TO GETTING TO THE EVIDENCE 

AND PRESENTING TO YOUR HONOR WHAT HAPPENED OUT IN THE MARKET 

PLACE. 

THANK YOU VERY MUCH. 

THE COURT: OKAY. TIME IS 10:07. 

OKAY. CALL YOUR FIRST WITNESS, PLEASE. 

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MR. HOPKIN: NATE HOPKIN, THAT'S N-A-T-E, HOPKIN WITH 

NO S. 

GOOD MORNING, YOUR HONOR. MAY IT PLEASE THE COURT. MY 

NAME IS NATE HOPKIN ON BEHALF OF FEDERAL TRADE COMMISSION. 

THE FTC'S FIRST WITNESS, MR. ERIC REIFSCHNEIDER, AS 

PREVIEWED, IS UNAVAILABLE TO TESTIFY TODAY, AND SO THE FTC WILL 

BE PRESENTING HIS TESTIMONY THIS MORNING BY VIDEO DEPOSITION. 

MR. REIFSCHNEIDER WAS FORMERLY OUTSIDE COUNSEL FOR 

QUALCOMM AND THEN BECAME GENERAL MANAGER OF QUALCOMM'S 

TECHNOLOGY LICENSING DIVISION AND NEGOTIATED SOME OF THE 

CELLULAR PATENT LICENSES AND INCENTIVE AGREEMENTS AT ISSUE IN 

THIS CASE. 

MR. REIFSCHNEIDER WAS DEPOSED ON FEBRUARY 22ND AND 23RD, 

2018. 

WE'VE PREPARED A BINDER OF DOCUMENTS FOR 

MR. REIFSCHNEIDER'S TESTIMONY. 

MAY I APPROACH WITH THE BINDERS? 

THE COURT: YES. 

HAVE YOU ALREADY PROVIDED THOSE? 

MR. HOPKIN: NOT FOR THIS WITNESS, YOUR HONOR. 

THE COURT: OH, OKAY. 

CAN WE MAKE ROOM FOR THE GENTLEMAN IN THE BACK, PLEASE. 

IF SOMEONE COULD SCOOT FURTHER OVER? THANK YOU. SORRY IT'S A 

LITTLE BIT TIGHT IN HERE. 

SO YOU HAVE WITNESS SPECIFIC BINDERS? 

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(PAUSE IN PROCEEDINGS.) 

MR. HOPKIN: SO THE BINDER INCLUDES THE FULL 

DEPOSITION TRANSCRIPT FROM MR. REIFSCHNEIDER'S DEPOSITION, WITH 

COLOR CODED HIGHLIGHTING INDICATING EACH PARTY'S DESIGNATIONS. 

THE FTC HAS DESIGNATED TESTIMONY HAS HIGHLIGHTED IN BLUE 

AND QUALCOMM'S COMPLETENESS DESIGNATIONS ARE HIGHLIGHTED IN 

YELLOW. 

THE BINDER ALSO INCLUDES EXHIBITS THAT WILL BE DISCUSSED 

IN MR. REIFSCHNEIDER'S TESTIMONY THAT ARE ON THE FTC'S EXHIBIT 

LIST. 

THESE EXHIBITS ARE ARRANGED IN THE BINDER IN THE ORDER 

THAT THEY WILL APPEAR IN THE VIDEO. 

EACH BINDER TAB IDENTIFIES AN EXHIBIT NUMBER WHICH HAVE A 

CX PREFIX FOR FTC EXHIBITS, OR THE DEPOSITION EXHIBIT NUMBERS 

DIFFER FROM TRIAL EXHIBIT NUMBERS, THE TAB SHOWS THE DEPOSITION 

EXHIBIT NUMBER AS REFERENCED IN THE TESTIMONY, WITH THE 

CORRESPONDING TRIAL EXHIBIT NUMBER IN PARENTHESES. THERE'S 

ALSO A TABLE CROSS-REFERENCING THE EXHIBIT AND TRIAL EXHIBIT 

NUMBERS IN THE FRONT OF THE BINDER. 

AND, YOUR HONOR, BEFORE PLAYING THE VIDEO AT THIS TIME, 

THE FTC MOVES TO ADMIT INTO EVIDENCE THE FOLLOWING EXHIBITS 

FROM MR. REIFSCHNEIDER'S DEPOSITION. 

THE COURT: OKAY. WAIT A MINUTE. I NEED TO START 

CHARGING YOUR TIME BECAUSE YOU'RE -- I'M NOT SURE, WHAT IS ALL 

THIS PREFATORY EXPLANATION? IS THAT WHAT THIS IS SO FAR?

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(PAUSE IN PROCEEDINGS.)

MR. HOPKIN: AS SOON AS YOU'RE READY, YOUR HONOR. 

THE COURT: ALL RIGHT. TIME IS 10:11. 

MR. HOPKIN: THE FTC MOVES TO ADMIT INTO EVIDENCE THE 

FOLLOWING EXHIBITS, 14 IN TOTAL: CX 6548, 5186, 6534, 6528, 

5211, 5210, 6491, 5179, 6500, 6516, 6522, 6530, 8300, AND 8297. 

THE TOTAL RUN TIME OF MR. REIFSCHNEIDER'S VIDEO TESTIMONY 

IS APPROXIMATELY ONE HOUR, AND ABOUT ONE MINUTE OF THAT 

CONSISTS OF QUALCOMM'S COMPLETENESS DESIGNATIONS. 

THE COURT: ALL RIGHT. ANY OBJECTION TO THE 

ADMISSION OF THE EXHIBITS? 

MR. BORNSTEIN: NO OBJECTION TO THE EXHIBITS, YOUR 

HONOR. 

THE COURT: THEY'RE ALL ADMITTED. 

(PLAINTIFF'S EXHIBITS 6548, 5186, 6534, 6528, 5211, 5210, 

6491, 5179, 6500, 6516, 6522, 6530, 8300, AND 8297 WERE 

ADMITTED IN EVIDENCE.) 

THE COURT: GO AHEAD, PLEASE. 

MR. HOPKIN: THANK YOU. 

MS. HILL, COULD YOU PLEASE BEGIN THE VIDEO. 

(THE VIDEOTAPED DEPOSITION OF ERIC REIFSCHNEIDER WAS 

PLAYED IN OPEN COURT OFF THE RECORD.)

MR. HOPKIN: MS. HILL, CAN YOU PLEASE PAUSE THE 

VIDEO? 

THE COURT: TIME IS 10:14. 

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MR. BORNSTEIN: CAN WE PAUSE IT? 

THE COURT: IS THERE A PROBLEM? 

MR. HOPKIN: WE'RE HAVING A TECHNICAL VIDEO ISSUE, 

YOUR HONOR. 

THE COURT: OH, OKAY. 

MR. BORNSTEIN: YOUR HONOR, WHILE WE'VE PAUSED, I 

DIDN'T WANT TO INTERRUPT THE PRESENTATION, BUT THERE'S A 

PORTION OF THE TESTIMONY THAT THE FTC HAD AGREED TO PLAY THAT 

WAS NOT INCLUDED IN THE CLIP, AND I'M NOT SURE WHY. IT WAS AN 

OBJECTION THEY HAD RAISED, AND THEN THEY DROPPED IT DURING THE 

MEET AND CONFER AND AGREED TO PLAY IT, AND IT WAS NOT INCLUDED 

IN WHAT WAS JUST PLAYED. WE DIDN'T RECEIVE THE CLIPS UNTIL 

VERY, VERY LATE LAST NIGHT AND THIS WASN'T IN THERE. 

SO I'M NOT -- WE CAN READ THE TESTIMONY. YOUR HONOR HAS 

THE TRANSCRIPT. I JUST WANT TO MAKE SURE THAT THE THINGS THAT 

THEY AGREED TO HAVE PLAYED ACTUALLY GET PLAYED FOR US. 

THE COURT: OKAY. BUT I DON'T WANT THIS TO BECOME AN 

EFFORT TO JUST USE UP THEIR TIME WITH YOUR EVIDENCE. 

MR. BORNSTEIN: WELL, YOUR HONOR -- 

THE COURT: SO THAT'S WHY I -- ANYWAY. SO WHAT IS 

THE PORTION? IS IT INCLUDED OR NOT INCLUDED? 

MR. HOPKIN: IT WAS INTENDED TO BE INCLUDED. ITS 

EXCLUSION WAS INADVERTENT, YOUR HONOR, FROM THE VIDEO. 

THE COURT: OH, OKAY. AND WHAT IS THE PAGE OR LINE 

NUMBER? 

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MR. BORNSTEIN: IT'S PAGE 24, YOUR HONOR, LINE 21, 

RUNNING THROUGH PAGE 25, LINE 4. 

AND THE COMPLETENESS TESTIMONY, YOUR HONOR, JUST FOR 

CLARITY, IS TESTIMONY THAT WE'VE AGREED SHOULD COME OUT OF OUR 

TIME. WE'RE NOT SAYING THEY SHOULD BE CHARGED. IT WAS 

SOMETHING THAT WAS INTENDED TO BE PLAYING. I WASN'T INTENDING 

TO INTERRUPT THE PROCEEDING, BUT I THOUGHT -- 

THE COURT: I THINK IT WOULD BE BEST, IF THERE ARE 

THINGS THAT YOU WANT TO PLAY ON YOUR TIME, THAT YOU PLAY THEM 

ON YOUR TIME. NO ONE TOLD ME THAT I WOULD BE DEDUCTING THIS 

TIME FROM THE FTC'S TIME, EVEN IF IT HAD BEEN PLAYED. 

MR. BORNSTEIN: YOUR HONOR, WE HAD WORKED THIS OUT. 

AS MR. HOPKIN EXPLAINED AT THE BEGINNING, THERE WAS A CERTAIN 

AMOUNT OF TIME THAT WAS OURS FOR THE COMPLETENESS DESIGNATIONS. 

WE WERE DEDUCTING THE TIME. 

THE COURT: YOU DIDN'T TELL ME THE TIME. WHAT IS THE 

TIME FOR THIS EXCERPT? 

MR. HOPKIN: THE TOTAL TIME FOR ALL OF QUALCOMM'S 

EXCERPTS IS ONE MINUTE, YOUR HONOR. 

THE COURT: OKAY, FOR MR. REIFSCHNEIDER. AND IF YOU 

TOLD ME, I APOLOGIZE, I MISSED IT. 

HOW DO YOU WANT TO DO THAT? DO YOU WANT TO JUST READ IT? 

MR. BORNSTEIN: SURE, THAT'S FINE, YOUR HONOR. 

THE COURT: OKAY. DO YOU WANT TO READ THAT PORTION 

NOW? BECAUSE I ASSUME YOU'VE ALREADY SHOWN THE -- 

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MR. BORNSTEIN: YES, YOUR HONOR, THAT PORTION HAS 

PASSED IN THE CHRONOLOGICAL PART OF THE VIDEO. I CAN READ IT 

OR MR. HOPKIN CAN READ. I AM HAPPY TO TAKE CARE OF IT. 

THE COURT: OKAY. WHY DON'T YOU READ IT, YOUR HONOR. 

MR. BORNSTEIN: OKAY. THANK YOU, YOUR HONOR.

"QUESTION: SO FOR THE SUBSCRIBER DEVICES, CAN YOU THINK 

OF ANY LICENSEE WHO DID NOT OR WAS NOT A CURRENT MODEM CHIP 

CUSTOMER? 

"ANSWER: THERE'S A CHINESE COMPANY CALLED MEIZU THAT I 

REMEMBER THAT WE WERE NEGOTIATING WITH TOWARD THE END OF MY 

TIME AS GENERAL MANAGER. I DID NOT PERSONALLY PARTICIPATE IN 

NEGOTIATIONS WITH THEM. BUT I WAS PART OF THE INTERNAL 

DISCUSSIONS ABOUT HOW TO NEGOTIATE WITH THEM." 

AND FOR CLARITY, YOUR HONOR, GOING FORWARD, THE PARTIES 

WILL BE CAREFUL TO MAKE SURE YOUR HONOR KNOWS HOW MUCH TIME 

COMES OUT OF EACH SIDE'S DESIGNATIONS. WE'VE MADE AN EFFORT TO 

DO THAT, AND WE WILL CONTINUE TO MAKE AN EFFORT TO DO THAT FOR 

THE COURT'S TIMEKEEPING. 

THE COURT: ALL RIGHT. THANK YOU. 

OKAY. BUT THAT DOESN'T SAY THEY WERE LICENSED, IT JUST 

SAYS I REMEMBER THEY WERE NEGOTIATING. 

AND THEN THE NEXT QUESTION IS, CAN YOU THINK OF ANY 

COMPANY THAT YOU NEGOTIATED WITH FOR A SULA LICENSE THAT WAS 

NOT A CURRENT CUSTOMER BUYING MODEM CHIPS FROM QUALCOMM. 

AND HE SAYS, NOT AS I SIT HERE RIGHT NOW. 

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MR. BORNSTEIN: THAT'S RIGHT. THE POINT IS, YOUR 

HONOR, THAT HE WAS NEGOTIATING WITH SOMEONE WHO WASN'T LICENSED 

AND WHO QUALCOMM HAD TO BRING LITIGATION AGAINST AND BRING A 

LICENSE. 

THE COURT: ALL RIGHT. THAT'S NOT IN THE TRANSCRIPT 

THAT YOU JUST READ. 

MR. BORNSTEIN: THAT'S CORRECT. WE'LL GET THAT. 

THE COURT: OKAY. HAVE YOU WORKED OUT YOUR TECHNICAL 

ISSUE, OR -- 

WHAT IS THE PROBLEM? YOU WANT TO SHOW THE ACTUAL EXHIBIT 

ON A SPLIT SCREEN? IS THAT -- WHAT'S THE TECHNICAL ISSUE? 

MR. HOPKIN: THAT'S EXACTLY IT, YOUR HONOR. 

THE COURT: OKAY. WELL, IF WE CAN'T HAVE THAT 

HAPPEN, I DON'T MIND JUST LOOKING AT THE DOCUMENT ITSELF. I 

MEAN, IT'S LESS HELPFUL, BUT I -- YOU KNOW, WE'RE ON A TIGHT 

TIMEFRAME TO GET THIS CASE TRIED IN TEN DAYS, SO WHAT DO YOU 

RECOMMEND. 

MR. HOPKIN: UNDERSTOOD. IF YOU'D LIKE TO CONTINUE, 

WE CAN DO THAT AND THEN MAYBE HOPEFULLY RESOLVE THIS ON THE 

FIRST BREAK. 

THE COURT: OKAY. AND WHAT IS -- IT WAS 64 -- 6548 

THAT WE SHOULD BE LOOKING AT. IS THAT RIGHT? 

MR. HOPKIN: CORRECT. 

THE COURT: OKAY. I MEAN, HOW MUCH MORE TIME WOULD 

YOU NEED TO FIX THIS? WE COULD TAKE OUR BREAK EARLY. WE 

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NORMALLY TAKE A BREAK AT 10:30. WE COULD TAKE IT NOW IF THAT'S 

HELPFUL. 

MR. HOPKIN: I THINK IT WOULD BE HELPFUL TO TAKE A 

BREAK NOW, YOUR HONOR. 

THE COURT: OKAY. LET'S GO AHEAD -- WE TAKE ONE 

BREAK IN THE MORNING OF 15 MINUTES. 

IT'S 10:20. LET'S TAKE A BREAK TO 10:35. 

MR. HOPKIN: THANK YOU, YOUR HONOR. 

THE COURT: ALL RIGHT. THANK YOU. 

THE CLERK: COURT IS IN RECESS. 

(RECESS FROM 10:20 A.M. UNTIL 10:36 A.M.) 

THE COURT: GOOD MORNING. WELCOME BACK. 

WE'RE WORKING ON HIGH PRIORITY OBJECTIONS RIGHT NOW. 

PLEASE TAKE A SEAT. 

QUALCOMM, YOU SUBMITTED THE DEPOSITION TRANSCRIPTS OF 

GEORGE DAVIS, BUT THE HIGH PRIORITY OBJECTIONS ARE AS TO 

MARK DAVIS, SO COULD YOU HAVE SOMEONE ON YOUR TEAM SUBMIT THE 

CORRECT DEPO TRANSCRIPTS SO WE CAN TRY TO RULE ON THOSE? 

MR. VAN NEST: WE WILL, YOUR HONOR. 

THE COURT: OKAY. THANK YOU. 

OKAY. DID YOU WORK OUT YOUR TECHNOLOGY ISSUE, I HOPE? 

MR. HOPKIN: YOUR HONOR, AT THIS TIME I PROPOSE THAT 

WE PROCEED WITH PLAYING THE VIDEO AND REVIEWING THE HARD 

COPIES. WE HAVEN'T BEEN ABLE TO FIGURE OUT HOW TO SHOW THEM 

BOTH ON THE SCREEN FOR TODAY. 

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THE COURT: OH, OKAY. AND DID -- I GUESS WE DIDN'T 

HAVE JACKSON -- WE SHOULD PROBABLY HAVE JACKSON COME MAYBE 

DURING LUNCH TO SEE IF HE CAN HELP. 

I DON'T KNOW. THIS IS ALL YOUR EQUIPMENT; IS THAT 

CORRECT? 

MS. MILICI: I BELIEVE QUALCOMM ACTUALLY INSTALLED 

THE EQUIPMENT, BUT WE'RE JUST DOING THE BEST WE CAN. WE'LL TRY 

TO FIGURE IT OUT. 

THE COURT: OKAY. AND QUALCOMM DOESN'T HAVE ANYONE 

WHO CAN ASSIST IN USING YOUR EQUIPMENT? 

MR. VAN NEST: I DON'T THINK IT'S AN EQUIPMENT 

PROBLEM, YOUR HONOR. 

MS. MILICI: IT MIGHT NOT BE. WE'LL WORK ON IT AT 

LUNCH AND HOPEFULLY RESOLVE IT BY THEN. 

THE COURT: OKAY. AND THEN I'M GOING TO ASK 

MS. GARCIA IF WE CAN HAVE JACKSON COME PERHAPS DURING THE LUNCH 

BREAK AND SEE IF HE CAN -- THIS IS NOT HIS SYSTEM, BUT HE MIGHT 

BE OF SOME ASSISTANCE. 

MR. HOPKIN: THANK YOU, YOUR HONOR. 

THE COURT: OKAY. 

YOU KNOW WHAT MIGHT BE EASIER? HOW LONG IS THIS 

TRANSCRIPT EXCERPT? IT MIGHT BE EASIER IF I KEEP THE TIME THAT 

WAY. 

MR. HOPKIN: THE WHOLE VIDEO IS APPROXIMATELY ONE 

HOUR. 

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THE COURT: OH, IT'S ONE HOUR. OKAY. DO YOU WANT ME 

TO JUST TIME IT THAT WAY? WOULD THAT BE EASIER? WHAT'S THE 

EXACT TIMING? IT'S AN HOUR? 60 MINUTES? 

MR. HOPKIN: I BELIEVE WE CAN GET YOU THE EXACT 

TIMING -- 

THE COURT: OKAY. 

MR. HOPKIN: -- DOWN TO THE SECOND. 

THE COURT: OKAY. THAT MIGHT BE AN EASIER WAY TO DO 

IT. 

OKAY. GO AHEAD, PLEASE. 

MR. HOPKIN: THANK YOU. 

THE COURT: IT'S 10:38. 

MR. HOPKIN: AND WE'LL BE BEGINNING WITH CX 68 -- 

6548. 

(PAUSE IN PROCEEDINGS.) 

(THE VIDEOTAPED DEPOSITION OF ERIC REIFSCHNEIDER WAS 

PLAYED IN OPEN COURT OFF THE RECORD.)

THE COURT: CAN YOU INCREASE THE VOLUME, PLEASE? 

THANK YOU. 

(THE VIDEOTAPED DEPOSITION OF ERIC REIFSCHNEIDER WAS 

PLAYED IN OPEN COURT OFF THE RECORD.)

THE COURT: YOU HAVEN'T INTRODUCED THIS EXHIBIT, 

RIGHT, AS PART OF THIS PACKAGE? 

MR. HOPKIN: THAT'S CORRECT, YOUR HONOR. 

(THE VIDEOTAPED DEPOSITION OF ERIC REIFSCHNEIDER WAS 

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PLAYED IN OPEN COURT OFF THE RECORD.)

THE COURT: ARE WE ON EXHIBIT 6500? 

MR. HOPKIN: YES, YOUR HONOR. 

THE COURT: THANK YOU. 

(THE VIDEOTAPED DEPOSITION OF ERIC REIFSCHNEIDER WAS 

PLAYED IN OPEN COURT OFF THE RECORD.)

THE COURT: WHAT NUMBER IS THIS, PLEASE? 

MR. HOPKIN: YOUR HONOR, WE'RE NOT MOVING TO ADMIT 

THIS EXHIBIT. 

THE COURT: OH. THANK YOU. 

(THE VIDEOTAPED DEPOSITION OF ERIC REIFSCHNEIDER WAS 

PLAYED IN OPEN COURT OFF THE RECORD.) 

MR. HOPKIN: FOR CLARITY, WE ARE NOT SEEKING 

ADMISSION OF THIS EXHIBIT, EITHER. 

(THE VIDEOTAPED DEPOSITION OF ERIC REIFSCHNEIDER WAS 

PLAYED IN OPEN COURT OFF THE RECORD.)

MR. HOPKIN: THANK YOU, YOUR HONOR. THAT CONCLUDES 

THE FTC'S DESIGNATIONS FOR MR. REIFSCHNEIDER. 

THE COURT: ALL RIGHT. THANKS. 

WHAT IS THE TIME NOW, PLEASE, ON THE TRANSCRIPT? 

THE REPORTER: 11:39. 

THE COURT: 11:39. OKAY. THANK YOU. 

ALL RIGHT. WHO IS YOUR NEXT WITNESS, PLEASE? 

MR. KEHL: PHIL KEHL ON BEHALF OF THE FTC. 

YOUR HONOR, THE FTC WILL NOW PLAY THE VIDEO DEPOSITION OF 

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IRA BLUMBERG WHO YOU HEARD ABOUT EARLIER THIS MORNING, WHICH 

WAS TAKEN ON APRIL 20TH, 2018. 

THE COURT: AND DO YOU HAVE A SEPARATE BINDER OF 

EXHIBITS FOR THAT WITNESS? 

MR. KEHL: YES. 

THE COURT: OKAY. 

MR. KEHL: HERE ARE TWO COPIES FOR THE COURT 

(HANDING). 

AND, YOUR HONOR, EXHIBITS WITHIN THIS BINDER WERE SEALED 

BY COURT ORDER YESTERDAY, SO IN LIGHT OF THAT ORDER AND OUR 

TECHNICAL DIFFICULTY, WE WON'T BE PROJECTING THEM ON THE 

MONITOR. 

LENOVO DID NOT SEEK TO SEAL THE COURTROOM IN PLAYING THE 

VIDEO TESTIMONY, SO WE'LL PLAY THE VIDEO TESTIMONY. 

THE COURT: OH, OKAY. AND ARE YOU MOVING TO ADMIT 

THESE EXHIBITS? 

MR. KEHL: YES, YOUR HONOR. WE MOVE TO ADMIT 

JX 0087. 

THE COURT: OKAY. GIVE ME JUST ONE -- 

MR. KEHL: SURE. 

THE COURT: ONE MINUTE, PLEASE. 

OKAY. TIME IS 11:40. 

YOU SAID JX WHAT AGAIN, PLEASE? 

MR. KEHL: 0087. 

THE COURT: OKAY. 

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MR. KEHL: CX 2093. 

THE COURT: OKAY. 

MR. KEHL: CX 2079.

THE COURT: YES.

MR. KEHL: CX 2120.

THE COURT: YES.

MR. KEHL: CX 2121, AND CX 2122. 

THE COURT: AND WHICH OF THESE ARE SEALED, PLEASE? 

MR. KEHL: EVERY EXHIBIT EXCEPT FOR JX 0087. 

THE COURT: OKAY. THEY'RE ALL SEALED. 

ALL RIGHT. ANY OBJECTION TO ADMITTING THESE EXHIBITS? 

MR. BORNSTEIN: NONE, YOUR HONOR. 

THE COURT: ALL RIGHT. THEY'RE ADMITTED.

(JOINT EXHIBIT 0087 WAS ADMITTED IN EVIDENCE.)

(PLAINTIFF'S EXHIBITS 2093, 2079, 2120, 2121, AND 2122 

WERE ADMITTED IN EVIDENCE.) 

MR. KEHL: YOUR HONOR, THE RUNTIME FOR THE VIDEO, THE 

FTC'S DESIGNATIONS RUN 53 MINUTES AND 10 SECONDS; AND 

QUALCOMM'S COMPLETENESS DESIGNATIONS RUN 1 MINUTE AND 45 

SECONDS. 

THE COURT: OKAY. ALL RIGHT. AND THE 53 MINUTES IS 

NOT INCLUDED -- IS NOT INCLUDING THE 2 MINUTES FOR QUALCOMM; 

RIGHT? 

MR. KEHL: THE 53 MINUTES DOES NOT INCLUDE THE -- 

MR. VAN NEST: IT'S ONLY 45, YOUR HONOR. 

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THE COURT: I KNOW. I WROTE IT DOWN AS 1 MINUTE, 45. 

I GUESS -- I JUST WANT TO MAKE SURE I DEDUCT THAT. 

ALL RIGHT. GO AHEAD, PLEASE. 

MR. KEHL: ALL RIGHT. 

MS. HILL, PLEASE PLAY THE VIDEO. 

(THE VIDEOTAPED DEPOSITION OF IRA BLUMBERG WAS PLAYED IN 

OPEN COURT OFF THE RECORD.)

THE COURT: EXCUSE ME. I'M SORRY TO INTERRUPT. IT'S 

12:01. I'D LIKE US TO GO AHEAD AND TAKE OUR LUNCH BREAK NOW. 

SO I'M SORRY TO INTERRUPT. WE'LL RESUME THAT WHEN WE 

RETURN. 

WE'LL TAKE A ONE HOUR BREAK. 

WHAT I'D LIKE YOU TO DO, FOR DEPOSITION EXCERPTS THAT ARE 

NOT SEALED, I'D LIKE YOU TO FILE THEM ON THE DOCKET. BUT I'D 

ALSO LIKE YOU TO GIVE A HARD COPY TO MS. GARCIA FOR LODGING. 

MR. KEHL: OKAY. 

THE COURT: FOR DOCUMENTS THAT WILL REQUIRE ANY 

SEALING, TO AVOID A LOT OF UNNECESSARY SEALING MOTIONS, WHICH 

WE'RE ALREADY DEALING WITH MANY LATE AT NIGHT, CAN YOU PLEASE 

JUST LODGE THOSE WITH MS. GARCIA? FOR PURPOSES OF ANY APPEAL 

OR IF WE HAVE TO RETRY THIS, WE NEED TO HAVE ALL OF THE RECORD 

OF WHAT WAS PLAYED SINCE THE COURT REPORTERS ARE NOT 

TRANSCRIBING THE DEPOSITION TESTIMONY. OKAY? 

SO IF YOU COULD GO AHEAD AND FILE BOTH MR. REIFSCHNEIDER'S 

AND MR. BLUMBERG SINCE NEITHER OF THOSE TRANSCRIPTS THEMSELVES 

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ARE SEALED; CORRECT? 

MR. KEHL: WELL, TO CLARIFY FOR MR. BLUMBERG, LENOVO 

SOUGHT TO SEAL THE TRIAL TRANSCRIPT OF CERTAIN PORTIONS OF THE 

DEPOSITION, BUT NOT SEALING THE PLAYING OF THE VIDEO IN THE 

COURTROOM. 

THE COURT: RIGHT. SO ALL -- I DON'T WANT YOU TO DO 

THE ENTIRE TRANSCRIPT. WHAT IS IN EVIDENCE IS ONLY WHAT'S 

BEING PLAYED. SO WHAT I WANT IS A TRANSCRIPT OF THE EXCERPTS 

THAT YOU ARE PLAYING. 

MR. KEHL: OKAY. 

THE COURT: THAT'S WHAT SHOULD BE FILED AND THAT'S 

WHAT SHOULD BE LODGED. 

MR. KEHL: AND PRESUMABLY WE'LL REDACT THE PORTIONS 

THAT THEY SOUGHT TO SEAL FROM THE TRIAL TRANSCRIPT. 

THE COURT: I'M SORRY. IS THERE ANY PORTION OF 

MR. BLUMBERG'S DEPOSITION EXCERPT THAT'S GOING TO BE SEALED? 

MR. KEHL: SO THEY WANT TO SEAL EXCERPTS FROM THE 

TRIAL TRANSCRIPT. 

THE COURT: WHAT'S THE TRIAL TRANSCRIPT? WHAT IS 

THAT? 

I'M JUST TALKING ABOUT THE DEPOSITION EXCERPT THAT YOU'RE 

PLAYING. IS THERE ANYTHING IN WHAT YOU'RE INTENDING TO PLAY 

THAT WILL REQUIRE ME TO EMPTY THIS COURTROOM OF ANYONE WHO'S 

NOT A PARTY IN THE CASE? 

MS. MILICI: IN THE MOTION THAT LENOVO FILED, THEY 

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UNITED STATES COURT REPORTERS

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SAID THAT THEY DID WANT THIS REDACTED FROM ANY TRANSCRIPT OF 

THESE PROCEEDINGS. 

THE COURT: I CAN'T DO THAT. THERE'S A LOT OF 

MEMBERS OF THE PUBLIC AND THE PRESS IN HERE. ONCE IT'S PLAYED, 

IT IS NOW PART OF THE PUBLIC DOMAIN. I AM NOT GOING TO 

RETROACTIVELY, AFTER EVERYONE IN THE PUBLIC HAS HEARD THIS, 

THEN GO AHEAD AND SEAL THIS TRANSCRIPT. 

THE EXCERPT IS NOT EVEN BEING TRANSCRIBED. 

MS. MILICI: OKAY. 

THE COURT: DO YOU UNDERSTAND WHAT I'M SAYING? 

MS. MILICI: I DO. 

THE COURT: THE COURT REPORTERS ARE NOT TRANSCRIBING 

ANY OF THESE VIDEO PLAYINGS. DO YOU UNDERSTAND THAT? 

SO THAT'S WHY THE RECORD OF WHAT IS BEING SAID HERE WILL 

BE THE TRANSCRIPT THAT YOU FILE ON THE DOCKET AND THAT YOU 

LODGE WITH THE COURT REPORTER. 

MS. MILICI: OKAY. AND MY UNDERSTANDING OF LENOVO'S 

POSITION WAS THAT IT HAD NO OBJECTION TO THIS BEING PLAYED IN 

THE COURTROOM, WHICH IS WHY WE PLAYED IT IN THE COURTROOM. 

BUT THEY DID ASK FOR THE, FOR THE TRANSCRIPT, WHATEVER 

THAT TRANSCRIPT IS, TO BE SEALED. 

THE COURT: RIGHT. BUT THIS IS A PUBLIC INSTITUTION. 

MS. MILICI: I UNDERSTAND. 

THE COURT: AND IF THEY PLAY IT, THERE ARE MEMBERS OF 

THE PUBLIC HERE AND THERE'S MEDIA HERE. SO ONCE THAT BELL IS 

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UNITED STATES COURT REPORTERS

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RUNG, I CAN'T UNRING THAT BELL. 

I HEARD NOTHING TODAY THAT WOULD BE CONFIDENTIAL THAT I 

WOULD SEAL. IT DOESN'T EVEN MEET THE GOOD CAUSE STANDARD FOR 

SEALING, EVERYTHING I'VE HEARD TODAY. 

NOW, I DON'T KNOW WHAT ELSE HE'S GOING TO TESTIFY TO, IF 

HE'S GOING TO GET INTO ANYTHING SPECIFIC. IS THERE GOING TO BE 

ANYTHING SPECIFIC IN THE REST OF THE PORTION THAT YOU'RE 

PLAYING? 

MR. KEHL: YOUR HONOR, WE OPPOSED THIS MOTION BECAUSE 

WE THOUGHT, AS YOU SAID, THE MATERIAL DID NOT MEET THE 

STANDARD. 

BUT THE COURT DID GRANT THE MOTION AS STYLED, SO THAT'S 

WHY WE RAISED THIS ISSUE. 

THE COURT: OH. WELL, THEN, THAT WAS OUR MISTAKE, 

NOT -- MY MISTAKE NOT TO CLARIFY, BECAUSE WHEN IT WAS TOLD TO 

ME THAT THAT WAS LENOVO'S REQUEST, I SAID NO, BECAUSE ONCE IT'S 

PLAYED, THERE ARE MEMBERS OF THE PUBLIC -- I'M SORRY. I'M 

REPEATING MYSELF. 

IT'S PUBLIC NOW. ANYTHING THAT'S PLAYED IN THIS 

COURTROOM, IN OPEN COURT, UNLESS I SEAL THE COURTROOM AND ASK 

EVERYONE TO STEP OUTSIDE WHO'S NOT PART OF THE CASE, IT'S NOW 

PART OF THE PUBLIC DOMAIN. 

YOU KNOW WHAT? I WILL FILE A CLARIFYING ORDER IF THAT 

WASN'T CLEAR, THAT THAT PARTICULAR REQUEST OF LENOVO'S IS 

REJECTED. 

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UNITED STATES COURT REPORTERS

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MS. MILICI: OKAY. SO WHEN WE RETURN AFTER LUNCH, DO 

YOU WANT US TO PLAY THE REST OF THIS IN A SEALED COURTROOM? 

THE COURT: I'M SORRY. I MAY NEED TO GO BACK AND 

LOOK AT THIS. 

LET ME JUST SEE THE SEALING ORDER. 

(PAUSE IN PROCEEDINGS.) 

THE COURT: WHAT PORTIONS HAVE ALREADY BEEN PLAYED OF 

THE BLUMBERG DEPOSITION? 

MR. KEHL: SO WE'RE IN THE MIDST OF PAGE 158 THROUGH 

161. 

THE COURT: ALL RIGHT. WELL, I'M SORRY THEN. SO 

YOU'VE ALREADY PLAYED THE EXCERPTS 44, LINE 23, THROUGH 156, 

LINE 11? 

MR. KEHL: THAT'S CORRECT. 

THE COURT: ALL RIGHT. WELL, I APOLOGIZE THEN. I 

THINK THOSE ARE WRONG SEALING RULINGS AND I'M GOING TO CHANGE 

THEM. OKAY? THOSE ARE GOING TO BE DENIED. 

LET ME GO BACK AND LOOK AT THE BLUMBERG DEPOSITION AND 

SEE. IF THERE ARE ANY PORTIONS THAT DO REQUIRE SEALING, THEN I 

AM GOING TO HAVE TO ASK EVERYONE TO STEP OUT. 

MS. MILICI: UNDERSTOOD. 

THE COURT: OKAY. THAT'S MY MISTAKE. I APOLOGIZE. 

OKAY. WELL, THEN, WHY DON'T YOU HOLD ON THE TRANSCRIPT 

BECAUSE I NEED TO GO BACK AND REVIEW THAT. 

MR. KEHL: OKAY. 

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UNITED STATES COURT REPORTERS

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THE COURT: I HAVEN'T HEARD ANYTHING TODAY THAT I 

THOUGHT WOULD BE SEALED FROM HIS TESTIMONY, OR SHOULD BE 

SEALED. 

ALL RIGHT. SO DURING LUNCH, I WOULD LIKE -- YOU KNOW, 

THERE WERE ABOUT 15 I.T. PEOPLE HERE YESTERDAY, SO I KNOW YOU 

HAVE THEM HERE. THEY MAY NOT BE IN THIS COURTROOM, BUT I NEED 

THEM TO COME AT LUNCH TO FIX WHATEVER NEEDS TO BE FIXED. 

IT IS A HINDRANCE NOT TO BE ABLE TO SEE WHAT ACTUAL 

DOCUMENT IS BEING DISCUSSED WHILE THE TESTIMONY IS BEING 

PLAYED. 

COULD WE HAVE JACKSON COME AS WELL? 

THIS MONITOR HAS NOT BEEN WORKING FOR THE LAST HOUR AND A 

HALF, SO IT'S OKAY BECAUSE I CAN LOOK AT THE SCREEN AND I'M 

MOSTLY LOOKING AT DOCUMENTS. 

BUT IT WOULD BE HELPFUL IF WE CAN GET ALL THESE KINKS 

WORKED OUT. SO IF YOU COULD PLEASE HAVE YOUR FOLKS TO COME 

DURING LUNCH TO TRY TO WORK THIS OUT, PLEASE? 

MS. MILICI: YOUR HONOR, WE'LL DO OUR BEST. TO BE 

CLEAR, THESE WERE NOT OUR I.T. PEOPLE. BUT WE WILL DO OUR BEST 

TO SEE IF WE CAN FIGURE THIS OUT. 

THE COURT: WELL, IF THIS SYSTEM DOESN'T WORK, THEN I 

WANT ALL THE QUALCOMM STUFF OUT, AND OVER THE WEEKEND, I WANT 

YOUR PEOPLE TO COME. 

THIS IS NOT WORKING FOR ME, AND IT'S NOT WORKING FOR YOU, 

AND OUR AUDIENCE CAN'T SEE ANYTHING ABOUT THE DOCUMENTS. I 

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UNITED STATES COURT REPORTERS

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WANT ALL THIS REMOVED. 

MR. BORNSTEIN: YOUR HONOR, TO BE CLEAR, THIS IS NOT 

A SYSTEM ISSUE. THIS IS A QUESTION OF WHAT'S ON THE COMPUTER 

AND WHAT'S ON THE VIDEO. WE'RE HAPPY TO WORK WITH THE FTC TO 

MAKE SURE THINGS ARE OPERATING PROPERLY, BUT IT'S NOT A 

SYSTEM -- IT'S NOT A SYSTEM ISSUE. 

THE COURT: OKAY. WELL, YOU HAD A TON OF PEOPLE IN 

HERE YESTERDAY. I SAW THEM ALL. 

MR. BORNSTEIN: YES. 

THE COURT: THEY NEED TO COME IN DURING LUNCH AND TRY 

TO ASSIST. IF THIS DOESN'T WORK, I WANT ALL THIS EQUIPMENT 

REMOVED AND I WANT ANOTHER SYSTEM PUT IN. 

MR. BORNSTEIN: YOUR HONOR, MR. DAHM IS HERE, WHO CAN 

ASSIST WITH THE COMPUTER. IT'S JUST A COMPUTER. WE'RE HAPPY 

TO HELP THE FTC ON THIS. 

MR. VAN NEST: IT'S NOT THE SYSTEM OVERALL. THAT'S 

THE POINT, YOUR HONOR. THEY HAVE A COMPUTER, WE HAVE A 

COMPUTER. IT'S THEIR COMPUTER THAT'S NOT WORKING. OUR 

COMPUTER IS WORKING FINE. IT'S NOT THE OVERALL SYSTEM. 

THE COURT: OKAY. WELL, FOLKS WERE IN HERE -- I'M 

SORRY TO INTERRUPT YOU. FOLKS WERE IN HERE FOR A REALLY LONG 

TIME YESTERDAY. I GUESS NO ONE TRIED THIS OUT. 

MS. MILICI: I THINK WE DID TRY IT OUT, AND I'M 

NOT -- FRANKLY, I'M NOT SURE WHAT THE TECHNICAL ISSUE RIGHT NOW 

IS. I WAS JUST MAKING CLEAR THAT THE FTC DOES NOT HAVE I.T. 

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PEOPLE HERE. 

BUT WE WILL PUT OUR HEADS TOGETHER AND SEE WHAT WE CAN 

FIGURE OUT. 

THE COURT: OKAY. WELL, IT'S HURTING THE 

PRESENTATION OF YOUR CASE. MAYBE YOU NEED TO HAVE SOMEONE COME 

OUT OR HIRE SOMEONE LOCALLY ON A CONTRACT BASIS. I DON'T KNOW. 

BUT I DO THINK IT'S A HINDRANCE NOT TO BE ABLE TO SEE THE 

DOCUMENTS. I'M DOING THE BEST I CAN, BUT IT WOULD BE 

MARGINALLY HELPFUL IF YOU COULD TAKE CARE OF THIS. OKAY? 

MS. MILICI: ABSOLUTELY. WE WILL DO EVERYTHING IN 

OUR POWER. 

THE COURT: OKAY. SO -- I MEAN, AND WE CAN TALK 

ABOUT THE REST OF THE ISSUES LATER. BUT WE DO NEED A DUE DATE 

FOR THE POST-TRIAL BRIEFS. I DON'T THINK WE ACTUALLY SET ONE. 

SO IF YOU CAN THINK ABOUT THAT AND WE CAN TALK ABOUT THAT AT 

THE END OF THE DAY AT 4:30. 

MR. VAN NEST: THANK YOU, YOUR HONOR. 

THE COURT: AND WE'LL TALK -- AND CAN QUALCOMM 

PROVIDE YOUR EXHIBIT LIST ON 8 AND A HALF BY 11, DOUBLE-SIDED, 

PLEASE. CAN YOU DO THAT? 

MR. VAN NEST: SURE. 

THE COURT: THANK YOU. 

OKAY. THEN WE'LL TALK ABOUT THE OTHER -- I'D ALSO LIKE A 

LIST OF ALL THE LAWYERS WHO ARE GOING TO BE PRESENTING DURING 

THE TRIAL ON BOTH SIDES. IF YOU COULD FILE THAT, PLEASE. 

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OKAY. THANK YOU VERY MUCH. 

MR. VAN NEST: THANK YOU, YOUR HONOR. 

THE COURT: THANK YOU. 

MS. MILICI: THANK YOU, YOUR HONOR. 

(THE LUNCH RECESS WAS TAKEN FROM 12:10 P.M. UNTIL 

1:08 P.M.) 

THE COURT: OKAY. GOOD AFTERNOON AND WELCOME. 

PLEASE TAKE A SEAT. 

MR. VAN NEST: THANK YOU, YOUR HONOR. 

THE COURT: SO I'VE LOOKED BACK -- I APOLOGIZE. I'VE 

LOOKED BACK OVER MR. BLUMBERG. 

I THINK, ESPECIALLY WITH THE TESTIMONY OF 

MR. REIFSCHNEIDER, WHO'S ALREADY TESTIFIED THAT THERE WAS A 

QUALCOMM PRACTICE OF NOT SUPPLYING CHIPS TO ANYONE WHO WAS NOT 

LICENSED TO QUALCOMM PATENTS, AND HIS EXHIBITS WHERE THEY'RE 

THREATENING TO CUT OFF PEOPLE'S CHIP SUPPLY IF THEY DON'T RENEW 

THEIR LICENSE, I THINK THAT'S NOW PART OF THE PUBLIC DOMAIN. 

I DON'T THINK ANYTHING IN THE TESTIMONY OF MR. BLUMBERG 

NEEDS TO BE SEALED, BUT HIS EXHIBITS DO NEED TO BE SEALED. 

NOW, I GUESS THE QUESTION IS, WITH REGARD TO MS. YU, SHE'S 

ONE OF YOUR WITNESSES TODAY -- AND WE'LL NEED TO WORK OUT A 

SYSTEM -- THE PROBLEM IS THE THIRD PARTIES ARE FILING THEIR 

SEALING MOTIONS THE DAY BEFORE, AND SO IT'S REALLY A TIGHT 

TIMEFRAME TO GO THROUGH ALL THE HIGH PRIORITY OBJECTIONS AND 

ALL THE THIRD PARTY SEALING MOTIONS, YOU KNOW, IN ONE DAY, AS 

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WELL AS THE PARTIES' SEALING MOTIONS. 

WHAT'S YOUR SUGGESTION ABOUT HOW WE CAN -- I MEAN, I'M 

HOPING WE'LL HAVE A SMOOTHER PROCESS GOING FORWARD AND TODAY 

WE'RE GOING TO SEE ALL THE HICCUPS THAT WE NEED TO FIX. 

WHAT DO YOU THINK? 

MS. MILICI: I THINK THAT'S MY HOPE, TOO. 

THE COURT: YEAH. 

MS. MILICI: BUT ONE ANSWER IS THAT ON MS. YU, MY 

UNDERSTANDING IS THAT HUAWEI HAS WAIVED ITS CONFIDENTIALITY 

REQUEST DURING THE BREAK -- 

THE COURT: THEY DID? 

MS. MILICI: -- AND IS NO LONGER SEEKING TO SEAL THAT 

DEPOSITION. 

THE COURT: OH, OKAY. BUT IS THERE SOMEONE HERE -- I 

MEAN, YOU'RE AN OFFICER OF THE COURT, I DON'T DOUBT YOUR -- 

MS. MILICI: I BELIEVE HE'S HERE. 

THE COURT: OKAY. THANK YOU. 

IF YOU COULD STATE YOUR PRESENCE ON THE RECORD. I 

CERTAINLY DON'T WANT TO DO ANYTHING TO YOUR CLIENT'S DETRIMENT 

WITHOUT HAVING YOU ON THE RECORD. 

MR. GIARDINA: CERTAINLY, YOUR HONOR. 

THE COURT: IF YOU WOULD STATE YOUR APPEARANCE FOR 

THE RECORD. 

MR. GIARDINA: DAVID GIARDINA, G-I-A-R-D-I-N-A, WITH 

SIDLEY AUSTIN FOR HUAWEI DEVICE. 

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UNITED STATES COURT REPORTERS

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AND, YOUR HONOR, THE FINAL VERSION OF THE DESIGNATIONS OF 

MS. YU'S DEPOSITION WERE MORE NARROW THAN WHAT WE HAD FILED OUR 

MOTION TO SEAL ON AND THAT YOU RULED ON. 

IN LIGHT OF THE NARROWING OF THE DESIGNATIONS, WE'RE 

CONTENT TO ALLOW THE DESIGNATIONS TO BE PLAYED IN OPEN COURT 

AND HAVE WITHDRAWN OUR CLAIMS OF CONFIDENTIALITY WITH RESPECT 

TO THE TESTIMONY THAT'S GOING TO BE PLAYED. 

YOUR HONOR GRANTED OUR MOTION WITH RESPECT TO CERTAIN 

EXHIBITS. WE WOULD MAINTAIN THAT THOSE -- OUR CLAIM OF 

CONFIDENTIALITY OVER THOSE EXHIBITS, AND I UNDERSTAND THAT 

THOSE WILL NOT BE DISPLAYED PUBLICLY DURING THE PLAYING OF THE 

DESIGNATIONS. 

MS. MILICI: THAT'S CORRECT. 

THE COURT: THEY WILL NOT BE DISPLAYED; CORRECT? 

MR. GIARDINA: YES. 

THE COURT: OKAY. THANK YOU. THANK YOU. THAT MAKES 

IT SIMPLER. 

NOW, I HAVEN'T HAD A CHANCE TO GO ALL OF THE OTHER -- THE 

CHONG DEPOSITION SEALING REQUEST IS DENIED, SO THAT'S NOT AN 

ISSUE. 

WHO ELSE DO WE HAVE THAT I WOULD NEED TO RULE ON TODAY? 

MS. MILICI: I'M NOT SURE WHO ELSE NEEDS TO BE RULED 

ON TODAY. 

THE COURT: OKAY. 

MS. MILICI: TODAY OUR ONLY REMAINING VIDEOS ARE 

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MS. YU, WHO WE JUST TALKED ABOUT, AND DR. PAUL JACOBS, A FORMER 

QUALCOMM EMPLOYEE, AND THERE ARE NOT SEALING REQUESTS. 

THE COURT: OKAY. ALL RIGHT. GOOD. 

BUT I WOULD APPRECIATE IT IF WE COULD THINK ABOUT, IF IT'S 

POSSIBLE FOR ME TO GET THE SEALING REQUESTS FROM THIRD PARTIES 

BEFORE THE DAY BEFORE, IF IT'S POSSIBLE. I DON'T KNOW IF 

THAT'S -- LET'S THINK ABOUT IT. 

MS. MILICI: OKAY. 

THE COURT: BUT IF WE COULD PERHAPS WORK OUT THIS 

SYSTEM WHERE DOCUMENTS ARE SEALED, BUT IF THE PARTIES ARE 

WILLING TO HAVE THE EXCERPTS THAT'LL BE PLAYED PUBLICLY 

DISPLAYED, THAT WILL CERTAINLY HELP. 

MS. MILICI: ABSOLUTELY. 

THE COURT: OKAY. 

MS. MILICI: WE WILL CONFER WITH OUR OPPONENTS THERE 

AND SEE WHAT WE CAN FIGURE OUT. 

ALSO, I MIGHT HAVE BEEN WRONG ABOUT OUR VIDEOS. WE MIGHT 

ALSO GET TO JOHN GRUBBS THIS AFTERNOON -- 

THE COURT: OKAY. 

MS. MILICI: -- FROM BLACKBERRY. I THINK MOST LIKELY 

WE WON'T GET THERE TODAY. 

THE COURT: OKAY. 

MS. MILICI: BUT THERE IS A CHANCE THAT IF WE FINISH 

EARLY, WE WOULD GET TO JOHN GRUBBS. 

THE COURT: ALL RIGHT. I GUESS DURING THE TWO BREAKS 

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UNITED STATES COURT REPORTERS

71

I'LL TRY TO LOOK VERY QUICKLY AT HIS TESTIMONY. 

JUST SO YOU KNOW, I THINK THE DESIGNATIONS OF JUST SEALING 

ALL LICENSING NEGOTIATIONS IS OVERBROAD AND THAT'S MY MISTAKE. 

THE ONLY THING THAT I WOULD PROBABLY SEAL WOULD BE ACTUAL 

ROYALTY RATES, UNLESS IT'S SOMETHING PUBLIC. LIKE THIS 

5 PERCENT SEEMS TO BE A PUBLIC DOMAIN PIECE OF INFORMATION, SO 

I WOULDN'T SEAL THAT. 

BUT, YOU KNOW, SOMETIMES IF THERE'S A DIFFERENT RATE FOR 

DOMESTIC VERSUS FOREIGN SALES -- I DON'T KNOW, IS THAT PUBLIC 

INFORMATION OR NOT? 

MS. MILICI: I THINK A LOT OF THE TIMES IT IS PUBLIC 

INFORMATION, BUT IT WOULD DEPEND ON THE SPECIFIC CONTEXT. 

THE COURT: RIGHT. OKAY. IT WOULD BE HELPFUL IF, IN 

THE SEALING DOCUMENTS, IT WAS -- IF YOU COULD SPECIFY WHAT IS 

PART OF THE PUBLIC DOMAIN OR NOT. THAT WOULD BE VERY HELPFUL, 

BECAUSE IF IT IS, I'M OBVIOUSLY NOT GOING TO SEAL IT. 

MS. MILICI: OKAY. 

THE COURT: BUT GENERALLY, ACTUAL SALES NUMBERS, 

ACTUAL ROYALTY RATES, ASSUMING THEY'RE NOT PUBLIC, AND ACTUAL 

ROYALTY PAYMENTS WHICH WOULD GIVE YOU AN INDICATION OF THE 

ROYALTY BASE, I.E., THE SALES NUMBER, I'M LIKELY TO SEAL THAT, 

BUT NOT THIS SORT OF GENERAL DISCUSSION. 

I'M CERTAINLY NOT GOING TO SEAL -- IN THE PRETRIAL 

STATEMENT, THE PARTIES TRIED TO SEAL EVERY -- YOU KNOW, ON 

AUGUST 22ND, 2013, HUAWEI AND QUALCOMM SIGNED AND EXECUTED A 

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72

LICENSE AGREEMENT. 

THAT'S REALLY NOT SEALABLE. YOUR PRETRIAL STATEMENT 

SEALING IS WAY OVERBROAD. 

SO I'M GOING TO ASK YOU -- I'LL TRY TO COME UP WITH A 

UNIVERSE OF DOCUMENTS THAT I'M GOING TO DENY THE SEALING 

REQUEST WITHOUT PREJUDICE AND HAVE YOU COME BACK. 

NOW, AS WE'RE SORT OF FINE TUNING WHAT SEALING WE'RE 

ACTUALLY GOING TO DO, I'D LIKE YOU TO DO A MORE NARROWED 

REQUEST BECAUSE, I MEAN, LITERALLY THERE WERE, LIKE, 15 PAGES 

OF JUST DATES OF WHEN LICENSE AGREEMENTS WERE EXECUTED. NO 

INFORMATION ABOUT WHAT WAS IN THE AGREEMENT. THAT'S ALL SEALED 

IN THE PRETRIAL STATEMENT. 

THAT'S WAY OVERBROAD. 

MS. MILICI: UNDERSTOOD, YOUR HONOR. 

THE COURT: OKAY. WELL, THEN, LET'S GO AHEAD, 

PLEASE, WITH MR. BLUMBERG'S TESTIMONY. 

MR. KEHL: MS. HILL, PLEASE PLAY THE VIDEO. 

(THE VIDEOTAPED DEPOSITION OF IRA BLUMBERG WAS PLAYED IN 

OPEN COURT OFF THE RECORD.)

THE COURT: I'M SORRY. ISN'T THIS SEALED? 

MR. KEHL: THIS DOCUMENT IS NOT SEALED. 

THE COURT: OKAY. ALL RIGHT. THANK YOU. SORRY FOR 

THE INTERRUPTION. THIS DOCUMENT IS NOT SEALED. 

(THE VIDEOTAPED DEPOSITION OF IRA BLUMBERG WAS PLAYED IN 

OPEN COURT OFF THE RECORD.)

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BLUMBERG DEPOSITION

UNITED STATES COURT REPORTERS

73

THE COURT: IS THAT THE END? 

MR. KEHL: NO, YOUR HONOR. WE'RE JUST TRYING TO TAKE 

THE DOCUMENT DOWN TO DISPLAY THE TESTIMONY. 

THE COURT: OH, OKAY. 

WHAT WAS THE LAST EXHIBIT NUMBER, PLEASE? 

MR. KEHL: CX 2079. 

THE COURT: OKAY. BUT THERE WAS AN ADDITIONAL 

PAGE -- 

MR. KEHL: AND THE EXHIBIT PRECEDING THAT WAS 

CX 2093. 

THE COURT: RIGHT. SO I HAVE -- I'VE HIGHLIGHTED 

WHAT WAS ON PAGES 4 AND 5 OF CX 2079. 

WHAT WAS THE PAGE THAT THEY WERE TALKING ABOUT IT WOULD 

TAKE THREE MONTHS TO FIND ANOTHER SOURCE OF SUPPLY? WAS THAT 

ON PAGE 7? 

MR. KEHL: THAT WAS ON PAGES -- IT STARTS ON PAGE 4 

AND CARRIES OVER TO PAGE 5. IT'S THE E-MAIL FROM MR. BLUMBERG 

DATED NOVEMBER 2ND, 2013. 

THE COURT: OH. I JUST DIDN'T SEE THE THREE MONTHS 

IN THERE. I DON'T KNOW WHAT HE WAS TALKING ABOUT. 

MR. KEHL: OH. THEN WE'RE GETTING INTO ANOTHER 

PARAGRAPH, ANOTHER E-MAIL IN THE CHAIN -- 

THE COURT: OKAY. 

MR. KEHL: -- WHICH IS ON PAGE 2. 

THE COURT: OH, OKAY. I WAS LOST THERE. 

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BLUMBERG DEPOSITION

UNITED STATES COURT REPORTERS

74

OH, I SEE, OKAY. OKAY, ON PAGE 2. 

OKAY. ALL RIGHT. 

ALL RIGHT. THANK YOU. I THINK I'M CAUGHT UP NOW. 

MR. KEHL: CAN WE PROCEED WITH THE VIDEO? 

THE COURT: YES. 

SO I DON'T HAVE -- I JUST WANTED TO MAKE SURE THAT AS FAR 

AS HIS EXHIBITS, BECAUSE ALL OF THE SEALING WAS GRANTED AS TO 

THE EXHIBITS TO MR. BLUMBERG'S DEPOSITION -- I'M JUST GOING TO 

DEFER TO YOU THAT WE'RE MAKING SURE THAT WHATEVER WAS SEALED IS 

NOT GOING TO APPEAR ON THE SCREEN. 

MR. KEHL: THAT'S CORRECT. 

THE COURT: OKAY. THANK YOU. 

GO AHEAD THEN. 

(THE VIDEOTAPED DEPOSITION OF IRA BLUMBERG WAS PLAYED IN 

OPEN COURT OFF THE RECORD.)

THE COURT: I'M SORRY, CAN I STOP YOU ONE MINUTE. 

WHAT'S THE TIME NOW, PLEASE? 

THE REPORTER: 1:33. 

THE COURT: OKAY. THIS SECTION WAS ALL SEALED, SO 

I'M NOT SURE WHY IT'S UP. 

MS. MILICI: IT'S -- YOUR HONOR, IT'S ONLY UP ON YOUR 

SCREEN. 

THE COURT: OH, I SEE. 

MS. MILICI: IT'S NOT UP ON THE PUBLIC SCREEN. 

THE COURT: I SEE. I'M SORRY. I APOLOGIZE. 

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BLUMBERG DEPOSITION

UNITED STATES COURT REPORTERS

75

MS. MILICI: WE'VE BEEN USING A CARDBOARD TO BLOCK 

OFF THE PUBLIC SCREEN WHEN THERE'S ONLY THINGS THAT YOU CAN 

SEE. 

THE COURT: I SEE. SO THAT'S WHAT YOU'RE GOING TO 

DO. 

ALL RIGHT. THAT'S FINE. THANK YOU. I APOLOGIZE. 

(THE VIDEOTAPED DEPOSITION OF IRA BLUMBERG WAS PLAYED IN 

OPEN COURT OFF THE RECORD.) 

MR. KEHL: YOUR HONOR, THIS CONCLUDES THE TESTIMONY 

OF MR. BLUMBERG. 

THE COURT: OKAY. IT'S 1:55. 

(PAUSE IN PROCEEDINGS.) 

THE COURT: OKAY. WHO'S YOUR NEXT WITNESS? 

MR. HOPKIN: THE FTC WILL NOW PRESENT THE VIDEOTAPED 

TESTIMONY OF DR. PAUL JACOBS, THE FORMER CEO AND EXECUTIVE 

CHAIRMAN OF QUALCOMM. 

THE COURT: AND IS THERE ANY TIME THAT SHOULD BE 

DEDUCTED TO QUALCOMM? 

MR. HOPKIN: SO THE RUNTIME FOR THE VIDEO IS 32 

MINUTES, 41 SECONDS FOR THE FTC, AND 1 MINUTE FOR QUALCOMM. 

MR. BORNSTEIN: AND TO BE CLEAR ON THE TIMING, YOUR 

HONOR, IT'S NOT INCLUSIVE OF EACH OTHER'S. IT'S 32 MINUTES, 

PLUS 1. THERE'S NO DEDUCTION. 

THE COURT: VERY GOOD. THANK YOU. 

MR. BORNSTEIN: THAT'S FOR ALL OF THEM, THE TIME FOR 

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UNITED STATES COURT REPORTERS

76

TODAY. 

THE COURT: ALL RIGHT. THANK YOU. 

MR. HOPKIN: AND WE'VE PREPARED BINDERS FOR 

MR. JACOBS AS WELL, DR. JACOBS (HANDING). 

THE COURT: OKAY. THANK YOU. 

WHAT WAS -- THE TOTAL RUNTIME FOR MR. BLUMBERG WAS 53 

MINUTES, MINUS THE 1. -- 1 MINUTE AND 45 SECONDS. 

MR. BORNSTEIN: IT'S INCREMENTAL, YOUR HONOR. 

THE COURT: IT'S EXCLUSIVE. 

MR. BORNSTEIN: IT'S 53 MINUTES FOR THE FTC, AND THEN 

IT WAS 1 MINUTE AND 45 SECONDS THAT MR. VAN NEST CAREFULLY 

IDENTIFIED FOR OUR SIDE. 

THE COURT: OKAY. THANK YOU. THANK YOU FOR 

CLARIFYING THAT. 

AND ARE YOU SEEKING TO ADMIT ANY EXHIBITS THROUGH THIS 

DEPOSITION? 

MR. HOPKIN: YES, YOUR HONOR. 

THE FTC MOVES TO ADMIT THE FOLLOWING EXHIBITS: JOINT 

EXHIBITS JX 36 AND JX 45; AND FTC EXHIBITS CX 7041, CX 7224, 

CX 7042, CX 6605, CX 7279, CX 7234, AND CX 7035. 

THE COURT: ALL RIGHT. ANY OBJECTION TO THOSE 

EXHIBITS? 

MS. SESSIONS: NONE, YOUR HONOR. 

THE COURT: OKAY. THEY'RE ADMITTED. 

(JOINT EXHIBITS 36 AND 45 WERE ADMITTED IN EVIDENCE.)

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PAUL JACOBS DEPOSITION

UNITED STATES COURT REPORTERS

77

(PLAINTIFF'S EXHIBITS 7041, 7224, 7042, 6605, 7279, 7234, 

AND 7035 WERE ADMITTED IN EVIDENCE.) 

MR. HOPKIN: THANK YOU, YOUR HONOR. 

THE COURT: GO AHEAD, PLEASE. 

MR. HOPKIN: MS. HILL, PLEASE PROCEED. 

(THE VIDEOTAPED DEPOSITION OF PAUL JACOBS WAS PLAYED IN 

OPEN COURT OFF THE RECORD.) 

THE COURT: IS THIS THE END? IT'S 2:32. 

MR. HOPKIN: YES, YOUR HONOR. 

THE COURT: OKAY. LET'S TAKE OUR BREAK NOW. WE'LL 

TAKE A TEN MINUTE BREAK. 

LET ME ASK YOU, ARE THERE ANY SEALING REQUESTS THAT I 

SHOULD REVIEW OVER THE BREAK? IT SOUNDS LIKE WE'RE OKAY WITH 

MS. YU FROM HUAWEI. 

ARE WE OKAY ON -- YOUR NEXT WITNESS IS GOING TO BE 

MR. WISE; CORRECT? THAT'S FINE? DO YOU NEED ME TO LOOK AT 

MR. GRUBBS' SEALING AGAIN? 

MR. HOPKIN: YES, YOUR HONOR -- 

THE COURT: OKAY. 

MR. HOPKIN: -- IN CASE WE HAVE TIME TO PLAY IT THIS 

AFTERNOON. 

THE COURT: OKAY. IS THERE ANYONE FROM BLACKBERRY 

HERE? ARE THEY GOING TO MAKE A SIMILAR AGREEMENT THAT, THE 

TRANSCRIPT IS OKAY TO PLAY PUBLICLY, BUT THE DOCUMENT SHOULD 

REMAIN SEALED? IS THERE ANYONE HERE FROM BLACKBERRY? NO? 

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UNITED STATES COURT REPORTERS

78

OKAY. 

ALL RIGHT. THANK YOU. LET'S TAKE A BREAK NOW. 

(RECESS FROM 2:33 P.M. UNTIL 2:50 P.M.) 

THE COURT: OKAY. WELCOME BACK. PLEASE TAKE A SEAT. 

SO WE'RE FILING A REVISED ORDER ON MR., IS IT GRUBBS, 

DEPOSITION TESTIMONY. THE EXHIBITS WILL REMAIN PER THE PRIOR 

SEALING ORDER. 

I'M JUST UNCLEAR. WHEN ARE THE RATES PUBLIC AND WHEN ARE 

THEY NOT PUBLIC? IS 5 PERCENT PUBLIC, ANYTHING THAT DEVIATES 

FROM 5 PERCENT IS NOT PUBLIC? 

WHAT'S THE -- 

MR. VAN NEST: GO AHEAD. 

MS. MILICI: I WAS GOING TO SUGGEST THAT -- 

MR. VAN NEST: YOUR HONOR, IT DEPENDS. OBVIOUSLY THE 

MORE CURRENT RATES ARE MORE LIKELY TO BE NOT PUBLIC. 

THE COURT: UM-HUM. 

MR. VAN NEST: BUT THE GENERAL 5 PERCENT RATE IS 

PUBLIC AND WE'RE NOT ASKING TO SEAL THAT. 

BUT EACH LICENSE NEGOTIATION IS DIFFERENT. SOMETIMES 

LICENSEES PAY MONEY UPFRONT TO GET A REDUCED RATE. 

THE COURT: UH-HUH. 

MR. VAN NEST: SOMETIMES LICENSEES ASK FOR OTHER 

ACCOMMODATIONS AND THE RATE CHANGES A LITTLE BIT. 

SO IT'S -- THERE'S NO -- THERE'S NO CLEAR ANSWER TO THAT. 

THE COURT: OKAY. 

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UNITED STATES COURT REPORTERS

79

MR. VAN NEST: IT IS STILL LICENSE BY LICENSE. AND I 

SUSPECT MOST OF THE OEM'S COMING IN HERE WANT TO HAVE THEIR 

RATES CONFIDENTIAL, AND THAT'S PROBABLY WHAT YOU'RE SEEING IN 

THE SEALING. 

THE COURT: WELL, THE DIFFICULTY IS, LIKE, WE HAD 

FIVE THIRD PARTIES FILE SEALING MOTIONS YESTERDAY MORNING, IN 

ADDITION WITH THE HIRE PRIORITY OBJECTIONS, AND WE ARE TRYING 

TO KEEP OTHER CIVIL AND CRIMINAL CASES GOING. I HAVE OTHER 

COURT WEDNESDAY MORNING AND AFTERNOON THIS WEEK AND THURSDAY 

AFTERNOON. SO IT'S A LITTLE BIT CHALLENGING. 

IS THERE ANY WAY THAT WHEN A THIRD PARTY FILES A SEALING 

MOTION, YOU ALL COULD LET US KNOW WHAT IS PUBLIC AND WHAT IS 

NOT PUBLIC OF WHAT THEY'VE REQUESTED VERSUS, LIKE, WE JUST KNOW 

YOU OPPOSE IT? THAT DOESN'T REALLY HELP US IN UNDERSTANDING 

WHY YOU OPPOSE IT, EXACTLY WHAT PIECES DO YOU OPPOSE SEALING. 

MR. VAN NEST: I THINK WE COULD DO THAT, YOUR HONOR. 

WE WOULD NEED TIME. I MEAN, WE HAVE THE SAME PROBLEM YOU DO. 

THE COURT: YEAH. 

MR. VAN NEST: WE GAVE THESE PEOPLE NOTICE AS EARLY 

AS WE COULD, AND SO DID THE FTC. BUT THEN THEY WAIT AND THEY 

DELAY. 

THE COURT: YEAH. 

MR. VAN NEST: BUT WE CAN TRY TO DO THAT. AND I 

THINK IT'LL GET BETTER AS WE GO ALONG. 

THE COURT: SURE, I THINK SO. 

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UNITED STATES COURT REPORTERS

80

MR. VAN NEST: BECAUSE WE'LL HAVE FEWER DISPUTES. 

THE COURT: SURE. 

MR. VAN NEST: BUT JUST IN GENERAL, THINGS LIKE YOU 

MENTIONED THIS MORNING, RATES -- 

THE COURT: YES. 

MR. VAN NEST: -- AND PAYMENTS, YES, THOSE ARE 

GENERALLY NOT PUBLIC, ESPECIALLY IF THEY'RE CURRENT. 

AND SO OUR GENERAL LICENSING PROGRAM -- 

THE COURT: BUT HOW DO YOU DEFINE "CURRENT"? I'M 

SORRY TO INTERRUPT YOU. IS IT 16 ON, OR -- I DON'T EVEN 

KNOW -- 

MR. VAN NEST: WE'VE AGREED THAT ANYTHING MORE THAN 

THREE YEARS OLD GENERALLY CAN BE PUBLIC, EXCEPT FOR THINGS LIKE 

RATES AND PAYMENTS. THOSE THINGS STAY CONFIDENTIAL FOR MUCH 

LONGER. 

THE COURT: OKAY. 

MR. VAN NEST: WHAT SOMEONE IS PAYING AND WHAT THE 

RATE IS. 

THE COURT: OKAY. 

MR. VAN NEST: BUT APART FROM THAT TYPE OF THING. 

THE COURT: YES. 

MR. VAN NEST: THESE E-MAILS THAT WE SHOWED IN THE 

OPENING THIS MORNING, INTERNAL APPLE OR INTEL, I MEAN, AFTER 

THREE YEARS, PEOPLE'S STRATEGY, IT'S EVOLVED IN THE MARKET. 

THE COURT: IT'S UPDATED. 

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UNITED STATES COURT REPORTERS

81

MR. VAN NEST: IT'S UPDATED, YEAH. 

THE COURT: SO THIS IS WHAT -- I'M SORRY, IS IT 

MR. CHUBS? 

MS. MILICI: GRUBBS. 

THE COURT: GRUBBS. SO ANYTHING RELATED TO 

ANTICIPATED SALES NUMBERS, ANYTHING RELATED TO THE RATES THEY 

WANTED, THE RATES THEY GOT, ANYTHING RELATED TO INCENTIVE 

PAYMENTS, TOTAL NUMBER, WHATEVER, IS SEALED. 

MR. VAN NEST: FINE. 

THE COURT: OKAY? AND FOR HIM, THAT'S MOST OF WHAT 

YOU WANT FROM HIM, SO I SUSPECT WHEN HIS TESTIMONY IS PLAYED, 

I'M JUST GOING TO HAVE TO EMPTY THE COURTROOM BECAUSE I DON'T 

SEE ANY OTHER WAY. TO WASTE TIME HAVING PEOPLE COME IN FOR A 

MINUTE AND THEN STEP OUT FOR TWO MINUTES AND THAT KIND OF SWISS 

CHEESE IN AND OUT WILL NOT BE REALLY HELPFUL. 

MR. VAN NEST: IT'S NOT CONVENIENT AND BENEFICIAL. 

VERY WELL. 

MS. MILICI: SURE. 

THE COURT: OKAY. SO FOR HIM, WE MAY JUST HAVE TO 

SEAL THE COURTROOM. 

MS. MILICI: OKAY. 

THE COURT: OKAY? 

ALL RIGHT. OKAY. BUT IF THERE IS -- AND THERE WON'T BE A 

SOLUTION TODAY. BUT IF WE COULD TRY TO WORK OUT -- DO YOU 

THINK OTHER DAYS WILL HAVE THIS MANY THIRD PARTIES? 

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UNITED STATES COURT REPORTERS

82

MS. MILICI: I DON'T THINK -- WE FRONT LOAD THE 

VIDEOS FOR A NUMBER OF REASONS OF NOT BEING ABLE TO GET THE 

LIVE WITNESSES HERE GIVEN THE HOLIDAY WEEK. 

THE COURT: UH-HUH. 

MS. MILICI: SO I THINK THAT THIS IS GOING TO SLOW 

DOWN JUST BY NATURE OF WE'RE GOING TO HAVE MORE LIVE WITNESSES 

HERE WHO HAVE HAD SOMEWHAT MORE NOTICE. SO I DO THINK IT IS 

GOING TO SLOW DOWN QUITE A BIT. 

THE COURT: OH, OKAY. ALL RIGHT. WELL, WE'RE NOT 

GOING TO SOLVE THIS TODAY, BUT IF YOU COULD SORT OF THINK ABOUT 

WHAT IS A WAY THAT WE COULD PERHAPS HEAR FROM THIRD PARTIES 

SOONER, AND HAVE YOU GIVE US SOME GUIDANCE ON WHAT YOU THINK IS 

PUBLIC OF WHAT THEY'RE SEEKING TO SEAL, AND THEY COULD DISAGREE 

WITH YOU, I DON'T KNOW. 

THAT WOULD BE GREAT. 

MR. VAN NEST: WE CAN TRY TO DO THAT, YOUR HONOR. 

MS. MILICI: SURE. 

MR. VAN NEST: AND WE WILL. 

MS. MILICI: THANK YOU, YOUR HONOR. 

THE COURT: ALL RIGHT. OKAY. BUT YOU WILL BE 

GETTING ANOTHER AMENDED RULING AS TO THE LAST WITNESS WHOSE 

TESTIMONY MAY BE PLAYED TODAY. OKAY? 

AND THEN I HAVE SOME HOUSEKEEPING THINGS TO DO WITH YOU, 

BUT I'D LIKE TO WAIT UNTIL 4:30. 

SO CALL YOUR NEXT WITNESS, PLEASE. 

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WISE DIRECT BY MR. MATHESON

UNITED STATES COURT REPORTERS

83

MR. MATHESON: THANK YOU, YOUR HONOR. 

DAN MATHESON FOR THE FTC. 

WE CALL MR. DAVID WISE. 

THE CLERK: PLEASE RAISE YOUR RIGHT HAND. 

(PLAINTIFF'S WITNESS, DAVID WISE, 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: DAVID WISE. W-I-S-E. 

MR. MATHESON: YOUR HONOR, MAY I APPROACH TO PROVIDE 

A BINDER OF DOCUMENTS I'M GOING TO USE WITH THE WITNESS TO YOUR 

CLERK? 

THE COURT: YES. THANK YOU. 

MR. MATHESON: (HANDING.) 

(PAUSE IN PROCEEDINGS.) 

THE COURT: THE TIME IS 2:57. GO AHEAD, PLEASE. 

MR. MATHESON: THANK YOU, YOUR HONOR. 

DIRECT EXAMINATION

BY MR. MATHESON: 

Q. SIR, YOU'RE PRESENTLY THE SENIOR VP OF FINANCE AND 

TREASURER AT QUALCOMM; IS THAT CORRECT?

A. YES.

Q. AND YOU'VE BEEN EMPLOYED BY QUALCOMM SINCE 1997; IS THAT 

CORRECT? 

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WISE DIRECT BY MR. MATHESON

UNITED STATES COURT REPORTERS

84

A. YES.

Q. AND PRIOR TO BECOMING YOUR SVP AND TREASURER, YOU WERE 

SENIOR VICE PRESIDENT STRATEGY AND FINANCE FOR QUALCOMM; RIGHT? 

A. YES.

Q. COULD YOU PLEASE OPEN YOUR BINDER TO TAB 1, SIR. IT'S A 

DOCUMENT MARKED CX 5248. 

A. I'M SORRY. WHICH NUMBER?

Q. IT'S TAB 1. 

A. 5248, YEAH. 

Q. THIS DOCUMENT IS MARKED CX 5248. 

YOU WERE COPIED ON THIS E-MAIL ATTACHING A DECK TITLED 5G 

CONSORTIUM DISCUSSION, AND YOU RECEIVED THE E-MAIL ON JUNE 8TH, 

2015; IS THAT RIGHT? 

A. YES. 

MR. MATHESON: YOUR HONOR, I MOVE TO ADMIT CX 5248 

INTO EVIDENCE. 

THE COURT: ANY OBJECTION? 

MS. SESSIONS: NO, YOUR HONOR. 

THE COURT: IT'S ADMITTED. 

(PLAINTIFF'S EXHIBIT CX 5248 WAS ADMITTED IN EVIDENCE.) 

THE COURT: GO AHEAD, PLEASE. 

BY MR. MATHESON: 

Q. NOW, YOU WERE SENIOR VICE PRESIDENT OF STRATEGY AND 

FINANCE AT THE TIME YOU RECEIVED THIS E-MAIL IN JUNE 2015; 

RIGHT? 

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WISE DIRECT BY MR. MATHESON

UNITED STATES COURT REPORTERS

85

A. YES.

Q. TAKING A LOOK AT THE COVER E-MAIL, THE END OF THE FIRST 

LINE STATES, "THIS VERSION IS VERY SIMILAR TO THE DRAFT WE 

SHARED WITH ERIC." 

DO YOU SEE THAT, SIR? 

A. YES.

Q. AND ERIC THERE REFERS TO MR. ERIC REIFSCHNEIDER; IS THAT 

CORRECT? 

A. I BELIEVE SO, YES.

Q. AND TURNING YOUR ATTENTION TO THE LAST SENTENCE OF THAT 

COVER E-MAIL, IT REFERS TO A SESSION SCHEDULED FOR 8:30 A.M. AS 

A FINAL PREP BEFORE THE DEREK MEETING TOMORROW. 

NOW, DOES THAT REFER TO MR. DEREK ABERLE? 

A. YES.

Q. AND IT'S A TRUE STATEMENT YOU MET WITH BOTH 

MR. REIFSCHNEIDER AND MR. ABERLE AND DISCUSSED THESE SLIDES; 

CORRECT? 

A. I BELIEVE SO. 

Q. NOW, YOU'D SAY YOU WERE THE THOUGHT LEADER ON THIS 5G 

CONSORTIUM DISCUSSION DECK; IS THAT FAIR? 

A. YES. 

Q. COULD YOU TURN YOUR ATTENTION, SIR, TO CX 5248-013. THIS 

IS TITLED CONVINCING CARRIERS TO PAY: CARROT/STICK. 

DO YOU SEE THAT AT THE TOP OF THE SLIDE, SIR? 

A. YES. 

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Q. TURNING YOUR ATTENTION TO THE MATERIAL UNDER NEW BUSINESS 

TERMS. DO YOU SEE THE TEXT, SIR, THAT SAYS NO INFRASTRUCTURE 

PRODUCT SALE WITHOUT A LICENSE (GIVE/GET)? 

A. YES.

Q. AND UNDERNEATH THE BULLET THERE READS QCT EMPLOYS THIS 

STRATEGY TODAY (NOT SELL CHIPSET INTO UNLICENSED DEVICE). 

DO YOU SEE THAT, SIR?

A. YES.

Q. AND THAT'S A TRUE STATEMENT THAT ACCURATELY DESCRIBES 

QCT'S PRACTICE DURING YOUR TENURE AT QUALCOMM; IS THAT FAIR? 

A. YES, WE DON'T SELL TO SOMEBODY THAT DOESN'T HAVE A 

LICENSE. 

Q. AND WITHOUT GETTING INTO THE DETAILS OF THE 5G CONSORTIUM 

PROPOSED IN THIS DECK, IT'S FAIR TO SAY THAT THESE BULLETS 

INDICATE THAT A PRACTICE OF SELLING PRODUCTS ONLY TO PURCHASERS 

WHO TAKE A LICENSE CREATES A GIVE/GET EXCHANGE? IS THAT A FAIR 

CHARACTERIZATION? 

A. I'M NOT SURE THAT'S WHAT I MEANT BY GIVE/GET.

Q. WELL, SIR, WHEN YOU TESTIFIED AT YOUR DEPOSITION WHAT YOU 

MEANT BY GIVE/GET WAS AN ORDINARY COMMERCIAL RELATIONSHIP; IS 

THAT CORRECT? 

A. YES.

Q. AND AN ORDINARY COMMERCIAL RELATIONSHIP IS ONE IN WHICH 

THE SELLER PROVIDES A PRODUCT AND THE SELLER RECEIVES A PRICE; 

IS THAT FAIR? 

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A. YES.

Q. AND THAT'S A GIVE/GET AS YOU USED IT IN THESE SLIDES; IS 

THAT RIGHT? 

A. THAT'S THE CONCEPT, YES. 

Q. COULD YOU TURN YOUR ATTENTION TO THE NEXT TAB IN YOUR 

BINDER, SIR, TAB 2, WHICH IS CX 6837. TURN YOUR ATTENTION, 

SIR, TO THE THIRD PAGE, CX 6837-003. THIS IS A -- APPEARS TO 

BE AN ATTENDANCE LIST FOR A BOARD OF DIRECTORS MEETING. 

IS THAT ACCURATE, SIR? 

A. SORRY. UH -- YES. 

Q. AND YOU'RE LISTED IN THE BOTTOM LOWER LEFT CORNER THERE, 

DAVID WISE, SVP FINANCE AND STRATEGY QUALCOMM?

A. YES.

Q. YOU, IN FACT, ATTENDED THIS MEETING; RIGHT, SIR? 

A. YES. 

MR. MATHESON: YOUR HONOR, MOVE TO ADMIT CX 6837. 

THE COURT: ANY OBJECTION. 

MR. MATHESON: NONE, YOUR HONOR. 

THE COURT: IT'S ADMITTED. 

(PLAINTIFF'S EXHIBIT CX 6837 WAS ADMITTED IN EVIDENCE.) 

THE COURT: GO AHEAD, PLEASE. 

BY MR. MATHESON: 

Q. PLEASE TURN YOUR ATTENTION, SIR, CX 6837-062. 

A. YES.

Q. THIS SLIDE DEALS WITH PROJECT PHOENIX; CORRECT? 

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A. YES. 

Q. IT'S FAIR TO SAY THAT YOU PERSONALLY WERE VERY INVOLVED IN 

LEADING THE ANALYSIS OF PROJECT PHOENIX; RIGHT? 

A. YES.

Q. AND IT'S FAIR TO SAY THAT IN PROJECT PHOENIX, AMONG OTHER 

OPTIONS, THE COMPANY CONSIDERED WHETHER TO SEPARATE ITS 

LICENSING BUSINESS FROM ITS COMPONENT SALES BUSINESS; RIGHT? 

A. YES.

Q. NOW, CX 6837-064, WHICH IS A FEW SLIDES AHEAD, THIS 

PRESENTS A TIMELINE FOR PROJECT PHOENIX; RIGHT? 

A. YES. 

Q. AND THIS TIMELINE INDICATES THAT IN OCTOBER, WHEN THIS 

BOARD MEETING TOOK PLACE, THAT'S THE MIDDLE OF THE TIMELINE, 

AND THEN A FINAL REVIEW AND RECOMMENDATION WAS TO TAKE PLACE IN 

DECEMBER 2015; IS THAT FAIR? 

A. THAT'S CORRECT.

Q. AND THAT FINAL REVIEW AND RECOMMENDATION, IN FACT, TOOK 

PLACE IN DECEMBER 2019; RIGHT? 

A. YES.

Q. AND DURING THE PROJECT PHOENIX PROCESS IN THE FALL AND 

WINTER OF 2015, THERE WERE AT LEAST TWO FULL BOARD MEETINGS 

THAT ADDRESSED PROJECT PHOENIX; RIGHT? 

A. YES, I BELIEVE SO.

Q. AND THERE WAS A SPECIAL COMMITTEE OF THE BOARD OF 

DIRECTORS RESPONSIBLE FOR PROJECT PHOENIX; RIGHT?

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A. YES.

Q. IT'S FAIR TO SAY THEY MET EVERY TWO OR THREE WEEKS, EITHER 

IN PERSON OR VIA TELEPHONE? 

A. CORRECT. 

Q. COULD YOU TURN YOUR ATTENTION, SIR, A FEW SLIDES EARLIER 

TO CX 6837-039. 

A. OKAY.

Q. THE TITLE OF THIS SLIDE, SIR, IS QCT TIER SUMMARY: 

REVENUE AND GROSS MARGIN. 

WOULD YOU TURN YOUR ATTENTION, SIR, TO THE RIGHT-HAND 

CHART? 

NOW, DOES THAT CHART INDICATE THE GROSS MARGIN PERCENTAGE 

ON THE RIGHT-HAND SIDE OF THE SLIDE UNDER GM PERCENTAGE?

A. YES, I BELIEVE SO.

Q. AND THIS DESCRIBES TIERS OF THIN MODEM, PREMIUM, MID/HIGH 

AND LOW/ENTRY; IS THAT FAIR? 

A. YES.

Q. AND FOR 2014 THIN MODEM GROSS MARGIN IS 50 PERCENT; RIGHT? 

A. YES.

Q. AND THAT'S HIGHER THAN THE SLOW/ENTRY GROSS MARGIN OF 34 

PERCENT; RIGHT? 

A. YES, THAT'S WHAT IT SAYS ON THE PAGE, YES. 

Q. THE PREMIUM TIER MARGIN OF 34 PERCENT IS LIKEWISE HIGHER 

THAN THE LOW/ENTRY MARGIN; IS THAT RIGHT? 

A. YES.

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Q. TURN YOUR ATTENTION TO THE NEXT TAB IN YOUR BINDER, SIR, 

WHICH IS TAB 3, THE BATES NUMBER IS -- OR THE EXHIBIT IS 

QX 8299. 

CAN YOU IDENTIFY THIS, SIR, AS AN E-MAIL YOU SENT ON 

OCTOBER 29TH, 2015, TITLED PHOENIX THINKING, EVOLUTION? 

A. YES. 

MR. MATHESON: YOUR HONOR, I MOVE TO ADMIT CX 8299. 

THE COURT: ANY OBJECTION? 

MR. MATHESON: NO, YOUR HONOR. 

THE COURT: IT'S ADMITTED. 

(PLAINTIFF'S EXHIBIT CX 8299 WAS ADMITTED IN EVIDENCE.) 

THE COURT: GO AHEAD, PLEASE. 

BY MR. MATHESON: 

Q. SO TURNING YOUR ATTENTION TO THE SECOND PARAGRAPH THAT 

BEGINS, "A SUMMARY OF MY THINKING." IT'S FAIR TO STATE THAT 

THIS E-MAIL REPRESENTS A SUMMARY OF YOUR THINKING ON THE 

COMPANY'S STRATEGIES -- STRATEGY AS RELATED TO THE PHOENIX 

PROCESS AT THE END OF OCTOBER 2015; RIGHT? 

A. SUMMARY OF MY THINKING, MY PERSONAL THINKING, YEAH. 

Q. TAKING A LOOK AT -- THERE'S A DASH AND THEN A FIRST MAJOR 

BULLET, QCT, THE SECOND SENTENCE, SIR, CAN I DIRECT YOUR 

ATTENTION TO "GIVEN QCT'S COST STRUCTURE AND DEPENDENCE ON 

PREMIUM TIER FOR PROFITABILITY." 

NOW, WHEN YOU REFERRED TO QCT'S DEPENDENCE ON PREMIUM TIER 

FOR PROFITABILITY, YOU MEANT THE SALE OF PREMIUM TIER MODEM 

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CHIPSETS; RIGHT? 

A. PREMIUM TIER CHIPSETS, YES.

Q. TURNING YOUR ATTENTION TO THE SECOND DASH ON THE PAGE THAT 

BEGINS, "I BELIEVE THE QTL BUSINESS MODEL RISK IS OUR BIGGEST, 

IN ALL CAPS, ISSUE. 

DO YOU SEE THAT, SIR? 

A. YES.

Q. NOW, THE SECOND REASON YOU EXPRESS IN THIS PARAGRAPH IS 

THAT QTL REPRESENTS THE VAST MAJORITY OF OUR VALUE, AND THAT'S 

THE REASON YOU BELIEVED THIS WAS THE BIGGEST ISSUE, OR ONE 

REASON YOU BELIEVED THIS WAS THE BIGGEST ISSUE FACING QUALCOMM; 

RIGHT? 

A. ONE OF THE REASONS.

Q. AND HISTORICALLY IT'S BEEN TRUE THAT QTL, THE LICENSING 

BUSINESS, HAS REPRESENTED AT LEAST TWO THIRDS OF THE VALUE OF 

QUALCOMM; CORRECT? 

A. GENERALLY SPEAKING. 

Q. THE NEXT SENTENCE WRITES, STATES, NOTE THAT 1 POINT OF 

ROYALTY IS $16-$20B IN VALUE. 

NOW, THAT'S 16 TO 20 BILLION DOLLARS IN VALUE; RIGHT? 

A. CORRECT. 

Q. AND I WANT TO UNDERSTAND WHAT YOU MEAN BY 1 POINT OF 

ROYALTY. 

SO HYPOTHETICALLY, IF IT WAS THE CASE THAT IN OCTOBER 

2015, QTL WAS CHARGING ITS HANDSET LICENSEES A ROYALTY RATE OF 

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4 PERCENT OF THE AVERAGE SELLING PRICE OF HANDSET -- IS THAT 

HYPOTHETICAL CLEAR? 

A. GOTCHA.

Q. THAT 1 POINT OF ROYALTY YOU'RE REFERRING TO WOULD BE A 

REDUCTION FROM 4 PERCENT OF THE PRICE OF HANDSET TO 3 PERCENT 

OF THE PRICE OF HANDSET; RIGHT? 

A. NOT EXACTLY. IF I CAN EXPLAIN?

Q. PLEASE DO. 

A. SO WHEN I'M TALKING ABOUT ROYALTY RATE, GENERALLY WHAT WE 

WOULD LOOK AT, OR WHAT I WOULD LOOK AT, IS WHAT WE WOULD CALL 

THE EXTERNALLY IMPLIED ROYALTY RATE, WHICH IS WHAT INVESTORS 

WOULD LOOK AT AS A METRIC OF OUR QTL REVENUES RELATIVE TO 

HANDSET REVENUES. SO IT WOULD BE SORT OF A BLENDED AVERAGE OF 

SORT OF ALL RATES.

Q. AND IF THAT RATE DECLINED FROM 4 PERCENT TO 3 PERCENT -- 

A. YES. 

Q. THAT'S THE 1 POINT OF ROYALTY YOU'RE REFERRING TO; IS THAT 

CORRECT? 

A. CORRECT.

Q. TURNING YOUR ATTENTION A LITTLE FURTHER DOWN, SIR, YOU 

WRITE, TWO BULLETS DOWN, THE THIRD SENTENCE, THE FUNDAMENTAL 

PROBLEM WITH QTL'S BUSINESS MODEL IS THAT THERE IS A LACK OF AN 

ONGOING GIVE/GET RELATIONSHIP WITH LICENSEES THAT CREATES AN 

ONGOING DEPENDENCE ON QTL. 

DO YOU SEE THAT, SIR? 

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A. YES.

Q. SO YOU'RE CONTRASTING HERE QTL'S RELATIONSHIP WITH 

STANDARDS IMPLEMENTERS WITH AN ORDINARY BUSINESS RELATIONSHIP 

THAT WOULD SUPPLY PRODUCT OR SERVICES; IS THAT FAIR? 

A. YES. THE -- THE QTL BUSINESS MODEL IS DIFFERENT THAN A 

TYPICAL PRODUCT OR SERVICE TYPE RELATIONSHIP.

Q. AND YOU EXPRESS THAT THE REASON THE BUSINESS MODEL IS 

DIFFERENT IS THAT THE INTELLECTUAL PROPERTY GOES INTO THE 

STANDARDS BODY WELL IN ADVANCE OF COLLECTING ROYALTIES. IF WE 

HAVE A DISPUTE OVER ROYALTY PRICING, WE CANNOT SIMPLY PULL THE 

TECHNOLOGY BACK UNTIL WE AGREE TO PRICE, AS YOU WOULD IN ANY 

OTHER BUSINESS RELATIONSHIP. SO THE ONLY RECOURSE IN A PRICING 

DISPUTE IS LEGAL CHANNELS. 

NOW, WHEN YOU USE PRICING THERE, YOU'RE REFERRING TO A 

DISPUTE OVER ROYALTY RATES. FAIR? 

A. ROYALTY RATES. 

Q. AND DIRECTING YOUR ATTENTION TO THE FINAL BULLET ON THIS 

PAGE, YOU WRITE, WE ARE SEEING IN THE MARKET TODAY THERE'S A 

HIGH CORRELATION BETWEEN OUR MODEM CHIP SHARE AND THE LICENSING 

COMPLIANCE AND ROYALTY RATE SUSTAINABILITY. WHERE WE HAVE LOW 

CHIP SHARE, WE ARE SEEING CHALLENGES WITH COMPLIANCE AND 

MAINTAINING THE ROYALTY RATE. 

AND WHEN YOU SAY LOW CHIP SHARE, ARE YOU REFERRING TO 

QCT'S SHARE OF A SALE OF MODEM CHIPS; RIGHT? 

A. CORRECT.

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Q. AND YOU WRITE, SO IN A SENSE, QCT HAS PROVIDED THE 

GIVE/GET RELATIONSHIP HIGHLIGHTED IN THE LAST POINT. 

AND WHAT YOU MEAN THERE IS THAT QCT HAS AN ORDINARY 

COMMERCIAL RELATIONSHIP WITH ITS CUSTOMERS, UNLIKE QTL? THAT'S 

FAIR; RIGHT? 

A. WHAT I MEANT IS, YEAH, QCT PROVIDES ONGOING YEAR IN, YEAR 

OUT RELATIONSHIP AND VALUE WITH THE OEM'S, OR THE LICENSEES. 

Q. AND -- 

A. SO THEY'RE MORE ACTIVELY INVOLVED ON A REGULAR BASIS WITH 

THE CUSTOMERS.

Q. AND QCT ALSO PROVIDES TO OEM'S A PRODUCT THAT THEY CAN 

HOLD BACK IN THE EVENT OF A COMMERCIAL DISPUTE, UNLIKE QTL? 

THAT'S THE DISTINCTION YOU'RE DRAWING; RIGHT? 

A. NO, I'M NOT DRAWING A DISTINCTION THAT -- 

Q. OKAY. LET'S MOVE ON, SIR. WE'LL GET BACK TO GIVEN/GET. 

CAN I TURN YOUR ATTENTION TO THE NEXT TAB, SIR. SORRY, 

TAB 5, SO WE'LL SKIP A TAB. THIS IS CX 3755. 

NOW, AT YOUR DEPOSITION, YOU IDENTIFIED THIS AS THE 

ANALYSIS THAT BCG PRESENTED TO THE SPECIAL COMMITTEE OF 

QUALCOMM'S BOARD OF DIRECTORS AS PART OF PROJECT PHOENIX. 

DO YOU RECALL THAT, SIR? 

A. YES. 

MR. MATHESON: YOUR HONOR, I MOVE TO ADMIT CX 3755. 

THE COURT: ANY OBJECTION? 

MR. MATHESON: YES, YOUR HONOR. AS WE BRIEFED IN THE 

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MOTION IN LIMINE, QUALCOMM HAS A HEARSAY OBJECTION TO THE BCG 

DOCUMENTS. WE UNDERSTAND YOUR RULING ON THE MOTION IN LIMINE, 

BUT ARE PRESERVING OUR OBJECTION FOR THE RECORD. 

THE COURT: ALL RIGHT. THANK YOU. 

IT'S ADMITTED. 

(PLAINTIFF'S EXHIBIT CX 3755 WAS ADMITTED IN EVIDENCE.) 

THE COURT: GO AHEAD, PLEASE. 

BY MR. MATHESON: 

Q. NOW, IT'S FAIR TO SAY YOU PERSONALLY HAD DISCUSSIONS WITH 

BCG ABOUT THIS DOCUMENT AS IT WAS PUT TOGETHER; RIGHT? 

A. LIMITED DISCUSSIONS. 

Q. AND YOU WERE PRESENT WHEN BCG PRESENTED THIS DOCUMENT TO 

THE SPECIAL COMMITTEE OF THE BOARD OF DIRECTORS; IS THAT RIGHT? 

A. YES.

Q. COULD YOU TAKE A LOOK, SIR, AT CX 3755-003? 

A. YES. 

Q. THE FOURTH BOLDED BULLET READS, THE LONG-TERM VALUE 

CREATION BENEFITS FROM SEPARATION ARE LOWER THAN DOWNSIDE 

RISKS. 

NOW, SEPARATION THERE REFERS TO THE POSSIBILITY OF 

SEPARATING QCT AND QTL; IS THAT FAIR? 

A. CORRECT.

Q. NOW, LET'S LOOK AT THE SECOND BULLET THAT READS, 

SEPARATION COULD WEAKEN TULANE IN RATE NEGOTIATIONS WITH MAJOR 

CUSTOMERS, SIMILAR TO OTHER COMMERCIAL PRECEDENTS. 

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NOW, TULANE WAS THE CODE WORD FOR QTL; RIGHT? 

A. CORRECT. 

Q. AND BCG ULTIMATELY CONCLUDED THAT A STANDALONE QTL WOULD 

BE MORE CHALLENGED THAN RATE NEGOTIATIONS; RIGHT?

A. BCG CONCLUDED, YEAH.

Q. AND BCG ALSO ADVISED THE SPECIAL COMMITTEE THAT SEPARATION 

COULD WEAKEN TULANE, THAT IS, QTL, IN RATE NEGOTIATIONS WITH 

MAJOR CUSTOMERS; RIGHT? 

A. BASED ON WHAT THEY SAID HERE, YEAH. 

Q. TURN YOUR ATTENTION, SIR, TO CX 3755-014. I'D LIKE TO 

DIRECT YOUR ATTENTION TO SPEAKER'S NOTES JUST TO UNDERSTAND 

WHAT THESE TERMS MEAN. 

THE TOP LINE, UNDER LHS READ, CALTECH HAS ENJOYED TTM 

ADVANTAGE IN LAST TWO GENERATIONS. 

DO YOU SEE THAT, SIR?

A. I'M SORRY. WHICH PAGE ARE YOU ON?

Q. CX 3755-014. LOOK AT THE SPEAKER'S NOTES UNDERNEATH THIS 

MAJOR SLIDE, SIR. 

A. OH, THE SPEAKER NOTES, OKAY.

Q. NOW, CALTECH WAS THE CODE NAME FOR QCT; RIGHT? 

A. CALTECH WAS QCT, YES.

Q. TTM ADVANTAGE MEANS TIME TO MARKET ADVANTAGE; RIGHT? 

A. YES.

Q. AND THE LAST TWO GENERATIONS, WHEN THIS SLIDE WAS WRITTEN, 

REFERS TO 4G AND 3G; RIGHT? 

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A. I BELIEVE SO. 

Q. TURN TO THE NEXT PAGE, SIR, CX 3755-015. 

A. UM-HUM. 

Q. THE SECOND PARAGRAPH IN THE SPEAKER'S NOTES BEGINS, QUOTE, 

4G/3G/2G INTEGRATED SOLUTION. 

DO YOU SEE THAT, SIR? 

A. YES. 

Q. NOW, THAT REFERS TO A MODEM CHIPSET THAT SUPPORTS LTE, 3G, 

AND 2G STANDARDS; RIGHT? 

A. YEAH, BCG'S NOTES. BUT, YES, I BELIEVE THAT'S WHAT 

THEY'RE REFERENCING TO.

Q. THE NEXT SENTENCE READS, CALTECH HAD BEEN THE ONLY ONE 

WITH SUCH PRODUCT SO OEM'S HAD TO USE CALTECH'S CHIPS, 

(OTHERWISE ENDING UP WITH MORE NUMBER OF CHIPS IN A PHONE, 

WHICH IS BAD IN TERMS OF COST, POWER, DESIGN ). 

DO YOU SEE THAT, SIR. 

A. YES. 

Q. IT'S A TRUE STATEMENT THAT FOR SOME TIME QCT WAS THE ONLY 

SUPPLIER OF LTE CHIPS; RIGHT? 

A. I'M NOT SURE. 

Q. SIR, IF YOU COULD TURN YOUR ATTENTION TO YOUR DEPOSITION 

TRANSCRIPT. 

A. UM-HUM.

Q. PAGE 135 TO 136. IF YOU READ THE -- LOOK AT THAT, SIR, 

AND REFRESH YOUR RECOLLECTION. 

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A. I'M SORRY. WHICH PAGE?

Q. PAGE 1365, LINE 19, TO 136, LINE 5. TURNING YOUR 

ATTENTION IN PARTICULAR TO 136:14. 

YOU WERE ASKED AT YOUR DEPOSITION, SIR -- WELL, I'LL LET 

YOU READ IT AND REFRESH YOUR RECOLLECTION. 

A. OKAY.

Q. IT'S A TRUE STATEMENT YOU TESTIFIED AT YOUR DEPOSITION, 

SIR, WE WERE THE FIRST TO MARKET WITH LTE AND FOR A WHILE WE 

WERE THE ONLY SUPPLIER; CORRECT? 

A. YES.

Q. AND THAT'S A TRUE STATEMENT SITTING HERE TODAY? FOR A 

WHILE, QCT WAS THE ONLY SUPPLIER OF LTE CHIPS; ISN'T THAT 

RIGHT? 

A. I THINK THAT MIGHT HAVE BEEN, YEAH.

Q. IT'S ALSO A TRUE STATEMENT THAT FOR SOME PERIOD OF TIME 

QCT WAS THE ONLY SUPPLIER OF INTEGRATED SOLUTIONS, THAT IS, 3G, 

4G CHIPS; IS THAT CORRECT? 

A. I'M NOT SURE, BUT I THINK SO.

Q. TURN YOUR ATTENTION, SIR, TO LINE 1 -- PAGE 136, LINES 6 

TO 11. YOU WERE ASKED THE QUESTION, WERE YOU THE ONLY SUPPLIER 

OF INTEGRATED SOLUTIONS AT THIS TIME AS WELL? 

YOU RESPONDED IN THE AFFIRMATIVE; IS THAT CORRECT, SIR? 

A. I DID. 

Q. TRUE STATEMENT TODAY, TOO, SIR, THAT QCT WAS, FOR SOME 

PERIOD OF TIME, THE ONLY SUPPLIER OF INTEGRATED 3G, 4G 

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SOLUTIONS? 

A. I'M NOT TOTALLY SURE, BUT I BELIEVE SO. 

Q. NOW, THE TOP OF THIS SLIDE, IF WE CAN TAKE A LOOK AT THE 

MAJOR MATERIAL, THE MAJOR SLIDE, THE GREY BOX STRETCHING FROM 

WHAT LOOKS LIKE YEARS -- IT READS SIGNIFICANT TTM ADVANTAGE IN 

EARLY STAGE OF A NEW STANDARD. 

DO YOU SEE THAT GREY BOX, SIR?

A. YES.

Q. AND THAT EXPRESSES THAT QCT HAS A SIGNIFICANT TIME TO 

MARKET ADVANTAGE IN THE EARLY STAGES OF EACH STANDARD; IS THAT 

RIGHT? 

A. YES.

Q. AND THAT'S BEEN TRUE IN YOUR EXPERIENCE; RIGHT? 

A. GENERALLY TRUE. 

Q. TURN YOUR ATTENTION, SIR, TO CX 021 -- CX 3755-021. 

AND AGAIN TURNING OUR ATTENTION TO THE SPEAKER'S NOTES 

UNDERNEATH THE SLIDE, IT READS, TWO DIFFERENT CALTECH STICKS IN 

THE HISTORY. AND TRANSLATING SOME TERMS IN THE FIRST ONE. 

THE FIRST QUOTATION READS, ENABLEMENT STICK. WHEN CALTECH 

HAS A FAR SUPERIOR PRODUCT, OEM'S WANT TO PURCHASE THEIR 

PRODUCTS, AND WILL COMPLY IN ORDER TO GAIN ACCESS TO THESE 

CHIPS (I.E., CALTECH WAS ABLE TO SAY YOU CAN BUY THESE CHIPS IF 

YOU COMPLY IN FULL). 

NOW, CALTECH MEANS QCT; RIGHT? 

A. CALTECH IS QCT.

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Q. AND WHEN IT SAYS CALTECH WAS ABLE TO SAY YOU CAN BUY THESE 

CHIPS, THAT REFERS TO THE FACT THAT CALTECH WAS ABLE TO EXPRESS 

TO OEM'S THAT THEY COULD PURCHASE QCT'S CHIPS ONLY IF THEY 

COMPLIED WITH THE ROYALTY REQUESTS FROM QTL; RIGHT? 

A. THAT'S WHAT IT SAYS. IT'S BCG'S WORDS.

Q. BCG'S WORDS WERE PRESENTED TO THE BOARD OF DIRECTORS WHEN 

YOU WERE THERE; RIGHT? 

A. YEAH. I DON'T KNOW IF THEY SAID EXACTLY THIS OR NOT.

Q. FAIR ENOUGH. IT'S BEEN TRUE -- SO TURNING OUR ATTENTION 

AGAIN UP TO THE MAJOR SLIDE, AGAIN, WE HAVE A TIMELINE AND IT 

APPEARS THAT BETWEEN 2010 AND 2013, THERE IS MATERIAL THAT 

READS ENABLEMENT STICK, OEM'S COMPLY TO BUY TECHNOLOGY 

ADVANTAGED CALTECH CHIPS. 

DO YOU SEE THAT, SIR? 

A. I SEE THAT. 

Q. AND THIS SLIDE WAS PRESENTED TO THE BOARD; RIGHT? 

A. YEAH. 

Q. NOW, IT'S FAIR TO SAY THAT AT THIS TIME, IN ORDER TO 

PURCHASE QCT CHIPS, OEM'S HAD TO BE LICENSED BY QTL; RIGHT? 

A. YEAH, WE SELL TO PEOPLE THAT HAVE A LICENSE TO THE 

TECHNOLOGY WE DEVELOP. 

Q. AND IT'S FAIR TO SAY THAT ABSENT QCT'S STRATEGY OF NOT 

SELLING CHIPSETS INTO UNLICENSED DEVICES, QTL WOULD HAVE FOUND 

IT MORE DIFFICULT TO SIGN NEW LICENSE AGREEMENTS WITH OEM'S ON 

TERMS THAT QTL REQUESTED; RIGHT? 

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A. I DON'T THINK THAT'S WHAT THIS CHART IS REFERRING TO.

Q. I DIDN'T ASK IF THIS CHART WAS REFERRING TO IT, SIR. 

IS IT A TRUE STATEMENT THAT AT THIS TIME, IT IS FAIR TO 

SAY THAT ABSENT QCT'S STRATEGY OF NOT SELLING CHIPSETS INTO 

UNLICENSED DEVICES, QTL WOULD HAVE FOUND IT MORE DIFFICULT TO 

SIGN NEW LICENSE AGREEMENTS WITH OEM'S ON TERMS THAT QTL 

REQUESTED? 

A. I DON'T KNOW IF I BELIEVE THAT TO BE TRUE. 

Q. DO YOU BELIEVE -- WELL, STRIKE THAT. 

IT'S TRUE THAT YOU BELIEVE THAT THE FACT THAT QCT HAD A 

STRATEGY OF NOT SELLING CHIPSETS INTO UNLICENSED DEVICES 

PROVIDED MOTIVATION FOR OEM'S TO SIGN NEW LICENSE AGREEMENTS ON 

TERMS THAT QTL REQUESTED; RIGHT? 

A. NO, I THINK I SAID THAT WE'VE HAD THAT POLICY OF NOT 

SELLING TO SOMEBODY THAT HASN'T SIGNED A LICENSE AGREEMENT AND 

IS PAYING US FOR THE TECHNOLOGY WE DEVELOPED. 

Q. I'M NOT SURE I UNDERSTOOD YOUR ANSWER, SIR. 

MY QUESTION IS, IT'S FAIR TO SAY THAT QCT'S NO LICENSE, NO 

CHIPS POLICY PROVIDED THE MOTIVATION FOR OEM'S TO SIGN LICENSE 

AGREEMENTS ON TERMS THAT QTL REQUESTED; RIGHT? 

A. NOT NECESSARILY.

Q. COULD YOU TURN YOUR ATTENTION, SIR, TO YOUR DEPOSITION 

TRANSCRIPT TO PAGE 206. 

SO TURNING YOUR ATTENTION, SIR, TO LINES 6 TO 10 ON PAGE 

206, YOU SAID AT YOUR DEPOSITION, SIR, LIKE IN CHINA WHERE WE 

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DIDN'T SELL OUR CHIPS UNTIL PEOPLE HAD SIGNED UP, QCT'S CHIPS 

ARE DESIRED. HOPEFULLY THAT WAS MOTIVATION FOR PEOPLE TO SIGN 

UP TO THE TERMS THAT NDRC HAD NEGOTIATED. 

IT'S A TRUE STATEMENT THAT AT YOUR DEPOSITION, YOU THOUGHT 

QCT'S NO LICENSE, NO CHIPS POLICY PROVIDED OEM'S WITH A 

MOTIVATION TO SIGN UP TO ROYALTY AGREEMENTS ON THE TERMS QTL 

REQUESTED; ISN'T THAT RIGHT? 

MS. SESSIONS: YOUR HONOR, THIS IS IMPROPER 

IMPEACHMENT. THAT ISN'T THE QUESTION THAT WAS ASKED AT THE 

DEPOSITION. 

THE COURT: OVERRULED. 

THE WITNESS: I SAID THAT IN THE DEPOSITION. 

BY MR. MATHESON: 

Q. AND IT'S A SENSIBLE STATEMENT TO MAKE AS A MATTER OF BASIC 

ECONOMICS THAT WHEN QCT HAS HIGHLY DESIRABLE CHIPSET, THE NO 

LICENSE, NO CHIPS POLICY PROVIDES OEM'S WITH THE MOTIVATION TO 

AGREE TO THE ROYALTY TERMS THAT QTL REQUESTS; RIGHT? 

A. POTENTIALLY. 

Q. IN FACT, YOU'VE SEEN ANALYSES THAT ARE NOT PREPARED BY 

BCG, BUT ARE PREPARED BY QUALCOMM MANAGEMENT THAT LIKEWISE 

INDICATE THAT QCT'S NO LICENSE, NO CHIPS POLICY MAKES IT EASIER 

FOR QTL TO NEGOTIATE NEW LICENSE AGREEMENTS WITH OEM'S; RIGHT? 

A. I DON'T BELIEVE SO. 

Q. TURN YOUR ATTENTION TO THE NEXT TAB IN YOUR BINDER, SIR, 

WHICH IS TAB 6. THIS IS CX 7200. 

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CAN YOU IDENTIFY THIS, SIR, AND LOOK AT THE E-MAIL IN THE 

CENTER OF THE PAGE. YOU ARE IN THE "TO" LINE FOR THE 

RIGHT-HAND SIDE. 

IT'S CORRECT THAT YOU RECEIVED IN E-MAIL IN OCTOBER OF 

2007 IN WITH PROJECT BERLIN; IS THAT RIGHT, SIR? 

A. CORRECT. 

MR. MATHESON: YOUR HONOR, I MOVE TO ADMIT CX 7200. 

MS. SESSIONS: NO OBJECTION. 

THE COURT: IT'S ADMITTED. 

(PLAINTIFF'S EXHIBIT 7200 WAS ADMITTED IN EVIDENCE.) 

THE COURT: GO AHEAD, PLEASE. 

BY MR. MATHESON: 

Q. NOW, IT'S FAIR TO SAY THAT YOU PERSONALLY LED A LOT OF THE 

PROJECT ANALYSIS IN PROJECT BERLIN; FAIR? 

A. I WAS INVOLVED, YES.

Q. WELL, YOU LED THE ANALYSIS. THAT'S A FAIR STATEMENT; 

RIGHT? 

A. YES.

Q. AND IT'S FAIR TO SAY THAT IN PROJECT BERLIN, AS IN PROJECT 

PHOENIX, THE COMPANY CONSIDERED WHETHER TO SEPARATE ITS 

LICENSING BUSINESS FROM ITS COMPONENT SALES BUSINESS; RIGHT? 

A. CORRECT. 

Q. COULD YOU TURN, SIR, TO CX 7200-018. LOOKING AT THE 

FOURTH MAJOR BULLET DOWN THAT BEGINS, CHINESE LICENSEES MAY 

CEASE COMPLYING WITH THEIR EXISTING LICENSE AGREEMENTS. 

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DO YOU SEE THAT, SIR? 

A. YES.

Q. IT'S FAIR TO SAY THAT THIS SLIDE PRESENTS SOME OF THE 

POTENTIAL DOWNSIDES OF A SEPARATION OF QCT AND QTL; RIGHT? 

A. YES. 

Q. AND LOOKING AT THE LAST SENTENCE IN THAT SAME BULLET, ONE 

OF THE DOWNSIDES HIGHLIGHTED IS IT WILL ALSO BE VERY DIFFICULT 

TO SIGN NEW OFDMA AGREEMENTS WITH THE CHINESE COMPANIES. 

DO YOU SEE THAT SENTENCE, SIR?

A. YES.

Q. OFDMA REFERS TO LTE TECHNOLOGY; RIGHT? 

A. TECHNOLOGY USED IN LTE, CORRECT. 

Q. LET'S TURN TO TAB 8 IN YOUR BINDER, SIR. WE'RE TURNING TO 

PROJECT PHOENIX. THIS IS AN E-MAIL YOU SENT TO MR. DEREK 

ABERLE ON OCTOBER 23RD, 2015; IS THAT RIGHT? 

A. YES. 

MR. MATHESON: YOUR HONOR, MOVER TO ADMIT CX 5417. 

MS. SESSIONS: NO OBJECTION, YOUR HONOR. 

THE COURT: IT'S ADMITTED. 

(PLAINTIFF'S EXHIBIT 5417 WAS ADMITTED IN EVIDENCE.) 

THE COURT: GO AHEAD, PLEASE. 

BY MR. MATHESON: 

Q. NOW, JANA PARTNERS IS AN ACTIVIST FUND THAT TOOK A 

POSITION IN QUALCOMM PRIOR TO PROJECT PHOENIX; RIGHT? 

A. CORRECT.

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Q. AND THEIR THESIS WAS THAT BY SEPARATING QCT AND QTL, THEY 

MIGHT CREATE MORE SHAREHOLDER VALUE; RIGHT? 

A. CORRECT.

Q. IF YOU TURN YOUR ATTENTION TO THE BOTTOM E-MAIL ON THIS 

PAGE FROM SCOTT OSTFELD, HE WAS AT JANA PARTNERS ACCORDING TO 

THE E-MAIL ADDRESS; IS THAT FAIR? 

A. THAT'S RIGHT.

Q. OKAY. HE WRITES, WE WANTED TO SHARE FEEDBACK ON QUALCOMM 

AND THE RELATIONSHIP BETWEEN QCT/QTL FROM A FORMER LONG-TIME 

EXECUTIVE OF ERICSSON. 

DO YOU SEE THAT, SIR? 

A. YES. 

Q. NOW, TURNING TO YOUR E-MAIL AT THE TOP OF THE PAGE, YOU 

WRITE TO MR. ABERLE, WHILE SPINNING AND QTL OPERATING AS AN NPE 

IS NOT THE RIGHT ANSWER, I AGREE WITH THE VIEWPOINT THAT AS 

LONG AS QCT HAS A VERY HIGH SHARE, THEY ARE BENEFICIAL TO QTL. 

IN THAT SENTENCE NPE STANDS FOR NONPRACTICING ENTITY; 

CORRECT? 

A. CORRECT. 

Q. TURN YOUR ATTENTION TO THE NEXT -- TO THE NEXT TAB, SIR, 

WHICH IS TAB 9, CX 7251. 

YOUR HONOR, WE MOVE TO ADMIT CX 7251. 

MS. SESSIONS: NO OBJECTION. 

THE COURT: IT'S ADMITTED. 

(PLAINTIFF'S EXHIBIT 7251 WAS ADMITTED IN EVIDENCE.) 

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THE COURT: GO AHEAD, PLEASE. 

BY MR. MATHESON: 

Q. THIS IS A SET OF TALKING POINTS PREPARED FOR EXECUTIVE 

ATTENTION TO USE DURING THE PUBLIC ANNOUNCEMENT OF THE RESULTS 

OF THE PROJECT PHOENIX REVIEW; IS THAT RIGHT? 

A. YES, I BELIEVE SO.

Q. PLEASE TURN TO THE NEXT TAB IN YOUR BINDER, SIR, TAB 10. 

THIS IS CX 5953. THIS IS AN E-MAIL FROM YOURSELF TO EXECUTIVES 

AT QUALCOMM; IS THAT CORRECT? 

A. TO MEMBERS OF THE QTL TEAM FOR THE MOST PART. 

Q. AND YOU WERE THE PRIMARY AUTHOR OF THE SLIDES ATTACHED TO 

THIS E-MAIL; IS THAT RIGHT? 

A. YES. 

MR. MATHESON: YOUR HONOR, MOVE TO ADMIT CX 5953. 

MS. SESSIONS: NO OBJECTION, YOUR HONOR. 

THE COURT: IT'S ADMITTED. 

(PLAINTIFF'S EXHIBIT CX 5953 WAS ADMITTED IN EVIDENCE.) 

THE COURT: GO AHEAD, PLEASE. 

BY MR. MATHESON: 

Q. TURN YOUR ATTENTION TO CX 5953-004. 

NOW, YOU SENT THIS E-MAIL ON DECEMBER 15TH, 2015; RIGHT? 

YOU HAVE TO LOOK AT THE FIRST PAGE TO SEE THAT. 

A. YEAH. 

Q. THAT'S THE SAME DATE AS -- 

A. DECEMBER -- 

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Q. SORRY. I DIDN'T MEAN TO TALK OVER YOU, SIR. 

A. DECEMBER 15TH, YES.

Q. AND THAT'S THE SAME DATE AS THE PUBLIC ANNOUNCEMENT OF 

PROJECT PHOENIX WE JUST DISCUSSED; RIGHT? 

A. I'M NOT SURE, BUT IT WAS AROUND THAT TIME, YEAH. 

Q. OKAY. LOOKING AT CX 5953-004, TWO MAJOR BULLETS UP FROM 

THE BOTTOM READS, THE QTL BUSINESS MODEL RISK IS OUR BIGGEST, 

IN ALL CAPS, ISSUE. 

DO YOU SEE THAT, SIR? 

A. YES.

Q. AND THEN LOOKING DOWN TWO MAJOR BULLETS AND ONE MINOR 

BULLET, 1 POINT OF ROYALTY IS 16 TO 20 BILLION IN VALUE. 

DO YOU SEE THAT, SIR?

A. YES.

Q. IT'S FAIR TO SAY THESE ARE ESSENTIALLY CONSISTENT WITH THE 

POINTS THAT YOU MADE IN THE E-MAIL YOU WROTE OCTOBER 29TH, 

2015, IN CONNECTION WITH PROJECT PHOENIX; RIGHT? 

A. CORRECT.

Q. TURN YOUR ATTENTION TO THE NEXT SLIDE, SIR, THE -- NOW, 

THIS SLIDE READS OVERALL LOGIC FOR A CHANGE IN STRATEGY. 

I DON'T WANT TO GET INTO WHAT THE CHANGE IN STRATEGY YOU 

HAD IN MIND. 

BUT IF WE COULD TAKE A LOOK AT THE FIRST MAJOR BULLET AND 

THE FIRST MINOR BULLET UNDER IT READS, QTL, ON ITS OWN, LACKS 

AN ONGOING GIVE/GET RELATIONSHIP WITH LICENSEE THAT IS CREATES 

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ONGOING DEPENDENCE ON QTL. 

NOW, THIS IS THE SAME CHALLENGE YOU HIGHLIGHTED IN OCTOBER 

IN CONNECTION WITH YOUR PROJECT PHOENIX E-MAIL; RIGHT? 

A. CORRECT. 

Q. AND LOOKING -- THE NEXT MAJOR BULLET DOWN READS, TO DATE, 

QCT HAS HELPED MAINTAIN THE GIVE/GET NECESSARY TO DEFEND THE 

ROYALTY RATE. 

DO YOU SEE THAT, SIR? 

A. YES.

Q. AND AGAIN, THE GIVE/GET NECESSARY TO DEFEND THE ROYALTY 

RATE THAT QCT PROVIDES IS THAT THEY ARE IN AN ORDINARY 

COMMERCIAL RELATIONSHIP WHERE THEY SUPPLY A PRODUCT TO OEM'S; 

RIGHT? 

A. THAT THEY POSITION THE COMPANY AS AN ONGOING TECHNOLOGY 

PARTNER TO THE OEM'S AND LICENSEES IN SELLING PRODUCT. 

Q. SIR, GIVE/GET RELATIONSHIP REFERS TO AN ORDINARY 

COMMERCIAL RELATIONSHIP IN WHICH SOMEONE PROVIDES A PRODUCT AND 

RECEIVES A PRICE? THAT'S FAIR; RIGHT? 

A. YEAH. IN THIS INSTANCE, I'M REFERRING TO THE POSITIONING 

THAT QCT GIVES US -- 

Q. THANK YOU, SIR. 

A. -- WITH THE CUSTOMERS. 

Q. CAN WE MOVE FORWARD TO CX 5953-011. AGAIN, WHY STRATEGY 

MAKES SENSE, HIGH MODEM SHARES -- THE TITLE OF THIS SLIDE IS 

WHY STRATEGY MAKES SENSE. WE DON'T NEED TO EXPLORE IN DETAIL 

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WHAT THE STRATEGY WAS, SIR. 

BUT I DO WANT TO ADDRESS THE FIRST MAJOR BULLET, ADDRESSES 

QTL COMPLIANCE CHALLENGES AND SUSTAINABILITY OF LONG-TERM 

ROYALTY RATE, WITHOUT RISKY LITIGATION. DO YOU SEE THAT, SIR? 

A. YES. 

Q. IT'S A TRUE STATEMENT THAT IT WOULD BENEFIT QUALCOMM'S 

LICENSING BUSINESS IF IT COULD AVOID RISKY LITIGATION; RIGHT? 

A. YES.

Q. LEAVING ASIDE ALL OF THE OTHER DOWNSIDES TO LITIGATION, IT 

IS A TRUE STATEMENT THAT ONE COMPONENT OF RISKY LITIGATION IS A 

RISK THAT QUALCOMM MIGHT NOT RECEIVE THE ROYALTY RATE IT SOUGHT 

IF IT INITIATED LITIGATION AGAINST AN OEM WHO WASN'T LICENSED; 

RIGHT? 

A. NO. THAT -- WHEN I TALK ABOUT RISKY LITIGATION, ANY OF 

THE LITIGATION THAT TAKES TWO OR THREE YEARS TO REVOLVE CREATES 

UNCERTAINTY. THAT CREATES UNCERTAINTY FOR OUR INVESTORS, WHICH 

IS NOT A GOOD THING FROM A VALUATION STANDPOINT.

Q. SITTING HERE TODAY, IT'S YOUR TESTIMONY, SIR, THAT IT IS 

NOT ONE COMPONENT OF LITIGATION RISK THAT QUALCOMM MIGHT 

RECEIVE, IF INITIATING LITIGATION AGAINST AN OEM WHO WASN'T 

LICENSED, A LOWER ROYALTY RATE THAN QUALCOMM SOUGHT? IS THAT 

YOUR TESTIMONY, SIR? 

A. MY TESTIMONY IS THERE IS UNCERTAINTY, WHICH COULD RESULT 

IN A BAD OUTCOME OR A GOOD OUTCOME. BUT THERE'S UNCERTAINTY.

Q. I UNDERSTAND THAT, SIR. BUT ONE COMPONENT OF RISKY 

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LITIGATION IS THE RISK THAT QUALCOMM DOESN'T GET THE ROYALTY 

RATE IT SEEKS? ISN'T THAT FAIR? 

A. YOU COULD END UP WITH NOT GETTING THE ROYALTY RATE YOU 

THINK YOU DESERVE, SURE.

Q. NOW, THE NEXT FINAL MINOR BULLET READS REDUCES DEPENDENCE 

ON LEGAL AND REGULATORY STRUCTURES TO SUSTAIN ROYALTY RATES. 

DO YOU SEE THAT, SIR?

A. YES.

Q. NOW, FOR AN EXTENDED PERIOD OF TIME IT'S FAIR TO SAY THAT 

QUALCOMM RELIED ON LEGAL AND REGULATORY STRUCTURES; CORRECT? 

A. YEAH, THEY'VE ALWAYS BEEN A PART OF THE LICENSING 

BUSINESS.

Q. AND IT'S ALSO TRUE THAT QUALCOMM HAS SOUGHT, OR SOUGHT IN 

2015, WAYS TO REDUCE ITS DEPENDENCE ON LEGAL AND REGULATORY 

STRUCTURES; RIGHT?

A. I WAS EXPLORING THAT. 

Q. AND TURN YOUR ATTENTION, SIR, TO CX 5953-014, SECOND MAJOR 

BULLET READS, ONGOING DEPENDENCE ON LEGAL AND REGULATORY 

CONSTRUCTS WILL BE COMPLETELY INSUFFICIENT TO SUSTAIN THE 

BUSINESS MODEL LONGER TERM. 

YOU'RE REFERRING TO THE QTL BUSINESS MODEL; RIGHT? 

A. QTL. 

Q. TURNING YOUR ATTENTION, SIR, BACK TO CX 7200, WHICH IS TAB 

6 OF YOUR BINDER. 

IF YOU LOOK, SIR, AT CX 7200-005. 

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NOW, SPIN RATIONALE: SUMMARY OF REASONS IS THE TITLE OF 

THIS SLIDE. 

SPIN REFERS TO A SEPARATION OF QCT AND QTL; RIGHT? 

A. YES.

Q. NOW, THE VERY FINAL SENTENCE OF THE SECOND BULLET READS, 

QCT'S COMPETITORS ROUTINELY ENTER INTO ROYALTY FREE 

CROSS-LICENSES WITH OTHER COMPANIES (INCLUDING SOME OF THOSE 

COMPANIES THAT ARE TODAY ATTACKING QUALCOMM) THEREBY ALLOWING 

THESE COMPETITORS TO DESIGN NEW TECHNOLOGIES INTO THEIR CHIPS 

WITH LESS PATENT INFRINGEMENT RISK. 

ONE OF THE COMPANIES ATTACKING QUALCOMM AT THE TIME THIS 

SLIDE WAS WRITTEN WAS BROADCOM; ISN'T THAT RIGHT? 

A. BROADCOM WAS, YES.

Q. BROADCOM MANUFACTURES ASICS, OR AT THE TIME THIS SLIDE WAS 

WRITTEN BROADCOM MANUFACTURED ASICS IN COMPETITION WITH 

QUALCOMM; ISN'T THAT RIGHT?

A. I'M SORRY. SAY THAT AGAIN.

Q. AT THE TIME THIS SLIDE WAS WRITTEN, BROADCOM MANUFACTURED 

APPLICATION SPECIFIC INTEGRATED CIRCUITS, INCLUDING MODEM 

CHIPS, IN COMPETITION WITH QUALCOMM; ISN'T THAT RIGHT? 

A. I'M NOT EXACTLY SURE. I KNOW AT ONE POINT THEY WERE.

Q. BUT DO YOU KNOW THAT BROADCOM HAS BEEN A MODEM CHIP 

COMPETITOR OF QUALCOMM? YOU'RE JUST NOT SURE IF THIS WAS THE 

CASE WHEN THIS SLIDE WAS WRITTEN; RIGHT? 

A. AT ONE POINT THEY WERE TRYING TO MAKE CHIPS, YES. 

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MR. MATHESON: NO FURTHER QUESTIONS AT THIS TIME, 

YOUR HONOR. PASS THE WITNESS. OBVIOUSLY WE RESERVE REDIRECT 

IF APPLICABLE, YOUR HONOR. 

THE COURT: OF COURSE. 3:35. 

GO AHEAD, PLEASE. 

(PAUSE IN PROCEEDINGS.)

THE COURT: GO AHEAD, PLEASE. 3:36. 

MS. SESSIONS: THANK YOU, YOUR HONOR. GOOD 

AFTERNOON. JUSTINA SESSIONS OF KEKER, VAN NEST AND APPEARING 

HERE FOR QUALCOMM.

CROSS-EXAMINATION

BY MS. SESSIONS:

Q. GOOD AFTERNOON, MR. WISE. 

A. GOOD AFTERNOON.

Q. MR. WISE, HOW LONG HAVE YOU WORKED AT QUALCOMM? 

A. ABOUT 22 YEARS. 

Q. AND YOUR CURRENT JOB TITLE IS? 

A. SENIOR VICE PRESIDENT AND TREASURER.

Q. OKAY. WHEN DID YOU BECOME SENIOR VICE PRESIDENT AND 

TREASURER? 

A. AROUND JANUARY OF 2016. 

Q. WHAT WAS YOUR ROLE BEFORE YOU BECAME SENIOR VICE PRESIDENT 

AND TREASURER? 

A. SENIOR VICE PRESIDENT OF FINANCE AND STRATEGY. 

Q. WHAT WERE YOUR RESPONSIBILITIES AS SENIOR VICE PRESIDENT 

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OF FINANCE AND STRATEGY? 

A. I WAS INVOLVED IN A NUMBER OF OUR BIGGER CORPORATE 

PROJECTS; ALSO HAD RESPONSIBILITY FOR FINANCE AND STRATEGY OF A 

NUMBER OF OUR EMERGING BUSINESSES, SMALLER EMERGING BUSINESSES 

OF OUTSIDE OF QTL AND QTL.

Q. WERE YOU IN THAT ROLE IN THE YEAR 2015? 

A. YES.

Q. MR. WISE, WHAT, IF ANY, HAS BEEN YOUR INVOLVEMENT WITH 

PATENT LICENSING DURING YOUR TIME AT QUALCOMM? 

A. NONE. 

Q. WHAT, IF ANY, HAS BEEN YOUR INVOLVEMENT IN CHIP 

DEVELOPMENT OR CHIP SALES DURING YOUR TIME AT QUALCOMM? 

A. NONE. 

Q. AND WHAT, IF ANY, HAS BEEN YOUR INVOLVEMENT WITH STANDARDS 

DEVELOPMENT OR STANDARDS ORGANIZATION PARTICIPATION AT 

QUALCOMM? 

A. NONE. 

Q. MR. WISE, TURNING YOUR ATTENTION BACK TO PROJECT PHOENIX, 

COULD YOU JUST PROVIDE A BRIEF TIMELINE OF THE COMPANY'S 

CONSIDERATION OF PROJECT PHOENIX ISSUES? 

A. SURE. 

SO WE, WE FIRST LOOKED AT A SEPARATION OF THE CHIP AND 

LICENSING BUSINESS IN EARLY 2015. WE PRESENTED OUR FINDINGS TO 

THE BOARD IN MAY OF 2015, THEY INDICATED WE SHOULD NOT SPLIT 

THE COMPANY UP AT THAT TIME. 

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AND THEN JANA PARTNERS OWNED SHARES IN QUALCOMM, AND ONE 

OF THEIR PIECES WAS TO SPLIT THE COMPANY. 

AND WE AGREED AT ONE POINT TO RELOOK AT THAT QUESTION WITH 

THEM, AND WE STARTED THAT OVER AGAIN IN AUGUST OF 2015 AS 

PROJECT PHOENIX, AND WE CONCLUDED THAT PROCESS WITH THE FINAL 

RECOMMENDATIONS IN EARLY DECEMBER 2015.

Q. WHO AT QUALCOMM WAS INVOLVED IN PROJECT PHOENIX? 

A. MYSELF, MY TEAM, EXECUTIVE MANAGEMENT, THE BOARD, AND A 

COMMERCIAL COMMITTEE OF THE BOARD.

Q. WHAT WAS THE MAKEUP OF THE COMMERCIAL COMMITTEE? 

A. THE SPECIAL COMMITTEE HAD PAUL JACOBS, OUR CHAIRMAN; AND 

THEN I WOULD SAY MAYBE FIVE OR SO INDEPENDENT DIRECTORS. 

Q. AT THE TIME THAT MANAGEMENT WAS CONSIDERING THE 

PROJECT PHOENIX ISSUES, WERE THERE ANY PARTICULAR BUSINESS 

CHALLENGES FACING THE COMPANY AT THE TIME? 

A. YEAH, A NUMBER OF THINGS. 

WE WERE JUST COMING OFF THE BACK OF THE NDRC REVIEW OF OUR 

LICENSING PROGRAM IN CHINA. CHINA WAS BECOMING A VERY, VERY 

BIG PART OF OUR BUSINESS AS THE CHINESE HANDSET MANUFACTURERS 

GAINED SHARE NOT ONLY IN CHINA, BUT ALSO GLOBALLY. THEY WERE 

BECOMING A MUCH BIGGER PART OF OUR BUSINESS, BOTH QCT AND QTL. 

AND WE WERE HAVING COMPLIANCE ISSUES WITH THE CHINESE 

OEM'S ON THE BACK OF THE NDRC SETTLEMENT WITH THEM PAYING FULL 

ROYALTIES OR, YOU KNOW, ON ALL THE DEVICES, ALL THEIR UNITS 

THAT THEY WERE SHIPPING. 

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AND THEN WE WERE ALSO SIGNIFICANTLY CONCERNED ABOUT 

VERTICALIZATION OF SOME OF THE BIGGER OEM'S, AND BY THAT I MEAN 

SOME OF THE LARGER OEM'S STARTING TO DO THEIR OWN CHIPSETS, 

BRINGING THAT IN-HOUSE, AND, YOU KNOW, MOVING AWAY FROM 

QUALCOMM. 

Q. MR. WISE, COULD YOU TURN IN YOUR BINDER TO CX 6837, 

PLEASE. I BELIEVE IT'S TAB NUMBER 2. 

A. YES. 

Q. DO YOU RECOGNIZE THIS DOCUMENT, MR. WISE? 

A. YES. 

Q. WHAT IS IT? 

A. A BOARD PACKAGE FOR OUR OCTOBER 5TH BOARD MEETING.

Q. AND I BELIEVE THAT YOU PREVIOUSLY TESTIFIED THAT YOU 

ATTENDED THE OCTOBER 5TH BOARD MEETING; IS THAT RIGHT? 

A. YES.

Q. DID MANAGEMENT MAKE A RECOMMENDATION REGARDING 

PROJECT PHOENIX AT THIS MEETING? 

A. YES. 

Q. WHAT WAS MANAGEMENT'S RECOMMENDATION AT THE OCTOBER 5TH 

BOARD MEETING? 

A. THAT WE SHOULD NOT SPLIT THE CHIP AND LICENSING 

BUSINESSES. 

Q. AT A HIGH LEVEL, WHY DID MANAGEMENT RECOMMEND NOT 

SPLITTING UP THE BUSINESSES? 

A. A NUMBER OF REASONS. THERE WERE FINANCIAL REASONS, COST 

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DYSSYNERGIES OF DUPLICATING COSTS OF SEPARATING THE BUSINESSES, 

TAX DYSSYNERGIES. THERE WERE ALSO REASONS UNRELATED TO 

BUSINESS. QUALCOMM HAS BEEN SUCCESSFUL IN GETTING ITS 

TECHNOLOGIES ADOPTED INTO THE STANDARDS BODIES BY THE FACT THAT 

WE HAVE THE COMBINED CAPABILITIES OF QCT AND QTL AND WE'RE ABLE 

TO INVEST AND DEVELOP GOOD TECHNOLOGY AND ABLE TO DEMONSTRATE 

THAT THE TECHNOLOGY FUNCTIONS, WE DEVELOP LIVE SYSTEMS TO BE 

ABLE TO SHOW AND DEMONSTRATE OUR INNOVATIONS CAN PERFORM AS 

PROMISED. 

AND WE, THROUGH QCT, HAVE A LARGE ABILITY TO IMPLEMENT THE 

STANDARDS ON THE DEVICE SIDE THROUGH CHIPS, WHICH POSITIONS US 

AS A VERY GOOD PARTNER FOR INFRASTRUCTURE VENDORS AND OTHER 

IMPORTANT PARTIES IN THE STANDARDS BODIES THAT ALLOW US TO HAVE 

GOOD PARTNERSHIPS AND SUCCESS IN GETTING FOLKS TO, YOU KNOW, 

ADOPT OUR TECHNOLOGY. 

Q. COULD YOU PLEASE TURN TO PAGE CX 6837-062. 

A. YES. 

Q. MR. WISE, DO YOU RECOGNIZE THE PRESENTATION THAT BEGINS ON 

PAGE 62 OF CX 6837? 

A. YES. 

Q. WHAT IS IT? 

A. IT'S THE PROJECT PHOENIX SLIDES FROM THE OCTOBER 5TH BOARD 

MEETING.

Q. WHOSE PROJECT PHOENIX SLIDES? 

A. MINE. 

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Q. DID THESE SLIDES ACCURATELY REFLECT YOUR ANALYSIS AND 

CONCLUSIONS REGARDING THE PROJECT PHOENIX CONSIDERATIONS AT 

THAT TIME? 

A. YES, REFLECTED MANAGEMENT'S RECOMMENDATIONS. 

MR. MATHESON: OBJECTION, YOUR HONOR. LACKS -- 

PORTIONS OF THIS DOCUMENT WERE REDACTED FROM PREJUDICE. MANY 

OF THESE SLIDES, OR SEVERAL OF THESE SLIDES WERE REDACTED FOR 

PRIVILEGE. IF MR. WISE PREPARED THEM, WE WOULD LIKE TO 

UNDERSTAND WHAT HE MEANS WHEN THESE ARE HIS ANALYSIS OR WE'D 

LIKE TO HAVE THE SLIDE PRODUCED AND WE CAN EXPLORE HIS ANALYSIS 

IN FULL. 

BY MS. SESSIONS: 

Q. MR. WISE, DID YOU SEEK OR RECEIVE ANY LEGAL ADVICE IN THE 

COURSE OF PREPARING YOUR ANALYSES AS PART OF PROJECT PHOENIX? 

A. YES. 

MS. SESSIONS: I BELIEVE, YOUR HONOR, THAT THE 

REDACTED PORTIONS OF THESE SLIDES REFLECT THE LEGAL ADVICE THAT 

MR. WISE SOUGHT OR RECEIVED OVER THE COURSE OF HIS ANALYSIS OF 

PROJECT PHOENIX. 

THE COURT: WHY DOESN'T HE TESTIFY TO THAT? 

MS. SESSIONS: OKAY. 

Q. WELL, MR. WISE, CAN YOU -- IF YOU CAN TURN TO, I GUESS 

IT'S PAGE 067 IS THE FIRST ONE? 

THE COURT: NO, IT'S ON 063 IS THE FIRST IT LOOKS 

LIKE. THE SECOND PAGE OF THE DOCUMENT. THE TITLE PAGE DOESN'T 

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HAVE REDACTIONS, BUT THE SECOND PAGE DOES. 

BY MS. SESSIONS: 

Q. MR. WISE, DO YOU SEE THE, THE REDACTED FOR PRIVILEGE BOXES 

IN THE SECOND BULLET -- 

A. UM-HUM. 

Q. -- IN THAT SLIDE DECK? 

A. YES.

Q. DO YOU RECALL SEEKING OR OBTAINING LEGAL ADVICE RELATING 

TO THE SUBJECT CONTAINED IN THAT BULLET? 

A. YES. 

Q. DO YOU RECALL WHO YOU MIGHT HAVE SOUGHT OR RECEIVED THAT 

LEGAL ADVICE FROM? 

A. LIKELY QTL LAWYERS. 

Q. MR. WISE, IF YOU COULD TURN TO PAGE 067 OF THE DECK, AND I 

KNOW IT'S DIFFICULT, BUT FROM THE CONTEXT, THE PRECEDING, OR 

SUCCEEDING SLIDES, CAN YOU TELL US WHETHER YOU SOUGHT OR 

RECEIVED LEGAL ADVICE RELATING TO THE SUBJECT MATTER OF SLIDE 

NUMBER 67? 

A. YEAH, HARD TO REMEMBER WHAT EACH OF THESE SLIDES WERE, BUT 

I BELIEVE SO. 

Q. BUT -- 

MR. MATHESON: YOUR HONOR, CAN I BE HEARD? I HAVE NO 

DESIRE TO WASTE YOUR TIME FORCING YOU TO WALK THROUGH THESE 

SLIDES. 

I THINK OUR LARGER POINT IS IF THESE ARE BUSINESS 

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COMMUNICATIONS MADE BY A BUSINESS PERSON TO THE BOARD, IN WHAT 

SENSE CAN THESE BE PRIVILEGED? 

MS. SESSIONS: YOUR HONOR, A BUSINESS IS ENTITLED TO 

SEEK AND RECEIVE LEGAL ADVICE WHEN CONSIDERING STRUCTURAL 

ISSUES, TAX IMPLICATIONS, ALL KINDS OF THINGS THAT MIGHT HAVE 

AN EFFECT ON THE BUSINESS, AND MR. WISE DID TESTIFY THAT HE 

BELIEVES HE SOUGHT AND RECEIVED LEGAL ADVICE REGARDING THESE 

PROJECT PHOENIX ISSUES. AND PROJECT PHOENIX DID INVOLVE A LOT 

OF LEGAL QUESTIONS BECAUSE THE COMPANY WAS CONSIDERING NEW, YOU 

KNOW, STRUCTURES OF THE BUSINESS, TAX ISSUES, AND THINGS LIKE 

THAT. 

SO I THINK IT'S ENTIRELY APPROPRIATE THAT THESE SLIDES 

MIGHT HAVE CONTAINED SOME PRIVILEGED MATTERS. 

AND THE BOARD IS, BOARD AND MANAGEMENT ARE ENTITLED TO 

SEEK AND OBTAIN LEGAL ADVICE, EVEN ON BUSINESS MATTERS, FROM 

THE COMPANY'S LAWYERS. 

THE COURT: YOU -- I HAD A QUESTION. IN THE OPENING 

SLIDES FOR QUALCOMM, THE FEBRUARY 23RD, 2012, SONY SAYS IT'S 

THE QC LEGAL TEAM THAT ORDERED THE HOLD OF SHIPMENTS OF MODEM 

CHIPS DUE TO NON-EXISTENCE OF A QTL LICENSE AGREEMENT. 

SO WHAT IF IT'S ACTUALLY THE LEGAL TEAM THAT IS ACTUALLY 

THE ONE THAT IS ENFORCING THE NO LICENSE, NO CHIPS POLICY? AT 

WHAT POINT DO THEY BECOME, IN FACT, THE ACTORS, THE BUSINESS 

ACTORS VERSUS JUST GIVING LEGAL ADVICE? 

THAT DID DISTURB ME. I'M LOOKING AT PAGE 14 OF THE SLIDE. 

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MR. VAN NEST: WHICH PAGE, YOUR HONOR?

THE COURT: PAGE 14. IT'S A QUOTE FROM BOB ISHIDA. 

IT SAYS, QUOTE, QC LEGAL TEAM ORDERED TO YOUR SALES TO HOLD ANY 

SHIPMENT TO SOMC, WHICH IS SONY, DUE TO NON-EXISTENCE OF QTL 

LICENSE AGREEMENT, DOT, DOT, DOT. ARE YOU AWARE OF THAT? 

IF IT'S THE LEGAL TEAM THAT IS THEN ORDERING THIS NO 

LICENSE, NO CHIPS POLICY ENFORCEMENT, WHAT DOES THAT MEAN? WHY 

SHOULD THAT BE PRIVILEGED? IS THAT PRIVILEGED? 

MS. SESSIONS: SO, YOUR HONOR, I DON'T BELIEVE THAT 

WE ASSERTED PRIVILEGE -- I MEAN, WE CERTAINLY DIDN'T ASSERT 

PRIVILEGE OVER THAT COMMUNICATION. 

THE COURT: UM-HUM. SO HOW ARE YOU DRAWING THE LINE? 

MR. VAN NEST: EXCUSE ME, YOUR HONOR. 

THE COURT: WHERE ARE YOU DRAWING THE LINE? 

MR. VAN NEST: JUST TO CLARIFY, THE -- THE STATEMENT 

YOU'RE REFERRING TO IS THE STATEMENT FROM SONY. IT'S NOT 

CORRECT. BUT THAT'S NOT SOMETHING WE SAID. 

THE STATEMENT FROM QUALCOMM IS FROM OUR CEO, 

MR. MOLLENKOPF. I'M NOT SURE WHAT MR. ISHIDA IS REFERRING TO. 

THE COURT: OKAY. 

MR. VAN NEST: BUT THAT'S NOT OUR STATEMENT. 

THE COURT: OKAY. BUT LET ME HEAR, YOU'RE SAYING IF 

THE LEGAL TEAM IS ORDERING IT, YOU WOULD NOT WAIVE -- YOU WOULD 

WAIVE PRIVILEGE AS TO THAT. BUT NOT AS TO BUSINESS STRATEGY? 

I WASN'T SURE, HOW ARE YOU DIVIDING THE LINE -- DRAWING THE 

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LINE HERE IN WHAT YOU JUST SAID? YOU SAID WE WAIVE PRIVILEGE 

AS TO THAT -- 

MS. SESSIONS: NO, YOUR HONOR. 

THE COURT: BUT NOT AS TO ANYTHING ELSE. 

MS. SESSIONS: SORRY, YOUR HONOR, I DIDN'T INTEND TO 

SAY THAT WE WAIVED PRIVILEGE OVER ANYTHING. I JUST MEANT TO 

SAY THAT I DIDN'T BELIEVE THAT WE HAD ASSERTED PRIVILEGE OVER 

THE SONY COMMUNICATION THAT YOU ALL WERE JUST DISCUSSING. 

BUT I -- I DON'T -- I THINK I FAILED TO SEE THE 

CONNECTION. I MEAN, IF YOU'RE ASKING IN GENERAL OF THE NATURE 

OF THE PRIVILEGE DETERMINATIONS THAT WERE MADE IN THIS CASE, I 

CAN TELL YOU THAT THEY WERE VERY HEAVILY LITIGATED AND WE WENT 

BACK AND FORTH MANY TIMES AND, YOU KNOW, DID REDUCE SOME OF THE 

PRIVILEGE CALLS THAT WE MADE WHEN THERE WAS A DISPUTE ABOUT 

WHETHER SOMETHING WAS BUSINESS ADVICE OR LEGAL ADVICE. 

BUT WE SPENT A LOT OF TIME REALLY TRYING TO SEPARATE THOSE 

TWO THINGS OUT, AND I BELIEVE MAGISTRATE JUDGE COUSINS, YOU 

KNOW, HEARD A NUMBER OF DISPUTES ON THOSE ISSUES AND DID RULE 

UPON THEM. 

THE COURT: UM-HUM. 

MR. MATHESON: YOUR HONOR, I HAVE NO WISH TO DERAIL 

THE EXAMINATION. OUR POINT IS THE ONLY THING THAT CAN BE 

PRIVILEGED IN THIS CIRCUIT IS A CONFIDENTIAL COMMUNICATION 

BETWEEN AN ATTORNEY AND A CLIENT. 

THE SIMPLE FACT THAT HE SOUGHT AND RECEIVED LEGAL ADVICE 

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DOESN'T MATTER UNLESS HE IS TRANSMITTING THE CONTENT OF A 

COMMUNICATION BETWEEN AN ATTORNEY AND A CLIENT. 

I DON'T WANT TO USE OUR POWER ON THIS ONE. I HAVE NO IDEA 

WHAT THESE SLIDES SAY. THERE WILL BE A MEMO CALLED THE 

COMPETITIVE RESPONSE MEMO IN CONNECTION WITH THE PROJECT BERLIN 

THAT THEY HAVE REDACTED. 

THE COURT: WELL, WHY DON'T I REVIEW THESE TO SEE IF 

THE PRIVILEGE IS APPROPRIATELY ASSERTED? I MEAN, JUDGE COUSINS 

HAD THOUSANDS AND THOUSANDS. WHY DON'T I REVIEW THESE TO SEE 

IF THE PRIVILEGE IS APPROPRIATELY ASSERTED? 

MR. MATHESON: ANOTHER ONE WE'D SUBMIT, YOUR HONOR, 

IS THE COMPETITIVE RESPONSE WHITE MEMO THAT'S ATTACHED TO 

PROJECT BERLIN WHICH HAS ALSO BEEN REDACTED. AGAIN, IT'S HARD 

TO SEE HOW A COMPETITIVE RESPONSE CAN BE AN ENTIRELY PRIVILEGED 

MATTER WHEN THE QUESTION ADDRESSED IS THE COMPETITIVE RESPONSE 

OF QUALCOMM'S COMPETITORS TO A SPIN BETWEEN PROJECT BERLIN -- 

BETWEEN QCT AND -- 

THE COURT: WHAT'S THE EXHIBIT ON THAT? I'D LIKE TO 

SEE CX 6837 AND I'LL JUDGE FOR MYSELF WHETHER THE REDACTIONS 

ARE APPROPRIATE. 

WHAT'S THE OTHER ONE, PLEASE? 

MR. MATHESON: I BELIEVE IT'S 7234, YOUR HONOR. I'M 

CHECKING ON THAT. 

MR. VAN NEST: YOUR HONOR, WE'D LIKE AN OPPORTUNITY, 

AT MINIMUM, TO BRIEF THIS OVERNIGHT. THESE ISSUES -- THIS IS A 

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DOCUMENT THE GOVERNMENT INTRODUCED, THEY'VE HAD IT, THEY'VE HAD 

IT FOR A LONG TIME, THEY PUT THIS INTO EVIDENCE IN ITS CURRENT 

FORM. 

ALL THESE PRIVILEGE ISSUES WERE LITIGATED BEFORE 

JUDGE COUSINS, AND I WOULD LIKE AN OPPORTUNITY TO BRING THAT TO 

THE COURT'S ATTENTION IF -- 

THE COURT: YOU'RE NOT GOING TO LET ME SEE IT IN 

CAMERA? 

MR. VAN NEST: WELL, I'D LIKE AN OPPORTUNITY TO BRIEF 

THAT BEFORE I DO, BECAUSE ALL THESE ISSUES WERE HANDLED IN 

FRONT OF JUDGE COUSINS -- 

THE COURT: YOU'RE TELLING ME -- I CAN CHECK WITH 

JUDGE COUSINS -- THAT HE LOOKED AT CX 6837 SPECIFICALLY? 

MR. EVEN: SO I -- I'LL NEED TO SEE THE EXACT ONE, 

YOUR HONOR, BECAUSE WE HAVE ARGUED THIS OBVIOUSLY FOR QUITE 

DIFFERENT -- 

THE COURT: BUT HE DID NOT REVIEW EVERYTHING IN 

CAMERA. IT WAS DONE IN A VERY BIG, WHOLESALE WAY. 

MR. EVEN: NO. I THINK WHAT HE DID IS HE GAVE A 

GENERAL RULING AS TO HOW TO APPLY THE PRIMARY PURPOSE RULE AS 

TO THE, AS TO THE PRIVILEGE, PRIMARY PURPOSE OF THE 

COMMUNICATION. 

HE DID LOOK IN CAMERA AT QUITE A FEW DOCUMENTS, I DON'T 

REMEMBER THE EXACT NUMBER, BUT MORE THAN A HANDFUL. 

HE DID SEND US BACK TO LOOK. THEY'VE REVIEWED SOME OF IT 

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AND OFFERED OBJECTIONS ON THAT, BOTH THE FTC AND THE MDL 

PLAINTIFFS IN THE OTHER CASE. 

JUDGE COUSINS LOOKED AT THAT AND ASKED THEM TO CHOOSE THE 

ONES THAT THEY THINK ARE MOST HIGH PRIORITY FOR THEM, AND HE 

LOOKED AT SOME OF THOSE. 

AND SO THIS IS A, A LONG BACK AND FORTH THAT HAS GONE ON 

FOR A WHILE. IT INCLUDED MANY OF THE DOCUMENTS SPECIFICALLY. 

MR. VAN NEST: AND ALSO, I'M ASKING A PROCESS POINT, 

YOUR HONOR. THIS IS A DOCUMENT THEY PUT INTO EVIDENCE. WE'RE 

NOT TRYING TO SPONSOR IT. WE'RE ON REDIRECT OF A WITNESS WHO 

WAS ASKED QUESTIONS ABOUT THIS DOCUMENT BY THE GOVERNMENT. 

THE COURT: THEN HE SAID THIS IS HIS DOCUMENT THAT HE 

CREATED WITH HIS ANALYSIS. 

MR. VAN NEST: HE DID, EXACTLY. BUT THAT DOESN'T 

MEAN THERE ISN'T PRIVILEGED MATERIAL. MY POINT IS THEY, THEY 

OFFERED IT, THE GOVERNMENT DID, WE DIDN'T OBJECT TO IT, THEY 

OFFERED IT IN ITS CURRENT FORM, AND WE'RE UP HERE DOING A FEW 

MINUTES OF REDIRECT AND ALL OF A SUDDEN THEY'RE UP ASKING THAT 

THE WHOLE THING BE UNREDACTED. 

THAT IS NOT PROTOCOL OR PROCESS. IT'S THEIR -- IF THEY 

HAD THIS ISSUE, THEY SHOULD HAVE RAISED IT WITH YOUR HONOR 

BEFOREHAND THEN THROWING ON ALL THIS IN THE MIDDLE OF TRIAL. 

THE COURT: ALL RIGHT. LET'S KEEP GOING. 

MR. VAN NEST: THIS IS NOT AN ISSUE THAT WE BROUGHT 

UP. 

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MR. MATHESON: YOUR HONOR, MAY I ADDRESS ONE ISSUE? 

CX 7200-55 IS THE COMPETITIVE RESPONSE WHITE PAPER WHICH HAS 

BEEN COMPLETELY REDACTED FROM PROJECT BERLIN, EVEN THOUGH IT 

ADDRESSES ISSUES THAT ARE CLEARLY RELATED TO BUSINESS 

COMPETITION AS WE'LL DEMONSTRATE DURING MR. ALTMAN'S EXAM 

TOMORROW. THEY REDACTED THE MEMO. THEY LET ONE SLIDE THROUGH 

THAT SUMMARIZES THE CONTENTS. IT'S ALL ABOUT BUSINESS 

POSITIONING AS FAR AS WE CAN TELL WITHOUT LOOKING AT IT. 

THAT'S CX 7200-055. 

MR. VAN NEST: HAS THAT BEEN BEFORE THIS WITNESS? 

MR. MATHESON: IT IS INDEED, SIR. IT WAS TAB 6. 

MR. VAN NEST: OKAY. THEY PUT EVIDENCE IN ITS 

CURRENT FORM, YOUR HONOR. WE HAVEN'T ASKED A SINGLE QUESTION 

ABOUT IT. BUT IF THEY -- IF WHAT WE'RE GOING TO DO IS PROCEED 

WITH THE GOVERNMENT PUTTING IN EXHIBITS AND THEN LATER 

COMPLAINING ABOUT THE FORM OF THEM, WE'LL NEVER GET THROUGH THE 

TRIAL. ALL OF THIS STUFF SHOULD HAVE BEEN LITIGATED PRETRIAL 

WITH JUDGE COUSINS. MOST OF IT WAS. AND I THINK THIS IS 

HIGHLY IMPROPER. I WOULD LIKE -- IF YOUR HONOR IS GOING TO 

ENTERTAIN THIS TYPE OF THING MID-TRIAL, I'D LIKE AN OPPORTUNITY 

TO BRIEF IT. 

THE COURT: ALL RIGHT. LET'S KEEP GOING, PLEASE. 

BY MS. SESSIONS: 

Q. MR. WISE, COULD YOU TURN TO PAGE 78 OF CX 6837. 

A. YES. 

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Q. MR. WISE, ON PAGE 78 OF CX 6837, THERE'S A COMPLIANCE 

CONCERN REFERENCE. 

DO YOU SEE THAT?

A. YES.

Q. WHAT WAS THE COMPLIANCE CONCERN AT THIS TIME? 

A. SO THE FACT THAT QCT, WHEN QCT SELLS CHIPS TO CHINESE 

OEM'S, THAT GIVES US A GOOD SENSE OF THE UNIT VOLUMES THAT 

THOSE OEM'S WERE LIKELY TO BE SHIPPING, WHICH GIVES US A GOOD 

UNDERSTANDING OF WHAT WE SHOULD EXPECT TO SEE IN TERMS OF 

ROYALTY PAYING UNITS. 

AND IF WE DID NOT HAVE QCT ANY LONGER, WE WOULD LOSE THAT 

VISIBILITY AND AN ABILITY TO ADDRESS NONCOMPLIANCE WITH THE 

LICENSEES. 

Q. MR. WISE, STEPPING BACK A MOMENT TO PROJECT PHOENIX MORE 

GENERALLY, WHAT WAS BCG'S ROLE IN PROJECT PHOENIX? 

A. SO BCG WAS HIRED BY THE SPECIAL COMMITTEE FAIRLY LATE IN 

THE PROCESS TO OFFER A SECOND OPINION ON TOP OF MANAGEMENT'S 

FIRST OPINION, WHICH WAS OUR RECOMMENDATION THAT WE NOT 

SEPARATE THE CHIP AND LICENSING BUSINESS. 

Q. WHAT ROLE, IF ANY, DID YOU HAVE IN BCG'S ANALYSIS? 

A. VERY LIMITED. WE WERE TOLD IT WAS A SECOND OPINION, IT 

WAS BEING DONE FOR THE SPECIAL COMMITTEE OF THE BOARD. SO WE 

WERE TOLD TO LARGELY BE HANDS OFF. WE PROVIDED SOME DATA THAT 

THEY COULD USE FOR THEIR ANALYSIS. THEY MET WITH SOME OF THE 

MANAGEMENT TEAMS FOR BACKGROUND. 

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Q. DID MANAGEMENT BASE ITS PROJECT PHOENIX RECOMMENDATIONS ON 

ANY INPUT OR RECOMMENDATIONS FROM BCG? 

A. NO. 

Q. MR. WISE, IF YOU COULD TURN TO CX 3755, WHICH IS TAB 5 OF 

YOUR BINDER. 

A. YES. 

Q. MR. WISE, BEFORE THIS LITIGATION STARTED, HAD YOU SEEN A 

VERSION OF BCG'S PRESENTATION WITH THE SPEAKER NOTES IN IT? 

A. NO. 

Q. DO YOU -- DO YOU KNOW WHETHER BCG PRESENTED THE 

INFORMATION IN THE SPEAKER'S NOTES TO ANYONE AT QUALCOMM? 

A. I DON'T BELIEVE THEY EVER PRESENTED IT TO THEM, NO.

Q. MR. WISE, IF YOU COULD TURN TO CX 5417, PLEASE. 

A. OKAY. 

Q. MR. WISE, THIS E-MAIL MENTIONS MODEM LICENSING. WHAT IS 

MODEM LICENSING? 

A. SO MODEM LICENSING WAS A CONCEPT THAT I WAS EXPLORING WITH 

RESPECT TO A CHANGE IN THE APPROACH TO THE QTL BUSINESS WHERE 

WE WOULD BUNDLE SEMICONDUCTOR MODEM DESIGNS WITH OUR PATENT 

LICENSE. 

Q. WHOSE IDEA WAS THE MODEM LICENSING? 

A. IT WAS MINE.

Q. ARE MODEM LICENSE -- MODEM DESIGNS DIFFERENT FROM PATENTS? 

A. YES. THEY'RE SEMICONDUCTOR DESIGNS. 

Q. SO HOW, IF AT ALL, DID YOUR MODEM LICENSING IDEA DIFFER 

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FROM QTL'S EXISTING BUSINESS MODEL? 

A. SO THE MODEM LICENSE IDEA WOULD BE WE WOULD BUNDLE THE 

DESIGNS IN WITH THE PATENT LICENSE SO THAT THERE WOULD BE 

BASICALLY A BUNDLE OF BOTH PATENTS AND MODEM DESIGNS THAT WOULD 

GO TO THE OEM'S AS OPPOSED TO JUST A PURE PATENT LICENSE. 

SO IN SOME WAY IT WAS A LITTLE BIT MORE LIKE WHAT ARM 

HOLDINGS DOES, A-R-M, HOLDINGS, DOES IN THE INDUSTRY. 

Q. AND IN THIS E-MAIL YOU WROTE, I AGREE WITH THE VIEWPOINT 

THAT AS LONG AS QTL HAS A VERY HIGH SHARE, THEY ARE BENEFICIAL 

TO QTL. 

WHAT DID YOU MEAN BY THAT? 

A. A COUPLE OF THINGS. ONE, AS I MENTIONED, IN CHINA WE WERE 

HAVING COMPLIANCE ISSUES. QCT SHIPPING CHIPS TO HANDSET OEM'S 

WOULD GIVE US MORE VISIBILITY INTO THE NUMBER OF LICENSING 

UNITS THAT WE SHOULD BE SEEING ROYALTIES PAID ON IN ORDER TO 

ADDRESS NONCOMPLIANCE ISSUES IN CHINA. 

AND THEN ALSO MORE BROADLY, AS I SAID BEFORE, THE -- THE 

ABILITY FOR US TO CONTINUE TO PROVIDE ONGOING YEAR IN, YEAR OUT 

SUPPORT FOR THE OEM'S THROUGH THE DELIVERY OF CHIPS AND 

SUPPORTING THEIR ABILITY TO SELL PRODUCTS BASED ON OUR CHIPS 

WOULD POSITION US AS A STRONG PARTNER AND AN ENABLER TO THE 

HANDSET OEM'S BEYOND JUST THE TECHNOLOGY WE'RE CONTRIBUTING TO 

THE STANDARDS. 

Q. AND WHAT DID YOU MEAN WHEN YOU WROTE, WE WOULD THEN CREATE 

THE GIVE/GET THAT COULD CREATE NEW AVENUES OF LEVERAGE IN ANY 

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ROYALTY NEGOTIATIONS? 

A. SO IN THE MODEM DESIGN -- MODEM DESIGN LICENSES CONCEPT, 

THE MODEM DESIGNS WOULD BE SOMETHING THAT WOULD BE PART OF THE, 

PART OF THE PACKAGE, AND IF YOU DIDN'T HAVE A LICENSE, YOU 

WOULDN'T GET THE MODEM DESIGNS.

Q. COULD YOU PLEASE TURN TO TAB 10, WHICH IS CX 5953. 

A. OKAY. 

Q. WHEN YOU WERE DISCUSSING THIS EXHIBIT WITH COUNSEL FOR THE 

FTC, I THINK HE SAID THAT WE DIDN'T NEED TO ADDRESS THE 

STRATEGY REFLECTED IN THESE SLIDES. 

WHAT WAS THE STRATEGY REFLECTED IN THESE SLIDES? 

A. MODEM LICENSING STRATEGY. 

MS. SESSIONS: THANK YOU, MR. WISE. I HAVE NO MORE 

QUESTIONS. 

THE COURT: OKAY. IT'S 4:02. GO AHEAD, PLEASE. DO 

YOU HAVE ANY REDIRECT? 

MR. MATHESON: I DO, YOUR HONOR. 

(PAUSE IN PROCEEDINGS.) 

MR. MATHESON: WITH YOUR HONOR'S PERMISSION? 

THE COURT: GO AHEAD. IT'S STILL 4:02.

REDIRECT EXAMINATION

BY MR. MATHESON: 

Q. YOU MENTIONED THAT BCG WAS BROUGHT ON LATE IN THE 

PROJECT PHOENIX PROCESS; IS THAT CORRECT? 

A. CORRECT.

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130

Q. WOULD YOU TURN YOUR ATTENTION, SIR, TO TAB 4 IN YOUR 

BINDER, WHICH IS CX 5419. 

A. YES.

Q. CAN YOU IDENTIFY THIS, SIR, AS AN E-MAIL YOU WROTE TO 

EXECUTIVES AT QUALCOMM, INCLUDING THE CEO, STEVE MOLLENKOPF, ON 

NOVEMBER 5TH, 2015? 

A. YES. 

MR. MATHESON: YOUR HONOR, I MOVE TO ADMIT CX 5419. 

THE COURT: ANY OBJECTION? 

MS. SESSIONS: NO, YOUR HONOR. 

THE COURT: IT'S ADMITTED. 

(PLAINTIFF'S EXHIBIT CX 5419 WAS ADMITTED IN EVIDENCE.) 

BY MR. MATHESON: 

Q. TURN YOUR ATTENTION TO THE BOTTOM OF THE E-MAIL YOU WROTE 

TO MR. MOLLENKOPF AND OTHERS ON NOVEMBER 5TH, 2015. YOU WROTE, 

QUOTE, WE DO NOT PLAN TO HAVE BCG PRESENT THEIR SLIDES AT THE 

MEETING, IN THE INTEREST OF TIME. WE CAN HIT THE HIGHLIGHTS. 

THEIR ANALYSIS AND CONCLUSIONS ARE IN LINE WITH MANAGEMENT'S 

ASSESSMENT.

NOW, THEIR ANALYSIS AND CONCLUSIONS MEANS BCG'S ANALYSIS 

AND CONCLUSIONS, RIGHT, SIR? 

A. THEIR GENERAL CONCLUSION THAT WE SHOULD NOT SEPARATE THE 

LICENSING AND CHIP BUSINESS.

Q. WELL, AND ALSO THEIR ANALYSIS, SIR? YOU WROTE THEIR 

ANALYSIS AND CONCLUSIONS. YOU MEANT BCG'S ANALYSIS AND BCG'S 

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CONCLUSIONS, RIGHT, SIR? 

A. THAT LED TO THE GEM CONCLUSION OF NOT SEPARATING THE CHIP 

AND LICENSING BUSINESS.

Q. THANK YOU. 

COULD YOU TURN YOUR ATTENTION, SIR, TO CX 7251, WHICH IS 

TAB 9 OF YOUR BINDER, PAGE 006. 

AND AGAIN, SIR, THESE ARE THE TALKING POINTS PREPARED FOR 

THE PUBLIC ANNOUNCEMENT OF THE RESOLUTION OF PROJECT PHOENIX ON 

DECEMBER 15TH, 2015; CORRECT? 

A. CORRECT. 

Q. AND THESE WERE PREPARED TO ADDRESS QUESTIONS FROM 

INVESTORS AND OTHERS? 

A. I BELIEVE SO, YES. 

Q. TURN YOUR ATTENTION TO 006 -- OH, SORRY. YEAH. SORRY 

ABOUT THAT. WRONG PAGE. 

TURNING YOUR ATTENTION TO PAGE -- YEAH, 006, ARABIC 

NUMERAL 7, HOW CAN WE BE SURE THAT PROCESS WAS ROBUST? DO YOU 

SEE THAT, SIR? 

A. YES.

Q. THE FINAL BULLET READS, WE HAD A LOT OF EXTERNAL ADVICE ON 

ALL THESE TOPICS, AND THE FIRST BULLET IS THE BOSTON CONSULTING 

GROUP. 

NOW, QUALCOMM'S MANAGEMENT TOLD INVESTORS THAT ONE REASON 

INVESTORS COULD HAVE CONFIDENCE IN THE OUTCOME OF 

PROJECT PHOENIX WAS ADVICE FROM THE BOSTON CONSULTING GROUP; 

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ISN'T THAT RIGHT? 

A. THEY PROVIDED A SECOND OPINION TO THE COMMITTEE. 

MANAGEMENT'S OPINION WAS PROVIDED BEFORE THAT.

Q. AND THAT'S ONE REASON THAT THE BOARD OF DIRECTORS AND THE 

MANAGEMENT OF QUALCOMM TOLD INVESTORS THEY COULD HAVE 

CONFIDENCE IN THE OUTCOME OF PROJECT PHOENIX, ONE COMPONENT OF 

THAT WAS THE ADVICE PROVIDED BY THE BOSTON CONSULTING GROUP. 

FAIR? 

A. A SECOND OPINION.

Q. YOU MENTIONED COMPLIANCE AS AN ISSUE OF OEM'S ABIDING BY 

THE TERMS OF THE AGREEMENTS THEY HAD SIGNED WITH QTL; RIGHT? 

A. YES.

Q. THAT'S ONE COMPONENT OF COMPLIANCE? 

A. THAT'S COMPLIANCE.

Q. YOU'VE ALSO PREVIOUSLY CHARACTERIZED COMPLIANCE AS 

INCLUDING PEOPLE NOT SIGNING UP TO LICENSES; ISN'T THAT RIGHT? 

A. MAY BE RELATED TO THE CHINA SITUATION COMING OFF THE BACK 

END OF THE NDRC. 

Q. SO IT'S FAIR TO SAY THAT ONE COMPONENT OF COMPLIANCE IS 

OEM'S NOT SIGNING UP TO LICENSES WITH QTL; RIGHT? 

A. THE MAIN COMPONENT IS NOT COMPLYING WITH AGREEMENTS.

Q. MY QUESTION WASN'T ABOUT THE RELATIVE SIZE OF THE 

COMPONENTS, SIR. MY QUESTION WAS, ONE COMPONENT OF COMPLIANCE, 

AS YOU USE THAT TERM IS OEM'S REFUSING TO SIGN UP TO LICENSE 

AGREEMENTS WITH QTL. FAIR?

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A. MIGHT NOT HAVE BEEN THE BEST USE OF WORDS. COMPLIANCE IN 

GENERAL, WHEN WE TALK ABOUT COMPLIANCE IN QTL, IT IS COMPLIANCE 

WITH EXISTING AGREEMENTS.

Q. OKAY. BUT ONE COMPONENT, SIR, OF COMPLIANCE, AS YOU USED 

THAT TERM IN THE PAST, IS OEM'S NOT SIGNING UP TO LICENSES; 

RIGHT? 

A. I DON'T KNOW WHAT YOU'RE REFERRING TO THERE, BUT -- 

Q. I'M NOT REFERRING TO ANYTHING, SIR. 

A. GENERALLY IT'S COMPLIANCE WITH THE EXISTING AGREEMENTS.

Q. OKAY. I DIDN'T ASK YOU WHAT IT WAS GENERAL. I'M NOT 

REFERRING TO ANYTHING. 

SITTING HERE TODAY, SIR, IT'S FAIR TO SAY THAT YOU 

PERSONALLY HAVE SAID THAT ONE COMPONENT OF COMPLIANCE IS OEM'S 

NOT SIGNING UP TO LICENSES; RIGHT? 

A. I DON'T KNOW IF I SAID THAT OR NOT. IF IT'S IN HERE, WE 

CAN LOOK AT IT. BUT YEAH. 

Q. I'M SORRY, SIR. I DIDN'T CATCH YOUR ANSWER. IS IT A FAIR 

STATEMENT THAT ONE COMPONENT OF COMPLIANCE IS OEM'S NOT SIGNING 

LICENSES WITH QTL? 

A. COMPLIANCE IS GENERALLY REFERRED TO AND CONSIDERED AS 

WHETHER PEOPLE ARE COMPLYING WITH THE EXISTING AGREEMENTS.

Q. TURNING YOUR ATTENTION, SIR, TO YOUR DEPOSITION 

TRANSCRIPT, PAGE 410, LINES 22 TO 23, SIR. 

A. UM-HUM.

Q. CAN YOU REFRESH YOUR RECOLLECTION REGARDING HOW YOU HAVE 

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USED THE TERM COMPLIANCE ISSUES IN THE PAST? 

A. SORRY. WHICH LINES? 

Q. LINES 22 AND 23, PAGE 410 OF YOUR DEPOSITION. 

(PAUSE IN PROCEEDINGS.) 

BY MR. MATHESON: 

Q. IT'S A TRUE STATEMENT, SIR, THAT YOU HAVE -- THAT YOU 

CHARACTERIZED AT YOUR DEPOSITION AS A COMPLIANCE ISSUE, PEOPLE 

NOT SIGNING UP TO LICENSES? IS THAT FAIR? 

A. YEAH, THAT'S IN THERE, YES. 

MR. MATHESON: THANK YOU, SIR. NO FURTHER QUESTIONS. 

THE COURT: ALL RIGHT. THE TIME IS 4:08. IS THERE 

ANY FURTHER CROSS? 

MS. SESSIONS: YES, YOUR HONOR, JUST BRIEFLY. 

THE COURT: OKAY. GO AHEAD, PLEASE. 

RECROSS-EXAMINATION

BY MS. SESSIONS: 

Q. MR. WISE, IN THE COLLOQUY YOU JUST HAD WITH COUNSEL FOR 

THE FTC, THE FULL SENTENCE OF YOUR DEPOSITION -- DO YOU STILL 

HAVE YOUR DEPOSITION TESTIMONY THERE? 

A. OH. 4?

Q. PAGE 410 OF YOUR DEPOSITION. 

MR. MATHESON: OBJECTION, YOUR HONOR. IS THIS 

REFRESHING RECOLLECTION OR READING DEPOSITION? 

MS. SESSIONS: WELL, THERE WAS PURPORTED IMPEACHMENT 

OF THE WITNESS AND -- WITH AN INCOMPLETE PORTION OF HIS 

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DEPOSITION TESTIMONY. SO I'M GOING TO ATTEMPT TO -- 

THE COURT: THAT'S FINE. 

MR. VAN NEST: -- HAVE THE WITNESS EXPLAIN HIS 

TESTIMONY. 

THE COURT: SIT DOWN, PLEASE. 

GO AHEAD, PLEASE. 

BY MS. SESSIONS: 

Q. SO THE FULL SENTENCE THAT COUNSEL FOR THE FTC DID NOT READ 

WAS YOU COULD SEE, I THINK YOU COULD AT TIMES SEE COMPLIANCE 

AND COMPLIANCE ISSUES IN TERMS OF PEOPLE NOT SIGNING UP TO 

LICENSES, LIKE THE LOW END IN CHINA. 

WHAT WERE YOU REFERRING TO WHEN YOU MADE THIS STATEMENT? 

A. SO IN CHINA, I BELIEVE THIS IS REFERRING TO AFTER THE NDRC 

RESOLUTION AND AGREEMENT ON LICENSING TERMS WITH THE NDRC, 

THERE WERE MANY, AT THE TIME, LITERALLY HUNDREDS OF NEW HANDSET 

OEM'S IN CHINA, MANY SERVING THE LOW END OF THE DOMESTIC CHINA 

MARKET WHO HAD NOT SIGNED UP TO LICENSE AGREEMENTS UNDER THE 

TERMS AGREED TO BY NDRC. 

MS. SESSIONS: THANK YOU, MR. WISE. 

NO FURTHER QUESTIONS. 

THE COURT: OKAY. THE TIME IS 4:10. 

IS THERE ANY FURTHER REDIRECT? OR RE-REDIRECT, I SHOULD 

SAY? 

MR. MATHESON: NO, YOUR HONOR. THANK YOU. 

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

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UNITED STATES COURT REPORTERS

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I FAILED TO ASK -- WELL, FIRST LET'S ASK FOR MR. WISE, IS HE 

SUBJECT TO RECALL OR NOT SUBJECT TO RECALL? 

MR. MATHESON: NOT FOR US, YOUR HONOR. 

MS. SESSIONS: WE ARE NOT GOING TO RECALL HIM, YOUR 

HONOR. 

THE COURT: OKAY. THEN YOU HAVE COMPLETED YOUR TRIAL 

TESTIMONY AND YOU'RE FREE TO LEAVE. 

DID I ASK AS TO THE THREE DEPOSITION WITNESSES? ARE THEY 

SUBJECT TO RECALL, OR NOT? 

MR. MATHESON: YOUR HONOR, WE WILL NOT CALL THEM AS 

WE HAVE ALREADY CALLED THEM. 

I BELIEVE IT'S QUALCOMM'S POSITION THAT THEY RESERVE THE 

RIGHT TO DO SO. 

MR. VAN NEST: THAT'S RIGHT, YOUR HONOR. 

THE COURT: SO THOSE ARE ALL SUBJECT TO RECALL. 

MR. VAN NEST: SUBJECT TO RECALL AND/OR COUNTERS FROM 

THEIR DEPOSITION. 

THE COURT: ALL RIGHT. THAT'S FINE. I'LL JUST MARK 

IT AS A YES. 

BUT YOU'RE FREE TO STEP DOWN AND LEAVE, SIR. YOU'VE 

COMPLETED YOUR TESTIMONY. 

THE WITNESS: THANK YOU. 

THE COURT: WHO'S YOUR NEXT WITNESS? THE VIDEOTAPE, 

OR DO YOU HAVE A WITNESS? 

MR. COX: MAY IT PLEASE THE COURT, MY NAME IS 

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KENT COX WITH THE FEDERAL TRADE COMMISSION. 

OUR NEXT WITNESS IS NANFEN YU, WHO IS SENIOR LEGAL COUNSEL 

AT HUAWEI. SHE LIVES AND WORKS IN CHEN CHEN, CHINA, AND WE 

WILL BE PRESENTING HER TESTIMONY BY VIDEO DEPOSITION. 

THE COURT: OKAY. 

MR. COX: AND I HAVE TIME TOTALS. 

THE COURT: ARE YOU GOING TO MOVE HER EXHIBITS INTO 

EVIDENCE? 

MR. COX: YES, WE WOULD LIKE TO, YOUR HONOR. 

THE COURT: OKAY. FOR THAT I NEED TO CHARGE YOU TIME 

FOR ADMISSION OF EXHIBITS. SO -- 

MR. COX: BY OUR COUNT, THE FTC -- 

THE COURT: ALL RIGHT. IT'S 4: -- 

MR. COX: -- DESIGNATIONS. 

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

TIME IS 4:11. GO AHEAD WITH YOUR EXHIBITS, PLEASE. 

MR. COX: SURE. MAY I APPROACH, YOUR HONOR? 

THE COURT: YES. WHAT ARE THE NUMBERS? 

MR. COX: YES. I WOULD LIKE TO MOVE INTO EVIDENCE 

CX 1 -- EXCUSE ME, CX 1000. 

THE COURT: OKAY. 

MR. COX: CX 1006, CX 1009, CX 1101. 

THE COURT: OKAY. 

MR. COX: AND JX 0022, JX 0027, JX 0097, AND JX 0098. 

THE COURT: ALL RIGHT. IS THERE ANY OBJECTION TO THE 

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ADMISSION OF THESE DOCUMENTS? 

MR. BORNSTEIN: I DIDN'T CATCH ALL OF THE JX'S, YOUR 

HONOR. IF THEY'RE JX'S, WE DON'T HAVE ANY OBJECTION. WE DON'T 

HAVE ANY OBJECTION TO THE CX'S THAT MR. COX IDENTIFIED. 

THE COURT: ALL RIGHT. I THINK IT'S 22, 27, 97, AND 

98 WERE THE FOUR JX'S. 

MR. BORNSTEIN: WE'RE CLEAR, YOUR HONOR. NO 

OBJECTION. 

THE COURT: OKAY. ALL RIGHT. THEN THOSE ARE 

ADMITTED. 

(PLAINTIFF'S EXHIBITS CX 1000, CX 1006, CX 1009, CX 1101 

AND JX 0022, JX 0027, JX 0097, AND JX 0098 WERE ADMITTED IN 

EVIDENCE.) 

THE COURT: DO YOU NEED TIME TO SET UP, OR ARE YOU 

READY TO GO? 

MR. COX: ONE MOMENT, YOUR HONOR. AND LET ME NOTE 

THAT THE LAST FIVE DOCUMENTS THAT ARE IDENTIFIED WILL BE FILED 

AND ARE UNDER SEAL, OR ARE UNDER SEAL. 

THE COURT: OKAY. SO THAT'S THE FOUR JX'S AND 

CX 1101 ARE SEALED. 

MR. COX: YES. 

THE COURT: OKAY, GREAT. THOSE ARE ALL SEALED, AND 

WE'LL TALK ABOUT THE EXHIBIT LIST LATER. 

OKAY. THANK YOU. 

GO AHEAD, PLEASE. 

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139

MR. COX: YOUR HONOR, I HAVE PROVIDED BINDERS TO THE 

COURT AND TO COUNSEL. 

THE COURT: THANK YOU. 

MR. COX: AND THESE BINDERS ARE ORGANIZED IN A 

SIMILAR FASHION TO THE BINDERS THAT WE PROVIDED EARLIER FOR THE 

VIDEO TESTIMONY THIS MORNING. 

THE COURT: OKAY. ALL RIGHT. THANK YOU. 

I'M STILL CHARGING YOU TIME. I'D SUGGEST YOU PLAY THE 

VIDEO. 

(THE VIDEOTAPED DEPOSITION OF NANFEN YU WAS PLAYED IN OPEN 

COURT OFF THE RECORD.)

THE COURT: I'M SORRY TO INTERRUPT, BUT I THINK IT'S 

4:35, AND WE SHOULD PROBABLY END FOR TODAY. SO WE CAN RESUME 

WITH RIGHT HERE ON MONDAY. 

OKAY. THANK YOU. 

ALL RIGHT. THANK YOU TO EVERYBODY. 

I HAVE SOME HOUSEKEEPING MATTERS THAT I'D LIKE TO DISCUSS 

WITH THE PARTIES. 

SO THE COURT'S HAVE MONEY THROUGH JANUARY 11TH. I DO NOT 

KNOW IF THE SHUTDOWN CONTINUES EXACTLY WHAT THE STATUS OF THIS 

COURT IS GOING TO BE. I'M ASSUMING WE CAN CONTINUE WITH TRIAL. 

WE'RE WAITING FURTHER INSTRUCTIONS. I WILL LET YOU KNOW AS 

SOON AS I GET ANY FURTHER INFORMATION. 

SO I APOLOGIZE FOR THAT, FOR THAT UNCERTAINTY. 

MR. VAN NEST: DID YOU SAY JANUARY 11TH, YOUR HONOR? 

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THE COURT: JANUARY 11TH IS WHEN THE COURT -- THE 

COURT HAS FUNDING TO FUND ITSELF THROUGH NEXT FRIDAY. 

MR. VAN NEST: OKAY. 

THE COURT: A WEEK FROM TODAY. 

I'M ASSUMING THAT WE WILL BE ABLE TO CONTINUE THIS TRIAL, 

BUT I -- I DON'T HAVE CONFIRMATION AT THIS POINT. 

MR. VAN NEST: OKAY. THANK YOU. 

THE COURT: I THINK WE SHOULD -- AND I REALLY 

APOLOGIZE, THIS IS VERY EMBARRASSING. 

BUT I WILL LET YOU KNOW AS SOON AS I KNOW ANYTHING. I 

THINK WE SHOULD JUST ASSUME THAT WE'RE GOING TO CONTINUE. 

MR. VAN NEST: WE WILL. 

THE COURT: OKAY? ALL RIGHT. 

MR. VAN NEST: YES. 

THE COURT: ALL RIGHT. NOW, WHAT ABOUT THE DUE DATE 

ON THE POST-TRIAL BRIEFS? I FORGOT TO SET THAT AT THE PRETRIAL 

CONFERENCE, BUT I THINK WE SHOULD PROBABLY SET A DATE. WHAT 

DATE MAKES SENSE? 

MR. VAN NEST: I THINK THAT'S FINE. IS YOUR HONOR 

CONTEMPLATING SIMULTANEOUS BRIEFING FOLLOWED BY SHORT REPLIES? 

OR WHAT DID YOU HAVE IN MIND? WE COULD CERTAINLY DO IT THAT 

WAY. 

OR WE COULD OPEN, OPPOSE, AND REPLY. BUT -- 

THE COURT: NO. 

MR. VAN NEST: IT SEEMS LIKE -- 

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THE COURT: I MEAN, I DON'T THINK THAT'S NECESSARY. 

MR. VAN NEST: IF -- IF WE WERE GOING TO DO 

SIMULTANEOUS BRIEFS -- 

THE COURT: YES. 

MR. VAN NEST: -- THEN I WOULD REQUEST THAT WE HAVE 

30 DAYS TO DO THAT, AND THEN A SHORTER PERIOD TO DO SHORT 

REPLIES TO EACH OTHER, LIKE 15 DAYS. 

MS. MILICI: YOUR HONOR -- 

THE COURT: NO. I MEAN, THIS IS IN LIEU OF -- I 

COULD JUST HAVE YOU DO CLOSING ORAL ARGUMENT. I MEAN, THAT'S 

THE OTHER OPTION AS WELL, AND I COULD PUT A TIME LIMIT ON IT. 

YOU KNOW, THE -- THE FINDINGS OF FACT AND CONCLUSIONS OF 

LAW QUALCOMM FILED WAS OVER 150 PAGES. THAT'S IN ADDITION TO 

THE PRETRIAL BRIEFS. THAT'S IN ADDITION TO THE JOINT PRETRIAL 

STATEMENT. THERE'S BEEN QUITE A BIT THAT'S FILED HERE. I'M 

NOT EAGER TO HAVE A WHOLE OTHER SET OF BRIEFING, AND THE LONGER 

THIS WAITS AFTER THE TRIAL, UNFORTUNATELY, THE EVIDENCE IS 

GOING TO BE LESS CLEAR BECAUSE WE'RE GOING TO HAVE TO KEEP 

WORKING ON OUR OTHER CASES. 

MR. VAN NEST: WHAT DID YOU HAVE IN MIND? MY ONLY 

THOUGHT IS THAT -- 

THE COURT: YEAH. 

MR. VAN NEST: -- WE'LL HAVE A RECORD OF PROBABLY 

FAIRLY SIGNIFICANT EXTENT WITH MANY EXHIBITS. 

THE COURT: UM-HUM. 

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MR. VAN NEST: AND THE TEAM WILL TAKE A LITTLE TIME 

TO GET THEM -- TO GET THEM ORGANIZED. WE HAVE TO DO IT IN 35 

PAGES. WE KNOW THAT. 

MS. MILICI: YOUR HONOR -- 

MR. VAN NEST: I'M THINKING THAT SOMETHING IN THE 

BALLPARK OF 30 PAGES IS NOT UNREALISTIC -- EXCUSE ME, 30 DAYS 

IS NOT UNREALISTIC. 

THE COURT: WHY DON'T WE JUST DO CLOSING ARGUMENT, DO 

THIS LIKE A REAL TRIAL. 

MS. MILICI: WE CAN DO CLOSING ARGUMENT. THE FTC WAS 

GOING TO COUNTER PROPOSE 14 DAYS FROM THE CLOSE OF TRIAL, BUT 

WE'RE HAPPY TO DO CLOSING ARGUMENTS IF THE COURT WOULD PREFER. 

WE'RE HAPPY TO DO 14 DAYS OR SHORTER IF A BRIEF IS WHAT THE 

COURT WANTS. 

MR. VAN NEST: WE CAN DO IT IN 14 DAYS IF THAT'S WHAT 

THE COURT WISHES. I'M OPEN EITHER WAY. 

THE COURT: OKAY. I MEAN, THERE'S CERTAINLY BEEN A 

LOT OF BRIEFING ALREADY, AND I JUST DON'T WANT TO BE BURIED IN 

FURTHER. 

I WOULD BE OKAY WITH JUST DOING ORAL ARGUMENT, TOO. 

MS. MILICI: THAT'S FINE WITH US. 

MR. VAN NEST: I THINK WE'D PREFER TO HAVE A CHANCE 

TO BRIEF ON THE RECORD, YOUR HONOR. 

THE COURT: I'LL HAVE YOU DO ORAL ARGUMENT. 

MR. VAN NEST: WOULD WE GET AN ADDITIONAL DAY, THEN, 

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FOR THAT? 

THE COURT: WELL, I DON'T THINK THAT WE WILL HAVE A 

FULL DAY ON OUR LAST DAY. THE WAY I'VE CALCULATED IT IN TERMS 

OF TIME, I THINK WE'LL ONLY NEED A VERY LITTLE BIT OF TIME FOR 

EVIDENCE ON THAT VERY LAST DAY. 

MR. VAN NEST: I AM NOT SURE THAT'S RIGHT, BUT I'LL 

CERTAINLY LOOK AT THE NUMBERS. 

THE COURT: WELL, OKAY. YOU KNOW WHAT? WHY DON'T WE 

DO THIS. LET ME THINK ABOUT THIS. 

MR. VAN NEST: WE'D LIKE TO THINK ABOUT IT, TOO, YOUR 

HONOR. I STILL THINK -- AND I'M VERY FLEXIBLE ON TIMING, BUT I 

STILL THINK YOUR HONOR SET SOME PAGE LIMITS ON THE BRIEFING, I 

STILL THINK THAT'S A GOOD IDEA. I THINK IT'LL HELP FOCUS THE 

ARGUMENTS THROUGH THE HEARING. 

AND WE CAN DO IT ON SHORTER NOTICE IF THAT'S BETTER FOR 

THE COURT. 

THE COURT: OKAY. ALL RIGHT. THANK YOU. LET ME 

THINK ABOUT THIS FURTHER. 

MR. VAN NEST: THANK YOU. 

THE COURT: AND WE CAN TALK AGAIN. 

MR. VAN NEST: SURE. 

THE COURT: OKAY. SO THAT'S ONE ISSUE THAT WE'LL 

HAVE TO CONTINUE TO TALK ABOUT. 

SO I WOULD LIKE US, EVERY DAY -- I DIDN'T KNOW WHICH 

EXACTLY WITNESSES WERE GOING TO BE CALLED TODAY. COULD WE 

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HAVE, EVERY DAY, THE DAY BEFORE A TRIAL DAY, YOU FILE A LIST OF 

WHICH WITNESSES YOU INTEND TO CALL THAT DAY? CAN WE DO THIS? 

WHAT TIME, BY WHAT TIME CAN YOU DO IT? 

MS. MILICI: YOU'D LIKE IT THE DAY BEFORE? 

THE COURT: YES. 

MS. MILICI: I THINK THAT WE'RE EXCHANGING LISTS WITH 

EACH OTHER. IT'S -- IT'S MORE THAN 48 HOURS BEFORE, SO 

CERTAINLY WE CAN GIVE IT TO YOU 48 HOURS. 

THE COURT: OH, OKAY. IS YOUR TIME -- OKAY, THAT'S 

FINE. THAT'S FINE. SO YOU'RE NOT SHIFTING, YOU'RE NOT 

CHANGING. SO THAT'S FINE. IF YOU COULD FILE IT 48 HOURS, 

WHATEVER YOU EXCHANGE WITH EACH OTHER, IF YOU COULD JUST FILE 

SO WE KNOW, THAT WOULD BE GREAT. 

MR. VAN NEST: WE CAN DO THAT. 

MS. MILICI: AND IF THE DAY BEFORE GOES LONGER THAN 

WE EXPECTED, LIKE TODAY WE HAD HOPED TO FINISH ONE MORE VIDEO, 

WE MIGHT SPILL OVER. 

THE COURT: SURE, THAT'S FINE. 

MS. MILICI: WE CAN CERTAINLY GIVE YOU THE ORDER THAT 

WE EXPECT TO CALL. 

THE COURT: THAT'S FINE. IT DOESN'T HAVE TO BE 

EXACT. IT JUST HELPS IN TERMS OF ORDER OF PRIORITIZATION OF 

SEALING AND HIGH PRIORITY OBJECTIONS TO MAKE SURE THAT THAT'S 

GETTING DONE FIRST. OKAY. THAT WOULD BE GREAT. 

AND I WOULD LIKE, EVERY DAY, FOR YOU TO FILE A JOINT 

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EXHIBIT LIST OF EVERYTHING THAT WAS ADMITTED ON THAT DAY OF 

TRIAL. NOW, IT'S FRIDAY, SO OBVIOUSLY YOU DON'T HAVE TO DO IT 

TODAY. BUT COULD YOU PERHAPS BY MONDAY MORNING FILE A JOINT 

EXHIBIT LIST THAT LISTS EVERYTHING THAT WAS ADMITTED TODAY, AND 

IF YOU HAVE A COLUMN THAT ALSO PROVIDES NOTIFICATION OF WHICH 

ONES ARE SEALED SO WE JUST DON'T GET THAT CONFUSED. 

MR. VAN NEST: WE CAN DO THAT. 

MS. MILICI: ABSOLUTELY. 

MR. VAN NEST: SO EACH DAY WE WOULD GIVE YOU THAT 

LIST THE NEXT MORNING. 

THE COURT: I WOULD PREFER IT -- I'M SAYING, BECAUSE 

IT'S THE WEEKEND, MONDAY MORNING IS FINE. I WOULD LIKE IT 

MONDAY NIGHT, IF YOU DON'T MIND, SO I HAVE IT FOR TUESDAY. 

MR. VAN NEST: SOMETIME LATER IN THE EVENING. 

THE COURT: IS THAT DOABLE? 

MR. VAN NEST: I THINK IT IS. 

THE COURT: DO YOU WANT THE NEXT MORNING? THAT'S 

FINE. 

MR. VAN NEST: THAT WOULD BE A LOT BETTER. 

THE COURT: THAT'S FINE. SO LET'S JUST SAY -- WHAT 

TIME THE NEXT MORNING? 

MR. VAN NEST: 8:00 A.M. WOULD BE FINE, YOUR HONOR. 

THE COURT: OKAY. THAT'S FINE. AND I'D LIKE THAT TO 

BE JOINT, AND IF YOU HAVE ANY DISPUTES, LET ME KNOW. I DOUBT 

THERE WOULD BE, BUT IF THERE ARE ANY, LET ME KNOW. 

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OKAY. SO THAT'S THE JOINT EXHIBIT LIST. THAT'S THE 

WITNESS LIST. 

ON THE HIGH PRIORITY OBJECTIONS, IT WOULD BE HELPFUL IF 

THERE WAS CLEARER DESIGNATION OF EXACTLY WHAT DEPOSITION 

EXCERPTS ARE BEING DISPUTED, BECAUSE YOU KIND OF HAVE TO SORT 

OF SEARCH FOR IT IN MANY PARAGRAPHS. WHEN YOU JUST SORT OF 

IDENTIFY EACH OBJECTION, IT WOULD BE CLEAR AS TO EITHER WHICH 

EXHIBIT NUMBER OR WHICH PAGE AND LINE NUMBER YOU'RE OBJECTING 

TO, THAT WOULD BE HELPFUL. COULD WE JUST HAVE MORE CLEAR 

DESIGNATIONS? 

MR. VAN NEST: CERTAINLY. 

MS. MILICI: ABSOLUTELY, YOUR HONOR. 

MR. VAN NEST: CERTAINLY. 

THE COURT: OKAY. THAT WOULD BE GREAT. 

GO AHEAD AND FILE -- ALL OF THE DEPOSITION EXCERPTS THAT 

WERE PLAYED TODAY WERE ALL UNSEALED; CORRECT? 

MS. MILICI: THAT'S CORRECT. 

THE COURT: OKAY. SO I'D ASK YOU THEN TO JUST GO 

AHEAD AND FILE THEM ON THE DOCKET. 

MS. MILICI: SURE. 

THE COURT: IT'LL BE EASIER IF I HAVE TO RETRY THIS 

TWO OR THREE YEARS FROM NOW TO FIND VARIOUS THINGS IF IT'S ON 

THE DOCKET. 

I WOULD ALSO ASK YOU -- LET ME ASK MS. GARCIA, DO YOU 

THINK WE ALSO NEED TO LODGE A COPY? OR IS IT OKAY TO ONLY HAVE 

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THE ONES THAT ARE UNDER SEAL LODGED? FOR EXAMPLE, THE 

BLACKBERRY ONE IS GOING TO HAVE TO BE UNDER SEAL. WHAT DO YOU 

THINK? WOULD IT BE WEIRD TO HAVE TWO SYSTEMS, ONE FOR SEALED 

AND ONE FOR UNSEALED, OR -- 

THE CLERK: FOR THE DEPOSITION TRANSCRIPTS? 

THE COURT: YES. 

THE CLERK: WE CAN LODGE EVERYTHING IF YOU'D LIKE. 

THE COURT: YEAH, MAYBE WE SHOULD JUST LODGE 

EVERYTHING SO THAT, YOU KNOW, IF IN THE FUTURE WE NEED TO FIND 

SOMETHING. 

SO IF YOU WOULD PLEASE LODGE A COPY OF ALL THE DEPOSITION 

EXCERPTS WITH MS. GARCIA, BUT THEN ALSO FILE THE UNSEALED ONES 

ON THE DOCKET. 

MS. MILICI: SURE. 

THE COURT: OKAY? ALL RIGHT.

MR. VAN NEST: SO THE ONES WE LODGE ARE THE ONES THAT 

HAVE BEEN SEALED. THE ONES THAT WE FILE ARE THE ONES THAT 

ARE -- 

THE COURT: THAT ARE PUBLIC. 

MR. VAN NEST: YEAH. 

THE COURT: BUT ACTUALLY, I THINK WE'RE ACTUALLY 

GOING TO HAVE EVERYTHING LODGED JUST SO THAT THE LODGED COPY IS 

COMPLETE. 

MR. VAN NEST: OKAY. 

THE COURT: OKAY? SO LODGE EVERYTHING, BUT FILE ONLY 

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PUBLIC VERSIONS. 

MR. VAN NEST: OKAY. 

THE COURT: OKAY. 

MS. MILICI: ABSOLUTELY. 

THE COURT: ALL RIGHT. NOW, YOU'RE GOING TO GIVE ME 

A LIST OF ALL OF THE LAWYERS WHO ARE PRESENTING DURING TRIAL. 

WHEN CAN YOU DO THAT? MONDAY MORNING? 

MR. VAN NEST: SURE. 

THE COURT: OKAY. AND IF IT'S TOO COMPLICATED TO DO 

A JOINT LIST, JUST GIVE ME SEPARATE LISTS, PLEASE. I JUST WANT 

TO MAKE SURE I'M GETTING EVERYBODY'S NAME CORRECT. 

MR. VAN NEST: THANK YOU. WE APPRECIATE THAT. 

MS. MILICI: SURE. 

THE COURT: ALL RIGHT. IF YOU WOULD FILE THAT, 

PLEASE, MONDAY BY 8:00. AND IN CHAMBERS COPIES IF YOU'D PLEASE 

MAKE IT DOUBLE-SIDED BECAUSE WE'RE GETTING SHORT ON SPACE HERE. 

I'M TRYING TO THINK IF THERE WAS ANYTHING ELSE. 

OH, THE GLOSSARY, CAN YOU INCLUDE ACRONYMS LIKE NDRC? 

MR. VAN NEST: SURE. 

THE COURT: I KNOW THAT HAS SOMETHING RELATING TO -- 

I DON'T KNOW IF THAT'S THE CHINESE GOVERNMENT. 

MR. VAN NEST: IT'S THE CHINESE COMPETITION 

AUTHORITY, YES. 

THE COURT: OH, OKAY. 

MR. VAN NEST: WE CAN DO THAT. 

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THE COURT: SO THERE WERE SOME ACRONYMS THAT ARE 

COMING UP THAT I HAVE A SENSE OF WHAT THEY REPRESENT, BUT I 

DON'T KNOW EXACTLY WHAT THEY ARE. SO IF YOU CAN INCLUDE THAT 

IN THE GLOSSARY. 

MR. VAN NEST: WE WILL. 

THE COURT: AND ANY OTHER ACRONYMS THAT MIGHT COMING 

UP GOING FORWARD. 

MR. VAN NEST: WE WILL. 

THE COURT: OKAY. THANK YOU. 

AND THEN I WAS GOING TO ASK, AND MAYBE I ALREADY HAVE, BUT 

I GUESS YOU WILL PROVIDE SOME SENSE OF WHAT ROYALTY RATES ARE 

PUBLIC IN YOUR SEALING DOCUMENTS. 

ARE YOU ACTUALLY -- CAN WE HAVE YOU FILE SOMETHING WHEN 

THE THIRD PARTIES FILE THEIR SEALING REQUESTS THAT GIVES 

GUIDANCE AS TO WHAT MIGHT ALREADY BE IN THE PUBLIC DOMAIN? 

MS. MILICI: SO THE ISSUE FOR THE FTC IS WE DON'T 

NECESSARILY KNOW WHAT'S IN THE PUBLIC DOMAIN. 

THE COURT: UH-HUH. 

MS. MILICI: YOU KNOW, WE CAN TRY TO GOOGLE IT AND 

SEE. 

THE COURT: YEAH. 

MS. MILICI: BUT WE ARE NOT IN A POSITION TO BE 

JUDGING WHAT IT IS THAT QUALCOMM HAS PREVIOUSLY MADE PUBLIC OR 

WHAT IT IS THAT A THIRD PARTY HAS PREVIOUSLY MADE PUBLIC. 

THE COURT: I SEE. THEN WHY ARE YOU OBJECTING TO 

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SOME OF THE THIRD PARTY SEALING REQUESTS THEN? 

MS. MILICI: I THINK WE'VE BEEN OBJECTING TO SOME OF 

THE THIRD PARTY SEALING REQUESTS BECAUSE THEY'VE BEEN BROAD AND 

COVERING THINGS BEYOND JUST ROYALTY RATES AND IN SOME INSTANCES 

PROBABLY ROYALTY RATES THAT WE DO KNOW ARE PUBLIC. 

THE COURT: OKAY. 

MR. VAN NEST: I -- I THINK, YOUR HONOR, THERE'S SORT 

OF A BRIGHT LINE IN THIS RESPECT: THERE ARE SOME PUBLISHED 

QUALCOMM PROGRAM RATES. 

THE COURT: OKAY. 

MR. VAN NEST: THOSE ARE PUBLISHED AND EVERYBODY 

KNOWS WHAT THEY ARE. 

THEN THERE ARE INDIVIDUAL RATES THAT LICENSEES NEGOTIATE 

AS, AGAIN, EACH LICENSE MIGHT BE DIFFERENT. 

THE COURT: OKAY. 

MR. VAN NEST: SOMEONE MIGHT WANT TO PAY MORE MONEY 

UPFRONT, GET A LOWER RATE. SOMEONE MIGHT WANT TO PAY LESS 

MONEY UPFRONT. SOME HAVE MORE VOLUME IN MIND, LESS VOLUME. 

THE COURT: SURE. 

MR. VAN NEST: THERE'S ALL SORTS OF THINGS. SO I 

THINK IN GENERAL, INDIVIDUAL RATES AND PAYMENTS, KIND OF LIKE 

YOU SAID EARLIER TODAY, WHERE AN INDIVIDUAL COMPANY IS PAYING 

AN INDIVIDUAL RATE THAT THEY HAVE, THAT IS APPROPRIATE TO SEAL. 

THE COURT: OKAY. 

MR. VAN NEST: THE PROGRAM RATES THAT QUALCOMM 

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PUBLISHES FOR EVERYBODY -- 

THE COURT: OKAY. 

MR. VAN NEST: -- TODAY'S VERSION OF THE 5 PERCENT 

RATE THAT I SPOKE ABOUT THIS MORNING. 

THE COURT: OKAY. 

MR. VAN NEST: AND THERE ARE VARIOUS OF THEM FOR 

VARIOUS FLAVORS OF LICENSES. 

THE COURT: OKAY. IS THERE ANY WAY -- BECAUSE IT 

WOULD BE HELPFUL, BECAUSE SOMETIMES IN THESE DEPOSITION 

TRANSCRIPTS THEY'RE KIND OF USING THE 5 PERCENT AS, IT SEEMS 

LIKE SORT OF LIKE A MARKER. 

MR. VAN NEST: RIGHT. 

THE COURT: AND IT'S UNCLEAR -- I MEAN, IF I KNEW 

THAT THAT WAS JUST A PUBLISHED RATE, THAT ANY TIME WHEN THEY'RE 

KIND OF TALKING ABOUT THAT, THEN I WOULD KNOW, NO, THAT DOESN'T 

NEED TO BE SEALED. 

MR. VAN NEST: I THINK THAT'S FAIR. THAT'S RIGHT. 

THE COURT: ALL RIGHT. 

MR. VAN NEST: IF THEY'RE TALKING ABOUT THAT RATE AS 

A 5 PERCENT RATE, I DON'T THINK YOU NEED TO SEAL THAT. 

THE COURT: OKAY. 

MR. VAN NEST: IF THEY'RE TALKING ABOUT A 

PARTICULARLY NEGOTIATED RATE THAT THEY GOT -- 

THE COURT: SURE. 

MR. VAN NEST: -- THAT'S UNIQUE TO THEM, THEN WE 

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WOULD AGREE WITH WHAT YOUR HONOR SAID EARLIER TODAY. 

THE COURT: YES. I'LL DEFINITELY SEAL ANYTHING THAT 

WILL GIVE AWAY THE SALES NUMBERS. 

MR. VAN NEST: THE RATE. 

THE COURT: REVENUES, PROFITS, RATES, ROYALTY BASE, 

WE'LL SEAL. 

MS. MILICI: BUT I THINK THAT THERE ARE A NUMBER OF 

CONTRACTS THAT ARE NO LONGER IN EFFECT, WHICH PROBABLY DON'T 

NEED THE RATES SEALED. 

THE COURT: WHICH ONES? I MEAN, IS THERE ANY WAY 

THAT YOU CAN -- I DON'T KNOW, PERHAPS FILE SOMETHING. OR MAYBE 

YOU DON'T WANT TO FILE IT -- THAT WOULD JUST LET ME KNOW WHAT 

ARE THE THINGS THAT ARE NO LONGER SEAL WORTHY? AND IT WOULD 

JUST HELP FACILITATE -- 

MR. VAN NEST: MAYBE THE EASIER THING WOULD BE LET'S 

SEE WHAT THE SEALING REQUESTS ARE COMING UP. 

THE COURT: OKAY. 

MR. VAN NEST: AND IF WE CAN PROVIDE GUIDANCE TO THE 

COURT, WE WILL. IF WE SEE SOMETHING OBVIOUSLY THAT'S A 

PUBLISHED PROGRAM RATE -- 

THE COURT: UM-HUM. 

MR. VAN NEST: -- WE CAN GIVE YOU NOTICE OF THAT AS 

SOON AS WE POSSIBLY CAN. 

THE COURT: WELL, BUT I STILL HAVE OTHER SEALING 

REQUESTS OUTSTANDING ON THE PRETRIAL STATEMENT AND OTHER THINGS 

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THAT WERE NOT COMPLETED. MOST OF THE PRETRIAL CONFERENCE 

SEALING WAS DONE. 

MR. VAN NEST: RIGHT. 

THE COURT: BUT WE STILL HAVE SOME STUFF OUTSTANDING, 

SO IT WOULD BE JUST HELPFUL TO KNOW. 

UNLESS YOU WANT TO JUST REDO THOSE SEALING REQUESTS IN 

LINE WITH THE WAY THE RULINGS HAVE BEEN SORT OF MORE REFINED 

AFTER ONE DAY OF TRIAL. 

MS. MILICI: I MEAN, I THINK OUR POSITION IS THAT 

WE'RE -- WE ARE NOT REQUESTING THAT ANYTHING IS SEALED. WE 

ARE, YOU KNOW, THIRD PARTIES AND QUALCOMM ARE REQUESTING THAT 

THINGS BE SEALED. 

THE COURT: UM-HUM. 

MS. MILICI: SO WE DON'T HAVE AN INDEPENDENT INTEREST 

IN KEEPING ANYTHING CONFIDENTIAL. 

THE COURT: UM-HUM. 

MR. VAN NEST: QUALCOMM HASN'T ACTUALLY REQUESTED 

MUCH. I THINK WE'RE IN LINE WITH YOUR HONOR'S APPROACH, 

THOUGH, EXACTLY AS YOU STATED IT. 

THE COURT: UM-HUM. 

MR. VAN NEST: AND I THINK IT SHOULD BE APPARENT FROM 

WHAT PEOPLE FILE. THEY SHOULDN'T BE FILING ANYTHING REQUESTING 

SEALING UNLESS IT IS AN INDIVIDUAL RATE FOR THEM OR THEIR 

PROFITS OR THEIR SALES UNIT AND STUFF LIKE THAT. 

THE COURT: YEAH. 

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MR. VAN NEST: AND THAT'S THE ONLY THING WE WOULD 

SEEK TO SEAL ON QUALCOMM'S PART, TOO. 

THE COURT: OKAY. BUT AS I SAID, LIKE THE PRETRIAL 

STATEMENT HAS PAGES AND PAGES THAT ONLY SAY A CERTAIN 

AGREEMENT -- A SULA WAS EXECUTED ON JUNE 3RD OF 2013 BETWEEN 

THESE TWO COMPANIES, AND THAT'S ALL REDACTED. SO IT'S 

OVERBROAD. 

MR. VAN NEST: OKAY. THAT'S THIRD PARTIES THAT HAVE 

DONE THAT, YEAH. THAT'S THIRD PARTIES THAT ARE INSISTING ON 

THAT, NOT QUALCOMM. 

THE COURT: OKAY. 

OKAY. FINAL REQUEST, AND THAT IS -- AND I APOLOGIZE FOR 

MAKING THIS REQUEST -- BUT I'M GOING TO NEED SOME CARTS. THESE 

ARE, UNFORTUNATELY, THAT'S ALL THE COURT HAD AND THEY DON'T 

EVEN FIT THE BINDERS VERTICALLY. 

I'M WONDERING IF THE PARTIES COULD PROVIDE SOME CARTS, 

BECAUSE I THINK THE NUMBER OF BINDERS IS GOING TO EXPAND 

BECAUSE YOU HAVE WITNESS BINDERS FOR EVERY WITNESS AND 

SOMETIMES YOU HAVE SEPARATE DEPOSITION BINDERS FOR EACH 

WITNESS, NOT INCLUDING WHAT YOU'VE ALREADY GIVEN ME. 

IS THAT POSSIBLE TO GET PERHAPS ON MONDAY? 

MS. MILICI: I'M NOT SURE THAT THE FTC IS CAPABLE OF 

DOING IT. WE'RE IN THE SAME SITUATION THE COURT IS ABOUT TO BE 

IN AND NOT -- BUT I CAN TRY. 

THE COURT: OKAY. WELL, COULD -- 

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MR. VAN NEST: HOW MANY DO YOU WANT, YOUR HONOR? HOW 

MANY DO YOU WANT? 

THE COURT: WELL, THIS IS NOT MY CHAMBERS OR MY 

COURTROOM, AND IT'S VERY TIGHT UP HERE. I THINK TWO IS ALL I 

CAN FIT. 

MR. VAN NEST: TWO MORE CARTS, UNLIKE WHAT YOU HAVE. 

THE COURT: I'M ACTUALLY GOING TO DO AWAY WITH THESE 

BECAUSE I CAN'T FIT FOUR BINDERS BECAUSE THEY'RE TOO SHORT. 

MR. VAN NEST: WE'LL BE HAPPY TO DO THAT, AND OUR 

STAFF WITH WORK WITH MS. GARCIA TO GET WHERE YOU WANT THEM. 

THE COURT: THANK YOU. I APOLOGIZE FOR MAKING THIS 

REQUEST. 

MR. VAN NEST: WE'LL BRING THEM WITH US ON MONDAY. 

THE COURT: THANK YOU. THAT WOULD BE MUCH, MUCH 

APPRECIATED. 

OKAY. I DON'T THINK I HAVE ANYTHING ELSE THAT WE NEEDED 

TO WORK OUT TODAY. I DO OWE YOU THE HIGH PRIORITY OBJECTION 

RULINGS. 

ANYTHING ELSE? DO YOU ANTICIPATE ANY THIRD PARTY SEALING 

NEEDING TO BE DONE BEFORE MONDAY MORNING? ANYTHING NEW? 

MS. MILICI: I'M NOT SURE WHAT'S BEEN FILED AND WHAT 

HASN'T AT THIS TIME. 

THE COURT: OKAY. 

OKAY. 

MR. VAN NEST: THANK YOU, YOUR HONOR. 

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THE COURT: ALL RIGHT. THANK YOU. 

MS. MILICI: YOUR HONOR -- 

THE COURT: THANK YOU ALL VERY MUCH. 

MS. MILICI: YOUR HONOR, WE JUST HAVE A QUESTION 

ABOUT TIME. 

THE COURT: YES. 

MS. MILICI: AND WHAT THE TIME IS TODAY. 

THE COURT: OKAY. SO LET ME DO THIS. SO I AM 

KEEPING TRACK -- ANY TIME YOU'RE INTRODUCING EVIDENCE FOR 

ADMISSION, THAT REALLY NEEDS TO COUNT TOWARD YOUR TIME. SO I'M 

ACTUALLY KEEPING -- I'M NOT JUST USING -- I'M ACTUALLY NOT 

USING AT ALL WHAT YOU'RE SAYING THE AMOUNT OF TIME IT TAKES 

BECAUSE I'M STARTING THE CLOCK WHEN YOU START INTRODUCING 

EXHIBITS AND JUST COUNTING THE TIME UNTIL THAT DEPOSITION ENDS. 

THAT'S THE SAME WAY THAT I'M COUNTING TIME FOR LIVE WITNESSES, 

SO I'M NOT GOING TO DO SOMETHING DIFFERENT AND I'M NOT GOING TO 

GET INTO SECOND CALCULATIONS. THAT'S NOT HOW WE DO LIVE 

WITNESSES SO I'M NOT GOING TO HAVE A DIFFERENT RULE, A SEPARATE 

RULE FOR DEPO EXCERPTS. SO I'M COUNTING TIME FROM THE 

BEGINNING. 

AND IT'S SAME FOR QUALCOMM. I'M NOT GOING TO START DOING 

45 SECONDS VERSUS 37 SECONDS. NO. I MEAN, EVERY WITNESS 

SHOULD BE THE SAME. I DON'T DO A SECOND CALCULATION BASED ON 

LIVE WITNESSES. 

MS. MILICI: SURE. 

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THE COURT: SO I'M JUST GOING TO DO THE TIME -- YOU 

KNOW, WHEN THE TIME CLOCK STARTS, WHETHER IT'S 4:52 AND 10 

SECONDS OR 57 SECONDS, IT'S 4:52, OKAY? 

SO SO FAR TODAY THE FTC HAS USED -- AND YOU CAN TAKE A 

SEAT -- 3 HOURS AND 55 MINUTES. 

I MEAN, IF YOU WANT A FURTHER BREAKDOWN, IT WAS 66 MINUTES 

FOR MR. REIFSCHNEIDER; 62 MINUTES FOR MR. BLUMBERG, AND IT 

COUNTED IN GETTING EXHIBITS IN; 36 MINUTES FOR THE JACOBS 

VIDEO; MR. WISE WAS 46 MINUTES; AND THIS LAST, MS. YU, THIS 

LAST WITNESS, WAS 25 MINUTES. 

SO THAT'S MY CALCULATION. 

YEAH, SO ALMOST FOUR HOURS. 

OKAY. AND FOR QUALCOMM IT'S 34 MINUTES. 

OKAY. ANYTHING ELSE? 

MR. MATHESON: YOUR HONOR, ON THE VIDEOS, SOME OF 

WHAT WE PLAYED WAS DESIGNATED BY QUALCOMM AND WE HAD AN 

AGREEMENT WITH THEM THAT THOSE COMPLETENESS DESIGNATIONS WOULD 

COUNT AGAINST THEIR TIME. 

THE COURT: OH. 

MS. MILICI: SO WE DO HAVE A RECORD OF WHAT THOSE 

ARE, AND WE'RE HAPPY TO GIVE IT TO THE COURT. 

THE COURT: ALL RIGHT. THAT IS -- THAT'S FAIR. 

MS. MILICI: OKAY. 

THE COURT: BUT THAT WOULD JUST REDUCE IT BY FOUR 

MINUTES. 

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MS. MILICI: I -- I'M NOT SURE THAT WE GAVE YOU THE 

NUMBER FOR THE LAST TAPE, BUT THAT ONE IS NOT DONE. BUT WE'RE 

HAPPY TO GIVE IT TO YOU IN WRITING. 

THE COURT: OH, YOU MEAN FOR MS. YU? THAT'S RIGHT, 

YOU HAVEN'T GIVEN IT. 

MR. VAN NEST: I SHOW 1 MINUTE ON MR. JACOBS; 1:45 ON 

MR. BLUMBERG. I DON'T HAVE THE NUMBER ON MS. YU. 

THE COURT: MR. REIFSCHNEIDER WAS 1 MINUTE AS WELL. 

MR. VAN NEST: OKAY. 

THE COURT: BUT I DON'T HAVE IT FOR MS. YU. WHAT IS 

IT FOR MS. YU? 

MS. MILICI: I'M NOT SURE. I'M HEARING THAT IT'S 

BETWEEN A MINUTE AND TWO MINUTES. BUT I CAN CHECK. 

THE COURT: OKAY. THAT IT'S 15 MINUTES AND 2 

MINUTES? 

MS. MILICI: NO, BETWEEN ONE AND TWO MINUTES. 

THE COURT: OH, I SEE. OKAY. SO WHY DON'T YOU -- I 

WILL MAKE A NOTE THAT ON MONDAY WE NEED TO SUBTRACT THE ONE OR 

TWO MINUTES FROM MS. YU. 

THE COURT: AND YOU'LL LET ME KNOW HOW MUCH TIME IT 

WAS. I THINK THE FTC'S COUNSEL WAS TRYING TO TELL ME, AND I 

MAY HAVE INTERRUPTED HIM SO I APOLOGIZE. I THINK HE WAS GOING 

TO TELL ME HOW MUCH IT WAS.

MR. COX: YES, YOUR HONOR.

THE COURT: HOW MUCH IS IT? 

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UNITED STATES COURT REPORTERS

159

MR. COX: A MINUTE AND 35 SECONDS. 

THE COURT: ALL RIGHT. ANYTHING ELSE FOR TODAY? 

MR. VAN NEST: NO, YOUR HONOR. THANK YOU. 

MS. MILICI: NO, YOUR HONOR. 

THE COURT: NO? OKAY. THANK YOU. 

(THE EVENING RECESS WAS TAKEN AT 4:55 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 4, 2019

Case 5:17-cv-00220-LHK Document 1509 Filed 07/02/19 Page 160 of 160