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UNITED STATES COURT REPORTERS

1343

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 18, 2019

VOLUME 7 

PAGES 1343-1584

SEALED PAGES 1473-1477, 

1570-1573

TRANSCRIPT OF PROCEEDINGS

BEFORE THE HONORABLE LUCY H. KOH 

UNITED STATES DISTRICT JUDGE

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

FOR THE PLAINTIFF: FEDERAL TRADE COMMISSION 

BY: JENNIFER MILICI

 DANIEL J. MATHESON 

 WESLEY G. CARSON

 KENT COX

 NATHANIEL M. HOPKIN

 PHILIP J. KEHL

 MIKA IKEDA 

600 PENNSYLVANIA AVENUE, NW 

WASHINGTON, D.C. 20580

APPEARANCES CONTINUED ON NEXT PAGE

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

CERTIFICATE NUMBER 9595

IRENE RODRIGUEZ, CSR, CRR, RMR

CERTIFICATE NUMBER 8074

PROCEEDINGS RECORDED BY MECHANICAL STENOGRAPHY

TRANSCRIPT PRODUCED WITH COMPUTER

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UNITED STATES COURT REPORTERS

1344

APPEARANCES (CONTINUED)

FOR THE DEFENDANT: KEKER, VAN NEST & PETERS 

BY: ROBERT A. VAN NEST

 JUSTINA K. SESSIONS

 EUGENE M. PAIGE

 CHRISTINA BLAIS

 MATAN SHACHAM

 CODY HARRIS

 KRISTIN HUCEK 

633 BATTERY STREET

SAN FRANCISCO, CALIFORNIA 94111 

CRAVATH, SWAINE & MOORE 

 BY: GARY A. BORNSTEIN

 MICHAEL BRENT BYARS

 YONATAN EVEN

 JORDAN D. PETERSON

 MING-TOY TAYLOR

 DEREK SUTTON

 ANDREW HUYNH 

 ANTONY RYAN

825 EIGHTH AVENUE 

 NEW YORK, NEW YORK 10019

NORTON, ROSE, FULBRIGHT

BY: RICHARD S. ZEMBEK

1301 MCKINNEY, SUITE 5100

HOUSTON, TEXAS 77010 

ALSO PRESENT: MARK SNYDER 

JEFF DAHM

KEN KOTARSKI 

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UNITED STATES COURT REPORTERS

1345

INDEX OF WITNESSES

DEFENDANT'S

JAMES THOMPSON

DIRECT EXAM BY MR PAIGE P. 1348

CROSS-EXAM BY MR. KEHL P. 1382 

ERIC REIFSCHNEIDER

VIDEOTAPED DEPOSITION P. 1389

FABIAN GONELL 

DIRECT EXAM BY MR. BORNSTEIN P. 1393 

CROSS-EXAM BY MR. MERBER P. 1481

REDIRECT EXAM BY MR. BORNSTEIN P. 1499 

MATTHIAS SAUER 

DIRECT EXAM BY MR. PAIGE P. 1502

CROSS-EXAM BY MR. CARSON P. 1522

REDIRECT EXA BY MR. PAIGE P. 1529 

LIREN CHEN 

DIRECT EXAM BY MR. ZEMBEK P. 1533

JOHN GRUBBS

VIDEOTAPED DEPOSITION P. 1564 

IRA BLUMBERG

VIDEOTAPED DEPOSITION P. 1565 

MARTIN ZANDER

VIDEOTAPED DEPOSITION P. 1569 

TODD MADDEROM

VIDEOTAPED DEPOSITION P. 1570 

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UNITED STATES COURT REPORTERS

1346

NANFEN YU

VIDEOTAPED DEPOSITION P. 1572 

INDEX OF EXHIBITS

MARKED ADMITTED

PLAINTIFF'S

5402 1383

6334 1386

6786R 1485

7961 1497

DEFENDANT'S

9350 1365

9204 1368

1725 1410

9223 1414

9242 1427

2776 1445

9266 1457

2259A 1463

1353 1506

9084 1507

9088 1518

9240 1536

2929 1569

2454 AND 2459 1570

JOINT

0047 1403

0105 1407

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UNITED STATES COURT REPORTERS

1347

SAN JOSE, CALIFORNIA JANUARY 18, 2019 

P R O C E E D I N G S

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

THE COURT: GOOD MORNING, WELCOME. 

MR. VAN NEST: GOOD MORNING, YOUR HONOR. 

MS. MILICI: GOOD MORNING, YOUR HONOR. 

THE CLERK: PLEASE BE SEATED. 

THE COURT: PLEASE TAKE A SEAT. 

PLEASE CALL YOUR NEXT WITNESS. 

MR. PAIGE: GOOD MORNING, YOUR HONOR. BEFORE WE 

BEGIN, WE HAVE PHOTOS OF THE WITNESSES FOR TODAY AND OTHER 

DAYS. I'LL HAND THEM OUT. 

THE COURT: OH, THANK YOU. THANK YOU VERY MUCH. 

MR. PAIGE: WOULD YOU LIKE TWO COPIES? 

THE COURT: SURE. THANK YOU. 

MR. PAIGE: THANK YOU, YOUR HONOR. 

THE COURT: ACTUALLY, IF YOU HAVE MORE, I'LL TAKE 

MORE. 

MR. PAIGE: WE HAVE TWO MORE. 

THE COURT: PERFECT. I'LL TAKE THEM. I'LL TAKE 

THEM. THANK YOU. 

MR. PAIGE: SURE. 

YOUR HONOR, QUALCOMM CALLS DR. JAMES THOMPSON. 

THE COURT: OKAY. IF HE COULD PLEASE COME FORWARD. 

THE CLERK: PLEASE RAISE YOUR RIGHT HAND. 

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THOMPSON DIRECT BY MR. PAIGE

UNITED STATES COURT REPORTERS

1348

(DEFENDANT'S WITNESS, JAMES THOMPSON, WAS SWORN.)

THE WITNESS: I DO. 

THE CLERK: THANK YOU. PLEASE BE SEATED. 

WOULD YOU PLEASE STATE YOUR FULL NAME AND SPELL YOUR LAST 

NAME FOR THE RECORD. 

THE WITNESS: JAMES HOWARD THOMPSON. YOU SAID LAST 

NAME? 

THE CLERK: YES. 

THE WITNESS: T-H-O-M-P-S-O-N. 

THE COURT: OKAY. TIME IS 9:04. GO AHEAD, PLEASE. 

MR. PAIGE: THANK YOU, YOUR HONOR. 

DIRECT EXAMINATION

BY MR. PAIGE: 

Q. GOOD MORNING, DR. THOMPSON. 

A. GOOD MORNING.

Q. DR. THOMPSON, WHAT'S YOUR CURRENT POSITION WITH QUALCOMM?

A. I'M THE EXECUTIVE VICE-PRESIDENT OF ENGINEERING AND THE 

CHIEF TECHNICAL OFFICER.

Q. AND WHAT ARE YOUR JOB RESPONSIBILITIES? 

A. SO YOU CAN THINK OF ME AS OVERSEEING ALL OF ENGINEERING AT 

QUALCOMM. 

Q. AND WHAT PART OF QUALCOMM'S BUSINESS DO YOU WORK WITH? 

A. SO MOST OF MY CAREER AT QUALCOMM HAS BEEN WORKING WITH THE 

CHIP GROUP. SO I'M -- YOU CAN THINK OF ME AS THE CHIP GUY. 

I'VE BEEN HEAD OF ENGINEERING FOR THE CHIP GROUP FOR A LONG 

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THOMPSON DIRECT BY MR. PAIGE

UNITED STATES COURT REPORTERS

1349

TIME.

Q. HAVE YOU EVER HAD RESPONSIBILITY FOR THE LICENSING 

BUSINESS AT QUALCOMM? 

A. NO. 

Q. TO WHOM DO YOU REPORT?

A. STEVE MOLLENKOPF.

Q. WHEN DID YOU START AT QUALCOMM?

A. TWENTY-SEVEN YEARS AGO ALMOST TO THE DAY.

Q. AND WHAT'S YOUR EDUCATIONAL BACKGROUND?

A. I HAVE A PH.D. IN ELECTRICAL ENGINEERING FROM THE 

UNIVERSITY OF WISCONSIN. THAT'S WHERE I GREW UP.

Q. OKAY. AND WHAT DID YOU WORK ON WHEN YOU STARTED AT 

QUALCOMM? 

A. SO WHEN I FIRST CAME TO QUALCOMM, I WAS WORKING ON THE 

CDMA PROJECT.

Q. AND WHAT DID QUALCOMM'S WORK ON CDMA INVOLVE AT THAT TIME? 

A. SO WE WERE PUTTING TOGETHER A SYSTEM -- WE WERE TRYING TO 

PROMOTE THE TECHNOLOGY AND SO -- AND PROVE THAT IT WORKED. 

SO WE BUILT A COMPLETE SYSTEM. BE BUILT BASE STATIONS, WE 

BUILT PHONES. WE DEPLOYED THE SYSTEM IN SAN DIEGO AND OTHER 

PLACES, SO THIS IS NOT JUST DONE IN A LAB. 

WE DEPLOYED THE SYSTEM OUTDOORS WITH REAL BASE STATIONS. 

AND THEN WE ALSO BUILT A SYSTEM WHERE WE BROUGHT THAT TO 

OTHER CITIES, LIKE NEW YORK CITY, HONG KONG, OTHER PLACES TO 

DEMONSTRATE THAT IT WORKED IN DIFFERENT ENVIRONMENTS.

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THOMPSON DIRECT BY MR. PAIGE

UNITED STATES COURT REPORTERS

1350

Q. AND WHAT WERE THE ADVANTAGES THAT QUALCOMM PERCEIVED OF 

CDMA TECHNOLOGY?

A. SO AT THE TIME THE CELLULAR SYSTEM WAS ANALOG AND THE 

CAPACITY WAS VERY LIMITED AND BECAUSE OF THE LIMITED CAPACITY, 

IT LED TO, YOU KNOW, VERY EXPENSIVE PHONE CALLS. SO CELLULAR 

WAS VERY EXPENSIVE AT THAT TIME. 

SO WHAT CDMA PROMISED WAS A MUCH HIGHER VOICE CAPACITY, 

AND ULTIMATELY IT LED TO, LIKE WITH CDMA, IT WAS, OUR ESTIMATE 

IS ABOUT 60 TIMES THE CAPACITY FOR A GIVEN AMOUNT OF SPECTRUM. 

AND THE KEY THERE IS THAT SPECTRUM THAT LIMITED. SO THE AMOUNT 

OF SPECTRUM IS LIMITED. SO WHAT THIS DID IS IT JUST OPENED UP 

THE AMOUNT OF CAPACITY IN THE SYSTEM. 

ONE OTHER THING IS JUST FROM A QUALITY, VOICE QUALITY, 

HAND-OFF QUALITY, RELIABILITY, THINGS LIKE THAT. SO IT 

IMPROVED PRETTY MUCH EVERYTHING.

Q. AND WHAT VISION DID QUALCOMM HAVE FOR THE FUTURE OF CDMA? 

A. SO EVEN THOUGH CDMA WAS A VOICE SYSTEM, OUR FOCUS IN THE 

COMPANY WAS DATA. 

SO WE HAD KIND OF AN ODD COMPANY IN THAT IT WAS REALLY 

FOUNDED BY PEOPLE, LIKE IRWIN JACOBS, WHO WERE COMMUNICATION 

THEORY PEOPLE. HE'S AN ICON. SO IT ATTRACTED A LOT OF 

COMMUNICATION THEORY PEOPLE. 

BUT WE ALSO HAD A LOT OF INVOLVEMENT IN THE INTERNET, AND 

THAT WAS VERY EARLY -- THE EARLY DAYS OF THE INTERNET. SO, FOR 

EXAMPLE, WE DEVELOPED AN E-MAIL CLIENT CALLED EUDORA THAT WE 

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THOMPSON DIRECT BY MR. PAIGE

UNITED STATES COURT REPORTERS

1351

USED INTERNAL TO QUALCOMM, AND IT ENDED UP BECOMING THE MOST 

POPULAR E-MAIL CLIENT IN THE WORLD AT ONE POINT. 

ANYWAY, THIS COMBINATION OF INTERNET PEOPLE AND 

COMMUNICATION THEORY PEOPLE, IT -- WE UNDERSTOOD THAT INTERNET 

WAS GOING TO BE HUGE AND THAT PROVIDING DATA SERVICES, YOU 

KNOW, WAS REALLY IMPORTANT. BECAUSE YOU THINK ABOUT AT THE 

TIME, IT WAS THESE DIAL-UP MODEMS THAT WERE VERY SLOW AND SO 

FORTH, AND WE KNEW THAT WE COULD DO SOMETHING MUCH BETTER OVER 

THE AIR THAN WHAT WAS AVAILABLE AT THAT TIME IN YOUR HOME.

Q. SO WHAT DID QUALCOMM DO TO HELP SEND DATA OVER THE ERR? 

A. SO WE, WE STARTED A PROGRAM IN 1995/'96, MID-'90S, AND IT 

WAS CALLED HDR, HIGH DATA RATE. ULTIMATELY THAT BECAME THE 

STANDARD EV-DO, EVOLVED DATA OPTIMIZED, THAT'S WHAT IT STOOD 

FOR. IT'S NOT A VERY GOOD ACRONYM, BUT WE'RE ENGINEERING, NOT 

MARKETING PEOPLE. 

SO WE STARTED THAT PROGRAM, AND I WANT TO MAKE IT CLEAR 

THAT THAT WAS A COMPLETELY DIFFERENT SYSTEM THAN WCDMA -- OR 

CDMA. SORRY. 

SO WITH CDMA, WE DEVELOPED THAT, YOU KNOW, FROM THE 

NETWORK PORTION OF IT, THE BASE STATION PORTION OF IT, PHONES, 

EVERYTHING. WE DEVELOPED THE WHOLE SYSTEM. 

WE DID THE SAME THING WITH DATA AS WELL, AND THIS WAS A 

BRAND NEW NETWORK, SO IT WAS I.P. BASED. 

AND WE ALSO OPTIMIZED THE AIR LINK FOR DATA SERVICES AS 

WELL. SO IT WASN'T ABOUT VOICE, IT WAS ALL ABOUT DATA.

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THOMPSON DIRECT BY MR. PAIGE

UNITED STATES COURT REPORTERS

1352

Q. AND ONCE QUALCOMM CREATED EV-DO, WHAT DID IT DO WITH EVDO? 

A. WE BROUGHT IT TO THE STANDARDS TO OPEN IT UP SO THAT 

OTHERS, YOU KNOW, COULD -- OUR GOAL WAS TO, TO PUSH THE 

TECHNOLOGY AS FAR AS WE COULD AND GET AS MANY PEOPLE INTERESTED 

IN THE TECHNOLOGY AS POSSIBLE. SO WE OPENED IT UP.

Q. WHY WAS QUALCOMM SUCCESSFUL IN CDMA? 

A. SO -- SO IN CDMA, WHEN WE ORIGINALLY WERE DOING CDMA, IT 

WAS MET WITH A LOT OF SKEPTICISM, SO WE ENDED UP HAVING A LOT 

OF EXPERIENCE, OBVIOUSLY, BECAUSE WE INVENTED IT. 

BUT THEN ALSO, BECAUSE THERE WAS A LOT OF SKEPTICISM, WE 

WENT THROUGH MULTIPLE GENERATIONS BEFORE OTHER PEOPLE REALIZED 

THIS WAS SOMETHING THAT WAS GOING TO HAPPEN. 

SAME THING HAPPENED WITH D.O. SO THERE WAS A LOT OF 

SKEPTICISM. IT SEEMS CRAZY TODAY, BUT AT THE TIME, IT WASN'T 

AS OBVIOUS TO PEOPLE THAT DATA WAS GOING TO BECOME IMPORTANT. 

OR THAT EVEN A DATA ONLY SYSTEM WAS SOMETHING REASONABLE 

BECAUSE IT WAS ALL ABOUT VOICE AND VOICE WAS CONSIDERED THE 

KILLER APP AT THE TIME. 

AND SO DATA IS SOMETHING THAT PEOPLE DIDN'T EMBRACE, 

ESPECIALLY IN THE '90S. 

Q. AND WHAT'S A MULTIMODE CHIP, DR. THOMPSON? 

A. SO A MULTIMODE CHIP, SO THAT WOULD BE MULTIMODE MODEMS, SO 

IT SUPPORTS MULTIPLE STANDARDS ON ONE PIECE OF SILICON. SO 

THAT'S -- WHEN WE TALK ABOUT MULTIMODE STANDARDS -- THE REASON 

WHY THAT'S IMPORTANT IS THESE DIFFERENT STANDARDS, DIFFERENT 

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THOMPSON DIRECT BY MR. PAIGE

UNITED STATES COURT REPORTERS

1353

PARTS OF THE WORLD USE DIFFERENT STANDARDS, SO THAT'S WHY IT'S 

IMPORTANT.

Q. AND DID QUALCOMM COME TO MAKE MULTIMODE CHIPS AT SOME 

POINT IN TIME? 

A. YEAH. SO, SO -- 

Q. WHY DID IT DO SO? 

A. OKAY. SO IF YOU LOOK AT CDMA, IT WAS NOT DEPLOYED VERY 

BROADLY AROUND THE WORLD, AND SO -- SO THERE WERE ONLY A 

HANDFUL OF OPERATORS THAT DEPLOYED IT. 

SO, FOR EXAMPLE, VERIZON, THEY DEPLOYED IT IN THE 

UNITED STATES. BUT -- AND THEY HAD A RELATIONSHIP VODAPHONE, 

AND THEY WANTED TO BE ABLE TO HAVE THEIR CUSTOMERS BE ABLE TO 

DO GLOBAL ROAMING. 

WHAT THAT MEANS IS SO SOMEBODY GETS ON AN AIRPLANE, FLIES 

TO EUROPE, AND THEN THEIR PHONE ACTUALLY WORKS. IF IT JUST HAD 

CDMA, IT WOULD NOT WORK. 

SO WHAT WE START IS WE STARTED -- WE INTRODUCED, FOR 

EXAMPLE, GSM INTO A CDMA CHIPSET SO THAT WE COULD PROVIDE 

GLOBAL ROAMING. AND THAT WAS OUR FIRST MULTIMODE CHIPSET WHERE 

WE SUPPORTED MULTIPLE STANDARDS THAT YOU COULD GO ANYWHERE IN 

THE WORLD. 

Q. WHAT WAS THE INDUSTRY VIEW OF CDMA IN THE 2000S? 

A. SO I WOULD SAY TWO THINGS. ONE IS IN THE EARLY 2000S, 

BECAUSE IT WAS NOT DEPLOYED BY THAT MANY OPERATORS, IT WAS -- 

AND IF YOU LOOK AT RELATIVE TO WCDMA, WHICH WAS THE EUROPEAN 3G 

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THOMPSON DIRECT BY MR. PAIGE

UNITED STATES COURT REPORTERS

1354

STANDARD, THERE WAS A LOT MORE OPPORTUNITY, MARKET OPPORTUNITY. 

SO THE WCDMA ENDED UP BEING MORE, LET'S SAY, FINANCIALLY 

ATTRACTIVE THAN CDMA BECAUSE JUST THE MARKET WAS LARGER. 

AND THEN IN THE LATE 2000S, THAT'S WHEN PEOPLE WERE 

STARTING TO THINK ABOUT EMBRACING DATA AND 4G WAS ON THE 

HORIZON AND 4G, THAT'S LTE, THE VIEW WAS THAT WE WOULD MOVE 

VERY RAPIDLY TO AN ALL DATA SYSTEM, KIND OF LIKE THE SAME 

CONCEPT THAT WE HAD WITH DO BACK IN THE '90S. 

BUT OUR VIEW AT THAT TIME WAS THAT, THAT THE TRANSITION -- 

THERE ARE A LOT OF TECHNICAL HURDLES TO GET OVER TO MAKE THAT 

TRANSITION TO AN ALL DATA SYSTEM, AND SO OUR VIEW -- AND WE 

MADE THIS BET IN, SAY, THE MID 2000S -- IS THAT MULTIMODE WAS 

GOING TO BE IMPORTANT AND MULTIMODE WAS NOT GOING TO GO AWAY. 

AND SO -- SO YOU HAD COMPANIES LIKE VERIZON, FOR EXAMPLE, 

MAKING STATEMENTS, PUBLIC STATEMENTS SAYING WE'RE GOING TO 

DISCONTINUE OUR CDMA NETWORK AND WE'RE GOING TO GO TO AN ALL 

VOICE-OVER LTE -- 

MR. KEHL: OBJECTION. HEARSAY, YOUR HONOR. 

THE COURT: SUSTAINED. 

THE WITNESS: SO WHAT DOES THAT MEAN FOR ME?

BY MR. PAIGE: 

Q. I'LL JUST ASK YOU A NEW QUESTION. 

WHY DID QUALCOMM CONTINUE TO INVEST IN CDMA IN THE LATE 

2000S? 

A. WELL, OUR VIEW WAS THAT MULTIMODE, OR THAT THE DATA ONLY 

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THOMPSON DIRECT BY MR. PAIGE

UNITED STATES COURT REPORTERS

1355

SYSTEM, A SINGLE MODE SYSTEM, WAS NOT GOING TO GO AWAY FAST. 

AND SO YOU REALLY NEEDED THIS MULTIMODE PRODUCT BECAUSE 

THERE WOULD BE -- AS THE NUMBER OF STANDARDS -- AS THE 

STANDARDS EVOLVED, THE OLD STANDARDS WERE NOT GOING TO GO AWAY 

AS QUICKLY AS, AS THE INDUSTRY BELIEVED THEY WOULD GO AWAY. 

SO OUR WHOLE STRATEGY WAS ABOUT MULTIMODE. 

Q. ARE YOU FAMILIAR WITH A COMPANY CALLED VIA? 

A. YES. 

Q. DID VIA MAKE CDMA CHIPS? 

A. YES. 

Q. HOW DID VIA'S PRODUCT DIFFER FROM QUALCOMM'S, IF AT ALL? 

A. YEAH. SO VIA DID A CDMA MODEM. THEY ALSO DID A DO MODEM. 

SO THEY DID BOTH OF THOSE AND THEY, THEY DID A REASONABLE JOB. 

SO THEY, THEY MET THE STANDARD AND THE -- FROM A MODEM 

PERSPECTIVE, THAT WERE FINE. 

THE ISSUE THAT THEY HAD, SAY, FROM A COMMERCIAL POINT OF 

VIEW IS, ONE, REMEMBER I TALKED ABOUT GLOBAL ROAMING, SO THEY 

DIDN'T DO A GSM MODEM OR A WCDMA MODEM, WHICH WERE REQUIREMENTS 

FOR GLOBAL ROAMING. SO THAT WAS AN ISSUE FOR THEIR PRODUCTS. 

AND THEN ALSO MULTIMEDIA IS SOMETHING LIKE ANYBODY WHO HAS 

A PHONE TODAY KNOWS THAT, YOU KNOW, IT'S ABOUT YOUR VIDEO 

VISUAL EXPERIENCE AND -- TODAY. AND THAT'S SOMETHING THAT THEY 

DIDN'T PURSUE. AND SO THEY DIDN'T -- I SHOULDN'T SAY THAT. 

THEY DIDN'T PURSUE IT IN A WAY THAT MADE THEM, YOU KNOW -- 

WOULD LEAD TO ANY SUCCESS IN THE MARKET. THEY DIDN'T HAVE, YOU 

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THOMPSON DIRECT BY MR. PAIGE

UNITED STATES COURT REPORTERS

1356

KNOW, THE KIND OF CAPABILITY THAT THEY REALLY NEEDED TO 

INTEGRATE INTO THAT CHIPSET AND TO BE SUCCESSFUL IN THIS 

BUSINESS, IT'S NOT JUST ABOUT HAVING A MODEM, IT'S ABOUT HAVING 

ALL THIS MULTIMEDIA CAPABILITY AS WELL.

Q. DID THERE COME A TIME THAT QUALCOMM BEGAN TO MAKE LTE 

CHIPS? 

A. YES. YEAH.

Q. AND WHAT HAS MADE QUALCOMM'S LTE CHIPS SUCCESSFUL?

A. WELL, I WOULD SAY TWO THINGS. ONE IS WE TRY AND SUCCEED 

TO BE THE FIRST TO COME OUT WITH THE LATEST FEATURE SET. SO 

EVERY YEAR WE'RE DEVELOPING, WE'RE IMPROVING OUR MODEM, COMING 

OUT WITH WHAT IS THE LATEST FEATURE SET DEVELOPED BY THE 

STANDARD. 

AND ALSO, I THINK THE OTHER VERY KEY THING, JUST AS 

IMPORTANT, IS THAT WE PROVIDE THIS MULTIMODE PRODUCT. 

Q. DR. THOMPSON, IF I COULD ASK YOU TO TURN TO THE 

DEMONSTRATIVES YOU HAVE THERE IN YOUR BINDER AND TURN TO THE 

THIRD ONE. IT'S UP ON THE SCREEN NOW AS WELL? 

A. OKAY.

Q. COULD YOU EXPLAIN TO THE COURT WHAT THIS SHOWS? 

A. YEAH. SO IF YOU LOOK AT THE -- EXCUSE ME. 

IF YOU LOOK AT THE BIG BOXES AT THE BOTTOM, THOSE ARE ALL 

THE DIFFERENT STANDARDS THAT EXIST IN THE WORLD. SO THERE'S A 

LOT OF THEM. 

AND NOW IF YOU DESIGN A MODEM, A MULTIMODE -- IF YOU WANT 

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THOMPSON DIRECT BY MR. PAIGE

UNITED STATES COURT REPORTERS

1357

TO SUPPORT ALL OF THOSE MODEMS, YOU COULD DESIGN EACH ONE OF 

THESE THINGS INDIVIDUALLY AND JUST PUT THEM NEXT TO EACH OTHER. 

BUT THAT WOULD BE VERY INEFFICIENT FROM A COST POINT OF VIEW. 

SO WHAT WE, WE DID AND WE STARTED DOING THIS IN THE 

MID-2S, IS WE WOULD DESIGN A PIECE OF HARDWARE THAT IS 

CONFIGURABLE SO THAT IT CAN SUPPORT ALL OF THESE DIFFERENT 

MODES OF THE MODEM. 

SO -- AND THEN -- SO THAT MAKES IT VERY EFFICIENT FROM A 

COST POINT OF VIEW. 

AND THEN AFTER THAT -- OR ANOTHER THING THAT'S REALLY 

IMPORTANT IS THAT THERE'S A LOT OF DIFFERENT COMBINATIONS OF 

THESE MODEMS, EVEN IF A, ONE OPERATOR'S NETWORK, THERE MAY BE, 

YOU KNOW, TWO OR THREE OR FOUR OF THESE MODES THAT NEED TO BE 

SUPPORTED. 

SO YOU HAVE TO BE ABLE TO SUPPORT HANDOFFS BETWEEN THEM. 

SO IT ENDS UP BEING A VERY COMPLICATED -- YOU KNOW, YOU SEE ALL 

THE SPAGHETTI AT THE BOTTOM THERE. THAT'S JUST REPRESENTING 

THE DIFFERENT COMBINATIONS OF THESE MODEMS THAT NEED TO OPERATE 

AT THE SAME TIME. 

AND THEN THE SMALL BOXES AT THE TOP, THE ONES WITH NUMBERS 

IN THEM, THOSE ARE THE FREQUENCY BANDS THAT YOU NEED TO SUPPORT 

AROUND THE WORLD. SO, LIKE, THINK OF THEM AS LIKE RADIO 

CHANNELS, YOU KNOW, LIKE YOU TURN YOUR TV OR YOUR RADIO OR 

WHATEVER. 

BUT ANYWAY, THERE'S ALSO A LOT OF DIFFERENT COMBINATIONS, 

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THOMPSON DIRECT BY MR. PAIGE

UNITED STATES COURT REPORTERS

1358

AND EVERY GOVERNMENT IN THE WORLD MAKES THEIR OWN DECISION 

ABOUT WHAT FREQUENCIES THEY'RE GOING TO OFFER. 

AND THEN EVEN WITHIN A COUNTRY, LIKE VERIZON USES 

DIFFERENT FREQUENCIES THAN SPRINT OR AT&T. 

AND SO IT ENDS UP BEING A VERY MULTI DIMENSIONAL PROBLEM, 

AND SO IT'S A REAL ENGINEERING CHALLENGE TO DO THIS MULTIMODE 

KIND OF ALL WORLD PRODUCT -- 

Q. AND WHAT DOES QUALCOMM -- 

A. -- THAT WE DO.

Q. SORRY. WHAT DOES QUALCOMM DO WITH CARRIERS AROUND THE 

WORLD TO HELP WITH THIS SYSTEM? 

A. YEAH. SO TO DO THIS MULTIMODE, ALL WORLD PRODUCT, WE HAVE 

TEAMS ALL OVER THE WORLD THAT ACTUALLY DO TESTING. SO WE DO 

TESTING IN THE FIELD. WE -- THERE'S TESTING THAT WE DO IN OUR 

LABS WHERE WE TRY TO DUPLICATE THE VARIOUS NETWORKS AROUND THE 

WORLD, SO WE DO THAT. 

AND THEN ALSO CHALLENGING SPOTS, YOU KNOW, IN VARIOUS 

NETWORKS, WE DO THAT IN OUR LABS. 

BUT ULTIMATELY WE HAVE TEAMS AROUND THE WORLD AND WE TEST 

IN THOSE NETWORKS TO PROVE THAT IT WORKS. AND SO IT MAKES IT 

EASY FOR OUR CUSTOMERS TO GO TO ANY OPERATOR THEY WANT.

Q. I WANT TO DRAW YOUR ATTENTION BACK TO THE TIME THAT 

QUALCOMM RELEASED ITS FIRST LTE MODEM CHIP. 

A. OKAY.

Q. WHAT DID QUALCOMM THINK ABOUT WHERE IT WOULD BE AS 

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THOMPSON DIRECT BY MR. PAIGE

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1359

COMPARED TO THE COMPETITION AT THE TIME IT RELEASED ITS FIRST 

LTE MODEM CHIP? 

A. YEAH. SO WHEN WE WERE WORKING ON, ON LTE -- ACTUALLY, IT 

WAS -- WE THOUGHT WE WERE BEHIND, AND IF YOU LOOKED AT -- 

BECAUSE THERE WAS A LOT OF EVIDENCE OF THAT. 

IF YOU LOOK AT DEMOS THAT WERE BEING DONE, LIKE IN KOREA 

WITH LG AND SAMSUNG, THEY WERE DOING DEMOS OF CHIPS BEFORE WE 

HAD A CHIP. SO WE THOUGHT WE WERE CLEARLY BEHIND. 

WE WERE BEING TOLD BY OPERATORS, YOU KNOW, GIVING A LIST 

OF OUR COMPETITORS THAT WERE AHEAD OF US. 

MR. KEHL: OBJECTION. HEARSAY. 

THE COURT: SUSTAINED. 

THE WITNESS: SO WE WERE BEING TOLD -- OR THE 

EVIDENCE -- 

MR. KEHL: SAME OBJECTION, YOUR HONOR. 

THE COURT: SUSTAINED. 

MR. PAIGE: I'LL MOVE ON. 

THE COURT: ALL THE HEARSAY IS STRICKEN FROM THE 

TRANSCRIPT.

BY MR. PAIGE:

Q. WHAT DID QUALCOMM DO WHEN IT THOUGHT IT WAS GOING TO BE 

BEHIND? 

A. OKAY. SO THAT -- IT WAS LIKE A CALL TO ARMS IN THE 

COMPANY WHERE WE, YOU KNOW, MARSHALLED THE RESOURCES THAT WE 

COULD AROUND THE COMPANY TO TRY TO CATCH UP, AND CLEARLY WE HAD 

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THOMPSON DIRECT BY MR. PAIGE

UNITED STATES COURT REPORTERS

1360

THESE DEMOS THAT WE SAW, SO THERE WAS A LOT OF EVIDENCE THAT WE 

WERE BEHIND. 

AND SO WE, WE -- YOU KNOW, WE PULLED OUT ALL THE STOPS AND 

THEN EVENTUALLY CAME OUT WITH A PRODUCT.

Q. AND WHAT HAPPENED WHEN QUALCOMM'S LTE MODEM CHIP ACTUALLY 

CAME OUT? 

A. TO OUR SURPRISE, WE WERE THE ONLY ONES WHEN WE CAME OUT 

WITH THAT PRODUCT. WE WERE THE ONLY ONES THERE THAT HAD A 

COMMERCIAL PRODUCT.

Q. SO WE'VE TALKED A BIT ABOUT THE FAST DATA RATES THAT MAKE 

QUALCOMM'S CHIPS ATTRACTIVE, AND YOU MENTIONED SOMETHING ABOUT 

MULTIMEDIA. 

COULD YOU EXPLAIN WHAT MULTIMEDIA IS AND HOW IT MAKES 

CELLULAR MODEMS ATTRACTIVE TO OEM'S? 

A. YEAH. SO JUST -- I THINK EVERYBODY HAS EXPERIENCE WITH 

THEIR PHONES TODAY, SO I'LL REFERENCE THAT. 

LIKE, FOR EXAMPLE, A CAMERA WOULD BE AN EXAMPLE OF 

MULTIMEDIA. AND YOU'VE SEEN THE CAMERA GO FROM, LIKE, DIGITAL 

CAMERA GO FROM, SAY, IN 19 -- IN 2000, SAY, IT WAS A TOY, YOU 

KNOW, SORT OF THE QUALITY WAS TERRIBLE AND ALL THAT. 

AND THEN NOW YOU SEE, LIKE, WITHIN A PHONE, THE IMAGE 

PROCESSING THAT WE CAN DO, IT'S DIGITAL SIGNAL PROCESSING IS 

WHAT IT IS, IT'S SO POWERFUL THAT WE CAN MAKE, YOU KNOW, THESE 

PHONES HAVE THIS INCREDIBLE QUALITY PICTURES. AND THE SAME 

THING APPLIES TO VIDEOS. IT'S THINGS LIKE GAMES AND 

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THOMPSON DIRECT BY MR. PAIGE

UNITED STATES COURT REPORTERS

1361

INTERESTING THINGS HAPPENING ON YOUR DISPLAY, IT'S AUDIO. 

THOSE ARE THE KIND OF THINGS THAT, THAT WE THINK, YOU KNOW, 

MAKE IT A COMPELLING EXPERIENCE. THAT'S A PART OF IT THAT 

MAKES IT A COMPELLING EXPERIENCE.

Q. AND ARE THOSE FUNCTIONALITIES ON THE MODEM CHIP ITSELF? 

A. YEAH, AT LEAST THE CHIP THAT IS WE SELL -- MOST OF THE 

CHIPS THAT WE SELL HAVE THIS ALL WORLD -- ALL MODE MODEM IN IT 

INTEGRATED WITH AN APPLICATION PROCESSOR. THAT APPLICATION 

PROCESSOR HAS ALL THIS MULTIMEDIA CAPABILITY, CPU. THINK OF IT 

AS A COMPUTER WITH A LOT OF DEDICATED HARDWARE TO DO CERTAIN 

FUNCTIONS LIKE VIDEO, CAMERA, GRAPHICS, ALL THOSE THINGS 

EXTREMELY WELL AND EFFICIENT. 

BUT THE KEY IS WE SELL THAT, PLUS A MODEM. THAT'S OUR 

MAIN BUSINESS.

Q. WHAT DO YOU CALL CHIPS THAT HAVE THESE FUNCTIONALITIES 

INTEGRATED ONTO THEM WITH THE MODEM? 

A. THE INDUSTRY CALLS IT SYSTEM ON A CHIP, OR SOC. 

Q. AND WHAT DO YOU CALL THE FUNCTIONALITIES THAT QUALCOMM 

INTEGRATES ONTO THESE SOC'S? 

A. AT LEAST INTERNAL TO QUALCOMM, WE CALL THEM CORES, AND YOU 

CAN THINK OF IT AS WE HAVE A CHASSIS, WHICH IS OUR KIND OF MAIN 

DESIGN, AND THEN YOU, LIKE LEGO BLOCKS, YOU SNAP IN THESE, YOU 

KNOW, GRAPHICS CORES OR CAMERA CORES OR VIDEO CORES INTO THAT 

CHASSIS AND THAT'S HOW WE DESIGNED THINGS.

Q. AND HOW DO THESE SOC'S WITH THE CORES CREATE VALUE FOR 

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THOMPSON DIRECT BY MR. PAIGE

UNITED STATES COURT REPORTERS

1362

OEM'S? 

A. YEAH. SO IF AN OEM HAD TO COBBLE TOGETHER ALL OF THESE 

THINGS, WHETHER IN DISCRETE FORM OR PUT THEM TOGETHER IN A 

CHIP, IT'S VERY, VERY COMPLICATED AND EXPENSIVE. 

SO WE DO ALL THOSE THINGS, ALL THE THINGS THAT YOU SEE IN 

A PHONE, WE TRY TO PULL ALL THAT TOGETHER AND CREATE A SYSTEM. 

AND THE FACT THAT WE DESIGN ALL OF THESE COMPONENTS 

OURSELVES, WE DON'T GET THEM FROM OTHER PEOPLE, WE DESIGN THEM 

ALL OURSELVES, MAKES FOR A VERY KIND OF TIGHT, EFFICIENT 

SYSTEM. AND THAT'S A BIG REASON WHY WE'RE SUCCESSFUL.

Q. CAN YOU TELL US A LITTLE BIT ABOUT THE SIZE OF THE TEAMS 

QUALCOMM HIRED FOR PUTTING THESE CORES ON SOC'S? 

A. YEAH. SO WITH MULTIMEDIA -- SO MAYBE GO BACK IN HISTORY. 

IN 2000, I THINK I MENTIONED THAT WE WERE DOING -- I DON'T 

THINK IF I MENTIONED WE WERE DOING CAMERA, WE WERE DABBLING IN 

CAMERA AND DABBLING IN MP3, WHICH IS AN AUDIO SYSTEM FOR MUSIC. 

AND THEN IT BECAME VERY CLEAR TO ME AND SOME OTHER PEOPLE 

THAT IF -- OUR COMPANY WAS ABOUT DATA, DRIVING INTERNET DATA, 

WIRELESS. 

AND WHAT WAS GOING TO DRIVE THAT IN A PHONE, YOU KNOW, 

WHAT'S GOING TO USE IT, WHAT'S GOING TO CONSUME THE DATA AND 

WHAT'S GOING TO GENERATE THE DATA IS REALLY MULTIMEDIA. 

SO I HAD ASKED THE TEAM, OUR SYSTEMS ENGINEERING TEAM TO 

COME BACK WITH KIND OF A GO BIG PLAN I CALLED IT. 

AND THEN I REMEMBER THERE WAS SOME SKEPTICISM, SOME PEOPLE 

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THOMPSON DIRECT BY MR. PAIGE

UNITED STATES COURT REPORTERS

1363

AGREED, SOME PEOPLE DIDN'T AT THE TIME. AND THEN THE LEAD CAME 

BACK AND SAID I'VE GOT THIS PLAN FOR SEVEN PEOPLE. AND I WAS 

LIKE, NO, I WANT 70 PEOPLE. AND EVEN -- I LOOK BACK TODAY AND 

I GO I WANT 70 PEOPLE, AND IT SEEMS ALMOST RIDICULOUS BECAUSE 

TODAY WE HAVE A COUPLE THOUSAND PEOPLE WORKING ON IT. 

BUT AT THE TIME IT WAS A VERY KIND OF BIG DECISION THAT WE 

MADE TO START RAMPING REALLY HARD ON MULTIMEDIA. 

Q. CAN YOU GIVE EXAMPLES OF SOME OF THE SIZES OF THE TEAMS IN 

MULTIMEDIA AS OF MARCH 2018? 

A. YEAH. SO OUR CAMERA TEAM, FOR EXAMPLE, WAS ABOUT 500 

PEOPLE. OUR GRAPHICS TEAM IS ABOUT 600 PEOPLE. WE DO ALL, ALL 

OF THAT OURSELVES INTERNALLY.

Q. SO IT SOUNDS LIKE THESE ARE GENERALLY HIGH END CHIPS. 

DOES QUALCOMM ALSO MAKE PRODUCTS FOR THE MORE BUDGET CONSCIOUS 

END OF THE MARKET? 

A. YES. SO WE HAVE A TIER OF PRODUCTS, SO WE DO WHAT WE 

WOULD CALL PREMIUM TIER, AND THEN WE DO A NUMBER OF TIERS ALL 

THE WAY DOWN TO WHAT WE CALL THE ENTRY LEVEL. 

AND SO IF YOU LOOK AT OUR ENTRY LEVEL PART, IT'S DESIGNED 

FOR A SMARTPHONE, SO IT DOES ALL THESE THINGS, BUT IT'S JUST 

MUCH CHEAPER. IT'S ABOUT ONE-TENTH THE COST. 

MR. PAIGE: YOUR HONOR, MAY I APPROACH THE WITNESS 

WITH A DEMONSTRATIVE? 

THE COURT: GO AHEAD, PLEASE. 

MR. PAIGE: THANK YOU (HANDING). 

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THOMPSON DIRECT BY MR. PAIGE

UNITED STATES COURT REPORTERS

1364

Q. DR. THOMPSON, WHAT'S A QRD? 

A. A QRD IS A QUALCOMM REFERENCE DESIGN, SO IT'S JUST A PHONE 

(INDICATING). 

AND I THINK THE KEY POINT HERE IS THAT IT IS A PHONE THAT 

WE DESIGN OURSELVES, SO WE DO THE WHOLE THING, AND THEN WE 

OFFER IT TO OUR CUSTOMERS. GENERALLY THE CUSTOMERS THAT ARE 

INTERESTED IN THIS ARE SMALL, A LOT OF TIMES IN THE DEVELOPING 

WORLD. 

AND WHAT -- AND THEY DON'T ALWAYS JUST TAKE THIS EXACTLY 

HOW WE DESIGN IT AND BRING IT TO, YOU KNOW, A MANUFACTURING AND 

RELEASE THAT. 

THEY'LL MAKE CHANGES. LIKE I WAS JUST SHOWN ONE FROM A 

CUSTOMER IN BRAZIL, ACTUALLY, THEY'RE GOING TO DO PHONE 

MANUFACTURING IN BRAZIL WHERE THEY JUST CHANGED THE CAMERA, FOR 

EXAMPLE. THEY TOOK OUR DESIGN AND CHANGED THE CAMERA. THAT'S 

AN EXAMPLE OF HOW IT MIGHT BE USED.

Q. SO WHAT DOES THE QRD ENABLE A SMALL COMPANY TO DO? 

A. WELL, WHAT WE TRY TO DO IS WE, WE DO ALL OF THIS R&D ON 

THE CHIPS, BUT THEN WE ALSO DESIGN THE ENTIRE PHONE AND WE TRY 

TO MAKE IT VERY SIMPLE FOR SMALL COMPANIES THAT DON'T HAVE A 

LOT OF RESOURCES TO BE ABLE TO COMPETE NOT JUST IN LOW TIER 

PHONES, BUT EVEN IN PREMIUM TIER PHONES. 

THE COURT: CAN WE PUT A NUMBER ON THAT JUST FOR THE 

RECORD? 

MR. PAIGE: SURE. 

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THOMPSON DIRECT BY MR. PAIGE

UNITED STATES COURT REPORTERS

1365

THE COURT: DO YOU WANT THAT TO BE QDX WHATEVER THE 

NEXT NUMBER IS? 

MR. PAIGE: 3349, YOUR HONOR. 9350, YOUR HONOR. 

THE COURT: 9350. OKAY. 

MR. PAIGE: THANK YOU, YOUR HONOR.

(DEFENDANT'S EXHIBIT QDX 9350 WAS MARKED FOR 

IDENTIFICATION.) 

THE COURT: AND THEN LET'S -- WE'LL TALK LATER ABOUT 

PROBABLY WE SHOULD HAVE ALL OF THE DEMONSTRATIVES AT LEAST 

LODGED, EVEN THOUGH THEY'RE NOT BEING ADMITTED, FOR THE RECORD 

IT SHOULD BE COMPLETE. AND WE'LL PROBABLY NEED THAT PHONE 

THEN. 

ALL RIGHT. THANK YOU. SORRY FOR THE INTERRUPTION. GO 

AHEAD, PLEASE. 

BY MR. PAIGE: 

Q. WHY DOES SOMETHING LIKE QRD MAKE SENSE FOR QUALCOMM? 

A. WELL, OUR GOAL IS TO PUSH THE TECHNOLOGY AS FAR AS WE CAN 

AND TO AS MANY PEOPLE AS WE CAN, AND I THINK ALSO IF YOU LOOK 

AT THE HISTORY OF THE MOBILE INDUSTRY, YOU END UP WITH THESE 

BIG PLAYERS -- THIS KIND OF HAS GONE THROUGH CYCLES, AND WE'VE 

LIVED THROUGH THE CYCLES WHERE YOU HAVE THE BIG PLAYERS, PHONE 

MANUFACTURERS IS WHAT I MEAN, THAT TEND TO CONTROL THE 

INDUSTRY. 

AND THEN LITTLE GUYS COME UP AND BECOME NEW BIG 

COMPETITORS FOR THEM. I'LL GIVE YOU AN EXAMPLE IS WE, LIKE 

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THOMPSON DIRECT BY MR. PAIGE

UNITED STATES COURT REPORTERS

1366

SAMSUNG, YOU GO BACK MANY YEARS AND WE STARTED WITH SAMSUNG IN 

THIS SORT OF MANNER AND THEY BECAME A BIG GUY. 

AND THEN YOU LOOK TODAY, WE HAVE SOME CUSTOMERS THAT 

STARTED OFF BEING VERY SMALL. I'LL GIVE YOU EXAMPLES WOULD BE 

LIKE OPPO, VIVO, XIAOMI, ONEPLUS, VERY SMALL AT A TIME, BUT NOW 

THEY'RE BECOMING VERY STRONG COMPANIES AND THEY'RE CHALLENGING, 

STARTING TO CHALLENGE HUAWEI, THEY'RE STARTING TO CHALLENGE 

SAMSUNG AND APPLE. THEY'RE GOING TO BE GOING TO EUROPE. 

AND SO WE TRY TO -- BASICALLY THE SMALL COMPANIES LOVE US, 

AND THEN THE LARGE COMPANIES, IT'S KIND OF LIKE WE'RE 

COMPETITION AND A SUPPLIER. SO THEY LIKE US AND DON'T LIKE US 

I GUESS.

Q. AND WHAT DO YOU THINK ABOUT THE SPREAD OF COMMUNICATIONS 

TECHNOLOGY AROUND THE WORLD THROUGH THINGS LIKE QRD? 

A. YEAH. SO FOR ME -- LIKE WHEN I STARTED IN THIS BUSINESS, 

OR WHEN I CAME TO QUALCOMM 27 YEARS AGO, YOU KNOW, I COULDN'T 

AFFORD A PHONE. YOU KNOW, SO PHONES WERE VERY EXPENSIVE. THE 

ANALOG PHONES WERE VERY, VERY EXPENSIVE. 

SO YOU LOOK AT WHAT'S HAPPENED, QUALCOMM, OUR INDUSTRY, 

YOU KNOW, NOW PHONES ARE, YOU KNOW, IT'S LIKE HALF THE 

POPULATION OF THE WORLD OWNS A PHONE, WHICH I THINK IS PRETTY 

INCREDIBLE. 

BUT IT'S NOT JUST A PHONE. IT'S ALSO A COMPUTING DEVICE. 

IT'S A CONNECTION TO THE INTERNET. AND SO YOU HAVE -- I THINK 

THIS IS ESPECIALLY IMPORTANT FOR THE DEVELOPING WORLD, AND 

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THOMPSON DIRECT BY MR. PAIGE

UNITED STATES COURT REPORTERS

1367

THEN -- AND JUST -- YOU KNOW, GOING BACK TO QRD AND SOME OF 

THESE SUPER LOW COST PARTS THAT WE DO IS THAT THAT'S -- I THINK 

THAT THE COMMUNICATIONS AND INTERNET AND DATA ARE, YOU KNOW, 

THE KEY TO KIND OF, I WOULD SAY, BOTH ECONOMIC SUCCESS AND 

HUMAN SUCCESS AROUND THE WORLD. 

SO IT'S SOMETHING THAT I'M ACTUALLY VERY PROUD OF THAT 

I'VE BEEN PART OF.

Q. DR. THOMPSON, IF I COULD ASK YOU TO TURN TO QX 9204 IN 

YOUR BINDER. 

THE COURT: THIS IS A QX AND NOT A QDX; IS THAT 

CORRECT? 

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

Q. DR. THOMPSON, DO YOU RECOGNIZE QX 9204? 

A. YES. 

Q. AND WAS THIS MADE IN OR AROUND THE TIME OF THIS -- BY 

SOMEONE WITH KNOWLEDGE OF THE DOCUMENT? 

A. YES. 

Q. WAS IT MADE IN OR AROUND THE TIME OF THE EVENTS RECORDED 

IN THE DOCUMENT? 

A. YES.

Q. IS IT KEPT BY QUALCOMM IN THE REGULAR COURSE OF ITS 

BUSINESS? 

A. YES. 

Q. AND IS IT MAINTAINED BY QUALCOMM IN ITS RECORDS? 

A. YES. 

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THOMPSON DIRECT BY MR. PAIGE

UNITED STATES COURT REPORTERS

1368

MR. PAIGE: I MOVE THE ADMISSION OF QX 9204, YOUR 

HONOR. 

MR. KEHL: NO OBJECTION, YOUR HONOR. 

THE COURT: IT'S ADMITTED. 

(DEFENDANT'S EXHIBIT 9204 WAS ADMITTED IN EVIDENCE.) 

THE COURT: GO AHEAD, PLEASE.

BY MR. PAIGE:

Q. DR. THOMPSON, IF YOU WOULD TURN TO SLIDE 14 OF QX 9204. 

A. OKAY. I'VE GOT IT.

Q. WHAT DOES THIS TELL US -- THIS WAS FROM JUNE 2011; RIGHT? 

A. YES.

Q. WHAT DOES THIS TELL US ABOUT QUALCOMM'S VIEW OF 

COMPETITION IN JUNE OF 2011? 

A. WELL, SO THIS -- THIS IS -- YOU LOOK AT THE COMPANY LOGOS, 

THIS IS SOME -- NOT ALL THE COMPETITION THAT WE HAD AT THAT 

TIME, BUT A LOT OF THE COMPETITORS THAT WE THOUGHT WERE, YOU 

KNOW, THAT WE WERE CONCERNED ABOUT, SAY. 

AND IF YOU LOOK AT THIS, THE -- WHAT THIS IS SAYING IS 

THAT, AT LEAST -- AND I MENTIONED THIS BEFORE IN MY 

TESTIMONY -- THAT WHAT THE KEY IS HAVING APPLICATION PROCESSOR 

WHICH INCLUDES ALL THIS MULTIMEDIA, AND A MODEM, INTEGRATE 

THOSE TWO THINGS TOGETHER. 

AND SO WHAT THIS IS DESCRIBING IS, LIKE, A BROADCOM, 

MARVEL, ST-ERICSSON WERE ALREADY THERE, THEY WERE ALREADY DOING 

THAT. 

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THOMPSON DIRECT BY MR. PAIGE

UNITED STATES COURT REPORTERS

1369

AND THEN WE HAD THE COMPANIES AT THE TIME, NVIDIA AND 

SAMSUNG, INTEL WERE ALL PURSUING THAT. SO WE WERE EXPECTING 

THAT AT LEAST THOSE THREE COMPANIES WOULD SOON MOVE OVER INTO 

THIS KIND OF TOTALLY INTEGRATED SOC PRODUCT. 

AND SO OUR, OUR EXPECTATION WAS THAT THAT'S WHERE YOU 

REALLY -- THAT'S WHERE THE BATTLEGROUND WAS, OR THAT'S WHERE 

THE MOST EFFICIENT DESIGN WOULD BE, AND SO WHOEVER WAS THERE 

WOULD BE THE KIND OF MOST DIFFICULT COMPETITION FOR US. 

Q. OKAY. AND IF YOU COULD TURN TO SLIDE 44, PLEASE. 

A. YEAH, OKAY.

Q. AND WHAT DOES THIS TELL YOU ABOUT QUALCOMM'S VIEW OF WHERE 

IT WAS AND WHERE IT NEEDED TO BE IN 2011 IN TERMS OF THIS 

INTEGRATION YOU'RE TALKING ABOUT? 

A. YEAH. SO IF YOU REMEMBER, I TALKED A LITTLE -- THESE ARE 

APPLICATION PROCESSOR TECHNOLOGIES, AND SO, LIKE CAMERA IS ONE 

OF THE MULTIMEDIAS -- 

Q. THE CORES THAT YOU TALKED ABOUT? 

A. YEAH, THE CORES, THAT'S RIGHT. 

SO WE FELT PRETTY GOOD AT THAT TIME ABOUT THE CAMERA. WE 

PUT A LOT OF FOCUS ON THE CAMERA. 

BUT THERE WERE SOME OF THESE TECHNOLOGIES THAT WE THINK -- 

WE THOUGHT THAT WE WERE BEHIND, AND I -- TO ME THE ONES THAT 

STOOD OUT WERE REALLY GPU, THAT'S GRAPHICS, BY THE WAY, AND 

ALSO VIDEO. 

THERE'S OTHERS, BUT THOSE ARE THE ONES THAT I WAS VERY, 

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THOMPSON DIRECT BY MR. PAIGE

UNITED STATES COURT REPORTERS

1370

VERY CONCERNED ABOUT. 

AND, OF COURSE, IF YOU LOOK ON THE RIGHT SIDE, OUR PLAN -- 

SO THIS WASN'T -- BY THE WAY, THIS CHART ISN'T JUST US 

REALIZING, OH, MY GOD, WE'VE GOT TO DO THIS BECAUSE I SAW THIS 

CHART. THIS WAS A CHART WHERE WE'RE TRYING TO REPRESENT WHAT 

OUR PLAN IS. 

SO OUR PLAN WAS TO GET -- IN THE 2013 TIMEFRAME, WE HAD A 

VERY SPECIFIC PART IN MIND, AND WE WANTED TO BECOME LEADERS IN 

THOSE TWO AREAS IN PARTICULAR. 

Q. AND TURNING TO THE NEXT SLIDE, SLIDE 45, WHAT DOES THIS 

TELL YOU ABOUT THE THINGS THAT QUALCOMM THOUGHT IT NEEDED TO DO 

WITH ITS CORES? 

A. YEAH. SO ON THE LEFT, THOSE ARE JUST TECHNOLOGIES THAT 

ARE PART OF THE APPLICATION PROCESSOR AND -- OR REPRESENT THE 

MAIN TECHNOLOGIES. SO THAT'S THE CAMERA, VIDEO, POSITION 

LOCATION, YOU KNOW, A LOT OF THINGS LIKE THAT. 

SO WE HAVE TEAMS ASSOCIATED WITH EACH ONE OF THESE 

TECHNOLOGIES, AND THEN -- THIS IS JUST VERY SIMPLE TO SHOW WHAT 

THESE TEAMS ARE -- WHAT THEY'RE CONCERNED ABOUT, WHAT THEY 

BELIEVE THEY HAVE TO DO IN THE NEXT FEW YEARS, WHAT SOME OF THE 

DISRUPTIONS MIGHT BE THAT THEY HAVE TO DEAL WITH. 

SO THAT'S KIND OF WHAT THIS CHART REPRESENTS.

Q. OKAY. DR. THOMPSON, I'D LIKE YOU TO TURN TO SLIDE 2 IN 

YOUR DEMONSTRATIVES, PLEASE. 

A. YEAH. GOT IT.

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THOMPSON DIRECT BY MR. PAIGE

UNITED STATES COURT REPORTERS

1371

Q. DOES THIS SLIDE SHOW SOME EXAMPLES OF THINGS THAT QUALCOMM 

HAS DONE FIRST? 

A. YEAH. SO THE FIRST CHIP ON HERE IS THE MSM 5500. THAT 

WAS THE FIRST EV-DO CHIP. IT ALSO INCLUDED CDMA AND HAD EV-DO 

IN IT AS WELL.

Q. AND THAT'S THE EV-DO WE SPOKE ABOUT EARLIER IN YOUR 

TESTIMONY? 

A. YES.

Q. AND THE CHIP NEXT TO THAT, THE MSM 6100, WHAT FIRST DOES 

THAT REPRESENT? 

A. YEAH, SO 6100, THAT IS WHERE WE WERE TRYING TO PROVIDE 

VERIZON GLOBAL ROAMING CAPABILITY SO THAT WE COULD USE THEIR 

PARTNERSHIP WITH VODAPHONE.

Q. I'M SORRY. IS THAT THE 6100? 

A. 60 -- MSM 6100. I GOT IT. I CAN SEE IT. YEAH. 

AND -- YEAH. SO THAT WAS REALLY OUR FIRST MULTIMODE 

PRODUCT THAT WE DID.

Q. WAS THAT THE 6300 OR THE 6100 WAS THE MULTIMODE? 

A. YEAH, OKAY. I -- I'M SORRY. I WAS TALKING ABOUT THE 

6300. OKAY. 

I'VE GOT TO START OVER AGAIN. 6100 WAS THE GLOBAL ROAMING 

PRODUCT, THE FIRST MULTIMODE -- OKAY. NOW I'M -- OKAY. I'M 

REALLY SCREWING THIS UP. 

6100 WAS THE FIRST PART THAT WE INTEGRATED -- I 

APOLOGIZE -- 6100 WAS THE FIRST PART THAT WE INTEGRATED CAMERA 

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THOMPSON DIRECT BY MR. PAIGE

UNITED STATES COURT REPORTERS

1372

AND MP3. SO MP3 IS THAT AUDIO STANDARD THAT I TALKED ABOUT. 

SO THAT WAS OUR FIRST, CALL IT, MULTIMEDIA CHIP. 

OKAY. 6300 WAS THE FIRST GLOBAL ROAMING PART THAT WE DID 

FOR VERIZON SO THAT THEY COULD -- THEIR CUSTOMERS COULD GO TO 

EUROPE.

Q. WITH VODAPHONE. YOU TALKED ABOUT THAT EARLIER? 

A. WITH VODAPHONE. SORRY ABOUT THE CONFUSION.

Q. THAT'S OKAY. MOVING OVER TO THE NEXT ONE, THE 7600, WHAT 

WAS THAT CHIP THE FIRST OF? 

A. OKAY. SO THAT'S -- SO I MENTIONED BEFORE THAT WE HAD MADE 

A DECISION TO SUPPORT ALL MODES IN THE WORLD SO OUR MODEMS 

COULD GO ANYWHERE IN THE WORLD, AND THAT WAS THE FIRST CHIP 

THAT SUPPORTED THAT. 

AND WHY -- LIKE FOR OUR CUSTOMERS, OUR CUSTOMERS ALL HAD 

GLOBAL AMBITIONS. SO THEY WANTED TO BE ABLE TO SELL ON ANY 

NETWORK IN THE WORLD. SO WHAT THEY WANTED AND WHAT WE THOUGHT 

WOULD BE VALUABLE TO THEM WAS IF WE PROVIDED A PRODUCT THAT 

THEY COULD TAKE ANYWHERE IN THE WORLD. 

Q. AND WHAT STANDARDS DID THE 7600 HAVE ON IT? 

A. IT WAS CDMA, D.O., WCDMA, GSM, GPRS, AND EDGE. 

Q. AND WAS THAT THE FIRST CHIP THAT QUALCOMM PRODUCED THAT 

HAD BOTH WCDMA AND CDMA ON IT? 

A. YES. 

Q. WHAT YEAR WAS THAT RELEASED? 

A. THAT WAS 2007. AND THEN AFTER THAT -- THAT WAS THE FIRST 

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UNITED STATES COURT REPORTERS

1373

CHIP WE DID THAT. 

AND THEN AFTER THAT, EVERY PART THAT WE'VE DONE SINCE 

THEN, WITH THE EXCEPTION OF ONE SUPER LOW END PART, HAS 

MULTIMODE. SO ALL -- WHAT I WOULD CALL ALL MODE.

Q. OKAY. NEXT TO THAT IS THE MDM 9X00. 

A. YEAH. 

Q. WHAT WAS THAT CHIP? 

A. THAT'S THE CHIP THAT WAS OUR FIRST LTE PART. THAT WAS AN 

MDM, SO IT WASN'T A FULL SOC WITH ALL THE MULTIMEDIA. IT WAS 

INTENDED ORIGINALLY FOR, LIKE, DATA CARTS AND DONGLES AND 

THINGS LIKE THAT.

Q. AND WAS THAT THE FIRST LTE MODEM RELEASE YOU REFERRED TO 

EARLIER IN YOUR TESTIMONY? 

A. YES.

Q. NEXT TO THAT IS THE MSM 8960. WHAT WAS THAT CHIP? 

A. SO THAT WAS AN IMPORTANT CHIP, A VERY IMPORTANT CHIP FOR 

US BECAUSE IT WAS WHEN WE WERE ABLE TO DO THIS ALL MODE LTE 

MODEM AND WE WERE ABLE TO MAKE IT SMALL ENOUGH AND EFFICIENT 

ENOUGH THAT WE COULD INTEGRATE IT WITH AN APPLICATION 

PROCESSOR. SO THEN IT HAD ALL THE MULTIMEDIA THAT WAS 

REQUIRED. 

AND ALSO, WHEN YOU DO THE INTEGRATED PRODUCT, IT ENDS UP 

BEING BETTER IN POWER, BETTER IN PERFORMANCE, BETTER IN COST. 

COST WAS ACTUALLY THE BIGGEST THING. 

SO IT ALLOWED -- IN MY MIND, IT ALLOWED LTE GLOBALLY TO 

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THOMPSON DIRECT BY MR. PAIGE

UNITED STATES COURT REPORTERS

1374

SCALE UP BECAUSE OF THAT, THAT PRODUCT.

Q. AND THEN NEXT TO IT IS THE MSM 8974. WHAT'S THE FIRST 

ABOUT THAT CHIP? 

A. YEAH. SO THAT'S -- THAT WAS THE MOST SUCCESSFUL PREMIUM 

TIER PART THAT WE'VE DONE, AND WHAT WAS SPECIAL ABOUT THAT PART 

WAS -- REMEMBER, I WAS TALKING ABOUT MULTIMEDIA AND HOW WE 

WANTED TO BE THE BEST AND WE WERE LAGGING IN SOME AREAS. 

AND IN PARTICULAR, THAT PART CAME OUT AND WE HAD OUR BRAND 

NEW GRAPHICS CORE INTERNALLY DESIGNED AND IT WAS HEAD AND 

SHOULDERS ABOVE OUR COMPETITORS IN TERMS OF PERFORMANCE, POWER, 

COST. 

AND SO THERE WAS ALSO A VIDEO CAMERA. 

AND SO WE LED ACROSS MULTIPLE DIMENSIONS OF MULTIMEDIA. 

SO IT WAS A VERY, VERY SUCCESSFUL PRODUCT.

AND THEN ONE OTHER COMPONENT OF THAT PART WAS IT WAS OUR 

FIRST CARRIER AGGREGATION PRODUCT, BECAUSE REMEMBER I WAS 

SAYING WE IMPROVED THE MODEM, TRIED TO IMPROVE THE MODEM EVERY 

YEAR TO ADD THE LATEST FEATURES.

Q. WHAT YEAR WAS THAT THAT YOU RELEASED CARRIER AGGREGATION 

FOR LTE? 

A. THAT WAS 2013. THAT'S WHEN THE PRODUCT WAS RELEASED.

Q. OKAY. LOOKING OUT AT THE RIGHT, THE SDM 1835, WHAT'S THAT 

CHIP'S FIRST? 

A. YEAH, SO THAT'S OUR GIGABIT LTE PART. SO THAT WAS SORT OF 

A MILESTONE, YOU KNOW, IN THE INDUSTRY WHERE WE COULD SUPPORT 

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THOMPSON DIRECT BY MR. PAIGE

UNITED STATES COURT REPORTERS

1375

UP TO A GIGABIT OF DATA THROUGHPUT ON A CHIP. BUT THAT WAS A 

FULL MSM. THERE'S OTHER THINGS ABOUT IT. IT WAS OUR FIRST 

PART IN 10 NANOMETERS. 

I THINK THE KEY POINT, THOUGH, IS THAT IT WAS, YOU KNOW -- 

IT SUPPORTED A GIGABIT OF THROUGHPUT.

Q. WHAT'S A GIGABIT OF THROUGHPUT LIKE IN TERMS OF DATA RATE? 

A. SO YOU THINK OF IT AS LIKE EQUIVALENT OF THE DATA 

THROUGHPUT YOU WOULD GET ON A FIBER OPTIC CABLE OR SOMETHING 

LIKE THAT.

Q. BUT THAT COMES OVER THE AIR? 

A. AND IT'S OVER THE AIR. SO IT'S VERY, VERY HIGH DATA RATE.

Q. LET ME LOOK AT ONE CHIP THAT ISN'T LABELED WITH A LINE 

THERE. IT'S THE MSM 8994. WHAT CAN YOU TELL US ABOUT THAT 

CHIP? 

A. YEAH. SO THAT PART WAS NOT A SUCCESS. THAT WAS A PREMIUM 

TIER PART THAT WE WERE WORKING ON. IT WAS IN A BRAND NEW 

PROCESS TECHNOLOGY AND WE HAD SOME ISSUES WITH THAT, 20 SOC, WE 

HAD SOME ISSUES WITH THE PROCESS TECHNOLOGY FROM A PERFORMANCE 

AND YIELD POINT OF VIEW. SO THAT -- BUT THAT WAS A MINOR 

ISSUE. 

THE BIG ISSUE WE HAD WITH THAT PART IS THAT THERE WAS A 

BIG MARKETING CAMPAIGN THAT CAME OUT THAT SAID 64 BIT 

PROCESSORS, WHICH WERE BETTER THAN 32 BIT PROCESSORS, AND IN 

REALITY FOR THIS PART FROM A TECHNICAL POINT OF VIEW, THAT 

WASN'T TRUE AT THAT TIMEFRAME. 

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1376

BUT THE MARKETING CAMPAIGN WON, AND BASICALLY EVERY ONE OF 

OUR CUSTOMERS CAME BACK AND SAID YOU MUST HAVE A 64 BIT 

PROCESSOR IN THIS CHIP. 

AND SO WE HAD HAD -- WE HAD A 32 BIT PROCESSOR IN THE 

CHIP, SO VERY LATE IN THE GAME, WE HAD TO SWAP OUT THE CPU, 

WHICH IS VERY DIFFICULT. AND THE PROBLEM IS WE JUST DIDN'T 

HAVE ENOUGH TIME TO OPTIMIZE THE DESIGN IN TERMS OF PERFORMANCE 

AND POWER. THAT WAS THE BIG ISSUE. 

AND SO THE PART CAME OUT, AND IT DIDN'T PERFORM THAT WELL, 

ESPECIALLY IN THE BEGINNING. WE WENT THROUGH MULTIPLE 

ITERATIONS TO TRY TO IMPROVE IT, BUT IT DIDN'T PERFORM VERY 

WELL FROM AN APPLICATION PROCESSOR POINT OF VIEW. 

AND SO WE HAD -- LIKE, FOR EXAMPLE, SAMSUNG WAS -- WE 

HAD -- THEY -- THEY WERE A VERY LARGE CUSTOMER OF OURS IN THE 

PREMIUM TIER. THEY USED -- MOST OF THEIR GALAXY, FOR EXAMPLE, 

USED OUR MSM, OUR SOC. 

AND THEN THEY, THEY WORKED WITH THAT PART FOR A LITTLE 

WHILE AND THEN ULTIMATELY DECIDED NOT TO USE IT. 

AND SO THEY, THEY DROPPED US COMPLETELY FROM THEIR GALAXY 

LINE, WHICH IS THEIR PREMIUM TIER PRODUCTS, AND THEY USED 

EXYNOS, WHICH IS THEIR INTERNALLY DESIGNED CHIPSET. 

AND THEN WE HAD OTHER CUSTOMERS, SOME OTHER CUSTOMERS USE 

THE OLD CHIP, SOME CUSTOMERS USED A LOWER TIERED CHIP. 

SO ANYWAY, IT CAUSED A LOT OF PAIN FOR US.

Q. WHAT WAS WRONG WITH THE MODEM IN THE MSM 8994? 

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1377

A. THE MODEM, IT WAS THE BEST, IN MY VIEW, THE BEST MODEM ON 

THE PLANET. BUT, BUT IT -- THAT WAS NOT ENOUGH TO SAVE THAT 

PART. 

SO OUR -- IF YOU LOOK AND YOU JUST COMPARE IT TO 8974, 

WHICH WAS OUR MOST SUCCESSFUL PREMIUM TIER PART WE EVER DID, WE 

HAD ABOUT A TENTH OF THE LIFETIME SALES ON THAT PART. SO VERY 

SIGNIFICANT. 

Q. SO WHAT DOES THAT TELL YOU ABOUT WHAT QUALCOMM NEEDS TO DO 

EVERY YEAR WITH ITS NEW PARTS?

A. WELL, SO WE WIN OR LOSE EVERY SINGLE YEAR, AND IT'S NOT 

ABOUT A SINGLE TECHNOLOGY. IT'S ABOUT, YOU KNOW, A LOT -- A 

WIDE RANGE OF TECHNOLOGIES, ALL THE THINGS THAT MAKE, YOU KNOW, 

A PHONE INTERESTING. SO IT'S NOT JUST ONE THING, IT'S MANY 

THINGS. 

IF YOU KIND OF HAVE A SPECTACULAR FAILURE ON ONE OF THOSE 

TECHNOLOGIES, IT DOESN'T MATTER, YOU'RE GOING TO LOSE. 

Q. LET ME TURN YOUR ATTENTION TO QUALCOMM'S R&D. 

HOW MUCH DID QUALCOMM SPEND ON R&D A YEAR FROM 2011 

THROUGH 2016? 

A. WE SPENT ABOUT $5 BILLION A YEAR, ROUGHLY.

Q. AND WHAT PERCENTAGE OF QUALCOMM'S REVENUE DOES THAT 

$5 BILLION A YEAR REPRESENT APPROXIMATELY? 

A. THAT'S A LITTLE OVER 20 PERCENT.

Q. OKAY. NOW, I WANT TO TURN YOUR ATTENTION TO APPLE. 

HAVE YOU WORKED WITH APPLE?

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UNITED STATES COURT REPORTERS

1378

A. YES.

Q. DOES APPLE PURCHASE THE SAME SORTS OF CHIPS FROM QUALCOMM 

AS OTHER OEM'S? 

A. NO. MOST OF OUR CUSTOMERS, OR I SHOULD SAY ALL OF OUR 

MOBILE CUSTOMERS, WITH THE EXCEPTION OF APPLE, USE THE SOC THAT 

I DESCRIBED. 

APPLE IS -- THEY HAVE A DIFFERENT ARCHITECTURE WHERE THEY 

DO THEIR OWN APPLICATION PROCESSOR AND THEN THEY HAVE A MODEM 

THAT CONNECTS TO IT. WE CALL IT FUSION INTERNALLY, BUT IT'S 

JUST, JUST A MODEM THAT'S SEPARATE. 

AND IT'S JUST THE MODEM.

Q. AND WHAT'S THE QUALCOMM DESIGNATION FOR THAT, FOR THE 

MODEM? 

A. A THIN MODEM. WE CALL IT A THIN MODEM.

Q. OKAY. AND DOES QUALCOMM DO R&D ON THE THIN MODEMS THAT IT 

SELLS TO APPLE?

A. YES.

Q. WHAT SORT OF R&D DOES IT DO? 

A. WELL, SO WHAT WE DO IS WE TAKE -- WE INTRODUCE A BRAND NEW 

MODEM IN THAT PREMIUM TIER MSM, THE SOC THAT WE DO, AND WE TAKE 

THAT EXACT SAME MODEM AND THEN WE PUT IT INTO OUR PRODUCT FOR 

APPLE. BUT WE HAVE TO WRAP A COMPLETELY DIFFERENT CHIPSET 

AROUND IT. 

SO THE CHIP -- AND THEN THE OTHER COMPANION CHIPS, WE DO A 

DIFFERENT SET OF CHIPS FOR IT.

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1379

Q. AND IS THERE ANY DIFFERENT SOFTWARE THERE? 

A. YEAH. THE SOFTWARE IS SIGNIFICANTLY DIFFERENT BECAUSE THE 

REQUIREMENTS ARE JUST VERY DIFFERENT FOR APPLE.

Q. HOW WOULD QUALCOMM'S MDM BUSINESS CHANGE IF APPLE WERE NO 

LONGER BUYING MDM'S? 

A. WELL, WE WOULD DO FEWER MDM'S. WE WOULD DO AN MDM EVERY 

TWO YEARS. 

OKAY. SO MAYBE BACK UP. APPLE REQUIRES THAT YOU COME OUT 

WITH A NEW ONE EVERY YEAR. 

BUT IF YOU LOOK AT THE OTHER CUSTOMERS THAT USE THESE 

TYPES OF PRODUCTS, LIKE, FOR EXAMPLE, IN THIS DATA CARD 

BUSINESS, THOSE CUSTOMERS DON'T EVEN WANT US TO DO A NEW CHIP 

EVERY YEAR BECAUSE THEY WANT TO HAVE TO CHURN THEIR DESIGN 

EVERY YEAR. THE SMARTPHONE COMPANIES THAT COME OUT WITH 

SOMETHING NEW EVERY YEAR. 

Q. SO WHAT WOULD THE CADENCE BE WITHOUT APPLE TELLING YOU TO 

DO A NEW ONE EVERY YEAR? 

A. SO IT WOULD BE EVERY TWO YEARS, THREE YEARS, THAT KIND OF 

TIMEFRAME.

Q. AND WHY WOULD QUALCOMM MOVE TO GO INTO ONCE EVERY THREE 

YEARS FOR A NEW MDM AT THAT POINT? 

A. WHY WOULD WE -- IF WE DIDN'T HAVE APPLE BUSINESS YOU'RE 

SAYING?

Q. YEAH. 

A. IF WE DIDN'T HAVE APPLE BUSINESS, THE CUSTOMERS THAT WE 

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THOMPSON DIRECT BY MR. PAIGE

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1380

HAVE FOR THOSE, LIKE I SAID, THE DATA CARD PEOPLE, CARS, THINGS 

LIKE THAT, THEY DON'T DEMAND THAT YOU UPGRADE IT EVERY YEAR.

Q. AND WHAT DOES IT COST -- LET'S JUST TAKE YOUR 

ORGANIZATION. WHAT DOES IT COST, THE COSTS YOU CAN CONTROL 

PERSONALLY, EVERY YEAR TO DO A NEW MDM? 

A. YEAH. SO I DID AN ANALYSIS ON THIS AT ONE POINT AND MY 

GROUP -- AND -- WE SPENT, SAY, $250 MILLION A YEAR ON THE MDM 

FOR APPLE. AND THAT INCLUDES MATERIAL COSTS, SO THAT'S LIKE 

MASKS AND WAFERS AND TEST PLATFORMS. BUT IT'S ALSO PEOPLE'S 

SALARIES AND THINGS LIKE THAT THAT ARE IN MY GROUP.

Q. AND IS THAT ALL THE COST THAT WOULD BE SAVED IF YOU DID 

FEWER MDM'S? 

A. NO. THERE'S ADDITIONAL COST. CLEARLY THE, YOU KNOW, 

THERE'S OTHER PEOPLE IN THE COMPANY THAT ARE -- LIKE BUILDINGS, 

FOR EXAMPLE. SO I DON'T CONTROL BUILDINGS. SO THERE'S 

BUILDINGS, THERE'S I.T. EQUIPMENT, THERE'S I.T. PEOPLE, THERE'S 

HR PEOPLE, THERE'S LAWYERS. THERE'S ALL THESE OTHER PEOPLE 

THAT ARE ASSOCIATED WITH THINGS.

Q. AND I WANT TO DRAW YOUR ATTENTION TO A CHIP YOU DID CALLED 

THE MDM 9X15. 

HOW WOULD THE TIMING OF THE MDM 9X15 DEVELOPMENT HAD BEEN 

DIFFERENT IF IT WEREN'T FOR APPLE BUSINESS? 

A. WELL, SO WHEN APPLE CAME TO US -- MAYBE BACK UP. 

WE ORIGINALLY DEFINED THAT PART TO BE FOR MOBILE 

BROADBAND, SO -- BUT THEN WHEN APPLE CAME TO US, THEY WERE -- 

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THOMPSON DIRECT BY MR. PAIGE

UNITED STATES COURT REPORTERS

1381

THEY HAD DECIDED THEY ORIGINALLY WERE GOING TO USE A 3G PART, 

AND SO WE WERE WORKING WITH THEM ON A 3G PART. 

AND THEN THEY CAME TO US AND SAID, NO, WE WANT TO SWITCH 

TO 4G, AND THEY WANTED TO USE THE 9X15. 

AND SO IF YOU LOOK AT THE SCHEDULES THAT WE HAD, OUR 

SCHEDULES WERE OFF BY ABOUT NINE MONTHS. AND SO WE HAD TO, YOU 

KNOW, WORK WITH THEM TO TRY TO FIGURE OUT HOW -- AND ULTIMATELY 

WE FIGURED IT OUT, TO PULL THE SCHEDULES IN FOR THAT.

Q. AND AT THE R&D PLANNING STAGE FOR THE 9X15, WAS QUALCOMM 

PLANNING TO SELL THE 9X15 AS A FUSION CHIPSET TO OTHER 

CUSTOMERS? 

A. NO. THAT'S GENERALLY NOT IN OUR PLAN. WE -- THAT'S -- 

THAT TENDS TO BE OPPORTUNISTIC, OR -- FUSIONS TEND TO BE, WE 

TRY NOT TO DO THEM. WE ONLY DO THEM WHEN WE'RE KIND OF BACKED 

INTO A CORNER AND WE DON'T HAVE A FEATURE THAT'S REQUIRED THAT 

SOMEBODY IS ASKING FOR OR SOMETHING LIKE THAT. 

MR. PAIGE: THANK YOU, DR. THOMPSON. 

I HAVE NO FURTHER QUESTIONS AT THIS TIME. 

THE COURT: OKAY. THE TIME IS 9:48. 

(PAUSE IN PROCEEDINGS.) 

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

THE COURT: GO AHEAD, PLEASE. 

(PAUSE IN PROCEEDINGS.) 

THE COURT: READY? 

MR. KEHL: YES. 

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THOMPSON CROSS BY MR. KEHL

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1382

THE COURT: GO AHEAD, PLEASE. IT'S 9:14. 

CROSS-EXAMINATION

BY MR. KEHL:

Q. GOOD MORNING, DR. THOMPSON. 

A. GOOD MORNING.

Q. IT'S FAIR TO SAY THAT THE R&D INVESTMENTS THAT QUALCOMM 

MAKES IN A GIVEN MARKET CORRESPOND TO THE AMOUNT OF OPPORTUNITY 

THAT QUALCOMM RECEIVES IN THAT MARKET? 

A. YES.

Q. AND QUALCOMM'S SCALE ADVANTAGE ALLOWS IT TO DEPLOY TEAMS 

THAT WORK AROUND THE WORLD; ISN'T THAT FAIR TO SAY? 

A. YES. YEAH. YES. 

Q. AND YOU NEED A LOT OF MARGIN TO SUPPORT THAT, DON'T YOU? 

A. YES. 

Q. AND SAME, SAME QUESTION WITH RESPECT TO THE SIZE OF THE 

TEAMS. QUALCOMM'S SCALE ALLOWS IT TO HAVE LARGE TEAMS; ISN'T 

THAT RIGHT? 

A. YES. 

Q. DR. THOMPSON, I'D LIKE TO REFER YOU TO AN EXHIBIT IN YOUR 

BINDER THAT'S BEEN MARKED AS CX 5402. 

A. IS IT GOING TO COME UP HERE, OR AM I GOING TO -- 

Q. IT WILL EVENTUALLY, BUT FOR NOW, THIS IS IN THE BINDER 

LABELED "WITNESS BINDER." 

A. TELL ME WHERE I'M SUPPOSED TO LOOK FOR CX 54. 

Q. SURE. SO YOU HAVE A DEPOSITION BINDER AND THEN A WITNESS 

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THOMPSON CROSS BY MR. KEHL

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1383

BINDER? 

A. OKAY. I'VE GOT THE DEPOSITION.

Q. DO YOU HAVE THE WITNESS BINDER? 

A. WHICH ONE DO YOU WANT ME TO LOOK AT?

Q. THE WITNESS BINDER. 

A. OKAY.

Q. AND I'LL REFER YOU TO CX 5402. 

A. OKAY. 

Q. AND CX 5402 IS AN E-MAIL EXCHANGE BETWEEN YOURSELF AND 

MR. MOLLENKOPF; IS THAT RIGHT? 

A. YES. 

MR. KEHL: YOUR HONOR, WE MOVE TO ADMIT CX 5402. 

MR. PAIGE: NO OBJECTION.

THE COURT: IT'S ADMITTED. 

(PLAINTIFF'S EXHIBIT CX 5402 WAS ADMITTED IN EVIDENCE.) 

THE COURT: GO AHEAD, PLEASE. 

BY MR. KEHL:

Q. DR. THOMPSON, I REFER YOU TO YOUR JUNE 29TH E-MAIL IN THIS 

STRING, WHICH APPEARS ON PAGE 3. 

DO YOU SEE THAT? 

A. I'M JUST ORIENTING MYSELF. JUNE 29TH, OKAY. I SENT -- 

PAGE 3. OKAY. GOT IT.

Q. AND IN YOUR E-MAIL, YOU HAVE, IN THE SECOND PARAGRAPH, A 

HEADER THAT READS, APPLE. 

DO YOU SEE THAT? 

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THOMPSON CROSS BY MR. KEHL

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1384

A. YES.

Q. AND THE SECOND SENTENCE IN THAT E-MAIL READS, IN THAT 

PARAGRAPH READS, "IF APPLE'S ULTIMATE GOAL IS TO TAKE DOWN OUR 

LICENSING BUSINESS OR AT LEAST CHIP AWAY AT IT WITH A 

NEGOTIATION EVERY FEW YEARS WE SHOULD FIGHT BACK WHILE WE ARE 

STRONG." 

DO YOU SEE THAT? 

A. YES.

Q. AND A FEW SENTENCES LATER YOU CONTINUE. "IN FACT, WITHOUT 

US, WE WOULD LOSE BIG PARTS OF NORTH AMERICA, JAPAN AND CHINA." 

DO YOU SEE THAT? 

A. YES.

Q. AND THAT STATEMENT IN PART REFERENCES CDMA MARKETS? 

A. CDMA AND TD-SCDMA. THAT'S A CHINESE STANDARD.

Q. AND YOU CONTINUE, "THAT WOULD REALLY HURT THEM"? 

A. THAT'S CORRECT. 

Q. YOU CAN PUT CX 5402 AWAY. 

DR. THOMPSON, QUALCOMM'S MSM 8655 MODEM CHIP -- 

A. AM I LOOKING AT SOMETHING?

Q. NO. 

A. OKAY.

Q. DR. THOMPSON, QUALCOMM'S MSM 8655 MODEM CHIP IS A CDMA 

CAPABLE MODEM CHIP? 

A. THAT -- THE MSM 8655, I'M TRYING TO REMEMBER. I -- YOU 

KNOW, OFF THE TOP OF MY HEAD, I'M TRYING TO REMEMBER WHICH ONE 

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THOMPSON CROSS BY MR. KEHL

UNITED STATES COURT REPORTERS

1385

THAT IS. WE USE INTERNAL CODE NAME, AND SO -- 

Q. DOES THE SECOND DIGIT BEING A 6 TELL YOU THAT THIS HAS 

CDMA?

A. HONESTLY, I DON'T -- I DON'T KNOW THE MARKETING CODES THAT 

ARE USED. I HAVE KIND OF -- I THINK 9 MEANS IT HAS LTE. 

BUT -- BUT I'M NOT SURE. I'M NOT 100 PERCENT SURE. SORRY. 

Q. I'LL MOVE ON. 

DR. THOMPSON, YOU TESTIFIED THAT QUALCOMM'S MDM AND MSM 

PRODUCTS USE THE SAME MODEM; IS THAT RIGHT? 

A. YES. 

Q. AND, IN FACT, THE MDM PRODUCTS AT TIMES PIGGY BACK OFF 

ENGINEERING EFFORTS THAT GO INTO THE MSM PRODUCTS; RIGHT? 

A. YES, WE TRY TO SHARE ENGINEER PRODUCTS, FOR SURE.

Q. FOR INSTANCE, THE MSM -- LET ME REPHRASE. FOR INSTANCE, 

THE MDM 9625 PIGGY BACKED OFF THE ENGINEERING EFFORT THAT WENT 

INTO THE MSM 8974? 

A. YES. 

Q. DR. THOMPSON, YOU'D ALSO AGREE THAT MODEM FEATURES THAT 

WERE ONCE PREMIUM WATER FALL DOWN TO LOWER TIERS? 

A. THAT'S CORRECT.

Q. DR. THOMPSON, I'D LIKE TO REFER YOU TO A DOCUMENT IN YOUR 

BINDER LABELED CX 6334. IT'S AT THE VERY END OF THE BINDER. 

A. OH. 6334. OKAY. I GOT IT. 

Q. AND CX 6334 IS A QCT COUNCIL PRODUCT TWO PRESENTATION FOR 

THE ELAN MODEM CHIP; IS THAT RIGHT? 

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THOMPSON CROSS BY MR. KEHL

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1386

A. YES.

Q. AND YOU'RE LISTED AS A CC RECIPIENT OF THIS COUNCIL 

PRESENTATION; CORRECT? 

A. I DON'T SEE THAT. BUT I ALWAYS GET THESE.

Q. YOU PARTICIPATED? 

A. I PARTICIPATED. 

MR. KEHL: YOUR HONOR, WE MOVE TO ADMIT 6334 AND NOTE 

FOR THE RECORD THAT THIS IS A TRUNCATED VERSION OF THE EXHIBIT 

FROM PAGES 1 TO 66. 

MR. PAIGE: NO OBJECTION TO THE ADMISSION OF PAGES 1 

THROUGH 66, YOUR HONOR. 

THE COURT: IT'S ADMITTED. 

(DEFENDANT'S EXHIBIT CX 6334 WAS ADMITTED IN EVIDENCE.) 

THE COURT: GO AHEAD, PLEASE. 

BY MR. KEHL:

Q. AND, DR. THOMPSON, THIS IS THE PRODUCT COUNCIL 

PRESENTATION FOR THE ELAN CHIPSET? 

A. YES. 

Q. ELAN WAS A THIN MODEM? 

A. YES. 

Q. AND THE PRODUCT COUNCIL APPROVAL REPRESENTS FINAL APPROVAL 

FOR A MODEM CHIP? 

A. IT'S THE APPROVAL OF THE PLAN. SO THE AMOUNT OF SPENDING, 

THE SCHEDULE, YOU KNOW, ALL OF THOSE KIND OF KEY ASPECTS OF THE 

PRODUCT, YEAH. 

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THOMPSON CROSS BY MR. KEHL

UNITED STATES COURT REPORTERS

1387

Q. IF I COULD REFER YOU TO PAGE 24 OF CX 6334, USING THE 

NUMBERS AT THE BOTTOM. 

A. OKAY. OH, THE CX -- I SHOULD LOOK AT THE CX NUMBERS? 

Q. LOOK AT THE CX NUMBERS. 

A. 24 YOU SAID? 

Q. YES. IT'S ALSO ON YOUR SCREEN. 

A. OH, OKAY. THAT'S EASIER. 

Q. DO YOU SEE THIS? 

A. YES. 

Q. SO THIS SLIDE READS PORTFOLIO VOLUME? 

A. YES. 

Q. AND THIS SLIDE REFLECTS THE SALES FORECASTS THAT PRODUCT 

COUNCIL USED TO GIVE APPROVAL TO THE ELAN CHIPSET? 

A. YES. 

Q. THANK YOU, DR. THOMPSON. YOU CAN PUT CX 6334 AWAY. 

DR. THOMPSON, QUALCOMM WILL NOT SELL MODEM CHIPS TO 

UNLICENSED COMPANIES; CORRECT? 

A. THE -- THE -- IF A COMPANY HAS A LICENSE, WE SELL. IF 

THEY'VE NEVER HAD A LICENSE AND THEY'RE NOT IN ANY KIND OF 

NEGOTIATIONS, MY UNDERSTANDING IS THAT WE DON'T.

Q. AND THAT INCLUDES MULTIMODE MODEM CHIPS? 

A. YES.

Q. AND THAT INCLUDES SYSTEMS ON A CHIP? 

A. YES. 

MR. KEHL: NO FURTHER QUESTIONS, YOUR HONOR. 

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UNITED STATES COURT REPORTERS

1388

THE COURT: ALL RIGHT. TIME IS 9:56. 

IS THERE ANY REDIRECT? 

MR. PAIGE: NO. THANK YOU, YOUR HONOR. 

THE COURT: ALL RIGHT. MAY THIS WITNESS BE EXCUSED 

SUBJECT TO RECALL OR NOT? WHAT DO YOU BOTH THINK? 

MR. PAIGE: NOT SUBJECT, YOUR HONOR. 

THE COURT: DO YOU AGREE? 

MR. KEHL: NOT SUBJECT TO RECALL. 

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

TESTIMONY, AND YOU'RE FREE TO LEAVE. 

THE WITNESS: THANKS. OH, WHAT SHOULD I DO WITH THIS 

(INDICATING)? 

THE COURT: LET'S LEAVE THAT HERE, PLEASE, AND WE'LL 

ASK THAT YOU PUT A NUMBER ON IT, A QDX NUMBER. 

THE WITNESS: SHOULD I GIVE IT TO MY LAWYER? 

THE COURT: YOU CAN LEAVE IT HERE ON THE WITNESS 

STAND. WE'LL TAKE CARE OF EVERYTHING. THANK YOU. 

OKAY. CALL YOUR NEXT WITNESS, PLEASE. 

MR. PETERSON: JORDAN PETERSON FROM QUALCOMM. 

WITH YOUR HONOR'S PERMISSION, QUALCOMM WILL NOW PLAY THE 

VIDEOTAPED DEPOSITION OF ERIC REIFSCHNEIDER, FORMERLY OF 

QUALCOMM. 

YOUR HONOR PREVIOUSLY HEARD TESTIMONY FROM 

MR. REIFSCHNEIDER VIA VIDEO IN THE FTC'S CASE ON JANUARY 4TH. 

THE VIDEO IS APPROXIMATELY 11 MINUTES IN LENGTH, AND THERE 

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REIFSCHNEIDER DEPOSITION

UNITED STATES COURT REPORTERS

1389

ARE NO COMPLETENESS DESIGNATIONS FROM THE FTC AS PART OF THIS 

VIDEO. 

THE COURT: OKAY. ALL RIGHT. IT'S 9:57. 

GO AHEAD, PLEASE. 

MR. PETERSON: AT THIS TIME WE'RE NOT OFFERING ANY 

ADDITIONAL EXHIBITS INTO EVIDENCE, BUT THERE ARE THREE EXHIBITS 

THAT ARE MENTIONED THAT THE FTC PREVIOUSLY OFFERED INTO 

EVIDENCE. THOSE ARE CX 6528, CX 5219, AND CX 6491. 

THE COURT: OKAY. GO AHEAD, PLEASE. 

(THE VIDEOTAPED DEPOSITION OF ERIC REIFSCHNEIDER WAS 

PLAYED IN OPEN COURT OFF THE RECORD.) 

THE COURT: OKAY. THE TIME IS 10:09. 

SO LET ME ASK, YOU WENT FROM YOUR FIRST WITNESS TO YOUR 

12TH WITNESS IN YOUR LIST FOR TODAY. WHAT'S THE ORDER OF 

WITNESSES YOU'RE CALLING TODAY? JUST FOR PLANNING PURPOSES, IT 

WOULD BE HELPFUL. WHO IS YOUR NEXT WITNESS? 

MR. VAN NEST: YOUR HONOR, OUR NEXT WITNESS WILL BE 

FABIAN GONELL. 

THE COURT: OKAY. AND THEN ARE YOU GOING TO PROCEED 

ACCORDING TO YOUR LIST, OR ARE YOU JUMPING AROUND? 

MR. VAN NEST: I DON'T THINK SO. I THINK WE'RE GOING 

TO PROCEED ACCORDING TO THE LIST. 

DO YOU HAVE MR. SAUER ON AFTER THAT? 

THE COURT: NO. I HAVE MR. HARTOGS. 

MR. VAN NEST: I THINK -- MR. SAUER IS FROM APPLE, SO 

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UNITED STATES COURT REPORTERS

1390

I THINK WE'LL FOLLOW AFTER LUNCH WITH HIM, AND THEN 

MR. HARTOGS. 

THE COURT: OKAY. 

MR. VAN NEST: AND THEN MR. CHEN. 

THE COURT: OKAY. 

MR. VAN NEST: AND WE HAVE SOME VIDEOS IF WE HAVE 

TIME IN THE LATE AFTERNOON. 

THE COURT: OKAY. AND ARE YOU -- I'M JUST WONDERING 

WHY YOU WENT FROM YOUR NUMBER 1 WITNESS TO YOUR 12TH WITNESS. 

MR. REIFSCHNEIDER WAS NOT UNTIL NUMBER 12. 

MR. VAN NEST: I THINK WE -- I THOUGHT WE SENT IN THE 

NEW LIST, BUT PERHAPS WE DIDN'T. I THINK WE MOVED THE VIDEO UP 

IN THE ORDER. 

THE COURT: I HAVE ECF 1332 FILED YESTERDAY. THAT -- 

THEY SHOULD HAVE BEEN FILED YESTERDAY. DID YOU FILE ONE THIS 

MORNING? MAYBE I DON'T HAVE THE LATEST LIST. 

MR. VAN NEST: I'M NOT SURE. 

THE WITNESS PHOTOS WE HANDED UP WERE IN THE RIGHT ORDER. 

THE COURT: OKAY. WELL, WHAT ABOUT YOUR WITNESS LIST 

FILED YESTERDAY, 1332? 

MR. VAN NEST: IT MAY BE AN ERROR. 

THE COURT: OKAY. 

MR. VAN NEST: IT MAY BE THAT WE MOVED THE VIDEO UP. 

BUT THE ORDER -- 

THE COURT: ALL RIGHT. MR. GONELL, MR. SAUER, 

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UNITED STATES COURT REPORTERS

1391

MR. HARTOGS. BECAUSE IT'S NOT IN THIS ORDER. 

MR. VAN NEST: MR. CHEN.

THE COURT: MR. CHEN. 

AND THEN WHICH VIDEOS ARE YOU GOING TO DO? 

MR. VAN NEST: MR. PETERSON, WHICH VIDEOS WILL BE 

PLAYED? 

THE COURT: WHO'S AFTER MR. CHEN? 

MR. PETERSON: WE'LL DO THE VIDEO OF MR. GRUBBS, THEN 

MR. BLUMBERG. 

THE COURT: OKAY. IT'S NOT IN THIS ORDER. SO I 

WOULD APPRECIATE IN THE FUTURE, IF YOU SEND ME A LIST, I DO 

WANT IT TO BE A GOOD FAITH LIST OF YOUR WITNESSES IN THE RIGHT 

ORDER. 

MR. VAN NEST: IT WAS, YOUR HONOR. 

THE COURT: OKAY? 

MR. VAN NEST: BUT WE'LL MAKE SURE WE GET IT RIGHT. 

AND IF WE HAVE TO CHANGE IT -- 

THE COURT: WELL, YOU'VE BEEN FILING THIS LIST SINCE 

LAST WEEK. IT'S ALWAYS BEEN IN THIS ORDER. SO I DON'T KNOW 

WHEN IT CHANGED. BUT I'D LIKE ANY CHANGE TO BE REFLECTED. 

MR. VAN NEST: WE'LL DO THAT. 

THE COURT: IT'LL BE MR. GRUBBS, THEN MR. BLUMBERG. 

THEN WHERE DOES IT GO FROM THERE? 

MR. PETERSON: MR. MADDEROM. 

THE COURT: OKAY. SO ON YOUR LIST. HE'S LAST. SO 

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UNITED STATES COURT REPORTERS

1392

HE IS NOW NUMBER 7. 

OKAY. THEN WHO AFTER THAT? 

MR. PETERSON: TIME PERMITTING, MR. MCGREGOR. 

THE COURT: OKAY. SO THAT WOULD BE NUMBER 8. OKAY. 

YOU KNOW WHAT I'D LIKE? I'D LIKE YOU TO FILE A NEW LIST 

THAT'S ACCURATE FOR TODAY. 

MR. VAN NEST: WE'LL DO THAT. 

THE COURT: WHEN CAN YOU DO THAT? CAN YOU YOU HAVE 

SOMEONE BACK AT THE HOTEL DO THAT SO I CAN PRINT IT OUT DURING 

THE BREAK AT 10:30? 

MR. VAN NEST: SURE. 

THE COURT: OKAY. ALL RIGHT. THANK YOU. 

ALL RIGHT. LET'S GO AHEAD AND CALL YOUR NEXT WITNESS, 

PLEASE. 

THE COURT: WHO APPROVED THIS WITNESS LIST FROM 

YESTERDAY? 

MR. VAN NEST: YOUR HONOR, I APPROVED A WITNESS LIST. 

THE COURT: YEAH. 

MR. VAN NEST: I'M NOT SURE WHAT YOU'RE LOOKING AT. 

BUT IF IT WAS FILED, I APPROVED IT. 

THE COURT: I'M LOOKING AT THE ONLY WITNESS LIST THAT 

QUALCOMM FILED YESTERDAY. 

MR. VAN NEST: THEN I APPROVED IT. 

THE COURT: OKAY. OKAY. 

MR. BORNSTEIN: YOUR HONOR, QUALCOMM CALLS 

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GONELL DIRECT BY MR. BORNSTEIN

UNITED STATES COURT REPORTERS

1393

FABIAN GONELL. 

THE COURT: OKAY. PLEASE COME FORWARD. 

THE CLERK: PLEASE RAISE YOUR RIGHT HAND. 

(DEFENDANT'S WITNESS, FABIAN GONELL, WAS SWORN.)

THE WITNESS: I DO. 

THE CLERK: THANK YOU. PLEASE BE SEATED. 

MR. BORNSTEIN: MAY I APPROACH, YOUR HONOR, WITH A 

BINDER? 

THE COURT: GO AHEAD, PLEASE. 

MR. BORNSTEIN: THANK YOU. 

THE CLERK: WOULD YOU PLEASE STATE YOUR FULL NAME AND 

SPELL YOUR LAST NAME FOR THE RECORD.

THE WITNESS: MY NAME IS FABIAN DENNIS GONELL. 

G-O-N-E-L-L. 

THE COURT: OKAY. TIME IS 10:13. GO AHEAD, PLEASE. 

DIRECT EXAMINATION

BY MR. BORNSTEIN:

Q. MR. GONELL, WHERE DO YOU WORK? 

A. I WORK AT QUALCOMM.

Q. AND WHAT DO YOU DO AT QUALCOMM? 

A. I'M SENIOR VICE PRESIDENT OF LICENSING STRATEGY AND LEGAL 

COUNSEL IN QUALCOMM'S LICENSING DIVISION, QTL.

Q. HOW LONG HAVE YOU BEEN IN QTL? 

A. ABOUT TEN YEARS. SINCE 2009.

Q. COULD YOU WALK BRIEFLY THROUGH WHAT POSITIONS YOU'VE HELD 

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GONELL DIRECT BY MR. BORNSTEIN

UNITED STATES COURT REPORTERS

1394

IN THOSE TEN YEARS? 

A. YES. I'VE ALWAYS BEEN A MEMBER OF THE LEGAL TEAM AT QTL. 

WHEN I FIRST ARRIVED AT QTL, I WAS A LAWYER ON THE LEGAL TEAM. 

MY RESPONSIBILITIES WERE NEGOTIATING AGREEMENTS AND DRAFTING 

AGREEMENTS. 

THOSE RESPONSIBILITIES BASICALLY STAYED THE SAME THROUGH A 

COUPLE OF PROMOTIONS UNTIL ABOUT 2016 -- NO, EXCUSE ME -- 2013 

WHEN I BECAME DIVISION COUNSEL OF QTL, WHICH IS BASICALLY THE 

CHIEF LICENSING LAWYER. AND I HELD THAT POSITION FOR THREE 

YEARS, UNTIL TAKING MY CURRENT POSITION.

Q. AND WHAT IS QTL? 

A. QTL IS QUALCOMM TECHNOLOGY LICENSING, WHICH IS A BUSINESS 

UNIT WITHIN QUALCOMM INCORPORATED, THE LEGAL ENTITY. 

AND QTL OPERATES THE LICENSING BUSINESS OF QUALCOMM. 

Q. DOES IT ALSO HAVE THE CHIP BUSINESS IN QTL AS WELL? 

A. NO. THE CHIP BUSINESS IS SEPARATE FROM QTL. IT'S KNOWN 

COLLOQUIALLY IN THE COMPANY AS QCT. IT WAS A SEPARATE BUSINESS 

UNIT AT ONE POINT. IT'S NOW IN A DIFFERENT LEGAL ENTITY 

ALTOGETHER AS WELL.

Q. SO I WANT TO START BY TALKING ABOUT JUST THE BASIC 

STRUCTURE OF QUALCOMM'S LICENSING PROGRAM. 

CAN YOU EXPLAIN, JUST IN GENERAL TERMS, WHAT QUALCOMM 

GIVES TO ITS LICENSEES AND WHAT QUALCOMM GETS IN RETURN IN A 

TYPICAL LICENSE AGREEMENT? 

A. OKAY. IN A TYPICAL LICENSE AGREEMENT, AT THE MOST BASIC 

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GONELL DIRECT BY MR. BORNSTEIN

UNITED STATES COURT REPORTERS

1395

LEVEL, WHAT QUALCOMM GIVES IS A LICENSE, PERMISSION TO USE 

QUALCOMM'S PATENTED INTELLECTUAL PROPERTY TO MAKE, USE, AND 

SELL CERTAIN DEVICES WHICH ARE LICENSED PRODUCTS. 

AND IT'S THAT PROMISE THAT'S THE CONSIDERATION FROM 

QUALCOMM TO THE LICENSEE. 

Q. WHAT DOES QUALCOMM GET IN RETURN IN A TYPICAL AGREEMENT? 

A. IN A TYPICAL AGREEMENT, AGAIN, AT THE MOST BASIC LEVEL, 

WHAT QUALCOMM GETS BACK FROM THE LICENSEE TO QUALCOMM IS MONEY. 

AND IT'S IN THE FORM OF TYPICALLY RUNNING ROYALTIES, WHICH IS A 

ROYALTY THAT'S PAID AS THE LICENSEE SELLS DEVICES THAT ARE 

LICENSED. 

THERE CAN ALSO BE, AND HISTORICALLY OFTEN WERE, UPFRONT 

FEES THAT WERE PAID AS PART OF THE LICENSE AGREEMENTS.

Q. OKAY. IS THERE A ONE-SIZE-FITS-ALL LICENSE THAT QUALCOMM 

HAS ALL OF ITS LICENSEES SIGN? 

A. NO. ONE ADDITION TO MY PRIOR ANSWER, THERE'S ALSO 

CROSS-LICENSES OFTEN IN LICENSE AGREEMENTS, ALTHOUGH THAT'S 

LESS COMMON THESE DAYS. 

BUT THERE'S NOT A ONE-SIZE-FITS-ALL AGREEMENT. THEY'RE 

ALL INDIVIDUALLY NEGOTIATED. 

Q. LET'S WALK THROUGH THE DIFFERENT ELEMENTS OF CONSIDERATION 

THAT YOU JUST DESCRIBED. 

FOR THE OUTBOUND LICENSES FROM QUALCOMM TO THE LICENSEES, 

DO ALL OF THE AGREEMENTS GRANT THE SAME SET OF RIGHTS? 

A. NO, THEY DON'T.

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GONELL DIRECT BY MR. BORNSTEIN

UNITED STATES COURT REPORTERS

1396

Q. SO WHAT ARE THE TYPICAL VARIATIONS IN THE TYPES OF RIGHTS 

THAT QUALCOMM GRANTS TO LICENSEES? 

A. THE PATENTS -- THERE ARE ESSENTIAL PATENTS WHICH I'LL 

THINK OF AS THE CELLULAR ESSENTIAL PATENTS, PATENTS THAT ARE 

ESSENTIAL TO CELLULAR STANDARDS, AND THAT IS A CATEGORY. AND 

WITHIN THAT CATEGORY, THERE ARE -- WE DIFFERENTIATE BY THE 

STANDARD. 

SO THERE ARE CDMA PATENTS, WHICH ARE PATENT ESSENTIAL TO 

CDMA STANDARDS; WCDMA PATENTS ESSENTIAL TO WCDMA STANDARDS; LTE 

PATENTS, PATENTS ESSENTIAL TO LTE STANDARDS; AND NOW 5G PATENTS 

ESSENTIAL TO 5G STANDARDS, FOR EXAMPLE. 

THERE ARE ALSO OTHER PATENTS, NON-ESSENTIAL PATENTS AND 

BASICALLY ALL OF THE OTHER PATENTS THAT ARE NOT CELLULAR 

ESSENTIAL PATENTS THAT MAY BE LICENSED.

Q. SO ALL OF THESE THINGS, ARE THEY LICENSED IN A PACKAGE OR 

CAN LICENSEES PICK DIFFERENT PARTS OF THE MENU? 

A. SO THEY CAN PICK CATEGORIES OF ESSENTIAL PATENTS, SO 

PATENTS, FOR EXAMPLE, ESSENTIAL TO A MENU OF STANDARDS, SO 

CDMA, WCDMA, LTE, 5G, FOR EXAMPLE. 

ONCE THEY HAVE AN ESSENTIAL PATENT LICENSE, THEY CAN 

CHOOSE TO ALSO THEN INCLUDE THE OTHER PATENTS. 

Q. OKAY. THE NON-ESSENTIALS? 

A. THE NON-ESSENTIAL PATENTS, YES.

Q. DO THE LICENSES COVER ONLY THE PATENTS THAT ARE IN 

EXISTENCE AS OF THE TIME OF THE AGREEMENT? 

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GONELL DIRECT BY MR. BORNSTEIN

UNITED STATES COURT REPORTERS

1397

A. TYPICALLY, NO. USUALLY THE -- AND ALMOST ALWAYS WITH 

RESPECT TO THE ESSENTIAL PATENTS, THEY COVER PATENTS THAT 

QUALCOMM OWNS OR ACQUIRES OR INVENTS AT ANY TIME DURING THE 

TERM OF THE AGREEMENT. 

SO THE WAY THAT WOULD WORK IS YOU HAVE A SET OF PATENTS 

THAT YOU HAVE WHEN YOU ENTER THE AGREEMENT; THE AGREEMENT LASTS 

FOR, SAY, FIVE OR TEN YEARS; EVERYTHING YOU INVENT BETWEEN THE 

TIME OF THE AGREEMENT AND THE END OF THE AGREEMENT IS INCLUDED. 

Q. IS THERE AN ADDITIONAL CHARGE FOR THOSE SUBSEQUENTLY 

OBTAINED PATENTS? 

A. NO. THE ROYALTY TERMS REMAIN THE SAME AND TAKEN INTO 

ACCOUNT IN THE NEGOTIATIONS. SO YOU GET THE ADDITIONAL 

PATENTS. THE ROYALTY TERMS STAY THE SAME.

Q. LET'S TALK ABOUT WHAT QUALCOMM GETS FROM THE LICENSEES. 

YOU MENTIONED AN UPFRONT FEE. WHAT'S THAT FOR? 

A. SO THE UPFRONT FEE CAN BE THOUGHT OF AS A TECHNOLOGY 

ACCESS FEE. IT'S JUST A FEE THAT'S PAID AT THE OUTSET OF THE 

AGREEMENT. IT'S ANOTHER WAY FOR MONEY TO CHANGE HANDS, AND 

IT'S A WAY THAT'S NOT DEPENDENT ON FUTURE SALES OR ANYTHING 

LIKE THAT. IT'S JUST AN AMOUNT THAT'S DUE AND THAT'S AGREED TO 

BE PAID AT THE TIME, OR SHORTLY THEREAFTER, AN AGREEMENT IS 

ENTERED INTO. 

Q. IS THE UPFRONT FEE USED AS A CREDIT AGAINST FUTURE 

PURCHASES OF CHIPS OR OTHER PRODUCTS FROM QUALCOMM? 

A. NO. 

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GONELL DIRECT BY MR. BORNSTEIN

UNITED STATES COURT REPORTERS

1398

Q. SO IF THERE'S AN OEM WHO HAD SAID THAT THE OEM FELT 

INCENTIVIZED, OR EVEN COMPELLED, TO PURCHASE QUALCOMM CHIPS AS 

OPPOSED TO A COMPETITOR'S CHIPS, IN ORDER TO RECOUP THE UPFRONT 

FEE, WOULD THAT MAKE SENSE TO YOU? 

A. NO, THAT DOESN'T MAKE SENSE TO ME. THAT'S NOT THE WAY THE 

UPFRONT FEES IN THE AGREEMENTS WORK.

Q. YOU ALSO MENTIONED, AT THE END OF YOUR ANSWER, SOME CROSS 

GRANTS THAT QUALCOMM GETS AT TIMES? 

A. YES.

Q. WHY DOES QUALCOMM REQUEST CROSS GRANTS FROM LICENSEES? 

A. QUALCOMM TYPICALLY REQUESTS CROSS GRANTS FROM LICENSEES 

WHEN IT IS GRANTING LICENSING TO ALL OF QUALCOMM'S PATENTS, 

WHAT I'LL CALL THE PORTFOLIO LICENSE. 

IN THAT SITUATION, IT'S A MATTER, YOU KNOW, OF COMMON 

PRACTICE AND, FRANKLY, PRUDENCE FOR A COMPANY THAT IS GRANTING 

ALL OF ITS RIGHTS TO SEEK SOME SET OF CROSS RIGHTS FROM THE 

LICENSEE IN ORDER TO NOT LEAVE ITSELF EXPOSED TO THE LICENSEE'S 

PATENTS AT A TIME WHEN IT HAS GRANTED RIGHTS TO ALL OF ITS 

PATENTS.

Q. IS THIS UNIQUE TO QUALCOMM? 

A. NO. THAT'S -- THAT'S VERY COMMON IN PATENT LICENSING. 

THAT'S WHAT PEOPLE DO. 

Q. SO OUTSIDE OF CIRCUMSTANCES WHERE YOU'RE GRANTING A, A 

LICENSE TO YOUR PATENTS, DOES QUALCOMM SEEK INBOUND LICENSES OF 

CELLULAR SEPS TO COVER ITS OWN MODEM CHIPS? 

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GONELL DIRECT BY MR. BORNSTEIN

UNITED STATES COURT REPORTERS

1399

A. NO. 

Q. AND WHY NOT? 

A. WELL, THEY -- THE PRACTICE IN THE INDUSTRY, HOW THE 

INDUSTRY HAS GROWN UP IS THAT CELLULAR SEPS ARE LICENSED AT THE 

DEVICE LEVEL. 

SO IT IS THE PRACTICE FOR PEOPLE WHO ARE GOING OUT AND 

LICENSING SEPS TO LICENSE THEM AT THE DEVICE LEVEL AND NOT AT 

THE CHIP LEVEL. 

SO IT'S -- IT'S NOT -- IT'S NOT NEEDED AS A COMMERCIAL 

MATTER. 

Q. AND THE LAST THING YOU MENTIONED WAS RUNNING ROYALTIES AS 

AN ELEMENT OF CONSIDERATION. ARE THE RUNNING ROYALTIES ALWAYS 

THE SAME IN LICENSE AGREEMENTS? 

A. NO. THEY VARY.

Q. ARE THERE TYPICAL RUNNING ROYALTY RATES FOR HANDSETS? 

A. FOR HANDSETS, THERE ARE TYPICAL ROYALTY RATES THAT -- THE 

TYPICAL RATES HAVE CHANGED OVER TIME, BUT THERE ARE TYPICAL 

RATES.

Q. AND SO WHAT ARE THOSE TYPICAL RATES AND WHAT HAVE THEY 

BEEN OVER TIME? 

A. OKAY. SO THE ORIGINAL, ORIGINAL LICENSES WERE AT 

5 PERCENT, THEY WERE CDMA ONLY LICENSES, THAT'S ALL THERE WAS 

AT THE TIME. AND IT WAS 5 PERCENT ON A FULL PORTFOLIO LEVEL 

AND THOSE WERE WHAT THE LICENSES WERE. 

AND THAT 5 PERCENT AT THE PORTFOLIO LEVEL HAS STAYED 

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GONELL DIRECT BY MR. BORNSTEIN

UNITED STATES COURT REPORTERS

1400

CONSTANT THROUGHOUT UNTIL RELATIVELY RECENTLY FOR CERTAIN 

PRODUCTS THAT I'LL GET INTO. 

FOR CDMA PRODUCTS, IT HAS STAYED CONSTANT THROUGHOUT UNTIL 

VERY RECENTLY.

Q. AND JUST TO BE CLEAR, WHEN YOU SAY "VERY RECENTLY," ARE 

YOU REFERRING TO SOMETHING BEFORE MARCH OF 2018? 

A. YES. I'M REFERRING -- YES.

Q. OKAY. THANK YOU. 

A. YES, I AM. 

SO BEFORE MARCH -- YES, BEFORE MARCH 2018, YES. 

AND SO IN -- WHEN LTE CAME ALONG, WE ANNOUNCED RATES FOR 

ESSENTIAL ONLY AT 3 AND A QUARTER FOR THE FIRST RELEASE; AND WE 

OFFERED FULL PORTFOLIO FOR LTE AT 4 PERCENT, AND THAT WAS THE 

TYPICAL RATE FOR A WHILE. 

AS LTE ADDED FUNCTIONALITY, THE ESSENTIAL ONLY RATE BECAME 

3 AND A HALF. 

AS THE PROGRAM CONTINUED TO EVOLVE, THERE WAS A DECISION 

AND RECTIFICATION PLAN IN CHINA BY THE NATIONAL DEVELOPMENT AND 

THE FORM COMMISSION, THE NDRC, THAT PROVIDED FOR CERTAIN 

ROYALTY TERMS FOR ESSENTIALS ONLY AGREEMENTS, AND THOSE ROYALTY 

TERMS WERE 3.25 PERCENT, NORMALLY EXPRESSED AT 5 PERCENT TIMES 

65 PERCENT OF THE PRICE FOR MULTIMODE PRODUCTS, 3G/4G PRODUCTS; 

AND 2.275 PERCENT, NORMALLY EXPRESSED AT 3 AND A HALF PERCENT, 

TIMES 65 PERCENT OF THE NET SELLING PRICE FOR SINGLE MODE LTE 

PRODUCTS. 

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GONELL DIRECT BY MR. BORNSTEIN

UNITED STATES COURT REPORTERS

1401

AND SINCE THEN, THAT SET OF TERMS HAVE BECOME OUR STANDARD 

TERMS FOR ESSENTIALS ONLY RATES WORLDWIDE FOR MULTIMODE 

ESSENTIALS ONLY LICENSES AND SINGLE MODE ESSENTIALS ONLY 

LICENSES FOR ANY SET OF STANDARDS, INCLUDING 5G. 

Q. SO LET ME UNPACK ONE THING THAT I THINK PROBABLY IS CLEAR 

FROM YOUR ANSWER, BUT DO LICENSEES PAY DIFFERENT RATES IF THEY 

TAKE AN ESSENTIALS ONLY LICENSE VERSUS IF THEY TAKE A LICENSE 

TO QUALCOMM'S FULL PORTFOLIO? 

A. YES, THEY DO. FOR ESSENTIALS ONLY, IT IS FOR A MULTIMODE 

DEVICE, WHICH IS A DEVICE THAT DOES MORE THAN ONE STANDARD, 

3.25 PERCENT. 

AND FOR THAT SAME DEVICE FOR A FULL PORTFOLIO LICENSE, IT 

WOULD BE 5 PERCENT. 

AND FOR SINGLE MODE, IT'S A LITTLE BIT LESS.

Q. ALL RIGHT. AND ASIDE FROM THESE PERCENTAGE AMOUNTS, ARE 

THERE ANY NUMERICAL OR JUST HARD DOLLAR CAPS ON THE ROYALTIES 

THAT LICENSEES OWE UNDER TYPICAL AGREEMENTS? 

A. YES. FOR HANDSETS, THERE HAVE BEEN CAPS SINCE LONG BEFORE 

I ARRIVED AT QUALCOMM THEY'RE A LONG STANDING FEATURE OF THE 

LICENSING PROGRAM. HISTORICALLY THE CAP ON A HANDSET FOR 

ROYALTIES HAD BEEN $25. 

THE CAPS TODAY, OR AS OF MARCH 2018, ARE $20 FOR A FULL 

PORTFOLIO MULTIMODE, AND $13 FOR AN ESSENTIALS ONLY MULTIMODE, 

AND LESS FOR SINGLE MODE.

Q. ALL RIGHT. SO TAKE A HYPOTHETICAL PHONE WITH $1,000 NET 

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1402

SELLING PRICE. 

WHAT WOULD THE CAP BE THAT WOULD APPLY TO THAT PHONE IF 

IT'S AN ESSENTIALS ONLY LICENSE? 

A. WELL, $1,000 PHONE -- $1,000 PHONE THESE DAYS WILL BE A 

MULTIMODE PHONE. SO THE CAP WOULD BE $13 FOR AN ESSENTIALS 

ONLY LICENSE ON THAT PHONE.

Q. AND AT THE RISK OF DOING MATH IN COURT, WHAT WOULD THE 

PERCENTAGE ROYALTY BE FOR THAT $1,000 PHONE GIVEN THE CAP AS AN 

EFFECTIVE MATTER? 

A. WELL, $13 IS 1.3 PERCENT OF $1,000. 

Q. ARE THERE ANY TERMS IN LICENSE AGREEMENTS THAT QUALCOMM IS 

JUST UNWILLING TO NEGOTIATE? 

A. NO. AT ONE TIME I THOUGHT THERE WERE, BUT THAT'S NOT THE 

CASE.

Q. WHAT DO YOU -- WHAT ARE YOU REFERRING TO? 

A. WE HAD A PROVISION IN LICENSE AGREEMENTS FOR A VERY LONG 

TIME THAT WAS -- HAD TO DO WITH EXPORT COMPLIANCE THAT WAS DONE 

BY PEOPLE CHARGED WITH EXPORT COMPLIANCE RULES THAT WAS THE 

LEGAL DEPARTMENT IN QTL CONSIDERED UNTOUCHABLE. AND I THOUGHT 

THAT FOR MANY YEARS, BUT AT ONE POINT SOMEBODY WANTED TO TOUCH 

IT AND IT WAS TOUCHABLE AS IT TURNS OUT. 

Q. SO CAN YOU GIVE AN EXAMPLE OF SOME LICENSE AGREEMENTS THAT 

YOU'VE BEEN INVOLVED IN NEGOTIATING THAT ARE DIFFERENT FROM 

THESE TYPICAL TERMS THAT YOU DESCRIBED? 

A. SURE. LIKE AGREEMENTS THAT ARE -- THAT VARIED FROM THE 

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1403

TYPICAL? SURE. 

Q. YES. 

A. SO NEGOTIATIONS THAT I'VE BEEN INVOLVED IN INCLUDED 

SAMSUNG, INCLUDED SONY MOBILE. THERE ARE OTHER AGREEMENTS THAT 

I KNOW OF FROM MY RESPONSIBILITIES, THOUGH MAY NOT HAVE 

NECESSARILY BEEN INVOLVED IN WITH BLACKBERRY THAT VARIED FROM 

OUR TYPICAL TERMS.

Q. WELL, LET ME DIRECT YOU TO A FEW OF THESE. 

THE FIRST ONE IS AT TAB 1 IN YOUR BINDER. IT'S JX 0047. 

AND, YOUR HONOR, THIS IS SUBJECT TO A SEALING ORDER, SO 

I'M NOT GOING TO PLACE IT ON THE SCREEN. 

THE COURT: OKAY. WOULD YOU LIKE IT ADMITTED? 

MR. BORNSTEIN: I WILL. I WAS GOING TO LAY A 

FOUNDATION WITH THE WITNESS. 

THE COURT: OKAY. GO AHEAD, PLEASE. 

BY MR. BORNSTEIN:

Q. WHAT IS THIS DOCUMENT, MR. GONELL? 

A. THIS DOCUMENT IS WHAT I THINK OF AS THE 2009 SAMSUNG 

AGREEMENT. AS A TECHNICAL MATTER, IT'S AN AMENDMENT TO AN 

EARLIER AGREEMENT. BUT IN ESSENCE, IT'S A LICENSE AGREEMENT 

THAT WE NEGOTIATED WITH SAMSUNG THAT WAS ENTERED INTO IN 2009. 

MR. BORNSTEIN: OKAY. YOUR HONOR, YES, I WOULD LIKE 

TO HAVE THE DOCUMENT ADMITTED, PLEASE. 

MR. MERBER: NO OBJECTION. 

THE COURT: IT'S ADMITTED. GO AHEAD, PLEASE. 

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1404

(JOINT EXHIBIT JX 0047 WAS ADMITTED IN EVIDENCE.) 

BY MR. BORNSTEIN:

Q. NOW, YOU SAID YOU WERE PERSONALLY INVOLVED IN THESE 

NEGOTIATIONS? 

A. I WAS PERSONALLY INVOLVED IN THE NEGOTIATIONS.

Q. HOW LONG DID THE NEGOTIATION OF THE AGREEMENT TAKE? 

A. THE NEGOTIATION OF THE 2009 SAMSUNG AGREEMENT TOOK ABOUT 

TWO YEARS. MY INVOLVEMENT CAME IN THE MIDDLE, SO IT HAD BEEN 

GOING ON FOR ABOUT A YEAR AT THE TIME THAT I JOINED IN 2009.

Q. AND WITHOUT GOING INTO SPECIFIC DOLLAR AMOUNTS AND 

PERCENTAGES AND NUMBERS, CAN YOU DESCRIBE AT A GENERAL LEVEL 

WHAT IS UNIQUE ABOUT THE STRUCTURE OF THIS AGREEMENT? 

A. WELL, THERE ARE MANY THINGS THAT ARE, THAT ARE UNUSUAL AND 

UNIQUE FEATURES OF THIS AGREEMENT COMPARED TO OUR TYPICAL 

AGREEMENT. 

SO SAMSUNG PAID AN UPFRONT FEE THAT WAS ORDERS OF 

MAGNITUDE HIGHER THAN OUR TYPICAL UPFRONT FEES. 

SAMSUNG TRANSFERRED TO QUALCOMM MANY PATENTS PURSUANT TO 

THIS AGREEMENT. 

SAMSUNG GAVE QUALCOMM A VERY ROBUST CROSS-LICENSE TO THEIR 

PORTFOLIO, WHICH WE CONSIDER A COMMERCIALLY SIGNIFICANT 

PORTFOLIO OF PATENTS IN THE INDUSTRY, AMONG OTHER THINGS.

Q. ALL RIGHT. SO YOU REFERRED TO A LARGE UPFRONT FEE. 

LET ME DIRECT YOU TO THE PAGE THAT ENDS WITH 016 OF THE 

AGREEMENT, AND DON'T SAY THE NUMBERS OUT LOUD. BUT DOES THIS 

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1405

PROVISION IN SECTION 2 ON PAGE 16 ACCURATELY REFLECT THE 

UPFRONT FEE THAT WAS PAYABLE BY SAMSUNG UNDER THIS AGREEMENT? 

A. YES, SECTION 2 OF THE AGREEMENT IS THE LUMP SUM FEE 

SECTION, YES. 

Q. AND LET ME THEN DIRECT YOU TO PAGE 20 OF THE AGREEMENT AND 

LOOK AT A DIFFERENT PROVISION. 

ON PAGE 20, DO YOU SEE SECTION 4.1.1.2? 

A. YES. THIS IS ANOTHER FEATURE OF THE SAMSUNG AGREEMENT 

THAT WAS VERY UNUSUAL. IN EXCHANGE FOR ALL OF THE THINGS THAT 

THEY HAD GRANTED TO US, THEY GOT VERY DIFFERENT ROYALTY TERMS. 

AND IN THE ROYALTY TERMS, THERE WAS RISK SHARING IN THAT 

THE ROYALTY TERMS COULD VARY DEPENDING ON HOW WELL SAMSUNG DID. 

AND THERE WAS A RANGE IN WHICH THEY COULD VARY, AND THE PLACE 

IN THE RANGE WAS DETERMINED EACH YEAR BY REFERENCE TO THIS 

SPECIFIC FORMULA. 

Q. ARE YOU REFERRING TO THE MATHEMATICAL FORMULA THAT APPEARS 

IN 4.1.1.2? 

A. YES. THAT'S THE -- THAT STARTS OUT FINAL SPECIFIED RATE 

EQUALS. 

Q. OKAY. AND WHO CAME UP WITH THIS FORMULA? 

A. I DID. 

Q. DID THIS NEGOTIATION PROGRESS SMOOTHLY OR WAS IT MORE 

CHALLENGING? 

A. WELL, THE NEGOTIATION TOOK TWO YEARS, SO IT WAS -- IT WAS 

A CHALLENGING NEGOTIATION. THIS WAS MY FIRST ONE, SO AT THE 

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1406

TIME I DIDN'T HAVE A REFERENCE POINT TO JUDGE. 

BUT SINCE NOW I'VE DONE THIS FOR TEN YEARS, I CAN STILL 

SAY THIS WAS ONE OF THE MORE CHALLENGING NEGOTIATIONS THAT I'VE 

EVER BEEN A PART OF. 

Q. WHAT WAS CHALLENGING ABOUT IT? 

A. EVERYTHING WAS UNUSUAL. THIS IS AN INCREDIBLY CUSTOMIZED 

AGREEMENT, AND SO, SO ALMOST EVERYTHING WAS AN ISSUE. EVEN BY 

THE TIME I GOT THERE -- AND BY THE TIME I GOT THERE THEY HAD 

KIND OF CONCEPTUALLY AGREED TO THE ROYALTY CONCEPT, BUT EVEN 

THAT WAS ONLY CONCEPTUAL. LIKE I SAID, I CAME UP WITH THE 

FORMULA. 

SAMSUNG IS VERY SOPHISTICATED. THEY ARE HARD NEGOTIATORS. 

THEY WERE, AT THE TIME, AND ARE STILL, BUT AT THE TIME THEY 

WERE AN IMPORTANT COMPANY IN THE INDUSTRY, AN IMPORTANT CHIP 

CUSTOMER OF QUALCOMM, AND AN IMPORTANT LICENSEE OF QUALCOMM. 

IT WAS A VERY IMPORTANT NEGOTIATION TO QUALCOMM AND IT WAS 

DIFFICULT. 

Q. LET ME DIRECT YOU TO TAB 2 IN YOUR BINDER. THIS IS 

JX 10 -- 0105. 

THIS IS ALSO SUBJECT TO A SEALING ORDER, YOUR HONOR. 

CAN YOU TELL ME WHAT JX 0105 IS? 

A. THIS IS A LICENSE AGREEMENT THAT QUALCOMM AND SONY ENTERED 

INTO IN 2015.

Q. WERE YOU INVOLVED IN NEGOTIATING THIS ONE? 

A. YES, I WAS. 

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1407

MR. BORNSTEIN: OKAY. YOUR HONOR, I'D OFFER JX 0105 

INTO EVIDENCE. 

MR. MERBER: NO OBJECTION. 

THE COURT: IT'S ADMITTED. 

(JOINT EXHIBIT JX 0105 WAS ADMITTED IN EVIDENCE.) 

THE COURT: GO AHEAD, PLEASE. 

BY MR. BORNSTEIN:

Q. DID THIS AGREEMENT ALSO DIFFER FROM THE TYPICAL QUALCOMM 

LICENSE TERMS? 

A. YES, IT DID.

Q. HOW SO? 

A. IN THIS AGREEMENT, SONY GRANTED QUALCOMM A VERY ROBUST 

CROSS-LICENSE TO WHAT WE CONSIDERED A COMMERCIALLY VALUABLE 

PORTFOLIO OF PATENTS. THEY TRANSFERRED CERTAIN PATENTS TO US. 

AND IN EXCHANGE, THE STANDARD -- WE DEVIATED FROM OUR 

STANDARD ROYALTY TERMS AND THEY OBTAINED, FOR LACK OF A BETTER 

TERM, A DISCOUNT FROM OUR STANDARD ROYALTY TERMS.

Q. WAS THIS ONE AN EASY NEGOTIATION? 

A. WELL, THIS WAS NOT -- THIS WAS NOT AS HARD AS THE SAMSUNG 

NEGOTIATION. BUT IT WAS HARDER THAN AVERAGE FOR SURE. 

Q. HOW SO? OR WHY SO? 

A. WELL, BECAUSE SONY CAME IN WHEN WE STARTED NEGOTIATING 

THIS PARTICULAR AGREEMENT WITH WELL PREPARED, I MEAN, VERY WELL 

PREPARED WITH A SET OF INFORMATION ABOUT THEIR PATENTS AND THE 

APPLICABILITY OF THEIR PATENTS TO OUR PRODUCTS, THE 

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1408

THOROUGHNESS OF WHICH WAS UNLIKE ANYTHING I HAD EVER SEEN 

BEFORE. 

IT WAS INCREDIBLY IMPRESSIVE AND MERITED A, YOU KNOW, A 

VERY ROBUST RESPONSE, WHICH WE DID. SO WE -- WE PRESENTED 

EQUALLY COMPREHENSIVE INFORMATION ABOUT OUR PATENTS AND THEIR 

APPLICABILITY TO SONY'S PRODUCTS. 

AND THAT LEVEL OF TECHNICAL INFORMATION, THAT LEVEL OF 

TECHNICAL INFORMATION WAS -- WAS EXTENSIVE, I MEAN, APPROPRIATE 

FOR THIS AGREEMENT BECAUSE OF THE SIGNIFICANCE OF THE 

CROSS-LICENSE IN THE AGREEMENT. BUT THAT TAKES TIME AND IS 

COMPLICATED. 

THE COURT: EXCUSE ME. I'M SORRY TO INTERRUPT, BUT 

IT'S 10:35. SO I'D LIKE US TO TAKE OUR -- I APOLOGIZE FOR 

INTERRUPTING. I'D LIKE US TO TAKE OUR BREAK THIS MORNING. 

MR. BORNSTEIN: OF COURSE. 

THE COURT: WE'LL TAKE A 15 MINUTE BREAK. AND I 

FORGOT TO AS L -- YOU MAY STEP DOWN DURING THE BREAK. I FORGOT 

TO ASK THE PARTIES ABOUT MR. REIFSCHNEIDER, IS HE -- WOULD YOU 

STILL LIKE HIM SUBJECT TO RECALL SO YOU HAVE THE AVAILABILITY 

TO PLAY MORE VIDEO? 

MS. MILICI: YES, WE WOULD. 

THE COURT: OKAY. SO HE'S A YES. FINE. 

ALL RIGHT. LET'S TAKE A 15 MINUTE BREAK. THANK YOU FOR 

YOUR PATIENCE. WE'LL BE BACK IN 15 MINUTES. THANK YOU. 

(RECESS FROM 10:36 A.M. UNTIL 10:55 A.M.) 

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1409

THE COURT: OKAY. GOOD AFTERNOON. WELCOME BACK. 

OKAY. LET'S CONTINUE. PLEASE TAKE A SEAT. TIME IS 

10:55. GO AHEAD, PLEASE. 

MR. BORNSTEIN: THANK YOU, YOUR HONOR. 

Q. BEFORE THE BREAK, WE WERE TALKING ABOUT NEGOTIATIONS THAT 

YOU HAD WITH SONY CORPORATION IN WHICH THERE WAS TECHNICAL 

INFORMATION EXCHANGED BETWEEN THE PARTIES. 

WAS THAT THE ONLY NEGOTIATION YOU'VE BEEN INVOLVED IN IN 

WHICH THERE'S BEEN TECHNICAL INFORMATION EXCHANGED ABOUT 

QUALCOMM'S PATENTS? 

A. NO. THERE -- THAT'S NOT UNCOMMON AT ALL AND, IN FACT, 

IT'S MORE COMMON ALL THE TIME. IT'S BEEN MORE COMMON RECENTLY 

THAN EVER BEFORE. 

BUT IT'S A FAIRLY COMMON OCCURRENCE.

Q. DURING YOUR TIME AT QTL, HAVE THERE BEEN SITUATIONS IN 

WHICH YOU JUST HAVEN'T BEEN ABLE TO REACH AGREEMENT WITH A 

POTENTIAL LICENSEE? 

A. THAT HAPPENS FROM TIME TO TIME.

Q. AND WHAT APPROACH DOES QUALCOMM TAKE TO TRY TO ADDRESS 

THOSE SITUATIONS? 

A. WELL, THE NEGOTIATIONS THAT I'VE LED, THAT I'VE BEEN 

INVOLVED IN, MY PRACTICE, OF COURSE, AUTHORIZED BY THE COMPANY, 

IS TO OFFER ARBITRATION IN THOSE CIRCUMSTANCES. 

Q. AND IN THE EVENT OF A DISPUTE WITH AN OEM, OR A 

DISAGREEMENT ON TERMS LIKE THIS, IS QUALCOMM WILLING TO HAVE 

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1410

THE TERMS OF THE BINDING AGREEMENT SET THROUGH AN ARBITRATION 

PROCESS? 

A. YES. FOR CELLULAR ESSENTIAL PATENTS, YES, ABSOLUTELY.

Q. INCLUDING THE ROYALTY TERMS? 

A. YES. THAT'S THE MOST COMMON THING THAT YOU CAN'T AGREE 

ON.

Q. CAN YOU GIVE SOME EXAMPLES WHEN YOU HAVE OFFERED A BINDING 

ARBITRATION LIKE THIS TO A POTENTIAL LICENSEE?

A. YES. I DID THAT IN NEGOTIATIONS WITH MEIZU. 

I DID THAT IN NEGOTIATIONS WITH ASUSTEK, A-S-U-S-T-E-K. 

I DID THAT IN NEGOTIATIONS WITH HUAWEI. 

I'VE DONE THAT IN NEGOTIATIONS WITH APPLE. 

Q. LET ME ASK YOU TO TURN TO TAB 3 IN YOUR BINDER. IT'S 

QX 1725. 

AND, YOUR HONOR, THIS, TOO, HAS BEEN SEALED IN PART BY A 

PRIOR ORDER. 

AND LET ME ASK YOU IF YOU RECOGNIZE THIS DOCUMENT. 

A. YES. THIS IS AN E-MAIL ENCLOSING A LETTER THAT I WROTE TO 

B.J. WATROUS, WHO'S A LAWYER AT APPLE. 

MR. BORNSTEIN: I MOVE THE ADMISSION OF QX 1725, YOUR 

HONOR. 

MR. MERBER: NO OBJECTION. 

THE COURT: IT'S ADMITTED. 

(DEFENDANT'S EXHIBIT QX 1725 WAS ADMITTED IN EVIDENCE.) 

THE COURT: GO AHEAD, PLEASE. 

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1411

BY MR. BORNSTEIN:

Q. AND WHAT WAS THE PURPOSE OF YOUR LETTER TO MR. WATROUS? 

A. THE PURPOSE OF THIS LETTER IS THAT QUALCOMM IS OFFERING 

APPLE BINDING ARBITRATION OVER THE TERMS OF THE LICENSE TO 3G 

AND 4G ESSENTIAL PATENTS.

Q. AND SPECIFICALLY, WHAT TERMS OF THE AGREEMENT WAS QUALCOMM 

WILLING TO, AND OFFERING TO, ARBITRATE WITH APPLE?

A. ALL OF THEM. THIS LETTER, THIS OFFER IS MODELED ON THE 

CONSENT ORDER THE FTC ENTERED INTO WITH GOOGLE IN WHAT'S KNOWN 

AS THE GOOGLE MMI CASE IN FRONT OF THE FTC. 

AND IT IS DESIGNED TO, AND DOES, FOLLOW THAT PROCESS. AND 

THE PROCESS IS THAT WE, THE LICENSOR, SENDS OVER A LICENSE 

AGREEMENT AND THE LETTER ATTACHES LICENSE AGREEMENTS. 

THE OTHER SIDE MARKS WHATEVER PARTS OF THE LICENSE 

AGREEMENT THEY WANT TO DISPUTE, AND THEN THE PROCESS GOES FROM 

THERE AND ULTIMATELY THIS ARBITRATION TO DECIDE THE DISPUTED 

TERMS.

Q. WHY DID YOU MAKE THIS ARBITRATION OFFER TO APPLE? 

A. BECAUSE WE HAD A DISPUTE WITH THEM, AND WE WANTED TO 

RESOLVE IT. 

Q. AND WHEN WAS THIS? WHAT'S THE DATE ON THE LETTER?

A. JULY 15TH, 2016.

Q. WAS QUALCOMM WILLING AT THAT POINT TO HAVE THE TERMS OF A 

LICENSE WITH APPLE SET BY AN ARBITRATION? 

A. YES. WE WERE WILLING THEN, AND WE ARE WILLING TODAY.

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1412

Q. AND DID APPLE AGREE TO THAT? 

A. NO, THEY HAVE NOT.

Q. IF SOMEONE HAD SAID THAT APPLE WAS SEEKING TO HAVE THE 

TERMS OF A BINDING LICENSE SET BY A COURT IN A DISPUTE WITH 

QUALCOMM, WOULD YOU AGREE WITH THAT? 

A. NO, I WOULD NOT.

Q. WHY NOT? 

A. BECAUSE I WAS IN THE COURTROOM IN THE SOUTHERN DISTRICT OF 

CALIFORNIA WHEN APPLE TOLD THE COURT THAT NOT ONLY WAS IT NOT 

SEEKING A FRAND DETERMINATION, BUT THAT IT WOULD BE UNLAWFUL 

FOR THE JUDGE TO DO A FRAND DETERMINATION AT QUALCOMM'S 

REQUEST. 

SO, NO, THEY'RE NOT SEEKING THAT. THEY'RE JUST NOT. 

Q. LET ME ASK YOU TO TURN TO THE NEXT TAB IN YOUR BINDER, TAB 

4. THIS IS QX 9223. 

A. YES.

Q. CAN YOU TELL ME WHAT THIS DOCUMENT IS, PLEASE? 

A. THIS DOCUMENT IS AN E-MAIL CHAIN THAT IS MOSTLY E-MAILS 

EXCHANGED BETWEEN ME AND A COUNTERPART AT MEIZU DURING THE 

COURSE OF NEGOTIATIONS WITH MEIZU. 

MR. BORNSTEIN: YOUR HONOR, I OFFER QX 9223 INTO 

EVIDENCE. 

MR. MERBER: YOUR HONOR, WE OBJECT THAT THE 

STATEMENTS BY THE MEIZU INDIVIDUALS ON THE E-MAIL CHAIN ARE 

HEARSAY. 

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1413

MR. BORNSTEIN: I BELIEVE THIS WAS ALREADY THE 

SUBJECT OF AN HPO, YOUR HONOR, THAT WAS OVERRULED. 

THE COURT: GIVE ME JUST ONE QUICK MINUTE, PLEASE. 

(PAUSE IN PROCEEDINGS.) 

THE COURT: DO YOU HAVE THE HPO ECF NUMBER FOR THAT 

ORDER? 

MR. BORNSTEIN: I'M SORRY, YOUR HONOR. I'M MISTAKEN 

ABOUT THAT. WE HAD REACHED AN AGREEMENT WITH THE FTC TO AVOID 

AN HPO. 

THE COURT: OKAY. 

MR. BORNSTEIN: THE AGREEMENT WAS WE WOULD NOT OFFER 

THIS FOR THE TRUTH OF THE MATTER ASSERTED, BUT WE WOULD OFFER 

IT FOR THE FACT OF THE OFFER AND RESPONSE THAT WERE MADE BY 

QUALCOMM AND MEIZU, VERBAL ACTS. 

THE COURT: ALL RIGHT. I DON'T SEE QX 9223 AS 

SUBJECT OF A HIGH PRIORITY EVIDENTIARY OBJECTION RULING IN ECF 

NUMBER 1350 FILED YESTERDAY. 

SO IS THE WHOLE DOCUMENT JUST NOT FOR THE TRUTH OF THE 

MATTER ASSERTED, OR JUST CERTAIN PORTIONS? 

MR. BORNSTEIN: I BELIEVE, AS MR. MERBER SAID, THE 

OBJECTION WAS LODGED ONLY WITH RESPECT TO STATEMENTS BY MEIZU. 

THE COURT: OKAY. 

MR. BORNSTEIN: AND SO THAT WAS THE SCOPE OF THE 

AGREEMENT THAT WAS REACHED. 

THE COURT: DO YOU AGREE WITH THAT? 

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1414

MR. MERBER: YES, YOUR HONOR. 

THE COURT: OKAY. SO IT'LL JUST SAY THE MEIZU, WHAT, 

E-MAILS ARE NOT OFFERED FOR THE TRUTH OF THE MATTER ASSERTED? 

MR. BORNSTEIN: I THINK THAT'S RIGHT, YOUR HONOR, 

YES. 

THE COURT: OKAY. WITH THAT CONDITION, IT'S 

ADMITTED. 

(DEFENDANT'S EXHIBIT QX 9223 WAS ADMITTED IN EVIDENCE.) 

THE COURT: GO AHEAD, PLEASE. 

MR. BORNSTEIN: THANK YOU.

Q. LET ME DIRECT YOU TO THE FOURTH PAGE OF THE AGREEMENT. IT 

ENDS WITH THE BATES STAMP 9826 WHERE THERE IS AN E-MAIL THAT 

APPEARS TO BE FROM YOU, MR. GONELL. 

DO YOU SEE THAT? 

A. YES, THIS IS AN E-MAIL, NOT AN AGREEMENT. BUT I SEE THAT.

Q. DID I SAY "AGREEMENT"? I'M SORRY. 

WHAT WAS THE PURPOSE OF THIS E-MAIL THAT YOU SENT TO 

MEIZU? 

A. OKAY. THIS E-MAIL, THE ONE AT THE TOP OF THE PAGE THAT I 

WROTE, IS AN E-MAIL IN WHICH I AM OFFERING MEIZU A WAY FORWARD 

IN THE NEGOTIATIONS THAT INCLUDES ARBITRATION IF WE CANNOT 

AGREE.

Q. AND WERE YOU OFFERING TO ARBITRATE THE ROYALTY RATE OF AN 

AGREEMENT WITH MEIZU? 

A. YES. 

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1415

Q. DID MEIZU ACCEPT? 

A. NO, THEY DID NOT.

Q. AND WHAT HAPPENED AFTER MEIZU DECLINED? 

A. WE CONTINUED TO NEGOTIATE AND WE -- THEY DIDN'T ACCEPT THE 

ARBITRATION, BUT WE CONTINUED TO NEGOTIATE, JUST TO BE CLEAR. 

WE WERE NOT ABLE TO REACH AGREEMENT FOR A TIME, AND 

QUALCOMM FILED PATENT INFRINGEMENT LAWSUITS IN CHINA AGAINST 

MEIZU. 

THAT LITIGATION BEGAN AND WAS ONGOING. THE PARTIES 

CONTINUED NEGOTIATING, AND WE EVENTUALLY REACHED AN AGREEMENT. 

Q. SO YOU'VE DESCRIBED TWO SITUATIONS IN WHICH POTENTIAL 

LICENSEES REFUSED TO AGREE TO ARBITRATION. 

HAVE THERE BEEN SITUATIONS IN WHICH LICENSEES, OR 

POTENTIAL LICENSEES, HAVE SAID YES AND AGREED TO ARBITRATE THE 

TERMS OF AN AGREEMENT, INCLUDING THE ROYALTY RATE? 

A. YES. 

Q. LET ME DIRECT YOU TO TAB 5 IN THE BINDER. THIS IS 

JX 0098. 

AND, YOUR HONOR, THIS DOCUMENT IS ALREADY IN EVIDENCE AND 

IS SUBJECT TO A SEALING ORDER. 

CAN YOU TELL ME WHAT JX 0098 IS? 

A. THIS IS A LICENSE AGREEMENT BETWEEN QUALCOMM AND HUAWEI 

THAT WAS ENTERED INTO IN 2014.

Q. AND DOES THIS AGREEMENT HAVE SOME KIND OF ARBITRATION 

PROVISION OF THE SORT YOU WERE DESCRIBING? 

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1416

A. YES, IT DOES.

Q. IS THAT WHAT WE CAN SEE ON PAGE 2 OF THE AGREEMENT, 

SECTION 2? 

AND I THINK THIS SECTION IS NOT UNDER SEAL, SO I'LL LIFT 

THE -- 

A. YES. SO SECTION 2 IS THE TERM OF THE AGREEMENT SECTION, 

AND HOW IT WORKS IS THAT THE AGREEMENT IS EFFECTIVE FOR AN 

INITIAL TERM OF ABOUT FIVE YEARS, ENDING AT THE END OF 2019. 

AND THIS PROVISION PROVIDES FOR THE PARTIES TO NEGOTIATE OVER 

THE TERMS FOR A LICENSE STARTING IN 2020, AND THAT IF WE CANNOT 

REACH AGREEMENT ON TERMS FOR THAT FUTURE LICENSE, THEN EITHER 

SIDE MAY INITIATE BINDING ARBITRATION IN ACCORDANCE WITH THE 

OTHER PROVISIONS OF THIS AGREEMENT TO DETERMINE THE TERMS.

Q. IS THIS THE ONLY AGREEMENT THAT QUALCOMM HAS REACHED THAT 

PROVIDES FOR ARBITRATION TO SET THE ROYALTY TERMS FOR A RENEWAL 

OR SUBSEQUENT AGREEMENT? 

A. NO, IT'S NOT. 

Q. OKAY. IS IT COMMON NOW ACROSS QUALCOMM'S LICENSING 

PROGRAM? 

A. SINCE WE ENTERED INTO THIS AGREEMENT WITH HUAWEI, IT HAS 

BECOME A VERY COMMON THING FOR US TO OFFER AND IT'S VERY 

COMMONLY AGREED TO BY LICENSEES TO PROVIDE FOR A TERM IN THIS 

MANNER. 

SO THERE ARE MANY, MANY, MANY AGREEMENTS THAT HAVE THIS 

PROVISION.

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1417

Q. SO I'M GOING TO TURN NOW TO SOME OF THE PRACTICES THAT THE 

FTC HAS CHALLENGED IN THIS CASE, AND I'LL START WITH SOMETHING 

THAT THE FTC CALLS "NO LICENSE, NO CHIPS." 

DO YOU KNOW WHAT POLICY OR PRACTICE THE FTC IS REFERRING 

TO WHEN THEY USE THAT PHRASE? 

A. YES.

Q. CAN YOU DESCRIBE IN YOUR OWN WORDS WHAT PRACTICE THE FTC 

IS CALLING NO LICENSE, NO CHIPS? 

A. THE COMPANY HAS A POLICY OF SELLING CHIPS, MODEM CHIPS, 

ONLY TO LICENSED OEM'S.

Q. WHEN YOU SAY, "ONLY TO LICENSED OEM'S," DOES A LICENSE -- 

DOES AN OEM NEED TO BE LICENSED TO THE ENTIRETY OF QUALCOMM'S 

PORTFOLIO BEFORE QCT WILL SELL CHIPS TO THAT OEM? 

A. NO. 

Q. SO EXPLAIN WHAT PORTION OF THE PORTFOLIO IS AT ISSUE HERE. 

A. OKAY. SO IT'S ESSENTIAL PATENTS, OKAY, AND IT'S ESSENTIAL 

PATENTS FOR A STANDARD THAT'S EMPLOYED IN THE PRODUCT, AND THE 

TEST IS, DOES THE LICENSE COVER THE PRODUCT INTO WHICH THE CHIP 

IS GOING TO GO?

Q. OKAY. SO LET'S SUPPOSE I'M AN OEM AND I REALLY, REALLY 

WANT TO BUY QUALCOMM'S CDMA CHIPS BECAUSE I THINK THEY ARE THE 

BEST AVAILABLE ALTERNATIVE. 

DO I NEED ALSO TO HAVE A LICENSE TO WCDMA TECHNOLOGY FROM 

QUALCOMM? 

A. NO. YOU'D NEED A CDMA LICENSE. 

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1418

Q. OKAY. LET'S SUPPOSE THE CHIPS THAT I WANT TO BUY ARE 

MULTIMODE, THEY'RE CDMA, THEY ALSO CAN BE USED FOR WCDMA. 

IN THAT CIRCUMSTANCE, DO I NEED TO HAVE A WCDMA LICENSE IN 

ORDER TO BUY THOSE CHIPS FROM QCT? 

A. NO, BECAUSE THE -- THE PRODUCT YOU'D PUT THE CHIP INTO 

WOULD BE A PRODUCT THAT DOES CDMA, IT WOULD BE LICENSED UNDER 

THE CDMA AGREEMENT, AND SO IT WOULD BE A LICENSED PRODUCT. AS 

I SAID, THE TEST IS, IS IT A LICENSED PRODUCT?

Q. IS SO THERE EVER ANY CIRCUMSTANCE IN WHICH I WOULD NEED A 

WCDMA LICENSE IN ORDER TO PURCHASE CDMA CHIPS? 

A. NO. IF YOU -- NO. A CDMA LICENSE IS WHAT YOU WOULD NEED.

Q. OKAY. WHY DOES QUALCOMM HAVE THIS PRACTICE? 

A. SO WE HAVE THIS PRACTICE FOR TWO PRINCIPAL REASONS. 

FIRST, THERE'S A FAIR VALUE, AN ESTABLISHED FAIR VALUE FOR OUR 

I.P., AND WE DON'T WANT THE FACT THAT WE HAVE A LICENSING 

BUSINESS TO PREJUDICE US, TO HURT OUR ABILITY TO OBTAIN THE 

FAIR VALUE FOR OUR I.P. 

Q. YOU SAID "WE DON'T WANT THE FACT THAT WE HAVE A LICENSING 

BUSINESS" -- 

A. EXCUSE ME. A CHIP BUSINESS. A CHIP BUSINESS, THE FACT 

THAT WE SELL CHIPS, WE DON'T WANT THE FACT THAT WE HAVE A CHIP 

BUSINESS TO PREJUDICE OUR ABILITY TO OBTAIN THE FAIR VALUE 

THAT'S BEEN ESTABLISHED FOR OUR I.P. 

Q. HOW WOULD HAVING A CHIP BUSINESS, OR SELLING CHIPS, 

PREJUDICE QTL'S ABILITY TO GET FAIR VALUE FOR THE INTELLECTUAL 

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1419

PROPERTY? 

A. WELL, SO TO UNDERSTAND, TO UNDERSTAND THAT, YOU NEED TO GO 

BACK TO THE, KIND OF THE BEGINNINGS OF HOW THIS ALL STARTED, 

RIGHT? 

SO THE COMPANY DOES SYSTEMS INNOVATION AND LICENSES THAT 

OUT; RIGHT? THAT'S HOW -- THAT'S THE FOUNDATION OF THE 

COMPANY. THE LICENSING BUSINESS STARTS FIRST. 

SO BY THE TIME THE CHIP BUSINESS STARTS, THERE'S AN 

ESTABLISHED VALUE FOR THE I.P. THAT'S FAIRLY NEGOTIATED, 

THERE'S A BUNCH OF AGREEMENTS. 

OKAY. THE CHIP BUSINESS COMES ALONG. WHEN THE CHIP 

BUSINESS COMES ALONG, THEY PRICE THEIR CHIPS USING, OR WITH 

JUST THE PRICE OF THE CHIP IN MIND, EXCLUDING THE VALUE OF THE 

I.P. BECAUSE THE VALUE OF THE I.P. IS ALREADY TAKEN CARE OF IN 

THE LICENSES. OKAY? 

SO WITH THAT SET UP, THE IMPORTANT POINT IS THE CHIPS ARE 

SOLD FOR THE VALUE OF THE CHIPS, EXCLUDING THE VALUE OF THE 

I.P. 

SO -- 

Q. AND WHY DOES THAT REQUIRE THIS PRACTICE WE'RE TALKING 

ABOUT? 

A. OKAY. SO WE THINK OF TWO SITUATIONS, YOU KNOW, SELLING TO 

A LICENSEE OR SELLING TO A NON-LICENSEE. 

IF YOU SELL TO A LICENSEE, THEN EVERYTHING IS FINE BECAUSE 

YOU GET THE VALUE OF THE CHIP WHEN YOU SELL THE CHIP AND YOU 

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GONELL DIRECT BY MR. BORNSTEIN

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1420

GET THE VALUE OF THE I.P., THE FAIR VALUE OF THE I.P. FROM THE 

LICENSE. OKAY? 

IF YOU SELL TO A NON-LICENSEE, THEN YOU GET THE VALUE OF 

THE CHIP FOR THE CHIP, BUT THERE'S NO AGREEMENT ABOUT THE VALUE 

OF THE I.P., SO YOU NEED TO TALK WITH THEM ABOUT GETTING FAIR 

VALUE FOR THE I.P. 

AND THE PROBLEM THAT ARISES IS THAT BY VIRTUE OF HAVING 

SOLD THEM THE CHIP, THEY NOW HAVE ARGUMENTS THAT ARISE UNDER 

PATENT LAW AND PRINCIPLES OF PATENT EXHAUSTION THAT THEY DON'T 

HAVE TO PAY YOU ANY MORE FOR THE FAIR VALUE OF THE I.P. BECAUSE 

YOU'VE SOLD THEM THE CHIP, EVEN THOUGH THEY HAVEN'T PAID 

ANYTHING FOR THAT YET. 

Q. AND HOW DOES THE AVAILABILITY OF THESE ARGUMENTS RELATING 

TO PATENT EXHAUSTION HAVE THE POTENTIAL TO PREJUDICE THE 

LICENSING BUSINESS? 

A. WELL, THE -- THOSE ARGUMENTS AND THE FACT -- THOSE ISSUES 

WILL AFFECT THE NEGOTIATIONS, WILL AFFECT POTENTIAL LEGAL 

CLAIMS WE CAN BRING IN CASE WE CAN'T REACH AGREEMENT, AND WILL 

AFFECT THE POTENTIAL REMEDIES WE GET, OR THE EFFECT OF THOSE 

REMEDIES IN CASE -- EVEN IF WE BRING A CASE AND WIN. 

SO ALL OF THAT DRIVES DOWN THE ULTIMATE OUTCOME TO BELOW 

THE FAIR VALUE. 

Q. AND HOW DOES THE PRACTICE THAT WE'RE TALKING ABOUT OF 

SELLING ONLY TO LICENSED OEM'S ADDRESS THE PROBLEM YOU'VE 

IDENTIFIED? 

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1421

A. WELL, AS I SAID, IF YOU GET -- IF YOU SELL TO SOMEONE THAT 

HAS A LICENSE, THEN THE LICENSE PROVIDES THE CONTRACTUAL 

AGREEMENT PROVIDING FOR THE FAIR VALUE. AND SO THESE ISSUES 

SIMPLY DON'T ARISE BECAUSE THERE IS ALREADY AN AGREEMENT FOR A 

FAIR VALUE. 

Q. SO YOU REFERRED EARLIER TO SOME HISTORICAL REASONS FOR WHY 

QUALCOMM DOESN'T PRICE THE I.P. INTO THE CHIP. 

ARE THERE OTHER, OTHER BENEFITS THAT QUALCOMM BELIEVES 

ARISE FROM THIS SEPARATE PRICING STRUCTURE? 

A. WELL, I THINK I -- I THINK I WAS TALKING EARLIER ABOUT WHY 

WE HAVE THE POLICY OF SELLING ONLY TO LICENSED OEM'S. 

IF WE -- IF YOU -- IF YOU'RE ASKING ABOUT WHY WE DON'T 

JUST PRICE THE I.P. IN THE CHIPS? IS THAT WHAT YOU'RE ASKING?

Q. WELL, IS THERE A REASON FOR THAT? 

A. WELL, YES, THERE'S THE MATTER OF HISTORICAL PRACTICE, THE 

LICENSING BUSINESS WAS FIRST AND THE CHIP BUSINESS CAME SECOND, 

AND SO THAT'S HOW IT STARTED. 

BUT, YOU KNOW, AS WE ARE NOW, PRICING -- TRYING TO PRICE 

THE I.P. PRICE INTO THE CHIP PRICE WOULD NOT WORK AS A METHOD 

TO GET YOU FAIR VALUE FOR THE I.P. 

Q. WHY IS THAT? 

A. WELL, BECAUSE -- WELL, YOU HAVE TO LOOK AT IT FROM THE 

POINT OF VIEW OF THE CHIP CUSTOMER AND THE CHOICES THE CHIP 

CUSTOMER IS FACING. OKAY? 

SO LET'S SAY THERE'S A CHIP PRICE X AND THAT THERE'S FAIR 

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GONELL DIRECT BY MR. BORNSTEIN

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1422

VALUE FOR QUALCOMM'S I.P. Y THAT'S ESTABLISHED IN THE MARKET. 

OKAY? 

SO WHAT WE'RE -- WHAT YOU'RE ASKING ABOUT IS A SITUATION 

WHERE QUALCOMM CHARGES FOR ITS CHIP X PLUS Y, AND FROM THE 

CUSTOMER'S POINT OF VIEW, THEIR CHOICE IS, OKAY, HERE'S 

QUALCOMM'S OFFERING, I HAVE TO PAY X PLUS Y. 

WHEN THEY'RE CONSIDERING SOMEBODY ELSE'S CHIP, OKAY, THEY 

HAVE TO PAY X, THE PRICE OF THE CHIP, OKAY, AND IF THEY HAVE A 

LICENSE AGREEMENT, THEY HAVE TO PAY Y AND IT'S THE SAME AND 

EVERYTHING IS FINE. 

BUT WHAT IF THEY DON'T HAVE A LICENSE AGREEMENT? SO IF 

THEY DON'T HAVE A LICENSE AGREEMENT, OKAY, THEN WE HAVE -- WE 

OBVIOUSLY HAVE TO TALK TO THEM ABOUT THAT AND MAYBE THEY'LL 

ENTER INTO A LICENSE AGREEMENT OR MAYBE THEY WON'T. 

BUT THE IMMEDIATE CHOICE THEY HAVE IS NOT PAYING X PLUS Y, 

IT'S PAYING X NOW AND, AT ABSOLUTE WORST, Y LATER. AND MAYBE 

THEY'LL END UP PAYING LESS THAN Y. 

Q. WHY IS Y LATER THE ABSOLUTE WORST CASE SCENARIO FOR AN 

UNLICENSED OEM IN THESE CIRCUMSTANCES? 

A. BECAUSE, AS I SAID, THERE'S AN ESTABLISHED VALUE FOR, FOR 

QUALCOMM'S I.P., SO WE'LL JUST SAY THAT IS THE FRAND -- WE'LL 

CALL THAT THE FRAND RATE AND SAY Y IS THE FRAND RATE. 

IN A DISPUTE THEN WITH THE -- WITH THIS UNLICENSED 

CUSTOMER, THEN WHEN WE GO TO COURT OR ARBITRATION TO RESOLVE 

THAT DISPUTE, WE'RE SEEKING A FRAND RATE. WE ARE SEEKING Y. 

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GONELL DIRECT BY MR. BORNSTEIN

UNITED STATES COURT REPORTERS

1423

QUALCOMM IS ASKING FOR Y. 

THE COURT OR ARBITRATOR IS NOT GOING TO GIVE US MORE THAN 

Y. THE COURT, IF WE WIN EVERYTHING, THEN THEY'RE GOING TO GIVE 

US Y. 

AND SO THAT'S WHY Y IS THE WORST CASE SCENARIO. 

Q. SO ARE THERE CONSEQUENCES THEN DOWN THE LINE FOR QUALCOMM 

FROM THE FACT THAT THE OEM HAS THIS CHOICE THAT YOU'VE 

DESCRIBED? 

A. OH, YES, RIGHT. YES, FOR SURE, BECAUSE, LOOK, IF THEY'RE 

FACING A CHOICE WHERE THE QUALCOMM -- THE QUALCOMM OFFERING IS 

X PLUS Y, AND THE COMPETING OFFERING IS X PLUS Y LATER, OR 

MAYBE LESS THAN Y LATER, THEN ALL OTHER THINGS BEING EQUAL, THE 

OTHER OFFERING IS GOING TO BE MORE ATTRACTIVE. 

SO QUALCOMM'S GOING TO HAVE TO ADJUST ITS PRICE TO PUT 

THINGS ON A LEVEL PLAYING FIELD, AND THAT ADJUSTMENT IN PRICE 

IS EXACTLY GETTING LESS THAN FAIR COMPENSATION. 

Q. AND ARE THERE ADDITIONAL BENEFITS THAT QUALCOMM HAS 

IDENTIFIED FROM HAVING SEPARATE PRICING FOR I.P. AND FOR CHIPS? 

A. WELL, HAVING SEPARATE PRICING FOR I.P. AND CHIPS HELPS 

AVOID PROBLEMS THAT WOULD ARISE IF YOU TRIED -- IF YOU COMBINE 

THEM, COMBINE THE PRICE OF THE CHIPS AND THE LICENSE.

Q. WHAT SORT OF PROBLEMS ARE YOU TALKING ABOUT? 

A. SO STANDARD ESSENTIAL PATENTS ARE SUBJECT TO FRAND 

COMMITMENTS AND THERE ARE LOTS OF ISSUES THAT GET RAISED WHEN 

I.P. IS SUBJECT TO FRAND COMMITMENTS. 

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UNITED STATES COURT REPORTERS

1424

ONE ISSUE THAT GETS RAISED, THAT HAS BEEN RAISED IN MY 

EXPERIENCE, IS THE ISSUE OF FRAND MAY PROHIBIT YOU FROM 

CHARGING FOR THE I.P. A DEVICE THAT USES YOUR COMPONENT LESS 

THAN A DEVICE -- THE SAME DEVICE THAT USES A COMPETING 

COMPONENT. OKAY? 

IN OTHER WORDS, YOU CAN'T CHARGE LESS FOR STUFF THAT USES 

YOUR CHIPS THAN YOU CHARGE FOR STUFF THAT USES SOMEBODY ELSE'S 

CHIPS, AT LEAST THAT'S HOW THE ARGUMENT GOES. 

THERE'S ALSO ISSUES OF NON-DISCRIMINATION, WHICH GOES TO 

SAY YOU HAVE TO TREAT SIMILARLY SITUATED PEOPLE SIMILARLY WHEN 

YOU'RE PRICING I.P. 

Q. SO WHAT'S THE RELEVANCE OF ALL THIS TO SEPARATE PRICING OF 

CHIPS AND LICENSING? 

A. SO IF YOU HAVE SEPARATE PRICES FOR I.P. AND CHIPS, THEN 

YOU CAN TELL WHAT'S GOING ON, RIGHT? YOU CAN TELL WHAT THE 

I.P. PRICE IS, YOU CAN TELL WHAT THE I.P. PRICE IS YOU'RE 

CHARGING DIFFERENT PEOPLE, YOU CAN TELL WHAT THE I.P. PRICE IS 

THAT YOU'RE CHARGING FOR YOUR DEVICES COMPARED TO -- FOR 

DEVICES THAT USE YOUR CHIPS COMPARED TO DEVICES THAT USE OTHER 

CHIPS. SO YOU CAN TELL, IS THERE -- ARE THESE ISSUES ARISING 

OR ARE THEY NOT? 

IF YOU COMBINE THE PRICES, THEN ANY CHANGE IN THE 

COMBINATION -- AND CHIP PRICES VARY FAR MORE THAN I.P. 

PRICES -- BUT ANY CHANGE THEN NOW BECOMES SUSPECT, NOW BECOMES 

SUBJECT TO THESE ARGUMENTS. IS THIS DISCRIMINATION? IS THIS 

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UNITED STATES COURT REPORTERS

1425

CHARGING SEPARATE I.P. PRICE FOR YOUR STUFF VERSUS SOMEBODY 

ELSE'S? 

AND, YOU KNOW, AVOIDING THOSE, THOSE ARGUMENTS AND THOSE 

ISSUES IS A GOOD THING. 

Q. NOW, WAY BACK EARLIER IN THIS DISCUSSION YOU MENTIONED 

THAT THERE WERE TWO PRINCIPAL REASONS FOR THE PRACTICE WE'VE 

BEEN DISCUSSING. WHAT'S THE OTHER ONE YOU HAD IN MIND? 

A. SO THE OTHER ONE I HAD IN MIND IS WHAT I'LL CALL THE ISSUE 

OF FAIRNESS, AND IT'S THE ISSUE OF ACTUAL FAIRNESS, ACTUALLY 

BEING FAIR TO THE LICENSEES AND THE PERCEPTION OF FAIRNESS, 

THEIR BELIEF, THEIR SUBJECTIVE BELIEF IN ARE YOU BEING FAIR? 

ARE YOU TREATING THEM FAIR?

Q. AND HOW DOES THE PRACTICE WE'RE TALKING ABOUT ADDRESS 

FAIRNESS ISSUES? 

A. OKAY. SO A FAIRNESS ISSUE WE HEAR ABOUT, WE HEAR ABOUT 

FREQUENTLY IS LICENSEES DON'T LIKE IT, I'LL JUST SAY, FIND IT 

UNFAIR IF THEY'RE DOING THE RIGHT THING AND THEY'RE PAYING 

ROYALTIES AND SOMEBODY ELSE THAT THEY'RE COMPETING WITH IS OUT 

THERE NOT DOING THE RIGHT THING AND NOT PAYING US ROYALTIES. 

IF WE WERE ENABLING THAT BY SELLING CHIPS, THEN IT WOULD 

BE MUCH, MUCH WORSE, IT WOULD BE 1,000 TIMES WORSE BECAUSE NOW 

WE'RE ENABLING THAT BAD ACTOR AND GIVING THEM ARGUMENTS THAT 

THEY DON'T HAVE TO PAY, AND THE LICENSEES THAT ARE DOING THE 

RIGHT THING WILL FIND THAT UNFAIR AND, IN FACT, I BELIEVE THAT 

IT WOULD BE UNFAIR. IT'S NOT JUST THEIR PERCEPTION. THE 

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UNITED STATES COURT REPORTERS

1426

REALITY WOULD BE THAT THAT'S NOT A FAIR SITUATION.

Q. AND ARE THERE SITUATIONS WHERE YOU'VE HAD LICENSEES WHO 

HAVE COMPLAINED ABOUT THE FACT THAT THERE ARE COMPETING OEM'S 

THAT AREN'T PAYING ROYALTIES TO QUALCOMM? 

A. YES. THAT HAPPENS NOT INFREQUENTLY. AND, AGAIN, THIS IS 

EVEN IN THE SITUATION WHERE WE'RE NOT ENABLING THE 

INFRINGEMENT, BUT JUST THE MERE FACT OF US SUPPOSEDLY 

TOLERATING THE INFRINGEMENT IS THE SOURCE OF COMPLAINT. 

Q. AND IS IT YOUR VIEW THAT ACTUALLY ENABLING THE 

INFRINGEMENT WOULD MAKE IT WORSE? 

A. YES, FAR, FAR WORSE.

Q. LET ME ASK YOU TO TAKE A LOOK AT TAB 6 IN THE BINDER. 

THIS IS QX 9242. AND I'LL ASK THAT YOU TELL ME WHAT THIS 

DOCUMENT IS? 

A. QX 9242 IS AN E-MAIL CHAIN THAT ENDS IN AN E-MAIL FROM 

BENSON LAM TO ME AND OTHERS AT QTL. 

MR. BORNSTEIN: YOUR HONOR, I'D OFFER QX 924 INTO 

EVIDENCE. 

MR. MERBER: YOUR HONOR, THE FTC OBJECTS THAT THIS 

DOCUMENT CONTAINS MULTIPLE LEVELS OF HEARSAY, FIRST, FROM THE 

CUSTOMERS TO MR. LAM, AND, SECOND, FROM MR. LAM TO MR. GONELL. 

MR. BORNSTEIN: YOUR HONOR, WE'RE OFFERING THE 

DOCUMENT FOR ITS EFFECT ON MR. GONELL AND ARE CONTENT TO NOT 

HAVE IT IN FOR THE TRUTH OF THE STATEMENTS REPORTED BY 

MR. LORBECK AND MR. LAM. 

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UNITED STATES COURT REPORTERS

1427

THE COURT: WHAT'S YOUR VIEW ON THAT? 

MR. MERBER: WITH THAT QUALIFICATION, NO OBJECTION. 

THE COURT: OKAY. SO HELP ME PHRASE, HOW IS THAT 

GOING TO BE? ANY -- 

MR. BORNSTEIN: I THINK WE COULD SAY IT'S BEING 

ADMITTED, BUT NOT FOR THE TRUTH OF THE STATEMENTS REPORTED BY 

INDIVIDUALS OTHER THAN MR. GONELL. 

DOES THAT WORK FOR YOU? 

THE COURT: WELL, THAT'S THE WHOLE THING. NONE OF 

THESE E-MAILS ARE ACTUALLY AUTHORED BY MR. GONELL. SO THAT'S 

THE WHOLE DOCUMENT; RIGHT? 

MR. BORNSTEIN: THE DOCUMENT -- 

THE COURT: SO THE WHOLE DOCUMENT WILL NOT BE 

ADMITTED FOR THE TRUTH OF THE MATTER ASSERTED. 

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

THE COURT: OKAY. SO WITH THAT CONDITION, IT'S 

ADMITTED. 

(DEFENDANT'S EXHIBIT QX 9242 WAS ADMITTED IN EVIDENCE.) 

THE COURT: GO AHEAD, PLEASE. 

MR. BORNSTEIN: THANK YOU.

Q. SO CAN YOU EXPLAIN TO ME WHAT THIS DOCUMENT IS AND WHY 

IT'S SIGNIFICANT TO THE DISCUSSION WE'VE BEEN HAVING? 

A. THIS DOCUMENT IS AN EXAMPLE OF SOME OF THE INFORMATION 

THAT'S COME TO ME OF -- ABOUT COMPLAINTS OF CUSTOMERS ABOUT 

SITUATIONS WHERE THEY ARE COMPETING WITH OTHER COMPANIES THAT 

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1428

ARE NOT LICENSED TO QUALCOMM'S PATENTS. 

Q. WHAT IS QUALCOMM'S PRACTICE WITH RESPECT TO SUPPLYING 

CHIPS TO A LICENSEE WHO IS DISPUTING THE TERMS OF ITS LICENSE? 

A. IF THERE'S A LICENSEE THAT IS DISPUTING THE TERMS OF ITS 

LICENSE, THEN WE CONTINUE TO SUPPLY CHIPS IF THEY WANT THEM.

Q. WHY DO YOU CONTINUE TO SUPPLY CHIPS TO SOMEONE WHO'S 

DISPUTING THE TERMS OF THE LICENSE? 

A. WHEN THEY'RE A LICENSEE -- SO THE ISSUES THAT I TALKED 

ABOUT BEFORE THAT APPLY IN SITUATIONS WHERE YOU'RE SELLING TO 

SOMEBODY THAT DOESN'T HAVE A LICENSE DON'T APPLY BECAUSE THEY 

HAVE A LICENSE. 

THE TERMS MIGHT BE IN DISPUTE AND THAT HAS TO BE DEALT 

WITH IN ALL OF THAT. 

BUT THE ISSUES THAT I WAS TALKING ABOUT THAT UNDERLIE THE 

POLICY OF SELLING ONLY TO LICENSED OEM'S, THOSE ISSUES DON'T 

ARISE WHEN THEY HAVE A LICENSE. THEY ONLY ARISE WHEN SOMEONE 

DOESN'T HAVE A LICENSE.

Q. AND HAVE THERE BEEN SITUATIONS WHERE LICENSED OEM'S HAVE 

STOPPED COMPLYING WITH THEIR AGREEMENTS, BUT QUALCOMM HAS 

CONTINUED TO SHIP THEM CHIPS? 

A. YES. 

Q. CAN YOU GIVE SOME EXAMPLES OF THAT? 

A. SURE. THERE HAVE BEEN MULTIPLE SITUATIONS LIKE THAT, JUST 

IN THE PAST FEW YEARS, BUT EVEN BEFORE. 

BUT OPPO, ONE OF THE TOP SIX IN THE WORLD, STOPPED PAYING 

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1429

QUALCOMM FOR OVER A YEAR WHILE THEY WERE RENEGOTIATING THEIR 

LICENSE, AND QUALCOMM CONTINUED TO SHIP. 

VIVO, ANOTHER OF THE TOP SIX IN THE WORLD, STOPPED PAYING 

WHILE THEY WERE RENEGOTIATING THEIR LICENSE. FOR OVER A YEAR, 

QUALCOMM CONTINUED TO SHIP. 

HUAWEI, BACK IN THE 2013/'14 NEGOTIATIONS THAT ENDED WITH 

THE AGREEMENT WE TALKED ABOUT EARLIER, THEY TOOK THE POSITION 

THAT THEY HAD MOVED THEIR BUSINESS TO AN UNLICENSED ENTITY AND 

STOPPED PAYING, AND WE CONTINUED TO SHIP THEM CHIPS THROUGHOUT 

THAT TIME PERIOD. 

APPLE HAS ORDERED ITS CONTRACT MANUFACTURERS NOT TO PAY US 

AND THEY HAVE, IN FACT, NOT PAID US FOR GOING ON TWO YEARS NOW, 

AND WE HAVE CONTINUED TO SHIP CHIPS. 

YOU KNOW, BEFORE THAT, I'M AWARE THAT WE HAD A DISPUTE 

WITH BLACKBERRY THAT -- WHERE BLACKBERRY WAS UNDERPAYING, THEY 

WEREN'T NOT PAYING AT ALL, BUT THEY WERE UNDERPAYING, IN OUR 

VIEW, WHAT THEY OWED AND WE CONTINUED TO SHIP THEM CHIPS DURING 

THAT TIME AS WELL.

Q. YOU PREVIOUSLY TALKED ABOUT A NEGOTIATION YOU HAD WITH 

SAMSUNG IN 2009. 

MR. MERBER: YOUR HONOR, I DIDN'T HEAR ANY TESTIMONY 

REGARDING THE EFFECT OF QX 9242 ON THE WITNESS IN ANY WAY, AND 

THE FTC WOULD MOVE TO STRIKE THE TESTIMONY ABOUT THAT DOCUMENT. 

MR. BORNSTEIN: I BELIEVE I COVERED THIS, BUT I CAN 

ASK THE QUESTION. 

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GONELL DIRECT BY MR. BORNSTEIN

UNITED STATES COURT REPORTERS

1430

Q. WHAT -- WHAT IS THE RELEVANCE, TO YOU, OF A DOCUMENT LIKE 

QX 9242, THE E-MAIL YOU RECEIVED FROM MR. LAM IN TERMS OF THE 

POLICY WE'VE BEEN DISCUSSING? 

A. SO IN TERMS OF THE -- IN TERMS OF THE POLICY I'M 

DISCUSSING, TO ME -- TO ME WHEN I GET INFORMATION LIKE THIS 

FROM PEOPLE THAT ARE OUT THERE IN THE FIELD ACTUALLY TALKING TO 

CUSTOMERS, AND THIS IS -- THIS IS AN E-MAIL COMING FROM PEOPLE 

IN CHINA TALKING ABOUT EVENTS IN CHINA, AND IT'S NOT THAT I 

NEVER GO TO CHINA, BUT I SPEND MOST OF MY TIME HERE. WELL, NOT 

HERE, BUT IN THE U.S. 

THIS, YOU KNOW, THIS IS, YOU KNOW, KIND OF VALUABLE 

INFORMATION TO ME ABOUT, OKAY, WHAT'S GOING ON? WHAT ARE THE 

PERCEPTIONS THAT ARE BEING REPORTED TO US? AND IT, TO ME, JUST 

TELLS ME THAT THE PERCEPTION OF FAIRNESS AND ACTUAL FAIRNESS 

ARE VERY IMPORTANT ISSUES AND TO ME -- FOR ME, IN MY JOB AS -- 

IN MY ROLE AS COMING UP WITH THE COMPANY'S LICENSING STRATEGY 

AND HOW WE CONDUCT OUR LICENSING BUSINESS, THIS TYPE OF THING 

REINFORCES MY BELIEF THAT FAIRNESS IS A VITAL, OF VITAL 

IMPORTANCE ON THIS ISSUE. 

Q. NOW, BEFORE MR. MERBER'S OBJECTION, YOU WERE TALKING ABOUT 

LICENSEES WHO HAD CEASED PAYING, BUT QUALCOMM CONTINUED TO SHIP 

CHIPS. 

AND I WAS TURNING TO ASK YOU ABOUT NEGOTIATION YOU HAD 

WITH SAMSUNG IN 2009. 

THE COURT: LET ME JUST OVERRULE THE OBJECTION BEFORE 

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GONELL DIRECT BY MR. BORNSTEIN

UNITED STATES COURT REPORTERS

1431

YOU DO THAT. 

GO AHEAD, PLEASE. 

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

AND WHILE WE'RE PAUSED, IT OCCURRED TO ME DURING THE 

NEGOTIATION, I NEGLECTED TO MENTION, YOUR HONOR, THAT THERE 

WILL BE A PORTION OF THIS THAT WE'LL NEED TO DO UNDER SEAL IN 

LIGHT OF AN ORDER YOU ENTERED PREVIOUSLY ON THE REQUEST OF 

AVANCI. I'LL SAVE THAT UNTIL THE VERY END OF THE EXAMINATION. 

THE COURT: OKAY. AND WE'LL DO THAT RIGHT BEFORE THE 

LUNCH BREAK. IS THAT OKAY? WILL THAT WORK FOR YOUR FLOW? 

MR. BORNSTEIN: THAT'S FINE, UNLESS I FINISH SOONER. 

THE COURT: OKAY. GO AHEAD, PLEASE. 

MR. BORNSTEIN: THANK YOU.

Q. SO THE NEGOTIATION YOU HAD WITH SAMSUNG IN 2009, DID 

ISSUES RELATING TO CHIP SUPPLY COME UP AT ALL IN THAT 

NEGOTIATION? 

A. NO, NOT TO MY KNOWLEDGE. AND CERTAINLY NOT WHILE I WAS A 

PART OF IT.

Q. AND WOULD IT HAVE MADE ANY SENSE FOR ISSUES RELATING TO 

CONTINUED CHIP SUPPLY TO SAMSUNG TO HAVE ARISEN IN THAT 

NEGOTIATION? 

A. NO, NOT TO MY MIND.

Q. WHY NOT?

A. BECAUSE THIS WAS NOT A SITUATION WHERE SAMSUNG WAS 

BECOMING UNLICENSED, WAS ABOUT TO BECOME UNLICENSED, OR WAS 

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GONELL DIRECT BY MR. BORNSTEIN

UNITED STATES COURT REPORTERS

1432

UNLICENSED. 

SAMSUNG HAD A LICENSE. WE WERE RENEGOTIATING THE LICENSE. 

THEY WERE LICENSED UNDER -- IF THEY WERE -- SAY THEY WERE 

LICENSED, SO THE ISSUES THAT ARISE FROM SELLING TO SOMEONE 

THAT'S NOT LICENSED JUST DIDN'T COME INTO PLAY.

Q. SO I'M GOING TO MOVE NOW TO TALK ABOUT A DIFFERENT 

PRACTICE THAT HAS BEEN THE SUBJECT OF A CHALLENGE FROM THE FTC. 

WHAT IS QUALCOMM'S PRACTICE WITH RESPECT TO GRANTING 

EXHAUSTIVE LICENSES TO MODEM CHIP SUPPLIERS? 

A. IT IS OUR STRONG PREFERENCE NOT TO GRANT EXHAUSTIVE 

LICENSES TO MODEM CHIP SUPPLIERS.

Q. HAS QUALCOMM EVER GRANTED AN EXHAUSTIVE LICENSE FOR 

CELLULAR SEPS TO A MODEM CHIP SUPPLIER? 

A. WE'VE NEVER ENTERED INTO AN AGREEMENT, TO MY KNOWLEDGE, 

FOR CELLULAR SEPS THAT WAS INTENDED TO BE EXHAUSTIVE.

Q. AND IS QUALCOMM UNIQUE AMONG HOLDERS OF CELLULAR SEPS IN 

THIS REGARD? 

A. NO. THAT'S THE COMMON INDUSTRY PRACTICE IS TO LICENSE AT 

THE DEVICE LEVEL AND NOT TO LICENSE MODEM CHIP COMPANIES.

Q. AND WHY DOES QUALCOMM HAVE THAT PRACTICE? 

A. WELL, QUALCOMM LICENSES AT THE DEVICE LEVEL. IT'S, YOU 

KNOW, INDUSTRY PRACTICE TO LICENSE AT THE DEVICE LEVEL. 

AND THE LICENSING AT THE CHIP LEVEL IS UNNECESSARY IN THAT 

REGIME. 

Q. WOULD THERE BE ANY NEGATIVE CONSEQUENCES TO THE INDUSTRY 

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GONELL DIRECT BY MR. BORNSTEIN

UNITED STATES COURT REPORTERS

1433

OR TO QUALCOMM IN LICENSING AT THE CHIP LEVEL? 

A. YES. IT WOULD MAKE LICENSING A LOT MORE CUMBERSOME AND 

MORE INEFFICIENT.

Q. HOW SO? 

A. WELL, SO WE'RE TALKING ABOUT ESSENTIAL PATENTS, CELLULAR 

ESSENTIAL PATENTS. THE PATENTS ARE WRITTEN IN A WAY THAT 

DESCRIBE USER EQUIPMENT, AND BASE STATIONS, BUT SET THAT ASIDE 

BECAUSE REALLY WE'RE TALKING ABOUT HANDSETS, WE'RE TALKING 

ABOUT USER EQUIPMENT. 

SO THE STANDARDS ARE WRITTEN IN A WAY THAT DESCRIBE USER 

EQUIPMENT, AND THE ESSENTIAL PATENTS READ ON USER EQUIPMENT. 

NOW, SOME OF THEM MAY ALSO READ ON CHIPS, BUT THERE'S -- 

IT'S UNDOUBTEDLY THE CASE THAT THERE ARE SOME OF THEM THAT READ 

ON USER EQUIPMENT AND DON'T READ ON CHIPS.

Q. AND JUST FOR CLARITY, WHAT DO YOU MEAN BY "USER 

EQUIPMENT"? 

A. USER EQUIPMENT IS AN END USER DEVICE, LIKE A HANDSET. 

USER EQUIPMENT IS HOW IT'S TALKED ABOUT IN THE STANDARD. SO I 

APOLOGIZE IF I'M GETTING INTO TECHNICALITIES. 

BUT THE POINT IS THAT THERE'S GOING TO BE SOME PATENTS 

THAT READ ON THE DEVICE AND DON'T -- AND DON'T READ ON THE 

CHIP, THAT YOU CAN'T HAVE AN INFRINGEMENT READ ON THE CHIP.

Q. AND WHAT'S THE PRACTICAL CONSEQUENCE OF THAT? 

A. SO THE PRACTICAL CONSEQUENCE OF THAT IS IF YOU DO 

LICENSING AT THE MODEM CHIP LEVEL, YOU'RE GOING TO ALSO HAVE TO 

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GONELL DIRECT BY MR. BORNSTEIN

UNITED STATES COURT REPORTERS

1434

DO SOME LICENSING AT THE DEVICE LEVEL, OR I GUESS YOU COULD 

FORGO VALUE, BUT THAT'S NOT THE GOAL EITHER; RIGHT? 

SO YOU'RE GOING TO LICENSE EVERYTHING, YOU'RE GOING TO 

HAVE TO DO LICENSING AT BOTH LEVELS. 

AND ONCE YOU'RE IN A WORLD WHERE YOU HAVE TO LICENSE A 

DEVICE ANYWAY, IT'S JUST MUCH MORE EFFICIENT TO DO ONE 

NEGOTIATION RATHER THAN TWO, PARTICULARLY GIVEN ALL OF THE 

UNCERTAINTIES INVOLVED AND THE POTENTIAL FOR DISPUTES.

Q. WHAT KIND OF POTENTIAL FOR DISPUTE ARE YOU TALKING ABOUT? 

A. WELL, YOU COULD HAVE SITUATIONS -- THERE'S -- THIS MULTI 

LEVEL STRUCTURE, YOU COULD HAVE SITUATIONS WHERE THE CHIP GUY 

SAYS, WELL, HOLD ON A SECOND, I DON'T THINK I NEED TO TAKE A 

LICENSE TO THIS. YOU SHOULD LICENSE THE DEVICE GUY. 

AND THE DEVICE GUY IS THEN TELLING YOU, WAIT, I DON'T 

THINK I SHOULD TAKE A LICENSE TO THIS. YOU SHOULD LICENSE THE 

CHIP GUY. 

AND NOW, INSTEAD OF BILATERAL NEGOTIATIONS OVER VALUE, 

WE'RE HAVING, IN SOME WEIRD SENSE, SOME THREE-WAY NEGOTIATION 

EVEN OVER THE ISSUE OF WHO SHOULD TAKE A LICENSE EVEN BEFORE WE 

GET TO VALUE. 

IT'S JUST MUCH MORE COMPLICATED. 

THE COURT: I DON'T UNDERSTAND THIS. THE QUESTION 

WAS, IS THE -- IS QUALCOMM NOT GRANTING AN EXHAUSTIVE LICENSE 

FOR CELLULAR SEPS COMMON OR NOT, AND THEN YOU IMMEDIATELY 

SWITCHED -- THIS WAS THE QUESTION. 

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GONELL DIRECT BY MR. BORNSTEIN

UNITED STATES COURT REPORTERS

1435

THE ANSWER WAS, WE HAVE NEVER ENTERED INTO AN AGREEMENT TO 

MY KNOWLEDGE FOR CELLULAR SEPS THAT WAS INTENDED TO BE 

EXHAUSTIVE. 

"QUESTION: IS QUALCOMM UNIQUE AMONG HOLDERS OF CELLULAR 

SEPS IN THIS REGARD? 

NO, THAT'S THE COMMON INDUSTRY PRACTICE, TO LICENSE AT THE 

DEVICE LEVEL AND NOT THE CHIP LEVEL. 

I DIDN'T UNDERSTAND HOW THAT'S AN ANSWER TO THE EXHAUSTION 

QUESTION. I THINK I'M STILL UNCLEAR. 

MR. BORNSTEIN: WELL, MAYBE I CAN TRY AND ADDRESS IT. 

Q. SO THE -- THE FIRST QUESTION IS, IS QUALCOMM THE ONLY 

LICENSOR THAT -- CELLULAR SEP LICENSOR THAT HAS THIS PRACTICE 

OF LICENSING AT THE DEVICE LEVEL? 

THE COURT: NO. THAT WASN'T THE QUESTION. THE 

QUESTION WAS, IS IT UNIQUE AMONG HOLDERS NOT TO DO EXHAUSTIVE 

LICENSES FOR CELLULAR SEPS. THAT WAS THE QUESTION. 

MR. BORNSTEIN: OKAY. 

THE COURT: AND THEN YOU FLIPPED IT TO LICENSING CHIP 

VERSUS DEVICE. I WANT TO KNOW WHAT'S THE QUESTION TO, IS IT 

UNIQUE NOT TO DO EXHAUSTIVE LICENSES FOR CELLULAR SEPS? THAT'S 

A DIFFERENT QUESTION. 

BY MR. BORNSTEIN:

Q. WHAT IS THE ANSWER TO THAT QUESTION, MR. GONELL? 

A. OKAY. IF WE'RE TALKING ABOUT LICENSES FOR CHIP MAKERS, IT 

IS NOT UNIQUE. IT'S COMMON THAT WE -- THAT ESSENTIAL PATENT 

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GONELL DIRECT BY MR. BORNSTEIN

UNITED STATES COURT REPORTERS

1436

HOLDERS DON'T GRANT LICENSES TO CHIPS EXHAUSTIVELY. EVERYBODY 

DOES GRANT EXHAUSTIVE LICENSES TO DEVICES. 

Q. AND I THEN MOVED TO WHAT'S THE REASON THAT QUALCOMM 

FOLLOWS THIS PRACTICE? 

A. YES, IT'S BEEN -- QUALCOMM -- WELL, QUALCOMM LICENSES AT 

THE DEVICE LEVEL BECAUSE IT IS MORE EFFICIENT, IT'S INDUSTRY 

PRACTICE, IT'S THE WAY THE INDUSTRY HAS GROWN UP. IT'S MORE 

ECONOMICALLY EFFICIENT. IT GETS YOU CLOSER TO THE -- 

THE COURT: CAN I ASK A QUESTION? I'M SORRY TO 

INTERRUPT. YOU'RE SAYING NO ONE LICENSES AT THE CHIP LEVEL, SO 

YOU'RE SAYING ALL THE CHIP LICENSES ARE NOT EXHAUSTIVE. BUT 

ACCORDING TO YOU, THERE ARE NONE. 

SO I GUESS I'M NOT WILLING FOLLOWING. YOU'RE SAYING 

DEVICE LEVEL LICENSES ARE EXHAUSTIVE. CHIP LEVEL LICENSES ARE 

NOT, NO ONE DOES. 

BUT YOU'RE ALSO SAYING NO ONE LICENSES AT THE CHIP LEVEL 

ANYWAY. SO THEN THERE'S NOBODY THAT DOES A NONEXHAUSTIVE 

LICENSE ACCORDING TO WHAT YOU'RE SAYING? ISN'T THAT RIGHT? 

THE WITNESS: WELL, OKAY. SO MAYBE -- SO I'M NOT 

BEING PRECISE. 

THE COURT: SO WHO DOES THE CHIP LICENSES THEN? 

THE WITNESS: SO -- SO IF YOU'RE AN SEP HOLDER -- 

THE COURT: YEAH. 

THE WITNESS: -- WHEN YOU GO OUT AND TRY TO LICENSE 

FOR MONEY, YOU DON'T GO OUT AND LICENSE CHIP MAKERS. THAT'S -- 

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GONELL DIRECT BY MR. BORNSTEIN

UNITED STATES COURT REPORTERS

1437

WE'RE TALKING ABOUT -- SO THAT'S EXHAUSTIVE LICENSING AT THE 

CHIP LEVEL. THAT DOESN'T HAPPEN. 

THE COURT: OKAY. I'M LOOKING AT -- YOU SAID IT'S 

COMMON THAT ESSENTIAL PATENT HOLDERS DON'T GRANT LICENSES TO 

CHIPS EXHAUSTIVELY. 

SO WHAT WERE YOU REFERRING TO? ARE THERE LICENSES -- ARE 

THERE SUCH LICENSES? I'M JUST LOOKING AT YOUR TESTIMONY. 

THE WITNESS: YEAH, SO -- 

THE COURT: YEAH. 

THE WITNESS: OKAY. LET ME TRY TO -- 

THE COURT: I THINK I MIGHT BE CONFUSED. 

THE WITNESS: LET ME TRY TO BACK UP. I'M 100 PERCENT 

SURE IT'S MY FAULT SO I APOLOGIZE. 

LET ME TRY TO BACK UP AND SAY THIS. IN THE INDUSTRY, 

AMONG LICENSORS OF CELLULAR ESSENTIAL PATENTS, THE PEOPLE THAT 

GO OUT AND HAVE LICENSING PROGRAMS AND DO LICENSING -- 

THE COURT: OKAY. 

THE WITNESS: THAT'S ALL DONE AT THE DEVICE LEVEL. 

THE COURT: OKAY. 

THE WITNESS: PEOPLE DON'T DO IT AT THE CHIP LEVEL. 

THEY DON'T LICENSE THEIR PATENTS FOR MONEY AT THE CHIP LEVEL. 

THE COURT: AND ALL THE DEVICE LEVEL LICENSES ARE 

EXHAUSTIVE. 

THE WITNESS: DEVICE LEVEL LICENSES ARE EXHAUSTIVE 

FOR SURE. 

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GONELL DIRECT BY MR. BORNSTEIN

UNITED STATES COURT REPORTERS

1438

THE COURT: OKAY. RIGHT. 

THE WITNESS: NOW, THERE SOMETIMES ARE, AND THIS IS 

MORE UNIQUE TO QUALCOMM THAN OTHER SEP LICENSORS. 

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

WHAT HIS FOUNDATION IS FOR DESCRIBING THE TERMS OF OTHER 

COMPANIES' LICENSES THAT DON'T INVOLVE QUALCOMM. 

THE COURT: WHAT IS YOUR KNOWLEDGE OF OTHER 

COMPANIES' LICENSES, OTHER THAN QUALCOMM FOR SEPS? 

THE WITNESS: SO I'VE BEEN A MEMBER OF THIS INDUSTRY 

FOR A VERY LONG TIME. I'VE GONE TO -- I'VE DISCUSSED LICENSING 

TOPICS GENERALLY AND HOW TO DO SEP LICENSING WITH COUNTER 

PARTIES BOTH ON THE LICENSEE SIDE AND THE LICENSOR SIDE. 

HOW LICENSING IS DONE IS A VERY COMMON TOPIC OF 

DISCUSSION. I HAVE, AT TIMES, REVIEWED LICENSES WITH -- THAT 

OTHER PEOPLE HAVE WHEN IT'S BEEN APPROPRIATE UNDER 

CONFIDENTIALITY RULES. 

AND FROM MY BASICALLY TEN YEARS IN THE INDUSTRY, AND 

UNDERSTANDING OF THE LICENSING BUSINESS AND HOW IT IS DONE, 

THAT'S THE BASIS OF WHAT I'M SAYING. 

MR. MERBER: YOUR HONOR, IT SOUNDS LIKE HE'S PLANNING 

TO OFFER AN EXPERT OPINION ABOUT LICENSING PRACTICE IN THIS 

INDUSTRY, AND HE'S NOT BEEN OFFERED AS AN EXPERT. 

MR. BORNSTEIN: YOUR HONOR, I THINK HE'S JUST 

DESCRIBING -- 

THE COURT: I'M SORRY. I MAY HAVE CAUSED MORE 

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GONELL DIRECT BY MR. BORNSTEIN

UNITED STATES COURT REPORTERS

1439

CONFUSION. 

CAN WE GO AHEAD WITH YOUR LINE OF QUESTIONING? LET'S JUST 

PICK UP WHERE YOU LEFT OFF. I APOLOGIZE I MAY HAVE CAUSED MORE 

PROBLEMS. 

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

WE'RE ALL HERE TO MAKE SURE THAT YOUR HONOR GETS MR. GONELL'S 

TESTIMONY. SO IF THERE'S SOMETHING THAT IS UNCLEAR, I WANT TO 

BE SURE THAT THAT DOES GET RESOLVED. 

THE COURT: I'M OKAY. LET'S GO AHEAD AND GO ON. I 

APOLOGIZE FOR THE INTERRUPTION. 

MR. BORNSTEIN: SURE.

Q. SO YOU HAD BEEN TALKING ABOUT SOME OF THE PRACTICAL 

CONSEQUENCES OF LICENSING AT MULTIPLE LEVELS OF THE VALUE 

CHAIN. 

ARE THERE ANY OTHER REASONS BESIDES AVOIDING THOSE 

PRACTICAL CONSEQUENCES, IN THE INDUSTRY PRACTICE YOU'VE 

DESCRIBED, THAT QUALCOMM LICENSES DEVICE MAKERS RATHER THAN 

CHIP MAKERS? 

A. WELL, IT'S MORE ECONOMICALLY EFFICIENT IN THAT YOU GET 

CLOSER TO THE ACTUAL VALUE OF THE LICENSE, THE VALUE OF THE 

TECHNOLOGY WHEN YOU'RE LICENSING AT THE DEVICE LEVEL THAN YOU 

CAN AS A PRACTICAL MATTER WHEN YOU'RE DOING LICENSING AT AN 

UPSTREAM, SAY, COMPONENT LEVEL. 

Q. SO IN YOUR TIME AT THE COMPANY, HAVE YOU NEGOTIATED ANY 

KIND OF PATENT AGREEMENTS AT THE CHIP LEVEL? 

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UNITED STATES COURT REPORTERS

1440

A. YES, I HAVE. 

Q. HOW COMMON OR UNCOMMON IS THAT? 

A. IT'S NOT VERY COMMON. BUT IT ARISES FROM TIME TO TIME, 

AND I'VE DONE IT FROM TIME TO TIME. 

Q. AND HAVE YOU HAD DISCUSSIONS WITH A COMPANY CALLED 

MEDIATEK? 

A. YES, I'VE BEEN INVOLVED IN NEGOTIATIONS WITH MEDIATEK.

Q. CAN YOU DESCRIBE WHAT KIND OF AGREEMENT YOU DISCUSSED WITH 

MEDIATEK AND HOW THAT CAME TO BE? 

A. YES. WHEN I ARRIVED AT QTL, MEDIATEK ALREADY HAD SOME SET 

OF AGREEMENTS, TWO AGREEMENTS, WITH QUALCOMM THAT WERE PATENT 

AGREEMENTS OF SOME KIND. 

IT CAME TO PASS THAT THEY WROTE US A LETTER SAYING THAT 

THEY WANTED TO DISCUSS THOSE AGREEMENTS AND LICENSING WITH US. 

AFTER SOME CORRESPONDENCE, WE WENT TO MEET WITH THEM AND 

DISCUSS WHAT THEY WANTED.

Q. AND WHAT DID YOU LEARN FROM THAT MEETING? 

A. IT QUICKLY BECAME APPARENT TO ME AT THE MEETING THAT THEY 

WERE NOT INTERESTED IN DISCUSSING WITH US A LICENSE UNDER WHICH 

THEY WOULD PAY US ROYALTIES. 

WHAT THEY REALLY WERE AFTER, WHAT THEY WANTED TO DO WAS IN 

SOME WAY RENEGOTIATE AND GET OUT FROM UNDER THE AGREEMENTS THAT 

WERE ALREADY -- THAT THEY HAD ALREADY ENTERED INTO WITH US.

Q. AND WHAT HAPPENED? 

A. WELL, WE -- THE DISCUSSIONS TURNED TO THAT TOPIC, TO 

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UNITED STATES COURT REPORTERS

1441

RENEGOTIATING THOSE AGREEMENTS, AND WE EVENTUALLY REACHED 

AGREEMENT ON AMENDMENTS THAT BASICALLY HAD THE EFFECT OF 

REDUCING THE OBLIGATIONS ON BOTH SIDES PRETTY DRASTICALLY, 

GIVING EACH SIDE AN OPTION TO REINSTATE THE OLD AGREEMENTS, BUT 

IF NOBODY EXERCISED THAT OPTION IN THREE YEARS, THEN EVERYTHING 

WOULD GO AWAY.

Q. AND SO WHAT HAPPENED AT THE END OF THIS THREE YEAR PERIOD?

A. EVERYTHING WENT AWAY. NOBODY DID ANYTHING. NOBODY 

EXERCISED OPTIONS AND EVERYTHING WENT AWAY.

Q. DID MEDIATEK HAVE THE RIGHT, ON ITS OWN, TO CONTINUE TO 

RECEIVE RIGHTS OF SOME KIND FROM QUALCOMM UNDER THIS AGREEMENT? 

A. IF THEY HAD EXERCISED ITS OPTION TO REINSTATE THE OLD 

AGREEMENTS, YES, THEY WOULD HAVE RETURNED TO FULL FORCE AND 

EFFECT AND MEDIATEK WOULD HAVE HAD THE RIGHTS THAT IT HAD.

Q. AND WAS THAT AN OPTION THAT THEY COULD EXERCISE 

UNILATERALLY IF THEY WANTED TO? 

A. YES.

Q. DID MEDIATEK EVER APPROACH QUALCOMM TO SAY, WE WANT TO 

CONTINUE HAVING SOME KIND OF RIGHTS TO YOUR I.P. BEFORE THIS 

AGREEMENT EXPIRED? 

A. NO, THEY DIDN'T. 

Q. DID YOU HAVE DISCUSSIONS WITH SAMSUNG ABOUT A CHIP LEVEL 

AGREEMENT? 

A. YES. 

Q. AND HOW DID THOSE BEGIN? 

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GONELL DIRECT BY MR. BORNSTEIN

UNITED STATES COURT REPORTERS

1442

A. SO SAMSUNG HAD COME TO BELIEVE, THROUGH REPORTS IN KOREAN 

MEDIA ABOUT A STATEMENT THAT THE HEAD OF QUALCOMM KOREA HAD 

MADE, THAT QUALCOMM HAD GRANTED LG SOME FORM OF PATENT RIGHTS 

FOR CHIPS. 

AND THEY CONTACTED US AND SAID, IN SUM AND SUBSTANCE, WE 

UNDERSTAND FROM THIS REPORT THAT YOU'VE GRANTED CHIP RIGHTS TO 

LG. OUR MANAGEMENT IS UPSET THAT WE DON'T HAVE CHIP RIGHTS. 

WE NEED TO TALK ABOUT THIS. 

Q. HAD QUALCOMM GRANTED ANY KIND OF CHIP RIGHTS TO LG? 

A. NO. 

Q. DID YOU EXPLAIN THAT TO SAMSUNG? 

A. YES, WE DID. 

Q. AND WHAT HAPPENED? 

A. WELL, SO THEY GOT IT, THEY UNDERSTOOD. BUT THEY SAID, 

WELL, LOOK, NOW THIS IS A MANAGEMENT ISSUE, MANAGEMENT WANTS US 

TO HAVE SOME RIGHTS, WE NEED TO TALK ABOUT SOME THINGS. 

SO WE STARTED TO TALK ABOUT SOME THINGS, AND WE STARTED TO 

NEGOTIATE OVER THE TERMS OF A NON-EXHAUSTIVE PATENT AGREEMENT 

BETWEEN QUALCOMM AND SAMSUNG.

Q. DID YOU ULTIMATELY REACH A NON-EXHAUSTIVE AGREEMENT WITH 

SAMSUNG AT THE CHIP LEVEL? 

A. NO, WE DID NOT -- IN THIS TIMEFRAME, NO, WE DID NOT. 

Q. WAS THERE -- DURING THESE DISCUSSIONS, WAS THERE ANYTHING 

IN THE PROPOSED AGREEMENTS, OR THE AGREEMENTS UNDER DISCUSSION, 

THAT RELATED TO THE FACT THAT SAMSUNG HAD A FOUNDRY BUSINESS 

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1443

WHERE IT MANUFACTURED CHIPS FOR THIRD PARTIES? 

A. YES. 

Q. AND -- 

A. THERE WERE -- THAT WAS AN ISSUE IN THE NEGOTIATIONS. 

Q. WHAT WAS THE ISSUE THAT WAS ADDRESSED BY THIS PROPOSED 

PROVISION? 

A. OKAY. SO FIRST LET ME EXPLAIN WHAT A FOUNDRY BUSINESS IS. 

SO A FOUNDRY -- A FOUNDRY IS A BIG PLANT THAT BASICALLY 

MAKES CHIPS, MAKES LITTLE ASIC CHIPS, AND THEY'RE VERY 

EXPENSIVE AND VERY HIGH TECH. 

AND PEOPLE THAT HAVE FOUNDRIES VERY OFTEN USE THEM TO NOT 

ONLY MAKE CHIPS FOR THEMSELVES, MAKE THEIR OWN CHIPS, BUT ALSO 

TO MAKE CHIPS FOR OTHER PEOPLE. 

SO, FOR EXAMPLE, QUALCOMM DOESN'T ACTUALLY MANUFACTURE ANY 

OF ITS OWN CHIPS. IT CONTRACTS THE MANUFACTURER OF ITS CHIPS 

OUT TO PEOPLE THAT HAVE FOUNDRIES AND THEY ACTUALLY PHYSICALLY 

MAKE THE CHIPS. 

AND SO SAMSUNG HAS FOUNDRIES AND HAS A FOUNDRY BUSINESS. 

SO WHEN YOU'RE NEGOTIATING PATENT RIGHTS, OR SOME KIND OF 

PATENT RIGHTS WITH A COMPANY THAT HAS A FOUNDRY BUSINESS, IT'S 

COMMON, IT'S WHAT YOU DO, TO MAKE SURE THAT YOU'RE 

DISTINGUISHING BETWEEN THE RIGHTS YOU'RE GRANTING THAT APPLY TO 

THE COMPANY'S PRODUCTS, IN WHICH CASE IN THIS CASE IT'S 

SAMSUNG'S PRODUCTS, AND THE RIGHTS THAT MAY OR MAY NOT APPLY TO 

PRODUCTS THAT THEY ARE MAKING FOR OTHER PEOPLE AS PART OF THEIR 

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GONELL DIRECT BY MR. BORNSTEIN

UNITED STATES COURT REPORTERS

1444

FOUNDRY BUSINESS.

Q. WAS THERE A PROVISION IN THE PROPOSED AGREEMENTS EVER THAT 

WOULD HAVE PROHIBITED SAMSUNG FROM USING THIRD PARTY 

INTELLECTUAL PROPERTY IN THE DEVELOPMENT OF ITS OWN CHIPS? 

A. NO. 

Q. HAVE YOU EVER HEARD OF AN AGREEMENT LIKE THAT BEING 

PROPOSED TO A CHIP MAKER? 

A. BY QUALCOMM? NO. THAT -- THAT'S -- NO. NO, AND NO.

Q. WOULD THAT MAKE ANY SENSE TO YOU? 

A. NO. 

Q. WHEN YOU'VE HAD THESE NEGOTIATIONS WITH A CHIP MAKER, WITH 

SAMSUNG, WITH MEDIATEK, WHAT HAS BEEN YOUR UNDERSTANDING, IF 

ANY, ABOUT WHETHER QUALCOMM HAD AN OBLIGATION TO GRANT THE CHIP 

MAKER AN EXHAUSTIVE LICENSE? 

A. SO MY UNDERSTANDING AT THE TIME THAT WE'VE BEEN DOING 

THESE NEGOTIATIONS THAT WE'VE BEEN TALKING ABOUT WAS THAT WE 

DID NOT HAVE THE OBLIGATION UNDER OUR FRAND COMMITMENTS TO 

GRANT AN EXHAUSTIVE LICENSE AT THE CHIP LEVEL. 

Q. AND WHAT WAS, AT THE TIME, THE BASIS OF YOUR 

UNDERSTANDING? 

A. WELL, AT THE TIME, THE BASIS OF MY UNDERSTANDING WAS MY 

UNDERSTANDING OF THE ETSI IPR POLICY OF INDUSTRY PRACTICE, 

THE -- AND WHAT I PERCEIVED AS THE COMMON UNDERSTANDING OF 

FRAND OBLIGATIONS FOR CELLULAR PATENTS IN THE INDUSTRY.

Q. SO YOU REFERENCED THE ETSI IPR POLICY. WHAT'S ETSI? 

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UNITED STATES COURT REPORTERS

1445

A. ETSI IS THE EUROPEAN TELECOMMUNICATIONS STANDARDS 

INSTITUTE. 

Q. OKAY. AND WHAT IS THE ETSI IPR POLICY? 

A. SO THE ETSI IPR POLICY IS THE SET OF RULES UNDER WHICH 

PATENTS THAT GO INTO ETSI STANDARDS, WHICH INCLUDE CELLULAR 

STANDARDS, ARE GOVERNED, AND THEY'RE THE RULES THAT -- THE 

RULES OF THE ROAD THAT PEOPLE PLAY BY WITH RESPECT TO PATENTS 

THAT GO INTO STANDARDS. 

Q. LET ME DIRECT YOU TO TAB 7 IN YOUR BINDER. IT'S QX 2776. 

AND I'LL ASK YOU TO IDENTIFY THIS DOCUMENT, PLEASE. 

A. 2776 IS A COPY OF THE ETSI IPR POLICY. 

MR. BORNSTEIN: YOUR HONOR, I'D OFFER QX 2776 INTO 

EVIDENCE. 

MR. MERBER: NO OBJECTION. 

THE COURT: IT'S ADMITTED. 

(DEFENDANT'S EXHIBIT QX 2776 WAS ADMITTED IN EVIDENCE.) 

THE COURT: GO AHEAD, PLEASE. 

BY MR. BORNSTEIN:

Q. AND WHAT IS THE REASON WHY YOU CONSIDERED THE ETSI POLICY 

IN PARTICULAR AS OPPOSED TO OTHER SDO IPR POLICIES? 

A. OKAY. SO CELLULAR STANDARDS ARE DEVELOPED IN AN 

ORGANIZATION CALLED 3GPP, WHICH IS THE THIRD GENERATION 

PARTNERSHIP PROJECT. 

AND 3GPP IS AN ORGANIZATION THAT WAS FORMED IN THE LATE 

1990S, LED BY A GROUP OF SDO'S, LED BY ETSI, TO STANDARDIZE 

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GONELL DIRECT BY MR. BORNSTEIN

UNITED STATES COURT REPORTERS

1446

CELLULAR TECHNOLOGY IN ONE PLACE. 

AND THE MEMBERS, THE SDO, INDIVIDUAL SDO ORGANIZATIONS, 

INCLUDING ETSI, THAT FORMED 3GPP AGREED, AS PART OF THE 

FORMATION, THAT ALL OF THEIR IPR POLICIES ARE COMPATIBLE WITH 

EACH OTHER. 

MR. MERBER: WAS THE WITNESS INVOLVED IN THIS 

AGREEMENT IN THE LATE 1990S IN ANYWAY? I DON'T UNDERSTAND HIS 

FOUNDATION. 

THE COURT: LAY THE FOUNDATION, PLEASE. 

BY MR. BORNSTEIN:

Q. WHAT ARE YOU DESCRIBING AT THIS POINT? LET ME ASK THE 

QUESTION DIFFERENTLY. 

WHAT WAS YOUR BASIS FOR RELYING ON ETSI AS A SOURCE OF 

INFORMATION ABOUT YOUR UNDERSTANDING OF QUALCOMM'S OBLIGATIONS? 

A. OKAY. SO, AGAIN, MY BASIS IS THESE FACTS THAT I'M 

DESCRIBING, AND I'M -- I CAN TELL YOU HOW I'VE LEARNED THESE 

FACTS OR BECOME AWARE OF THESE FACTS. 

I WAS NOT THERE IN THE EARLY 1990S. I WAS -- GRADUATED 

FROM LAW SCHOOL IN '99, SO I WAS IN NEW YORK WHEN THIS WAS 

HAPPENING. 

BUT SINCE THEN, AS PART OF MY JOB, I'VE HAD TO LEARN ABOUT 

THIS AND UNDERSTAND IT, AND I'M HAPPY TO DISCUSS HOW I DID 

THAT. 

BUT THIS INFORMATION IS WHAT'S FORMED THE BASIS OF MY 

VIEW.

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GONELL DIRECT BY MR. BORNSTEIN

UNITED STATES COURT REPORTERS

1447

Q. AND IN MAKING DECISIONS IN THE COURSE OF YOUR 

RESPONSIBILITIES AT QUALCOMM, DID YOU ACTUALLY CONSIDER THESE 

EVENTS THAT YOU'RE DESCRIBING NOW? 

A. YES. 

Q. OKAY. AND DID THEY FORM A BASIS FOR THE ACTIONS THAT YOU 

TOOK AND DIDN'T TAKE? 

A. YES. 

Q. WOULD IT BE IN QUALCOMM'S COMMERCIAL INTEREST TO ASSERT 

ITS CELLULAR SEPS AGAINST ONE OF ITS COMPETITORS IN THE MODEM 

CHIP BUSINESS? 

A. MAY I HAVE THAT QUESTION READ BACK, PLEASE?

Q. I CAN ASK IT AGAIN? 

A. OKAY. 

Q. WOULD IT BE IN QUALCOMM'S COMMERCIAL INTEREST, IN YOUR 

VIEW, FOR QUALCOMM TO ASSERT ITS CELLULAR SEPS AGAINST ONE OF 

ITS COMPETITORS IN THE MODEM CHIP BUSINESS? 

A. NO. 

Q. WHY NOT? 

A. WELL, THERE'S A FEW REASONS. 

FIRST OF ALL, IN MANY OF THE LICENSES, ESPECIALLY THOSE, 

THOSE ENTERED INTO SINCE I WAS DIVISION COUNSEL BACK IN '13, WE 

GRANTED RIGHTS IN THE LICENSES TO DEVICE MAKERS THAT PROVIDE 

FOR PATENT COVERAGE UNDER QUALCOMM'S PATENTS FOR THE CHIPS THEY 

PURCHASE FROM ANYONE, FROM OTHER -- FROM COMPETING CHIP MAKERS. 

SO WITH RESPECT TO THOSE COMPETING CHIP MAKERS' SALES TO 

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GONELL DIRECT BY MR. BORNSTEIN

UNITED STATES COURT REPORTERS

1448

THOSE OEM'S, WE DON'T EVEN HAVE A LEGAL BASIS TO MAKE SUCH AN 

INFRINGEMENT CLAIM, AND OBVIOUSLY IT'S NOT IN YOUR COMMERCIAL 

INTEREST TO MAKE A BASELESS CLAIM. 

MR. MERBER: OBJECTION. HE'S OFFERING A LEGAL 

OPINION. 

THE COURT: OKAY. GIVE ME A MINUTE TO LOOK AT THIS 

MORE CLOSELY. 

(PAUSE IN PROCEEDINGS.) 

THE COURT: WHAT'S YOUR RESPONSE? 

MR. BORNSTEIN: THE QUESTION IS TO ASK ABOUT HIS VIEW 

OF THE COMPANY'S COMMERCIAL INTEREST, AND HE'S PROVIDING AN 

ANSWER RELATING TO WHAT HAS INFORMED HIS VIEW REGARDING THE 

COMPANY'S COMMERCIAL INTEREST. 

MR. MERBER: MY OBJECTION WAS TO THE PART OF THE 

ANSWER IN WHICH HE DESCRIBED THE COMPANY'S LEGAL CLAIMS AND 

WHICH LEGAL CLAIMS WOULD EXIST, NOT TO THAT ASPECT OF THE 

QUESTION. 

THE COURT: WHAT'S YOUR RESPONSE TO THAT? 

MR. BORNSTEIN: SO HE'S REFERRING TO THE RIGHTS THAT 

HE UNDERSTANDS THE COMPANY HAS AND DOESN'T HAVE UNDER 

AGREEMENTS THAT HE'S BEEN RESPONSIBLE FOR PUTTING INTO PLACE. 

THE COURT: WHAT'S YOUR SPECIFIC OBJECTION? TO WHICH 

PORTION?

MR. MERBER: HE WAS TESTIFYING ABOUT WHAT LEGAL CLAIM 

WOULD OR WOULD NOT EXIST FOR THE COMPANY IN THE EVENT THAT 

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GONELL DIRECT BY MR. BORNSTEIN

UNITED STATES COURT REPORTERS

1449

LICENSE A LICENSED OEM PURCHASED A CHIP FROM AN UNLICENSED CHIP 

MAKER. HE WAS TESTIFYING ABOUT WHETHER THERE WOULD BE A LEGAL 

CLAIM FOR INFRINGEMENT AGAINST THAT CHIP MAKER. 

MR. BORNSTEIN: WELL, I CAN ASK THE QUESTION THIS 

WAY. 

THE COURT: OKAY. PLEASE GO AHEAD. I'LL SUSTAIN IT. 

MR. BORNSTEIN: THANK YOU. 

Q. I'LL ASK THE QUESTION THIS WAY. IN THE LICENSE AGREEMENTS 

THAT YOU'RE -- 

MR. MERBER: UNLESS QUALCOMM IS INTERESTED IN WAIVING 

PRIVILEGE ON HIS OPINIONS IN THAT TIMEFRAME. 

BY MR. BORNSTEIN:

Q. IN THE LICENSE AGREEMENTS THAT YOU NEGOTIATED THAT YOU 

WERE DESCRIBING, CAN YOU EXPLAIN WHAT THE LICENSE AGREEMENTS 

PROVIDE WITH RESPECT TO THE RIGHTS THAT ARE GRANTED TO THE OEM 

RELATING TO ITS ABILITY TO HAVE -- TO PURCHASE CHIPS FROM THIRD 

PARTIES? 

A. THE LICENSES PROVIDE, IN THE LANGUAGE OF THE LICENSES, FOR 

SOMETHING CALLED HAVE MADE RIGHTS. AND WHEN THE TOPIC OF WHAT 

THIS -- WHAT DOES THIS MEAN HAS COME UP IN DISCUSSIONS WITH 

LICENSEES UNDER THE TYPES OF AGREEMENTS I'M TALKING ABOUT, WHAT 

WE'VE TOLD THEM, WHAT I PERSONALLY HAVE TOLD THEM IS THAT THIS 

IS -- THIS PROVISION PROVIDES HAVE MADE RIGHTS UNDER QUALCOMM'S 

PATENTS FOR THE CHIPS -- 

THE COURT: I'M SORRY TO INTERRUPT YOU. 

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GONELL DIRECT BY MR. BORNSTEIN

UNITED STATES COURT REPORTERS

1450

(PAUSE IN PROCEEDINGS.) 

THE COURT: OKAY. GO AHEAD, PLEASE. SORRY FOR THE 

INTERRUPTION. 

THE WITNESS: I'VE EXPLAINED TO THEM THAT THE PURPOSE 

OF THIS PROVISION IS TO PROVIDE RIGHTS UNDER QUALCOMM'S PATENTS 

THAT COVER THEIR PURCHASES OF CHIPS FROM PEOPLE OTHER THAN 

QUALCOMM. 

BY MR. BORNSTEIN:

Q. AND ARE THERE ANY OTHER REASONS WHY YOU BELIEVE IT WOULD 

NOT BE IN QUALCOMM'S COMMERCIAL INTEREST TO ASSERT CELLULAR 

SEPS AGAINST OTHER MODEM CHIP SUPPLIERS? 

A. YES. BECAUSE IT'S COUNTER TO THE FOUNDATIONAL DEVICE 

LEVEL LICENSING OF OUR LICENSING PROGRAM. 

IF YOU ASSERT AGAINST A CHIP SUPPLIER A CELLULAR ESSENTIAL 

PATENT, YOU NEED TO BE PREPARED TO LICENSE THOSE PATENTS TO THE 

CHIP MAKER. 

AND FOR ALL THE REASONS I EXPLAINED WHY MULTI LEVEL 

LICENSING IS INEFFICIENT, WE DON'T WANT TO DO IT AND IF YOU 

ASSERT, THAT'S WHAT YOU'RE SIGNING ON TO. YOU'RE SIGNING ON TO 

MULTI LEVEL LICENSING. 

Q. SO I'M GOING TO MOVE FROM THE SUBJECT OF GENERAL PRACTICES 

TO A COUPLE OF SPECIFIC NEGOTIATIONS. 

I'LL START WITH ASKING WHETHER YOU WERE INVOLVED IN 

LICENSE NEGOTIATIONS WITH SONY MOBILE IN 2012? 

A. YES, I WAS. 

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GONELL DIRECT BY MR. BORNSTEIN

UNITED STATES COURT REPORTERS

1451

Q. OKAY. AND JUST AT A VERY BRIEF LEVEL, WHAT WAS THE 

PRECIPITATING EVENT FOR THOSE NEGOTIATIONS? 

A. SO VERY BRIEFLY, SONY MOBILE USED TO BE SONY ERICSSON. IT 

WAS A JOINT VENTURE BETWEEN ERICSSON AND SONY. ERICSSON 

DIVESTED ITS SHARE TO SONY, AND SO SONY ERICSSON BECAME SONY 

MOBILE, WHICH IS JUST A SONY ENTITY. AND THAT CAUSED 

CONSEQUENCES IN THEIR AGREEMENTS, AND THAT'S WHY WE HAD 

NEGOTIATIONS.

Q. AND SPECIFICALLY WHY DID THAT PRECIPITATE NEGOTIATIONS? 

A. WELL, SPECIFICALLY BECAUSE SONY ERICSSON HAD BEEN 

OPERATING UNDER ERICSSON'S AGREEMENT. 

ONCE IT BECAME SONY MOBILE AND ERICSSON WAS NO LONGER 

INVOLVED, THAT AGREEMENT NO LONGER APPLIED AND SO THEN WE HAD 

TO LOOK ELSEWHERE FOR THEIR LICENSING -- FOR THEIR LICENSING 

RIGHTS.

Q. SO AT THAT POINT -- 

A. AND THERE WERE OTHER -- THERE WERE OTHER AGREEMENTS THAT 

APPLIED, BUT FOR WCDMA, THEY BECAME UNLICENSED AT THE TIME OF 

THE DIVESTITURE.

Q. SO AT THE TIME OF THE DIVESTITURE, WERE THEY STILL 

LICENSED FOR CDMA? 

A. YES, BECAUSE THERE WAS A PREEXISTING SONY AGREEMENT THAT 

WHEN THE DIVESTITURE HAPPENED, BEGAN TO APPLY TO THE NEW 

ENTITY. SO THEY HAD CDMA COVERAGE.

Q. DURING THESE NEGOTIATIONS, DID SONY MOBILE EVER BECOME 

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GONELL DIRECT BY MR. BORNSTEIN

UNITED STATES COURT REPORTERS

1452

UNLICENSED FOR CDMA? 

A. NO. 

Q. WAS SONY MOBILE, DURING THESE NEGOTIATIONS, ABLE TO 

PURCHASE CDMA CHIPS FROM QUALCOMM THE ENTIRE TIME? 

A. YES. 

Q. WHEN THE DIVESTITURE CLOSED, DID THEY BECOME UNLICENSED TO 

WCDMA?

A. YES.

Q. AND SO AT THAT POINT DID QUALCOMM STOP SHIPPING CHIPS TO 

SONY MOBILE? 

A. NO.

Q. WHY NOT? 

A. BECAUSE WE KNEW -- WE BELIEVED, AND WE DID, WE BELIEVED WE 

COULD, AND WE DID, ENTER INTO INTERIM ARRANGEMENTS THAT WOULD 

ALLOW THE PARTIES' BUSINESSES TO CONTINUE, WOULD PROTECT 

QUALCOMM AGAINST THE ISSUES RAISED BY SELLING TO SOMEONE THAT'S 

NOT LICENSED, AND ALLOW NEGOTIATIONS TO GO FORWARD UNTIL THEY 

COULD EVENTUALLY GET TO A FAIR LICENSE. 

Q. WELL, WHAT WAS QUALCOMM'S USUAL PRACTICE WHEN A LICENSEE, 

LIKE SONY MOBILE, SUDDENLY LOST ITS LICENSE AS A RESULT OF A 

TRANSACTION LIKE THIS? 

A. THERE WAS NO USUAL PRACTICE. THIS WAS A HIGHLY UNUSUAL, 

UNPRECEDENTED IN MY EXPERIENCE, EVENT WHERE, BECAUSE OF 

SOMETHING LIKE THIS, SOMEBODY SUDDENLY BECOMES UNLICENSED. IT 

JUST DOESN'T HAPPEN. SO THERE WASN'T A POLICY IN PLACE.

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GONELL DIRECT BY MR. BORNSTEIN

UNITED STATES COURT REPORTERS

1453

Q. WERE THE PARTIES ABLE TO ENTER INTO THE KIND OF TEMPORARY 

OR INTERIM ARRANGEMENTS THAT YOU DESCRIBED? 

A. YES, WE WERE. 

Q. LET ME ASK YOU TO TAKE A LOOK AT TAB 9 IN YOUR BINDER. 

YOUR HONOR, THIS IS ALREADY IN EVIDENCE. IT'S JX 0063. 

CAN YOU TELL ME WHAT THIS DOCUMENT IS? 

A. THIS DOCUMENT IS A LICENSE AGREEMENT BETWEEN QUALCOMM AND 

SONY MOBILE THAT WAS INTENDED TO BE, AND WAS, AN INTERIM 

AGREEMENT DURING THESE NEGOTIATIONS TO ALLOW THE PARTIES TO 

CONTINUE THE NEGOTIATIONS WITHOUT PREJUDICING EITHER SIDE'S 

POSITION.

Q. HOW DID THE PARTIES HANDLE THE ROYALTY TERMS IN THIS 

INTERIM AGREEMENT? 

A. SO THE -- THE ROYALTY TERMS IN THE INTERIM AGREEMENT -- 

Q. AND YOU CAN DO IT WITHOUT SAYING THE SPECIFIC NUMBERS. 

A. OKAY. SO WITHOUT SAYING SPECIFIC NUMBERS, IN THE 

NEGOTIATIONS, THERE WAS A ROYALTY RATE THAT QUALCOMM WAS ASKING 

FOR AND THERE WAS A ROYALTY RATE THAT SONY WAS OFFERING, AND 

THERE WAS A DIFFERENCE BETWEEN THE TWO. THOSE ARE NOT THE SAME 

RATES. 

AND HOW THAT SITUATION WAS HANDLED IN THIS AGREEMENT 

WAS -- 

Q. AND MAYBE WE CAN JUST PUT UP ON THE SCREEN SECTION -- ON 

PAGE 15, SECTION 4.1, WHICH IS SUBJECT TO A SEALING ORDER. 

A. HOW THIS SITUATION WAS HANDLED IN THE AGREEMENT WAS SONY 

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GONELL DIRECT BY MR. BORNSTEIN

UNITED STATES COURT REPORTERS

1454

RESPECTED QUALCOMM'S POSITION BY AGREEING TO PAY WHAT QUALCOMM 

WAS ASKING DURING THIS INTERIM PERIOD. 

QUALCOMM RESPECTED SONY'S POSITION BY AGREEING THAT ONLY 

WHAT SONY WAS OFFERING WOULD BE NONREFUNDABLE, AND THE 

DIFFERENCE BETWEEN WHAT SONY WAS OFFERING AND QUALCOMM WAS 

ASKING WAS SUBJECT TO ADJUSTMENT AND TRUE UP WHEN THE PARTIES 

COULD FINALLY REACH AGREEMENT. 

AND IF WE COULDN'T AGREE, THEN THIS PROVIDES FOR 

ARBITRATION. 

Q. AND WERE QUALCOMM AND SONY MOBILE ABLE TO REACH AGREEMENT 

ON A LICENSE FOR A LONGER TERM BEFORE THIS INTERIM ARRANGEMENT 

EXPIRED? 

A. NOT BEFORE THE INTERIM ARRANGEMENT EXPIRED, BUT ULTIMATELY 

WE WERE ABLE TO REACH AGREEMENT. 

Q. WAS THERE ANY PERIOD BETWEEN THE END OF THE INTERIM 

AGREEMENT AND THE ULTIMATE AGREEMENT WHEN SONY MOBILE BECAME 

UNLICENSED AGAIN? 

A. YES. SO WE DID ONE EXTENSION TO THIS AGREEMENT FOR A 

COUPLE OF WEEKS, AND AT THAT POINT THE LICENSE AGREEMENT WAS 

JUST ABOUT DONE, BUT THEY -- THEY WERE HESITATING ON ANSWERING. 

WE ASKED THEM TO DO ANOTHER EXTENSION, BUT THEY WOULDN'T. 

AND SO THEY BECAME UNLICENSED FOR A PERIOD OF TIME.

Q. AND DID QUALCOMM SHIP CHIPS TO SONY MOBILE DURING THAT 

PERIOD OF TIME? 

A. YES.

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GONELL DIRECT BY MR. BORNSTEIN

UNITED STATES COURT REPORTERS

1455

Q. AND DID THE PARTIES -- YOU MENTIONED THE PARTIES 

ULTIMATELY CAME TO AN AGREEMENT. HOW DID THAT COME TO PASS? 

A. SO WHAT WAS GOING ON IN THIS TIME PERIOD WAS BASICALLY THE 

LICENSE AGREEMENT WAS DONE. SO WE HAD NEGOTIATED THE TERMS OF 

THE LICENSE AGREEMENT, IT WAS -- WE HAD BASICALLY AGREED. 

A MAJOR HOLDUP HAD BEEN THE TERM OF THE AGREEMENT, AND 

ONCE QUALCOMM CAVED ON HOW LONG THE AGREEMENT WOULD BE, SONY 

WAS CONTENT WITH THE ROYALTY TERMS AND THEN THE PARTIES CAME TO 

AGREEMENT. 

BUT SIMULTANEOUSLY, WHILE THIS WAS GOING ON, SONY WAS 

NEGOTIATING SOMETHING ON THE CHIP SIDE, I DON'T KNOW THE 

DETAILS OF THAT, BUT I KNOW THAT IT WAS HAPPENING, AND WHAT WAS 

GOING ON IS THEY WERE HOLDING UP THE EXECUTION OF THE LICENSE 

AGREEMENT UNTIL THEY FINISHED UP WHAT THEY WERE DOING ON THE 

CHIP SIDE. 

Q. SO LET ME MOVE TO A DIFFERENT -- 

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

NOW. 

HOW MUCH LONGER DO YOU HAVE OF THE UNSEALED PORTION? I'M 

WILLING TO GO A LITTLE BIT LONGER, OR SHOULD WE TAKE OUR BREAK, 

OR DO YOU WANT TO DO THE SEALED PORTION NOW? OR -- IT DOESN'T 

MATTER TO ME WHETHER WE, YOU KNOW, JUST ASK PEOPLE TO STEP OUT 

LATER. 

MR. BORNSTEIN: OKAY. LET ME TELL YOU WHAT I THINK 

WE'LL DO AND THEN WE CAN DECIDE WHAT WORKS BEST. 

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UNITED STATES COURT REPORTERS

1456

THE COURT: OKAY. 

MR. BORNSTEIN: I THINK THERE'S PROBABLY MAYBE SIX OR 

SEVEN MINUTES OF UNSEALED TESTIMONY, FOLLOWED BY MAYBE THE SAME 

LENGTH OF SEALED TESTIMONY AT MOST. 

THE COURT: OKAY. THEN LET'S GO AHEAD AND FINISH 

THE -- SO YOU THINK TOTAL TEN MINUTES? 

MR. BORNSTEIN: BETWEEN THE TWO, MAYBE CLOSER TO 15. 

BETWEEN 10 AND 15. 

THE COURT: OKAY. WHY DON'T WE JUST DO THIS: LET'S 

JUST DO THE PUBLIC PORTION, THEN TAKE OUR BREAK, THEN WE'LL DO 

THE SEALED PORTION, AND THEN WE CAN OPEN UP THE COURTROOM. 

MR. BORNSTEIN: SURE. 

THE COURT: IS THAT OKAY? 

MR. BORNSTEIN: YES. 

THE COURT: ALL RIGHT. LET'S GO AHEAD, PLEASE. 

BY MR. BORNSTEIN:

Q. SO I'M GOING TO TURN TO NEGOTIATIONS WITH LENOVO AND ASK 

YOU TO TAKE A LOOK AT TAB 11 IN YOUR BINDER. 

THIS IS SUBJECT TO A SEALING ORDER, YOUR HONOR. IT'S 

QX 9266. 

THE COURT: AND HAS THIS BEEN PREVIOUSLY ADMITTED, OR 

NO? NOT YET? 

MR. BORNSTEIN: NOT YET. 

THE COURT: OKAY. 

BY MR. BORNSTEIN:

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GONELL DIRECT BY MR. BORNSTEIN

UNITED STATES COURT REPORTERS

1457

Q. CAN YOU TELL US WHAT THIS DOCUMENT IS, MR. GONELL? 

A. THIS IS A LICENSE AGREEMENT ENTITLED CHINESE PATENT 

LICENSE AGREEMENT, OR WHAT WE COLLOQUIALLY CALLED A CPLA, 

BETWEEN QUALCOMM AND LENOVO ENTERED INTO IN 2016. 

MR. BORNSTEIN: AND I WOULD LIKE TO OFFER THIS INTO 

EVIDENCE, YOUR HONOR. 

THE COURT: ALL RIGHT. ANY OBJECTION? 

MR. MERBER: NO OBJECTION, YOUR HONOR. 

THE COURT: IT'S ADMITTED. 

(DEFENDANT'S EXHIBIT QX 9266 WAS ADMITTED IN EVIDENCE.) 

THE COURT: GO AHEAD, PLEASE. 

BY MR. BORNSTEIN:

Q. OKAY. SO TELL US, WHAT IS A CPLA? 

A. A CPLA IS A CHINESE PATENT LICENSE AGREEMENT. IT IS A 

FORM OF AGREEMENT THAT QUALCOMM BEGAN OFFERING FOLLOWING A 

RESOLUTION IN CHINA OF ANTITRUST CLAIMS BROUGHT BY CHINA'S 

NDRC, WHICH IS THE NATIONAL DEVELOPMENT AND REFORM COMMISSION, 

AND IT IS A LICENSE AGREEMENT THAT LICENSES ONLY CHINESE 

PATENTS AND LICENSES PRODUCTS MADE AND SOLD FOR USE IN CHINA, 

OR MADE IN CHINA AND SOLD IN PARTS OF THE WORLD WHERE QUALCOMM 

DOESN'T HAVE OTHER PATENTS. 

Q. AND HOW MANY OF THESE CPLA AGREEMENTS HAS QUALCOMM SIGNED?

A. OVER 200. 

Q. AND YOU REFERRED TO THIS, REFERRING ONLY -- GRANTING 

RIGHTS ONLY TO CHINESE PATENTS. IS IT LIMITED TO CELLULAR 

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GONELL DIRECT BY MR. BORNSTEIN

UNITED STATES COURT REPORTERS

1458

SEPS, OR DOES IT COVER THE FULL PORTFOLIO? 

A. CPLA'S ARE SEP ONLY. SO THEY'RE ONLY CELLULAR ESSENTIAL 

PATENTS.

Q. WERE THE CPLA'S SUBJECT TO APPROVAL BY THE NDRC IN CHINA? 

A. WELL, THE TERMS OF THE CPLA WERE -- HAD TO FOLLOW THE 

RECTIFICATION PLAN THAT WE FILED WITH THE NDRC IN FEBRUARY OF 

2015.

Q. AND DOES THAT INCLUDE THE ROYALTY TERMS? 

A. YES, THE RECTIFICATION PLAN HAS PROVISIONS THAT GOVERN THE 

ROYALTY TERMS THAT CAN BE CHARGED IN CPLA'S. 

IN ADDITION, PART OF QUALCOMM'S COMPLIANCE WITH THAT ORDER 

AND RECTIFICATION PLAN WAS ONGOING MONITORING OF THE NDRC OVER 

LICENSING ACTIVITY, WHICH INCLUDED SUBMITTING AGREEMENTS, 

CPLA'S, TO THE NDRC AS WE SIGNED. 

Q. WERE YOU INVOLVED -- 

THE COURT: I'M SORRY. WHAT'S THAT CALLED, A 

RECTIFICATION PLAN? IS THAT WHAT IT'S CALLED? 

MR. BORNSTEIN: YES, YOUR HONOR. 

THE COURT: OKAY. GO AHEAD, PLEASE. 

BY MR. BORNSTEIN:

Q. WERE YOU INVOLVED IN THE NEGOTIATION OF THIS CPLA WITH 

LENOVO? 

A. YES, I WAS, AT LEAST A LITTLE BIT, FOR SURE.

Q. DURING THE NEGOTIATIONS WITH LENOVO, WAS LENOVO STILL 

LICENSED TO QUALCOMM'S CELLULAR SEPS UNDER SOME OTHER 

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GONELL DIRECT BY MR. BORNSTEIN

UNITED STATES COURT REPORTERS

1459

AGREEMENT? 

A. YES, LENOVO HAD A LICENSE.

Q. WAS A QUESTION OF CHIP SUPPLY EVER RAISED AT ANY POINT 

DURING THE NEGOTIATIONS OF THIS AGREEMENT, QX 9266? 

A. NO, NOT TO MY KNOWLEDGE. 

Q. WOULD IT HAVE BEEN CREDIBLE TO THREATEN LENOVO WITH A 

CESSATION OF CHIP SUPPLY DURING THE NEGOTIATION OF THIS 

AGREEMENT? 

A. NO, I DON'T BELIEVE SO. 

Q. WHY NOT? 

A. WELL, THEY HAD AN EXISTING AGREEMENT, FIRST OF ALL. SO 

THERE WASN'T -- THEY HAD EXISTING CHIP SUPPLY ARRANGEMENTS. 

AND WE COULDN'T HAVE STOPPED SHIPPING THEM CHIPS WITHOUT 

VIOLATING THOSE, THOSE ARRANGEMENTS. 

SECOND OF ALL, BY THIS TIME, THEY HAD COMPLETED AN 

ACQUISITION OF MOTOROLA MOBILITY. QUALCOMM HAD AGREED THAT 

THEY COULD CONTINUE TO OPERATE THE MOTOROLA MOBILITY BUSINESS 

AS IF IT WERE UNLICENSED, AND THAT BUSINESS WAS OPERATING AS IF 

IT WAS UNLICENSED, IN OTHER WORDS, THROUGH LICENSED OEM'S. SO 

THAT BUSINESS WAS GETTING CHIPS THROUGH LICENSED OEM'S THAT 

THEMSELVES HAD LICENSE AGREEMENTS. 

AND THAT WE COULDN'T STOP SHIPPING CHIPS WITHOUT VIOLATING 

THOSE AGREEMENTS. 

SO THIS IS NOT AN UNLICENSED SITUATION WHERE CHIP SUPPLY 

WOULD EVER COME UP.

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GONELL DIRECT BY MR. BORNSTEIN

UNITED STATES COURT REPORTERS

1460

Q. LET ME ASK YOU ABOUT NEGOTIATION WITH HUAWEI. 

WERE YOU INVOLVED IN NEGOTIATING HUAWEI IN 2013, 2014? 

A. YES.

Q. AND WHAT WAS THE MAIN FOCUS OF THOSE NEGOTIATIONS? 

A. THE MAIN FOCUS OF THOSE NEGOTIATIONS WAS A RENEGOTIATION 

OF THEIR EXISTING 3G AGREEMENTS AND THE NEGOTIATION OVER A NEW 

4G AGREEMENT.

Q. AND AT THAT TIME, DID THEY HAVE AN AGREEMENT THAT COVERED 

CDMA SALES IN CHINA? 

A. YES. 

Q. AND WHAT WAS THAT AGREEMENT CALLED? 

A. WELL, I THINK IT WAS CALLED A SUBSCRIBER UNIT LICENSE 

AGREEMENT, OR SULA. 

BUT IT WAS OF THE TYPE OF AGREEMENT WE REFERRED TO AS A 

RECTIFICATION -- AS A FRAMEWORK AGREEMENT.

Q. AND WHAT'S A CHINESE FRAMEWORK AGREEMENT? 

A. SO A CHINESE FRAMEWORK AGREEMENT IS AN AGREEMENT WITH 

TERMS THAT WERE NEGOTIATED WITH CHINA'S MIIT, WHICH IS A 

GOVERNMENT ENTITY IN CHINA, THAT THE CHINESE GOVERNMENT 

REQUIRED QUALCOMM TO OFFER TO A DESIGNATED SET OF CHINESE 

COMPANIES AS PART OF THE ARRANGEMENTS BY WHICH CHINA AGREED TO 

ALLOCATE CERTAIN SPECTRUM TO USE CDMA FOR CELLULAR 

COMMUNICATIONS.

Q. DID THE CHINESE MIIT FRAMEWORK AGREEMENT INCLUDE THE 

ROYALTY RATES THAT QUALCOMM WAS REQUIRED TO CHARGE? 

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GONELL DIRECT BY MR. BORNSTEIN

UNITED STATES COURT REPORTERS

1461

A. YES, FOR CDMA PRODUCTS, IT DID. 

Q. SO GOING BACK TO THESE NEGOTIATIONS WITH HUAWEI, HOW LONG 

DID THEY TAKE? 

A. THEY STARTED IN, IN 2013 AND ENDED AT THE END OF 2014, SO 

MAYBE NOT QUITE TWO YEARS, BUT CERTAINLY MORE THAN A YEAR.

Q. WAS IT A DIFFICULT NEGOTIATION? 

A. YES, IT WAS A DIFFICULT NEGOTIATION.

Q. WHY? OR HOW SO? 

A. WELL, HUAWEI EMPLOYED SOME VERY, YOU KNOW, I'LL SAY 

AGGRESSIVE TACTICS DURING THE NEGOTIATIONS. THEY TOOK THE 

POSITION THAT THEY HAD OR WERE MOVING THEIR BUSINESS TO AN 

UNLICENSED ENTITY SUBSIDIARY AND THAT, THEREFORE, THEY WERE 

ABLE TO STOP PAYING ROYALTIES, AND THEY DID STOP PAYING 

ROYALTIES. 

IN THE MIDDLE OF THE NEGOTIATIONS, OR MAYBE A LITTLE BIT 

TOWARDS THE BEGINNING, BUT AFTER NEGOTIATIONS HAD BEEN ONGOING 

FOR A WHILE, THE NDRC INVESTIGATION STARTED, AND WHEN THAT 

INVESTIGATION STARTED, HUAWEI BEGAN TO TAKE A, I'LL SAY HARSHER 

NEGOTIATING POSITIONS, BACKTRACKING FROM SOME PREVIOUS 

POSITIONS. 

AND IT QUICKLY BECAME CLEAR THAT, YOU KNOW, HUAWEI WAS, 

WAS VERY CLOSELY INVOLVED IN THE NDRC INVESTIGATION. 

AND SO THOSE -- THE NEGOTIATIONS WITH HUAWEI AND THE NDRC 

MATTER PROCEEDED IN PARALLEL FOR THE BETTER PART OF 2014, AND 

THAT WAS A -- THAT WAS UNUSUAL AND DIFFICULT. 

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GONELL DIRECT BY MR. BORNSTEIN

UNITED STATES COURT REPORTERS

1462

Q. SO BEFORE WE WRAP UP FOR THE BREAK, LET ME ASK YOU TO TAKE 

A LOOK AT TAB 12 OF YOUR BINDER, WHICH IS EXHIBIT 2259. 

A. YES. 

Q. AND CAN YOU TELL ME WHAT EXHIBIT QX 2259 IS? 

THIS IS ALSO SEALED, YOUR HONOR, NOT YET ADMITTED. 

A. SO THIS IS 2259A?

Q. YES. 

A. OKAY. SO 2259A IS A PROPOSAL THAT HUAWEI MADE TO QUALCOMM 

ON NOVEMBER 14TH, 2013, FOR TERMS FOR 3G AND 4G AND 

INFRASTRUCTURE EQUIPMENT LICENSES. 

MR. BORNSTEIN: YOUR HONOR, I OFFER EXHIBIT QX 2259A 

INTO EVIDENCE. 

MR. MERBER: WE HAD DISCUSSED BEFOREHAND THAT YOU 

WERE NOT GOING TO OFFER THIS FOR THE TRUTH OF THE MATTER 

ASSERTED, THAT QUALCOMM WAS NOT GOING TO OFFER THIS FOR THE 

TRUTH OF THE MATTER ASSERTED. 

BUT WITH THAT LIMITATION, WE WOULD NOT OBJECT. 

MR. BORNSTEIN: WE'RE OFFERING IT FOR THE CONTENT OF 

THE TERMS THAT WERE PROPOSED BY HUAWEI TO QUALCOMM. I'M NOT 

SURE WHAT THE TRUTH OF THE MATTER ASSERTED WOULD BE. THIS IS A 

PROPOSAL OF CONTRACT TERMS. 

THE COURT: OKAY. THIS WAS THE SUBJECT OF -- THIS 

WAS THE SUBJECT OF THE HPO NUMBER 5, AND IT'S OVERRULED. THE 

OBJECTION'S OVERRULED. THEY CITED THAT NINTH CIRCUIT LAW ABOUT 

THE OFFER BEING AN ACT AND NOT BEING HEARSAY. 

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GONELL DIRECT BY MR. BORNSTEIN

UNITED STATES COURT REPORTERS

1463

MR. MERBER: WITHDRAWN THEN, YOUR HONOR. 

THE COURT: THAT'S ADMITTED. 

(DEFENDANT'S EXHIBIT QX 2259A WAS ADMITTED IN EVIDENCE.) 

THE COURT: GO AHEAD, PLEASE. 

BY MR. BORNSTEIN:

Q. LET ME DIRECT YOU TO THE SECOND PAGE. I WON'T HAVE IT ON 

THE SCREEN BECAUSE IT'S UNDER SEAL, BUT ON THE BOTTOM OF THE 

SECOND PAGE, THERE'S SOMETHING THAT SAYS OTHER TERMS AND 

CONDITIONS FOR SUBSCRIBER UNITS AND MODEM CARDS. 

DO YOU SEE THAT? 

A. YES.

Q. AND DON'T READ THE NUMBER ALOUD, BUT IN THAT FIRST BULLET 

POINT CAN YOU TELL ME WHAT THAT REFERS TO? 

A. THAT REFERS TO THE TERM, THE ROYALTY TERMS THAT THEY WERE 

PROPOSING FOR THE LICENSE TO QUALCOMM'S LTE ESSENTIAL PATENTS.

Q. WAS THIS BEFORE OR AFTER THE INITIATION OF THE NDRC 

INVESTIGATION? 

A. THIS WAS BEFORE. 

Q. AND WHAT -- AGAIN, WITHOUT REVEALING THE NUMBER, WHAT DID 

HUAWEI PROPOSE FOR AN LTE LICENSE AFTER THE NDRC INVESTIGATION 

BEGAN? 

A. THEIR NEXT PROPOSAL WAS LESS THAN ONE-THIRD OF WHAT THEY 

HAD PREVIOUSLY PROPOSED. 

Q. AND DURING THIS NEGOTIATION, DID QUALCOMM EVER CEASE THE 

SUPPLY OF CHIPS TO HUAWEI? 

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GONELL DIRECT BY MR. BORNSTEIN

UNITED STATES COURT REPORTERS

1464

A. NO. 

Q. DID QUALCOMM EVER THREATEN TO CEASE THE SUPPLY OF CHIPS TO 

HUAWEI DURING THIS NEGOTIATION? 

A. NO. 

Q. ONE VERY FINAL TOPIC. I'LL ASK YOU TO TAKE A LOOK AT TAB 

13 IN YOUR BINDER. THIS IS ALREADY IN EVIDENCE. IT'S JX 0078. 

AND I'LL ASK YOU TO TELL ME WHAT THIS IS. 

A. THIS IS AN AGREEMENT ENTITLED BUSINESS COOPERATION AND 

PATENT AGREEMENT BETWEEN QUALCOMM AND APPLE. 

Q. DID YOU HAVE ANY ROLE IN THE NEGOTIATION AND DRAFTING OF 

THIS AGREEMENT? 

A. YES. I WAS ONE OF THE PRIMARY DRAFTERS OF THIS AGREEMENT 

AND A PERIPHERAL PLAYER IN THE NEGOTIATIONS.

Q. OKAY. DOES THE AGREEMENT PROVIDE FOR ANY PAYMENTS FROM 

QUALCOMM TO APPLE? 

A. YES, IT DOES. 

Q. ARE THOSE PAYMENTS CONDITIONED IN ANY WAY ON APPLE'S 

SELECTION OF MODEM CHIP SUPPLIER? 

A. NO, THEY'RE NOT.

Q. IS APPLE, UNDER THIS -- OR WAS APPLE, UNDER THIS 

AGREEMENT, ENTITLED TO RECEIVE THE FULL PAYMENTS UNDER THE BCPA 

REGARDLESS OF WHETHER IT USED QUALCOMM'S CHIPS OR SOMEONE 

ELSE'S CHIPS? 

A. YES, IT WAS. 

MR. BORNSTEIN: YOUR HONOR, I HAVE NO FURTHER 

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GONELL DIRECT BY MR. BORNSTEIN

UNITED STATES COURT REPORTERS

1465

QUESTIONS FOR THE PUBLIC PORTION. AND I APOLOGIZE FOR MISSING 

MY ESTIMATE OF TIME. 

THE COURT: IT'S FINE. IT'S ONLY 12:12. 

ALL RIGHT. LET'S GO AHEAD, PLEASE, AND TAKE OUR BREAK, 

AND WHEN WE COME BACK, WE'LL DO THE SEALED PORTION FIRST. BUT 

YOU SAID THAT'S ABOUT FIVE MINUTES. 

MR. BORNSTEIN: THAT'S ABOUT RIGHT. 

THE COURT: OKAY. AND THEN WE'LL REOPEN THE 

COURTROOM FOR THE REST OF THE EXAMINATION. 

OKAY. ANYTHING ELSE? OTHERWISE I'LL SEE EVERYONE BACK IN 

ONE HOUR. LET'S JUST SAY 1:15. OKAY? 

MR. BORNSTEIN: THANK YOU, YOUR HONOR. 

(THE LUNCH RECESS WAS TAKEN FROM 12:13 P.M. UNTIL 

1:18 P.M.) 

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GONELL DIRECT BY MR. BORNSTEIN

UNITED STATES COURT REPORTERS

1466

AFTERNOON SESSION

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

LET ME ASK THE PARTIES IF YOU'RE SATISFIED THAT ANYONE WHO 

IS REMAINING IN THE COURTROOM SHOULD BE HERE. 

MR. BORNSTEIN: NOT YET, YOUR HONOR. BUT IT OCCURS 

TO ME, I'VE GOT A FEW QUESTIONS I COULD DO IN THE PUBLIC 

SESSION IF YOU WANT TO LET PEOPLE STAY, AND THEN AFTER 90 

SECONDS OF QUESTIONING WE CAN EXCUSE PEOPLE, OR I CAN DO IT THE 

OTHER WAY. IT'S COMPLETELY UP TO YOUR HONOR'S PREFERENCE. 

THE COURT: LET'S DO THE SEALED PORTION NOW BECAUSE I 

THINK EVERYONE HAS NOT COME BACK. 

MR. BORNSTEIN: OKAY. WE'VE GOT A FEW PEOPLE WHO I 

THINK DO NEED TO EXIT. 

THE COURT: OH, OKAY. OKAY. ARE THE PARTIES 

SATISFIED THAT ANYONE LEFT SHOULD REMAIN IN THE COURTROOM? 

MR. BORNSTEIN: I'M NOT CERTAIN OF THE TWO FOLKS ALL 

THE WAY IN THE BACK RIGHT CORNER. 

THE COURT: COULD YOU IDENTIFY YOURSELVES, PLEASE. 

MS. METSCH: BIBEANE METSCH AND RAISA AHMAD. 

THE COURT: ARE YOU BOTH REPRESENTING APPLE? 

MS. METSCH: YES. 

THE COURT: OH, OKAY. THAT'S FINE. 

ANYONE ELSE? 

OKAY. I THINK EVERYONE ELSE IS APPROPRIATELY REMAINING 

HERE. ALL RIGHT. TIME IS 1:19. GO AHEAD, PLEASE. 

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GONELL DIRECT BY MR. BORNSTEIN

UNITED STATES COURT REPORTERS

1467

MR. BORNSTEIN: THANK YOU, YOUR HONOR. 

Q. MR. GONELL, IN YOUR TIME AT QTL, HAVE YOU BEEN INVOLVED IN 

ANY WAY WITH THE AVANCI LICENSING PLATFORM?

A. I HAVE.

Q. AND WHAT IS AVANCI? 

A. EXCUSE ME. AVANCI IS A LICENSING PLATFORM, AN EFFORT AT 

JOINT LICENSING OF CELLULAR ESSENTIAL PATENTS FOR CERTAIN 

PRODUCTS. 

Q. FOR WHAT PRODUCTS? 

A. CURRENTLY FOR VEHICLES AND SMART METERS. 

Q. OKAY. SO WHAT'S A SMART METER? 

A. A SMART METER IS A UTILITY METER, LIKE AN ELECTRIC METER 

OR GAS METER, THAT HAS CELLULAR CONNECTIVITY SO THAT INSTEAD OF 

HAVING TO HAVE SOMEONE COME OUT AND READ THE METER 

PERIODICALLY, IT JUST SENDS THE READINGS OVER THE AIRWAVES.

Q. OKAY. SO IF I'M A SMART METER MANUFACTURER AND I TAKE A 

LICENSE FROM AVANCI, WHOSE PATENTS DO I GET RIGHTS TO? 

A. YOU GET RIGHTS TO ALL OF THE PATENTS -- ALL OF THE 

ESSENTIAL PATENTS, CELLULAR ESSENTIAL PATENTS, 3G AND 4G, THAT 

ARE THE PATENTS OF THE AVANCI LICENSORS, THE PEOPLE THAT HAVE 

SIGNED ON TO BE LICENSORS FOR AVANCI. 

Q. OKAY. AND WHO DO I PAY ROYALTIES TO? 

A. YOU WOULD PAY ROYALTIES TO AVANCI AND AVANCI DISTRIBUTES 

THOSE ROYALTIES ACCORDING TO AN AGREED TO METHODOLOGY. 

Q. HAS QUALCOMM CHOSEN TO PARTICIPATE IN THE AVANCI LICENSING 

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GONELL DIRECT BY MR. BORNSTEIN

UNITED STATES COURT REPORTERS

1468

PLATFORM? 

A. YES.

Q. AND DOES QUALCOMM -- IN WHICH -- FOR WHICH PRODUCTS? 

A. FOR VEHICLES AND SMART METERS. 

Q. DOES QUALCOMM STILL RETAIN THE RIGHT TO LICENSE DIRECTLY 

FOR VEHICLES OR SMART METERS ITS CELLULAR ESSENTIAL PATENTS? 

A. YES, ALL THE AVANCI LICENSORS RETAIN THAT RIGHT.

Q. DOES AVANCI DO ANYTHING IN TERMS OF LICENSING OF HANDSETS? 

A. DOES AVANCI DO ANYTHING IN TERMS OF HANDSET LICENSING? 

NO, IT DOES NOT.

Q. WHAT'S BEEN YOUR ROLE IN CONNECTION WITH AVANCI? 

A. SO MY ROLE WAS THAT I WAS TASKED WITH EVALUATING THE 

AVANCI OPPORTUNITY, NEGOTIATING THE AVANCI AGREEMENTS, AND 

MAKING A RECOMMENDATION TO THE COMPANY AS TO WHETHER IT SHOULD 

PROCEED OR NOT.

Q. WHAT RECOMMENDATION DID YOU MAKE? 

A. I ULTIMATELY RECOMMENDED THAT THE COMPANY PROCEED.

Q. AND WHAT FACTORS DID YOU CONSIDER IN REACHING YOUR 

RECOMMENDATION? 

A. I SAW AVANCI AS AN OPPORTUNITY FOR THE COMPANY TO 

EXPERIMENT WITH JOINT LICENSING, AND I THOUGHT IT WAS A 

PARTICULARLY GOOD OPPORTUNITY FOR A FEW REASONS. 

ONE WAS THE PEOPLE INVOLVED IN AVANCI WERE PEOPLE I HAD 

CONFIDENCE IN. OUR CO-INITIAL PARTNER WITH AVANCI WAS 

ERICSSON, WHICH IS ANOTHER VERY PROMINENT LICENSOR OF PATENTS. 

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GONELL DIRECT BY MR. BORNSTEIN

UNITED STATES COURT REPORTERS

1469

VERY PROMINENTLY IN MY DECISION MAKING WAS THAT THE 

INITIAL AVANCI EFFORT WOULD BE LIMITED TO VEHICLES AND SMART 

METERS, AND THOSE PRODUCTS WERE VERY IMPORTANT IN MY DECISION, 

OR MY RECOMMENDATION, I SHOULD SAY. 

AND THAT THE STANDARDS WOULD BE LIMITED TO 3G AND 4G. 

Q. SO LET'S -- 

THE COURT: I'M SORRY TO INTERRUPT YOU. NONE OF THIS 

HAS BEEN SEALED. 

MR. BORNSTEIN: NO. 

THE COURT: I DENIED MOST OF THE AVANCI SEALING 

REQUESTS THAT WENT BEYOND THE QUALCOMM SEALING REQUESTS. SO 

WHY ARE WE SEALING ALL OF THIS. 

MR. BORNSTEIN: I WAS ABOUT TO GET TO THE PART OF THE 

CONTRACT THAT REFERS TO THE ALLOCATION OF THE ROYALTIES. I 

AGREE WITH WHAT YOUR HONOR HAS SAID FOR SURE AND I THOUGHT IT 

MIGHT BE DISRUPTIVE TO GO IN AND OUT, BUT HOWEVER YOUR HONOR 

WANTS TO HANDLE IT -- 

THE COURT: OKAY. WELL, THE TRANSCRIPT UP UNTIL NOW 

SHOULD NOT BE SEALED. IT SHOULD BE PUBLIC EVEN THOUGH WE'VE 

EMPTIED THE COURTROOM. NOTHING OF WHAT HAS BEEN TESTIFIED TO 

SO FAR IS CONFIDENTIAL. 

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

THE COURT: IS THIS NOW WHEN YOU WANT TO MOVE TO THE 

SEALED PORTION OF THE TRANSCRIPT? 

MR. BORNSTEIN: I THINK MR. GONELL IS GOING TO FINISH 

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GONELL DIRECT BY MR. BORNSTEIN

UNITED STATES COURT REPORTERS

1470

EXPLAINING HIS RATIONAL, AND THEN I'M GOING TO TURN TO THINGS 

THAT HAVE BEEN SEALED. 

THE COURT: OKAY. 

MR. BORNSTEIN: SO IT'LL BE ANOTHER MINUTE OR TWO, 

HOWEVER LONG IT TAKES MR. GONELL TO ANSWER THE QUESTION. 

THE COURT: NO, YOU WERE ASKING A QUESTION. SO YOU 

SAID "SO LET'S," AND THEN I INTERRUPTED YOU. SO HE WASN'T 

ANSWERING. 

MR. BORNSTEIN: I MEANT HOW LONG IT'LL TAKE HIM TO 

ANSWER THE QUESTIONS I'M GETTING TO. PROBABLY ABOUT TWO 

MINUTES. 

THE COURT: OKAY. THAT'S FINE. JUST LET US KNOW 

WHEN WE SHOULD START SEALING THE TRANSCRIPT. 

MR. BORNSTEIN: OKAY. I WILL. SORRY ABOUT THAT, 

YOUR HONOR. 

THE COURT: OKAY. THANK YOU. NO PROBLEM. 

BY MR. BORNSTEIN:

Q. SO YOU HAD BEEN DESCRIBING THE FACTORS THAT YOU CONSIDERED 

IN RECOMMENDING TO THE COMPANY THAT YOU PARTICIPATE IN THE 

AVANCI PLATFORM. 

ONE OF THE THINGS THAT YOU MENTIONED WAS THAT IT WAS 

RELEVANT TO YOU THAT THE PRODUCTS AT ISSUE WERE VEHICLES AND 

SMART METERS. WHY WAS THAT RELEVANT? 

A. SO THAT WAS RELEVANT BECAUSE, FOR VARIOUS HISTORIC 

FACTORS, THE ROYALTY RATES THAT QUALCOMM IS CURRENTLY CHARGING 

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GONELL DIRECT BY MR. BORNSTEIN

UNITED STATES COURT REPORTERS

1471

FOR 3G/4G FOR THOSE PRODUCTS ARE ALREADY BELOW WHAT I WOULD 

CONSIDER NORMAL FRAND RATES. 

AND GIVEN THAT, AVANCI PROVIDED AN OPPORTUNITY TO 

EXPERIMENT AT RELATIVELY LOW COST WITH JOINT LICENSING.

Q. AND YOU ALSO REFERRED TO THE FACT THAT IT WAS A 3G AND 4G 

PROGRAM. WHY WAS THAT RELEVANT TO YOU? 

A. WELL, AGAIN, BECAUSE NOW WE'RE TALKING -- WE'RE TALKING 

ABOUT -- IT RELATES TO WHAT I JUST SAID, WHICH IS FOR THESE 

PRODUCTS AND THIS COMBINATION OF STANDARDS, WE'RE -- QUALCOMM 

IS ALREADY LICENSING, AND FOR VARIOUS REASONS, WE'RE ALREADY 

LICENSING AT BELOW -- WHAT I CONSIDERED BELOW FRAND RIGHTS. 

AND SO LONG AS THE INITIAL AVANCI OFFERING WAS LIMITED TO 

THIS COMBINATION OF PRODUCTS AND STANDARDS, AND WE WEREN'T 

LOCKED INTO DOING ANYTHING ELSE, THEN THIS PROVIDED A GOOD 

OPPORTUNITY TO EXPERIMENT. 

Q. AND HAS QUALCOMM AGREED TO LICENSE 5G PATENTS THROUGH THE 

AVANCI PLATFORM? 

A. NO, WE HAVE NOT. 

Q. AND WHY NOT? 

A. WELL, SOME OF -- YOU'RE ASKING ME ABOUT EVENTS THAT TOOK 

PLACE AFTER MARCH 13TH, 2018.

Q. OKAY. WELL, THEN, I'LL WITHDRAW THE QUESTION. 

A. OKAY. THANK YOU. 

MR. BORNSTEIN: YOUR HONOR, I THINK I'M GOING TO GET 

TO THE SEALED INFORMATION RIGHT NOW. 

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GONELL DIRECT BY MR. BORNSTEIN

UNITED STATES COURT REPORTERS

1472

THE COURT: OKAY. SO THE TRANSCRIPT SHOULD BE SEALED 

FROM NOW ON.

(PROCEEDINGS UNDER SEAL FROM PAGES 1473-1477.)

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GONELL DIRECT BY MR. BORNSTEIN

UNITED STATES COURT REPORTERS

1478

 (IN OPEN COURT.)

MR. BORNSTEIN: WOULD YOU LIKE ME TO WAIT, YOUR 

HONOR? 

THE COURT: LET'S WAIT. I DON'T WANT TO COUNT 

TOWARDS YOUR TIME WAITING FOR PEOPLE TO COME BACK IN. 

MR. BORNSTEIN: WE APPRECIATE THAT. 

(PAUSE IN PROCEEDINGS.) 

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

SEAT. WE'RE BACK IN THE PUBLIC PORTION. 

IT'S 1:33. GO AHEAD, PLEASE. 

MR. BORNSTEIN: THANK YOU, YOUR HONOR.

Q. WE TALKED A LITTLE BIT BEFORE THE BREAK, MR. GONELL, ABOUT 

THE COMPANY'S PRACTICE OR PREFERENCE OF NOT GRANTING LICENSING 

AT THE CHIP LEVEL. DO YOU RECALL THAT?

A. I DO.

Q. HAS QUALCOMM ENTERED INTO NON-EXHAUSTIVE AGREEMENTS WITH 

MODEM CHIP SUPPLIERS? 

A. WE HAVE.

Q. IN WHAT CIRCUMSTANCES HAS QUALCOMM DONE THAT? 

A. WELL, WE'VE DONE THAT WITH SAMSUNG VERY RECENTLY IN 

JANUARY OF 2018. WE DID THAT WITH MEDIATEK IN ABOUT, I THINK, 

2008 AND THERE WERE ARRANGEMENTS THAT I TESTIFIED ABOUT 

PREVIOUSLY. 

Q. DID -- 

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GONELL DIRECT BY MR. BORNSTEIN

UNITED STATES COURT REPORTERS

1479

A. THAT'S WHAT I CAN THINK OF AS I SIT HERE. I KNOW THAT 

THERE ARE MORE. THERE ARE HISTORIC ONES.

Q. DID THESE NON-EXHAUSTIVE AGREEMENTS POSE THE SAME KIND OF 

PROBLEMS THAT YOU DESCRIBED EARLIER ABOUT MULTI LEVEL LICENSING 

THAT ARISE FROM THE EXHAUSTIVE CHIP LEVEL AGREEMENTS? 

A. NO.

Q. WHY NOT? 

A. BECAUSE THE, THE NON-EXHAUSTIVE AGREEMENTS ARE INTENDED TO 

GIVE, PROVIDE IN SOME WAY SOME ASSURANCES TO THE CHIP COMPANY 

THAT THE CHIP COMPANY WILL NOT BE SUBJECT TO A LAWSUIT, BUT IT 

DOESN'T -- BUT THEY DON'T CONSTITUTE AN AUTHORIZATION TO SELL 

UNDER QUALCOMM'S PATENTS. 

AND SO WE DON'T NEED TO BE COMPENSATED, RIGHT, FOR THAT IN 

TERMS OF MONEY. 

AND, THEREFORE, WE CAN CONTINUE TO HAVE ALL OF THE VALUE 

THAT WOULD BE IN THE DEVICE LEVEL LICENSE, AND THE PROBLEMS 

ASSOCIATED WITH ALLOCATING VALUE BETWEEN THE CHIP LEVEL AND THE 

DEVICE LEVEL DON'T ARISE IN THIS CONTEXT. 

Q. DOES QUALCOMM GO OUT AND AFFIRMATIVELY SEEK TO ENTER INTO 

THESE NON-EXHAUSTIVE AGREEMENTS WITH CHIP SUPPLIERS? 

A. NO, WE DON'T. IT'S SOMETHING WE DO AS AN ACCOMMODATION 

WHEN PEOPLE SEEK THEM FROM US. 

MR. BORNSTEIN: I HAVE NO FURTHER QUESTIONS, YOUR 

HONOR. 

THE COURT: ALL RIGHT. TIME IS 1:35. 

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GONELL CROSS BY MR. MERBER

UNITED STATES COURT REPORTERS

1480

(PAUSE IN PROCEEDINGS.) 

MR. MATHESON: MAY I APPROACH, YOUR HONOR (HANDING). 

(PAUSE IN PROCEEDINGS.) 

THE COURT: OKAY. LET ME KNOW WHEN YOU'RE READY. 

MR. MERBER: YOUR HONOR, JUST TO CONFIRM, DID I GIVE 

YOU THE RIGHT DEPOSITION BINDER? 

THE COURT: OH. MR. GONELL'S? YES. 

MR. MERBER: GREAT. 

THE COURT: OKAY. LET ME KNOW WHEN YOU'RE READY. 

MR. MERBER: I'M READY, YOUR HONOR. 

THE COURT: OKAY. 1:37. GO AHEAD, PLEASE. 

MR. MERBER: KEN MERBER ON BEHALF OF THE FEDERAL 

TRADE COMMISSION. 

CROSS-EXAMINATION

BY MR. MERBER: 

Q. GOOD AFTERNOON, MR. GONELL. 

A. GOOD AFTERNOON.

Q. YOU'RE NOT RESPONSIBLE FOR PATENT VALUATION, ARE YOU? 

A. I AM NOT.

Q. AND YOU'RE NOT AWARE OF ANY ANALYSIS AT QUALCOMM THAT 

APPORTIONED THE VALUE OF ITS CELLULAR PATENTS BETWEEN STANDARD 

ESSENTIAL PATENTS AND NON-STANDARD ESSENTIAL PATENTS, ARE YOU? 

A. MAY I HAVE THAT READ BACK?

Q. I CAN REPEAT IT. 

A. OR CAN YOU REPEAT THE QUESTION. 

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GONELL CROSS BY MR. MERBER

UNITED STATES COURT REPORTERS

1481

Q. YOU'RE NOT AWARE OF ANY ANALYSIS AT QUALCOMM THAT 

APPORTIONED VALUE OF QUALCOMM'S CELLULAR PATENTS BETWEEN ITS 

STANDARD ESSENTIAL PATENTS AND ITS NON-STANDARD ESSENTIAL 

PATENTS; CORRECT? 

A. I'M NOT SURE WHAT YOU MEAN BY "CELLULAR PATENTS." BUT I'M 

NOT AWARE OF ANY STUDY OR APPORTIONMENT AT QUALCOMM AS BETWEEN 

STANDARD ESSENTIAL PATENTS AND OTHER PATENTS.

Q. OKAY. AND QUALCOMM DOES NOT ASSIGN AN ACCOUNTING VALUE TO 

THE PATENTS THAT IT DEVELOPS; CORRECT? 

A. NOT THAT I'M AWARE OF. 

Q. AND YOU BELIEVE THAT QUALCOMM'S CELLULAR STANDARD 

ESSENTIAL PATENT PORTFOLIO HAS BEEN VALUED BASED ON THE LICENSE 

AGREEMENTS THAT QUALCOMM HAS; RIGHT? 

A. THAT'S FAIR, YEAH. 

Q. OKAY. AT YOUR DEPOSITION, YOU WERE ASKED WHETHER A FUTURE 

LICENSE BETWEEN QUALCOMM AND APPLE WOULD BE FAIR. 

DO YOU RECALL THAT? 

A. NOT SPECIFICALLY. 

Q. OKAY. 

A. I WAS DEPOSED FOR MANY HOURS.

Q. AND I BELIEVE YOU TESTIFIED THAT SIMPLY KNOWING AN 

AGREEMENT WAS REACHED WOULD NOT NECESSARILY MEAN THAT THE 

AGREEMENT WAS FRAND. 

MR. BORNSTEIN: COUNSEL, WHAT PAGE ARE YOU READING 

FROM? 

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GONELL CROSS BY MR. MERBER

UNITED STATES COURT REPORTERS

1482

MR. MERBER: I AM READING FROM PAGE 471. 

MR. BORNSTEIN: THANK YOU.

BY MR. MERBER: 

Q. YOU TESTIFIED THAT SIMPLY KNOWING AN AGREEMENT WAS REACHED 

WOULD NOT NECESSARILY MEAN THAT AN AGREEMENT WAS FRAND; RIGHT? 

A. THE MERE FACT OF AN AGREEMENT DOES NOT NECESSARILY MEAN AN 

AGREEMENT IS FRAND. 

Q. AND WOULD YOU AGREE THAT IT IS POSSIBLE THAT APPLE BRINGS 

ENOUGH ECONOMIC PRESSURE, FAIRLY OR UNFAIRLY, TO BEAR THAT THE 

RESULTING AGREEMENT IS NOT FAIR? 

A. IN NEGOTIATIONS WITH QUALCOMM?

Q. CORRECT. 

A. WELL, WOULD I AGREE THAT IT'S POSSIBLE? YES, I PRESUME -- 

IT'S -- ANYTHING IS POSSIBLE, SURE. 

Q. WELL, IN FACT, AT YOUR DEPOSITION YOU STATED THAT IT IS 

POSSIBLE THAT APPLE BRINGS ENOUGH ECONOMIC PRESSURE, FAIRLY OR 

UNFAIRLY, TO BEAR THAT THE RESULTING AGREEMENT IS NOT FAIR; 

CORRECT? 

A. WELL, IF YOU'LL DIRECT ME TO MY TESTIMONY -- 

Q. SURE. 

A. THEN I'M HAPPY TO SAY WHETHER I SAID THAT OR NOT. BUT 

THAT'S BASICALLY WHAT I JUST SAID, SO SURE.

Q. I WOULD DIRECT YOU TO PAGE 472 WHERE YOU STATED THAT. 

A. 472?

Q. UM-HUM, LINES 20 TO 25. 

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GONELL CROSS BY MR. MERBER

UNITED STATES COURT REPORTERS

1483

A. PAGE 472, 20 TO 25. 

IT'S POSSIBLE -- I SAID, IT IS POSSIBLE THAT APPLE BRINGS 

ENOUGH ECONOMIC PRESSURE FAIRLY OR UNFAIRLY TO BEAR THAT THE 

RESULTS AGREEMENT IS NOT FRONT -- FAIR, RATHER. THAT IS 

POSSIBLE I WOULD GUESS. I WOULD HOPE NOT, BUT WE SHALL SEE.

Q. SO I TAKE IT THAT YOU WOULD AGREE THAT A NEGOTIATED 

AGREEMENT MAY NOT BE FAIR IF ENOUGH ECONOMIC PRESSURE IS 

BROUGHT TO BEAR; CORRECT? 

A. IT IS POSSIBLE THAT A NEGOTIATED AGREEMENT IS NOT FAIR. 

THAT'S POSSIBLE. YOU HAVE TO LOOK AT THE CIRCUMSTANCES AND THE 

TERMS. 

Q. OKAY. YOU MENTIONED THAT QUALCOMM'S POLICY IS TO SELL 

MODEM CHIPS ONLY TO COMPANIES THAT HAVE TAKEN A LICENSE TO 

QUALCOMM'S STANDARD ESSENTIAL PATENTS RELATED TO THOSE CHIPS. 

DO YOU RECALL THAT? 

A. YES. THE TEST IS WHETHER THE PRODUCT AND CHIPS ARE GOING 

TO BE USED AS LICENSED.

Q. DO DEVICE MANUFACTURERS PURCHASING WI-FI COMPONENTS FROM 

QUALCOMM HAVE TO FIRST TAKE A LICENSE TO QUALCOMM'S WI-FI 

STANDARD ESSENTIAL PATENTS? 

A. NO. 

Q. A MOMENT AGO YOU TESTIFIED IN PART UNDER SEAL, SO I'LL BE 

CAREFUL TO AVOID CONFIDENTIALITY ISSUES, ABOUT AN AGREEMENT 

THAT QUALCOMM HAS ENTERED INTO WITH AVANCI. 

DO YOU RECALL THAT? 

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GONELL CROSS BY MR. MERBER

UNITED STATES COURT REPORTERS

1484

A. YES.

Q. OKAY. SO -- AND AGAIN, I WOULD ASK YOU TO KEEP YOUR 

ANSWERS AT A HIGH LEVEL. 

AVANCI IS A LICENSING PLATFORM THAT COLLECTS ROYALTIES ON 

BEHALF OF ALL OF THE PARTICIPATING LICENSORS; IS THAT CORRECT? 

A. YES. THEY ACT AS AN AGENT FOR THE PARTICIPATING 

LICENSORS.

Q. AND THEN AVANCI DISTRIBUTES THE ROYALTIES IT COLLECTS 

ACCORDING TO A CONTRACTUALLY AGREED UPON MECHANISM, WHICH I'D 

ASK YOU NOT TO DESCRIBE. 

A. THAT'S CORRECT. 

Q. AND AS I BELIEVE YOU JUST TESTIFIED, YOU WERE INVOLVED IN 

NEGOTIATING THAT MECHANISM WITH ERICSSON AND AVANCI; CORRECT? 

A. I WAS, INDEED.

Q. WAS THAT A VOLUNTARY, ARM'S LENGTH NEGOTIATION? 

A. YES. 

Q. IN JULY 2012, YOU HAD A CONVERSATION WITH THE INTERNAL 

REVENUE SERVICE DISCUSSING QUALCOMM'S LICENSING PRACTICES. 

DO YOU RECALL THAT? 

A. NO, BUT I'VE SEEN SOMETHING THAT PURPORTS TO BE A 

TRANSCRIPT OF THAT CONVERSATION. BUT I DON'T HAVE A DISTINCT 

RECOLLECTION OF THAT. 

Q. OKAY. AND I BELIEVE WHAT YOU SAID AT YOUR DEPOSITION WAS 

THAT LOOKING AT THAT TRANSCRIPT -- AND THIS IS ON PAIGE 178 -- 

REFRESHES MY MEMORY THAT SUCH A MEETING HAPPENED. 

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GONELL CROSS BY MR. MERBER

UNITED STATES COURT REPORTERS

1485

WOULD YOU LIKE TO SEE THAT AGAIN TO REFRESH YOUR 

RECOLLECTION, OR DOES -- DO YOU RECALL IT SUFFICIENTLY NOW? 

A. I'VE SEEN THE TRANSCRIPT. I REALLY, AT THIS POINT, DON'T 

HAVE A, A MEMORY OF THE MEETING. BUT I HAVE NO REASON TO DOUBT 

THAT IT HAPPENED.

Q. OKAY. 

YOUR HONOR, I MOVE TO ADMIT THE AUDIO RECORDING OF THAT 

MEETING, WHICH IS CX 6786R. 

MR. BORNSTEIN: IT HASN'T BEEN SHARED WITH US, BUT AS 

LONG AS WHAT WE'RE TALKING ABOUT -- 

THE COURT: BUT YOU PRODUCED IT. YOU PRODUCED IT IN 

DISCOVERY. I ASSUME YOU'VE HEARD IT. 

MR. BORNSTEIN: AS LONG AS WHAT WE'RE TALKING ABOUT 

IS THE VERSION WE PRODUCED IN DISCOVERY, THEN THAT'S FINE. IT 

JUST HASN'T BEEN SHARED WITH US SUBSEQUENT SO WE KNOW WHAT'S 

BEING ADMITTED IN EVIDENCE IS WHAT WE PRODUCED. BUT IF COUNSEL 

IS REPRESENTING THAT THAT'S WHAT IT IS, WE HAVE NO OBJECTION. 

THE COURT: IS THAT WHAT WAS PRODUCED IN DISCOVERY? 

MR. MERBER: CORRECT. THIS IS A THUMB DRIVE 

CONTAINING THE AUDIO FILE THAT WAS PRODUCED TO US IN DISCOVERY. 

MR. BORNSTEIN: THEN WE HAVE NO OBJECTION. 

THE COURT: ALL RIGHT. THEN GO AHEAD. IT'S 

ADMITTED. 

(PLAINTIFF'S EXHIBIT CX 6786R WAS ADMITTED IN EVIDENCE.) 

MR. MERBER: I WOULD OFFER A COPY TO THE COURT. I 

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GONELL CROSS BY MR. MERBER

UNITED STATES COURT REPORTERS

1486

DON'T BELIEVE IT'S CURRENTLY BEEN LODGED. 

THE CLERK: DO YOU WANT IT? 

THE COURT: NO, BUT WE SHOULD PROBABLY PUT A CX 6786R 

STAMP ON IT. THAT'S THE NUMBER YOU GAVE; CORRECT? 

MR. MERBER: CORRECT. AND THERE IS A STAMP ON THE 

FLASH DRIVE. 

THE COURT: OH, THERE IS. GREAT. 

BY MR. MERBER: 

Q. NOW, MR. GONELL, AT THIS MEETING -- THE PURPOSE OF THE 

MEETING WAS TO TALK ABOUT THE -- QUALCOMM'S ROYALTIES AND ALLOW 

THE IRS TO ASK QUESTIONS OF QTL EXECUTIVES. 

DO YOU RECALL THAT? 

A. NO, NOT SPECIFICALLY. BUT I -- THAT IS CONSISTENT WITH 

THE TRANSCRIPT, OR KIND OF TRANSCRIPT THAT I'VE SEEN. 

Q. OKAY. AND WHEN THE IRS ASKED QUALCOMM TO EXPLAIN ITS 

LICENSING OR ROYALTY PRICING POLICY FOR THIRD PARTY LICENSEES, 

MR. BLECKER GAVE A RESPONSE. 

DO YOU RECALL THAT? 

A. NO. 

Q. WHAT MR. BLECKER STATED WAS HE REFERENCED SEVERAL 

DIFFERENT TYPES OF LICENSING CATEGORIES AND HE SAID THAT THE 

FOURTH CATEGORY, WHICH HE BELIEVED THE IRS WAS MOST FAMILIAR 

WITH, WAS THE ASIC LICENSE, AND HE SAID THAT WAS AN ASIC 

PATENT -- 

MR. BORNSTEIN: OBJECTION, YOUR HONOR. WE -- THERE'S 

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GONELL CROSS BY MR. MERBER

UNITED STATES COURT REPORTERS

1487

NO FOUNDATION. HE'S JUST TESTIFIED HE DOESN'T REMEMBER THIS, 

AND COUNSEL IS NOW TELLING HIM WHAT WAS SAID. 

MR. MERBER: I'M HAPPY TO -- I'M HAPPY TO PLAY THE 

TAPE FOR HIM IF YOU'D LIKE. 

THE COURT: GO AHEAD. WHAT'S THE PORTION -- I WANT 

TO HEAR PORTIONS OF THIS TAPE, SO -- 

MR. MERBER: CERTAINLY. 

THE COURT: WHY DON'T YOU -- 

MR. MERBER: CERTAINLY. 

CAN YOU PLAY CLIP 5, OR ACTUALLY, CLIPS 3, 4, AND 5? 

MR. BORNSTEIN: SO IS THERE A PENDING QUESTION THAT 

THIS RELATES TO? 

MR. MERBER: I WAS GOING TO ASK A QUESTION FOLLOWING 

THE CLIP. 

Q. I WOULD LIKE TO KNOW IF THIS IS, IN FACT, A REPRESENTATION 

THAT QUALCOMM MADE TO THE INTERNAL REVENUE SERVICE THAT 

ACCURATELY REFLECTED ITS VIEWS OF ITS LICENSING PRACTICES. 

BUT I WOULD LIKE MR. GONELL TO HEAR THAT STATEMENT BEFORE 

HE ANSWERS THAT QUESTION. 

MR. BORNSTEIN: OKAY. 

(AN AUDIOTAPE WAS PLAYED IN OPEN COURT OFF THE RECORD.)

BY MR. MERBER: 

Q. SO DO YOU AGREE WITH MR. BLECKER THAT THE ASIC PATENT 

AGREEMENTS THAT HE WAS DESCRIBING THAT YOU'VE JUST TESTIFIED 

ABOUT WERE NOT LICENSES? 

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GONELL CROSS BY MR. MERBER

UNITED STATES COURT REPORTERS

1488

A. I DON'T KNOW WHAT MR. BLECKER IS REFERRING TO THERE FOR 

SURE AND THERE WAS STUFF MISSING. I MEAN, YOU WENT FROM A 

DESCRIPTION TO A FOURTH. HE SAID FOURTH. 

I -- I DON'T -- I DON'T KNOW WHAT HE'S TALKING ABOUT 

THERE. 

THAT IS ABSOLUTELY 100 PERCENT MARV BLECKER'S VOICE. 

THERE IS NO QUESTION IN MY MIND. I DON'T KNOW WHO THE WOMAN ON 

THE TAPE IS, BUT THAT IS ABSOLUTELY MARV BLECKER'S VOICE. 

SO HE SAID THOSE THINGS, ABSOLUTELY. I JUST DON'T KNOW 

WHAT HE MEANS BY THOSE THINGS SO I CAN'T TELL YOU WHETHER I 

AGREE WITH IT OR NOT. 

Q. OKAY. BUT YOU AGREE THAT THAT IS SOMETHING HE SAID? 

A. THAT IS ABSOLUTELY MARV BLECKER'S VOICE. I DON'T KNOW 

WHAT ELSE IS SAID ON THE TAPE. BUT THAT IS 1,000 PERCENT, TO 

MY EARS, MARV BLECKER'S VOICE.

Q. OKAY. AND I'D LIKE TO PLAY ANOTHER STATEMENT FROM 

MR. REIFSCHNEIDER. 

ACTUALLY, EXCUSE ME. IS IT A TRUE STATEMENT THAT QUALCOMM 

TOLD THE IRS THAT ITS ASIC PATENT AGREEMENTS ARE NOT LICENSE 

AGREEMENTS IN REALITY? 

A. WELL, I DON'T KNOW. NO, I DON'T KNOW. I MEAN, MARV 

BLECKER SAID THAT. I DON'T KNOW WHAT THE CONTEXT WAS, AND I 

DON'T KNOW WHAT ELSE WAS SAID. SO I DON'T KNOW THE ENTIRETY OF 

WHAT WAS COMMUNICATED TO THE IRS. 

BUT THOSE WORDS, WHATEVER THOSE WORDS JUST, WE JUST HEARD, 

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GONELL CROSS BY MR. MERBER

UNITED STATES COURT REPORTERS

1489

MARV BLECKER SAID FOR SURE. 

BUT WHAT WAS COMMUNICATED AND WHAT WAS INTENDED TO BE 

COMMUNICATED, YOU KNOW, I'D HAVE TO LISTEN TO THE WHOLE THING 

OR READ THE TRANSCRIPT TO TRY TO UNDERSTAND. 

Q. OKAY. AND I'D LIKE TO PLAY YOU A CLIP TO SEE IF YOU CAN 

IDENTIFY WHO'S SPEAKING IN THIS ONE, THAT'S ALSO DESCRIBING 

QUALCOMM'S LICENSING PRACTICE. 

COULD YOU PLAY CLIP 6. 

(AN AUDIOTAPE WAS PLAYED IN OPEN COURT OFF THE RECORD.) 

BY MR. MERBER:

Q. IS THAT A STATEMENT FROM MR. ERIC REIFSCHNEIDER? 

A. THAT IS ERIC REIFSCHNEIDER'S VOICE, YES.

Q. AND ERIC REIFSCHNEIDER WAS THE HEAD OF QTL; CORRECT? AT 

CERTAIN POINTS IN TIME? 

A. HE WAS THE GENERAL MANAGER OF QTL WHILE HE WAS AT QTL, 

YES. 

Q. OKAY. AND SO THAT WAS A STATEMENT THAT MR. REIFSCHNEIDER 

MADE TO THE INTERNAL REVENUE SERVICE ON THIS PHONE -- IN THIS 

MEETING; CORRECT? 

A. IF THIS IS -- IF THIS IS A MEETING OF SOMETHING WITH THE 

INTERNAL REVENUE SERVICE, I -- AND HE'S SAYING THAT TO -- 

THAT'S WHO HE'S TALKING TO, THEN, YES. IT WAS CLEARLY HIM 

TALKING.

Q. OKAY. AND CAN WE PLAY THE CLIP 7, PLEASE. 

(AN AUDIOTAPE WAS PLAYED IN OPEN COURT OFF THE RECORD.) 

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GONELL CROSS BY MR. MERBER

UNITED STATES COURT REPORTERS

1490

BY MR. MERBER:

Q. WAS THAT ALSO -- 

MR. BORNSTEIN: YOUR HONOR, I HAVE A COMPLETENESS 

OBJECTION. CAN WE HAVE THAT KEEP PLAYING, PLEASE. I THINK WE 

CUT OFF FOR SOME IMPORTANT CONTEXT FOR MR. REIFSCHNEIDER'S 

COMMENTS. 

THE COURT: WE'LL DO THIS IN YOUR TIME. I MEAN, IT 

WOULD HAVE BEEN EASIER WITH THE TRANSCRIPT. QUALCOMM BLOCKED 

THE TRANSCRIPT FROM COMING IN, AND HE'S SAYING, "OH, BUT IF I 

HAD THE TRANSCRIPT, I WOULD BE ABLE TO TESTIFY X AND Z." 

SO IT'S A LITTLE BIT FRUSTRATING FROM OUR PERSPECTIVE. 

YOU'RE REQUIRING US TO GO BACK IN CHAMBERS AND LISTEN TO THE 

WHOLE TAPE, WHICH IS I HOPE WHAT YOU WANTED BECAUSE THAT'S 

WHAT'S GOING TO HAPPEN BECAUSE YOU WOULD NOT ALLOW THE 

TRANSCRIPT IN. SO YOU'LL DO YOUR COMPLETENESS OBJECTIONS ON 

YOUR OWN TIME. 

GO AHEAD, PLEASE. 

MR. MERBER: THANK YOU, YOUR HONOR. 

Q. THAT WAS ALSO A STATEMENT MR. REIFSCHNEIDER MADE IN THIS 

MEETING; CORRECT? 

A. THAT WAS MR. REIFSCHNEIDER'S VOICE, YES. 

Q. AND THEN COULD YOU PLAY, PLEASE PLAY CLIPS 8 AND 9. OH, 

AND 10. 

(AN AUDIOTAPE WAS PLAYED IN OPEN COURT OFF THE RECORD.) 

BY MR. MERBER:

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GONELL CROSS BY MR. MERBER

UNITED STATES COURT REPORTERS

1491

Q. ARE THOSE STATEMENTS MADE BY MR. BLECKER AND YOURSELF ON 

THIS CONVERSATION, IN THIS CONVERSATION WITH THE IRS? 

A. YES, ALTHOUGH THE CONVERSATION CONTINUED, AND I EXPRESSED 

MY DISAGREEMENT WITH MR. BLECKER'S STATEMENT.

Q. SO YOU RECALL THIS MEETING NOW? 

A. NO. I REMEMBER -- I REMEMBER READING THAT. 

Q. SO YOU REMEMBER READING THE TRANSCRIPT THAT HAS NOT BEEN 

ADMITTED? AND THAT'S WHAT REMINDED YOU OF YOUR DISAGREEMENT 

WITH THIS? 

WHAT EXACTLY WAS YOUR DISAGREEMENT? 

A. I WAS -- IT WAS -- MY DISAGREEMENT WAS WITH HIS STATEMENT 

THAT, THAT COURTS WOULD NOT, CATEGORICALLY WOULD NOT APPLY A 

ROYALTY, WOULD FIND A ROYALTY NOT TO BE FRAND JUST BECAUSE IT 

WAS LARGE COMPARED TO THE PRICE OF A CHIP. 

Q. SO MR. BLECKER TOLD THE INTERNAL REVENUE SERVICE THAT A 

COURT WAS UNLIKELY TO FIND THAT SORT OF ROYALTY APPROACH TO BE 

FRAND, AND YOU TOLD THE IRS THAT MR. BLECKER MIGHT BE INCORRECT 

IN SO CHARACTERIZING QUALCOMM'S ROYALTIES; IS THAT CORRECT? 

A. NO. I TOLD THE IRS -- I TOLD THE IRS THAT MR. BLECKER'S 

SPECULATION ABOUT WHAT COURTS MIGHT DO WAS, IN MY VIEW, WRONG. 

Q. OKAY. BUT YOU DID AGREE THAT AS A PRACTICAL MATTER, IT 

WOULD BE CHALLENGING TO COLLECT THESE ROYALTIES, THE SAME 

DOLLAR ROYALTY ON A CHIP THAT YOU -- THAT QUALCOMM COLLECTS ON 

A HANDSET? THAT WAS YOUR STATEMENT A MOMENT AGO, EARLIER IN 

THE TRANSCRIPT; CORRECT? 

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GONELL CROSS BY MR. MERBER

UNITED STATES COURT REPORTERS

1492

A. YES.

Q. OKAY. AND IF YOU WOULD PLAY CLIP 12, PLEASE. 

(AN AUDIOTAPE WAS PLAYED IN OPEN COURT OFF THE RECORD.) 

BY MR. MERBER:

Q. AND WAS THAT A STATEMENT YOU MADE TO THE IRS? 

A. YES, THAT WAS A STATEMENT THAT I MADE.

Q. AND THAT STATEMENT WAS THAT HAVING TO CHOOSE BETWEEN 

LICENSING CHIPS AND LICENSING AT THE HANDSET, THE HANDSET WAS 

HUMONGOUSLY MORE LUCRATIVE; CORRECT? 

A. YES. IF WE'RE MAKING THE CHOICE AS TO WHAT WE WANT TO DO, 

THAT'S ABSOLUTELY CORRECT. 

Q. EARLIER IN YOUR TESTIMONY, YOU WERE DISCUSSING AN NDRC 

INVESTIGATION THAT CAME UP WHILE QUALCOMM WAS NEGOTIATING WITH 

HUAWEI. 

DO YOU RECALL THAT? 

A. I DO. 

Q. THE NDRC WAS INVESTIGATING WHETHER QUALCOMM HAD VIOLATED 

CHINA'S ANTI-MONOPOLY LAW THROUGH ITS LICENSING PRACTICES; 

CORRECT? 

A. YES. 

Q. YOU ALSO MENTIONED THAT THAT INVESTIGATION WAS RESOLVED 

WITH SOMETHING CALLED A RECTIFICATION PLAN. 

DO YOU RECALL THAT? 

A. I RECALL MENTIONING THE RECTIFICATION PLAN. THE -- THE 

INVESTIGATION WAS CONCLUDED WITH AN ADMINISTRATIVE SANCTION 

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GONELL CROSS BY MR. MERBER

UNITED STATES COURT REPORTERS

1493

DECISION AND THE RECTIFICATION PLAN FOLLOWED ACCORDING TO THE 

PROCEDURES OF CHINESE LAW. 

Q. OKAY. AND ONE OF THE PRACTICES THAT THE NDRC HAD 

CHALLENGED WAS QUALCOMM'S ALLEGED REFUSAL TO OFFER SEP ONLY 

LICENSES; CORRECT? 

A. I'M NOT SO SURE I WOULD CHARACTERIZE IT THAT WAY. THEY -- 

THE NDRC HAD A LIST OF NINE ISSUES THAT WERE THE INITIAL 

ISSUES. I'D HAVE TO LOOK AT THE LIST OF INITIAL -- LOOK AT THE 

ISSUES TO SEE EXACTLY WHAT THEY WERE. 

Q. OKAY. 

A. WHAT THEY IDENTIFIED. 

Q. OKAY. AND YOU TESTIFIED THAT DURING YOUR NEGOTIATIONS 

WITH HUAWEI, YOU CONTINUED TO SHIP THEM CHIPS EVEN WHEN THERE 

WAS SOME DELAY IN ROYALTY PAYMENTS; IS THAT CORRECT? 

A. NO. I SAID THAT THEY STOPPED PAYING, NOT THAT THEY 

DELAYED. THEY STOPPED. AND, YES, WE CONTINUED TO SHIP THEM 

CHIPS.

Q. I TAKE YOUR CORRECTION ON THAT. THANK YOU. 

SO YOU CONTINUED TO SHIP HUAWEI CHIPS AFTER THEY HAD 

STOPPED PAYING; CORRECT? IS THAT WHAT YOU TESTIFIED? 

A. YES.

Q. AND THIS WAS THE NDRC INVESTIGATION INTO WHETHER QUALCOMM 

HAD VIOLATED THE CHINESE ANTI-MONOPOLY LAW? 

A. YES. 

Q. YOU ALSO TESTIFIED SOME EARLIER ABOUT INDUSTRY PRACTICES 

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GONELL CROSS BY MR. MERBER

UNITED STATES COURT REPORTERS

1494

RELATING TO LICENSING CELLULAR SEPS AT THE CHIP LEVEL. 

DO YOU RECALL THAT? 

A. MORE ACRIDLY ABOUT NOT DOING THAT, BUT YES. 

Q. QUALCOMM HAS HAD EXHAUSTIVE CHIP LEVEL LICENSES COVERING 

CELLULAR STANDARD ESSENTIAL PATENTS FROM OTHER COMPANIES; 

RIGHT?

A. INBOUND LICENSES?

Q. CORRECT. 

A. YES.

Q. AND QUALCOMM HAS HAD LICENSES TO OTHER COMPANIES CELLULAR 

STANDARD ESSENTIAL PATENTS THAT APPLIED TO QUALCOMM'S CHIPS 

FROM ERICSSON; CORRECT? 

A. YES, AS PART OF A 1999 SETTLEMENT, YES.

Q. AND FROM INTERDIGITAL? 

A. I DON'T KNOW FOR SURE. THE INTERDIGITAL AGREEMENT IS 

REALLY OLD AND WAS ESSENTIALLY A DEAD LETTER BY THE TIME I 

ARRIVED AT QTL. 

THERE IS LANGUAGE ABOUT INTERDIGITAL PATENT RIGHTS IN SOME 

OF OUR OLDER AGREEMENTS, BUT I DON'T RECALL WHAT THE EXACT 

CONTRACTUAL ARRANGEMENTS WERE BETWEEN QUALCOMM AND 

INTERDIGITAL. 

Q. BUT QUALCOMM HAD LICENSES TO CELLULAR STANDARD ESSENTIAL 

PATENTS FROM SEVERAL COMPANIES THAT COVERED QUALCOMM'S CHIPS; 

CORRECT? 

A. YES. 

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GONELL CROSS BY MR. MERBER

UNITED STATES COURT REPORTERS

1495

Q. YOU TESTIFIED THAT -- REGARDING THE NEGOTIATIONS WITH SONY 

IN THE 2012 TIMEFRAME. 

DO YOU RECALL THAT?

A. YES, I DO. 

Q. AND YOU TESTIFIED THAT SONY HAD A CDMA LICENSE -- SONY 

CORPORATION HAD A CDMA LICENSE AND SO THERE WERE NO CONCERNS 

ABOUT SONY MOBILE'S SUPPLY OF CDMA CHIPS FROM QUALCOMM. 

DO YOU RECALL THAT? 

A. THERE WOULD NOT HAVE BEEN. WE WOULD NOT HAVE BEEN 

CONCERNED ABOUT WC -- ABOUT CDMA CHIPS.

Q. COULD YOU TURN TO TAB 7 OF YOUR BINDER, WHICH IS CX 6522, 

WHICH WAS PREVIOUSLY ADMITTED.

A. I'M AT TAB 7. 

Q. OKAY. AND TAB 7 IS AN E-MAIL FROM MR. REIFSCHNEIDER TO 

YOU, AMONG OTHERS, WITH A LONG E-MAIL CHAIN. 

AND IF YOU'D GO TO PAGE 5 USING THE CX NUMBER. 

A. CX 6522-005?

Q. YES, THAT'S CORRECT. 

A. OKAY, I'M THERE. 

Q. OKAY. AND AT THE VERY BOTTOM OF THE PAGE, THERE'S AN 

E-MAIL FROM CAROL BLUBAUGH. 

DO YOU SEE THAT? 

A. I DO.

Q. AND SHE SAYS, "I BELIEVE YOU ARE AWARE THIS SITUATION 

REGARDING THE RECENT DIVESTITURE OF SEMC AND THAT, AS A RESULT, 

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GONELL CROSS BY MR. MERBER

UNITED STATES COURT REPORTERS

1496

SEMC IS NOT CURRENTLY LICENSED FOR WCDMA." 

DO YOU SEE THAT?

A. I DO SEE THAT, YES.

Q. AND THEN SHE SAYS THAT -- THIS IS SKIPPING A FEW LINES, 

"QTL WILL ADVISE BY TOMORROW IF WE NEED TO HOLD OFF ON THE 

PENDING SHIPMENTS FOR 6655 AND/OR OTHER ORDERS (SEE ATTACHED 

E-MAIL)." 

DO YOU SEE THAT? 

A. YES. 

Q. THE 8655 IS A CDMA 2000 ENABLED CHIP, IS IT NOT? 

A. I HAVE NO IDEA. 

Q. OKAY. AND IF YOU WOULD TURN BACK ONE PAGE TO THE PAGE 

ENDING DASH 003? 

A. OH, THE OTHER WAY.

Q. YEAH, SORRY. 

A. 003, YES. 

Q. YOU'LL NOTICE THAT THERE'S AN E-MAIL IN RED TEXT IN WHICH 

MS. BLUBAUGH HAD COMMUNICATED TO SONY THAT, QUOTE, "OUR 

OPERATIONS TEAM HAS BEEN ADVISED TO HOLD ALL COMPONENT 

SHIPMENTS TO SEMC/SONY MOBILE." 

DO YOU SEE THAT? 

A. I DO. 

Q. OKAY. SO THAT STATED THAT AT THAT POINT, ALL CHIP 

SHIPMENTS TO SONY MOBILE WERE IMPLICATED IN THESE DISCUSSIONS; 

CORRECT? 

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GONELL CROSS BY MR. MERBER

UNITED STATES COURT REPORTERS

1497

A. THIS IS -- I MEAN, THIS SAYS WHAT IT SAYS. AND IT SAYS, 

"OUR OPERATIONS TEAM HAS BEEN ADVISED TO HOLD ALL COMPONENT 

SHIPMENTS TO SEMC/SONY MOBILE." 

SO I AGREE THAT IT SAYS WHAT I JUST SAID.

Q. OKAY. 

A. I DON'T UNDERSTAND WHAT YOU SAID.

Q. OKAY. COULD YOU TURN TO TAB 15 IN YOUR BINDER, WHICH IS 

CX 7961. 

A. YES. 

Q. AND PORTIONS OF THIS ARE UNDER SEAL. WE SHOULDN'T PUT IT 

UP YET ANYWAY. 

AND YOU'LL SEE THAT THIS IS AN E-MAIL FROM 

MR. REIFSCHNEIDER TO YOU, AMONG OTHER PEOPLE. 

DO YOU SEE THAT? 

A. YES, I DO. 

MR. MERBER: YOUR HONOR, I MOVE TO ADMIT CX 7961, 

PORTIONS OF WHICH ARE SEALED. 

MR. BORNSTEIN: THERE'S NO OBJECTION. 

THE COURT: IT'S ADMITTED. 

(PLAINTIFF'S EXHIBIT 7961 WAS ADMITTED IN EVIDENCE.) 

THE COURT: GO AHEAD, PLEASE. WHAT ABOUT THE LAST 

DOCUMENT, WAS THAT ALREADY ADMITTED? 

MR. MERBER: YES, THE LAST DOCUMENT WAS ALREADY 

ADMITTED. 

THE COURT: ALL RIGHT. GO AHEAD, PLEASE. 

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GONELL CROSS BY MR. MERBER

UNITED STATES COURT REPORTERS

1498

BY MR. MERBER: 

Q. SO, MR. GONELL, THIS E-MAIL IS -- IS ADDRESSED -- EXCUSE 

ME. 

THIS E-MAIL SAYS, "IF I'M READING THIS SPREADSHEET 

CORRECTLY, IT LOOKS LIKE THERE ARE SHIPMENTS SCHEDULED TO GO 

OUT ON OCTOBER 24TH AND OCTOBER 25TH, CORRECT?" 

DO YOU SEE THAT? 

A. YES, I SEE THAT TEXT, YES. 

Q. AND THEN IT LISTS QUITE A FEW SHIPMENTS TO SONY MOBILE IN 

A CHART. 

DO YOU SEE THAT? 

A. IT -- YES, SIX, SIX -- I MEAN, I DON'T COMPLETELY 

UNDERSTAND THIS CHART, BUT, YES, THERE'S SIX LISTINGS ON THIS 

CHART THAT APPEAR TO BE THINGS THAT ARE QUANTITIES AND PRICE AT 

THE END. 

Q. OKAY. AND THEN IT SAYS, FROM MR. REIFSCHNEIDER, "IF SO, 

AND IF THEY STILL HAVE NOT SIGNED THE LICENSE AGREEMENT, I 

THINK WE NEED TO SERIOUSLY CONSIDER HOLDING THOSE SHIPMENTS 

UNTIL THEY DO." 

DO YOU SEE THAT? 

A. I DO.

Q. AND THIS IS DATED OCTOBER 25TH, 2012; CORRECT? 

A. IT IS DATED THAT DATE, YES.

Q. SO THIS IS RIGHT AROUND THE TIME THAT, IN BETWEEN THE 

EXPIRATION OF THE INTERIM AGREEMENT AND THE EXECUTION OF THE 

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GONELL REDIRECT BY MR. BORNSTEIN

UNITED STATES COURT REPORTERS

1499

LONGER TERM AGREEMENT BETWEEN QUALCOMM AND SONY; CORRECT? 

A. YES. THIS IS, TO MY MEMORY, DURING THE PERIOD WHERE -- 

THE INTERIM AGREEMENT HAD EXPIRED, EVEN THE TWO WEEK EXTENSION 

HAD EXPIRED, AND THEY HAD REFUSED TO SIGN AN ADDITIONAL 

EXTENSION, AND THEY WERE BASICALLY HOLDING UP THE LICENSE FOR 

THE CHIP DEAL, BUT THE LICENSE WAS ESSENTIALLY DONE. 

Q. AND MR. REIFSCHNEIDER WAS THE HEAD OF QTL AT THIS TIME; 

CORRECT? 

A. YES, HE WAS. 

MR. MERBER: YOUR HONOR, NO FURTHER QUESTIONS. 

THE COURT: ALL RIGHT. TIME IS 2:05. 

TIME IS 2:06. GO AHEAD, PLEASE.

MR. BORNSTEIN: THANK YOU, YOUR HONOR.

REDIRECT EXAMINATION

BY MR. BORNSTEIN:

Q. IF YOU STILL HAVE TAB 15 IN FRONT OF YOU, CAN I ASK YOU TO 

TAKE A LOOK AT IT. THIS IS CX 7961. IT'S TAB 15 IN THE WHITE 

BINDER FROM THE FTC. 

A. YES.

Q. GREAT. WHAT'S THE DATE ON THIS E-MAIL? 

A. THE DATE ON THIS E-MAIL IS OCTOBER 25TH, 2012. 

Q. AND WAS -- DID QUALCOMM -- WHEN DID THE LICENSE AGREEMENT 

ULTIMATELY GET SIGNED BETWEEN SONY MOBILE AND QUALCOMM IN THIS 

TIMEFRAME? 

A. I'D HAVE TO GO LOOK TO SEE THE EXACT EXECUTION DATE, BUT 

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GONELL REDIRECT BY MR. BORNSTEIN

UNITED STATES COURT REPORTERS

1500

SHORTLY AFTER THIS, I THINK.

Q. AND BETWEEN THE TIME OF THIS E-MAIL AND THE TIME THE 

AGREEMENT WAS SIGNED, DID QUALCOMM CUT OFF THE SUPPLY OF ANY 

CHIPS TO SONY MOBILE? 

A. NO, QUALCOMM NEVER CUT OFF THE CHIP SUPPLY TO SONY MOBILE.

Q. LET ME ASK YOU TO TURN BACK TO TAB 7, PLEASE, ALSO IN THE 

FTC'S BINDER. 

A. TAB 7, YES. 

Q. OKAY. AND COUNSEL FOR THE FTC ASKED YOU SOME QUESTIONS 

ABOUT TWO E-MAILS FROM CAROL BLUBAUGH. 

DO YOU RECALL THAT?

A. YES.

Q. WHO IS MS. BLUBAUGH? 

A. MS. BLUBAUGH IS -- WORKS IN QCT. SHE'S A CONTRACTS 

ADMINISTRATOR. SHE MIGHT NOT BE WITH THE COMPANY ANYMORE, BUT 

THAT WAS HER ROLE AT THIS TIME FOR SURE.

Q. DID QTL AUTHORIZE MS. BLUBAUGH, OR ANYONE AT QCT, TO ISSUE 

THIS E-MAIL TO SONY MOBILE ABOUT CUTTING OFF CHIPS? 

MR. MERBER: OBJECTION. FOUNDATION. 

THE WITNESS: NO. 

THE COURT: SUSTAINED. LAY THE FOUNDATION, PLEASE. 

MR. BORNSTEIN: SURE.

Q. DID YOU, MR. GONELL, TELL ANYONE AT QCT TO ISSUE A 

STATEMENT ABOUT CEASING THE SUPPLY OF CHIPS TO SONY MOBILE AT 

THIS TIME? 

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GONELL REDIRECT BY MR. BORNSTEIN

UNITED STATES COURT REPORTERS

1501

A. NO, I DID NOT.

Q. AND TO YOUR KNOWLEDGE, DID ANYBODY ELSE AT QTL AUTHORIZE 

THE CUTTING OFF OF CHIPS TO SONY MOBILE? 

A. NO. 

Q. AND WHAT'S THE BASIS OF YOUR KNOWLEDGE? 

A. BECAUSE WHEN I SAW THIS LATER ON, I MEAN, I'M ADDED TO 

THIS LATER AND I SEE THIS, YOU CAN SEE THAT THIS WHOLE E-MAIL 

CHAIN STARTS WITH AN E-MAIL FROM ME, AND I SOUGHT TO FIND OUT, 

DID YOU DO THIS BECAUSE OF ME OR BECAUSE OF SOME OTHER REASON? 

BECAUSE IN MY E-MAIL, I'M NOT ASKING THEM TO STOP SHIPPING 

CHIPS. 

AND IT TURNS OUT THAT THEY MISUNDERSTOOD MY E-MAIL AND DID 

IT BECAUSE OF MY E-MAIL AND NOT BECAUSE SOMEBODY ELSE AT QTL 

SAID THAT THEY SHOULD DO IT. 

MR. BORNSTEIN: I HAVE NO FURTHER QUESTIONS. 

THE COURT: OKAY. TIME IS 2:08. 

DO YOU HAVE ANY MORE CROSS, OR NOT? 

MR. MERBER: NO, NO FURTHER QUESTIONS, YOUR HONOR. 

THE COURT: OKAY. MAY THIS WITNESS BE EXCUSED 

SUBJECT TO RECALL OR NOT SUBJECT TO RECALL? 

MR. BORNSTEIN: NOT SUBJECT TO RECALL FROM US. 

MR. MERBER: SUBJECT TO RECALL FROM US. 

THE COURT: OH, OKAY. ALL RIGHT. THEN YOU'RE DONE 

FOR THE DAY, BUT YOU MAY BE CALLED BACK. 

AND YOU'RE FREE TO LEAVE FOR NOW. 

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SAUER DIRECT BY MR. PAIGE

UNITED STATES COURT REPORTERS

1502

THE WITNESS: THANK YOU, YOUR HONOR. 

THE COURT: AND PLEASE HAVE YOUR NEXT WITNESS READY, 

PLEASE. 

MR. PAIGE: YOUR HONOR, QUALCOMM CALLS MATTHIAS SAUER 

TO THE STAND. 

THE COURT: OKAY. 

(PAUSE IN PROCEEDINGS.) 

MR. VAN NEST: MR. SAUER. 

THE WITNESS: RIGHT HERE? 

THE CLERK: YES. PLEASE RAISE YOUR RIGHT HAND. 

(DEFENDANT'S WITNESS, MATTHIAS SAUER, WAS SWORN.)

THE WITNESS: I DO. 

THE CLERK: THANK YOU. PLEASE BE SEATED. 

WOULD YOU PLEASE STATE YOUR FULL NAME AND SPELL YOUR LAST 

NAME FOR THE RECORD. 

THE WITNESS: MATTHIAS SAUER. LAST NAME IS 

S-A-U-E-R. 

THE COURT: OKAY. TIME IS NOW 2:10. GO AHEAD, 

PLEASE. 

MR. PAIGE: THANK YOU, YOUR HONOR. 

DIRECT EXAMINATION

BY MR. PAIGE: 

Q. GOOD AFTERNOON, MR. SAUER. 

A. GOOD AFTERNOON.

Q. WE HAVEN'T MET. MY NAME IS GENE PAIGE, AND I REPRESENT 

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SAUER DIRECT BY MR. PAIGE

UNITED STATES COURT REPORTERS

1503

QUALCOMM. 

A. NICE TO MEET YOU.

Q. NOW, YOU'RE AN ELECTRICAL ENGINEER; CORRECT? 

A. THAT IS CORRECT.

Q. YOU USED TO WORK FOR A COMPANY CALLED INFINEON; RIGHT?

A. THAT IS CORRECT.

Q. AND YOU WORKED ON BASEBAND PROCESSORS FOR INFINEON; RIGHT? 

A. THAT IS CORRECT. 

Q. AND FOR SOME OF THE TIME YOU WORKED FOR INFINEON, INFINEON 

WAS SUPPLYING BASEBAND PROCESSORS TO APPLE; CORRECT? 

A. THAT IS CORRECT. 

Q. AND AFTER APPLE PURCHASED -- I'M SORRY. 

AFTER INTEL PURCHASED INFINEON WIRELESS BUSINESS, YOU 

BECAME AN INTEL EMPLOYEE; CORRECT? 

A. THAT IS CORRECT.

Q. YOU THEREAFTER JOINED APPLE'S WIRELESS ARCHITECTURE GROUP 

IN OCTOBER OF 2011; RIGHT? 

A. THAT IS RIGHT. 

Q. AND YOU'RE CURRENTLY AN APPLE EMPLOYEE; CORRECT? 

A. THAT IS ALSO CORRECT. 

Q. NOW, PRIOR TO LEAVING INFINEON, YOU BELIEVED THAT INFINEON 

SHOULD DEVOTE MORE RESOURCES TO LTE DEVELOPMENT; CORRECT? 

A. THAT WAS ONE OF THE OBSERVATIONS I MADE, YES. 

Q. BUT DURING THE -- 

THE COURT: CAN YOU -- I'M SORRY TO INTERRUPT. CAN 

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SAUER DIRECT BY MR. PAIGE

UNITED STATES COURT REPORTERS

1504

YOU BRING THE MICROPHONE CLOSER TO YOU. 

THE WITNESS: SORRY, YOUR HONOR. 

THE COURT: THANK YOU. GO AHEAD, PLEASE. SORRY FOR 

THE INTERRUPT. 

BY MR. PAIGE:

Q. DURING THE TIME YOU WERE WITH INFINEON, THEY CONSIDERED 

THEMSELVES TO BE A FAST FOLLOWER; CORRECT? 

A. THAT WAS ONE OF THE ANALYSIS WE DID, YES.

Q. AND WHILE YOU WERE STILL WORKING AT INFINEON, YOUR VIEW 

WAS THAT CDMA WOULD BE OF DECLINING IMPORTANCE AND MIGHT NOT BE 

RELEVANT TO INVEST IN THAT TECHNOLOGY; RIGHT?

A. THAT IS RIGHT. 

Q. BUT AS IT TURNS OUT, THE IMPORTANCE OF CDMA CAPABILITY HAS 

LASTED FOR A LONGER TIME THAN YOU HAD EXPECTED; CORRECT? 

A. THAT IS CORRECT, AND STILL THE DECLINING IMPORTANCE, I 

THINK, IS A VALID ASSESSMENT.

Q. NOW, AS PART OF YOUR JOB RESPONSIBILITIES AT APPLE, YOU 

HAVE EVALUATED PROPOSALS FROM VARIOUS BASEBAND PROCESSOR 

SUPPLIERS; RIGHT? 

A. YES.

Q. AND AROUND THE TIME YOU JOINED APPLE IN 2011, APPLE WAS 

ACTIVELY WORKING WITH ST-ERICSSON AS A POTENTIAL SECOND SOURCE 

OF BASEBAND PROCESSORS; RIGHT? 

A. YEAH. WHEN I JOINED, WE STARTED TO ACTIVELY WORK WITH 

ST-ERICSSON. 

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SAUER DIRECT BY MR. PAIGE

UNITED STATES COURT REPORTERS

1505

Q. AND YOU WERE INVOLVED IN THAT WORK WITH ST-ERICSSON, WERE 

YOU NOT? 

A. I WAS, YES.

Q. AND THE CODE NAME FOR ST ERICSSON AT APPLE, THAT WAS 

STEEL; RIGHT? 

A. THAT IS RIGHT.

Q. AND WHEN APPLE TRACKED DELIVERABLES FROM ST ERICSSON, 

ST ERICSSON WAS NOT MEETING THE DEVELOPMENT DATES, WAS IT? 

A. AS IT TURNED OUT IN THE COURSE OF THE PROJECT, IT TURNED 

OUT THAT THEY WERE SLIPPING IN THEIR EXECUTION. 

Q. AND YOUR GROUP EVENTUALLY FOUND ST ERICSSON'S DELAYS WERE 

NOT ACCEPTABLE; RIGHT? 

A. THAT WAS ONE OF THE ANALYSIS.

Q. YOU CONCLUDED THESE DELAYS WOULD LIKELY CONTINUE INTO THE 

FUTURE; RIGHT? 

A. THAT WAS OUR PREDICTION. 

Q. LET ME HAND YOU A BINDER OF DOCUMENTS, SIR. 

A. UM-HUM. 

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

THE COURT: YES. 

MR. PAIGE: (HANDING.) 

Q. COULD YOU TURN TO TAB QX 1353, PLEASE, SIR. 

A. I HAVE THAT.

Q. THIS IS AN E-MAIL THAT YOU SENT ON OR AROUND THE 8TH OF 

MARCH 2012? 

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SAUER DIRECT BY MR. PAIGE

UNITED STATES COURT REPORTERS

1506

A. YES. 

MR. PAIGE: I MOVE THIS INTO EVIDENCE, YOUR HONOR. 

THE COURT: OKAY. ANY OBJECTION? 

MR. CARSON: NO OBJECTION. 

THE COURT: IT'S ADMITTED. 

(DEFENDANT'S QX 1353 EXHIBIT WAS ADMITTED IN EVIDENCE.) 

THE COURT: GO AHEAD, PLEASE. 

BY MR. PAIGE:

Q. IN THE TOP E-MAIL FROM YOU, YOU SAID "AS MUCH AS I LIKE 

THE STEEL ARCHITECTURE APPROACH AS MUCH AS I HAVE TO CONFESS 

HOW FRUSTRATING THE ATTEMPTS OF A MEANINGFUL SCHEDULE 

DISCUSSION HAVE BEEN OVER THE LAST THREE MONTHS." 

CORRECT?

A. YES.

Q. AND SO BASED ON THOSE FRUSTRATIONS, YOU RECOMMENDED TO 

OTHERS AT APPLE THAT IT SHOULD STOP WORKING WITH ST ERICSSON 

DUE TO THESE DELAYS; CORRECT? 

A. THAT WAS MY RECOMMENDATION, YES.

Q. AND DO YOU SEE ON PAGE 2 OF THE DOCUMENT, THERE IS AN 

E-MAIL FROM MR. SHELL WHERE MR. SHELL SAID THAT ST ERICSSON 

COULD NEITHER EXECUTE NOR MANAGE THEIR WAY OUT OF A PAPER BAG? 

A. I SEE THAT.

Q. AND YOU RECALL MR. SHELL EXPRESSING THOSE SENTIMENTS, DO 

YOU NOT? 

A. I DO.

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SAUER DIRECT BY MR. PAIGE

UNITED STATES COURT REPORTERS

1507

Q. SO APPLE DECIDED, IN MARCH 2012, THAT IT WOULD DISCONTINUE 

WORKING WITH ST ERICSSON AS A POTENTIAL BASEBAND PROCESSOR 

SUPPLIER; CORRECT? 

A. AS I REMEMBER CORRECTLY, IT WAS AROUND THAT TIME.

Q. IF YOU COULD TURN TO PAGE, OR DOCUMENT QX 9084, PLEASE, 

MR. SAUER. 

A. I HAVE THAT. 

Q. AND THAT'S AN E-MAIL FROM YOU DATED ON THE 25TH OF MARCH 

2012; CORRECT? 

A. THAT IS CORRECT. 

MR. PAIGE: YOUR HONOR, I OFFER IT INTO EVIDENCE. 

THE COURT: ANY OBJECTION? 

MR. CARSON: NO OBJECTION. 

THE COURT: IT'S ADMITTED. 

(DEFENDANT'S EXHIBIT QX 9084 WAS ADMITTED IN EVIDENCE.) 

THE COURT: GO AHEAD, PLEASE. 

BY MR. PAIGE:

Q. MR. SAUER, DOES THIS E-MAIL MEMORIALIZE THE DECISION OF 

YOUR TEAM TO RECOMMEND TO OTHERS TO TERMINATE THE ENGAGEMENT 

WITH ST ERICSSON ON THE N6X? IT'S LINE 1 DOWN BELOW THERE. 

A. THAT IS WHAT'S STATED HERE, YES.

Q. AND THE N6X, THAT WAS A CODE NAME FOR AN IPHONE AT APPLE; 

RIGHT? 

A. THAT WAS A CODE NAME FOR A DEVELOPMENT PROJECT IN THE 

IPHONE FAMILY.

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1508

Q. AND BECAUSE APPLE HAD ABANDONED ST ERICSSON AS A VIABLE 

OPTION, IT ALSO ABANDONED THE IDEA OF USING ST ERICSSON IN AN 

IPAD; RIGHT? 

A. THAT IS MY RECOLLECTION, YES. 

Q. AND BY THE TIME APPLE MADE THAT DECISION IN MARCH 2012, 

YOU BELIEVED THAT IT WAS TOO LATE TO EVALUATE OTHER POTENTIAL 

SECOND SOURCE SUPPLIERS FOR 2014 AND THAT YOU SHOULD START 

LOOKING AT ALTERNATIVE VENDORS FOR 2015 OR 2016 APPLE PRODUCTS; 

CORRECT? 

A. I NEED TO -- I DON'T EXACTLY REMEMBER WHAT -- IF THAT WAS 

THE, THE BELIEF AT THE TIME. BUT IF THERE'S SOMETHING IN THE 

E-MAIL, THEN IT MIGHT BE CORRECT.

Q. YOU RECALL GIVING A DEPOSITION IN APRIL OF 2018, 

MR. SAUER? 

A. YES. 

Q. IF YOU COULD TURN TO THE DEPOSITION TRANSCRIPT FROM 

THERE -- THAT WAS UNDER OATH; CORRECT? 

A. THAT IS CORRECT.

Q. OKAY. AND IF YOU LOOK AT PAGE 100 OF THAT DEPOSITION 

TRANSCRIPT, STARTING AT LINE 18. 

A. PAGE 100, YOU SAID?

Q. THAT'S RIGHT, STARTING AT LINE 18. 

A. YES. 

Q. AND DO YOU SEE WHERE YOU TESTIFIED, "I THINK WE HAD 

CONCLUDED THAT FOR 2014, TIME HAS PASSED AND IT WOULD BE TOO 

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UNITED STATES COURT REPORTERS

1509

LATE TO EVALUATE OTHER OPTIONS FOR 2014 AND THAT WE SHOULD 

START LOOKING AT ALTERNATE VENDORS FOR FUTURE PROGRAMS"? 

A. I SEE THAT.

Q. AND BY "FUTURE PROGRAMS," YOU MEAN PROGRAMS AFTER 2014? 

DO YOU SEE THAT? 

A. THAT IS WHAT I SEE, YES. 

Q. OKAY. COULD YOU PLEASE TURN TO TAB QX 9090 IN YOUR 

BINDER. 

A. I HAVE THAT.

Q. AND THIS IS AN E-MAIL SENT TO YOU BY MR. STEVE SHELL; 

CORRECT? 

A. THAT IS CORRECT. 

MR. PAIGE: YOUR HONOR, I OFFER QX 9090 INTO 

EVIDENCE. 

MR. CARSON: OBJECTION. HEARSAY. 

THE COURT: IS THAT AN OBJECTION TO THE COVER E-MAIL 

OR TO THE ENTIRE -- TO THE POWERPOINT THAT'S ATTACHED? 

MR. CARSON: TO THE ENTIRETY OF THE DOCUMENT, YOUR 

HONOR. 

THE COURT: ALL RIGHT. WHAT'S THE RESPONSE? 

MR. PAIGE: WE'RE GOING TO SHOW THAT THE MATERIAL IN 

THE E-MAIL WAS PART OF THEIR DECISION TO STOP WORKING WITH 

BROADCOM. 

MR. CARSON: I'M CONFUSED WITH THE RESPONSE, YOUR 

HONOR. 

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UNITED STATES COURT REPORTERS

1510

THE COURT: THAT'S NOT A HEARSAY EXCEPTION, SO 

SUSTAINED. 

MR. PAIGE: OKAY. 

Q. MR. SAUER, YOU RECALL THAT BROADCOM WAS HAVING, WAS HAVING 

DISCUSSIONS WITH APPLE ABOUT A PART CALLED THE BCM 21890, DON'T 

YOU? 

A. I RECALL THAT THERE WERE PRESENTATIONS ABOUT THAT PRODUCT 

WITH APPLE. 

Q. AND YOU, YOURSELF, WERE CONCERNED THAT THERE WAS NO 

LEGITIMATE PREDECESSOR PLATFORM FOR THE BCM 21890; CORRECT? 

A. I DON'T REMEMBER IF I PERSONALLY WAS CONCERNED WITH THAT. 

BUT IT WAS ONE OF THE SENTIMENTS IN THE, IN THE DISCUSSION 

ABOUT THIS PRODUCT. 

Q. AND THAT CONCERN WAS THAT THE BCM 21890 WAS A FIRST 

GENERATION ARCHITECTURE THAT WAS NOT PROVEN IN THE MARKET; 

RIGHT? 

A. THAT IS RIGHT. 

Q. AND YOU HAD CONCLUDED THAT BROADCOM'S LTE MODEM 

DEVELOPMENT PROGRAM WAS TOO LATE FOR 2014 APPLE PRODUCTS; 

RIGHT? 

A. I THINK THAT WAS CORRECT. 

Q. AND SO APPLE DECIDED NOT TO ENGAGE WITH BROADCOM AT THAT 

TIME IN 2012; CORRECT? 

A. THAT WAS ONE OF THE REASONS. 

Q. OKAY. AND THEN LATER IN 2014, YOU WERE INVOLVED IN DUE 

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UNITED STATES COURT REPORTERS

1511

DILIGENCE OF THE BROADCOM LTE MODEM PLATFORM THAT WAS BEING 

CONSIDERED FOR USE IN 2016 APPLE PRODUCTS; RIGHT?

A. THAT IS RIGHT.

Q. AND YOU HAD CONCERN ABOUT THE MATURITY OF BROADCOM'S LTE 

MODEM PLATFORM AT THAT TIME AS WELL, DIDN'T YOU? 

A. WE HAD DONE A DEEPER INVESTIGATION AND THAT WAS ONE OF THE 

CRITERIA WE HAD AND, AND ONE OF THE RISK ITEMS THAT WAS 

FLAGGED.

Q. AND IN 2014, THE APPLE ENGINEERING TEAM MADE A UNANIMOUS 

RECOMMENDATION TO SELECT INTEL OVER BROADCOM FOR ENGAGEMENT AS 

A POTENTIAL SECOND SOURCE SUPPLIER OF BASEBAND MODEM CHIPS; 

CORRECT? 

A. THAT IS CORRECT.

Q. AND THE DECISION TO SELECT INTEL OVER BROADCOM, THAT WAS 

BASED ON ENGINEERING CONSIDERATIONS AND NOT ON BUSINESS 

CONSIDERATIONS; RIGHT? 

A. THAT WAS OVERALL ACROSS FUNCTIONAL DISCUSSION. I WAS 

RESPONSIBLE FOR THE ENGINEERING EVALUATION WHERE THE, THE 

RECOMMENDATION YOU STATED CAME OUT OF. BUSINESS CONSIDERATIONS 

WERE CERTAINLY ALSO AMONGST THE CONSIDERATIONS.

Q. BUT YOUR GROUP'S RECOMMENDATION NOT TO ENGAGE WAS BASED 

STRICTLY ON ENGINEERING CONSIDERATIONS; RIGHT? 

A. THAT WAS BASED ON ENGINEERING CONSIDERATIONS.

Q. OKAY. AFTER APPLE ENDED THE INVESTIGATION OF ST ERICSSON 

AS A POTENTIAL SECOND SOURCE SUPPLIER FOR 2014 IPADS, APPLE 

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UNITED STATES COURT REPORTERS

1512

CONSIDERED INTEL AS A SECOND SOURCE; RIGHT? 

A. THAT IS RIGHT.

Q. AND APPLE WAS CONSIDERING INTEL AS A SUPPLIER FOR AN IPAD 

MINI WITH RETINA DISPLAY; CORRECT? 

A. THAT IS CORRECT.

Q. AND THE APPLE CODE NAME FOR THE IPAD, THAT WAS J86; RIGHT? 

A. AS FAR AS I REMEMBER, THAT IS CORRECT. 

Q. AND AT ONE POINT IN TIME, THE LAUNCH DATE FOR WHAT IS 

CALLED THE J86 WAS THE SPRING OF 2014; RIGHT? 

A. AS FAR AS I REMEMBER, THAT IS CORRECT.

Q. AND YOU RECALL THE INTEL XMM 7160 CHIP WAS THE INTEL MODEM 

PLATFORM THAT MIGHT HAVE BEEN READY IN TIME FOR THE J86 IF THE 

FDA HAD BEEN RELEASED AS ORIGINALLY PLANNED IN THE SPRING OF 

2014; RIGHT? 

A. THAT WAS THE, THE ASSESSMENT AT THAT TIME, YES. 

Q. AND WHETHER APPLE WOULD CONSIDER INCLUDING AN INTEL MODEM 

IN THE J86 IPAD DEPENDED ON WHAT THE APPLE PRODUCT DEVELOPMENT 

TEAM DECIDED ON IN TERMS OF DATE OF PRODUCT RELEASE; RIGHT? 

A. SORRY. CAN YOU REPEAT THAT?

Q. SURE. WHETHER APPLE WOULD CONSIDER INCLUDING AN INTEL 

MODEM IN THE J86 IPAD DEPENDED ON WHAT THE APPLE PRODUCT 

DEVELOPMENT TEAM DECIDED IN TERMS OF THE PRODUCT RELEASE; 

RIGHT? 

A. THAT WAS ONE OF THE DEPENDENCIES, YES.

Q. IF THE APPLE PRODUCT DEVELOPMENT TEAM DECIDED TO PULL IN 

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SAUER DIRECT BY MR. PAIGE

UNITED STATES COURT REPORTERS

1513

THE J86 IPAD IN THE FALL OF 2013, APPLE WOULD HAVE TO USE 

QUALCOMM INSTEAD BECAUSE THE XMM 7160 WOULDN'T BE READY IN 

TIME; RIGHT? 

A. THAT IS WHAT I REMEMBER BECAUSE OF THIS BEING A NEW 

DEVELOPMENT, SO NOT A LOT OF REUSE FROM PRIOR DEVELOPMENT THAT 

WE HAD.

Q. BUT THE RELEASE DATE FOR THE J86 IPAD, THAT BECAME THE 

FALL OF 2013; RIGHT? 

A. IF I REMEMBER, YES.

Q. AND THE REASON FOR PULLING IT INTO THE FALL OF 2013 HAD 

NOTHING TO DO WITH BASEBAND PROCESSOR SUPPLIERS; RIGHT?

A. NOT TO MY RECOLLECTION. 

MR. CARSON: YOUR HONOR, I'M GOING TO OBJECT TO 

FOUNDATION. I DON'T KNOW THAT THEY'VE LAID A FOUNDATION THAT 

THIS WITNESS CAN TESTIFY FOR THE REASONS THAT THE PULL IN FOR 

THE IPAD HAPPENED. FROM AN ENGINEERING SIDE, HE CAN TESTIFY 

FROM THAT PERSPECTIVE. BUT NOT FROM BUSINESS PERSPECTIVES OR 

ANY OTHER PERSPECTIVES AT APPLE. 

THE COURT: OKAY. CAN YOU JUST LAY THE FOUNDATION 

FOR HIS KNOWLEDGE, PLEASE? 

BY MR. PAIGE:

Q. YOU'RE NOT AWARE OF ANY REASON, ON THE ENGINEERING SIDE, 

THAT HAD ANYTHING TO DO WITH BASEBAND PROCESSOR SUPPLIERS; 

RIGHT? 

A. NOT TO THE EXTENT THAT I WAS INVOLVED IN. 

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SAUER DIRECT BY MR. PAIGE

UNITED STATES COURT REPORTERS

1514

Q. NOW, INTEL'S XMM 7160 MODEM CHIP, THAT DIDN'T SUPPORT A 

FEATURE CALLED CARRIER AGGREGATION, DID IT? 

A. THAT IS CORRECT.

Q. AND IN 2012, YOUR UNDERSTANDING WAS THAT CARRIER 

AGGREGATION WOULD BE AN IMPORTANT FEATURE FOR CERTAIN NETWORKS 

IN NORTH AMERICA IN 2014; RIGHT? 

A. WE ASSESSED THAT THIS WILL BE -- WOULD BE BECOMING AN 

IMPORTANT FEATURE IN THIS TIMEFRAME.

Q. AND YOU BELIEVE THE XMM 7160 WOULD NOT BE A GOOD CHOICE 

FOR THE NORTH AMERICAN MARKET FOR 2014 APPLE PRODUCTS BECAUSE 

IT LACKED CARRIER AGGREGATION; RIGHT? 

A. FOR CERTAIN PRODUCTS, THAT WAS CORRECT. 

Q. AND APPLE SET CARRIER AGGREGATION AS A REQUIREMENT IN THE 

RFP FEATURE SET; RIGHT? 

A. YEAH. WE GENERALLY SET A SET OF PRE-REQUIREMENTS IN THE 

RFP'S. THESE ARE THEN SOMETIMES DIRECTLY OR NOT DIRECTLY 

RELATED TO THE PRODUCT LEVEL DECISIONS.

Q. BUT CARRIER AGGREGATION WAS SET AS A REQUIREMENT IN THE 

RFP, WAS IT NOT? 

A. IT WAS SET AS A REQUIREMENT IN THE RFP FOR THE 2014 

TIMEFRAME.

Q. OKAY. NOW, INTEL'S XJJ 7160 MODEM CHIP, THAT LACKED 

TD-SCDMA CAPABILITY ALSO; RIGHT?

A. THAT IS CORRECT.

Q. AND APPLE REQUIRED TD-SCDMA CAPABILITY FOR 2014 PRODUCTS; 

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SAUER DIRECT BY MR. PAIGE

UNITED STATES COURT REPORTERS

1515

RIGHT? 

A. FOR SPECIFIC, SPECIFICALLY ONE CARRIER IN CHINA, THAT WAS 

REQUIRED. 

Q. OKAY. THE XMM 7160 DIDN'T SUPPORT TDD LTE EITHER, DID IT? 

A. AT LEAST TO MY KNOWLEDGE, YES. 

Q. AND TDD LTE, THAT WAS AN IMPORTANT FEATURE ON THE ROADMAP 

FOR APPLE PRODUCTS, TOO, WASN'T IT? 

A. IN GENERAL, THAT IS CORRECT FOR CERTAIN OPERATORS. 

Q. SO IN MARCH 2013, APPLE TOLD INTEL THAT THERE WAS NO MATCH 

BETWEEN THE XMM 7160 AND APPLE'S PRODUCT NEEDS DUE TO THE 

INCREASING IMPORTANCE OF LTE CARRIER AGGREGATION AND TDD LTE; 

RIGHT? 

A. THAT IS -- 

MR. CARSON: OBJECTION. HEARSAY. 

THE COURT: SUSTAINED. 

BY MR. PAIGE:

Q. SO THE XMM 7160 ENDED UP BEING UNSUITABLE FOR 2014 IPADS; 

CORRECT? 

A. THAT'S NOT WHAT I WOULD SAY BECAUSE WE SHIPPED IPADS -- 

THE IPAD MINI WITHOUT CARRIER AGGREGATION. SO FROM THAT 

PERSPECTIVE, IT WOULD HAVE BEEN SUITABLE. 

Q. COULD I TURN YOU TO PAGE 120 OF YOUR DEPOSITION, PLEASE, 

MR. SAUER. DO YOU SEE LINE 22? 

YOU WERE ASKED THE QUESTION, "SO, THEREFORE, THE INTEL XMM 

7160 ENDED UP BEING UNSUITABLE FOR APPLE 2014 FDAS. RIGHT?"

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SAUER DIRECT BY MR. PAIGE

UNITED STATES COURT REPORTERS

1516

A. I SEE THAT. 

Q. YOUR ANSWER WAS YES? 

A. THAT IS CORRECT.

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

A. YES. 

Q. DO YOU STAND BY THAT TESTIMONY TODAY? 

A. I STAND BY THAT TESTIMONY, AND I THINK THAT WAS A GENERIC, 

OR A BROADER QUESTION AND I TRIED TO BE MORE PRECISE IN MY 

RESPONSE TODAY. 

Q. OKAY. VOICE-OVER LTE, OR VOLTE, THAT WAS A REQUIREMENT 

FOR 2014 IPHONES, WAS IT NOT? 

A. WE CONSIDERED IT AS A REQUIREMENT IN THE RFP, AND WE WERE 

INVESTIGATING WHETHER IT WILL BE READY IN TIME FOR THAT.

Q. WELL, IN OCTOBER 2012, APPLE LEARNED THAT INTEL WASN'T 

READY FROM A VOICE PERSPECTIVE FOR 2014; RIGHT? 

A. THAT IS WHAT, WHAT WE HEARD FROM INTEL. 

Q. AND THAT WAS REFERRING TO THE FACT THAT INTEL WOULD NOT 

HAVE VOICE-OVER LTE ON THE 7160 IN TIME FOR A 2014 IPHONE; 

RIGHT? 

A. THAT IS OUR -- WAS OUR UNDERSTANDING AT THAT TIME. 

Q. AND SO THE XMM 7160 WAS ALSO NOT SUITABLE FOR USE IN A 

2014 IPHONE, WAS IT? 

A. THAT IS MY UNDERSTANDING, YES. 

Q. NOW, INTEL'S S8 MILESTONE IS THE COMMERCIAL SAMPLE DATE OF 

A MODEM CHIP PLATFORM WHERE THE SOFTWARE AND ALGORITHM FULLY 

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SAUER DIRECT BY MR. PAIGE

UNITED STATES COURT REPORTERS

1517

VALIDATED FOR COMMERCIAL RELEASE; RIGHT? 

A. THAT WAS OUR, OUR UNDERSTANDING. WE HAVE HAD DIFFERENT 

MAPPINGS OF THE MILESTONES ON WHAT WE CALL THE COMMERCIAL 

SAMPLES. BUT S8 IS COMMONLY USED.

Q. AND APPLE TYPICALLY WANTS TO BE SURE THAT BASEBAND 

PROCESSORS HAVE BEEN FULLY VALIDATED FOR COMMERCIAL RELEASE BY 

A CERTAIN PERIOD OF TIME BEFORE THE APPLE PRODUCT IS SET FOR 

RELEASE; RIGHT? 

A. THAT IS WHAT WE TYPICALLY STRIVE FOR, WITH EXCEPTIONS IF 

NECESSARY.

Q. AND THE TYPICAL TARGET DATE APPLE SETS FOR BASEBAND 

PROCESSOR SUPPLIERS TO MEET WHAT APPLE CALLS THE S8 MILESTONE 

IS JUNE OF THE YEAR BEFORE THE APPLE PRODUCT IS RELEASED; 

RIGHT? 

A. THAT'S WHAT WE TYPICALLY SET IN THE RFP. THE REAL MATCH 

WOULD BE A SEPTEMBER COMMERCIAL SAMPLE DATE THAT WE MAYBE USE 

TO SYNCHRONIZE OUR PROGRAMS. 

Q. SO FOR A PRODUCT TO BE RELEASED IN 2014, APPLE WOULD WANT 

THE S8 MILESTONE TO BE MET BY JUNE OF 2013; RIGHT? 

A. THAT'S WHAT WE ASK FOR AND TYPICALLY IT'S SYNCHRONIZED FOR 

SEPTEMBER.

Q. PLEASE TURN TO TAB QX 0988 IN YOUR BINDER. 

A. I HAVE THAT.

Q. IS THIS AN E-MAIL THAT YOU SENT TO MR. GERHARD MARTIN AT 

INTEL? 

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SAUER DIRECT BY MR. PAIGE

UNITED STATES COURT REPORTERS

1518

A. MY APOLOGIZE. I HAVE THE WRONG ONE. 0988. 

Q. IT'S 9088. I APOLOGIZE IF I HAD IT WRONG. 

A. ALL RIGHT. YEAH, I HAVE IT. 

Q. IS THAT AN E-MAIL THAT YOU SAID TO MR. GERHARD MARTIN OF 

INTEL? 

A. YES.

Q. ON OCTOBER 17TH, 2012? 

A. YES. 

MR. PAIGE: YOUR HONOR, I OFFER QX 98 -- 9088 INTO 

EVIDENCE. 

MR. CARSON: NO OBJECTION. 

THE COURT: IT'S ADMITTED. 

(DEFENDANT'S EXHIBIT QX 9088 WAS ADMITTED IN EVIDENCE.) 

THE COURT: GO AHEAD, PLEASE. 

BY MR. PAIGE:

Q. DO YOU SEE THE PRESENTATION ATTACHED TO THE E-MAIL, 

MR. SAUER? 

A. YES. 

Q. AND LOOKING AT PAGE 6 OF THAT PRESENTATION, IF YOU LOOK 

DOWN ON THE LOWER RIGHT SIDE TOWARDS THE CENTER, IS THAT 

TELLING YOU THAT THE XMM 7260 S8 DATE IS GOING TO BE JUNE OF 

2014? 

A. YES. 

Q. AND THAT MEANT THE XMM 7260 WOULD NOT BE AVAILABLE IN TIME 

FOR A 2014 APPLE PRODUCT; CORRECT? 

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UNITED STATES COURT REPORTERS

1519

A. THAT WAS THE ROADMAP INFORMATION WE HAD AT THE TIME. 

Q. AND A VARIANT OF THE XMM 7260 CALLED THE XMM 7262, THAT 

WAS TOO LATE FOR APPLE'S 2014 PRODUCTS AS WELL; CORRECT? 

A. BASED ON THE ROADMAP INFORMATION, THAT IS CORRECT. AND I 

THINK THAT WAS THE DISCUSSION IN THAT E-MAIL THAT I WANTED TO 

HAVE CLARIFICATION ABOUT THE CONTENT OF WHAT WAS PRESENTED. 

Q. IT'S FAIR TO SAY THE MOBILE DEVICE INDUSTRY IS DYNAMIC AND 

RAPIDLY CHANGING, ISN'T IT?

A. AS A GENERAL STATEMENT, I WOULD AGREE.

Q. FEATURES ARE CHANGING EVERY YEAR AND CUSTOMERS GENERALLY 

WANT THE LATEST AND GREATEST FEATURES; RIGHT? 

A. THAT'S A VERY BROAD STATEMENT. I THINK THE FEATURES ARE 

TYPICALLY WELL, WELL DEFINED WHEN IT COMES TO THE STANDARD. 

THE SELECTION OF WHAT WE THINK IS RELEVANT FOR A PRODUCT, THAT 

CAN VARY. SO -- IN THE BROAD TERM YOU'VE DESCRIBED IT, I WOULD 

NOT WHOLEHEARTEDLY AGREE. BUT IT'S GOING THE RIGHT DIRECTION.

Q. LET'S NARROW IT A LITTLE BIT. LAST YEAR'S BASEBAND 

PROCESSOR WOULD GENERALLY NOT PROVIDE AS ATTRACTIVE A FEATURE 

SET AS THE CURRENT YEAR'S MODEL; RIGHT? 

A. THAT WOULD BE TRUE, CORRECT.

Q. OKAY. AND IN THE FALL OF 2012, YOUR VIEW WAS THAT THE XMM 

7260 MIGHT HAVE BEEN ATTRACTIVE IN TERMS OF FEATURES IF IT HAD 

BEEN READY IN TIME FOR 2014 APPLE PRODUCTS; RIGHT? 

A. YES. SO THE DISCUSSION WAS ABOUT, I THINK, IF I LOOK BACK 

AT THE DATE OF THE E-MAIL, THE 22ND, THAT WAS ABOUT THE TIME WE 

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UNITED STATES COURT REPORTERS

1520

ALREADY HAD SOME ENGAGEMENT WITH INTEL ON THE 7160. SO THIS 

WAS A DISCUSSION ABOUT FUTURE GENERATIONS AND WE NEEDED TO 

CLARIFY WHERE THE THOUGHTS OF INTEL ARE GOING IN TERMS OF HOW 

THEY WOULD UPDATE THEIR ROADMAP FOR OUR NEEDS.

Q. OKAY. BUT BY THE SAME TOKEN, THE XMM 7260 WAS FAR LESS 

ATTRACTIVE IF IT WAS ONLY READY IN TIME FOR 2015 APPLE 

PRODUCTS; RIGHT? 

A. THAT IS RIGHT. IF I REMEMBER, INTEL HAD CHANGED THEIR 

ROADMAP SUBSEQUENTLY IN A WAY THAT THEY WERE SHIPPING THE 7260 

OR A DERIVATIVE THEREOF WITH CUSTOMERS IN THE 2014 TIMEFRAME.

Q. NOW, YOU RECALL THAT -- 

A. 20 -- 

Q. I'M SORRY? 

A. SORRY. IT WAS 2015. I APOLOGIZE, 2015 TIMEFRAME. 

Q. YOU RECALL THAT TDD LTE CARRIER AGGREGATION WAS 

PARTICULARLY IMPORTANT FOR USE ON THE CHINA MOBILE NETWORK; 

RIGHT? 

A. YES. 

Q. AND YOU WOULD AGREE THAT IT WAS A REASONABLE ASSESSMENT TO 

SAY THAT IN 2015, INTEL WAS STRUGGLING EVEN TO MATCH QUALCOMM; 

RIGHT? 

A. YES. 

Q. NOW, ALL THE CELLULAR ENABLED IPADS RELEASED IN 2015 AND 

SINCE HAVE BEEN WHAT THEY CALL UNLOCKED; RIGHT? 

A. I DON'T KNOW FOR SURE. 

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SAUER DIRECT BY MR. PAIGE

UNITED STATES COURT REPORTERS

1521

Q. OKAY. FINALLY, MR. SAUER, YOU WOULD AGREE THAT THE 2016 

INTERCEPT OF THE XMM 7360 AND THE APPLE IPHONE 7 WAS THE FIRST 

APPLE PRODUCT SINCE 2011 WHERE THE INTEL OFFERING MET APPLE'S 

REQUIREMENTS; RIGHT? 

A. I WOULDN'T TOTALLY AGREE WITH THAT STATEMENT. IF YOU LOOK 

AT FROM A GENERAL CHIPSET ROADMAP PERSPECTIVE, THEN THIS WAS A 

CORRECT STATEMENT IN THE SENSE THAT IT MET ALL OF THE 

REQUIREMENTS THAT WE HAD. WE HAD OTHER PRODUCTS SHIPPED WHERE 

EARLIER PRODUCTS WOULD HAVE MET THE REQUIREMENTS.

Q. MR. SAUER, IF I COULD ASK YOU TO TURN TO PAGE 256 OF YOUR 

DEPOSITION? 

A. SURE. 

Q. STARTING ON LINE 6, RUNNING THROUGH LINE 16. 

"QUESTION: NOW, WE TALKED BEFORE ABOUT INTEL'S CHIPSET 

PLATFORM OFFERING IN PARTICULAR 2014 AND 2015 APPLE PRODUCTS. 

RIGHT? 

"ANSWER: YES. 

"QUESTION: WAS THE 2016 INTERCEPT OF THE XMM 7360 AND THE 

APPLE IPHONE 7 THE FIRST APPLE PRODUCT WHERE THE INTEL OFFERING 

MET APPLE'S REQUIREMENTS?"

"ANSWER: WELL, THE FIRST AFTER RE-ENGAGING OR AFTER 2011, 

WHEN THE -- APPLE CHOSE TO WORK WITH QUALCOMM ON THE IPHONES, 

YES." 

WERE YOU ASKED THAT QUESTION AND DID YOU GIVE THOSE 

ANSWERS? 

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SAUER CROSS BY MR. CARSON

UNITED STATES COURT REPORTERS

1522

A. YES. 

Q. DO YOU STAND BY THAT TESTIMONY TODAY, SIR? 

A. YES. 

MR. PAIGE: NO FURTHER QUESTIONS. 

THE COURT: ALL RIGHT. IT'S 2:34. LET'S GO AHEAD 

AND TAKE A TEN MINUTE BREAK, PLEASE. WE'LL TAKE ANOTHER BREAK 

AT 3:30. 

YOU CAN STEP DOWN DURING THE BREAK, BUT YOU WILL HAVE TO 

COME BACK. 

OKAY. ALL RIGHT. THANK YOU. WE'LL TAKE A TEN MINUTE 

BREAK. 

(RECESS FROM 2:35 P.M. UNTIL 2:45 P.M.) 

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

TIME IS 2:45. 

GO AHEAD, PLEASE. 

MR. CARSON: WESLEY CARSON FOR THE FTC. 

THE COURT: 2:46. GO AHEAD.

CROSS-EXAMINATION

BY MR. CARSON:

Q. HELLO, MR. SAUER. HOW ARE YOU? 

A. WELL, THANK YOU. 

Q. NOW, WE TALKED A LOT ABOUT VALUATIONS FROM AN ENGINEERING 

PERSPECTIVE?

DO YOU REMEMBER THAT? 

A. I DO, YES. 

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SAUER CROSS BY MR. CARSON

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1523

Q. AND YOU'RE INVOLVED IN THE VALUATION FROM AN ENGINEERING 

PERSPECTIVE; IS THAT RIGHT? 

A. THAT IS CORRECT.

Q. YOU'RE NOT INVOLVED WITH THE VALUATIONS FROM A BUSINESS 

PERSPECTIVE, ARE YOU? 

A. NOT DIRECTLY, NO. 

Q. WE ALSO TALKED ABOUT TWO TECHNOLOGIES, TD-SCDMA AND 

TDD LTE. 

DO YOU REMEMBER THAT?

A. I DO, YES.

Q. ARE THOSE TECHNOLOGIES REQUIRED WORLDWIDE? 

A. DEPENDS ON WHAT TIME YOU'RE TALKING ABOUT. BUT TD-SCDMA 

IS, TO MY KNOWLEDGE, SOLELY REQUIRED IN CHINA FOR A SINGLE 

OPERATOR THERE.

Q. AND WHEN APPLE HAS A WORLDWIDE DESIGN FOR A PRODUCT, DOES 

THAT MEAN THAT THEY USE THE EXACT SAME COMPONENTS IN EVERY 

PRODUCT WORLDWIDE? 

A. NO, TYPICALLY NOT. SO WE HAVE DIFFERENT REGIONAL SKUS 

DEVICES, WE STRIVE FOR HAVING AS FEW AS POSSIBLE AND STRIVE FOR 

HAVING THE HARDWARE TO SUPPORT THAT. BUT IT WOULD BE DIFFERENT 

COMPONENTS, ELECTIONS FOR DIFFERENT REGIONS.

Q. YOU TALKED ABOUT, ON YOUR DIRECT EXAMINATION, HOW YOU WERE 

INVOLVED IN THE POTENTIAL SELECTION OF A CHIPSET FOR A 2014 

IPAD, THE IPAD MINI 2. 

DO YOU REMEMBER THAT?

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SAUER CROSS BY MR. CARSON

UNITED STATES COURT REPORTERS

1524

A. I DO, YES.

Q. SO AS OF OCTOBER 2012, WAS APPLE MOVING FORWARD WITH AN 

ENGINEERING ENGAGEMENT WITH INTEL FOR THAT IPAD MINI 2? 

A. YES, WE WERE.

Q. AND IN 2012, DO YOU RECALL ANYTHING ABOUT WHY APPLE WANTED 

A SECOND SUPPLIER FROM QUALCOMM FOR THOSE CHIPSETS? 

A. AS FAR AS I REMEMBER, THERE WAS A STRONG MOTIVATION FROM A 

BUSINESS PERSPECTIVE TO GO FOR A SECOND SUPPLIER.

Q. AND DID INTEL -- OR DID APPLE END UP SELECTING INTEL FOR 

THE IPAD MINI 2 PROJECT? 

A. NO, WE DID NOT.

Q. NOW, THE INTEL MODEM, I THINK AS WE'VE HEARD, DIDN'T 

SUPPORT CARRIER AGGREGATION. 

DO YOU REMEMBER THAT?

A. I DO, YES.

Q. AND WAS THE FACT THAT THE INTEL MODEM DIDN'T SUPPORT 

CARRIER AGGREGATION A PROBLEM FOR APPLE'S PLANS FOR THE IPAD 

MINI 2? 

A. NO, IT WAS NOT. 

Q. NOW, YOU SAID, I THINK, ON DIRECT EXAMINATION THAT CARRIER 

AGGREGATION IN 2014 WAS MORE OF A REGION-BY-REGION REQUIREMENT; 

IS THAT RIGHT? 

A. THAT IS MY -- 

MR. PAIGE: OBJECTION. MISSTATES THE TESTIMONY. 

THE COURT: OVERRULED. 

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SAUER CROSS BY MR. CARSON

UNITED STATES COURT REPORTERS

1525

BY MR. CARSON:

Q. YOU CAN FINISH YOUR ANSWER. 

A. IT WAS A NASCENT TECHNOLOGY -- I DON'T KNOW IF I 

PRONOUNCED IT CORRECT, EXCUSE ME, MY ACCENT -- AN EMERGING 

TECHNOLOGY THAT WAS FIRST INTRODUCED IN SELECT MARKETS, LIKE 

NORTH MESH. 

Q. SO WAS THE CHOICE NOT TO USE INTEL MODEMS FOR THE IPAD 

MINI 2, DID THAT HAVE ANYTHING TO DO WITH TECHNICAL REASONS? 

MR. PAIGE: OBJECTION. FOUNDATION. 

THE COURT: SUSTAINED. LAY THE FOUNDATION. 

BY MR. CARSON:

Q. DID YOU EVALUATE THE INTEL MODEMS FROM A TECHNICAL 

PERSPECTIVE? 

A. YES, WE DID.

Q. FROM YOUR PERSPECTIVE, WERE THERE TECHNICAL REASONS NOT TO 

USE THE INTEL MODEM, THE XMM 7160 FOR THE 2014 IPAD MINI 2? 

A. FOR THE REGIONAL SKUS THAT WE HAD PLANNED, THERE WAS NO 

TECHNICAL REASON TO MY KNOWLEDGE.

Q. NOW, DID THE QUALCOMM MODEM -- WAS A QUALCOMM MODEM 

ULTIMATELY USED IN THE IPAD MINI 2? 

A. IT WAS A QUALCOMM MODEM USED, YES.

Q. AND DID THE QUALCOMM MODEM THAT WAS USED IN THE IPAD MINI 

2 ULTIMATE SUPPORT CARRIER AGGREGATION? 

A. NO, IT DID NOT.

Q. ARE YOU FAMILIAR WITH A PRODUCT CALLED THE IPAD MINI 3? 

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SAUER CROSS BY MR. CARSON

UNITED STATES COURT REPORTERS

1526

A. I THINK, YES, IF I MATCH THE CODE NAMES. BUT, YES, I AM. 

Q. AND WAS THE IPAD MINI 3 LAUNCHED IN THE FALL OF 2014? 

A. IF I REMEMBER CORRECTLY, YES. 

Q. WAS A QUALCOMM MODEM USED IN THE IPAD MINI 3? 

A. YES.

Q. AND DID THE QUALCOMM MODEM THAT WAS USED IN THE IPAD MINI 

3 RELEASED IN THE FALL OF 2014 SUPPORT CARRIER AGGREGATION? 

A. NO, IT DID NOT. 

Q. NOW, DO YOU AGAIN RECALL APPLE CONSIDERING USING INTEL 

MODEMS FOR 2016 APPLE PRODUCTS? 

A. YES, I DO.

Q. AND DID THIS EVALUATION OCCUR IN THE 2014 TIMEFRAME? 

A. YES, BASICALLY.

Q. SO IN 2014, WHAT DO YOU RECALL ABOUT WHY APPLE WANTED TO 

BRING IN A SECOND SUPPLIER TO QUALCOMM? 

A. TO MY KNOWLEDGE, THIS WAS MAIN -- 

MR. PAIGE: OBJECTION. FOUNDATION. 

MR. CARSON: I'M ASKING WHAT HE RECALLS, YOUR HONOR. 

THE COURT: WELL, STILL SUSTAINED. LAY THE 

FOUNDATION FOR EVEN HIS RECOLLECTION. 

BY MR. CARSON:

Q. WERE YOU INVOLVED IN THE SELECTION OF CHIPSET SELECTIONS 

FOR 2016 APPLE PRODUCTS? 

A. YES. 

Q. AND WHAT DO YOU RECALL ABOUT WHY APPLE WANTED TO BRING IN 

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SAUER CROSS BY MR. CARSON

UNITED STATES COURT REPORTERS

1527

A SECOND SUPPLIER TO QUALCOMM FOR 2016 APPLE PRODUCTS? 

A. MY RECOLLECTION, WE HAD DISCUSSIONS ABOUT BUSINESS 

MOTIVATION, SOME TECHNICAL MOTIVATION, BUT PRIMARILY BUSINESS 

MOTIVATIONS FOR BRINGING ON A SECOND SUPPLIER.

Q. AND DID YOU EVALUATE AN INTEL MODEM FOR THESE POTENTIAL 

2016 APPLE PRODUCTS? 

A. I DID EVALUATE THEM FROM A TECHNICAL PERSPECTIVE.

Q. AND FROM YOUR TECHNICAL EVALUATION, DID YOU IDENTIFY ANY 

RISK IN USING AN INTEL MODEM FOR 2016 APPLE PRODUCTS? 

A. CERTAINLY, YES, THERE'S ALWAYS RISK WITH A NEW PROJECT. 

BUT WE THOUGHT THOSE RISKS ARE MANAGEABLE, AND WE THOUGHT 

THERE'S A GOOD CHANCE OF SUCCESS OF COMPLETING SUCH A PROJECT.

Q. SO YOU MENTIONED THAT THERE'S ALWAYS RISKS WITH NEW 

PRODUCTS. HAVE YOU EVER IDENTIFIED ANY RISK WITH USING 

QUALCOMM MODEMS IN APPLE PRODUCTS? 

A. YES, WE DID. 

Q. COULD YOU ELABORATE A BIT? 

A. I CAN'T COME UP WITH SOME COMPLETE EXAMPLES. BUT WE 

TYPICALLY HAD SOME RISKS WITH COMPLETING CERTAIN TECHNICAL 

QUALITY CRITERIA. WE HAD DISCUSSED RISKS ON MEETING POWER 

TARGETS IN A PROJECT WE HAD. SUPPLY RISKS. SO THERE'S A 

MULTITUDE OF FACTORS THAT WE TYPICALLY TRIED TO MANAGE WITH OUR 

CHIPSET PARTNERS DURING THE COURSE OF A PROJECT.

Q. SO WHEN YOUR TEAM WAS EVALUATING INTEL MODEM FOR A 2016 

PROJECT, WHAT WAS THE GENERAL ENGINEERING VIEW ABOUT WHETHER TO 

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SAUER CROSS BY MR. CARSON

UNITED STATES COURT REPORTERS

1528

BRING IN INTEL FOR THAT PROJECT? 

A. I THINK, IF I REMEMBER CORRECTLY, THE GENERAL ENGINEERING 

VIEW WAS THAT, IF WE SELECT A SECOND SUPPLIER, WE HAVE A HIGH 

CHANCE OF SUCCESS. WE HAD A CROSS-FUNCTIONAL EVALUATION OF 

DIFFERENT ASPECTS OF THE ENGINEERING WORK. 

AND WE CONCLUDED THAT THE IDENTIFIED RISKS ARE MANAGEABLE. 

Q. DID THE ENGINEERING TEAM HAVE ANY RECOMMENDATIONS ABOUT 

WHETHER TO STICK WITH SOLELY A QUALCOMM MODEM FOR A 2016 

PROJECT? 

A. I DON'T REMEMBER A CONCRETE RECOMMENDATION OF THAT SORT. 

Q. SO AFTER THE SELECTION OF THE INTEL MODEM, WAS INTEL 

RESPONSIVE TO THOSE RISKS THAT YOU IDENTIFIED? 

A. YES. WE DEVELOPED A, A FAIRLY DEEP ENGINEERING 

RELATIONSHIP WITH OUR COUNTERPARTS ON THE INTEL ENGINEERING 

SIDE AND WERE WORKING THROUGH THE ISSUES AS THEY WERE EMERGING.

Q. AND WERE THOSE ISSUES YOU IDENTIFIED, THOSE RISKS YOU 

IDENTIFIED RESOLVED? 

A. THEY WERE RESOLVED IN THE END, AND WE SHIPPED A PRODUCT. 

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

HONOR. 

THE COURT: 2:53. 

OKAY. 

MR. PAIGE: BRIEFLY, YOUR HONOR. 

THE COURT: OKAY. 2:53. GO AHEAD, PLEASE.

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SAUER REDIRECT BY MR. PAIGE

UNITED STATES COURT REPORTERS

1529

REDIRECT EXAMINATION

BY MR. PAIGE:

Q. THE IPAD MINI 3, THAT WAS THE J86 M, WAS IT NOT? 

A. THAT SOUNDS CORRECT.

Q. AND THE IPAD MINI 2, THAT WAS THE J86? 

A. YES. 

Q. AND APPLE WANTED TO HAVE THE J86 AND THE J86 M USE THE 

SAME MODEM; CORRECT? 

A. I DON'T REMEMBER IF THAT WAS THE MOTIVATION, THAT SHE 

SHOULD HAVE THE SAME MODEM. IT MAY OR MAY NOT BE TRUE. I 

DON'T KNOW.

Q. OKAY. AND THE IPAD MINI 3, THAT SUPPORTED CDMA; CORRECT? 

A. THAT IS CORRECT, AT LEAST FOR SOME REGIONS.

Q. AND NO INTEL MODEM AT THAT TIME SUPPORTED CDMA; RIGHT, 

SIR? 

A. THAT IS RIGHT. 

MR. PAIGE: NOTHING FURTHER. 

THE COURT: ALL RIGHT. TIME IS 2:54. 

MR. CARSON: NO RECROSS, YOUR HONOR. 

THE COURT: OKAY. MAY THIS WITNESS BE EXCUSED 

SUBJECT TO RECALL OR NOT SUBJECT TO RECALL? WHAT DO YOU THINK? 

MR. PAIGE: NOT SUBJECT, YOUR HONOR. 

THE COURT: DO YOU AGREE? 

MR. CARSON: NOT SUBJECT. 

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

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UNITED STATES COURT REPORTERS

1530

TESTIMONY, AND YOU ARE FREE TO LEAVE. 

THE WITNESS: THANK YOU, YOUR HONOR. 

MR. VAN NEST: YOUR HONOR, IN THE INTEREST OF TIME, 

WE'RE GOING TO SKIP -- PASS OVER MR. HARTOGS. 

THE COURT: OKAY. 

MR. VAN NEST: AND RELEASE HIM AND MOVE ON TO 

MR. CHEN. 

THE COURT: OKAY. ARE YOU NOT GOING TO CALL 

MR. HARTOGS AT ALL? 

MR. VAN NEST: WE ARE NOT GOING TO CALL MR. HARTOGS 

AT ALL. 

THE COURT: OKAY. I THINK THAT'S A BIT ODD. 

MR. VAN NEST: WE'RE ON A PRETTY STIFF TIME CLOCK AND 

SOME OF OUR WITNESSES TODAY HAVE BEEN LONGER THAN WE 

ANTICIPATED AND JUST IN THE INTERESTS OF TIME. I HAVEN'T GOT 

THE TIME BUDGET. 

SO WE ADVISED THE FTC THAT WE WOULD NOT BE CALLING 

MR. HARTOGS, AND WE'RE CALLING MR. CHEN. 

I'M NOT TRYING TO MOVE HIM IN THE ORDER. I'M DROPPING HIM 

OUT. 

THE COURT: ALL RIGHT. IT'S JUST THAT I DO SEALING, 

AND I DO HIGH PRIORITY OBJECTIONS AS TO THESE WITNESSES AND IF 

YOU DECIDE NOT TO USE THEM SOONER, THEN -- I DON'T KNOW, WHEN 

DID YOU TELL THE FTC YOU WEREN'T GOING TO CALL HIM? 

MR. VAN NEST: JUST DURING THE BREAK. 

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UNITED STATES COURT REPORTERS

1531

MS. MILICI: JUST TWO MINUTES AGO. 

MR. VAN NEST: JUST DURING THE BREAK. 

THE COURT: OKAY. SO WE ALL DO ALL THIS PREPARATION. 

ALL RIGHT. WELL, I MEAN, YOU KNEW WHAT THE TIME LIMITS WERE. 

HOW LONG WERE YOU GOING TO HAVE MR. HARTOGS'S DIRECT BE? 

MR. VAN NEST: WE WERE GOING TO HAVE HIM ON FOR 

PROBABLY HALF AN HOUR. AND I JUST DON'T HAVE THE BUDGET WITH 

MY TIME, AND I DON'T THINK IT'S THAT CRITICAL. SO I MADE A 

DECISION, AND I'D LIKE TO MOVE ON TO MR. CHEN. 

THE COURT: OKAY. 

MR. VAN NEST: THANK YOU. 

THE COURT: IT'S A LITTLE UNUSUAL, BUT GO AHEAD. 

MR. VAN NEST: THANK YOU, YOUR HONOR. 

THE COURT: BRING HIM FORWARD, PLEASE. 

THE CLERK: PLEASE RAISE YOUR RIGHT HAND. 

(DEFENDANT'S WITNESS, LIREN CHEN, WAS SWORN.)

THE WITNESS: YES, I DO. 

THE CLERK: THANK YOU. PLEASE BE SEATED. 

THE COURT: BEFORE WE MOVE ON, WOULD IT BE MORE 

HELPFUL -- SO IN EACH OF -- YOU KNOW, THESE WITNESS DISCLOSURES 

ARE SUPPOSED TO BE THE WITNESSES WHO WILL BE CALLED THE NEXT 

DAY. 

AND SO IF QUALCOMM HAS DISCLOSED 22 WITNESSES PER DAY, WE 

END UP DOING A LOT OF EVIDENTIARY OBJECTIONS AND SEALING 

MOTIONS FOR WITNESSES WHO ARE NOT GOING TO BE CALLED AT ALL, OR 

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UNITED STATES COURT REPORTERS

1532

WHO ARE CERTAINLY NOT GOING TO BE CALLED THE NEXT DAY. 

IS THERE ANY MORE PRECISE WITNESS IDENTIFICATION THAT 

QUALCOMM CAN DO? I THINK THE FTC SHOWED A LOT OF PROFESSIONAL 

COURTESY, THEIR WITNESS LIST WAS RIGHT ON, THEY CALLED THE 

WITNESSES THEY WERE GOING TO CALL, THEY FULLY DISCLOSED THEM, 

THEY CALLED THEM IN THE SAME ORDER. THE ONLY VARIATION WAS THE 

VERY LAST DAY I THINK WHEN THEY RAN OUT OF TIME. 

AND, YOU KNOW, WE'RE GETTING WITNESS DISCLOSURES OF, WHAT, 

22, 23 WITNESSES A DAY, AND YOU'RE NOT CALLING THEM, AND WE'RE 

ALL RUNNING AROUND DOING SEALING MOTIONS AND EVIDENTIARY 

OBJECTIONS AS TO 22 WITNESSES. 

SO I'M JUST WONDERING IF THERE COULD BE PERHAPS MORE 

PRECISE AND PERHAPS MORE FOCUSSED -- THESE ARE SUPPOSED TO BE 

DAILY, YOU KNOW, THE WITNESS LIST FOR THE FOLLOWING DAY. 

MR. VAN NEST: WE CAN -- 

THE COURT: COULD WE DO THAT? 

MR. VAN NEST: WE SURE CAN, YOUR HONOR, PARTICULARLY 

AS WE'RE GETTING CLOSER TO THE END OF THE TRIAL, THAT'LL BE 

MUCH EASIER. RECALL THAT BEFORE YOU WERE GETTING THE WITNESS 

STATEMENTS, THE FTC WAS FOLLOWING A PROCEDURE THAT WE WERE, 

TOO, WHICH WAS DISCLOSING A LOT MORE DEPOSITION THAN YOU COULD 

ACTUALLY PLAY THAT DAY. AND SO -- 

THE COURT: OKAY. BUT THEY HAD, WHAT, MAYBE TWO OR 

THREE FORMER WITNESSES. YOU'VE BEEN DISCLOSING 22 WITNESSES A 

DAY SINCE YOUR DISCLOSURES LAST WEEK. SO I WOULD JUST ASK, 

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CHEN DIRECT BY MR. ZEMBEK

UNITED STATES COURT REPORTERS

1533

GOING FORWARD, WE ONLY HAVE A FEW DAYS LEFT -- 

MR. VAN NEST: THAT'S RIGHT. 

THE COURT: -- THAT IT BE A LITTLE BIT MORE FOCUSSED 

AND MORE PRECISE SO WE DON'T END UP DOING ALL OF THESE 

EVIDENTIARY OBJECTIONS, SEALING OBJECTIONS ON MR. HARTOGS WHO'S 

NOT GOING TO BE CALLED. SO I WOULD APPRECIATE. I KNOW MY 

CHAMBERS WOULD APPRECIATE IT. 

MR. VAN NEST: AND WE'LL DO THAT, YOUR HONOR. THANK 

YOU. 

THE COURT: OKAY. 

THE CLERK: WOULD YOU PLEASE STATE YOUR FULL NAME AND 

SPELL YOUR LAST NAME FOR THE RECORD. 

THE WITNESS: YES. MY NAME IS LIREN CHEN. CHEN IS 

SPELLED C-H-E-N. 

MR. ZEMBEK: RICHARD ZEMBEK OF NORTON, ROSE, 

FULBRIGHT. 

MAY I APPROACH THE WITNESS, YOUR HONOR? 

THE COURT: YES. IT'S 2:59. GO AHEAD, PLEASE. 

DIRECT EXAMINATION

BY MR. ZEMBEK: 

Q. GOOD AFTERNOON. 

A. GOOD AFTERNOON.

Q. COULD YOU PLEASE INTRODUCE YOURSELF TO THE COURT? 

A. YES. MY NAME IS LIREN CHEN. I'M A SENIOR VICE PRESIDENT 

OF ENGINEERING AND LEGAL COUNSEL WORKING FOR QUALCOMM IN 

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CHEN DIRECT BY MR. ZEMBEK

UNITED STATES COURT REPORTERS

1534

QUALCOMM TECHNOLOGY LICENSING DIVISION. 

Q. WOULD YOU PLEASE DESCRIBE YOUR RESPONSIBILITIES AS SENIOR 

VICE PRESIDENT ENGINEERING AND LEGAL COUNSEL? 

A. YES. AT QTL, I'M RESPONSIBLE FOR MANAGING QTL'S 

TECHNOLOGY ROADMAP, AS WELL AS WORKING WITH CORPORATE LEGAL 

I.P. DEPARTMENT TO MANAGE QUALCOMM I.P. PORTFOLIO, PATENT 

PORTFOLIO, AS WELL AS PRESENTING PATENT RELATED INFORMATION 

DURING LICENSING NEGOTIATION.

Q. WHAT IS YOUR EDUCATIONAL BACK GROUND, MR. CHEN? 

A. I GREW UP IN CHINA IN THE CITY CALLED TSING TAO. IF THE 

NAME SOUNDS A LITTLE FAMILIAR, THERE'S A BEER NAMED AFTER THE 

CITY. 

AND THEN I WENT TO BEIJING TO COLLEGE BEFORE I CAME TO 

U.S. FOR GRADUATE SCHOOL, THE UNIVERSITY OF MAINE. 

I WENT TO SAN DIEGO AND HAD AN M.B.A. AND ALSO A J.D. 

WHILE I WAS WORKING AT QUALCOMM. 

Q. HOW LONG HAVE YOU BEEN AT QUALCOMM? 

A. I STARTED QUALCOMM IN '96, SO THAT'S 22 SOME YEARS NOW.

Q. COULD YOU PLEASE DESCRIBE YOUR WORK HISTORY AT QUALCOMM? 

A. YES. SO I STARTED AS A SOFTWARE ENGINEER AND WORKING ON 

PRODUCT DEVELOPMENT, SPENT ABOUT SEVEN YEARS WRITING SOFTWARE 

FOR QUALCOMM PRODUCT. 

AND THEN IN 2003, I TRANSFERRED TO WHAT'S CALLED OTCS, 

OFFICE OF THE CHIEF SCIENTIST. IT'S A RESEARCH BRANCH IN 

QUALCOMM. I WAS DOING WIRELESS SYSTEM RESEARCH FOR ABOUT FIVE 

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1535

YEARS. 

IN 2008, I TRANSFERRED TO WHAT HAD BECOME QUALCOMM I.P. 

DEPARTMENT. SO I SPENT ABOUT EIGHT YEARS IN I.P. DEPARTMENT 

DOING PATENT ANALYSIS, LITIGATION SUPPORT, AND ALSO CREATING 

LICENSING MATERIAL, INCLUDING PORTFOLIO INFORMATION AND PATENT 

CLAIM CHARTS TO SUPPORT QTL LICENSE. 

Q. DO YOU HAVE ANY PATENTS? 

A. I DO. 

Q. HOW MANY? 

A. I HAVE ABOUT 130 PATENTS AND PENDING APPLICATIONS 

WORLDWIDE. 

Q. AND WHO OWNS THEM?

A. QUALCOMM. 

Q. AS PART OF YOUR RESPONSIBILITIES AT QUALCOMM, DO YOU MAKE 

PRESENTATIONS REGARDING THE PORTFOLIO? 

A. I DO. 

Q. COULD YOU PLEASE TURN IN YOUR BINDER TO EXHIBIT CX 9240. 

QX 9240. EXCUSE ME? 

A. OKAY. 

Q. COULD YOU IDENTIFY THIS, PLEASE? 

A. YES, I CAN. 

Q. AND WHAT -- 

A. THIS IS A PRINTOUT OF AN E-MAIL I SENT TO GINA AND 

HEATHER, WHO WORK AT APPLE'S I.P. DEPARTMENT. THIS IS AN 

E-MAIL I SENT TO THEM AFTER WE HAD FACE-TO-FACE MEETING WITH -- 

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CHEN DIRECT BY MR. ZEMBEK

UNITED STATES COURT REPORTERS

1536

AT APPLE AND WHERE WE PRESENTED THE PATENT INFORMATION.

Q. AND WHAT'S ATTACHED TO THE E-MAIL? 

A. THERE'S A POWERPOINT ATTACHED TO THE E-MAIL. 

Q. AND DID YOU HAVE ANY ROLE IN CREATING THESE SLIDES? 

A. YES. I WAS ONE OF THE FEW PEOPLE WHO WORKED ON CREATING 

THE SLIDES. YES, I WAS INVOLVED IN CREATING THEM.

Q. DID YOU PRESENT THEM? 

A. I WAS THE MAIN PRESENTER OF THE DAY.

Q. DO YOU HAVE PERSONAL KNOWLEDGE REGARDING THE INFORMATION 

IN THESE SLIDES? 

A. YES, I DO. 

MR. ZEMBEK: YOUR HONOR, QX 9240 WAS THE SUBJECT OF A 

HIGH PRIORITY OBJECTION WITH RESPECT TO THE POWERPOINT 

PRESENTATION, IT'S NOT BEING ADMITTED FOR THE TRUTH OF THE 

MATTER ASSERTED, BUT OTHERWISE QUALCOMM OFFERS QX 9240. 

THE COURT: ALL RIGHT. ANY OBJECTION? 

MR. HOPKIN: NO OBJECTION SUBJECT TO THAT LIMITATION 

IN THE HPO. 

THE COURT: ALL RIGHT. IT'S ADMITTED. 

(DEFENDANT'S EXHIBIT QX 9240 WAS ADMITTED IN EVIDENCE.) 

THE COURT: GO AHEAD, PLEASE.

BY MR. ZEMBEK: 

Q. BEFORE WE GO INTO THIS DOCUMENT IN DETAIL, YOU MENTIONED 

THESE SLIDES WERE PRESENTED TO APPLE. 

IS THE INFORMATION IN THESE SLIDES SPECIFIC TO APPLE? 

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A. NO, IT IS NOT. 

Q. WHAT, IF ANY, IS THE RELEVANCE OF THESE MATERIALS, OR 

WHAT, IF ANYTHING, DO THESE MATERIALS MATTER TO OTHER POTENTIAL 

LICENSEES? 

A. THE FOCUS OF THESE PRESENTATIONS ABOUT QUALCOMM'S 

WORLDWIDE PATENT PORTFOLIO, SO WE BELIEVED THOSE PATENTS HAVE 

WIDELY BEEN USED BY OUR LICENSEES, SO THEY'RE NOT SPECIFIC TO 

APPLE. 

Q. COULD YOU PLEASE TURN TO THE SLIDE THAT ENDS IN BATES 

NUMBER 235. 

A. YES. 

Q. AT THE TIME YOU GAVE THIS PRESENTATION TO APPLE, HOW MANY 

PATENTS DID QUALCOMM HOLD? 

A. AT THE TIME, WE HAVE ABOUT 120,000 PATENTS, GRANTED 

PATENTS, AS WELL AS PENDING APPLICATIONS WORLDWIDE.

Q. DOES QUALCOMM BREAK THOSE PATENTS DOWN INTO ANY PARTICULAR 

CATEGORIES? 

A. WE DO. 

Q. AND WHAT ARE THE CATEGORIES? 

A. SO AT THE HIGHEST LEVEL WE GROUPED THEM INTO THREE 

DIFFERENT CATEGORIES. THE FIRST CATEGORY IS CALLED CELLULAR 

SEPS, AS MARKED ON THE CHART. IT REALLY REPRESENTS CELLULAR 

STANDARD ISSUES OR PATENTS. 

THE SECOND CATEGORY IS A CATEGORY OF WHAT'S ON THE CHART 

AS NON-CELLULAR SEPS. WHAT THAT MEANS IS STANDARD ESSENTIAL 

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PATENTS FOR AREAS BEYOND CELLULAR STANDARD. 

AND THE LAST CATEGORY HERE IS MARKET NON-SEPS, BASICALLY 

IT'S NON-STANDARD ESSENTIAL PATENTS. SOMETIMES PEOPLE ALSO 

REFERRING TO IT AS IMPLEMENTATION PATENTS.

Q. ABOUT HOW MANY PATENTS DID QUALCOMM HAVE AT THE TIME IN 

THESE DIFFERENT CATEGORIES? 

A. SO AT THAT TIME, QUALCOMM HAVE ABOUT 20 PERCENT OF THE 

PORTFOLIO, WHICH IS AROUND 23000-PLUS PATENTS AND PENDING 

APPLICATIONS IN THE CELLULAR SEPS. 

WE HAVE ABOUT 15 PERCENT, OR 14 PERCENT, WHICH IS ABOUT 

16,000 PATENTS AND PENDING APPLICATIONS OF STANDARD ESSENTIAL 

PATENTS IN OTHER STANDARD AREAS. 

AND THEN WE HAVE ABOUT 230 OF THE PORTFOLIO, WHICH IS 

ABOUT 80,000 PATENTS WORLDWIDE, IN THIS NON-STANDARD ESSENTIAL 

AREAS.

Q. COULD YOU PLEASE GIVE THE COURT AN EXAMPLE OF A 

NON-CELLULAR SEP, OR A SEP STANDARD ESSENTIAL PATENT BEYOND 

CELLULAR? 

A. YES. SO WE HAVE PATENTS IN DIFFERENT STANDARD AREA OF 

TECHNOLOGY. FOR EXAMPLE, WE HAVE PATENTS THAT ARE COVERING 

VIDEO KODAK, KODAK MEANS CODING AND DECODING, SO THAT IS A 

STANDARD THAT'S NOT CELLULAR, THAT'S NOT CELLULAR. 

Q. AND WHICH OF THESE CATEGORIES OF PATENTS DOES QUALCOMM 

PRESENT DURING LICENSING DISCUSSIONS? 

A. WE TYPICALLY PRESENT ALL OF THEM.

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Q. WHY IS THAT? 

A. BECAUSE QUALCOMM IS A SYSTEM INNOVATOR. WE ARE VERY OFTEN 

KNOWN FOR CREATING TECHNOLOGY IN CELLULAR SPACE. WE ACTUALLY 

CONDUCT VERY BROAD R&D AND TECHNOLOGY DEVELOPMENT IN MANY 

DIFFERENT AREAS. 

AND ALL THOSE TECHNOLOGY ARE RELEVANT, AND THEY'RE VERY 

IMPORTANT FOR THE OVERALL WORKING TOGETHER OF THE SYSTEM FOR A 

SMARTPHONE USER. SO WE TRY TO PRESENT ALL THE INFORMATION 

ABOUT OUR PATENTS BECAUSE THEY ARE DELIVERING VALUE TO OUR 

LICENSEES TOGETHER. 

Q. AND WHEN YOU USE THE TERM "VALUE," DO YOU MEAN TECHNICAL 

VALUE? 

A. YES, I DO. 

Q. COULD WE PLEASE TURN TO THE NEXT PAGE, WHICH IS BATES -- 

ENDING IN BATES 236? 

A. YES. 

Q. WHAT WERE YOU INTENDING TO CONVEY WHEN YOU CREATED THIS 

SLIDE? 

A. THIS IS A CHART DEMONSTRATING QUALCOMM'S PATENT PORTFOLIO 

GROWTH OVER TIME. SO WE TRIED TO PURSUE A LONGER PERIOD OF 

TIME OF PATENT GROWTH. 

THE REASON WE SHOW THIS CHART IS WE ARE NOT LICENSED IN A 

PATENT PORTFOLIO THAT EXPIRES OVER TIME. WHAT WE ARE CREATING 

HERE IS QUALCOMM HAS A LOT OF ONGOING R&D THAT KEEP GENERATING 

NEW I.P. THAT KEEP GETTING ADDED TO OUR PORTFOLIO. 

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SO THAT'S SHOWN IN THE CHARTS TO SHOW HOW THE PATENT 

PORTFOLIO KEEP GROWING OVER TIME. THE REALLY IMPORTANT THING 

IS WHEN WE NEGOTIATE WITH LICENSEE, WE ARE TRYING TO GENERALLY 

NEGOTIATE A LONGER TERM DEAL THAT'S FIVE TO TEN YEARS LONG. 

SO I WANTED THE LICENSEE TO HAVE A CLEAR UNDERSTANDING OF 

HOW QUALCOMM KEEP ON GETTING INVENTIONS INTO THE PORTFOLIO AND, 

THEREFORE, ACCESS TO THE TECHNOLOGY.

Q. AND WHAT IS THE GROWTH RATE OF THE PORTFOLIO? 

A. AS INDICATED ON THIS CHART AND THROUGH THE LAST 20-PLUS 

YEARS, WE HAVE BEEN GROWING THE PORTFOLIO AT 30-PLUS PERCENT OF 

THE COMPOUND ANNUAL GROWTH.

Q. DO YOU REFRESH THIS PRESENTATION FROM TIME TO TIME? 

A. YEAH, WE DO, YES.

Q. AS OF MARCH OF 2018, APPROXIMATELY HOW MANY PATENTS DID 

QUALCOMM HAVE IN ITS PORTFOLIO?

A. WE -- ABOUT MARCH OF 2018, WE HAD ABOUT 140,000 GRANTED 

PATENTS AND PENDING APPLICATIONS. 

AND BY THE WAY, IT IS ALSO IMPORTANT THAT WHEN WE REFRESH 

THE CHART, AS I REFERRED TO EARLIER, WE ALSO REMOVE EXPIRED 

PATENTS FROM THE CHART.

Q. ABOUT HOW QUICKLY IS QUALCOMM OBTAINING PATENTS? 

A. WE ACTUALLY OBTAINING A LOT OF PATENTS EVERY DAY. FOR 

EXAMPLE, ON AVERAGE, WE GET ABOUT 35 GRANTED PATENTS NET 

ADDITION INTO OUR PORTFOLIO PER DAY WORLDWIDE. 

THIS IS, AGAIN, IT'S COUNTING ON THE PATENTS WE ARE 

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GETTING GRANTED RECENTLY, NEWLY GRANTED PATENTS, AND 

SUBTRACTING THE PATENT THAT HAS EXPIRED. 

Q. COULD WE PLEASE TURN TO THE PAGE ENDING IN BATES 241. 

MR. CHEN, THIS SLIDE IS A LITTLE BIT BUSY. WHAT WERE YOU 

PRESENTING IN CONNECTION WITH THIS SLIDE? 

A. YES, I DO APOLOGIZE FOR THIS. THIS IS A BUSY CHART. HAD 

I KNOWN THIS CHART WOULD BE SHOWN IN COURT, I PROBABLY WOULD 

HAVE TRIED TO MAKE IT SIMPLER AND NICER AT THE TIME. 

BUT WHAT WE ARE TRYING TO SHOW ON THIS CHART IS 

STRAIGHTFORWARD. I WAS TRYING TO SHOW THREE POINTS ON THIS 

CHART. 

ONE, IT'S THE TIMING OF QUALCOMM'S R&D RESEARCH;

THE SECOND POINT I WAS TRYING TO SHOW ON THE CHART IS 

REALLY HOW THE DIFFERENT GENERATION OF TECHNOLOGY, OF CELLULAR 

TECHNOLOGY ARE BUILT ON TOP OF EACH OTHER; 

THE THIRD POINT I'M TRYING TO SHOW IS WITHIN EACH 

GENERATION, HOW THE TECHNOLOGY KEEP ON GETTING, EVOLVING, 

GETTING NEW VALUE ADDED THROUGH EVERY RELEASE, R-E-L-E-A-S-E. 

I DO APOLOGIZE. 

Q. ARE THERE ANY COMMON CHARACTERISTICS IN QUALCOMM'S 

STANDARD ESSENTIAL PATENTS? 

A. YES. THERE'S A -- AT THE HIGHEST LEVEL, QUALCOMM'S 

STANDARD ESSENTIAL PATENT GENERALLY HAVE EARLIER PRIORITY DATES 

AND THEY TEND TO COVER MORE, MANY DIFFERENT FOUNDATIONAL, 

IMPORTANT FEATURES OF THE STANDARD. 

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AND OUR PATENTS ARE GENERALLY FILED FAIRLY EXTENSIVELY IN 

TERMS OF JURISDICTIONS, AS WELL AS TECHNOLOGY AREAS.

Q. NOW, WHEN YOU WERE TALKING ABOUT THIS CHART, YOU FIRST 

TALKED ABOUT THE TIMING. 

WHAT DID YOU MEAN WHEN YOU WERE ILLUSTRATING TIMING ON 

THIS CHART? 

A. YEAH. SO I TRIED TO PICK TWO DIFFERENT COLORS 

REPRESENTING WHEN R&D HAPPENS AND WHEN THE TECHNOLOGY GETTING 

ACCEPTED INTO THE STANDARD. 

SO I USED THE GOLDEN COLOR REPRESENTS WHEN QUALCOMM R&D 

STARTED, AND THE WHITE BOXES ON THE CHART REPRESENTS WHEN THOSE 

TECHNOLOGIES GETTING ACCEPTED INTO STANDARD. 

SO AS YOU CAN TELL, ALMOST IN EVERY CASE FOR 2G, 3G, 4G, 

AND 5G TECHNOLOGY DEVELOPMENT GENERALLY, OUR R&D RESEARCH 

STARTS FROM FIVE TO TEN YEARS BEFORE THOSE TECHNOLOGY GETTING 

ADOPTED INTO THE STANDARD. 

Q. WHY DO THESE TIMELINES OVERLAP FOR THE STANDARDS? 

A. YEAH, THAT'S A -- SO SOMETIMES PEOPLE HAVE THE 

MISPERCEPTION TO SAY YOU DEVELOP ONE GENERATION TECHNOLOGY AND 

THEN YOU CLOSE THE DEVELOPMENT, YOU MOVE ON TO THE NEXT ONE. 

THAT'S JUST NOT HOW IT WORKS, BECAUSE IN THE CELLULAR SPACE 

HERE, THERE'S MULTIPLE GENERATIONAL TECHNOLOGY THAT ARE IN USE 

AT THE SAME TIME. 

SO THAT'S WHY A LOT OF PHONES SUPPORT MULTIPLE MODES OF 

DIFFERENT GENERATIONAL TECHNOLOGY. 

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SO IN THIS CASE HERE, AS YOU CAN TELL, WITH THE 3G, 4G, 

FOR EXAMPLE, THAT TIMELINE OVERLAPS BECAUSE QUALCOMM KEEP ON 

CREATING NEW TECHNOLOGIES AND WE TRIED TO, TO ADD THOSE 

TECHNOLOGIES INTO, YOU KNOW, DIFFERENT GENERATIONAL STANDARDS, 

AND NOT ONLY THE NEXT GENERATION, BUT WE ALSO TRY TO IMPROVE 

THE CURRENT GENERATIONAL TECHNOLOGY STANDARD BECAUSE IT'S VERY 

IMPORTANT FOR THE CARRIER, THE CONSUMER WHO HAS SPENT -- THE 

CARRIER SPENT A LOT OF MONEY DEPLOYING THE NETWORK, SO THEY 

WANTED A LONGER RUNWAY OF THE NETWORK INVESTMENT BEFORE THEY 

CAN IMPORT THE NEXT GENERATION. 

SO WE KEEP ON INTRODUCING TECHNOLOGY IN PARALLEL INTO 

EXISTING GENERATIONAL TECHNOLOGY, AS WELL AS INTO THE NEXT ONE, 

AND THIS IS THE WAY FOR US TO DELIVER VALUE TO CUSTOMER. 

I'M SORRY, FOR VALUE, I MEAN TECHNOLOGY PERFORMANCE.

Q. YOU MENTIONED THAT THE STANDARDS BUILD ON EACH OTHER WHEN 

DESCRIBING THE STACKING. WHAT DID YOU MEAN BY THAT? 

MR. HOPKIN: OBJECTION, YOUR HONOR. THIS IS BEYOND 

THE SCOPE OF MR. CHEN'S 30(B)(6) DEPOSITION TESTIMONY. 

THE COURT: SUSTAINED. 

MR. ZEMBEK: YOUR HONOR, I DON'T BELIEVE IT IS BEYOND 

THE SCOPE OF THE TESTIMONY. HE ACTUALLY TESTIFIED AS TO -- 

THE COURT: WELL, WHY DON'T YOU JUST POINT ME TO THE 

DEPOSITION TRANSCRIPT. 

MR. ZEMBEK: I WILL, YOUR HONOR. 

THE COURT: AND I'D LIKE TO SEE THE 30(B)(6) NOTICE, 

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PLEASE. 

DO YOU HAVE IT? 

MR. ZEMBEK: I DO NOT HAVE A COPY OF THE NOTICE. 

THE COURT: LET ME ASK IF THE PLAINTIFF DOES? DO YOU 

HAVE A COPY OF THE NOTICE? WHAT TOPIC IS COVERED? 

MR. ZEMBEK: IF YOU TURN TO -- IF WE COULD, MR. DAHM, 

PLEASE TURN TO -- 

THE COURT: DO YOU HAVE A COPY OF THE NOTICE? COULD 

YOU PLEASE GIVE THAT TO MS. GARCIA? 

MR. HOPKIN: YES, I DO. IT'S -- I ALSO HAVE -- I'VE 

HIGHLIGHTED -- 

THE COURT: IF IT'S HIGHLIGHTED, I DON'T WANT IT. 

DOES ANYONE HAVE A CLEAN ONE? 

MR. ZEMBEK: I CAN MOVE ON, YOUR HONOR. 

THE COURT: OKAY. ALL RIGHT. GO AHEAD, PLEASE.

BY MR. ZEMBEK: 

Q. COULD WE PLEASE TURN FORWARD TO THE SLIDES THAT ARE ON 

BATES 242 AND 243. 

MR. CHEN, WHAT WERE YOU INTENDING TO CONVEY ON THESE 

PARTICULAR SLIDES? 

A. YEAH. THESE SLIDES ARE SOME OF THE EXAMPLE AREA OF 

QUALCOMM'S FUNDAMENTAL ENGINEERING CREATIONS AND ALSO PATENTS 

IN THOSE FUNDAMENTAL FEATURES IN THE 3G SYSTEM. 

IN THIS CASE, WCDMA SYSTEM.

Q. AND WHAT ARE CORE WCDMA FEATURES? 

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A. THOSE ARE SOME OF THE EXAMPLES OF QUALCOMM'S CREATION, AND 

ALSO QUALCOMM PATENTS IN, FOR EXAMPLE, CDMA CHANNELIZATION. 

CDMA CHANNELIZATION BASICALLY MEANS THE WAVEFORM THAT USES IN 

THOSE SYSTEMS, AS WELL AS MANY OF THE IMPORTANT FUNDAMENTAL 

FEATURES FOR THE WIRELESS SYSTEM.

Q. AND YOU USED THE WORD "CONTRIBUTION" ON THESE SLIDES. 

WHAT DO YOU MEAN BY THAT? 

A. CONTRIBUTION ON THIS SLIDE JUST MEANS THE QUALCOMM 

TECHNOLOGY CREATION, AS WELL AS OUR PATENTS COVERING THOSE 

AREA, AND WE ARE SHARING THEM THROUGH OUR LICENSING PROGRAM 

WITH OUR LICENSEES. 

Q. DO YOU PRESENT ON ANY 3G STANDARDS OTHER THAN WCDMA? 

A. YES, I DO.

Q. WHICH ONES? 

A. FOR EXAMPLE, VERY OFTEN I PRESENT INFORMATION ON THE CDMA 

2000, SOMETIMES IT'S ALSO REFERRED TO AS CDMA EV-DO STANDARD. 

Q. IS THERE ANY OVERLAP ON THE PATENTS THAT YOU PRESENT 

REGARDING WCDMA AND EV-DO? 

A. THERE'S A LOT OF OVERLAPPING. AS A MATTER OF FACT, ALMOST 

ALL OF THESE AREAS THAT'S PRESENTED ON THE CHART APPLIES 

EQUALLY TO WCDMA AND CDMA 2000 SYSTEMS, AND WE HAVE MANY 

PATENTS COVERING BOTH OF THEM.

Q. COULD YOU PLEASE TURN FORWARD TO THE SLIDES ENDING IN 

BATES 258 AND 259. 

MR. CHEN, WHAT WERE YOU PRESENTING ON THESE PARTICULAR 

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SLIDES? 

A. THOSE ARE THE QUALCOMM EXAMPLE CONTRIBUTION -- EXAMPLE 

CREATIONS OF TECHNOLOGY AND PATENTS IN 4G, WHICH IS ALSO 

REFERRED TO AS LTE SYSTEMS. 

Q. HAS QUALCOMM BEEN AWARDED PATENTS IN THESE AREAS? 

A. YES, WE HAVE, MANY, MANY PATENTS COVERING ALL THESE AREAS.

Q. WHAT ARE THE CORE LTE FEATURES? 

A. SO UNDER THE CORE LTE FEATURES, I WAS GIVING A FEW 

EXAMPLES. FOR EXAMPLE, I WAS GIVING EXAMPLE OF UPLINK. 

COMMUNICATION PROTOCOL BY UPLINKING THE CELLULAR SYSTEM, I MEAN 

HOW THE CELL PHONES ARE SENDING DATA FROM THE PHONE TO THE 

NETWORK. 

THE NEXT ONE IS DOWNLINK COMMUNICATION, WHICH MEANS HOW 

THE CELL PHONE IS DOWNLOADING TRAFFIC FROM THE NETWORK TO THE 

HANDSET. 

SO THOSE TWO, THINK OF CARRIER SINGLE CARRIER FDMA AND THE 

OFDMA ARE, I'M SORRY FOR THE ACRONYMS, AND THEY ARE JUST THE 

DEFINITION OF THE WAVEFORM IN THE 4G SYSTEM. THEY'RE VERY 

IMPORTANT. 

AND THEN THE NEXT TWO ARE JUST THE NETWORK ARCHITECTURE OF 

4G. THAT'S VERY FUNDAMENTAL TO THE SYSTEM.

Q. WHAT DID YOU MEAN BY HIGHER DATA RATE TECHNOLOGIES? 

A. SO WHAT DIFFERENTIATES 3G FROM 4G? THEY ARE BOTH ABOUT 

DATA. BUT 4G IS REALLY ABOUT VERY FAST DATA. 

SO QUALCOMM MADE MANY CONTRIBUTIONS IMPROVING THE DATA 

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SPEED OF HOW YOU UPLOAD TRAFFIC, AS WELL AS DOWNLOAD IN TRAFFIC 

IN THE SYSTEM, AND THE FOLLOWING ARE SOME OF THE EXAMPLE AREAS.

Q. LET'S PICK AN EXAMPLE, WHAT IS MIMO, M-I-M-O? 

A. OKAY. MIMO STANDS FOR MULTI IN, MULTI OUT. WHAT THAT 

TECHNOLOGY DOES IS ALLOW THE HANDSET, AS WELL AS THE NETWORK, 

TO BE ABLE TO SEND LARGE AMOUNT OF DATA, MULTIPLE PACKS AT THE 

SAME TIME. 

IF I MAY USE AN ANALOGY, IT'S BASICALLY LIKE A HIGHWAY 

SYSTEM. MIMO IS EQUIVALENT TO ALLOWING THE TRAFFIC TO GO 

THROUGH MULTIPLE LANES AT THE SAME TIME. SO THE BENEFIT IS 

SIGNIFICANT INCREASE IN SPEED, AND IT ALLOWS A USER TO SEND A 

LOT OF DATA IN A SHORT PERIOD OF TIME.

Q. AND WHY DOES QUALCOMM HAVE PATENTS ON HIGHER SYSTEM 

CAPACITY TECHNOLOGIES? 

A. BY HIGHER SYSTEM CAPACITY HERE, THAT MEANS AT THE NETWORK 

LEVEL. SO IT'S IMPORTANT TO KNOW THAT WHEN WE DESIGN THE 

SYSTEM, WHEN QUALCOMM IS A SYSTEM INNOVATOR TO DESIGN THE 

WIRELESS SYSTEM, WE ARE NOT DESIGNING THE SYSTEM JUST FOR ONE 

USER OR FOR A SMALL AMOUNT, FEW USER. WE DESIGNED THE SYSTEM 

TO BE CAPABLE OF SUPPORTING MILLIONS OF USERS TO USE THE 

NETWORK AT THE SAME TIME. 

SO WE HAVE CREATED A LOT OF TECHNOLOGY TO ALLOW THE 

CARRIER WHO HAVE SPENT A LOT OF MONEY, VERY OFTEN BILLIONS OF 

DOLLARS, TO ACQUIRE THIS THING CALLED SPECTRUM, ESSENTIALLY THE 

RIGHT TO USE CERTAIN FREQUENCY OR WAVEFORMS AT ANY GIVEN AREA. 

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SO WE INVENTED ALL THIS TECHNOLOGY FOR THE CARRIER TO BE 

ABLE TO SUPPORT AS MANY USERS AS POSSIBLE ON THE NETWORK, WHILE 

GIVING EVERY SINGLE USER A VERY GOOD USER EXPERIENCE. 

SO THIS IS WHAT WE REFER TO AS INCREASING OUR -- 

INCREASING THE SYSTEM CAPACITY OR WHAT WE REFER TO ON THE CHART 

AS HIGH SYSTEM CAPACITY TECHNOLOGY.

Q. UNDER LOWER POWER CONSUMPTION TECHNOLOGY, WHAT IS THAT SUB 

BULLET? 

A. OKAY. SO, SO LOWER POWER CONSUMPTION, I APOLOGIZE ON THE 

NEXT ONE IS REALLY THE -- IT'S DISCONTINUOUS TRANSMISSION AND 

DISCONTINUOUS RECEPTION. 

ENGINEERS ARE GOOD AT MANY THINGS, BUT SOMETIMES COMING UP 

WITH THE RIGHT NAME IS NOT OUR STRENGTH. SO IT'S A LONG NAME. 

WHAT THIS MEANS IS WE INVENTED TECHNOLOGY TO SEND TRAFFIC 

THROUGH A VERY SHORT SPURT OF TIME AT HIGH SPEED. 

WHAT THIS TECHNOLOGY ALLOWS THE PHONE COMPANY TO DO IS TO 

BE ABLE TO SEND THE DATA TRAFFIC AND THEN THE PHONE TO FALL 

BACK TO SLEEP. 

BY FALLING BACK TO SLEEP, THE PHONE IS ABLE TO CONSERVE A 

LOT OF POWER. BASICALLY THE BATTERY LASTS FOR A WHOLE DAY. 

WITHOUT THIS TECHNOLOGY, THE PHONE WOULD BE STUCK IN ACTIVE 

MODE AND NOT ABLE TO FALL BACK TO SLEEP AND THAT WILL DRAIN THE 

POWER.

Q. HAS QUALCOMM BEEN AWARDED PATENTS RELATED TO THESE 

TECHNOLOGIES? 

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A. YES, YES, WE HAVE PATENTS IN ALL THESE AREAS.

Q. OKAY. I'D LIKE TO TURN BACK TO THE CATEGORIES THAT WE 

WERE DISCUSSING A LITTLE BIT EARLIER, AND I'D LIKE TO TURN TO 

THE STANDARD ESSENTIAL PATENTS THAT ARE BEYOND CELLULAR. 

A. SURE. 

Q. DOES QUALCOMM PARTICIPATE IN ANY NON-CELLULAR STANDARD 

SETTING ORGANIZATIONS? 

A. YES, WE DO. 

Q. ABOUT HOW MANY? 

A. WE -- WE ARE ACTIVE PARTICIPANTS IN ABOUT 200-PLUS 

STANDARD SETTING ORGANIZATIONS, AS WELL AS INDUSTRY 

ASSOCIATIONS THAT'S CREATING REALLY THE TECHNOLOGIES.

Q. WHY? 

A. BECAUSE IF YOU LOOK AT -- EVEN THOUGH QUALCOMM IS KNOWN TO 

BE A CELLULAR TECHNOLOGY COMPANY, WE TRY TO APPLY SYSTEM LEVEL 

INNOVATION IN MANY DIFFERENT AREAS. ALL OF THOSE TECHNOLOGIES 

ARE REALLY IMPORTANT IN ENABLE THE BEST USER EXPERIENCE FOR 

SMARTPHONE USERS. 

SO SMARTPHONE IS REALLY COMPLEX. IT HAS MANY DIFFERENT 

TYPE OF TECHNOLOGY INVOLVED. SO WE ARE ACTIVE PARTICIPANTS IN 

MANY OF THEM. 

Q. COULD YOU GIVE THE COURT A FEW EXAMPLES? 

A. YES. SO I ALREADY MENTIONED VIDEO CODEC, BUT THERE'S ALSO 

AUDIO TECHNOLOGY AND AUDIO CODING, DECODING TECHNOLOGY. THAT'S 

CALLED AUDIO CODEC. 

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WE ARE ALSO ACTIVE PARTICIPANTS IN STANDARDS THAT DEFINES 

MEMORY TECHNOLOGY, BECAUSE IT'S IMPORTANT TO HAVE VERY HIGH 

CAPACITY MEMORY THAT'S RELIABLE, THAT'S STABLE, THAT CONSUMES 

AS LITTLE POWER AS POSSIBLE ON THE DEVICE. 

AND WE HAVE TECHNOLOGIES, FOR EXAMPLE, COVERING THE 

TECHNOLOGY CALLED NFC, THAT'S NEAR FIELD COMMUNICATION, WHICH 

ENABLES USERS, SUCH AS MOBILE PAYMENT, SUCH AS USE YOUR PHONE 

FOR BUS TOKENS IN CERTAIN COUNTRIES. 

AND WE HAVE TECHNOLOGY THAT ENABLES MULTIMEDIA AREAS 

BEYOND VIDEO AND AUDIO. AND WE HAVE ALSO TECHNOLOGY THAT'S 

COVERING WIRELESS CHARGING, FOR EXAMPLE, THAT YOU DON'T HAVE TO 

PLUG IN YOUR PHONE. THERE'S A STANDARD INVOLVED IN -- AND 

THERE ARE MANY OTHER EXAMPLES.

Q. SO DOES QUALCOMM HAVE STANDARD ESSENTIAL PATENTS RELATED 

TO THE TECHNOLOGIES YOU DESCRIBED?

A. YES, WE DO.

Q. AND YOU MENTIONED VIDEO CODING A COUPLE OF TIMES. COULD 

YOU GIVE THE COURT AN EXAMPLE OF THE TYPE OF PATENTS QUALCOMM 

HAS RELATED TO VIDEO CODING? 

A. YES, I CAN. AND BEFORE I GET INTO THE EXAMPLE HERE, I DO 

WANT TO EXPLAIN WHY VIDEO IS SO IMPORTANT, BECAUSE GENERALLY 

THERE'S A LOT OF TRAFFIC ON THE INTERNET AND THERE'S OVER 90 

PERCENT OF THE TRAFFIC TODAY ON THE INTERNET, INCLUDING MOBILE 

INTERNET, ARE DRIVEN BY VIDEO SERVICES AND VIDEO APPLICATIONS. 

SO IT'S REALLY, REALLY IMPORTANT TO BE ABLE TO TRANSFER A VIDEO 

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1551

VERY HIGHLY EFFICIENTLY AND TO BE ABLE TO HAVE THE MOST 

EFFICIENT VIDEO CODEC IS CRITICAL. 

SO QUALCOMM PUT A LOT OF EFFORT IN INVENTING VIDEO RELATED 

TECHNOLOGY, AND ONE OF THE REALLY IMPORTANT VIDEO STANDARDS IS 

CALLED HEVC, IT'S HIGH EFFICIENCY VIDEO CODEC, THAT'S WHAT IT 

REPRESENTS. 

SO IT'S ABLE TO DO REALLY GOOD COMPRESSION AND 

DECOMPRESSION OF THE SIGNAL WHILE CONSUME AS LITTLE POWER AS 

POSSIBLE ON THE MOBILE DEVICE. 

AND QUALCOMM IS A VERY ACTIVE PARTICIPANT, AND WE ARE A 

LEADING CREATOR OF TECHNOLOGY THAT'S GETTING TO THE HEVC 

STANDARD.

Q. AND IS THE HEVC STANDARD, DO YOU MAKE THAT AVAILABLE TO 

YOUR LICENSEES? 

A. YES, WE DO.

Q. AND WHY ARE THEY INTERESTED IN IT? 

A. BECAUSE QUALCOMM TECHNOLOGY OFFERS REALLY SIGNIFICANT 

PERFORMANCE IMPROVEMENT OVER THE COMPETING TECHNOLOGIES. 

SO LET ME GIVE YOU ONE EXAMPLE. IN THE HEVC, THERE'S A 

QUALCOMM INVENTED TECHNOLOGY CALLED VARIABLE BLOCK ENCODING. 

WHAT THAT MEANS IS WE WILL LOOK AT WHAT'S ON THE VIDEO, AND WE 

WOULD ALSO LOOK AT HOW FREQUENT THE VIDEO CHANGES FRAME BY 

FRAME AS THE VIDEO IS TRANSFERRED, AND WE WILL PICK THE MOST 

OPTIMIZED SIZE OF THE BLOCK TO ENCODE IT. 

AND OUR TECHNOLOGY IS AT LEAST 50 PERCENT, THAT'S 5-0, 

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1552

PERCENT BETTER THAN THE COMPETING TECHNOLOGY, AND THAT SAVES A 

LOT OF, IN BANDWIDTH, IF YOU WANT TO DELIVER THE SAME CONTENT 

OF MATERIAL, WHICH MEANS THE CARRIER CAN ADD AT LEAST TWICE AS 

MANY USERS ON THE NETWORK FOR THESE TYPE OF SERVICES, OR IF YOU 

WANT TO HAVE THE SAME AMOUNT OF USERS SUPPORTED ON THE NETWORK, 

YOU CAN GIVE THEM TWICE AS GOOD OF SERVICES FOR THE SAME AMOUNT 

OF USERS. 

AND THAT IS VERY, VERY SIGNIFICANT IF YOU ARE THE NETWORK 

OPERATOR OR IF YOU'RE THE CONSUMER. 

Q. I'D LIKE TO SWITCH TO THE NON-STANDARD ESSENTIAL PATENTS, 

OR THE IMPLEMENTATION PATENTS. 

CAN YOU GIVE THE COURT A FEW EXAMPLES OF AREAS OF WHICH 

QUALCOMM HOLDS IMPLEMENTATION PATENTS? 

A. SURE. QUALCOMM IMPLEMENTATION PATENT IS VERY, VERY LARGE. 

AS I DESCRIBED EARLIER, IT'S ROUGHLY TWO-THIRD OF THE 

PORTFOLIO. IT HAS ABOUT 80,000 GRANTED AND PATENT PENDING 

APPLICATIONS. SO WE HAVE PATENTS COVERING THE CELLULAR AREA. 

WE ALSO HAVE PATENTS THAT'S COVERING USER EXPERIENCE, 

SOFTWARE AREA. 

WE HAVE PATENTS THAT ARE COVERING THE COMPUTING PLATFORM, 

SO KEEP IN MIND, A SMARTPHONE IS NOT JUST A PHONE, IT'S REALLY 

A COMPUTER IN YOUR POCKET. SO WE HAVE MANY PATENTS COVERING 

THE COMPUTING ASPECTS. 

WE HAVE PATENTS THAT COVER MULTIMEDIA AREAS THAT'S BEYOND 

THE STANDARD AREAS. WE HAVE PATENTS THAT'S COVERING ANTENNAS 

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UNITED STATES COURT REPORTERS

1553

AND RF'S, VIDEO FREQUENCY DESIGNS OF THE PHONE, AND WE HAVE 

MANY OTHER PATENTS IN DIFFERENT AREAS. 

Q. THE FIRST EXAMPLE YOU GAVE WAS CELLULAR. 

A. YES. 

Q. WHY DO YOU HAVE CELLULAR PATENTS IN YOUR IMPLEMENTATION 

CATEGORY? 

A. OKAY. IT'S IMPORTANT TO KNOW THAT WHEN YOU TALK ABOUT 

CELLULAR STANDARD, CELLULAR STANDARD PRIMARILY FOCUSSES ON 

INTERFACE BETWEEN THE DEVICE AND THE NETWORK. 

CELLULAR STANDARD, HOWEVER, DOES NOT DEFINE HOW YOU 

IMPLEMENT THE TECHNOLOGY. SO QUALCOMM HAS PUT A LOT OF EFFORT 

INTO IMPLEMENTING THE CELLULAR TECHNOLOGY TO MAKE IT EFFICIENT, 

TO MAKE IT LOWER POWER CONSUMPTION, TO MAKE IT FASTER. 

SO WE HAVE TO HAVE MANY, MANY PATENTS IN IMPROVING THE 

PERFORMANCE OF THE CELLULAR TECHNOLOGY THAT ARE NOT STANDARD 

DRIVEN.

Q. AND DO YOU MAKE THOSE PATENTS AVAILABLE TO YOUR LICENSEES? 

A. WE DO. 

Q. YOU ALSO MENTIONED USER INTERFACE PATENTS? 

A. YES.

Q. WHAT DID YOU MEAN BY THAT? 

A. SO BY USER INTERFACE, THAT IS A PRETTY BROAD AREA HERE. 

SO IT'S WORTH -- IT'S IMPORTANT TO REMEMBER THAT QUALCOMM USED 

TO MAKE CELL PHONES. SO WE INNOVATE A LOT OF AREA BEYOND THE 

CELLULAR SPACE IN TERMS OF OPERATING THE SYSTEM, APPLICATION 

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UNITED STATES COURT REPORTERS

1554

LAYERS AND THE USER INTERFACE LAYERS. 

AND IT'S ALSO WORTH NOTING THAT EVEN UNTIL TODAY, WE KEEP 

ON MAKING CELL PHONES NOT AS A COMMERCIAL DEVICE TO SELL TO 

CUSTOMER, BUT AS A REFERENCE DESIGN TO GIVE IT TO OUR LICENSEES 

AND TO GIVE IT TO OUR CUSTOMERS. 

SO WE KEEP ON INNOVATING BY ADDING FEATURES INTO THE USER 

EXPERIENCE BUCKETS, AND SOME OF THOSE AREAS CAN BE THE, THE 

TOUCH SCREEN USER INTERFACE. SOME OF THEM CAN BE OPERATING 

SYSTEM PATENT THAT SHOW YOU HOW TO RUN MULTIPLE APPLICATIONS AT 

THE SAME TIME. 

AND SOME OF THEM CAN BE EVEN BASED ON THE NETWORK 

SERVICES, HOW YOU INCORPORATE NETWORK SERVICES WITH THE MOBILE 

PHONE, FOR EXAMPLE. THERE'S A NEW AREA WE ALSO KEEP ON ADDING, 

SUCH AS AR/VR, AND THAT REPRESENTS AUGMENTED REALITY AND 

VIRTUAL REALITY. 

AND ALSO SOME OF THE NEWER TECHNOLOGY WE ARE INTRODUCING 

IN THESE AREAS, INCLUDING A.I., ARTIFICIAL INTELLIGENCE. 

THAT'S REALLY HOW YOU MAKE THE PHONE SMARTER BY LEARNING YOUR 

USER DAY-BY-DAY TO IMPROVE THE SERVICE. 

SO ALL OF THOSE DIFFERENT CATEGORIES ARE WHAT WE DEFINE AS 

USER EXPERIENCE TECHNOLOGY AND WE HAVE PATENTS ADDRESSING THOSE 

TECHNOLOGIES IN OUR PORTFOLIO.

Q. AND DOES QUALCOMM MAKE THE THREE CATEGORIES OF PATENTS 

THAT WE'VE TALKED ABOUT, THE STANDARD ESSENTIAL, THE CELLULAR 

STANDARD ESSENTIAL, THE NON-CELLULAR AND BEYOND CELLULAR 

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UNITED STATES COURT REPORTERS

1555

ESSENTIAL PATENTS AND THE IMPLEMENTATION PATENTS AVAILABLE TO 

LICENSEES? 

A. YES, WE DO. 

MR. ZEMBEK: NO FURTHER QUESTIONS, YOUR HONOR. 

THE COURT: OKAY. TIME IS NOW 3:28. LET'S GO AHEAD 

AND TAKE OUR TEN MINUTE BREAK NOW, AND WE'LL GO TODAY UNTIL 

4:30. 

YOU MAY STEP DOWN DURING THE BREAK. 

THE WITNESS: THANK YOU. 

THE COURT: OKAY. THANK YOU ALL. 

(RECESS FROM 3:28 P.M. UNTIL 3:39 P.M.) 

THE COURT: ALL RIGHT. TIME IS 3:39. GO AHEAD, 

PLEASE. 

MR. PAIGE: YOUR HONOR, IF I MAY? YOU HAD ASKED 

EARLIER TODAY THAT WE MARK THIS WITH A DEMONSTRATIVE. 

THE COURT: YES. 

MR. PAIGE: AND LODGE IT. HOW WOULD YOU LIKE US TO 

DO THAT? 

THE COURT: SO YOU MARKED IT? 

MR. PAIGE: IT'S MARKED, YES. 

THE COURT: GREAT. THANK YOU. I GUESS I'LL JUST 

HAVE MS. GARCIA HOLD ON TO IT, BECAUSE YOU'RE ALSO HOLDING ON 

TO THE SEALED DEPOSITION TRANSCRIPT, RIGHT, MS. GARCIA, THE 

ONES THAT ARE NOT PUBLICLY FILED? 

THE CLERK: YES. 

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UNITED STATES COURT REPORTERS

1556

THE COURT: ARE THE PARTIES GIVING YOU THOSE? 

THE CLERK: YOU GAVE ME DEPOSITION BINDERS. IS 

THAT -- 

THE COURT: NO. WHAT I WOULD LIKE, JUST SO THE 

RECORD IS COMPLETE, I WOULD LIKE EVERYTHING THAT'S NOT 

ADMITTED, WHETHER IT'S A DEMONSTRATIVE OR -- I GUESS IT 

PRIMARILY WOULD BE THE DEMONSTRATIVES THAT HAVE BEEN SHOWN BUT 

AREN'T ADMITTED, I WOULD JUST LIKE A COPY LODGED SO IT'LL BE 

PART OF THE RECORD. IT WON'T BE AN ADMITTED EXHIBIT. 

I'D ALSO LIKE THE SEALED -- WELL, I GUESS IT WOULD HAVE TO 

BE ALL DEPOSITION TRANSCRIPTS BECAUSE THEY'RE NOT BEING 

TRANSCRIBED BY THE COURT REPORTERS. WE NEED SOME RECORD OF 

WHAT WAS SAID. SO I THINK WE NEED AT LEAST A LODGED COPY OF 

ALL THE TRANSCRIPTS. 

DOES THAT MAKE SENSE? 

MR. CARSON: YOUR HONOR, I BELIEVE -- 

MR. VAN NEST: WHICH TRANSCRIPTS, YOUR HONOR, ARE YOU 

REFERRING TO? 

THE COURT: SO THE TRIAL TRANSCRIPT IS BLANK WHENEVER 

A VIDEO IS PLAYED. 

MR. VAN NEST: RIGHT. 

THE COURT: SO SOME WHERE WE NEED A RECORD OF WHAT 

WAS PLAYED DURING THE TRIAL, SO THOSE DEPOSITION TRANSCRIPTS 

SHOULD BE LODGED WITH THE COURT SO FOR THE RECORD WE HAVE SOME 

RECORD OF WHAT TESTIMONY WAS PLAYED. 

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UNITED STATES COURT REPORTERS

1557

MR. VAN NEST: RIGHT. 

THE COURT: SO THAT DOESN'T MATTER WHETHER IT'S 

SEALED OR PUBLIC. I'D LIKE THE TRANSCRIPTS LODGED. 

MR. VAN NEST: I THINK WE'RE DOING THAT. 

THE COURT: OKAY. GREAT. 

MR. CARSON: YES, WE ARE. 

MR. VAN NEST: MY UNDERSTANDING IS THAT WHEN -- 

THERE'S TWO THINGS, TWO FORMS OF IT. IF IT'S PLAYED, THEN 

YOU'RE GETTING THE CLIPS LODGED THAT SHOW EXACTLY WHAT WAS 

PLAYED. 

AND THEN IF IT'S -- IF IT'S SOMETHING THAT IS ADOPTED BY 

THE WITNESS DURING THE EXAMINATION, WE'RE FILING THOSE, TOO. 

SO, FOR EXAMPLE, IF A WITNESS IS SHOWN TESTIMONY, "DO YOU 

STAND BY THAT TESTIMONY?" 

"I DO." 

WE'RE FILING THOSE FOR EACH WITNESS FOR WHOM THAT HAPPENS 

FOR THE VERY REASON YOUR HONOR STATES, TO BE SURE THE RECORD IS 

COMPLETE. 

I THINK THOSE ARE THE ONLY FORMS OF DEPOSITION THAT YOU 

WOULD NEED. 

THE COURT: WELL, NO. SO YOU'RE GIVING US WITNESS 

BINDERS; RIGHT? 

MR. VAN NEST: WE ARE. 

THE COURT: AND WHAT I'M TALKING ABOUT IS THAT THAT 

ALREADY TAKES UP ALMOST A FULL WALL. 

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UNITED STATES COURT REPORTERS

1558

MR. VAN NEST: RIGHT. 

THE COURT: ONE SECTION OF A WALL, AND THAT WILL BE 

USED BY MY CHAMBERS TO PREPARE THE ORDER. 

WHAT I'M ASKING FOR IS SOMETHING SEPARATE BECAUSE WE DON'T 

HAVE ROOM IN THE CLERK'S OFFICE FOR ALL THOSE BINDERS. I WOULD 

LIKE EVEN JUST IN A RED WELL, "HERE ARE ALL THE DEPOSITION 

TRANSCRIPTS THAT WERE PLAYED DURING THE TRIAL." 

MR. CARSON: AND, YOUR HONOR -- 

THE COURT: PUBLIC AND SEALED. 

MR. CARSON: MAYBE I CAN CLEAR THAT UP. I THINK THE 

FTC, THROUGH THE END OF OUR CASE-IN-CHIEF, HAS BEEN PROVIDING 

YOUR HONOR WITH BINDERS OF ALL THE DEPOSITION TRANSCRIPTS THAT 

HAVE BEEN PLAYED, AS WELL AS FILING THE PUBLIC VERSIONS OF THE 

DEPOSITION TRANSCRIPTS AND REDACTED VERSION OF THE SEALED 

VERSIONS ON THE DOCKET. 

SO I BELIEVE YOU HAVE THOSE DEPOSITION BINDERS UP THROUGH 

THE END OF THE FTC'S CASE-IN-CHIEF. 

THE COURT: BUT I DON'T WANT THE BINDER OF THE WHOLE 

DEPOSITION. 

MR. CARSON: IT'S ONLY WHAT HAS BEEN PLAYED, YOUR 

HONOR. 

THE COURT: OKAY. 

MR. CARSON: IT'S THE CLIP REPORTS OF WHAT WAS 

ACTUALLY PLAYED IN COURT THAT WE'VE BEEN LODGING EACH DAY. 

THE COURT: I APOLOGIZE, THEN. MAYBE MS. GARCIA 

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UNITED STATES COURT REPORTERS

1559

ALREADY HAS IT. 

DO YOU HAVE WHAT YOU NEED IN TERMS OF TRANSCRIPTS OF 

DEPOSITIONS THAT HAVE BEEN PLAYED? DO YOU HAVE THOSE FOR ALL 

THE WITNESSES? 

THE CLERK: I CAN CLARIFY OFF LINE. 

THE COURT: OKAY. ALL RIGHT. ALL RIGHT. WELL, IF 

WE DON'T HAVE IT, THE CLERK'S OFFICE IS REALLY, REALLY -- HAS 

VERY CONFINED SPACE, AND SO WE DON'T WANT YOUR WITNESS BINDERS 

GOING DOWN THERE. AND IT'S REALLY UNNECESSARY BECAUSE ALL OF 

YOUR WITNESS BINDERS INCLUDE WAY MORE EXHIBITS THAN WHAT YOU 

ACTUALLY INTRODUCED. 

SO WE JUST DON'T NEED COPIES AND COPIES AND COPIES. WE 

JUST DON'T ARE ROOM, UNFORTUNATELY. 

MR. CARSON: YES, YOUR HONOR. IF I'M THINKING OF THE 

RIGHT THING, THE DEPOSITION BINDERS ARE VERY NARROW. 

THE COURT: I HOPE THERE'S NOT ONE FOR EVERY SINGLE 

WITNESS. ARE YOU GIVING US A SEPARATE BINDER FOR EVERY 

WITNESS? THAT ALREADY IS TOO MUCH SPACE. 

MR. CARSON: IT'S ONE FOR EACH DAY OR TWO OF THE 

LODGES. WE'RE HAPPY TO DO THAT IN A DIFFERENT FORM IF THAT'S 

MORE CONVENIENT FOR THE COURT. IF YOU WOULD LET US KNOW, THAT 

WOULD BE GREAT, AND WE CAN ABSOLUTELY DO WHATEVER IS MORE 

CONVENIENT FOR THE COURT. 

THE COURT: OKAY. I MEAN, I THINK IN OTHER TRIALS 

THEY'VE GIVEN IT IN A RED WELL BECAUSE THE BINDERS TAKE UP 

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UNITED STATES COURT REPORTERS

1560

SPACE, AND WE DON'T HAVE THE SPACE AND OTHERWISE THE CLERK'S 

OFFICE WILL PAY FOR SPACE. AND AS YOU KNOW, WE'RE RUNNING OUT 

OF MONEY NEXT FRIDAY. SO PLEASE DON'T KEEP BURDENING US WITH 

MORE AND MORE BINDERS. 

WHAT WE NEED IS AS LIGHT AS POSSIBLE AND TAKING UP AS 

MINIMAL SPACE AS POSSIBLE. 

MR. VAN NEST: AND WHAT YOU WANT, YOUR HONOR, JUST SO 

I'M CLEAR, YOU JUST WANT THE CLIPS THAT ARE PLAYED IN COURT, 

NOT THE WHOLE DEPOSITION? 

THE COURT: THAT'S CORRECT. 

MR. VAN NEST: THAT'S RIGHT. AND THAT'S WHAT WE'VE 

BEEN DOING. 

THE COURT: PERFECT. 

MR. VAN NEST: AND THAT'S WHAT WE'RE PLANING TO DO. 

THE COURT: PERFECT. 

MR. VAN NEST: AND NOT GIVE YOU THE WHOLE DEPOSITION, 

JUST WHAT WAS IN THE RECORD FROM BEING PLAYED IN COURT. 

THE COURT: RIGHT. BECAUSE THE TRIAL TRANSCRIPT 

DOESN'T REFLECT AT ALL ANYTHING THAT'S SAID ON THE VIDEOS. 

MR. VAN NEST: THAT'S RIGHT. 

THE COURT: AND WE'RE GOING TO NEED IT SOMEWHERE FOR 

THE RECORD. 

MR. VAN NEST: WE ARE -- 

THE COURT: YOU ALL MAY BE DOING IT, AND I'M WASTING 

YOUR TIME. I APOLOGIZE. IF YOU ARE DOING IT, PERFECT. 

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UNITED STATES COURT REPORTERS

1561

MR. VAN NEST: IT'S GOOD TO BE CLEAR. SO WE 

UNDERSTAND. 

THE COURT: AND I JUST WANT THE SAME FOR ALL 

DEMONSTRATIVES, I JUST WANT THEM LODGED. THEY WON'T BE FILED. 

THEY WON'T BE PART OF THE ADMITTED EXHIBITS, BUT JUST SO WE 

HAVE IT FOR THE RECORD, I THINK IT'S HELPFUL. 

MR. VAN NEST: WOULD THAT INCLUDE THE SLIDES WE 

SHOWED IN THE OPENING, OR JUST THE DEMONSTRATIVES THAT WE'RE 

USING DURING THE TESTIMONY OF THE WITNESSES? 

THE COURT: I WOULD SAY EVERYTHING, INCLUDING 

CLOSING. 

MR. VAN NEST: AND OPENING AS WELL? 

THE COURT: YES, PLEASE. 

MR. VAN NEST: YOU HAVE -- YOU HAVE A SET, I THINK, 

FROM BOTH PARTIES, BUT YOU WANT US TO LODGE THAT, WHICH WE CAN 

EASILY DO WITH MS. GARCIA. BODY SIDES WILL LODGE WHAT WE 

SHOWED DURING THE OPENING. 

THE COURT: THAT WOULD BE HELPFUL BECAUSE WHAT YOU'RE 

GIVING TO ME IS GETTING TAKEN BACK TO CHAMBERS AND IS GOING TO 

GET USED FOR THE ORDER. 

WHAT I'M ASKING IS JUST A SEPARATE CLEAN COPY IN A RED 

WELL FOR MS. GARCIA. SO THAT WILL PROBABLY END UP IN THE 

CLERK'S OFFICE. 

MR. VAN NEST: OKAY. 

THE COURT: WHEREVER THE DUNGEON IS FOR THIS CASE, 

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UNITED STATES COURT REPORTERS

1562

WE'LL STORE ALL THE ADMITTED EXHIBITS AND DEMONSTRATIVES AND 

TRANSCRIPTS OF DEPOSITIONS THAT WERE PLAYED DURING TRIAL. SO 

JUST -- I JUST WANT A COMPLETE RECORD. 

MR. VAN NEST: WE'LL DO IT? 

THE COURT: IN A SEPARATE PLACE, NOT WHAT WE'RE USING 

BACK IN CHAMBERS. 

MR. VAN NEST: WE GOT IT. 

THE COURT: OKAY. 

MR. VAN NEST: WE'LL LODGE THOSE WITH MS. GARCIA. 

THE COURT: OKAY. THANK YOU. AND WHEN THE CASE IS 

OVER, WE DO RETURN ALL THE PHONES, SO YOU'LL GET EVERYTHING 

BACK. IT'S JUST THAT IF THE CASE GOES ON FOR A LONG TIME, 

WE'LL BE HOLDING ON TO IT. 

MR. VAN NEST: OUR CARTS, TOO. 

THE COURT: NO. I'LL RETURN ALL OF THAT TO YOU. 

WE'LL TALK ABOUT, AT THE END OF THE TRIAL -- NO, I MEAN THE 

DEMONSTRATIVES. MR. PAIGE WILL GET THAT PHONE BACK AT SOME 

POINT. 

MR. VAN NEST: YEAH. 

MR. PAIGE: THANK YOU, YOUR HONOR. 

THE COURT: AND I'LL TALK TO YOU ABOUT WHAT WOULD 

BE -- AND WE DON'T HAVE TO DO THIS NOW, I MAY NOT NEED ANY OF 

THAT FOR THE ORDER BECAUSE I'M BASICALLY USING THE BINDERS -- 

THE WITNESS BINDERS ARE VERY HELPFUL BECAUSE THEY'RE FOCUSSED 

BY WITNESS, SO I'M NOT SURE IF I'LL EVEN NEED THAT ULTIMATELY. 

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UNITED STATES COURT REPORTERS

1563

BUT WE CAN DISCUSS THAT LATER. 

AND WE HAVE A SET OF ALL THE EXHIBITS BACK IN CHAMBERS 

ANYWAY THAT WE'RE USING FOR, YOU KNOW, THE HIGH PRIORITY 

OBJECTIONS. 

MR. VAN NEST: RIGHT. GOOD. 

THE COURT: SO WE MAY NOT NEED IT. 

MR. VAN NEST: LET US KNOW. 

THE COURT: ALL RIGHT. THANK YOU. 

ALL RIGHT. SORRY, MR. CHEN. JUST DOING HOUSEKEEPING. 

THE WITNESS: NO PROBLEM. 

THE COURT: LET'S GO -- WHERE ARE WE? WE'RE ON THE 

CROSS; IS THAT RIGHT? DO YOU HAVE ANY? 

MR. HOPKIN: YES, BUT THE FTC HAS NO QUESTIONS FOR 

MR. CHEN. 

THE COURT: OKAY. LET ME ASK YOU, I GUESS YOU HAVE 

NO REDIRECT? 

MR. ZEMBEK: NO, YOUR HONOR. 

THE COURT: OKAY. IS MR. CHEN -- SORRY TO MAKE YOU 

WAIT FOR ALL THAT. 

THE WITNESS: OH, NO PROBLEM. 

THE COURT: OKAY. SO HE'S EXCUSED SUBJECT TO RECALL? 

I ASSUME NOT. IS THAT RIGHT? NOT SUBJECT TO RECALL? 

MS. MILICI: NOT SUBJECT TO RECALL BY THE FTC. 

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

TESTIMONY, AND YOU'RE FREE TO LEAVE. 

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GRUBBS DEPOSITION

UNITED STATES COURT REPORTERS

1564

THE WITNESS: THANK YOU SO MUCH. 

THE COURT: OKAY. CALL YOUR NEXT WITNESS, PLEASE. 

MR. PETERSON: YOUR HONOR, JORDAN PETERSON ON BEHALF 

OF QUALCOMM. 

WITH YOUR HONOR'S PERMISSION, QUALCOMM WILL NOW PLAY THE 

VIDEOTAPED DEPOSITION OF JOHN GRUBBS OF BLACKBERRY, WHICH THE 

FTC PREVIOUSLY PLAYED PORTIONS OF ON JANUARY 8TH. 

NO PORTION OF THIS TESTIMONY IS SEALED. YOUR HONOR DID 

SEAL OTHER PORTIONS OF MR. GRUBBS'S, BUT WE WILL NOT BE PLAYING 

THOSE. 

THE COURT: OKAY. ALL RIGHT. AND ARE YOU SEEKING TO 

ADMIT ANY EXHIBITS WITH HIM, OR NOT? 

MR. PETERSON: QUALCOMM IS NOT. 

THE COURT: OKAY. 

MR. PETERSON: AND THE VIDEO IS ABOUT 2.5 MINUTES IN 

LENGTH, WITH NO COMPLETENESS DESIGNATIONS BY THE FTC. 

THE COURT: OKAY, GREAT. 3:47. GO AHEAD, PLEASE. 

(THE VIDEOTAPED DEPOSITION OF JOHN GRUBBS WAS PLAYED IN 

OPEN COURT OFF THE RECORD.)

THE COURT: OKAY. TIME IS 3:50. CALL YOUR NEXT 

WITNESS, PLEASE. 

MR. PETERSON: YOUR HONOR, AT THIS TIME QUALCOMM 

WOULD LIKE TO PLAY THE VIDEO DEPOSITION OF MR. IRA BLUMBERG OF 

LENOVO. 

YOUR HONOR PREVIOUSLY HEARD TESTIMONY FROM MR. BLUMBERG ON 

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BLUMBERG DEPOSITION

UNITED STATES COURT REPORTERS

1565

JANUARY 4TH DURING THE FTC'S CASE. NO PORTION OF THIS 

TESTIMONY HAS BEEN SEALED, ALTHOUGH THERE IS A SEALED EXHIBIT, 

AND SO WE WILL COVER THE PROJECTOR AT THAT POINT. THAT EXHIBIT 

IS CX 2079, WHICH YOUR HONOR SEALED IN ITS ENTIRETY. 

THE COURT: CAN WE GO BACK TO MR. GRUBBS? DOES 

ANYONE INTEND TO PLAY ANY MORE VIDEO OR IS HE NOW DONE? IS HE 

SUBJECT TO RECALL OR NOT? 

MR. CARSON: NOT FOR THE FTC. 

MR. PETERSON: NOT FOR QUALCOMM. 

THE COURT: OKAY. SO NOW HE'S COMPLETED THEN. OKAY. 

ALL RIGHT. I'LL WRITE A "NO" NEXT TO HIS NAME. 

ALL RIGHT. FOR MR. BLUMBERG, DO YOU WANT TO INTRODUCE ANY 

EXHIBITS? 

MR. PETERSON: WE DO NOT, BUT I NOTE THAT THE FTC 

PREVIOUSLY INTRODUCED TWO EXHIBITS THAT WILL BE USED DURING 

THIS PORTION OF THE VIDEO. 

THE COURT: OKAY. 

MR. PETERSON: THOSE ARE JX 87 AND CX 2079. 

THE COURT: ALL RIGHT. GO AHEAD, PLEASE. 3:51. 

(THE VIDEOTAPED DEPOSITION OF IRA BLUMBERG WAS PLAYED IN 

OPEN COURT OFF THE RECORD.)

THE COURT: OKAY. IS THAT THE END? 3:54. CALL YOUR 

NEXT WITNESS, PLEASE. 

FOR BLUMBERG, IS ANYONE GOING TO SHOW MORE VIDEO FOR HIM? 

MS. MILICI: IT'S POSSIBLE WE WILL. 

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UNITED STATES COURT REPORTERS

1566

THE COURT: OKAY. SO HE'S A YES. 

GO AHEAD, PLEASE. WHO'S THE NEXT WITNESS? 

MR. PETERSON: THE NEXT VIDEOS WE'D LIKE TO SHOW ALL 

INVOLVE SEALED TESTIMONY. TWO OF THEM A PORTION YOUR HONOR 

SEALED AND THE OTHER THEY ARE SEALED TESTIMONY AND EXHIBITS 

DISCUSSED THROUGHOUT. 

WE'RE HAPPY TO PROCEED HOWEVER YOUR HONOR WOULD LIKE, IF 

YOU'D LIKE US TO SEAL THE COURTROOM FOR THE WHOLE TIME OR WE 

CAN FILE THE PUBLIC TRANSCRIPT. IT'S THE PREFERENCE THAT YOUR 

HONOR HAS. 

THE COURT: WHO ARE YOUR NEXT THREE WITNESSES? 

MR. PETERSON: MR. MADDEROM, MR. MCGREGOR, AND 

MS. YU. 

THE COURT: AND YOU'RE SAYING ALL THREE OF THOSE ARE 

SEALED WITNESSES; IS THAT RIGHT? 

MR. PETERSON: FOR MR. MCGREGOR, THERE'S SEALED 

MATERIAL DISCUSSED THROUGHOUT, SO IT'S NOT POSSIBLE TO PLAY IT 

WITHOUT SEALING THE COURTROOM. 

THE COURT: ALL RIGHT. 

MR. PETERSON: FOR THE OTHER TWO, UNFORTUNATELY THE 

SEALED TESTIMONY IS SORT OF RIGHT IN THE MILD OF THEIR 

TESTIMONY, SO WE CAN EITHER HAVE PEOPLE COME IN AND OUT OR WE 

CAN, IF YOUR HONOR WOULD PREFER, WE CAN PLAY THE WHOLE THING 

AND THEN MAKE SURE THE FILED TRANSCRIPT IS AVAILABLE TONIGHT. 

THE COURT: HOW IS EACH WITNESS'S DEPOSITION EXCERPT? 

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UNITED STATES COURT REPORTERS

1567

MR. PETERSON: MR. MADDEROM IS ABOUT EIGHT MINUTES. 

THE COURT: OKAY. 

MR. PETERSON: MS. YU I BELIEVE IS ABOUT TWO AND A 

HALF MINUTES, AND LET ME CHECK ON MR. MCGREGOR. 

THE COURT: OKAY. I DON'T THINK IT MAKES SENSE TO 

HAVE PEOPLE LEAVE FOR AN EIGHT MINUTE VIDEO. THAT SEEMS TOO 

SHORT. 

WHAT ABOUT MR. MCGREGOR? 

MR. PETERSON: MR. MCGREGOR IS APPROXIMATELY SEVEN 

MINUTES. 

THE COURT: OKAY. 

MR. PETERSON: SO IN TOTAL, IT'S ABOUT 20 MINUTES 

ACROSS ALL THREE VIDEOS. 

THE COURT: I'VE GOT 17.5. 

SO IS YOUR NEXT -- ZANDER IS YOUR NEXT WITNESS? 

MR. PETERSON: AFTER THOSE THREE, YES. 

THE COURT: BECAUSE I THINK YOU'LL GET ONE MORE. HOW 

LONG IS MR. ZANDER? 

MR. PETERSON: I BELIEVE THAT'S ABOUT EIGHT MINUTES, 

BUT I CAN CHECK FOR YOUR HONOR. 

THE COURT: AND IS HE SEALED OR HE'S PUBLIC? 

MR. PETERSON: NO. THE THREE FOLLOWING ZANDER, WOLF, 

AND MR. LINDNER, NONE OF THOSE ARE SEALED. 

THE COURT: OH, OKAY. 

YOU SAID ZANDER IS HOW LONG, EIGHT MINUTES? 

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UNITED STATES COURT REPORTERS

1568

MR. PETERSON: YES. 

THE COURT: WOULD YOU BE OPEN TO DOING ZANDER AND 

THEN I'LL JUST ASK EVERYONE TO LEAVE AND THE REST OF THE DAY 

WILL JUST BE THE THREE SEALED WITNESSES. 

MR. PETERSON: IF THAT'S YOUR HONOR'S PREFERENCE, WE 

CAN DO THAT. 

THE COURT: CAN WE DO THAT? 

MR. PETERSON: SURE. JUST GIVE US ONE SECOND TO GET 

THE RIGHT MATERIALS. 

THE COURT: ALL RIGHT. THANK YOU FOR YOUR 

FLEXIBILITY. 

MR. PETERSON: WITH YOUR HONOR'S PERMISSION, QUALCOMM 

WILL NOW PLAY THE VIDEO DEPOSITION OF MARTIN ZANDER OF 

ERICSSON. NO PORTION OF THIS IS SEALED. THE VIDEO IS 

APPROXIMATELY EIGHT MINUTES IN LENGTH THAT DOESN'T -- WITH NO 

COMPLETENESS DESIGNATIONS FROM THE FTC. 

THE COURT: OKAY. 

MR. PETERSON: AT THIS TIME QUALCOMM WOULD OFFER TWO 

EXHIBITS INTO EVIDENCE. 

THE COURT: OKAY. I'VE GOT TO CHARGE YOU TIME. ALL 

RIGHT. 3:57. GO AHEAD, PLEASE. 

WHAT EXHIBITS WOULD YOU LIKE? 

MR. PETERSON: QX 2928. 

THE COURT: QX 2928. 

MR. PETERSON: AND QX 2929. 

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ZANDER DEPOSITION

UNITED STATES COURT REPORTERS

1569

THE COURT: QX 2929. ANY OBJECTION? 

MS. GILLEN: NO OBJECTION, YOUR HONOR. 

THE COURT: ALL RIGHT. THOSE ARE ADMITTED. 

(DEFENDANT'S EXHIBIT QX 1569 WAS ADMITTED IN EVIDENCE.) 

THE COURT: GO AHEAD, PLEASE. 

(THE VIDEOTAPED DEPOSITION OF MARTIN ZANDER WAS PLAYED IN 

OPEN COURT OFF THE RECORD.)

THE COURT: OKAY. TIME IS 4:06. 

OKAY. LET ME GO AHEAD THEN AND EMPTY THE COURTROOM. 

IF FOLKS WHO ARE NOT ABLE TO SEE THE SEALED MATERIAL WOULD 

PLEASE STEP OUTSIDE THE COURTROOM. 

WE'LL RESUME ON TUESDAY MORNING AT 9:00. THERE WILL BE NO 

TRIAL ON MONDAY, IT'S MARTIN LUTHER KING DAY. 

AND I'LL ASK THE PARTIES, ONCE EVERYONE HAS LEFT, TO 

APPROVE EVERYONE WHO IS REMAINING.

MR. BORNSTEIN: ALL CLEAR, YOUR HONOR. 

THE COURT: OKAY. FTC IS OKAY WITH WHO'S LEFT? 

MS. MILICI: WE ARE. THANK YOU.

(PROCEEDINGS UNDER SEAL FROM PAGES 1570-1573.) 

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UNITED STATES COURT REPORTERS

1574

(IN OPEN COURT.) 

MR. BORNSTEIN: I HAVE ONE BIT OF HOUSEKEEPING, YOUR 

HONOR -- 

THE COURT: YES. 

MR. BORNSTEIN: -- WHICH IS -- IT RELATES TO THE 

AUDIOTAPE THAT WAS PLAYED DURING MR. GONELL'S TESTIMONY. 

THE COURT: YES. 

MR. BORNSTEIN: IT HAD NOT OCCURRED TO ME THAT IT 

MIGHT IMPOSE A BURDEN ON THE COURT TO HAVE TO LISTEN TO THE 

FULL TAPE, AND WHEN YOUR HONOR MENTIONED IT, THE LIGHT BULB 

WENT OFF. 

WE HAD OBJECTED TO THE TRANSCRIPT BECAUSE IT HAS 

CORRECTIONS AND CROSS-OUTS AND ALL KINDS OF THINGS THAT LED US 

TO HAVE A CONCERN. 

SO WE HAD A PROPOSAL, WHICH WE MADE TO THE FTC AND WANTED 

TO SHARE WITH THE COURT, AS A WAY TO ALLEVIATE THE BURDEN ON 

THE COURT. 

I'M HAPPY TO HAVE YOUR HONOR LISTEN TO AS MUCH OF THE 

TRANSCRIPT AS YOU LIKE. THERE'S NOTHING IN THERE WE'RE 

CONCERNED ABOUT. 

THE COURT: UH-HUH. 

MR. BORNSTEIN: BUT IF IT WOULD BE HELPFUL, WE CAN, 

AT QUALCOMM'S EXPENSE, HAVE A CERTIFIED TRANSCRIPT MADE TO 

FACILITATE THE COURT'S REVIEW IF THAT WOULD BE USEFUL. 

MS. MILICI: YOUR HONOR, THE FTC WOULD HAVE BEEN VERY 

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UNITED STATES COURT REPORTERS

1575

HAPPY TO CONSIDER THIS PROPOSAL MONTHS AGO WHEN WE PUT THIS 

EXHIBIT ON OUR EXHIBIT LIST, AND WE ARE HAPPY TO CONSIDER IT 

NOW IF IT WOULD BE HELPFUL TO THE COURT. 

BUT OBVIOUSLY THIS IS SOMETHING WE COULD HAVE DONE A LONG 

TIME AGO AND NOT SPENT TIME TODAY PLAYING CLIPS OF THE AUDIO 

TAPE. 

THE COURT: I'M GOING TO LISTEN TO IT ANYWAY. NOW 

YOU'VE PIQUED MY CURIOSITY. I WANT TO KNOW WHO'S IN THERE, 

WHAT ARE THEY SAYING TO THE IRS? 

I MEAN, I THINK A TRANSCRIPT WOULD BE HELPFUL, THOUGH. 

MS. MILICI: SURE. 

MR. BORNSTEIN: SO WE'LL DO THAT, AND WE'LL SHARE IT 

WITH THE FTC, OF COURSE, IF THEY'D LIKE TO SEE IT IN ADVANCE OF 

GOING TO THE COURT, AND WE'LL ENDEAVOR TO GET THAT DONE. 

THE COURT: OH, WELL, YOU HAVE TO SHOW IT TO THEM. 

MR. BORNSTEIN: OH, OF COURSE. 

THE COURT: IF IT'S NOT A STIPULATED TRANSCRIPT, I'M 

NOT GOING TO CONSIDER IT.

MR. BORNSTEIN: THAT'S WHAT I SAID. 

THE COURT: THAT WAS THE WHOLE POINT OF THE HIGH 

PRIORITY OBJECTION. 

MR. BORNSTEIN: YES, I SAID I WOULD SHARE IT WITH 

THEM, OF COURSE. AND SO WE'RE WILLING TO GET THAT DONE AS 

QUICKLY AS WE CAN. I'M HAPPY TO HAVE THE COURT LISTEN TO THE 

TRANSCRIPTS. I'LL JUST GIVE A WARNING, I THINK IT'S A COUPLE 

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UNITED STATES COURT REPORTERS

1576

OF HOURS. 

THE COURT: OKAY. WELL, I DRIVE LONG DISTANCE, SO -- 

MR. BORNSTEIN: GREAT. ALL RIGHT. IF THAT'S 

USEFUL -- 

THE COURT: BETTER THAN A PODCAST, I'M SURE. 

MR. BORNSTEIN: IF THAT'S USEFUL, WE'LL GET IT DONE. 

THE COURT: ACTUALLY, I -- YOU HAVE IT ON A THUMB 

DRIVE, RIGHT? THAT'S HOW IT'S BEEN INTRODUCED? 

MS. MILICI: THAT'S CORRECT, YOUR HONOR. 

MR. BORNSTEIN: YES. 

THE COURT: OH, MY CAR IS OLD SCHOOL. I PREFER TO 

HAVE A DVD. COULD I HAVE THIS ON A DVD? AND I COULD LISTEN TO 

IT AS I'M DRIVING TO AND FROM WORK. 

MS. MILICI: WE DO NOT HAVE ONE WITH US IN COURT 

TODAY, BUT WE CAN CERTAINLY HAVE ONE MADE. 

THE COURT: GREAT, THANK YOU. 

MS. MILICI: THE FTC HAS TWO MORE ISSUES FOR 

HOUSEKEEPING. 

THE COURT: WHAT'S THAT? 

MS. MILICI: ONE IS JUST FOR NANCY YU, WHOSE 

DEPOSITION WE JUST PLAYED, SHE IS SUBJECT TO RECALL BY THE FTC. 

THE COURT: OKAY. SO SHE'S A YES. GOT IT. 

MS. MILICI: YES. AND THEN THE OTHER ISSUE IS JUST 

ON THIS, ON THE REBUTTAL CASE IN TRYING TO PLAN OUT WHEN IT IS 

THAT WE WOULD NEED TO HAVE REBUTTAL WITNESSES HERE, WE JUST 

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UNITED STATES COURT REPORTERS

1577

HAVE SOME QUESTION ABOUT HOW THE COURT IS SEEING THE NEXT 

COUPLE DAYS OF TRIAL PLAY OUT. IT LOOKS LIKE WE MIGHT BE USING 

UP ALL THE PARTIES' TIME AS OF FRIDAY, AND WE'RE JUST NOT CLEAR 

ON WHEN WE SHOULD HAVE A REBUTTAL WITNESS AVAILABLE. 

THE COURT: OKAY. DO YOU WANT ME TO GIVE YOU YOUR 

TIME ESTIMATES? WOULD THAT HELP? 

MR. BORNSTEIN: SURE. 

MR. VAN NEST: THAT WOULD HELP, YOUR HONOR. 

THE COURT: ALL RIGHT. IT LOOKS LIKE FTC TODAY, 

GIVING THEM THE 1 MINUTE FROM THE YU COMPLETENESS, YOU USED 

TODAY 46 MINUTES. SO WITH WHAT YOU ALREADY USED BEFORE, THAT'S 

21 HOURS AND 19 MINUTES. SO YOU HAD 20 HOURS AND 33 MINUTES 

YESTERDAY, PLUS 46 TODAY, THAT'S 21 HOURS AND 19 MINUTES. 

OKAY? 

NOW, QUALCOMM, AS OF YESTERDAY, HAD USED 12 HOURS AND 12 

MINUTES. LET ME -- GIVE ME ONE MINUTE, PLEASE, TO DO THE 

CALCULATION. 

(PAUSE IN PROCEEDINGS.) 

THE COURT: SO I HAVE 4 HOURS AND 37 MINUTES TODAY. 

SO THAT'S 16 HOURS AND 59 MINUTES. 

MR. VAN NEST: WOULD YOU -- WHAT'S THAT TOTAL? 

THE COURT: 16 HOURS AND 59 MINUTES. SO I HAVE 4 

HOURS AND 37 MINUTES TODAY. THE TOTAL AS OF -- I'M SAYING 

YESTERDAY, BUT THAT'S WRONG -- AS OF TUESDAY WAS 12 HOURS AND 

12 MINUTES. SO ADDING THAT UP, IT'S 16 HOURS -- SO IT'S 

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UNITED STATES COURT REPORTERS

1578

ROUGHLY A MINUTE SHY OF 17 HOURS. 

MR. BORNSTEIN: YOUR HONOR, I HESITATE TO SUGGEST. I 

THINK IT'S 16 HOURS AND 49 MINUTES. 

THE COURT: OH, YOU'RE RIGHT. MY MISTAKE. 

MR. BORNSTEIN: THANK YOU, YOUR HONOR. 

THE COURT: YOU'RE RIGHT. I APOLOGIZE. SO IT'S 16 

HOURS AND 49 MINUTES. SO YOU HAVE 11 MINUTES PLUS, WHAT, 9 

HOURS? IS THAT ROUGHLY -- AND THEN -- SO WHAT WAS YOUR 

QUESTION? I GUESS IF WE DO -- SO HOW MUCH TIME IS LEFT TOTAL? 

SO IF YOU HAVE -- WHAT? YOU HAVE, WHAT, 3 HOURS AND 41 

MINUTES. DOES THAT SOUND RIGHT, FTC? 

MS. MILICI: YES, THAT SOUNDS RIGHT. 

THE COURT: OKAY. AND THEN QUALCOMM HAS, WHAT? 

MR. BORNSTEIN: I THINK IT'S 8 HOURS AND 11 MINUTES, 

YOUR HONOR. 

THE COURT: 8 HOURS AND 11 MINUTES. SO WHAT IS THAT 

TOTALING, 11 HOURS AND 52 MINUTES? 

MS. MILICI: 11 HOURS AND 52 -- 

THE COURT: YEAH, WE'RE DOING ABOUT 5 HOURS AND 37 

MINUTES A DAY. THAT'S BEEN OUR ROUGH AVERAGE, I THINK. 

SO I THINK THEN WE'D BE FINISHING EARLY ON MONDAY. DOES 

THAT SOUND RIGHT? 

MR. VAN NEST: THAT SOUNDS RIGHT TO ME, YOUR HONOR. 

MS. MILICI: YES, YOUR HONOR. 

MR. VAN NEST: WHAT I WAS GOING TO SUGGEST, WE'LL 

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UNITED STATES COURT REPORTERS

1579

TAKE IN THE NUMBERS, DO OUR PLANNING, LOOK AT OUR WITNESSES, 

AND AS SOON AS WE HAVE A BETTER ESTIMATE OF WHEN WE'RE GOING TO 

REST, WE'LL LET THE FTC KNOW IT AS SOON AS POSSIBLE. BUT IF WE 

FINISH EARLY MONDAY, IT'S CONCEIVABLE THAT THEY WOULD NEED A 

WITNESS FRIDAY. WE'LL -- BUT I'LL TRY TO BE MORE PRECISE THAN 

THAT. 

THE COURT: OKAY. 

MR. VAN NEST: BECAUSE THAT TIME INCLUDES REBUTTAL 

TIME, OUR TOTAL TIME, AND YOURS AS WELL. 

THE COURT: SO FOR YOUR CASE -- HOW MANY EXPERTS WILL 

YOU HAVE TESTIFY? 

MR. VAN NEST: I THINK WE HAVE FOUR EXPERTS. 

THE COURT: OKAY. 

MR. VAN NEST: AND WE STILL HAVE A NUMBER OF 

PERCIPIENT WITNESSES AS WELL. 

THE COURT: OKAY. LIVE OR VIDEO? 

MR. VAN NEST: LIVE. 

THE COURT: OKAY. 

MR. VAN NEST: WE HAVE VIDEO AS WELL. 

THE COURT: OKAY. 

MR. VAN NEST: WE PROBABLY HAVE, I'M NOT SURE HOW 

MANY, BUT WE HAVE A NUMBER OF ADDITIONAL VIDEO -- MOST OF THE 

VIDEO WE'VE SHOWN SO FAR ARE COUNTERS, OR WITNESSES THAT YOUR 

HONOR SAW DURING THE FTC CASE. 

THE COURT: OKAY. 

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UNITED STATES COURT REPORTERS

1580

MR. VAN NEST: AND THEN WE HAVE A NUMBER -- A COUPLE 

MORE OF THOSE, AND THEN A NUMBER OF OTHER VIDEOS OF PEOPLE THAT 

YOU HAVEN'T MET YET. 

THE COURT: OKAY. 

MR. VAN NEST: AND WE HAVE SOME LIVE WITNESSES, AND 

THEN WE HAVE THE FOUR EXPERTS. 

I'LL TRY TO DO AN ESTIMATE AGAIN WITH THE TEAM THIS 

WEEKEND, AND IF I THINK THAT WE'RE GOING TO FINISH FRIDAY, I 

WILL TELL MS. MILICI THAT SO SHE CAN BE READY. 

THE COURT: OKAY. BUT IT SOUNDS LIKE SHE DOESN'T 

NEED TO HAVE ANY WITNESSES ON TUESDAY. DOES THAT SOUND RIGHT? 

MR. VAN NEST: NEXT TUESDAY? NO. NO. 

THE COURT: YOU'LL NEED THE TIME. 

MR. VAN NEST: SHE WILL NOT NEED WITNESSES TUESDAY, 

THAT'S FOR SURE. 

THE COURT: OKAY. SO IT SOUNDS LIKE YOU PROBABLY MAY 

NEED SOME WITNESSES ON FRIDAY. 

MR. VAN NEST: POSSIBLY SO. I'LL TRY TO BE MORE 

PRECISE, BUT I'LL LOOK AT MY LIST AND MY TIMES AND -- 

THE COURT: OKAY. 

MR. VAN NEST: -- SEE WHAT WE HAVE. 

THE COURT: OKAY. SO I WILL FILE THE SAMSUNG SEALING 

MOTION IN A COUPLE MINUTES. I ALMOST FINISHED IT DURING THE 

FIRST BREAK. 

BUT DO YOU ANTICIPATE -- I MEAN, I GUESS THERE'S -- 

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UNITED STATES COURT REPORTERS

1581

NOTHING ELSE HAS BEEN FILED TODAY; CORRECT? 

MR. VAN NEST: I HAVEN'T BEEN ONLINE, YOUR HONOR. I 

DON'T KNOW. 

THE COURT: OKAY. 

MR. EVEN: I THINK, YOUR HONOR, ALL THIRD PARTIES HAD 

TO FILE BY FRIDAY FOR TUESDAY, SO THE NEXT BATCH IS ONLY FOR -- 

THE COURT: GOOD. SO I CAN DENY ANYTHING ELSE THAT 

COMES IN AS UNTIMELY. 

(LAUGHTER.) 

THE COURT: OKAY. AND I HAVE HIGH PRIORITY 

OBJECTIONS. I'LL TRY TO GET THAT DONE AS QUICKLY AS POSSIBLE 

AS WELL. 

BUT THEN I THINK THE NEXT BATCH WILL NOT BE UNTIL NEXT 

THURSDAY FOR FRIDAY. 

MR. VAN NEST: THAT'S RIGHT. 

MS. MILICI: I THINK THAT'S RIGHT. 

THE COURT: OKAY. 

MR. VAN NEST: THAT'S RIGHT. 

THE COURT: ALL RIGHT. GOOD. 

WHAT -- NOW, LET'S SAY WE FINISH IN THE MORNING ON 

TUESDAY, WHICH SOUNDS POSSIBLE NOW, RIGHT, IF WE GO -- 

MS. MILICI: ON MONDAY. 

THE COURT: OR MONDAY, THE 28TH. 

MS. MILICI: YES. 

THE COURT: SO THAT SEEMS HIGHLY LIKELY BECAUSE IT 

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UNITED STATES COURT REPORTERS

1582

SOUNDS LIKE YOU MAY HAVE, LIKE, BASICALLY AN HOUR. 

MS. MILICI: I THINK THAT'S RIGHT, YOUR HONOR. 

THE COURT: RIGHT? 

MR. VAN NEST: I'D HAVE TO LOOK AT THE MATH. IT 

DEPENDS ON HOW MUCH TIME WE GET IN TUESDAY AND FRIDAY, OF 

COURSE. 

THE COURT: OKAY. WOULD YOU WANT TO DO YOUR CLOSINGS 

ON TUESDAY AFTERNOON, OR DO YOU STILL WANT TO WAIT UNTIL FRIDAY 

MORNING? 

MR. VAN NEST: I PREFER TO WAIT UNTIL FRIDAY, YOUR 

HONOR, AS WE HAVE SCHEDULED. 

THE COURT: IT JUST MAKES EVERYONE HAVE TO BE HERE 

FOR A FULL OTHER WEEK IS THE ONLY CONCERN. 

MR. VAN NEST: THAT'S WHAT I'D PREFER. GIVE US A 

LITTLE TIME TO MAKE IT CONCISE. WE HAVE A LIMIT ON TIME. WE 

HAVE A LIMIT ON SLIDES. 

THE COURT: UM-HUM. ALL RIGHT. WELL, LET ME TAKE A 

LOOK AT MY, MY SCHEDULE. I GUESS ANOTHER POSSIBILITY MIGHT BE 

THURSDAY MORNING DEPENDING ON WHAT MY LAW AND MOTION LOOKS LIKE 

THURSDAY AFTERNOON, TO ADVANCE IT A DAY. 

MS. MILICI: THE FTC WOULD BE HAPPY TO ADVANCE IT A 

DAY. WE'D ALSO BE WILLING TO DO IT ON TUESDAY IF THAT'S BETTER 

FOR THE COURT. OF COURSE, THURSDAY MIGHT -- WE WOULD AGREE TO 

THURSDAY FOR SURE. 

THE COURT: WOULD THURSDAY GIVE YOU ENOUGH TIME? 

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UNITED STATES COURT REPORTERS

1583

MR. VAN NEST: I THINK SO. 

THE COURT: WHAT DO -- 

THE CLERK: YOU HAVE THE SPECIAL SET HUNG HA CASE. 

THE COURT: OH, AT 10:00 RIGHT? 

THE CLERK: YES. 

THE COURT: AND WHAT DO WE HAVE IN THE AFTERNOON THAT 

DAY? I FORGOT. 

THE CLERK: MADANI, MOTION TO ENFORCE SETTLEMENT WITH 

FURTHER CASE MANAGEMENT; REYNA, JOINT STATEMENT ON CLASS 

NOTICE; RAQUEDAN, MOTION TO CERTIFY CLASS; AND MCGOVNEY, MOTION 

TO DISMISS. 

THE COURT: I'M SORRY, WHAT WAS THE LAST ONE, MOTION 

TO DISMISS? 

THE CLERK: MCGOVNEY. 

THE COURT: OH, THAT'S ARROW NETWORKS. I THINK 

THAT'S A SECURITIES CLASS ACTION. 

OKAY. I DO HAVE THIS CRIMINAL MATTER SPECIALLY AT 10:00. 

I THINK IT WOULD HOPEFULLY BE SHORTER THAN HALF AN HOUR, MAYBE 

20 MINUTES. 

POSSIBLY THURSDAY WOULD BE OKAY. 

MR. VAN NEST: WHY DON'T YOUR HONOR CONSIDER THURSDAY 

AFTERNOON OR FRIDAY, THEY'RE BOTH FINE. EITHER ONE IS OKAY. 

WHATEVER YOU PREFER. 

THE COURT: OKAY. LET ME GO BACK AND TAKE A LOOK AT 

MY SCHEDULE FURTHER, AND THEN I CAN LET YOU KNOW ON TUESDAY. 

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UNITED STATES COURT REPORTERS

1584

DOES THAT SOUND OKAY? 

MR. VAN NEST: THAT'S GREAT. THAT'S FINE. 

THE COURT: ALL RIGHT. SO WHAT ELSE DO WE HAVE TO DO 

TODAY? ANYTHING ELSE TODAY? 

MR. VAN NEST: NOTHING THAT I'M AWARE OF. 

MS. MILICI: NOTHING FROM THE FTC. 

THE COURT: ALL RIGHT. THANK YOU. SEE YOU TUESDAY. 

(THE EVENING RECESS WAS TAKEN AT 4:41 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 18, 2019

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