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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

HANGZHOU CHIC INTELLIGENT and

UNICORN GLOBAL, INC.,

Plaintiffs,

-vsTHE PARTNERSHIPS AND

UNINCORPORATED ASSOCIATIONS

IDENTIFIED ON SCHEDULE "A,"

Defendants.

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Case No. 20 C 4806

Chicago, Illinois

December 2, 2022

10:00 a.m.

TRANSCRIPT OF PROCEEDINGS - PRELIMINARY INJUNCTION HEARING

BEFORE THE HONORABLE THOMAS M. DURKIN

APPEARANCES:

For the Plaintiffs: TARTER KRINSKY & DROGIN LLP

BY: MR. RICHARD JOSEPH LAMAR LOMUSCIO

MS. CHANDLER ELIZABETH STURM

MR. MARK BERKOWITZ

1350 Broadway

11th Floor

New York, NY 10018

PALMERSHEIM & MATHEW

BY: MR. ANAND C. MATHEW

401 N. Franklin Street

Suite 4S

Chicago, IL 60654

Court Reporter: KELLY M. FITZGERALD, CSR, RMR, CRR

Official Court Reporter

United States District Court

219 South Dearborn Street, Room 1420

Chicago, Illinois 60604

Telephone: (312) 818-6626

kmftranscripts@gmail.com

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APPEARANCES: (Continued)

For the Defendants: GLACIER LAW LLP

BY: MR. YU-HAO YAO

9660 Flair Drive

Suite 328

El Monte, CA 91731

GLACIER LAW LLP

BY: MR. HE CHENG

MR. TAO LIU

41 Madison Avenue

Suite 2529

New York, NY 10010

GLACIER LAW LLP

BY: MR. WEI WANG

200 Park Avenue

Suite 1703

New York, NY 10166

ALSO PRESENT: Mr. Peter Phaneuf

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(Proceedings heard in open court:)

THE CLERK: This is case number 20 CV 4806, ABC

Corporation v. The Defendants Identified on Schedule A.

Could I please have the attorneys present on behalf

of the plaintiffs state their names?

MR. LOMUSCIO: Richard Lomuscio on behalf of the

plaintiffs.

MR. BERKOWITZ: Mark Berkowitz also on behalf of

plaintiffs.

THE COURT: All right.

MS. STURM: And Chandler Sturm on behalf of

plaintiffs.

THE COURT: Okay.

MR. MATHEW: Anand Mathew on behalf of the

plaintiffs.

THE COURT: Okay. All right.

And for defendants?

MR. CHENG: Good morning, Your Honor. He Cheng on

behalf of defendants.

MR. YAO: Good morning, Your Honor. This is attorney

Yu-Hao Yao on behalf of defendant third-party respondents.

THE COURT: Okay.

MR. WANG: This is Wei Wang on behalf of the

defendants.

MR. LIU: This is Tao Liu on behalf of defendants.

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THE COURT: Okay. Let's go through a few -- nice to

see all of you. I've never seen any attorneys on this case

yet. You've all been over the phone so it's nice to see all

of you. Let's go through a few ground rules.

You could all generally, unless you're examining a

witness, you can object or argue from the tables. No need to

come up here, but it's absolutely essential you use the

microphone. My court reporter can't hear you unless you're

using a microphone so make sure the mic is in front of you.

They're all adjustable. The base is moveable so just make

sure it's there.

We're here on plaintiffs' motion for preliminary

injunction. I have a couple of preliminary questions.

My understanding is that you had completed discovery

before Judge Cole; is that correct?

MR. LOMUSCIO: Yes, Your Honor.

THE COURT: You can stay seated.

MR. LOMUSCIO: Oh, I'm sorry.

THE COURT: That's fine. That way the mic is right

there.

MR. LOMUSCIO: Yes, Your Honor.

THE COURT: Okay.

Defense agrees?

MR. YAO: Yes, Your Honor.

THE COURT: Okay. Are all efforts to settle this

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case exhausted?

MR. LOMUSCIO: There's always a possibility,

Your Honor; but as of the conference, there was no interest in

settlement as far as I'm aware.

THE COURT: All right.

Defendants agree?

MR. YAO: Yes, Your Honor. We are open to

settlements. However, as Mr. Lomuscio has indicated, there

hasn't been any fruitful settlement discussion, I would say.

THE COURT: All right. Let's go off the record.

(Off the record.)

THE COURT: All right. Does either side wish to make

an opening statement, brief opening statement, but make an

opening statement?

MR. LOMUSCIO: We do not, Your Honor. We'd prefer to

just go right to witnesses.

THE COURT: All right.

And defense?

MR. YAO: Yes, Your Honor, if I may present my

opening statements.

THE COURT: Sure. And if you want to do that from

the podium, you're free to do so.

You want to change your mind?

MR. LOMUSCIO: I would like to change my mind if --

THE COURT: All right.

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opening - plaintiff

6

Well, hang on. It's their motion so you scared them

into it.

All right. Proceed. You can do it -- if you're more

comfortable standing, just make sure you're at the podium near

the microphone.

And, again, you're Mr. --

MR. LOMUSCIO: Lomuscio, Your Honor.

THE COURT: Lomuscio. Got it.

OPENING STATEMENT ON BEHALF OF THE PLAINTIFFS

MR. LOMUSCIO: And thank you, Your Honor, for

scheduling this on such a tight time frame. We appreciate it.

Plaintiffs Hangzhou Chic and Unicorn have renewed

their preliminary injunction motions to prevent further

infringement by defendants Gyroor, Gyroor-US, Urbanmax,

Fengchi-US, HGSM, Gaodeshang-US, and Gyroshoes. There's no

dispute that the Federal Circuit's decisions vacated the prior

preliminary injunctions entered by this Court. It is

important to note, however, that the Federal Circuit did not

hold that there's no basis for the prior injunctions, only

that the form of the order provided by the Court lacked a

product-by-product analysis of how the accused products

infringed the patents at issue.

While plaintiffs believe the record established for

the prior preliminary injunction sufficiently established

likelihood of success on the merits and irreparable harm and

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opening - plaintiff

7

the Federal Circuit did not hold otherwise, the renewed motion

follows the roadmap for issuance of a renewed preliminary

injunction now sought by plaintiffs.

First, plaintiffs illustrate and will illustrate

today how each product infringes the two patents in issue, the

'723 and the '256 patent. Mr. Hatch, a patent design expert

whom you will hear testimony from today, details how each of

the accused products infringe on the patents in issue. You

will further hear from Mr. Hatch how the minor details, such

as drill holes relied upon by defendants to argue

non-infringement, do not insulate the accused products from

infringement liability.

Second, you will hear testimony today from Richard

Bero, a damages expert, regarding the irreparable harm --

THE COURT: Let me interrupt you, which I'll do

frequently so don't be --

MR. LOMUSCIO: Yeah, I'm sure.

THE COURT: It's more than the drill holes. It's the

shape of the wheel covers. It's the pattern across the pads.

I mean, there's a lot of differences that defendants point

out, and, you know, the '906 patent seems to indicate, the

Fed Circuit seems to indicate, not seems, they held, that's

important prior art and it should really focus the analysis on

everything other than the hourglass shape which was a big part

of Mr. Hatch's report. And, you know, that's how I read the

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opening - plaintiff

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Fed Circuit decision. We ought to be looking at the

hoverboard absent the hourglass shape and all the other

features that are in your patents and in their five products.

I'll get to whether it's five products or three.

MR. LOMUSCIO: Mm-hmm.

THE COURT: And that the '906 patent plays a central

role in what an ordinary observer is going to have to look at.

Look at it absent the hourglass shape and see what the

difference is.

MR. LOMUSCIO: And you will hear the testimony today

that Mr. Hatch describes how you have to look at the entire

product, the entire impression for the observer standard.

THE COURT: You do.

MR. LOMUSCIO: Okay.

THE COURT: But you've got to include, in essence,

the prior art and take that out of your observation, at least

as a distinguishing feature, or a feature that is similar to

the accused products because that is prior art. And I read

the Fed Circuit case as making it pretty clear that's -- it's

highly -- here's what they said: "The '906 patent is highly

relevant to the question of infringement because it discloses

an hourglass shape, a prominent feature common to the asserted

patents and most of the accused products and a feature relied

upon by the plaintiff to establish substantial similarity."

And then they note: "The Hatch report is far from recognizing

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opening - plaintiff

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that the hourglass figure of the asserted patents could not be

relied on to establish substantial similarity improperly

relied upon that feature to show substantial similarity. The

Hatch reports did not support a finding of substantial

similarity." The Court even continued: "Even a cursory

review of the four accused products shows that they are

different from each other, display features not found in the

asserted patents and lacked features shown in the asserted

patents."

So it really I think the Fed Circuit certainly seems

to indicate the hourglass shape is a background feature that

should be disregarded in analyzing infringement in this case.

Now, I know Mr. Hatch has a revised report, and he's

going to testify. But I hope that -- I'm sure he's read the

Fed Circuit opinion, and I hope that is something he addresses

in his testimony.

MR. LOMUSCIO: That will be, Your Honor. And that is

one of the -- there are two points really, Your Honor. One is

we think the Federal Circuit misread part of Mr. Hatch's prior

reports; but even the current report which builds upon the

prior report and he'll go through today points out how there

can be confusion with regard to these particular products.

THE COURT: Okay. Proceed.

MR. LOMUSCIO: Thank you.

You will also hear in addition to Mr. Hatch, you will

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opening - plaintiff

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hear testimony from Mr. Richard Bero regarding the irreparable

harm suffered by defendants and that will be suffered by

defendants through the pendency of this litigation if there's

not an injunction entered. And this is a point apparently

conceded by defendants in their opposition papers given their

failure to even reference Mr. Bero's report.

THE COURT: I'm not sure -- well, perhaps.

MR. LOMUSCIO: Right.

THE COURT: It's still your burden of proof.

MR. LOMUSCIO: Yeah, I totally understand,

Your Honor.

THE COURT: And whether they contest it in their

response brief or not, I have to be satisfied by a

preponderance standard you've met that particular element --

MR. LOMUSCIO: Of course, Your Honor.

THE COURT: -- seeking a preliminary injunction.

MR. LOMUSCIO: Of course, Your Honor. That's why

you'll hear from Mr. Bero today.

THE COURT: All right.

MR. LOMUSCIO: Third, it's apparent from defendants'

papers that they have no viable rhetoric to plaintiff's

prima facie showing of infringement. The two experts

defendants proffer with their opposition papers provide

contradictory testimony regarding infringement and concede

that they never reviewed the accused products prior to issuing

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opening - plaintiff

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their reports. In fact, defendants make no factual showing at

all, either through affidavits or testimony, and improperly

rely on attorney supposition in their papers. Such

speculation does not and cannot overcome what plaintiffs have

demonstrated through their preliminary injunction motion.

Finally, defendants gloss over the infringement

analysis in favor of presenting a series of procedural attacks

they claim undercut the renewed motion. These contentions are

directly undercut by the extended record in this case.

Contrary to defendants' claims, all parties that plaintiffs

seek to enjoin with this motion remain party to this action.

Mr. Hatch's supporting declaration for this motion is proper,

and the Federal Circuit decisions do not preclude this motion.

In sum, plaintiffs are entitled to a preliminary

injunction in this case that prevents defendants from selling

their infringing products as demonstrated in the moving papers

and the testimony the Court will hear today.

Thank you very much.

THE COURT: All right. Just so before you sit down.

MR. LOMUSCIO: Yeah.

THE COURT: The parties you are seeking an injunction

against --

MR. LOMUSCIO: Yes.

THE COURT: -- are Gyroor.

MR. LOMUSCIO: Yes.

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opening - plaintiff

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THE COURT: Urbanmax.

MR. LOMUSCIO: Yes.

THE COURT: U-r-b-a-n-m-a-x. I'm spelling these for

my court reporter.

MR. LOMUSCIO: Sure. Sure.

THE COURT: Fengchi-US, F-e-n-g-c-h-i-U-S, correct?

MR. LOMUSCIO: Yes, Your Honor.

THE COURT: HGSM?

MR. LOMUSCIO: Yes.

THE COURT: Gaodeshang, G-a-o-d-e-s-h-a-n-g-U-S?

MR. LOMUSCIO: Yes, Your Honor.

THE COURT: And Gyroshoes, G-y-r-o-s-h-o-e-s,

correct?

MR. LOMUSCIO: That's correct, Your Honor.

THE COURT: Are those the only defendants you're

seeking an injunction against?

MR. LOMUSCIO: The only defendants we're seeking an

injunction against.

THE COURT: All right.

MR. LOMUSCIO: I just want to make sure I didn't

miss -- I have -- I just -- so your list is the same as mine,

Gyroor, Gyroor-US, Urbanmax --

THE COURT: I didn't mention -- I didn't hear

Gyroor-US.

MR. LOMUSCIO: Okay.

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opening - plaintiff

13

THE COURT: Gyroor-US?

MR. LOMUSCIO: Gyroor-US, Urbanmax, Fengchi-US, HGSM,

Gaodeshang-US, and Gyroshoes.

THE COURT: All right. And which products, if we go

on the products being listed as Gyroor A through E, I believe.

MR. LOMUSCIO: Yep.

THE COURT: Which products are you seeking an

injunction on?

MR. LOMUSCIO: Gyroor A, Gyroor C, and Gyroor E.

THE COURT: Okay. Not B or D?

MR. LOMUSCIO: Not B or D. B and D remain in the

case but are not the subject of this particular motion.

THE COURT: Okay. All right. Because I would like

defense counsel to address this issue first. Make sure we

have the right parties.

MR. YAO: Yes.

THE COURT: We're not going to do this twice. We

have the right parties, the right products and that proper

notice is given to the parties that are being sought to be

enjoined.

MR. YAO: Yes, Your Honor.

THE COURT: Anything else?

MR. LOMUSCIO: Nothing else, Your Honor. Thank you

very much.

THE COURT: All right. I'll hear from defense

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counsel.

Are you going to use the -- you can -- oh, I see.

You have a PowerPoint.

MR. YAO: We have a PowerPoint as well. Can you see

that, Your Honor?

THE COURT: I have. Have you given this to defense

counsel?

MR. LOMUSCIO: I have not received it, no.

THE COURT: Well, you will see it at the same time I

do then.

MR. LOMUSCIO: Okay.

THE COURT: All right.

Please introduce yourself again.

MR. YAO: Good morning, Your Honor. This is attorney

Yu-Hao Yao appearing on behalf of defendant Gyroor-US.

THE COURT: Okay.

MR. YAO: Third-party respondents Gyroor, Urbanmax,

Fengchi-US, HGSM, Gaodeshang-US, and Gyroshoes.

THE COURT: Okay. So with that, I believe every

entity plaintiff mentioned you are representing?

MR. YAO: Yes, we represent defendant Gyroor-US as

well as third-party respondents the other Gyroor, Fengchi-US,

Urbanmax, HGSM, Gaodeshang-US, and Gyroshoes.

THE COURT: All right. So I count the same

defendants they've said are the subject of their potential

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preliminary injunction. You agree?

MR. YAO: Yes, Your Honor.

THE COURT: Okay.

MR. YAO: The number of defendants and third-party

respondents are the same, yes.

THE COURT: And the names.

MR. YAO: Yes, and the name is also the same as well,

yes.

THE COURT: All right. And you represent them?

MR. YAO: Yes, I do. Yes.

THE COURT: And you've had notice of the preliminary

injunction?

MR. YAO: Yes, Your Honor.

THE COURT: And you've responded in writing to that

preliminary injunction?

MR. YAO: Yes, Your Honor.

THE COURT: And you're prepared to respond to their

motion today?

MR. YAO: Yes, Your Honor.

THE COURT: Okay. And then as to the products,

Gyroor, we'll call it Gyroor A, C, and E.

MR. YAO: Yes, Your Honor.

THE COURT: Do you agree those are the products that

the plaintiffs are seeking to enjoin?

MR. YAO: Yes, Your Honor. And I would also like to

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opening - defendant

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point out that Group B, or Gyroor B and Gyroor D are not

subject to this preliminary injunction.

THE COURT: Correct. And that's what plaintiff has

acknowledged.

MR. YAO: Yes.

THE COURT: Okay. Perfect. I think we're on the

same page.

Proceed.

MR. YAO: All right. Thank you, Your Honor.

OPENING STATEMENT OF BEHALF OF DEFENDANTS

MR. YAO: So let's -- today we are here because

plaintiffs have decided once again to file their frivolous and

baseless motion for preliminary injunction and temporary

restraining order against defendant and third-party

respondents. And so before we start, I would like to just

look a little bit at the factual background of this case.

So who are the defendants in this case? As I

mentioned earlier, I represent defendant Gyroor-US who is the

only sole defendant in this case which we also have indicated

in our brief. We have third-party respondents who are now

subject to this PI motion. We have Gyroor, Urbanmax,

Fengchi-US, HGSM, Gaodeshang-US, and Gyroshoes. And as we

just confirmed, the accused products, we have Group A product

as the only accused product in this case, but nonaccused

product which plaintiffs have blindly all lumped together are

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opening - defendant

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Group C and Group E products, and as we also mentioned earlier

that plaintiffs dropped Group B and Group D products in this

proceeding, or they indicated that they are not subject to

this motion for a preliminary injunction.

THE COURT: Well, you mentioned -- there's nothing in

the Fed Circuit decision that rejected the third-party

respondents as not being properly before the Court. Whether

we technically call them defendants or third-party respondents

there's nothing in the Fed Circuit decision that means -- that

says they can't be bound by any injunction I grant. Do you

agree?

MR. YAO: Well, Your Honor, I disagree with you. If

we take a look at -- look at the case here we have, so we also

filed a motion for clarification which this Court denied as

moot after the issuance of the Federal Circuit order. And

based on what we've read -- based on our understanding of the

Federal Circuit court -- I'm sorry -- Federal Circuit order,

the only defendant we have left in this case is Gyroor-US

which I can go into details why we believe defendant --

Gyroor-US is the only defendant in this case. And in

addition, Gyroor -- I'm sorry -- Gaodeshang-US never sold

any -- never sold any accused products.

So if the Court would want to clarify maybe on the

spot as to why our -- since we never had a chance to deal with

our motion for clarification, if the Court would like to

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opening - defendant

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clarify or give us clarification as to --

THE COURT: I don't think it's going to change the

scope of what we do today or next week. I think I'll

reexamine your motion to clarify. I'll look again at the --

how they got into the case as third-party respondents, but I

don't think it's going to change in any material way what each

of the parties present as evidence.

MR. YAO: Okay then.

THE COURT: I'm not conceding that an injunction in

this case is not going to bind those other parties. And if

it's a party that hasn't sold the product, so be it, but that

doesn't mean if the injunction is granted that they somehow

can sell it.

So go ahead.

MR. YAO: All right, Your Honor. I would like to

give you a little bit as to -- background as to why we are

third-party respondents and there's only one defendant in this

case. We also provide it in our brief, but I'll give you a

little bit more overview as to our view of why there are

third-party respondents and only Gyroor-US in this case. So

let me go ahead and skip through the slides real quick.

THE COURT: You know, and I don't want to interrupt

what you have, but the fact is the question of whether these

third-party respondents are bound by an injunction or

whether -- it's not going to affect the scope of the -- I

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opening - defendant

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don't believe at least of the plaintiffs' witnesses as I read

the reports. They don't really deal with that, unless I

misread them.

MR. LOMUSCIO: No, Your Honor.

THE COURT: And I'd rather, for the sake of

witnesses, get them into court on the stand, direct, cross,

and get that over with because none of my questions of them,

to the extent the questions aren't asked by the lawyers, are

going to impact the question of the third-party respondent

versus defendants. I'll give you a chance to argue it, and

maybe we end up briefing it further, but I don't think that is

going to be a key factor for today. I would rather get to

witnesses.

Now, what I would like you to address is some of the

questions I had for plaintiff which is the -- you know, the

'906 patent and how that ought to be read in conjunction with

an ordinary observer's view of the accused products.

MR. YAO: Your Honor, when we get to that, I'll

address the questions you asked to plaintiff about the '906

patent and --

THE COURT: All right.

MR. YAO: -- their patent said.

Before we also move on, just to see if you could

clarify, as I had mentioned, whether Gaodeshang-US never sold

the accused products in this case and plaintiffs failed to

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provide any evidence as so, and that's -- wondering if the

Court would clarify for both parties at this moment as to why,

you know, Gaodeshang is still considered a defendant even

though it isn't.

THE COURT: I'm not clarifying anything on the spot.

MR. YAO: Oh.

THE COURT: If anything I learned from the procedural

history of this case is I need to be careful how I make

findings, the absolutely correct instruction from the

Fed Circuit on that. And so there will be no decision on the

spot about the third-party respondents because it doesn't

impact our -- the gist of the witness testimony today which is

what I want to get to.

So please address --

MR. YAO: Okay.

THE COURT: -- the issue that I raised with

plaintiff. I interrupted him to address that. I'm

interrupting you to address that.

MR. YAO: All right. So, Your Honor, let's go

through -- let me go back to the slide again real quick.

So today we -- the patents -- patent-in-suit for this

preliminary injunction are as we see here plaintiffs' '723

patent and the '256 patent. Those are the only two

patents-in-suit for this preliminary injunction. The

plaintiffs have voluntarily dropped the other two patents

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which were included in the previous motion for preliminary

injunction which they did not include in this case.

THE COURT: Plaintiffs agree with that?

MR. LOMUSCIO: We did not drop them from the case,

Your Honor, no. We dropped them --

THE COURT: You dropped them from the preliminary

injunction motion.

MR. LOMUSCIO: From the injunction motion, yes, Your

Honor.

THE COURT: Okay. Understood.

Go ahead.

MR. YAO: Okay. And as we see here, we also have the

prior art, the '906 patent, which plaintiffs' patent claimed

designer art based on. So if we could -- let's go ahead and

take a view of this model we did.

So, Your Honor, could you see the screen?

THE COURT: Yes, I can.

MR. YAO: All right. So, Your Honor, if you just

look at this from the top view, you could see the -- if you

could see the fenders on the -- on both the left and the

right. You could both see the fenders of the '256 patent as

well as the '723 patent are very similar if not the same

design as the '906 prior art. And if we just look at the

overall impression of the hoverboards, you could clearly see

the '256 patent and the '723 patent are substantially similar

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if not even the same based on the prior art. And if we look

at the --

THE COURT: Let me interrupt you real quick. The

'906 prior art, I thought the fenders were drawn with dotted

lines which means they are not claimed. Am I misunderstanding

the '906 patent? I thought the key part of the '906 patent

that was patentable and therefore is something we should

consider as prior art was the hourglass shape, not the

fenders.

MR. YAO: All right. Yes, Your Honor. You are

correct about that. I will also point out the overall

impression which we will get into later.

THE COURT: Sure. Okay.

MR. YAO: But if you look at the hour -- I'm sorry --

hourglass shape, it is very substantially similar, if not --

but the plaintiffs' '256 patent and '723 patent are very

substantially similar if not the same as the '906 prior art.

Okay. Paul, if you want to -- I'm sorry -- Peter, if

you want to kind of move it around.

Your Honor, so if we take a view from this

perspective, you could also see the hourglass shape is also

very similar between the '256 patent and '723 patent and the

prior art.

And I'll address the fender issue. The fender was

merely disclosed in the '906 patent. But if we just, based on

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the overall impression and as an ordinary observer which we'll

get into later, as an ordinary observer, they would see that

the fenders and just the overall shape, as well as the

hourglass shape of the '256 patent and the '723 patent are

very substantially similar to the '906 prior art which the

patents-in-suit, that's what they're based on.

THE COURT: Slow down a little bit too, okay?

MR. YAO: Oh, sorry.

THE COURT: Thank you.

So those are lights in the front; is that correct?

MR. YAO: Yes, Your Honor. Those are lights on the

plaintiffs' hoverboards.

THE COURT: Well, those the two patents.

MR. YAO: The two patents, but they also have the

actual light on their hoverboards, but this is just a 3D

drawing.

THE COURT: Right.

MR. YAO: Yes. So if we look from the bottom view,

you could also see the hourglass shape is -- excuse me.

Peter, for the '906 patent, could you -- yeah, there we go.

So if we look from the bottom perspective, you could

also clearly see the substantial similarities here between the

'256 patent and the '723 patent as well, as the prior art we

could see the shape is very substantially similar which it is

clear you can clearly see that, the '256 patent and the '723

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patent is based on the prior art, '906 prior art.

THE COURT: Was '906 disclosed in the '256 and '723

patents?

MR. YAO: Yes, Your Honor.

THE COURT: So this was patented over the prior art?

MR. YAO: Yes, Your Honor.

THE COURT: Okay. Good. Go ahead.

MR. YAO: Yes, Your Honor.

Peter, if we could go back to the original.

Your Honor, this is our -- this is our patent, the

'857 patent, and this is what our accused products, the

design, is based on. If you just take a look -- if we take a

look at this, I believe just based on this top view and bottom

view you could see the hourglass shape differences, very

substantially -- it's substantially different from the

patents-in-suit, the '256 patent as well as the '723 patent.

And --

THE COURT: So your products, whether it's the three

products that defendants are seeking to enjoin, each one of

them practices this '856 patent? Because is the '857 patent

really relevant? It's really your product versus their

patent. Isn't that the comparison?

MR. YAO: Yes, Your Honor. I think it is very

relevant because this is what we -- the accused products are

based on. Just based on the design, we base our products on

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opening - defendant

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our own design. We deny our design does not infringe the

patents-in-suit which the plaintiffs claim in this case. And

if we go to the next slide, we have --

THE COURT: Was your patent -- it looks like it was

granted after the two plaintiff patents. Were their patents

listed as prior art in your patent application?

MR. YAO: I believe so, yes.

THE COURT: And the '906 was also listed as prior

art.

MR. YAO: Yes.

THE COURT: Okay. Go ahead.

MR. YAO: Okay. Peter, if we could take a look at

this.

So as we see here, we have the '906 patent with a

'256 -- the patents-in-suit, '256. If you just take a look at

it, if we want to play real quick, if you just see, they're

almost exactly the same similarly to what plaintiffs base

their design on as the prior art. If you want, I could replay

it for you, Your Honor.

THE COURT: No. Well, what is Figure 1? Is that

from --

MR. YAO: Figure 1 is the -- this is the -- so

Figure 1 is the '906 patent, the prior art -- I'm sorry. I'm

sorry. This is the '256, and the one on the top is the '906

patent.

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THE COURT: Well, the one on the top is '906.

MR. YAO: Yes.

THE COURT: But the one on the bottom is --

MR. YAO: The Figure 1 is '256.

THE COURT: '256.

MR. YAO: Yes.

THE COURT: Okay.

MR. YAO: So if you just look -- look at the

substantial similarity between the two, if we kind of combine

the two -- Peter, if you want to play again -- you could see

how almost exactly the same way the '256 patent is based on

the prior art. It's so similar it almost fits perfectly into

the design of the '906 prior art.

THE COURT: Well, one of the key differences is that

'906 does not cover the fenders, the ends, and the '256 which

covers it -- and it also doesn't cover any design for the

pads. But the '256 has part of its design, the fenders --

MR. YAO: If you look at the hourglass shape, that is

almost exactly the same.

THE COURT: No, I understand. I understand your

point. I'm just saying what's the difference in what is

patented in '256 that is different from the '906 is the ends,

the pads and possibly some other features.

MR. YAO: Yes, Your Honor.

If we could then -- so before we move on, I would

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like to make a correction. The '906 patent was filed earlier,

but it was not referenced in the two patents-in-suit.

However, '906 is still a prior art to the patents.

THE COURT: All right. So '906 was not referenced in

'723 and '256?

MR. YAO: Yes. But it is still prior art to the two

patents.

THE COURT: Yeah. Referencing it doesn't change --

you know, it's prior art if it came out before. Whether it's

relevant prior art is an issue for me or a jury if we got to

it, but I understand. But it's not in the -- those two

patents. Was it in your patent, any or all three of those?

MR. YAO: Yes, Your Honor. Yes.

THE COURT: '723, '256, and '906 --

MR. YAO: Yes.

THE COURT: -- were all in the '857 patent?

MR. YAO: Yes, Your Honor.

THE COURT: Okay. Very good.

MR. YAO: So, Your Honor, what we have here is,

again, on the top right here which I just point the second

black dot is, again, the '906 patent, and on the bottom right

here is the '723 patent. So if we -- as we did, we'll show

you the similarity which is almost exactly the same. You

could see the hourglass shape of the '723 patent and the '906

prior art patent, it's very substantially similar if not the

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opening - defendant

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same as well which clearly plaintiffs base their '723 patent's

design on the '906 prior art which was -- which is still a

prior art to the two patents.

And here we also have -- this is the '906 patent.

This is the design. And if we have -- if we want to take a

look, if we -- as we can see just basically before we put

them -- if we put them together, you can also see how the

fenders are almost exactly -- are very similar if not the

same. They are kind of enclosed. And if we took it -- just

look at the two little lines as well as the front view, it's

almost exactly the same as well as just given overall shape as

well. It clearly can be seen that the '723 patent -- I'm

sorry -- the '256 patent is based on the '906 prior art.

THE COURT: Well, lower it again where you started.

MR. YAO: Oh.

THE COURT: As I understand the design patent law,

and tell me if I'm incorrect on this, the dotted lines on both

ends just don't count. They're not being claimed in '906. So

the similarity, I think I raised this point earlier, the

similarity may be in the hourglass shape, but the difference

is the fenders.

MR. YAO: Well, Your Honor --

THE COURT: Then we have to compare what is claimed

in the '723 and '256 patents as the fenders and other features

with the accused products. I don't think '906 really deals

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opening - defendant

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with prior art as to the ends of these hoverboards, not when

they have dotted lines out there. If I'm wrong on that,

correct me; I'm happy to hear it. But --

MR. YAO: Well, Your Honor, as I mentioned earlier,

the '906 was filed earlier, and it's -- even though it was not

referenced in the '256 and '723 patent, it is still a prior

art to the two patents which plaintiffs most likely if not

they have contemplated at least look at this prior art of --

'906 prior art before.

THE COURT: I think we're misunderstanding each

other. '906 doesn't have to be disclosed in the '723 or '256

to be considered as prior art. All I'm saying is '906 doesn't

claim the ends of this hoverboard which means that the real

focus of today's inquiry ought to be, if there is --

plaintiffs think the hourglass shape is something that is

different than '906, I think the Fed Circuit said otherwise.

But I'm happy to hear argument on that, but I think the key

area is --

MR. CHENG: Your Honor, if I --

THE COURT: Well, let me just finish my thought.

I think the key area is what -- what's different.

And what's different from '906 in both their patents and then

in your products are the coverings on the -- of the wheels,

possibly some other features in the body of the hoverboard,

but that's my belief as to what the key inquiry is. If that's

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wrong, I'm happy to hear argument. If your colleague wants to

say something -- I'd rather we not double team. Why don't you

talk to your colleague and see what he wants to say and then

you can come back.

MR. YAO: All right. I'll be right back, Your Honor.

THE COURT: Sure.

(Off the record.)

MR. YAO: Well, Your Honor, going back to the fenders

point. As you mentioned earlier about the dotted lines on the

wheels and the fenders, they're not claiming design. Even

though the fenders were not claimed in the '906 patent, it is

still considered prior art. It was disclosed and which -- as

I indicated, the plaintiffs, when they filed this, their

application for the '723 patent, the '256 patent, they had

probably, you know, considered this design -- well, at least

they looked at it and it was referenced in the '906 prior art

and this is what they based it on. But, Your Honor, you have

a different reading of what we read from. Each if you just

take a look at the hourglass shape, that is very similar, if

not the same. The '256 patent is based on the '906 prior art.

THE COURT: I understand your argument, and I think

the Fed Circuit addressed that too. Go ahead.

MR. YAO: Again, if we take a look at the '723 patent

as well as the '906 prior art, again, you know, the hourglass

shape is very similar if not the same compared to the '906

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opening - defendant

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prior art which we could see the hourglass shape. So it is

clearly -- it could be clearly seen that plaintiffs, when they

filed their patent, the '723 patent as well as the 9 -- the

'256 patent, they have definitely looked at this '906 patent.

They contemplated about it. And when they filed their

application, it can be seen that this -- they base their

patents and patenting design on the '906 prior art.

So, again, this is the accused products, Group A

products, Your Honor. This is -- we also have -- we also

brought in an actual hoverboard if we may present it to you,

Your Honor, an actual hoverboard.

THE COURT: I have one. I'm not sure. I think it's

A, down in chambers. Somebody gave it to us early on in this

case. But I'm happy to --

MR. YAO: May I approach with the hoverboard,

Your Honor?

THE COURT: The whole thing? Sure.

Just put it up here. You could put it up on the

bench.

And this is product A?

MR. YAO: Yes, Your Honor.

THE COURT: Okay.

MR. YAO: This is Gyroor -- yes, that is group

product A. Yes.

Your Honor, if we take a look at it which you have in

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opening - defendant

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front of your screen as well as next to you the actual accused

products in this case. And just -- if we just take a look

from -- as an ordinary observer in this case or just overall

impression, we could take a look at it, we could see how the

hourglass shape are very substantially different from

either -- from the top view, the front view, the bottom view,

as well as the back view. And it's just so substantially

similar that plaintiffs cannot claim infringement if we -- of

the '723 and '256 patent of accused product A.

And here we have accused product C which we are -- if

I could also approach you with it.

THE COURT: And is the color difference --

MR. YAO: (Unintelligible.)

THE COURT REPORTER: I'm sorry. I couldn't hear

anything you said.

THE COURT: Yeah, go back to the mic.

My question was there's the PowerPoint for what is

product C, it has a pink color. The one you -- that the

demonstrative you gave me, or the example you gave me is black

color. But I take it the colors are irrelevant to any

considerations we have?

MR. YAO: You are correct, Your Honor. The color

does not have any difference. The only thing is we don't have

any pink in stock so we brought a black one; but other than

that, there are no relevance.

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opening - defendant

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THE COURT: Fair enough.

MR. LOMUSCIO: Your Honor, we do have a pink one if

the time comes.

THE COURT: If it's the same product, the color is

not anything that's the subject of controversy in this case.

MR. YAO: Your Honor, if you want I could show

plaintiffs an actual product which we brought today if they

think that the color difference might make a difference.

THE COURT: Is anyone contending the color difference

is part of any claim that is a basis for infringement?

MR. LOMUSCIO: No, Your Honor. I was just simply

noting that if you did want to see a pink one, we have one.

THE COURT: I don't.

All right.

MR. YAO: As you can see on the screen, Your Honor,

we have the accused product C which is called Gyroor T580

which you also have next to you, you can see -- as you can

also clearly see that from the top, front, bottom, back view,

the hourglass shape is very substantially -- I'm sorry -- is

very substantially different compared to the patents-in-suit.

Even with the back we have the little microphones as well as

the ventilation holes. It's so substantially different which

as an ordinary observer it is -- they could clearly see that

our accused product, Group C, does not infringe the '723 and

the '256 patent.

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opening - defendant

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THE COURT: Well, your point is -- as I understand it

is that if we essentially look at these products, take away

from them or disregard the hourglass shape because it's prior

art, '906 prior art, the differences I ought to be looking

at -- I may have asked this question four or five different

ways but I'm asking it again. The differences I ought to be

looking at is how is your product different than the '723 and

'256 patents if I disregard the hourglass shape?

MR. YAO: Yep. Well, it's also clear you can see the

fenders are much different.

THE COURT: Well, that's my point. Yeah.

MR. YAO: You see --

THE COURT: I mean, that's what I ought to be looking

at. Now, plaintiffs may disagree, and I'm going to hear from

Mr. Hatch. But I'm trying to get a handle on what the key

contested issues are.

MR. YAO: You will also hear from one of our experts,

Mr. Gandy, later about how the accused products' design

infringe any of the two patents-in-suit.

We have the third nonaccused products is the Gyroor

G11, or as we call it, the Group E products which we also

have -- which we brought one today which if I may approach?

THE COURT: Yes. What was the number on the first

one, the A product, by the way?

MR. YAO: It's T581.

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opening - defendant

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THE COURT: 581?

MR. YAO: Yes.

THE COURT: Okay. All right.

MR. YAO: And this one, the G11, is the Group E

products.

THE COURT: All right. Thank you.

Okay.

MR. YAO: Your Honor, as you can see in front of you,

next to you, we have the Group E accused products, the Gyroor

G11. Again, from the top, front, bottom and back view, we

could clearly see that the hourglass shape are substantially

different. Again, also we don't have the ribs toward here in

the which I'll circle here. You can see the ribs different

when you compare it with the plaintiff's patents-in-suit, the

'256 patent as well as the '723 patent. And if you look at

this design of the hourglass shape, we also have different

line designs which we'll go into later which is very

substantially different from the patents-in-suit as well.

THE COURT: Okay.

MR. YAO: So to give you a little bit of overview of

procedural history as to why we are here today again and why

there are third-party respondents and only defendant

Gyroor-US.

THE COURT: Let's deal with that later.

MR. YAO: Oh.

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opening - defendant

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THE COURT: I'm happy to see your PowerPoints on that

one, but I think we need to start hearing from witnesses. I

don't want to have a closing argument before we start hearing

evidence.

MR. YAO: There's one thing that I would like to

point out. There's a factual mistake in the plaintiffs'

motion on page 12 of their -- it's Docket 592. Plaintiffs

said that none of the relevant prior art creates the same

visual impression of the patents, namely the integrated

hourglass body with a relatively flat surface across the top

of the main body. This is actually -- both features were

disclosed in the '906 patent.

THE COURT: Okay.

MR. YAO: And, Your Honor, I'll close my opening

statement with this. As we all know, we are here today for a

preliminary injunction hearing. The burden of proof is on

plaintiffs, or the movant, to prove that they will be -- they

have a likelihood of success on the merits as well as they

will be irreparably -- I'm sorry -- irreparably harmed if the

injunction would not be in place. As plaintiffs have pointed

out, their expert, Mr. Bero who will testify later, his report

is deficient, contains no analysis whatsoever of any casual

nexus that is required or any lost sales that plaintiffs

contend. And even if plaintiffs did claim. A lost sales

injunction does not remedy lost sales. It's clearly

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opening - defendant

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compensatable with monetary damages.

In addition, the irreparable harm to defendant would

be much greater if the injunction would be in place compared

to the plaintiff.

In addition, plaintiffs also in their reply brief

does not address any of the oppositions -- opposition in

response that we put in our brief regarding the loss of

harms -- the loss of sales as well as any -- loss of market

share which is required to prove this patent -- to prove --

for injunction.

In addition, having an injunction in place just

because defendants and third-party respondents are direct

competitors goes against public policy and goes against the

heart of free market and capitalism and as you will hear later

today with our expert, Mr. Gandy, as to why there are no -- no

claims of likely -- no claims of infringement in this case.

THE COURT: All right. Thank you.

MR. YAO: Thank you.

THE COURT: All right. Plaintiffs may call their

first witness.

MR. BERKOWITZ: Plaintiffs would like to call

Mr. Paul Hatch.

THE COURT: All right.

Mr. Hatch.

(Witness sworn.)

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THE COURT: You may begin.

PAUL HATCH, PLAINTIFFS' WITNESS, DULY SWORN,

DIRECT EXAMINATION

BY MR. BERKOWITZ:

Q. Good morning, Mr. Hatch.

A. Good morning.

Q. Could you state your full name for the record.

A. Yes. I am Paul Hatch. I reside here in Chicago.

Q. Okay.

THE COURT: Is the microphone on? Is there a green

light there on the bottom?

THE CLERK: It's on now.

THE COURT: It's on now. Okay. All right.

Okay. Go ahead.

BY MR. BERKOWITZ:

Q. Could you tell us what has been your role in this case up

through now?

A. Yes. I've been engaged by plaintiffs to review the

patents and to analyze this case of design patent

infringement.

Q. And what is your understanding as to who the plaintiffs

are?

A. The plaintiffs are Hangzhou Chic and Unicorn Global.

Q. Okay. And do you understand the relationship between

those two parties?

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A. Yes. I believe Hangzhou Chic is the manufacturer and the

owner of the patents in question, and Unicorn Global is a

licensee and has the license to distribute the product here in

the U.S.

Q. And when did you first start working on this case?

A. I started in 2020.

Q. And since that time, have you provided any other testimony

in this case?

A. Yes, I have. I provided testimony for the first

preliminary injunction in 2020. I also wrote a declaration in

2021 for the second preliminary injunction. I also provided

testimony and reports during discovery which was summer this

year and of course have provided a declaration in this current

preliminary injunction.

Q. Okay. Thank you.

Could you tell us about your current employment?

A. Yes. I am currently undertaking a Ph.D. in the learning

sciences at the University of Illinois at Chicago.

Q. Okay. So are you not currently employed?

A. I'm not. I recently retired from my employment.

Q. Okay. So before we go to the employment, could you tell

us a little bit about your current Ph.D. work?

A. Yes. So learning sciences involves looking at psychology,

technology, and education. It's essentially about how people

perceive things and how people learn. And it's been an area

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of interest of mine for many years, so I decided to go the

full route with this for the next six years.

Q. Okay. And when did you start that program?

A. I started in 2020.

Q. Okay. And prior to 2020, were you employed?

A. Yes. I was the CEO of Teams Design.

Q. Okay. Can you take us back to your education post high

school?

A. Yes. My undergraduate degree was in industrial design

which was at the University of Northumbria in the UK.

Q. And what kind of coursework did you engage in while you

were doing your undergrad?

A. Within industrial design, we learned a range of things,

obviously drawing techniques, understanding about manufacture,

engineering, a lot about how to design and how people perceive

those designs. And ergonomics, for instance, is a very big

part of it.

Q. Okay. And when did you complete your undergraduate

training?

A. That was 1993.

Q. Okay. And after 1993, did you begin working?

A. Yes. I began at -- I moved from Germany from the UK, and

I began employment at Teams Design in Germany.

Q. What was your role at Teams Design, at least initially?

A. So I started as a junior designer and became senior

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designer after a number of years. And at the point of about

five years, the company wanted to open up a branch in the U.S.

and selected me to open it up for them which I did in 1998

here in Chicago.

Q. Okay. And before we get into your specific role, can you

tell us a little bit about what Teams Design does in general?

A. Yes. So Teams Design is an industrial design consultant.

So by that role, they consult with manufacturing companies

that make consumer products, make industrial products, who

have brands, and essentially provide industrial design

services. So that covers undertaking research to understand

consumer needs, ideation, creating new ideas, problem solving,

and then designing the products, that is the look and feel of

the products, to -- all the way from sketch, through

computer-aided design, through into engineering, and very

often we would follow it through manufacture. We wouldn't do

the actual manufacture ourselves, but we would walk the shop

floor to make sure things are working out.

Q. Okay. Could you give us some examples of some of the

companies that Teams Design works with?

A. Yes. So we became one of the largest design

consultancies, industrial design consultancies in the world,

so we were lucky to be able to work with some of the largest

corporations as well. So we designed a lot with Bosch and

with Samsung; with Chrysler, the automobile company, for

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instance; with Siemens.

Q. And did you yourself work with those particular companies?

A. Yes. Yes.

Q. And could you tell us a little bit more about your role I

guess in working with those companies?

A. So I was engaged from start to finish on all of the work

we did. Obviously I had a number of staff. We reached almost

30 people at one point, in Chicago that is, and of course had

multiple branches. However, I was involved right to the end

until I retired in going out into user research and to

people's homes, understanding their needs, in guiding the

design and guiding the ideas and the development, essentially

all the stages.

THE COURT: Hang on. Let's go off the record for a

moment.

(Off the record.)

THE COURT: All right. Are we still missing some

people?

MR. YAO: We're missing my colleagues.

THE COURT: We'll wait until they're back.

(Off the record.)

THE COURT: All right. Okay to begin?

MR. YAO: Yes.

THE COURT: Here we go. It looks like we have

everyone here.

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All right. You may continue your direct examination.

MR. BERKOWITZ: Thank you.

BY MR. BERKOWITZ:

Q. So when we left off, Mr. Hatch, you had told us a little

bit about your -- some of the types of work that you had done

while at Teams Design.

Could you tell us a little bit more about the

specific products that you worked on while at Teams Design,

and in the interest of time, some of the -- as they relate to

the types of products at issue here in this case.

A. Yes, of course. And I did work on a number of consumer

products. That was about 50 percent of our business. And

related to the products in this case, I also worked on a

number of self-balancing vehicles, that is one of our clients,

for instance, had an entire department that was dedicated

towards devices of mobility as they called it. And so we

worked on redesigning some segway devices. And segways, for

those who might not know, came out --

THE COURT: I know what they are.

THE WITNESS: Yes, thank you.

And essentially we were redesigning it for use in

certain spots in other areas. So we were creating a different

look and feel and making it more applicable to the target

area.

And we also worked on some electronic bikes, for

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instance, even some single-wheeled self-balancing devices as

well.

BY MR. BERKOWITZ:

Q. Okay. Thank you.

So let's jump in. I know you said earlier that you

were retained in this case to provide opinions. Could you

tell us what types of opinions that you've been asked to

provide here?

A. Yes. I was asked to analyze the patents and the accused

products, and so looking to -- at the area of infringement.

Q. Okay. And what is your understanding of a patent?

A. So there are two main types of patent, utility and design

patent of course. And as I understand, it offers protection

for the inventor, that is it precludes someone from infringing

on their invention.

Q. And what types of patents are at issue in this case?

A. So in this case, we have four design patents that we're

looking at.

Q. Okay. And today, how many patents are we here to talk

about?

A. So in the preliminary injunction here today, we're looking

at just two of those four patents.

Q. Okay. And which two of those patents are we here to talk

about?

A. It's -- I do have some slides, but the patents themselves

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are the -- what we've called the '723 and the '256.

Q. Okay.

MR. BERKOWITZ: We do have some slides that Mr. Hatch

prepared. Can we bring them up on the screen?

THE COURT: Yes. And have you shared these with the

defense?

MR. BERKOWITZ: Not yet, but we do have paper copies

that we can mark.

THE COURT: Yeah. Why don't you give a paper copy to

my law clerk if you've got -- and me, and then defense, of

course.

MR. BERKOWITZ: May I approach?

THE COURT: Yeah, through my courtroom deputy,

please. Thank you.

All right. You may proceed.

MR. BERKOWITZ: I'm just going to bring it up on the

screen.

THE COURT: All right.

Is it properly connected at your table?

MR. LOMUSCIO: It appears to be connected, yes.

THE COURT: All right. Did you test it out before

the hearing? Was it working then, or do you know?

MS. STURM: Do you know?

MR. LOMUSCIO: We weren't able to.

THE COURT: Okay. Then here's what we'll do. We'll

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call the IT department to come up and work on it, but in the

meantime, we all have paper copies. Does the witness have

one?

MR. BERKOWITZ: No.

THE COURT: Let's give him one, and then we can work

off of the same -- it's numbered pages. We'll work off the

same documents.

And then, Emily, will you ask somebody to come up?

THE CLERK: Yes.

THE COURT: Thank you.

We'll have someone come up and solve that, but in the

meantime, we'll all work off the paper copies. Alternatively,

I think you can do a hookup off your computer on the deck here

might work.

MR. BERKOWITZ: I can try that.

There we go.

THE COURT: All right. Very good. So you're going

to ask the questions and push the slides, but I'm sure you can

do that.

MR. BERKOWITZ: I'll give it a shot if I can get it

to work. Let's just move forward.

THE COURT: I think your colleague may put another

laptop up there.

THE WITNESS: Yes, there we go. Third time's a

charm.

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MR. BERKOWITZ: Thank you.

THE COURT: You may proceed.

MR. BERKOWITZ: Yes.

BY MR. BERKOWITZ:

Q. Okay. So before that little glitch, we were talking about

the two patents that are asserted in this case?

A. Yes, that's correct. So on this slide, we see the two

patents which I will continue to refer to as the '723 and the

'256. We see they are both from the same inventor, and they

were filed at the -- I'm sorry. They were -- the date of the

patent -- I'm sorry. They were filed at the same time.

Q. Okay. By the same time, what do you mean?

A. On the same date. They were literally filed on the same

date even though the date of the patents, it differs between

them.

Q. Can you tell us a little bit about the type of information

that's shown on the cover of the patent?

A. So we see, first of all, the title of the patent; in this

case, the self-balancing vehicle.

On the -- towards the bottom right, we also see the

claim and the description which we've got on the next slide

highlighted. So, for instance, on the '723 here, we can see

the title, the self-balancing vehicle, the filing date and the

issue date. Importantly, it was filed in 2014.

On the next slide, we can see the claim and

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description. And being a design patent, the claim here refers

directly to the figures.

Q. Okay. And how many figures are claimed and disclosed in

the '723 patent?

A. There are eight figures. And in the description, it

provides a description of exactly which angle each of those

figures represents.

Towards the bottom, we can see highlighted in yellow

pointing out that the broken lines are shown for purposes of

illustrating, that is environmental, it provides context, and

those are items that are not part of the claimed design.

Q. Was there a reason that you highlighted that for us?

A. Yes, it's just important to know that as we look at the

figures that there are certain elements that are unclaimed as

part of that patent.

Q. Okay.

A. And so the next few slides we show some detailed images of

the patent. I'll only go through those briefly for brevity.

But essentially we see in Figure 1, there are some

areas that are unclaimed. There we see the O and the I that's

part of the foot tread area. Also towards the very middle of

the product there's some dotted lines showing some unclaimed

markings on the buttons.

And we also see on both drawings, Figure 1 and 2, the

hubs of the wheels are unclaimed. And on Figure 2 we see the

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tread of the wheels, that is the wheels as a whole are shown

with broken line, and, therefore, are unclaimed.

Q. Could you tell us a little bit about how you take into

account what's claimed and unclaimed when performing a design

patent analysis?

A. Yeah. The unclaimed matter, it is important to understand

the context that it's providing so that's why it's included in

drawings like this.

However, if it's unclaimed, that is shown through the

dotted lines, this is not part of the claim of the design.

That is the protected part of the design.

Q. Okay.

A. We can go to the next figures maybe on the next slide.

We've got Figure 3 and 4. And there we're seeing the rear

view, straight on, and the front elevation, as is typical with

patents with seeing very specific views.

We also see some unclaimed matter here, what appeared

to be screw buses. We see the hubs and the wheels are

unclaimed. And of course there's some -- on the front

elevational drawing there's a button and probably a charging

port that are marked in dotted lines as well.

Q. Okay. And, again, those claimed versus unclaimed

features, are those taken into account during the analysis?

A. They're part of the consideration of the design as a whole

because it's giving us context, but it is not part of the

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claimed part, the protected part of the design.

Q. Okay.

A. On the next slide we've got Figure 5 and 6, 5 showing an

end view, or left-side view, I should say, and it does point

out in the description that the right side is a mirror image

of the same. And there we do see obviously the open fender

that we see wrapping over the top of the wheel. And the wheel

itself and the hub cap are all marked as unclaimed.

And Figure 6 we see a nice angled view. In this case

it's the rear top right perspective of the design, and we see

the same elements that we've covered in the other views that

are marked as unclaimed.

Q. Okay.

A. Then finally, on the next slide where we see Figure 7 and

8, excuse me, two more angled views. On the left there,

Figure 7, we're seeing a front top/left perspective, and,

again, we're seeing the unclaimed matter that aligns with what

we're seeing on the other images.

And Figure 8, we're looking from an angled view from

below.

Q. Before we move on to the second patent, are there

particular views that are more important than others?

A. No. When analyzing or understanding what's claimed here,

it's important to look at all of the views to understand the

design as a whole. It would be wrong to look at one specific

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view and make inferences based on one view alone.

Q. Okay. And could you sort of run through the same analysis

for -- the same description for the '256 patent?

A. Yeah, absolutely. I'll be a little bit more brief as well

in the interest of time, but we also see here as the same

title, as self-balancing vehicle. It was also filed on the

same date here in 2014 which it lays claim to and -- I'm

sorry -- priority to.

And on the next slide, we see also zoomed in to the

claim and description, the claim again and description

referring directly to the figures. We also have eight

figures, and the descriptions are very similar here. And it

also calls out that the broken lines form no part of the

claimed design.

THE COURT: What is the essential difference between

those two patents? Is there something you can point to in a

particular figure that is different from one to the other?

THE WITNESS: Yes. Maybe if we go to the third

slide, the angled view, we get a good view.

THE COURT: What page would that be? Go ahead.

THE WITNESS: I'm sorry. I think it's the scene we

could look at there. So there are a lot of similarities

between the two patents. There are some differences we can

see in even the unclaimed areas here. The design of -- there

are some differences around the design of the form as it comes

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to the -- towards the fenders and the treatment of the fenders

themselves.

The unclaimed wheels appear a little different here

and some differences in the treatment of the -- of the

pronounced footing areas.

But all in all, there's a lot of similarities. They

were both filed on the same date, and they were both granted a

patent independently from each other.

Q. And just to clarify, you were looking at Figure 6 as you

were providing that description?

A. Yes. Thank you.

And so. Yes, we have similar angles for the rest of

the patent here. We have Figure 7 and Figure 8 as well.

Q. Are there any other differences that you would like to

call out between the '256 and the '723?

A. Yeah, there are some differences in smaller details when

we look at the lighting areas, for instance, which we see on

Figure 7 and Figure 8. There are some differences in the

center of the body as a whole. But these are design

differences. They do contribute to the overall impression,

but the -- they -- well, yes. That's it. Thank you.

Q. Okay. And we've now covered the two patents that are

asserted in this case. I would like to move on to the accused

products.

Would you -- in general in this case, how many

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different accused products are there?

A. So there are five accused products, but here for the

preliminary injunction we're looking at just three of those,

as was mentioned earlier today. There is the -- what I show

on the slide here, the Gyroor A, C, and E. And we already

have physical samples, I believe, to the left of the bench

here.

Q. Okay. And did you bring your own samples with you today?

A. I did, yes. And actually these are the samples I used

when I was analyzing the products itself. It was very useful

to be able to look at the products in person rather than

through photos.

Q. Okay.

A. It's a little less deceiving that way.

Q. Okay.

THE COURT: Do you practice the patent on the -- this

is more to the attorneys, and if the witness can answer, fine,

but does the plaintiff practice the patents? In other words

do you have products that are identical to the patents so I

can actually do a -- rather than comparing a drawing to the

Gyroor products, I could compare a plaintiff product to the

Gyroor product as long as the product for the plaintiff is

identical to the patent?

MR. BERKOWITZ: We don't have a sample of our product

with us. We do --

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THE COURT: All right. And it's irrelevant unless

you actually practice the patent.

MR. BERKOWITZ: I believe we do. But, yeah, the

analysis is the drawings against the accused product.

THE COURT: All right. Well, you've got my question.

We'll address it later. But it's an easier side-by-side

comparison if you're looking at two hoverboards as long as

the -- and it's not the analysis unless your hoverboard, the

plaintiffs' hoverboard, is identical to the claimed drawings

in the patent.

MR. BERKOWITZ: Okay.

THE COURT: So anyway, go ahead.

MR. BERKOWITZ: I would like to mark each of the

three hoverboards as exhibits, if that's all right.

THE COURT: Sure. Why don't you -- just call them

plaintiffs' --

MR. BERKOWITZ: I was going to do 1, 2, and 3.

THE COURT: That's fine. Plaintiffs' 1, 2, and 3,

and I will consider these ones, the ones provided to me by

defendants, Defendants' 1, 2, 3, 1 being Gyroor A, 2 being

Gyroor C, and 3 being Gyroor E.

MR. BERKOWITZ: Okay.

BY MR. BERKOWITZ:

Q. So, Mr. Hatch, could you just give us an overview of the

accused products?

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A. Yes. As we can tell, they are very, very similar to each

other, and they are all self-balancing vehicles, as is the

patent description. And they are marked as hoverboards.

Q. Okay. So we've talked about the asserted patents. We've

identified the three accused products. Can you in general

walk us through your methodology in making an infringement or

non-infringement analysis for design patents?

A. Yes. So very briefly, the stages that I would go through,

first of all, would be claim construction. That is by looking

at the design patents themselves, looking at what's claimed,

understanding what's unclaimed, and getting a good sense of

the design as a whole which is the important first step.

Excuse me.

Following that, it's important to identify who the

ordinary observer would be for this particular case which I'll

get on to shortly, and is essentially our understanding of the

ordinary observer is informed in part by understanding the

actual purchaser of the accused product.

The next stage I would go through, one should go

through is to understand the prior art, to look at the prior

art of the invention at the time, at the specific time. And

that gives some understanding as to how novel the design was

at the time, what existed before it and the real context of

the design that we're looking at through the figures.

Following that, conducting two stages of infringement

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analysis or the ordinary observer test, the first of which

we -- we do a direct comparison between the accused products

and the patent to the drawings of the patent and the design as

a whole. And the second -- in that first stage, we look

broadly to see if they are plainly dissimilar or not.

Given that then we move on to the second stage where

we then bring in the prior art and view it through the eyes of

the ordinary observer to understand if the accused products in

the patent are closer than they are to the -- closer to each

other than they are to the prior art.

Q. Okay. So now let's take the next step and apply that

methodology to the particular patents and products in this

case.

So you said the first step was construing the claims.

Could you tell us how you went about doing that in this

particular case with respect to each of the patents?

A. Yes. So essentially looking at the claimed design and

understanding what's unclaimed; as we kind of walked through

before, looking at the patents and also as part of my analysis

looking at the file history to see if there's any other

signals there that may give us further indication.

Q. In this particular case, was there anything of note in the

file histories?

A. No, there wasn't. The designs were accepted for the

patent.

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Q. Is that the case for each of the asserted patents?

A. That's correct, yes.

Q. Okay. So step 1 is construe the claims. You said that

step 2 was to define the ordinary observer; is that correct?

A. Yes, that's correct.

And so I believe the next slide, I -- yes, we can

talk briefly about the ordinary observer. This is important

to understand because the viewpoint in looking at the figures

has to go through understanding the viewpoint of the ordinary

observer. This is a hypothetical person. So to read the top

lines here and not all of it, but the ordinary observer is one

who is not an expert in the claimed designs but rather one of

ordinary acuteness who is a principal purchaser of the

product.

And so first of all, as part of the process, we look

to, okay, who is the purchaser of the accused product. And

based on my experience in this case, I defined that that would

be a consumer user or the parents of the user, each having

little or no experience purchasing hoverboards.

We use that information about the purchaser to

understand the level of acuity or attention that that person

pays to the design and the details of the product itself.

THE COURT: What is the basis of your conclusion that

the consumer user would have little or no experience

purchasing hoverboards? And if you're coming to that in your

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outline, you can wait until you get to it; if that's not in

your outline --

MR. BERKOWITZ: Now is a good time.

THE COURT: All right. Go ahead.

THE WITNESS: No, it's a good question. Based on my

experience, it's clearly a consumer product. And seeing how

it's retailed, for instance, chiefly online in stores like

Amazon, there are some brick-and-mortar stores where it's

retailed like Best Buy and Walmart, and the way it's presented

certainly speaks to their attracting attention to the

consumer. And price point and features seem to be the

prominent items that are being presented.

So in many years I've worked with consumers,

conducted user research to get an understanding of how they go

about purchase habits and how they look at products. And so

based on that experience and seeing everything that I have

here, it looks like the purchaser is not going to have an

intricate knowledge of all the nooks and crannies and styling

details of the particular designs.

BY MR. BERKOWITZ:

Q. And I think you touched on this before, but can you

explain a little bit more about the interplay between this

principal purchaser and how you use that in connection with

the ordinary observer?

A. Yeah. I think that's very good to explain. Actually I've

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created a diagram on the next slide because it's often

misunderstood.

The hypothetical ordinary observer we understand to

have knowledge of all the relevant prior art. So in this

case, they have knowledge of the prior art that's cited. They

would have knowledge of the '906, of course, because it was

invented at around the same time.

And so this hypothetical ordinary observer has

knowledge that those exist but the question remains how much

attention do they pay when they're looking at those designs,

if -- whether they, for instance, have intricate detail

inspection of the designs or whether it's more of a fleeting

glance.

And so to find that out, that's where we use and

refer to the principal purchaser. We understand the level of

attention that they apply and use that to construct our

hypothetical ordinary observer.

THE COURT: Is there evidence that both the -- again,

if -- that these products are sold in brick-and-mortar stores

at the same time? In other words, there's a Gyroor product

and a plaintiff product in a Walmart or in a Best Buy where a

person, an ordinary observer, could actually physically

compare the two, and whether they're boxed so that all they

would see is a picture anyway, they couldn't even hold up each

one to do a comparison? Are you aware of that fact or that

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factor being present here?

THE WITNESS: That was not part of my analysis as I

strictly have to look at how the patent is representing the

design as a product and its packaging may actually infer other

qualities that the patent doesn't have.

THE COURT: Okay. No, I understand. And it goes

back to my question of whether there's actually a physical

product of the plaintiff that practices the patent that would

be something that a person online would look at, look at both

products, and an ordinary observer could see if there were

differences or they're confusingly similar, or if they are

physically present at a brick-and-mortar store, whether

they're packaged in a way where a person could actually

observe differences or not.

Not a criticism of Mr. Hatch. You know, that's not

what he was asked to do, but I'm raising that with the

parties. You can answer it at some point in the future.

Go ahead.

MR. BERKOWITZ: Sure.

BY MR. BERKOWITZ:

Q. Mr. Hatch, I see on the website of this slide that you

prepared below the principal purchaser, you've identified what

you say here is a low level of attention. Can you explain

what you mean by that?

A. Yes, and that sort of goes back to after understanding

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that the purchaser might be someone who is quickly looking

through Amazon.com or walking through the shelves in Walmart,

that their attention is going to be drawn towards things like

the price point or how long does the battery last and things

that the -- the actual features on these pages and on the

boxes call out. And, therefore, they have a low level of

attention, not in life in general, but towards the styling

details.

Q. Okay. So we've covered first I believe the first two

steps of your methodology: construing the claims, defining the

ordinary observer. You said that the next step would be to

understand the prior art. So we have -- we have talked a

little bit about the prior art. Can you tell us what you

would do particularly in this case as applied to these patents

to understand the prior art?

A. Yes. And it's a very important part of the analysis to

understand the prior art.

What we see I think on the next slide here, we see

the six items, only six items of prior art, and these were

cited -- excuse me -- the six items that were cited on both

patents, on the '723 and '256, that had exactly the same prior

art. And we get an understanding then of the ordinary

observer, what they saw out in the world and how different

this new design was.

Now, if we go to the next slide, my understanding is

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also that the '906 was invented at or around the same time, or

this was filed at or around the same time. And so even though

it wasn't -- the inventors did not include it or this hadn't

been made public at the time that the patents in issue were

filed, this is considered prior art in this case.

And so the '906 adds to our understanding of what

existed at that time.

Q. Okay. And can you characterize the '906 patent for us?

A. Yes. So we see from the '906 that it is also for a

similar-type vehicle, a self-balancing vehicle is our

understanding, and we see a very slick race move body.

Obviously we are seeing an hourglass shape which we saw in a

number of the other prior art as well. That itself was not

unique to the '906 when it was filed. Hourglasses have been

around for a while.

However, what we're seeing here is their

interpretation of that form in the way that it's so smooth and

so rounded, and I believe in my deposition I used the word

melted. It doesn't have those sort of hardened edges that we

see in some of the other prior art at the time.

Q. Okay. So we've now established the universe of prior art.

Can you tell us how that sort of plays into your analysis in

connection with these particular patents for each of the '256

and '723?

A. Yes. And I think maybe going back to the last side, I

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think it's important to see that, you know, with our

understanding of what existed at the time, the '723 and '256

patents provided something that was really quite different,

quite radically different, and hadn't existed before it. So

in doing so, we see that the prior art is really quite far

away from the patents at issue, and, therefore, you would

understand that it has very broad scope.

Q. Okay. So we've now covered the first three steps of the

analysis. We've construed the claims, defined the ordinary

observer. We've gone through your understanding of the prior

art. What's the next step?

A. So the next step, if you go forward -- thank you.

THE COURT: Do you need some water?

THE WITNESS: Thank you.

THE COURT: Oh, you've got some. Okay.

BY THE WITNESS:

A. So in the next step, as I had mentioned before, first of

all, we do a direct comparison between the patent, the design

as a whole of the claimed part of the patent to the accused

product. And, again, of course my analysis was to the

physical product that I had at hand.

Here, as specifically, we're looking at a more sort

of broader look in this direct comparison to understand if are

they plainly dissimilar, are we looking at an apple and a

banana, or are we looking at similar products here.

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The conclusion, as can be clearly seen, these are not

plainly dissimilar.

Q. And when you say "these," specifically what are you

referring to?

A. The -- yes, thank you. The accused product and the -- in

this case, the '723 design patent were not plainly dissimilar.

Q. So if you made the determination that the design claimed

in the '723 and the accused products, Gyroor A, are not

plainly dissimilar, what's the next step?

A. So when that has been confirmed, then we move on to the

next step of the analysis, the next step of the ordinary

observer test, which is where we now view this through the

eyes of the ordinary observer and we compare the patent, the

claimed design of the patent to the accused product and to see

whether they are closer to each other than they are to the

prior art.

Here on the slide we're seeing all three elements; in

this case, the '723 patent and the Gyroor A product, and the

prior art, including the '906 that was part of my analysis.

Q. And when you're performing this analysis, which views are

you focusing on as you compare -- do this three-way analysis?

A. It's very important to understand the design as a whole

because as we understand from this type of infringement

analysis and from Egyptian Goddess, the case that lays out

this process, we need to understand the design as a whole and

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the impression that it makes, rather than take it apart into

individual isolated parts that you view through individual

viewpoints.

Q. Okay. I see here you have a particular perspective view,

for example, from Figure 6 of the '723 and comparing with

similar views. Is there a reason you chose that particular

view?

A. Well, the analysis was done looking at all the views of --

and of course the actual physical sample here, but for this

slide at least, this is a representative view showing an

angle. I think if I showed one of the more what's called

isometric angles like straight down or straight from the

front, that's not how people view products. It's very rare

that you would see it so directly. And so the ordinary

observer gets -- or us looking at this, we get a better

representation of the design at this angled view. But of

course the analysis was done with all views in mind.

Q. Okay. And could you walk us through how you would

apply -- how you would walk through that analysis with all

these different views?

A. Yes. Excuse me.

And so importantly here is to understand the design,

the impression of the design of the patent and then looking at

the accused product to understand the impression it's making.

In this case, we found, or I found that the impression that

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they're making through the eyes of the ordinary observer would

be very much the same in light of the prior art. And so when

we're looking at the prior art, we get an understanding of how

far or how close that might be.

Q. Okay. So can you tell us a little bit more about how you

did that analysis, particularly with respect to the '906

patent?

A. Yes. So, for instance, with the '906 patent, maybe the

next slide may be -- thank you. So here we've got Figure 4

from the '906. Again, we're looking at it in all directions.

But we do see this very smooth, uncluttered, rounded body, and

there's no sort of pronounced areas around it. And I

understand, you know, I'm an industrial designer and not a

lawyer, but in my understanding, while it doesn't claim the

fenders as such in its own protection, when used in the

three-way analysis like this, we do consider them because it

has been disclaimed. It's something that was invented in the

past. And so we -- in looking at the '906 in this context, we

do see these closed fenders that cover the wheels, including

covering the hub.

Q. Okay. So --

THE COURT: You construe that, those dotted lines as

being fenders that cover the hub?

THE WITNESS: Yes. Yes, I would. It is not titled

as such in the patent, but knowing the context, that this is a

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self-balancing vehicle or similar, I think it's fair to call

fenders. There may be other names that we can use, but what's

important here I think is the look that those give and the

impression. I wouldn't want to limit it to a particular word.

THE COURT: All right. But the upper oval you would

view as the fender, and the bottom half circle would be the

wheel?

THE WITNESS: Yes, that's my understanding.

THE COURT: Okay.

BY MR. BERKOWITZ:

Q. Now, you used the word "impression" several times. What

is that impression here when you're comparing these three

different products or references?

A. Yeah. So, again, obviously it's incorrect in this

analysis to translate everything directly into words and only

use the words as the claim. However, in this analysis, it's

kind of useful for me to explain how I think an ordinary

observer would be looking at this in light of the prior art.

So, for instance, the wording that I've included at

the bottom of this slide which is from my report describes how

the ordinary observer would see both the '723 patent and the

Gyroor A design when viewing them which I will briefly read

out here. They both create a visual impression of an

integrated hourglass body with a relatively flat surface

across the top of the main body, pronounced footing areas and

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open-arched fenders over the top of the wheel area.

And so in a sense, it's a combination of those

features that we -- that give the overall impression and not

one of those features in isolation.

Q. Okay. And how did those features compare to those of the

'906 patent?

A. And so I do have a description for that which I'll cover

first and maybe explain a little bit further. But the

description here, again, describing how the ordinary observer

may see this, this creates an impression of very uncluttered,

rounded, smooth body with no pronounced footing area, and it

has closed fender skirts.

Maybe to clarify as well in using the term "fender

skirts" is from automotive and other areas where in the '50s

and '60s they used to hide the wheels, tucked away, that way

you'd just see the wheel popping out the bottom which is kind

of what we're seeing here.

But also important part of this analysis is not

individual features. For instance, the hourglass, we can't

help but see that there is an hourglass shape that all three

of these have. So we don't think the hourglass away, and I

believe it's incorrect to remove it from this type of analysis

because it's about the overall impression.

However, the hourglasses, the designs we see on the

left are more than just an hourglass representation. It's

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also my opinion that the '906 at the time it was filed was

also protecting more than just an hourglass shape which has

existed for probably thousands of years.

Q. And so now that you've sort of explained what your

impression is of these different designs, what's the next step

in the infringement analysis?

A. And so here, having understood that overall impression and

seeing the different impression that we have, in this case the

Gyroor A and the '723 patent generally having -- giving the

same overall impression and understanding also that there are

differences. There are many intricate differences between the

two products. They are not identical. And that is important

to know. And that's why we look to prior art to understand

and have somewhat of a measuring stick to understand how close

they truly are.

My conclusion here, of course, that they look, when

referring to the prior art of the '906 here which has been

identified as the closest prior art, the Gyroor A and the '723

claimed design look very much the same, substantially the

same.

Q. And based on that, do you have an opinion with respect to

the issue of infringement with respect to the '723 and the

Gyroor A product?

A. Yes. And so that tells me that the Gyroor A infringes on

the '723 patent.

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Q. Okay. And did you repeat that analysis for the second

patent, the '256 patent?

A. Yes, I did. And we can very briefly go through that. I

have some slides here, of course.

This is also comparing directly to the Gyroor A to

the claimed design of the '256 patent. Here in the first

step, again, looking to see if they are plainly dissimilar, I

concluded that they are not plainly dissimilar and therefore

moved on to the second step on the next slide, where I also

conducted the three-way analysis, comparing the patent and the

Gyroor A to each other in light of the prior art to understand

how close they are.

And on the next slide as well, we see there that, you

know, my concluding opinion coming from this is that the

Gyroor A and the claimed design of the '256 patent are

substantially the same in light of the '906 closest prior art

in the eyes of the ordinary observer.

Q. Okay. And did you then repeat this process for the other

accused products?

A. Yes, I did. And so after conducting this for the '723 and

Gyroor A, I also conducted the same for Gyroor C.

THE COURT: Can I interrupt? On Gyroor A, what -- I

know you're talking about overall impressions, but what

particular details do you believe are different or you found

to be different between the '256 patent and Gyroor A?

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Understanding your opinion is the impression is they're the

same, but are there particular features of it that you would

acknowledge are different?

THE WITNESS: Yes, absolutely. There are

differences. And I think it's important to understand how

different those are, obviously in the three-way analysis

compared to the '906.

So, for instance, the fenders that we've spoken about

today, here we're looking at the '256 patent. We see the

fenders, cover, almost all of the very top of the wheel, and

the Gyroor A, for instance, cover a little bit less. The

wheel in this case of course is much wider so it's popping out

from the fender itself, but the fender is approximately the

same sort of proportions, but there are differences. It sort

of trims off a little sooner.

So certainly differences between the two, but to

understand how important those differences are, that's where

we go to prior art that existed prior to it, and there we're

seeing something entirely different. And so in this

particular case, we're seeing very minor differences that make

them not the same but very close to each other. And the '906

is clearly in a different ball park, if I can use that

expression.

THE COURT: What other small differences did you

observe between the '256 patent and the Gyroor A?

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THE WITNESS: So I did obviously note that the

footing areas on both of them, they both have these pronounced

footing areas that the '906 doesn't have. And so within those

footings areas, we see the sort of angled grooves that they

both have, but those grooves are different shapes. So when we

zoom in to compare directly one to the other, we see, you

know, it's not the same shape. However, they both got those

pronounced footing areas in generally the same sort of shape.

And so glancing over to the '906 we see, again, it's not in

the same ball park.

There are some other differences. I would say the

shape of the lights, for instance. But these differences

contribute to the overall impression and shouldn't be ignored,

but the question is how significant are they to the overall

impression, particularly in light of the '906.

THE COURT: Okay.

BY MR. BERKOWITZ:

Q. Okay. So we've now covered the Gyroor A product with

respect to both of the asserted patents, so we were I think

about to move on to the Gyroor C product. Can you walk us

through your analysis with respect to Gyroor C?

A. Yes. I'll try and keep it brief in the interest of time,

but obviously step 1, I found they were not plainly

dissimilar.

In the second step of the ordinary observer test, I

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found that the '723 patent and the Gyroor C were closer in

design than to the '906 prior art; and, therefore, the Gyroor

C infringes on the patent.

Q. Okay. And with respect to the '256 patent, did you also

do an analysis against the Gyroor C product?

A. That's correct. And so the same was applied independently

here, looking -- directly comparing Gyroor C to the

'256 patent which -- and they are not plainly dissimilar. And

so in the second step of the analysis on the next slide,

comparing the Gyroor C to the claimed design of the '256, I

found them to be closer to each other than to the prior art;

and, therefore, Gyroor C infringes on the '256 patent.

Q. In terms of the analysis, is there any notable differences

between the Gyroor A and Gyroor C?

A. There are; again, small differences, but those are very

minor in this regard. They -- Gyroor A and C are virtually

the same product.

I did note, again, some differences in the fender,

some small differences. But, again, in this analysis where

we're considering the size of differences based upon how far

away the prior art is, even those differences between the

Gyroor A and C do not have substantial impact on the overall

impression.

THE COURT: Well, it looks like Gyroor C, the fenders

cover the majority or all of the wheel, at least on the

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example I have, compared to Gyroor A, which covers about half

the wheel.

THE WITNESS: Yes, that's correct. And so the Gyroor

C fender goes down a little bit further, and the wheel is

different too. I think Gyroor A has a much thicker wheel and

it would take a much bigger fender to cover it. So it's --

these are proportions that we take into respect, but, again,

it's -- it doesn't seem a significant difference between

Gyroor A and C.

THE COURT: It looks like the foot paddings, the

design of the foot paddings on A and C are the same. They're

different in E. But you'll get to that.

THE WITNESS: Yes.

THE COURT: But the design looks the same of the two

products anyway.

THE WITNESS: Yes. And in -- at least in this

infringement analysis, I wasn't doing a direct comparison

between, say, A, C, and E. However, obviously in

understanding their design and comparing it to the patent, I

found they played exactly the same role.

BY MR. BERKOWITZ:

Q. Okay. So we've now covered the accused product Gyroor A,

Gyroor C. Did you repeat this analysis for the final product,

the Gyroor E?

A. Yes, I did, so we can briefly go through that as well,

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where I compared in the first step Gyroor E to the '723 patent

and found they are not plainly dissimilar, and then comparing

to the prior art to understand how much effects the

differences have between the two products. I also found that

Gyroor E and the '723 are much closer together, not identical,

but much closer together than the prior art.

Q. To the judge's question, are there any notable differences

between the A, C, and now looking at E?

A. Yes. And, again, in the fender area, we see that it has a

somewhat shorter fender than Gyroor B, for instance. It may

be a little closer to A if we were looking at that part in

isolation. We see some differences around the lighting area

and the grooves are generally the same sort of feel; but when

we compare, we do see differences.

Q. Okay. As far as your infringement analysis, what is the

impact of those differences?

A. Because of how far away the '906 is, the impacts of those

is relatively insignificant on the overall impression. They

do -- they are part of the overall impression, and if we were

comparing only A, B, and E together, we would then be seeing a

narrowing down on those slight differences as being very

important. However, of course, when comparing directly to the

'906, we see how insignificant small differences are in

particular between the accused products and the patent.

Q. Okay. I just want to -- so with respect to the Gyroor E

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product, are there differences with respect to these footpads

as compared to the A and the C?

A. Yes, there are. Beyond obviously the color or material

differences, I believe there's one or two grooves less, but it

has the same what we would call a fleur-de-lis type

impression. It's the angled length. So very similar, and,

again, that would just be analyzing those particular

differences on that particular part.

Q. Okay. And did that -- did these differences have any

impact on your determination as to infringement or

non-infringement?

A. Well, I guess I wasn't looking directly at differences

between the products. It was always, as I understand it

should be, to the patent itself. And so yes, of course I

understood and saw those differences. I do not believe that

an ordinary observer would -- would not see those differences

if faced with one design next to the other. However, it

doesn't have an impact on the overall impression when

comparing these designs.

Q. Okay. And just to close the loop on the '723 patent as

compared to the Gyroor E, what is your opinion with respect to

the issue of infringement?

A. That Gyroor E infringes on the '723 patent.

Q. Okay. And moving on to the '256 patent, could you just

quickly walk us through your infringement analysis?

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A. Yes. I also found that Gyroor A was not plainly

dissimilar from the '256 patent; therefore conducted the next

step where I also concluded after the analysis that the

Gyroor E is closer to the '256 patent than the closest prior

art, and, therefore, that it infringes on the '256 patent.

Q. Okay.

MR. BERKOWITZ: So we don't have any more questions

for Mr. Hatch.

THE COURT: All right.

Cross-examination.

MR. CHENG: Shall we start?

THE COURT: Yes, you may proceed.

CROSS-EXAMINATION

BY MR. CHENG:

Q. Hi, Mr. Hatch. As instructed -- hi. As instructed by the

Federal Circuit, we should look through the infringement issue

through the lens of prior art.

THE COURT: You're a little soft spoken.

MR. CHENG: Right.

THE COURT: So move the mic a little closer or raise

your voice.

MR. CHENG: Yes, sorry.

BY MR. CHENG:

Q. As instructed by the Federal Circuit, we have to look at

the infringement issue through the lens of the prior art. Do

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you agree that the '906 patent is a prior art in this case to

the patents-in-suit here?

A. I don't know all the legal structure, but my understanding

is that it should, as far as my analysis is concerned, be

considered prior art.

Q. Okay. And do you agree that the comparison between the

D '906 patent and the two patents-in-suit is necessary to

determine the infringement issues here?

A. As part of the analysis, as I showed, it plays a role when

we do the three-way analysis to understand which is closer and

which is further apart.

Q. So let me ask you, when you compare the D '906 patent with

the two patents-in-suit, what are the similarities between the

D '906 patent and the two patents-in-suit?

MR. CHENG: And, Peter, if you can bring the '906

patent with the '723 patent side by side so --

MR. PHANEUF: '906 and '723?

MR. CHENG: Yes. Just do the overlay so it will be

easier for us to understand.

THE COURT: Here we go.

MR. CHENG: Great.

BY MR. CHENG:

Q. So, Mr. Hatch, was the hourglass body shape disclosed in

the '906 patent?

A. The '906 includes an hourglass body, a version of it that

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is, but that's not all it includes.

Q. Right. And was a flat surface on top of the hoverboard

also disclosed in the '906 patent?

A. It appears to feature a generally flat upper surface as

part of its claimed design.

Q. Yeah. So I'm going to read a part of the plaintiffs'

motion, and that is page -- that is on page 12 of

Docket No. 593. It says, "None of the relevant prior art

creates the same visual impression of the patent-in-suit,

namely the integrated hourglass body with a relatively flat

surface across the top of the main body."

So as you just admitted, '906 have disclosed the

hourglass shape with a flat surface, does that change your

opinion knowing that --

A. Could you read the rest of the sentence? I think you cut

it off.

Q. Okay.

THE COURT: This is from a brief, not from his

report?

MR. CHENG: That is from the motion brief, yes.

THE COURT: Okay. Well, go ahead, but that's of what

limited utility. That's what the lawyer said. His own

affidavit is, of course, fair game for cross.

MR. CHENG: Oh, that portion was quoted from his --

THE COURT: It's quoted from his --

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MR. CHENG: From his report.

THE COURT: Okay. Fair enough. Go ahead.

BY MR. CHENG:

Q. So, "Namely, the integrated hourglass body with a

relatively flat surface across the top of the main body,

pronounced footing area, and open-arched fenders over the top

of the wheel area."

A. So you understand why I wanted the rest of the sentence

read out.

Q. Mm-hmm.

A. Because taken out of context it could mean something quite

different.

Q. But you do agree that both the flat surface and the

hourglass body shape were disclosed in the '906 patent?

A. The '906 patent which shows obviously a very different

design does include those particular attributes. However,

that sentence in full is making a different statement.

MR. CHENG: Peter, can we do the overlay of the top

view of '906 and the '723?

BY MR. CHENG:

Q. By comparison, the hourglass peripheral shape looks very

identical between the '906 patent and the '723 patent. Do you

agree?

A. Obviously you're just showing this one particular view.

There are --

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Q. That's one of the views I'm showing, yes.

A. Yes. There are differences, and there's a lot of

similarities.

Q. Can you --

A. Conceptually speaking, they both have an hourglass as does

the accused product, which I think is important in this

comparison. But we don't rule out the hourglass. We have

different interpretations of something that's an hourglass

form.

Q. So you are saying even if the hourglass shape was

disclosed in the '906 patent it should still be factored into

infringement analysis?

A. It should not -- my understanding of the procedure in the

three-way comparison is that we don't factor out or remove

specific elements. We need to consider them as part of the

overall impression. And important in this particular case

that has been raised is the question of the hourglass shape.

On the '906 as well as the '723, the hourglass shape was not

the reason either of them were awarded a patent. It was not

novel at the time. What was novel was the overall impression

that the '906 has provided as shown in the figures.

Q. Right. But you do know that your previous report was

criticized by the Federal Circuit for lack of specific

comparison because if we're using the overall impression

without getting into details, then there's virtually no

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analysis. You are just using the phrase to cover the

comparison or the detailed analysis that's supposed to be done

here.

So what I'm showing you here is should the hourglass

shape be -- if it's disclosed in the '906 patent, why should

that be considered for the infringement analysis since every

hoverboard basically on the market followed the '906 patent in

that they all have similar hourglass shape?

A. And your question is whether it should be considered?

Q. Why it should -- why shouldn't -- yes, why it should be

considered if it's disclosed in your prior art already?

A. Chiefly because Egyptian Goddess tells us what the

infringement analysis should include, and my understanding of

the three-way analysis is that we do look to the overall

impression through the eyes of the ordinary observer. I'm not

using that as a blanket, you know, in the way that you are

putting forward. The overall impression is created by looking

at individual features of the overall design. But it is a sum

of those features. So we don't extract the hourglass and then

say, oh, the hourglass existed already, we ignore it. That's

my understanding of the law is it still is an important part

of the overall impression.

Q. I'm glad that you mentioned different features, and I

think we are just trying to identify which features were

disclosed on and which feature were new to the products. So

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in that way, I think we'll have a better understanding when

the ordinary observer looks at the products how the

impression, the overall impression was formed by different

features, right. If two products have similar features, then,

I mean, it's hard to tell the difference, and that's exactly

why we have to look through the lens of prior art. Was the

fender also disclosed in the '906 patent in your opinion?

A. The '906 patent has -- shows an unclaimed fender so it

does not protect a design of a fender.

Q. That's not what I asked. I asked was the fender disclosed

in the '906 patent?

A. I'm sorry. I misunderstood.

So when it comes to infringement analysis, in a

three-way analysis as we conducted, yes, we consider it to be

disclosed.

Q. And when you were talking about the footing area to the

'723 patent, does the claim protect the idea of the footing

area on the hoverboard, or does the claim protect the design

of that footing area?

A. The claim of the '723 is to the ornamental design of the

pronounced footing area, that is, you know, just using words,

that we have a footing area that is somewhat pronounced in

that area.

Q. So when you say "pronounced," are you talking about

because the '723 patent has the footing area as pronounced, or

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because you had the design that is different from the '906

patent so it's pronounced?

A. No, we're not talking about conceptually whether it has,

you know, an item or not. Pronounced is offering an

attribute, you know, that it's not just a footing area but

this has been pronounced in some way, that that is a decision

that has been made by the designer as opposed to, say, on the

'906, there was a decision to not pronounce what might be a

footing area.

Q. When you say might be footing area, do you agree that '906

patent has a flat top surface?

A. I believe you asked that before, but yes, it's a generally

flattop surface, but it is -- it may or may not be a footing

area.

Q. So if we compare the '906 patent to the '723 patent, just

a top view, the defense is the '723 has the footing area, but

the idea of having this footing area is not protected, but the

design of the straight lines on the footing area is what's

protected by the claim?

A. Which straight lines are you referring to that are

protected by the claim?

MR. CHENG: Can we take a look at the '723 patent?

Here it is.

BY MR. CHENG:

Q. Yes.

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A. Mm-hmm.

Q. So what's being protected, as you just admitted, is not

the idea that it has a foot padding but the actual design of

this foot padding?

A. Yes, the solid lines show what is claimed. However, to

understand infringement, then we look to the prior art to

understand how much scope elements like that have.

Q. Meaning that the prior art doesn't have any design on the

top, so here what's being protected is really just, you know,

the straight line of this design; is that correct?

A. What do you mean by the straight line of the design?

Q. The straight line as --

A. Are you referring to the ribbed detail?

Q. Yes. I'm talking about the lines on top of the padding.

A. Okay. Yes.

MR. CHENG: Can I just use one of these?

BY MR. CHENG:

Q. Can you tell that the lines --

THE COURT: You need to be in front of a microphone.

MR. CHENG: Oh.

THE COURT: Just make sure that you're there.

BY MR. CHENG:

Q. But can you tell -- can you see the lines here on this

foot padding, those are not straight lines? They're bended in

two different directions?

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A. Yes, they are -- those ribs, and I am familiar with it.

They have angles, yes.

Q. And this is one of the features that you mentioned that is

different from the patent; is that correct?

A. Which patent are you referring to?

Q. '723. Let us just use '723 as a patent so it will be

easier to avoid any confusion.

So the lines here, they are bended lines, and they

are different from the straight lines on that '723 patent. Do

you agree?

A. Yes. When we are looking at this, comparing those exact

details, there are differences, as I have pointed out and

acknowledged, but of course that's not the analysis here.

Q. Right. We are just trying -- I'm just trying to

understand the different elements as you put the different

designs into elements. So this element is different. Is this

element noticeable to an ordinary observer in your opinion?

A. In the three-way analysis, we understand -- we use that as

a structure to understand what would be noticeable in your

words.

Q. Uh-huh.

A. And of course in the overall look and feel, it doesn't

have a significant effect on the overall impression. For

instance, if those lines were slightly different, it would not

have a significant difference on the overall impression --

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Q. Yeah.

A. -- and make it suddenly closer to the '906.

Q. Well, I wouldn't call this slightly different. I mean,

the lines are drastically different as they are bended, it's

not straight, and that they are going two different

directions, and the bended, you know, direction is not towards

the wheel but towards the metal. So do you think this is

noticeable to an ordinary observer?

A. When looking at the product as a whole, the ordinary

observer would see those differences.

Q. Okay.

A. But it does not change the overall impression.

Q. And what about the fender --

MR. CHENG: If you can just show the '906 -- the '906

side -- front view versus the '723 front view.

BY MR. CHENG:

Q. So as we can see here as you acknowledged, the fender was

disclosed in the '906 patent. And the fender in the '723

covers the whole wheel, right? Take a look from --

THE COURT: Let me interrupt. It was disclosed but

not claimed in the '906 patent.

THE WITNESS: Yes, that's my understanding,

Your Honor.

THE COURT: What is the difference between something

that's been disclosed and claimed? You can answer.

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THE WITNESS: As a nonlawyer, my understanding in

this analysis is it -- the patent shows the unclaimed matter.

It is not offered protection of that design. However, when

we're looking back at it as prior art in this analysis, we

understand that the inventor had that shape in mind, and it

was disclosed to the public. So, therefore, that design,

there is already public knowledge of that design even though

that patent does not offer protection for that inventor.

THE COURT: And how does that impact your analysis

of -- as it relates to the comparison between the --

THE WITNESS: Yeah.

THE COURT: -- allegedly infringing products and the

two patents?

THE WITNESS: And so here what the 9 -- the

protection of the '906 is almost irrelevant for me because the

'906 is used as prior art, and, therefore, my analysis

included the fenders, the closed fenders, that that design has

as part of the consideration.

THE COURT: Okay.

You can continue your questions.

MR. CHENG: Yes.

THE COURT: How much more do you have? Because we're

at 12:30. If you got a ways to go, we'll break.

MR. CHENG: I have three-quarters --

THE COURT: All right.

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MR. CHENG: -- left. We can take a break if

Your Honor --

THE COURT: Why don't we take a -- and you're local;

is that correct?

THE WITNESS: Yes.

THE COURT: You're not going to miss a flight if we

break for lunch. So let's break for lunch. You can continue

your cross-examination.

The witness is on cross-examination so you can't

discuss his testimony with him during the break.

We'll break for an hour. Come back at 1:30.

Thank you.

MR. LOMUSCIO: Thank you, Your Honor.

(Lunch recess had from 12:31 p.m. to 1:30 p.m.)

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90

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF ILLINOIS

EASTERN DIVISION

HANGZHOU CHIC INTELLIGENT

TECHNOLOGY CO., and UNICORN

GLOBAL, INC.,

Plaintiffs,

-vsTHE PARTNERSHIPS AND

UNINCORPORATED ASSOCIATIONS

IDENTIFIED ON SCHEDULE "A,"

Defendants.

)

)

)

)

)

)

)

)

)

)

)

)

Case No. 20 CV 4806

Chicago, Illinois

December 2, 2022

1:31 p.m.

TRANSCRIPT OF PROCEEDINGS - PRELIMINARY INJUNCTION HEARING

BEFORE THE HONORABLE THOMAS M. DURKIN

APPEARANCES:

For the Plaintiffs: MR. RICHARD J.L. LOMUSCIO

MR. MARK BERKOWITZ

MS. CHANDLER ELIZABETH STURM

Tarter Krinsky & Drogin

1350 Broadway

New York, NY 10018

MR. ANAND C. MATHEW

PALMERSHEIM & MATHEW

401 N. Franklin Street, Suite 4S

Chicago, Illinois 60654

Court Reporter:

KATHLEEN M. FENNELL, CSR, RPR, RMR, FCRR

Official Court Reporter

United States District Court

219 South Dearborn Street, Suite 1426

Chicago, Illinois 60604

Telephone: (312) 435-5569

Kathleen_Fennell@ilnd.uscourts.gov

* * * * * * * * * * * * * * * * * *

PROCEEDINGS REPORTED BY CERTIFIED STENOGRAPHER

TRANSCRIPT PRODUCED WITH A COMPUTER

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APPEARANCES: (Continued)

For Defendants Gyroor

US, et al.: MR. HE CHENG

MR. TAO LIU

Glacier Law LLP

41 Madison Avenue, Suite 2529

New York, NY 10010

MR. YU-HAO YAO

Glacier Law LLP

9660 Flair Dr., Suite 328

El Monte, CA 91731

MR. MR. WEI WANG

Glacier Law LLP

200 Park Avenue, Suite 1703

New York, NY 10166

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(Proceedings heard in open court:)

THE COURT: Just need defense counsel, and then we'll

get going.

MR. CHENG: Your Honor, we just --

THE COURT: We'll go off the record. Is this

scheduling?

MR. CHENG: Yes.

(Discussion held off the record.)

THE COURT: Back on the record.

Sir, you're still under oath.

THE WITNESS: Yes.

MR. CHENG: Peter, if you can just put on the slide,

the side edge of the product. I think I was --

THE COURT: Kathy, when he's speaking to his

colleague, you don't have to transcribe it.

PAUL HATCH, PLAINTIFFS' WITNESS, PREVIOUSLY SWORN,

CROSS-EXAMINATION (RESUMED)

BY MR. CHENG:

Q. Mr. Hatch, we were talking about the fenders which is one

of the main feature mentioned in the Federal Circuit opinion.

Do you think -- you can see from the front view and

also in the screen in front of you, do you think the fender,

the shape of the fender, the structure, the concept of design,

are those all different from -- from the two patents

significantly or noticeable to an ordinary observer?

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A. To clarify, you said the shape and the concept of the

fender?

Q. Well, let's do that one by one. Do you think the shape is

different?

A. There are differences that we can notice of the fender in

particular, yes.

Q. And do you think you can elaborate the differences between

this fender here and the two patents? Let's just stick with

one. '723, can you tell -- ask what the differences are?

A. Yes. If we -- if we are focusing solely on the fender, we

do see differences. The difference is that the accused

product that you're holding up, that's Gyroor A, has a fender

that goes over the wheel but then cuts back a little bit

sooner as it comes down to the platform, but it kind of joins

the platform.

The wheels on it, of course, are wider, so that sort

of has an effect on how we're seeing the fender as well. But,

yes, it -- it goes over the top of the wheel, but then it cuts

back as it goes towards the platform.

Q. Does the fender cover the wheel?

A. It covers at least some of the wheel.

Q. From this side, does the fender cover the wheel from the

side view?

A. In all views, it covers only side of the -- I mean, we can

see it's above the wheel still. It's still covering some of

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the wheel. It doesn't change if you turn it around.

Q. Yeah, can you see the whole wheel from this side?

A. I can see -- I can see the whole wheel.

Q. As you mentioned, there are so many features in the

hoverboard design. Do you give equal weight to every design

element?

THE COURT: You're going to have to stay in front of

the microphone.

BY MR. CHENG:

Q. As you said, there are so many features in a hoverboard

design. Do you give equal weight to every design feature?

A. Viewing it through the eyes of the ordinary observer, all

the features are -- do contribute to the overall impression,

so they do not get taken away, but they do have different

effects on that impression.

Q. So you value some features more than the others?

A. Some features have a bigger contribution to the

impression. It's not, you know, how I view it, it's through

the eyes of the ordinary observer.

Q. And as the Federal Circuit mentioned, since the hourglass

was disclosed in the prior art, it becomes a minor feature and

it's kind of retreated to the background.

Do you agree with Federal Circuit's analysis here?

A. I don't disagree with Federal Circuit's analysis, although

you seem to have interpreted it quite differently.

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Q. Oh, how would you interpret the Federal Circuit's decision

on this issue?

A. Well, my understanding of what we need to do here is to

include the hourglass shape as part of what's giving us the

overall impression. I agree with the Federal Circuit that the

hourglass shape is not something that was novel to any of

these, including the '906 before that existed, and so these

patents don't rely solely on that.

Q. And as you can see in front of you the comparison, can you

tell us what feature brought you to make the conclusion that

the accused products is not substantially dissimilar to

the '723 patent?

A. Are you referring to the first stage of the analysis where

we are not comparing to prior art?

Q. That was a double negative. Let me rephrase it.

What features made you conclude that the accused

product is substantially similar to the D '723 patent?

A. All of the features are included because they all,

including the hourglass shape, they all contribute to the

overall impression. So, you know, I'm not ruling out features

because of that.

Q. Oh, I'm not asking to be ruling out features, but you just

admitted that the fender looked different, the design of the

foot padding looked different, and the hourglass, as the

Federal Circuit is a minor feature, even we don't, you know,

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exclude that feature, but since that was disclosed in the

prior art, it becomes a minor feature.

So, and as you said, all features put together form

this overall impression. But that's conclusive. That's same

as saying their detailed analysis is not required, as long as

I use the word overall impression. The overall --

THE COURT: I think you're giving a closing argument.

MR. CHENG: Sorry, your Honor.

THE COURT: Simply ask questions.

BY MR. CHENG:

Q. So the overall impressions viewed on the features, do you

agree with that?

A. It includes viewing the features, all of the features that

we see here, absolutely.

Q. And I noticed on your analysis you didn't do a comparison

of the bottom view.

Is that why that was not included in your analysis or

in your report to support the preliminary injunction motion?

A. No, I included all of the product as a whole, and the

bottom was certainly part of that analysis.

Q. I'm looking at the report that you provided, document

number 594, and I don't see any reference to the bottom view.

A. You'll find I did the full, all of the views in -- the

applicable views of the patents in Exhibit 1 that was

attached.

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Q. No, no. Exhibit 1 is your CV, I think.

A. I'm sorry, Appendix 1. It's where the three-way

comparisons are.

Q. The Appendix 1 is your CV.

A. Oh, then it's Exhibit 1.

Q. I don't see any exhibit attached to this report.

A. There is a full -- there should be an attachment, which

has been referred to in the past, you brought it up in

deposition, that includes all of the three-way analyses.

MR. CHENG: Peter, do you mind putting on the bottom

view comparison?

THE COURT: Well, show him his expert report. You're

saying there's something missing from his expert report. Just

show it to him, and he can identify it or disagree with you.

MR. CHENG: Oh, I'm doing it now. It's not in the

expert witness report, so I don't know -- I don't want to

reference to any other documents.

THE COURT: Do you have the report up there with you?

THE WITNESS: I don't, but I believe counsel --

THE COURT: Any objection to him having the report up

there?

MR. CHENG: Well, they can bring up the report.

THE COURT: Yeah, if you've got one without notes,

you can give it to him.

What I can see is Exhibit 1 is a three-way comparison

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98

between the accused products and the patents-in-suit. There

is a CV attached as Appendix A, and then there's the

affidavit, the declaration.

BY MR. CHENG:

Q. Anyway, we're going to put the bottom view on the screen

so we can look at the pictures unless you don't think they

clearly represent the bottom view of the products.

So I think it shows the top view, the front view, and

the bottom view of the accused product, the prior art, and

the -- one of the accused patent.

Can we just stick with '723 for all cases? I think

that's the next page.

Oh, never mind. That works.

If we're only focused on the bottom view, there are

three pictures at the bottom line of this slide?

A. Only the bottom three, ignoring the rest.

Q. So you can see that there's a bottom view of the accused

product, a bottom view of the prior art, and a bottom view of

one of the patents-in-suit.

In your opinion, are they look substantially similar

to each other?

A. The opinion that I gave was through the eyes of an

ordinary observer --

Q. Uh-huh.

A. -- and, importantly, it was of the product as a whole, and

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99

as I explained, they are substantially similar. If we were

incorrectly to focus only on one view at a time, yes, we

notice differences.

Q. So do you see the ribs in the middle of the accused

product?

A. Yes, I see it on the product and also in this view, yes.

Q. And are you aware there is a built-in speaker to this

product?

A. Say that again?

Q. Are you aware there are built-in speaker in this

hoverboard product?

A. I --

Q. Speaker.

A. I heard speaker. The word before that?

THE COURT: Built-in.

BY THE WITNESS:

A. Built-in, sorry.

BY MR. CHENG:

Q. Yes.

A. Yes, I'm aware. But, of course, that's not part of

looking at the patent analysis here.

Q. Can you see the holes on the bottom of this product?

A. I see the fine holes, yes, the perforation, yes.

Q. And this speaker ventilation hole present in the prior

art, in the accused -- in the one of the patents-in-suit, the

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100

D '723 patent?

A. No, it doesn't have holes in that location.

Q. Do you think this is a noticeable difference?

A. In the overall impression, it does not have a significant

effect. If it were there or not, the patent would still

infringe. Sorry, the accused product would still infringe of

the patent.

Q. Yes. Let's also compare the pads here, and the pads has

been isolated in the picture showing on the screen.

Can you see that the shape and the lines and the

designs, do you think they are substantially similar?

A. Well, what's shown is not the patent, for one thing.

Q. It's one feature, yes, I agree with you.

A. No, still it's an interpretation of the patent that's gone

a certain direction. You've made some certain calls to change

it in a certain way.

My analysis was not -- it was based upon the patent

and what the patent covers, and the analysis would be

incorrect to compare it to an interpretation of that patent.

Q. Uh-huh.

A. And also the prior art is missing in this picture.

Q. So I think what confuses me is if all the features are

different as acknowledged by you and the hourglass shape and

the flat surface are minor features decided by the Federal

Circuit, then how can the overall impression viewed on those

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Hatch - cross by Cheng

101

features substantially different -- substantially similar?

MR. BERKOWITZ: I'm just going to note my objection.

This mischaracterizes his testimony.

THE COURT: The witness can correct it if he thinks

he mischaracterizes it.

BY THE WITNESS:

A. Yes, there were a number of things there, but I certainly

didn't say that all of the features are substantially

different, and I -- sorry, can you unpack that question,

rephrase it?

BY MR. CHENG:

Q. Sure, I guess that question has two parts.

First is that the Federal Circuit noticed that the

hourglass shape and the flat surface were disclosed in the

prior art, so they become minor features. And then all the

other features you also acknowledged they are different from

the accused products. Then how can the overall impression

viewed on those features substantially similar?

A. Because when -- again, you packed a number of somewhat

untruths in there. The Federal Circuit did not say that it

was minor, is my understanding, but they did point out that --

sorry, I'll move forward to your question.

The overall impression is still substantially similar

especially when we look to the prior art because we combine

all of those details as you're referring to of the designs

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102

together to gain the overall impression, and when we look at

the '906, it's devoid of such details, like the perforations

that you're pointing out very nicely right now. The '906

doesn't have them.

So it's important that we use the '906 as the basis

for the comparison within infringement analysis.

MR. CHENG: Can I have the two patents-in-suit side

by side, the '723 and the '256.

BY MR. CHENG:

Q. Mr. Hatch, you just mentioned previously during the direct

examination that you were saying those two patents are very

similar to each other.

A. They were filed at the same time, and they have many

similarities, yes.

Q. And somehow separate patents were granted to both of them?

A. Yes. One doesn't act as prior art to the other. They

came from the same inventor.

Q. So do you think the examiner acknowledged there are

sufficient differences between those two patents, so separate

patents were granted to both of them?

A. Yes.

Q. So --

A. Other --

Q. Sorry. I'll let you finish.

A. But, of course, they acknowledge that one can't be prior

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Hatch - cross by Cheng

103

art to the other because it's from the same inventor. So I

understand that would be different if they were looking at two

patents from two different inventors.

Q. So if the minor difference between those two is sufficient

to support the issuance of two separate patents, do you think

the differences between this accused product is

substantially -- is substantial and noticeable to an ordinary

observer to the two patents-in-suit?

A. My understanding that's not a legal comparison, but the

comparison, of course, for infringement is between the accused

product in light of the prior art.

These were also examined in light of the prior art

and found to be substantially dissimilar, so the comparison

goes back to the prior art. We should not ignore that when

conducting infringement analysis.

Q. Just a few more questions.

A. They are quite heavy.

Q. Just a few more questions.

One of your prior report, and in your previous report

and, you know, one example of them in Document 388 that you

included four products, A, B, C, D, against the -- against

four patents-in-suit, and obviously product B and product D

were dropped from your most recent report.

Has your mind changed considering the infringement

nature that you previously included against product B and

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104

product D?

A. No, it has not.

Q. And can you tell us why they were not included in your

most recent report?

A. Because in this preliminary -- in this particular

preliminary injunction, the focus is on A, C and E, and that

does not include B and D, which I have included in other

reports.

Q. Uh-huh. And a little bit more on the legal standard that

you proposed regarding the ordinary observer, that you

mentioned that that has to be a real life purchaser with

little or no experience purchasing hoverboards.

Do you think that is consistent with the legal

standard purported by Federal Circuit?

A. I don't see a fault with my understanding that the

purchaser in this particular case would be as I described in

the report. I'm not sure where you're pointing out there's a

gap.

Q. Because this hypothetical ordinary observer supposed to be

conversant with all the prior arts. Do you disagree with

that?

A. That is correct. As I showed in my diagram, we understand

who the purchaser is to understand the level of acuity that a

hypothetical ordinary observer would apply to their knowledge

of the prior art.

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105

Q. If that purchaser has little or no experience purchasing

hoverboards, how can you expect that purchaser to be

conversant with all the prior arts?

A. The purchaser is not conversant, sorry, conversant with

the entire prior art. The purchaser is not looked at for

their knowledge of prior art, but they are looked at for the

acuity that they pay towards that in order to form the

construct of a hypothetical ordinary observer.

You were referring only to the purchaser there.

Q. So you disagree with the legal standard that the

hypothetical purchaser should be conversant with the prior

art?

A. The hypothetical ordinary observer in this test is the

construct we use to represent someone who is conversant with

the entire relevant prior art, whereas we only look at the

purchaser as an example to understand the level of acuity.

Q. I still don't get it. Are you mixing a real live

purchaser with this hypothetical ordinary observer?

A. No. I understand the confusion. It's quite common, but

the purchaser we only look at to understand, okay, how

quickly, do they give a fleeting glance to these products, or

do they really tear it apart and understand things? I've

worked in both areas, and I understand there's a big

difference. You don't want to hear my tales about that.

But the hypothetical ordinary observer is not a real

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106

person. It is a hypothetical person that's used as a

construct in this type of analysis. The only thing that we

take from the purchaser is their level of acuity. That is my

understanding. So I'm not confusing the two.

Q. Well, my understanding -- but you do agree an ordinary

observer with little or no experience purchasing a hoverboard

cannot be conversant with all the prior arts?

A. No. You are mixing the two. So the hypothetical ordinary

observer has knowledge of the prior art. That is the

construct that we use here.

And the purchaser we base on real life to understand

how that person goes about purchasing and what level of

attention do they pay in that situation.

Q. And you're saying a low level of attention is sufficient

to support this ordinary observer's knowledge of all prior

arts?

A. Again, you're mixing the two things there. The knowledge

of prior art is the ordinary observer, which is a hypothetical

person.

You could bring up my diagram if you want. I've gone

to lengths to explain this.

Q. I've seen the diagram and that's what confused me, but

thank you for your explanation.

Do you understand the differences between the outline

of a drawing and the shading of a drawing?

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A. As a designer, yes, I do.

Q. Okay. I'm just going to -- this is Figure 3 of the '906

patent. I just got it printed, so it looks bigger.

Does that represent a curved bottom, the drawing?

A. It is somewhat curved, yes. We understand that by looking

at all the views.

Q. And to look at this, this is Figure 1 of the '906 patent.

Do you agree this represent a flat surface from the shading of

the drawing?

A. When you're pointing, you're referring to the whole body?

Q. No. I mean this is the outline, right, and there are

lines in the middle --

A. Ah, right.

Q. -- that the shading of the drawing represent a flat

surface for this particular design?

A. The shading on the edges there represents that it curves

on that top surface, so the top surface is not entirely flat.

Q. You're saying the top surface is not entirely flat?

A. Point to the shading that you're referring to. Around the

edges, right?

Q. No, like this is a shading. See this straight line?

A. Yes.

Q. This is shading.

A. Yes.

Q. This is also a shading. Does that represent a flat

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108

surface of this drawing?

A. It -- the shading does show that there is a surface there,

and we know based on the other views that it is a somewhat

flat surface. There is and can be curvature there.

Q. Sorry, can you repeat the last part? I didn't --

A. It's a somewhat flat surface.

Q. Okay.

A. And, you know, we see shading being used here to designate

curvature, where it's certainly not flat, such as at the very

top of that image.

You were talking about the shading, right?

Q. I'm talking about shading, like this part.

A. Those particular lines, right.

Q. Are you saying this is flat or this is curved?

A. In looking at all the views, we know that it is, say,

substantially flat --

Q. Okay.

A. -- but not entirely flat. It's partially flat with

rounded edges.

MR. CHENG: Your Honor, I've finished my cross, but

my colleague, Mr. Yao, wanted to continue the cross. Would

that be allowed?

THE COURT: Why? It's really -- the usual procedure

is one attorney asks questions on direct, one on cross. Why

do you need to have two attorneys asking questions on cross?

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109

MR. YAO: I could hand him the questions if you

prefer, your Honor. I could just hand him my questions so he

can finish.

THE COURT: What, did you divide the subject areas?

MR. YAO: I'm sorry?

THE COURT: Did you divide the subject areas?

MR. YAO: Sort of, yes.

THE COURT: How long is your cross going to be?

MR. YAO: Probably like ten minutes max.

THE COURT: Go ahead and do it. No, you can do it.

If these are your questions, go ahead and ask them. But try

and restrict it to one attorney on direct, one attorney on

cross.

MR. YAO: All right. Thank you, your Honor. I do

apologize.

CROSS-EXAMINATION

BY MR. YAO:

Q. Mr. Hatch, earlier during your direct examination, you

examined defendants' accused product, correct?

A. I've examined the accused products, yes.

Q. Have you examined plaintiffs' own products?

A. That was not part of my analysis. That would -- that

should not be part of my analysis.

Q. Okay. Have you -- but you did examine plaintiffs' claimed

design and patents-in-suit, correct?

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Hatch - cross by Yao

110

A. I examined the claimed design in all of the

patents-in-suit, yes.

Q. And you were -- have you examined Defendants' '857 patent?

Have you examined that?

A. The '857 was not part of the design infringement, as I

understand.

Q. And earlier, you indicated the ordinary observer test, it

has a low -- low -- sort of low level attention, correct?

A. The hypothetical ordinary observer would apply a low level

of attention to details.

Q. And in that, you also included that they would consider

the price, maybe location or other different factors when they

considered the products, correct?

A. No. The purchaser would consider other factors, not the

hypothetical ordinary observer as a construct.

Q. Well, aren't you confusing the ordinary purchaser with the

hypothetical ordinary observer in this case?

A. No.

Q. What is your basis?

A. I --

Q. Well, because -- let me rephrase that because you did

mention about if we go back to your PowerPoint real quick.

Let's talk about the low level attention you were

talking about. How -- why is your understanding of a

hypothetical ordinary observer different from what the Federal

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Circuit has laid out in the Egyptian Goddess case?

A. My understanding aligns with the correct interpretation of

that. It's not in conflict.

Q. In your report, you quoted -- I'm sorry, not in your

report. It says: The ordinary observer is one who is not an

expert in the claimed design but rather one of ordinary -- I'm

sorry -- a consumer use or the parent user each having little

or no experience purchasing hoverboards.

You did write that in your declaration, correct?

A. Yes. I think you just quoted from two separate parts.

Some of that was --

Q. The second part where I said the consumer -- a consumer

user or the parent of a user, each having little or no

experience of purchasing hoverboards, that's your

understanding of the hypothetical ordinary observer, correct?

A. That's describing the purchaser who we use to inform us of

the acuity that an ordinary observer would apply. I think

that's outlined there.

Q. And then you also said that you said the ordinary observer

encounters products --

(Court reporter interruption.)

BY MR. YAO:

Q. So in your report, you also talk about the ordinary

observer also encounters products in brick-and-mortar stores

like Wal-Mart, Best Buy or online stores, correct?

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A. Yes, the purchaser in real life would encounter the

product in question in those situations, yes.

Q. So wouldn't you consider -- what you're saying is you're

considering ordinary purchaser is the same thing as a

hypothetical ordinary observer, correct?

A. That's not what I said, no.

Q. But based on -- based on this what you wrote in your

declaration, you're confusing an ordinary purchaser with a

hypothetical ordinary observer, correct?

A. No, I'm not confusing them.

Q. Well, you did said that they would encounter products at

the, you know, brick-and-mortar stores and they would take

into consideration of the price and other stuff while they

were looking at the products.

Doesn't that deal with more of consumer behavior and

their purchasing habits, rather than looking at a product as

an ordinary observer?

A. It's important to understand how the purchaser looks at

the accused product. That's not about trying to find out the

habits as such but to find out with what level attention do

they pay when they're looking at the products. We seem to be

stuck on the same point.

Q. Well, let's talk about the new report you submitted for

this motion for preliminary injunction.

You read the Federal Circuit decision, correct?

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A. Correct, yes.

Q. And you attempted to cure your deficiencies criticized by

the Federal Circuit, correct?

A. In what way do you mean?

Q. Well, you did -- for example, if we go back to your

previous reports for the federal injunction, all you did at

least -- you grouped all the accused products together with

the patents-in-suit and you called that a comparison, but,

however, in this one you put -- you did Group A products with

the patents-in-suit and the prior art, correct?

A. The analysis was previously done, looking at every product

individually. However, to be clear in the report, it was

important to respond to the request by the Federal Circuit to

clearly demonstrate each separately. So I did that, but there

was no opinion change or change of analysis.

Q. But what you did essentially is to cure the deficient or

inconclusory analysis laid out by the Federal Circuit,

correct?

A. No.

Q. Why would you say that?

A. I did not change my opinion. My analysis did not change.

Only the format of how I presented the work, but the exact

same pictures were presented in my previous declarations.

There was no curing of something that was missing. It was

more reformatting.

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Q. Well, certainly in this report, you did one comparison of

Group A products with the patents-in-suit and the prior art

compared to your first report, you simply group all of them

together and in addition -- well, why was there a sudden

change?

A. I believe we covered that. So the analysis was exactly

the same. The format changed because in respect to the

Federal Circuit, they would like to see it more clearly

itemized separately or presented separately, so that's what I

did. I changed the presentation layout, but the content was

all there. The analysis was all there in the original.

Q. But in your report, you only included top and perspective

view, correct, in your most recent submitted report?

A. That's also incorrect.

Q. Were you aware that expert discovery closed on

October 23rd, 2022?

THE COURT: That's an argument for -- I'm sorry.

That's an argument for me, not for the witness. If

you want to raise issues about whether the expert report

was -- the revised expert report was timely, we can address

that, but -- with the lawyers, but not with the witness. It's

not his issue.

MR. YAO: Okay. I don't have any further questions,

your Honor.

THE COURT: All right. Any redirect?

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MR. BERKOWITZ: No, your Honor. Thank you.

THE COURT: Okay. The witness is excused. Thank

you, sir.

THE WITNESS: Thank you, your Honor.

THE COURT: I'll let defendants call their witness to

allow him to get on and off the stand and travel back to North

Carolina.

MR. CHENG: Sure, your Honor.

THE COURT: Sir, please raise your right hand.

(Witness sworn.)

THE WITNESS: I do.

THE COURT: All right, have a seat, please.

JAMES GANDY, DEFENDANTS' WITNESS, DULY SWORN,

DIRECT EXAMINATION

BY MR. CHENG:

Q. Hi, Mr. Gandy. Can you give us a brief introduction about

yourself and your experience as a patent examiner at the USPTO

and the other relevant work experience?

A. Yes. My name is James Gandy. I worked at the United

States Patent Office from 1972 until 2005 as a design patent

examiner, as a supervisor, and as the practice specialist for

the design patent technology center.

Since retiring, I have been an advisor to attorneys

at times on the filing of design patent applications, and I

have done expert witness work in a number of cases.

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Q. And, Mr. Gandy, let's just cut into the prior art, the

'906 patent here.

Why do you think the D '906 patent is important for

the infringement analysis in this case?

A. Mainly, I think it's because it has the overall hourglass

shape. It has the relatively flat top surface that extends

over -- a relatively flat surface that extends over the main

body of the top of the design, and also it shows the same

substantial contour to the front and rear surfaces of the

hoverboard that is claimed in the two design patents.

Q. And what about the wheels, the fenders, the things the

Court asked -- is there any difference between a feature that

was claimed by a design patent and a feature that was

disclosed in a design patent as the wheel cover in this case?

A. It's always been my understanding that a design patent can

be used for everything that it discloses, not only the subject

matter that's claimed, but also whatever might be shown in

broken lines as part of the article in which the design is

embodied.

Q. So in other words, the -- what the effects of this wheel

cover that was disclosed in the '906 patent, how is that

relevant to the infringement analysis?

A. Well, it's relevant in that it does show that you can have

a wheel cover, an arcuate-shaped wheel cover over the wheels

of the hoverboard.

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THE COURT: What's an arcuate-shaped wheel cover?

Speak into the microphone.

BY THE WITNESS:

A. It would be like a semicircular shape or curved shape, a

rounded shape.

THE COURT: Arcuate I have never heard before.

THE WITNESS: I've used the term arcuate many times

in my career at the Patent Office.

THE COURT: I've used it never in my career.

Go ahead.

BY MR. CHENG:

Q. And from comparing the '906 patent to the two

patents-in-suit, what can we -- why should we even compare

those two, the prior art with the two patents-in-suit?

A. Well, I think it's because the prior art, the '906 patent

basically shows substantially all of the general features that

are in the two design patents that are in this case, that is,

the hourglass shape, the relatively flat top surface across

the main body, as well as the contour of the front and rear

surfaces and also wheel covers over the wheels.

Q. And to your opinion, are those features relevant to

infringement analysis?

A. I think based on what the recent CAFC decision said is

that they become background information, but then once they're

shown in the prior art, you have to look at other features for

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the purpose of determining whether the claimed design and the

alleged infringing products are not similar.

Q. So essentially you're saying different features should be

given different weight or value in infringement analysis?

A. Well, I think the features that are shown in the prior art

no longer become the primary features for the purpose of

determining infringement.

Again, I think, you know, the CAFC clearly set that

out that they become more background features and that now you

have to look at other features of the claimed design and the

alleged infringing products to determine whether they are

sufficiently close to be considered infringing.

Q. Is there any comparison you wanted to show us that will

demonstrate the other feature that you just mentioned?

A. Yeah, sure. I think if you want to pull up the -- one of

the two design patents, as well as the three Gyroor products

that are alleged to be infringing, we can look at them and

compare them.

Q. Do you want to -- an overlay? What slides do you want?

A. Well, we can start with the top plane views.

Q. Of the --

A. Of the -- one of the two design patents. It doesn't

matter. It can be either one. And then the three Gyroor A, C

and E.

Q. Yes, so let's just do -- like the picture in front of you?

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A. Yeah, yeah. I mean if we want to look at the top plan of

what would be the Gyroor A in the prior art and the D '723

patent, if the hourglass shape and the relatively flat surface

across the top of the main body of the design become more of

background, you have to look at what the other features are in

that view that would show that they were either substantially

similar or substantially different over the -- over the

claimed design, the '723 design patent.

In this instance, I think what you would have to look

at is the foot pads and the difference in the shape and the

surface treatment. The surface pattern on the foot pads I

think become more important in determining whether they're

substantially similar or substantially different.

Also, if we look at the front views of those three of

the prior art, '906 prior art with D '723 patent, what I was

saying about the front view, that the contour, the shape and

contour of the front surface in the prior art and D '723

patent are substantially the same, whereas in the Gyroor A

hoverboard, it actually is different because the center

portion of the top surface actually drops down below the foot

pads on each end, which creates a different visual impression.

Q. You're talking about the middle here --

A. Yes.

Q. -- for the contour?

A. Yes, and because of that recess, when you look at the '906

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prior art and you look at the D '723 design in the top view,

the surfaces across the entire hoverboard appear to be

continuous, appear to be just a continuous surface, whereas in

the Gyroor A hoverboard, because the center portion is

recessed, you get a distinct visual impression of the foot

pads, the opposing foot pads, which are raised up above it.

You don't get this continuous smooth transition from one side

to the other like you do in the '906 prior art and the D '723

patent.

As we go along here, what I want to go ahead and

indicate because, you know, you might start thinking, well,

you're picking out, you know, different features.

Well, when you're looking at the -- comparing the

overall appearance of an alleged infringing product and the

claimed design, it's all of the features on all of the

surfaces that are being claimed that have to be looked at and

considered as a whole in making a determination as to whether

they have a similar appearance or a dissimilar appearance.

So if I'm pointing out features on one surface or

another surface, what I'm looking at is combining them

all together is what you consider when determining whether

there's infringement.

Q. So you do think analysis between different features is

important to form the overall impression of --

A. Yes, I do. I don't think the infringement analysis is

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that much different than the patentability determination

analysis.

When you're determining patentability of a claimed

design in an application, you're looking at all of the

features that make up that overall appearance and compare them

to the prior art to determine whether that overall appearance

is distinct over the prior art. You have to consider all of

the features that make up the claimed design.

Q. And as you previously mentioned, some features should be

given more weight and some features should be given less

weight depend on whether or not they were disclosed in the

prior art?

A. Yeah. I think if it's disclosed -- if features are

disclosed in the prior art, they become less relevant with

regards to the question of infringement. At least that's what

the CAFC certainly seemed to be saying, and they did say then

you have to start looking at other features as to whether they

distinguish one over the other.

Q. And two more questions on this slide.

Why should the bottom view matter? Because, you

know, when people stand on this hoverboard, they don't usually

see the bottom of the hoverboard.

A. Yeah, well, that's normally the case, but in this fact or

in this case, the design, the claimed design in the '723

patent was claiming the bottom as part of the ornamental

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design.

And whatever you're showing in solid lines and you're

claiming as part of your design, you have to consider them for

the purpose of, you know, infringement.

So in this instance, even though the bottom might not

normally be visible, clearly the bottom of the Gyroor A

hoverboard has features on it that are different than the

prior art and the D '723 patent.

The prior art and the D '723 patent are substantially

plain, they have like a rounded surface, but they have no any

kind of ornamentation on them, whereas the Gyroor and A

hoverboard does.

THE COURT: Does any of your analysis deal with

functionality? Does that have any role from this injunction

hearing?

THE WITNESS: No, no. If what's being claimed in

solid lines as the ornamental design, that would have to be

considered ornamental and not functional.

THE COURT: That would be considered that or is part

of the analysis whether that acts as a -- in a functional way

and has to be disregarded?

THE WITNESS: No, I don't -- I don't agree with that.

I think that when you're dealing with potentially the issue of

functionality in design patent, if you can show that something

can be done in different ways and have a different appearance

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and still perform the same function, then it would have to be

considered clearly primarily ornamental rather than primarily

functional.

THE COURT: All right. Thank you.

BY MR. CHENG:

Q. And Mr. Hatch also mentioned that D '906 patent doesn't

have foot padding. However, the D '723 patent had the foot

padding, and because '723 has the foot padding and the accused

product A have the foot padding, they are somehow closer to

each other.

Do you agree with that analysis?

A. No. I don't agree with that because what we have to look

at in this instance is the '906 prior art design patent was

the first hoverboard ever invented. So hoverboards that would

be designed after that may have additional features on them

that are not in the prior art, and if it's not in the prior

art, what's considered the best prior art reference, that

doesn't mean that the alleged infringing product is -- is

infringing the claimed design, in this instance '723.

You have to look. Once you see that there are

features that are not in the prior art, then you have to start

evaluating those features between the alleged infringing

product with the claimed design, in this instance, the '723

patent.

Q. So you're saying the idea of adding the foot pad is not

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protected by the D '723 patent?

A. Could you rephrase that?

Q. Sorry. So you're saying the concept of putting a standing

pad on the D '23 patent as an improvement from the '906 patent

is not protected by the D '723 patent?

A. Well, I mean, it's not protected in the sense by itself.

It's part of the overall design of the '723 hoverboard, so

it's part of the ornamental design that's being claimed.

Q. Is the idea being claimed?

A. No, no, it's the -- it's the appearance, the shape and

appearance.

What's being claimed in a design patent is the shape

and appearance of a design embodied in an article of

manufacture. So all of the features that would be shown in

the design in solid lines are considered part of the

ornamental design being claimed for an article of manufacture.

Q. And the D '723 patent have a different design with the --

compared with accused product A on the top surface?

A. Yes. As I indicated before, visually when you look at

the '723 design patent and the prior art, '906 patent, they

have what appears to be from right to left a continuous

surface that is uniform, whereas in the Gyroor A hoverboard

because the center portion is recessed, it creates this visual

distinction of two opposing foot pads that are not continuous

with the center portion.

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Q. And is that noticeable to an ordinary observer?

A. I think it would be.

Q. And the front view, aside from that what you mentioned has

the contour of the accused products is different, is there

anything else that would separate the accused product A from

the D '723 patent?

A. Yeah, yeah. I mean, the lights on the front surface

clearly have a distinct appearance over the lights that are

shown on the '723 patent.

And, again, because the contour of the front and rear

surfaces in the '723 patent are shown in the '906 prior art

patent, they become more background features, and so you have

to look at the other features that might be on that surface as

having relevance to the question of infringement.

And in this instance, the lights on the Gyroor A

hoverboard are very narrow, elongated, rectangular-type shape,

whereas the lights on the '723 patent are more almost like a

parallelogram shape.

THE COURT: The lights on the '723 --

THE WITNESS: The '723 are more like a parallelogram

shape.

THE COURT: You're looking at Figure 3.

THE WITNESS: Figure 3, yes.

THE COURT: It's the -- looks like an oval with a

line bisecting or at an angle across it; is that correct?

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THE WITNESS: Right.

THE COURT: Okay. That's what the lights are

represented as in the '723?

THE WITNESS: Right, yes.

THE COURT: All right.

BY MR. CHENG:

Q. And this one shows kind of half of the hoverboard top

design together with the fender. How significant do you think

the shape of the fender affects the overall perception of an

ordinary observer?

A. Oh, I think it has a significant impact on the overall

appearance. I don't think -- I don't see how, in my opinion,

when you look at these two, I think the difference in the

shape of the fenders just jumps right out at you. I don't see

how you can say that they're insignificant.

Q. Okay. And so to the extent, I think Mr. Hatch used the

term overall appearance without getting to the detailed

analysis, do you think that is consistent with the Federal

Circuit's opinion?

A. No, I don't. Mr. Hatch's statement that just broadly

stating that the overall appearance between the claimed

hoverboard and the accused products are not clearly dissimilar

is just a -- I don't see where he has any support for making

that statement. He hasn't identified what it is that makes

them not dissimilar.

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Q. Isn't the overall perception sufficient to support the

finding of the differences?

A. Yeah, I mean, you're making the determination based on the

overall appearance, but you're making that based on -- the

overall appearance based on all of the features that make up

the entire design.

Q. So in your opinion, just to the term overall experience

without getting into the features is insufficient to support a

finding of substantial similar or substantial dissimilar?

A. Yeah, I think it's just a subjective, you know, statement

without having any support as to what are the features that

you're relying on to say that they're dissimilar.

MR. CHENG: Can we look at the pink one, the product

C?

BY MR. CHENG:

Q. And the reason I brought up this one is because opposing

party, plaintiffs have mentioned that this product looks more

similar since -- this is product C -- the cover is kind of

extended over the wheel; but in your opinion, is this

substantially similar to the D '723 patent?

A. No. Again, I think, you know, you have to take more than

just the wheel covers. I mean, yes, the wheel covers on the

Gyroor C are more rounded, but they actually are wider and

they have a flatter appearance on the top, whereas the '723

design patent, the wheel covers actually have a curvature to

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them. So there are some differences between the wheel cover

in the Gyroor C and the D '723 design patent.

And, again, when you're looking at all of the

features that are on the Gyroor C and the D '723, particularly

again in the top view. As I said, the '723 kind of has this

continuous, what appears to be just this continuous surface

from right to left, whereas the -- in the Gyroor C, you again

have a recessed center area so that the opposing pads appear

to be separate from the center portion. It's not a continuous

flow to it.

And also in the center area on the top surface of the

Gyroor C, you have these almost boomerang-shaped features that

are not shown in the D '723 patent that contribute to the

appearance of as you're looking at it.

Q. When you say the recessed area, are you referring to this

portion of the neck, kind of the hourglass?

A. You mean the recess?

Q. Yeah.

A. Yeah, yeah.

Q. From which angle?

A. I'm sorry?

Q. From which angle you were referring to?

A. From the top view.

Q. From the top view.

A. From the top view. Also from the side view, from the

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front view, you can see the recess.

Q. So you're saying that the metal is curved inside instead

of bulged like in the prior art?

A. Yeah, the '906 prior art and the D '723 patent show a

convex contour in the center area, whereas the Gyroor C

hoverboard has a recessed surface, and this creates a distinct

appearance not only in the top but also when you look at it

from the front or the rear.

Again, you can see that the two end portions, the

foot pads, are separate from the center portions. There's no

continuous flow to them.

Q. And I think from the same slides, the bottom view, you

will have the same view as the product A that --

A. Yes.

Q. -- the ventilation, the speaker holes and the metal ribs

are also different from the --

A. Yeah, yeah, I mean, you have the ribs on them, and you

also have this just on the outside of where the center rib

portion, you have this arc, this rounded, this rounded

recessed edge that then defines the outer surfaces where you

have the perforated openings.

So whereas the '906 prior art and the D '723 design

patent, they have no ornamentation to them at all as far as

any details that -- like ribs or perforations. They're just

basically a plain surface.

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Q. Okay. And is there anything else within this product C

that you think a feature might separate the product from --

A. Well, same thing in the front you have the lights. The

lights, again, have a completely different appearance in the D

'273 design patent, and they actually are recessed in so you

kind of get this -- this separation between the upper surface

and the lower surface that's created by these recessed lights.

Again, that has a visual impact on the overall appearance.

THE COURT: The ribs you're talking about are on the

underside on either side of the center perforation?

THE WITNESS: On the bottom.

THE COURT: On the bottom, right.

THE WITNESS: Yes, yes.

THE COURT: And on each side of that little --

THE WITNESS: Yes, yes.

THE COURT: -- separation --

THE WITNESS: Right, right.

THE COURT: -- that's on the picture?

Okay.

BY MR. CHENG:

Q. Let's do the other part, and we'll just go through this

very quickly. They're kind of similar.

As we have the slides here, do you -- yes, just go

through the similarity and differences in your opinions.

A. Okay, yeah.

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Again, pretty much the same type of situation. The

top plan view, the Gyroor E, the center area is recessed.

Again, when you look at it, you can see it more when you're

looking at it in front, the front view, just below the top

plan view, you can see where it's recessed. And, again, it

creates this visual distinction of not being a continuous top

surface like the prior art, the '906 prior art and the D '723

design patent.

But, again, also the foot pads have a different

shape. They have a different surface pattern to them that

creates a different visual appearance along with the recessed

center area. When you take all of these together, you get --

you create this different visual impression.

Q. It has like a more round edge towards the center. Does it

matter for your analysis? Like the foot padding, it's not as

pointy as product A or --

A. Right, right, but it still has a different contour than

the foot pads in the D '723 patent. Along with the surface

pattern on it and the different shape in the peripheral shape

of the pads, that, to me, has a significant visual

distinction.

Q. And the front lighting is not recessed as product A or

product C and looks thicker. Does that change your analysis?

A. No. It doesn't change my analysis as far as, again,

creating a different visual appearance from the front and the

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D '723 design patent, the lights on the front surface in the

Gyroor E are clearly different in their shape and appearance

than the lights shown in the D '723 patent.

Q. And the light is on one side of this product instead of

the other products, the light is on both sides, but this one's

only on one side. Does that change -- does that change your

analysis?

A. No. It doesn't change my analysis from an overall

standpoint. It's just that in this particular product, the

Gyroor E, the front rear surfaces are not identical as they

were in the A and C hoverboards.

Q. Then the bottom, I mean, the ventilation or the speaker

holes are significantly smaller than the other two products.

Also have ribs. Do you still consider the bottom view as

significantly different from the D '27 patent?

A. Yeah, I mean, if you just look at the bottom surface, it

certainly last a different look to it when you're considering

the ribs and the center part and the recessed ridge that

defines the outer edge of them, along with the perforations.

Clearly, you know, these are all features.

And what you're talking about as part as

functionality, they could be considered to be -- to have a

function, but they can be done in many different ways, and so

I would have to consider them more primarily ornamental rather

than primarily functional, and I think they have -- you have

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to consider, since the bottom is claimed in the D '723 design

patent, you have to consider that as part of the analysis of

infringement. So you have to look at the bottom surface of

the alleged accused infringing product.

Q. Kind of catch the switch.

A. I guess the other thing is, again, the wheel covers on

these are different than the wheel covers on the D '723.

They're almost a pentagon -- not pentagon shape, trapezoidal

shape with a flat top surface, then they flare out on each

side, whereas the wheel covers on the D '723 patent are

rounded.

Q. Okay. And that is the way the D '723 patent. Although

they're very similar, the D '723 patent with the other one,

the A 25 -- is it A 25? Can we show the slides of the other

patent-in-suit?

THE COURT: Off the record.

(Discussion held off the record.)

THE COURT: Back on the record.

BY THE WITNESS:

A. That's the '256. Yeah, that's the one you want, isn't it?

That's the other design patent?

BY MR. CHENG:

Q. The other design patent. We can just use this one.

I mean, you do see the '723 and the '256 patent, they

have slightly different design. Does that change your

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opinion, the overall analysis that you did? When we're

switching the '723 patent to the '256 patent, does that change

your analysis?

A. I don't quite understand what you're asking.

Q. Sorry. What we just did was compared the accused products

with '723 patent in light of the '906 patent. If we're

switching the '723 patent-in-suit to this '256 patent, does

that change your analysis?

A. No. I would consider the analysis to be virtually the

same.

Q. And one last question. When you did your analysis, you

didn't see the actual products but based your analysis on the

pictures of the products and the patents; is that correct?

A. Yes, that's correct.

Q. And does that affect your opinion --

A. No.

Q. -- without seeing the actual product?

A. What I kind of felt strange about being criticized about

that in my report is I thought that we don't see actual

products that are submitted to the Patent Office in design

patent applications. All our determinations on patentability

of a design patent are based on drawings or photographs

compared to the prior art, which are usually patents or

publication photographs.

So I don't see where having to have the actual

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product is going to preclude you from being able to make a

proper analysis. We do that -- we did that or I did that and

the Patent Office does that every day in design patents.

Q. Just look at the pictures?

A. Just looking at pictures.

MR. CHENG: I have no further questions, your Honor.

THE COURT: All right, cross-examination.

Before you start though, I had made a comment earlier

about does plaintiff practice their patent so they have a

hoverboard that looks just like the patent.

I realize on reflection, that's not really the

analysis. The analysis is whether or not the defendants'

products infringe your patents, not whether your product

matches their product or there's a difference because that's

really not the infringement analysis we're supposed to engage

in.

So I mused earlier, but I probably should have done

it off the record, but it's not an important -- it's not even

a factor I can consider because that's not the analysis I have

to engage in.

Cross-examination.

CROSS-EXAMINATION

BY MS. STURM:

Q. Good afternoon, Mr. Gandy.

A. Good afternoon.

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Q. So can you -- in your over 30 years of experience in the

Patent Office, did you conduct any infringement analyses?

A. No, no, that's not what -- that's not what you do at the

Patent Office.

However, as a patent examiner, as a supervisor and a

practice specialist, I always was looking at what decisions

were coming down based on patentability or infringement by the

district courts or the Federal Circuit.

Q. So you would say the legal standard for patentability that

you applied in the Patent Office is different than the legal

standard that you would apply here in your analysis of

infringement?

A. Yeah, there is a difference. Yeah, there's a difference.

What I would go ahead and indicate to you though is that when

you're determining patentability under 35 U.S.C. 102

anticipation, the standard is the ordinary observer, same as

what it is in infringement, but the difference in infringement

is the ordinary observer is familiar with the prior art.

Q. Right, and --

A. So there is some similarity when you're coming to -- when

you're determining the patentability on anticipation.

Q. Correct, and back just to the ordinary observer point, you

would say that the ordinary observer in this case is a

potential purchaser of hoverboards, correct?

A. That's correct.

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Q. And you have no experience as a product designer; is that

correct?

A. I don't have any experience as a product designer, but I

do have experience as an architectural designer. I've

designed two houses and had them built since I've retired, and

I've designed furniture for my house. So I have done a lot of

designing.

Q. So does any of that design work, did that help you in your

analysis for the design of hoverboards?

A. Well, again, my background is an architectural design

person, so I clearly have a lot of design experience just from

my education.

Q. And your experience in infringement analysis is -- has

been solely been as a testifying expert; is that correct?

A. I'm sorry, could you repeat that?

Q. Yeah, let me rephrase that. Sorry.

So you have no experience in conducting infringement

analyses other than as a testifying expert; is that correct?

A. Yes, that's correct. Yeah, I've testified in the past on

infringement issues, but not when I was a patent examiner.

Q. All right. So let's turn -- just going to ask -- so you

did not review any physical examples of the accused products

prior to preparing your report --

A. That's correct.

Q. -- in this case; that's correct?

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And all of the photos that you included in your

report were provided by defendants' counsel; is that correct?

A. That's correct.

Q. So looking at the patents, I guess the '723, you would say

that the '723 patent has raised foot pads; is that correct?

A. I'm sorry, has what?

Q. Has raised foot pads?

A. Yes.

Q. Yes. And you would say the same for the '256 patent?

A. Yes.

Q. Are you aware of any other prior art patents with raised

foot pads?

A. I haven't looked at any. I mean, there may be, but I

haven't looked at any as far as pointing out whether this has

been done maybe in patents or hoverboards that were patented

prior to these two.

THE COURT: By raised foot pads, do you mean the foot

pads have grooves in them, or do you mean they're higher than

the center of the -- you testified earlier the foot pads

appear higher than the center, at least on the --

THE WITNESS: On the accused products.

THE COURT: -- on the accused products.

THE WITNESS: Right.

THE COURT: And you just said there are raised foot

pads in these patents. Are you referring to the grooves on

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the foot pads?

THE WITNESS: No, the foot pads themselves are

actually raised, and then you have a pattern of ribs on the

top surface of the foot pads.

THE COURT: Okay. Maybe we'll get to that with

pictures, side-by-side pictures.

BY MS. STURM:

Q. And so you didn't consider any other prior art that had

raised foot pads in your analysis; is that correct?

A. That's correct, yeah.

Q. And did you want to just take a look at those? Let's look

at the front view of the '256.

So you're --

THE COURT: I see. I'm sorry to interrupt you.

MS. STURM: No, you're good.

THE COURT: Are you talking about the slightly

elevated foot pads as you look at it from the cross -- from

the side view?

MS. STURM: Correct.

THE COURT: And that's what your testimony related

to.

THE WITNESS: Yeah, yeah, right.

THE COURT: Just want to make sure I understand.

THE WITNESS: I think with the Gyroor products, when

I'm referring to the foot pads being raised, the center area

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Gandy - cross by Sturm

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is recessed, but not only is the foot pad raised, but the

actual pads themselves are also raised --

THE COURT: Okay.

THE WITNESS: -- on those surfaces.

THE COURT: Thanks. Thanks for clarifying that.

BY MS. STURM:

Q. And you would say that the '723 patent has fenders over

the wheels; is that correct?

A. Yeah, I don't have the '723 up here.

Okay. Yeah, go ahead.

Q. So you would say that the '723 patent has raised -- sorry,

has fenders; is that correct?

A. Yes.

Q. And the same for the '256; is that correct?

A. Yes.

Q. Are you aware of any prior art patents that have fenders?

A. Other than what's showed disclosed in the '906, I haven't

looked -- I mean, as far as my -- what I was retained for

here, I have not done any searching to see whether there's

other prior art patents out there that may have this. I'm

just looking at what was presented to me and the '906 prior

art.

Q. So you would say that none of the prior art patents that

were cited on the face of both the '256 and the '723, none of

those patents had fenders; is that correct?

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A. I'd have to look at them again. I couldn't recall right

offhand whether they did or not.

Okay. Actually, the '991 does, the D 647,991.

Q. And you could tell that from a perspective view?

A. Sure.

Q. And would you say that the '723 patent has lights on the

front -- or what we could say is the front of -- front figure

of the patent? I think it's Figure 6 -- yeah, if you want to

go -- sorry.

A. Does it have lights on it?

Q. Yes.

A. Yeah. Yes.

Q. And you would say the same for the '256?

A. If you can pull it up.

Okay. Yeah.

Q. And, again, are you aware of any prior art patents with

lights, including lights on them?

A. Not that I'm aware of.

Q. And did you consider the '857 patent in your analysis,

defendants' patent?

A. No. No, I didn't.

Q. And did you consider any other later-filed patents in your

analysis?

A. No.

Q. So do you agree that later-filed patents are irrelevant to

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your infringement analysis?

A. Later-filed patents, you mean after the issue date of

the '256 and the '723?

Q. That's correct.

A. Well, they wouldn't be considered prior art to theirs.

Q. So in a sense, they wouldn't be relevant to your

infringement analysis; is that correct?

A. I would have to say that's correct because they wouldn't

be prior art.

Q. You're aware that defendants have engaged multiple

infringement experts in this case, correct?

A. You mean multiple cases?

Q. No, in this case, are you aware that -- or you are aware

that defendants have engaged multiple infringement experts,

correct?

A. Yes, I am. I'm sorry, I didn't quite understand what you

were asking. Yes, I am.

Q. All right. And you were not aware of that prior to your

deposition of October 2022 earlier, correct, when --

A. That's right. I -- I know that they have another expert,

but I've never had any contact with that person.

Q. Correct. And just to clarify, that was plaintiffs'

deposition of you in October of 2022 that you first learned of

the other expert defendants have retained?

A. I think I knew that they had one, but, like I say, I've

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Gandy - cross by Sturm

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never had any contact with him. I've never discussed him with

the attorneys for the defendant.

MS. STURM: I would like to admit into evidence the

deposition transcript from October 26, 2022, as Plaintiffs'

Exhibit 4.

THE COURT: Any objection?

MR. CHENG: No objections.

THE COURT: Admitted. Admitted without objection.

(Plaintiffs' Exhibit No. 4 was received in evidence.)

(Document tendered to the Court.)

THE COURT: Thank you.

BY MS. STURM:

Q. So if you could please turn to page 16, line 16.

A. Page 16, line 16?

Q. That's correct.

A. Okay.

Q. And when asked if you knew whether defendants had retained

any other experts in this case, you testified that: "I'm not

aware of that"?

A. I said that.

Q. "I have not been told that." Is that correct?

A. That may be the case. I just don't remember. I thought I

had learned about it before then. Maybe it was after that.

Q. So you have not reviewed any expert reports from

defendants' other expert; is that correct?

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Gandy - cross by Sturm

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A. No, I have not. As I said, I've had no contact. I've

never seen anything from the other expert.

Q. So you were previously testifying up here that the foot

pads make the most impression of -- have the most -- the foot

pads have more of an impact on the overall visual impression;

is that correct?

Let me rephrase that. Sorry.

When you said -- you had previously testified that

the foot pads make more of an impression on the overall visual

appearance of the hoverboards; is that correct?

A. I said that in light of what the prior art shows with

respect to the hourglass, and, again, based on what the CAFC

said when you have the prior art shows what would be a

dominant feature like the hourglass and it's in the prior art,

it becomes more of a background. So then you have to start

looking at other features, and what I said is I think the foot

pads then become a very dominant feature.

Q. So you would say that you're looking at these features in

isolation; is that correct?

A. No, no. I'm always looking at them based on the overall

appearance.

As I indicated earlier when I started out, when I

talk about all these individuals, individual features, that's

part of the whole analysis from an overall appearance

standpoint. You have to look at all of the features as a

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Gandy - redirect by Cheng

145

whole. That's what determines what the overall appearance

looks like.

MS. STURM: Thank you, Mr. Gandy.

Thank you, your Honor. I have no further questions.

THE COURT: Any redirect?

MR. CHENG: Yes, your Honor. Just a few questions.

THE COURT: All right.

REDIRECT EXAMINATION

BY MR. CHENG:

Q. One thing I want to clarify, the D '906 patent was filed

before the other two patents-in-suit but was granted

afterwards.

Does that change the fact the D '906 patent is still

a prior art to those two patents-in-suit?

A. Yes, having an earlier filing date, so it would be

considered prior art.

Q. So '906 is still the prior art?

A. Yes.

Q. And if -- I mean, without looking into other potentially

relevant patents, if the two patents, '723 and '256, if they

were the first design patent to have foot padding on them, was

that idea of adding foot padding protected by those two design

patents?

A. Well, the claim to a design patent goes to the overall

appearance of design, not to any individual elements. So, I

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mean, if you put foot pads, since they were the first ones to

put foot pads on a hoverboard, that would be, you know, a

potentially new feature on the hoverboard.

But the claim again would be directed to the overall

appearance of the hoverboard. You don't get protection on

individual parts in a design patent.

Q. So the idea of whether or not there is a foot padding

added into later products are not protected, we are really

looking at the design or the shape or the lines or the figures

of those foot paddings?

A. I'm sorry, could you rephrase that?

Q. Sorry.

So I guess the design concept of having a foot pad is

not protected by the design patent, but really the look, the

appearance of those foot padding should be considered --

A. Yes.

Q. -- in infringement analysis?

A. Sure, sure.

Q. And it's the same for whether or not there were lighting

added to a later design patent. The idea of having a light to

the new patent is not protected. We should really look at the

shape or the position or the size of the light instead of the

concept of having a light?

A. Yeah, that's right. In those two patents, they had lights

on them, but when you've got later filed -- you got later

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Gandy - redirect by Cheng

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designs, not necessarily filed for patent, but you have later

designs that also may include lights, if those lights have a

different appearance, shape to them, then, you know, that

would be a difference.

Q. And just to summarize that, can you, in a very plain term,

explain the difference between the appearance and the concept,

the design concept, which --

A. Well --

Q. Okay.

A. -- you don't get design patents on a concept. You get

design patents on the actual specific shape and appearance to

an article of manufacture.

So when you're making a reference to design concept,

you don't -- design patents don't cover design concepts. They

cover specific shapes and appearance to a new design embodied

in an article of manufacture.

Q. And when we're talking about shape and appearance, we're

talking about, like, what would constitute as the shapes and

appearance?

A. Well, in this instance, if you're claiming as in the two

patents basically the overall appearance of the hoverboard,

obviously some of the features were in broken lines, but all

of the parts that are in full lines were what would be

considered the claimed design.

So you're looking at patentability based on just that

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148

overall appearance, not on any individual elements. Same with

respect to infringement.

MR. CHENG: Thank you, your Honor.

Thank you, Mr. Gandy. No further questions.

THE COURT: Any additional cross-examination based on

the last questions?

MS. STURM: No, your Honor.

THE COURT: All right, sir, you're excused. Thank

you.

THE WITNESS: Thank you.

THE COURT: Okay. What do we have left on witnesses,

and can we finish them today?

MR. LOMUSCIO: We have Mr. Bero, your Honor.

THE COURT: All right. And he's where, in Wisconsin?

MR. LOMUSCIO: He's in Wisconsin. He's available

remotely.

THE COURT: And where is your -- you have another

witness, too, correct?

MR. CHENG: Oh, no, your Honor.

THE COURT: You're not.

MR. CHENG: Mr. Rake was scheduled next week.

THE COURT: Okay.

MR. YAO: Is scheduled next week.

THE COURT: Okay. Mr. Rake is your other -- why

don't you sit down so you're in front of the mic.

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What is he going to testify to?

MR. CHENG: He's going to testify to the

non-infringement nature of the products.

THE COURT: Okay. All right. And he's going to

testify remotely or come into court?

MR. CHENG: He's going to come to the court.

THE COURT: All right. Where is he from?

MR. CHENG: He's based in Kentucky?

THE COURT: All right.

MR. CHENG: Sorry, Kansas.

THE COURT: That's fine then. Let's hear from the

remote witness now.

How long do you expect his direct examination to be?

MR. LOMUSCIO: Twenty minutes, your Honor.

THE COURT: Oh, good. Let's -- why don't we take a

ten-minute break right now so we can get him set up, but we'll

take a ten-minute break.

MR. LOMUSCIO: Thank you, your Honor.

MR. CHENG: Thank you, your Honor.

(Recess from 3:04 to 3:13 p.m.)

THE COURT: All right. Looks like -- we're off the

record.

(Discussion held off the record.)

THE COURT: We can go back on the record, and please

call your next witness.

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MR. LOMUSCIO: Plaintiffs call Richard Bero.

THE COURT: Okay. Mr. Bero, can you hear me?

THE WITNESS: Yes, I can.

THE COURT: You're on mute. I can't hear you.

THE WITNESS: Can you hear me? I can hear you.

THE COURT: All right. We can hear you, too. You

have to speak up a little, but we can hear you.

Please swear in the witness.

(Witness sworn.)

MR. LOMUSCIO: May I proceed, your Honor?

THE COURT: You may.

RICHARD BERO, PLAINTIFFS' WITNESS, DULY SWORN,

DIRECT EXAMINATION

BY MR. LOMUSCIO:

Q. Good afternoon, Mr. Bero. Could you please introduce

yourself for the record.

A. Sure. My name is Richard Bero, and I have a company

called The Bero Group, and we provide financial and damages

and valuation services, generally speaking.

THE COURT: Is there a way to up the volume here?

MR. YAO: It's tough for us to hear.

THE COURT: We're going to try it from our end,

Mr. Bero. Maybe you just have to speak up, but see if we can

raise the volume at our end here.

THE WITNESS: How about now, is that okay?

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THE COURT: A little better.

THE WITNESS: Can you hear me?

THE COURT: I think you're right though. It's only

going through the TV and not through the court mics. Why

don't you say your name again? Let's see if it gets any

louder.

THE WITNESS: My name is Richard Bero.

THE COURT: All right. That's as good as we're going

to get. I think everyone just needs to listen carefully. So

go ahead.

BY MR. LOMUSCIO:

Q. Mr. Bero, what type of company do you work for?

A. I have a company called The Bero Group, and we provide

litigation consulting, financial valuation types of services

in cases such as this one.

Q. And so have you testified in patent cases before?

A. Yeah. I've testified on probably close to a hundred

patent cases.

Q. And who retained you for this case?

A. I was retained initially on behalf of the plaintiffs by a

law firm by the name of Loeb & Loeb.

Q. Who are the plaintiffs? When I say retained, who are the

plaintiffs who are the plaintiffs in this case?

A. Hangzhou Chic.

Q. And were you also retained by Unicorn Global?

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A. Correct, correct.

Q. And what is Hangzhou Chic?

A. So my understanding of Hangzhou Chic is it's a

manufacturer and developer of hoverboards and hoverboard

technology and has 400-plus patents and so forth on

hoverboards.

Q. And what is your understanding of Unicorn?

A. Unicorn, as I understand, is an exclusive licensee of

Hangzhou Chic for sales and distribution of hoverboards in the

United States.

Q. And you'd testified earlier you've done work in patent

cases. What is the value in your experience of having a

patent?

A. Well, just generally speaking, the value, it can take form

in lots of different fashions certainly, but it essentially

provides a monopoly, a patent owner has a monopoly over that

particular technology, that particular patent to disallow

others from using it in the marketplace.

Q. Does a patent holder also have the ability to license that

patent?

A. Certainly, yes.

Q. What is the impact of infringement on the value of a

patent?

A. Well, again, it depends on the facts and circumstances of

the type of infringement, but when you have, as we have here,

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153

direct competitors, it tends to diminish the value of that

particular patent, and it can take -- it can take shape in a

variety of different forms. It can take shape in the form of

lost royalties, lost sales, lost profits, additional pricing

pressure that otherwise wouldn't exist.

You know, it really can -- you know, again, it

depends on the facts and the circumstances of the particular

patent and type of infringement and relationship between the

patent owner and the infringer.

Q. And did you provide, in connection with the pending

preliminary injunction motion, a declaration?

A. Yes, I did. I've prepared a number of declarations in

this matter.

Q. And focusing on the most recent declaration that you

prepared, did you provide any opinions in that declaration?

A. Yes. Essentially, I provided two what I would describe as

high-level opinions, and one has to do with the issue of

nexus, the causal nexus, and the other one has to do with the

issue of irreparable harm.

Q. And focusing on the causal nexus point first, what did you

conclude based upon your analysis as to the causal nexus in

this particular case?

A. Well, I concluded based on -- I was asked to look at two

issues. One is the issue of direct competition, and the other

was the issue of commercial success. My understanding is that

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to the extent those exist in a case, that tends to suggest a

more likely causal connection between the infringement and

the -- and the demand for the patented products, or

vice-versa, I guess I should say.

And so essentially at a high level, those are the two

issues I looked at with regard to the causal nexus.

Q. And so with regard to competition, who are the competitors

you reviewed in connection with this particular case?

A. Well, it's Hangzhou Chic, but as I understand it, Unicorn

Global is the primary U.S. distributor, as the exclusive

licensee of products in the U.S., but Hangzhou Chic certainly

has sold products into the U.S. as well.

So on the one hand, you have those two parties that

are selling the patented products, the plaintiffs' products;

and then on the other hand, you have the accused infringers in

this case. My understanding, I know we went through it

earlier today the list of the entities, but we've been

referring to those entities as the Gyroor defendants and their

products.

Q. And what are the products that plaintiffs Hangzhou Chic

and Unicorn and the defendants, the Gyroor defendants, what

products do they compete with regard to?

A. Well, as I indicated, certainly the hoverboards, and

we've -- I think your Honor mentioned it right in the opening,

we have direct competitors, and that's my understanding and

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that's what I've seen from the information on the plaintiffs'

side in declarations they've provided sort of the approach

they've taken in this case and being concerned about the

alleged infringement that's taken place.

And then we also see that the companies are selling

through similar kinds of distribution and primarily on that

note, selling through Amazon. And the majority of the sales,

as I understand it again, that the defendants have been

selling through is online and largely Amazon, which is also

where the plaintiffs sell their products.

Q. And in terms of looking and determining the existence of

competition between the parties, what did you analyze with

regard to that?

A. Well, certainly, you know, I've reviewed the legal

filings, and it's evident that -- and part of those

declarations of -- there are a couple of different

declarations of some of the Unicorn people. I believe there

are -- and, again, the names changed over time, but the focus

was or the declarations were that these companies compete with

each other.

That's part of the information. I've looked at

websites. I'm not a technical expert, so I don't know what

infringes versus doesn't infringe, but I understand some of

the products that are accused of infringement. Both companies

sell hoverboards, and Hangzhou Chic is one of the largest

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Bero - direct by Lomuscio

156

market participants selling hoverboards in the United States.

Q. With regard to your declaration, you also said you looked

at commercial success. What does that mean?

A. Well, commercial success is -- I suppose it's somewhat of

a vague term, but what we look at in patent cases, we look at

it, there's different ways to look at it, but, you know,

generally speaking if a product is selling and it's successful

in the market, that would demonstrate commercial success.

That would certainly indicate commercial success.

Q. And with regard to the sales in this case, did you see an

indication of commercial success with regard to the patented

products?

A. Certainly. The data that we have was leading up to I

believe the -- there were different hearings and so forth and

injunction hearings and so forth as I understand.

Initially, we looked at data that went up from 2019

through September of 2020, so a little less than two years.

And during that period of time, Hangzhou and Unicorn sold I

believe it was 230,000 hoverboards, and they were selling --

they sold over $50 million worth of hoverboards, which in and

of itself -- patented hoverboards, I should say, what I

understand to be patented hoverboards.

So there alone, that's certainly an indication that

these products have been commercially successful.

Q. And based upon your analysis of both the competitive

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elements and the commercial elements, what was your first

opinion with regard to the patented products in this case?

A. Well, again, it's my understanding that an indication of

direct competition, such as we have here, and commercial

success, such as what we have here, is an indicator of the

nexus and -- the causal nexus. And so looking at it through

that lens, that has certainly been the case.

Q. And you testified earlier that you provided a second

opinion with regard to the declaration provided in this case.

What was that second opinion?

A. Yeah, the second opinion has to do with whether there is

likely irreparable harm. And, you know, given what I've seen

and what I'm aware of, which is, quite frankly, some limited

information that's based on what the defendants have produced

or haven't produced, provided, that's not for me to determine

whether that's proper or not certainly, but it would appear

based on the limited information I have that irreparable harm

is likely.

Q. And what, in coming to that conclusion, what did you focus

on in connection with your analysis?

A. Well, it really boils down to one piece of information.

One of the things that I would like to look at is the number

of sales that the defendants have made of the accused products

and how much money it was making and so forth and really kind

of work our way towards a damages analysis and get in

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effect -- a sense for the effect in the market from a

quantitative perspective.

We don't have that in this case. Obviously it's

early from that sort of a viewpoint. But one of the pieces of

information I thought was telling and really underlies this is

a few weeks before the August 2021 hearing, the Gyroor US

defendants indicated, somebody had -- I believe had a

declaration or maybe it was in the motion, but said that they

were going to go out of business by the end of the month,

which was August of 2021, if the protective order or the

injunction, excuse me, was not dissolved, and that suggested a

couple of things to me.

First of all, based on the other available

information, which is the amount of frozen assets that was

provided to the plaintiffs through -- by Amazon, Gyroor USA

was far and away the largest or had the largest amount of

frozen assets.

And then if they were so dependent on these products,

that suggests that there's not much else they are selling,

which calls into question whether or not they have a solid

foundation, financial foundation. And to the extent they

don't have a solid financial foundation, that calls into

question whether or not they'd be able to pay, capable of

paying any damages to the extent we went that far, we got that

far in this particular case.

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Bero - cross by Yao

159

And if you can establish damages but you can't

collect damages as a plaintiff, then you're certainly going to

be irreparably harmed.

MR. LOMUSCIO: Nothing further, your Honor.

THE COURT: All right. Cross-examination.

MR. YAO: Yes, your Honor.

CROSS-EXAMINATION

BY MR. YAO:

Q. Good afternoon, Mr. Bero.

A. Good afternoon.

Q. Okay. So first question, so you indicated in your report

that there needs to be a casual nexus in addition to

irreparable harm for an injunction, correct?

A. I'm not sure I followed that.

Q. Okay. Let's start with in your report, you wrote that

there appears to be some casual nexus between the '723

and '256 patents and the demand for the patented products,

correct?

A. Yeah, yeah. It's causal nexus.

Q. Causal.

A. Correct, rather than casual. Yes.

Q. And you just testified earlier that direct competition

between competitors suggests causal connection as well,

correct?

A. That's an indicator as I understand it, which makes sense.

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Bero - cross by Yao

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That's one of the indicators, yes.

Q. Okay. In your -- in your expert report on page 21, I

would say paragraph 85, you give examples of what the Federal

Circuit indicates for a causal nexus.

So, first, let's take a look at you quoted: Evidence

that a patented feature is one of several features that cause

consumers to make their purchasing decisions; second, evidence

that inclusion of a patented feature makes a product

significantly more desirable; and, third, evidence that the

absence of a patented feature would make a product

significantly less desirable.

Do you remember writing those?

A. Yes.

Q. So, however, in your report, have you included any

evidence of any patented feature that causes consumer to make

their purchasing decisions?

A. Are you referring to the first bullet point, cause

consumers to make their purchasing decisions?

Q. Yes.

A. I have not analyzed that, no.

Q. Have you included evidence that the inclusion of a

patented feature makes a product significantly more desirable?

A. I've referenced somewhere in my report, and I haven't

analyzed that issue specifically with regard to all the

features and competition, but I would note that somewhere in

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Bero - cross by Yao

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my report, I address one of the -- one of the declarations

that plaintiffs presented were that the designs were

revolutionary, which certainly -- now, I haven't gone out to,

set out to establish that or prove that, but certainly to the

extent that's the case, then that would certainly fit that

bullet point there.

Q. But the information you provided in this report of

patentable feature that you just described, those were

provided by plaintiffs, correct?

A. I'm sorry, I'm not sure I followed that.

Q. So in your report, you just described that you might have

talked about evidence of the inclusion of a patented feature

that makes a product significantly more desirable, you just

indicated that your report might have referenced that.

Are those information based on what plaintiffs have

given you?

A. That information I referenced? Yeah, that comes from, I

believe, a declaration. I can't remember the name of the

individual. I think it's spelled C-I-U is the last name, but,

yes, that -- and as I said, I didn't set out to establish that

particular bullet point, if you will.

Q. Well, have you done your own independent analysis?

A. That's what's contained in my -- my declaration, yes. As

I said, I -- I analyzed, I was asked to analyze the issue of

direct competition and commercial success as it relates to

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Bero - cross by Yao

162

this issue, this nexus issue.

Q. So --

A. That's what I was asked, that's what I analyzed.

Q. So is it your opinion that direct competition between

different businesses would essentially mean that there is some

causal nexus that would be established, that all we need is

direct competition?

A. No, that's -- that's not my opinion. As I said, as I say

in my report, if you look at paragraph 86, I understand it

considers these issues and I understand the nexus considers

the issue of whether there is direct competition and whether

the patented products have had commercial success. I have

been asked to address these two issues.

Q. So let's take a look at direct competition.

In your report, in that section, you wrote -- you

indicate that plaintiffs are one of the biggest competitors in

the hoverboard market, which is a competitive market. That's

on paragraph 88. And on paragraph 90, you also indicated that

Unicorn considered Gyroor defendants to be direct competitors

in the U.S. hoverboard market, correct?

A. Correct.

Q. Are there -- are there any data to support that, that

would support the notion that Unicorn considers Gyroor

defendants to be direct competitors in the U.S. market?

A. Is there data?

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Bero - cross by Yao

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Q. Yes. Is there data?

A. Yeah. I mean, this whole case is about -- this whole case

is about the defendants offering these accused products for

sale through Amazon and through various online websites, which

are hoverboards, and that's not -- that's not complicated.

That's pretty obvious.

And we know the plaintiffs also sell these similar

types of hoverboards. So I think it's very obvious that

they're direct competitors.

Q. Are you aware that there are also other direct competitors

in this hoverboard market?

A. Absolutely.

Q. So how would that affect your -- your opinion or analysis,

knowing that there are other competitors, direct competitors,

out there in the market?

A. It doesn't -- it doesn't matter. I mean, the fact is

these two companies sell similar looking hoverboards and

they're direct competitors. There may be other competitors as

well, but when we're looking at the issue of direct

competition, I mean, it's pretty obvious, I think.

Q. Well, are you aware that there are other substitute

products in the market as well?

A. I'm aware there's other hoverboard products, certainly. I

haven't made any attempt at this point to analyze all the

different hoverboards that are available and, you know, the

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Bero - cross by Yao

164

different features and so forth and so on.

I do note in here some of the market data which

indicates some of the bigger competitors in the market.

Q. So in your -- you also indicated, let's go to the

commercial success portion. You indicated that on

paragraph -- on paragraph 98, you indicated that from

September 2020 through approximately August 2021 -- sorry --

2021, I understand Unicorn's monthly sales of patented

hoverboards were approximately 50 percent less than they were

in comparable months in 2019 and 2020.

Do you have any data of most recent sales or, I'm

sorry, do you have any most recent data?

A. I don't have any other -- any subsequent data from

plaintiffs, and as I noted before, I don't have any of the

defendants' data. It hasn't been provided.

Q. So you didn't include any most recent data in this -- in

this third supplemental report for plaintiffs' motion for a

preliminary injunction, correct?

A. Right. That took us up to I believe it was the -- there

was a hearing in August of 2021, but I don't have any updated

data since then.

Q. So you don't have any data of commercial success of this

year, 2022, correct?

A. I don't have any sales data in 2022, that's correct.

Q. So you only include sales data of 2019 in this report,

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Bero - cross by Yao

165

correct?

A. No. I have sales data from 2019 up through September of

2020, and just those periods, as I indicated, are over 50

million in sales.

And my understanding is that after that period of

time, the monthly sales dropped, and it had to do with the

function of a couple of different factors. One was there was

a big sales bump due to COVID in 2020 that diminished sales,

and subsequent to September of 2020, it was experienced not

only by the plaintiffs but by other large manufacturers of

hoverboards.

There were some -- part of that was issues associated

with supply chain, trying to get parts, as we all know that

that was a challenge.

And then plaintiffs also believe, I can't speak to

this, but they believe that the defendants' sales were cutting

into their own sales.

Q. So you're basically basing off of what plaintiffs have

told you at least for they have less -- approximately less

than 50 percent of the sales of 2020 and 2021 without any

actual data that you received from plaintiffs, correct?

A. No, I -- no, your question didn't make sense. It's not

consistent with what I've just said. Their sales based on

information that maybe help -- based on information the

plaintiffs told me or provided to me, I believe it was again

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Bero - cross by Yao

166

in a declaration, is that after September of 2020 for the next

year approximately, their sales were about half of what they

were during the previous 12-month period.

Q. And in your report, you haven't established any exclusive

market share for plaintiffs, correct?

A. I don't know what you mean by exclusive market share. I

talk about the issue of market share in the hoverboard market

broadly in my report, but I'm not -- I don't know what you

mean by exclusive market share.

Q. Well, let me interface it. Do you think the plaintiffs

own the majority of the market share in the hoverboard market?

A. No.

Q. Even with the sales --

A. Just to be clear, just to be clear, when I'm answering

these questions, I'm focusing only on the U.S. market.

Q. Yes. I'm also only focusing on the U.S. market as well.

But even after you've seen all the data and sales

report of -- provided to you by plaintiffs, that's your

opinion, that the plaintiffs did not hold a good amount or a

substantial amount of market share in the hoverboard market?

A. That's not correct. As I talk about in my report, I

looked at -- there was, I believe, a market share study that I

refer to which indicated that Hangzhou Chic had I believe it

was 5 or 6 percent of the hoverboard market.

But it also indicated that the entire hoverboard

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Bero - cross by Yao

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market, and I believe that was in 2019, was a little over a

million units, and we know from the data that Hangzhou Chic

had sold I believe it was 230 million, it's in my report,

but -- or my declaration, I should say -- but based on the

unit data that I had, that would indicate that Hangzhou Chic

actually had approximately 19 or 20 percent of the market.

So certainly that's a significant part of the market,

but, again, we don't -- we don't have all the data certainly

at this point on market share.

Q. But based on the data you've seen that was provided by

plaintiffs and you also cited I believe it's other competitors

such as Segway and other competitors in the market and as well

as defendants' data, is it your opinion that plaintiff has,

not a majority, but has a good amount of market share in the

U.S. hoverboard market?

A. It would appear that they have a nice chunk of the market.

It's not entirely clear to me at this point anyway what

exactly that market share percentage is.

Q. In your report, have you discussed any indication of price

erosion?

A. I note it's one of the forms of damages that are

potentially available in patent cases, but I'm not -- not

suggesting that there is. I haven't done that kind of an

analysis.

My understanding is the plaintiffs believe defendants

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may have been undercutting their prices, but I have not -- I

don't have an opinion on that. I have not studied that.

Q. So you have no opinion as to whether there are price

erosion in this case, correct?

A. That's correct.

Q. All right. Let's go back to the market share topic.

Based on the data that plaintiffs provide to you,

they said -- they indicated that they lost approximately

50 percent of sales in 2020 and 2021. Would that have any

effect as to their market share?

A. So what you stated at the beginning of that question was

not correct. I didn't say they lost 50 percent of their sales

in '20 and '21.

They said that from September of 2020 through August

of 2021, their sales had dropped about 50 percent. So for

that one-year period, their sales were lower by 50 percent.

Q. Well --

A. And then the next part of your question was related to

market share, does that indicate their market share was lower.

And as I said before, I don't know all the market share data,

but the plaintiffs believe, from discussing with other

hoverboard manufacturers or gathering information in the

market, is that the entire market dropped in late 2020 and

through at least August of 2021, relative to the preceding

12-month period, and there's two primary reasons.

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Bero - cross by Yao

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One is the period leading up to that timeframe, there

was -- there was a run on, if you will, a lot of people were

buying hoverboards. As we know, you know, COVID caused lots

of people to, you know, spend more time outside and whatever.

So that inflated their sales during that period over and above

what they had projected and expected.

But then on the flip side that you're now measuring

against -- in the subsequent time period, you're now measuring

against the higher bar that they didn't expect in the first

place. So the belief was that those sales in 2020 had --

basically were sales they otherwise would have made later.

And so that's why their later sales were lower. In part, that

along with the supply chain issues that I mentioned, and as I

also indicated, they thought that defendants had taken some of

their sales.

But, you know, again, I can't -- I can't establish

that. I can't prove that. I haven't done that type of an

analysis yet.

Q. So as you indicated in your resumé that you're a CPA.

Based on -- and you have seen sales data provided by

plaintiffs in the previous years, and based on your projection

and your expertise as a CPA, would you consider that the loss

of -- if there is any loss of market share, that's due to many

different reasons, such as the COVID-19 pandemic, supply chain

issues, and that the defendants alleged infringing activity

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Bero - cross by Yao

170

has no bearing or effect on the market share?

A. I'm not really sure I followed that question because it

didn't make an awful lot of sense. So you can either try

again, or I can try to answer what I understand you maybe were

trying to ask.

Q. I'll rephrase that.

So since plaintiffs said that they believed that, you

know, they lost or they might have lost approximately

50 percent sales between 2020 and 2021, and that could be

contributed to a lot of factors, such as COVID-19 pandemic,

supply chain issues and other factors that's just out of

control, and based on your expertise as a Certified Public

Accountant, and you've seen sales data provided to you by

plaintiffs of their previous years' sales data given -- but

you haven't seen as of right now, correct? You haven't seen

any data as of 2021 or 2022?

A. Correct. That's correct. I haven't seen that data.

Q. So is it your -- based on just your expert opinion as a

Certified Public Accountant that the approximate loss of sales

is due to many contributing factors, which defendants' alleged

infringing activities in this case might not even have any

effect on the approximate loss of sales?

A. Just -- I need to be clear. I'm not -- the plaintiffs

aren't claiming -- I'm not claiming, I'm not suggesting that

these are lost sales, that 50 percent isn't intended to

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Bero - cross by Yao

171

indicate they lost those sales.

So I'm not -- I'm not claiming those are lost sales,

and I hope that's really clear in my declaration. I haven't

quantified that kind of a damages-type analysis.

But there are factors that I just -- we've just been

talking about that are reasons those sales were lower for that

late 2020 and nine months or eight months in 2021 period

compared to the preceding 12 months.

And, yeah, there are a variety of factors certainly

that would play into that.

Q. So it is possible that defendants' alleged infringing

activities in this case have no effect whatsoever on the

approximate lower sales of the plaintiffs' products?

A. You keep talking about the lower sales. A damage case

typically, and certainly in a patent case, it's not about

lower sales. That might indicate, be an indicator, but it's

about lost sales due to the infringement, and I haven't

quantified what those lost sales are.

I have an example in here suggesting that if you

simply used a market share approach to the damages, which we

oftentimes do in patent cases, at least 5 or 6 percent or

whatever their market share would be reasonably attributable

of those sales would be reasonably attributable to the

plaintiffs.

But that's not intended to be a damages analysis or a

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Bero - cross by Yao

172

claim that they've lost sales or certainly a quantification of

lost sales because, quite frankly, as I've said, I don't have

the information. I don't know what the defendants have sold

because that information hasn't been -- hasn't been produced.

Q. Well, let's go to the point where you indicated in your

declaration, I believe it's on --

THE COURT: How much more do you have on cross?

MR. YAO: I would say, like, ten minutes max.

THE COURT: All right.

BY MR. YAO:

Q. Let's take a look at page 28 of your declaration,

paragraph -- paragraph 118 to 120.

You indicated that Gyroor defendants claimed that

more than 1 million of the U.S. account have been frozen as a

result of the preliminary injunction and that they claim that

the defendants would go out of business if an injunction was

not dissolved, meaning that you believed that the Gyroor US

defendants would be insolvent, correct?

A. I didn't necessarily believe they would be insolvent.

Q. That they don't have the ability to pay damages, correct,

meaning that --

A. That's certainly an indicator that -- that there's a

question there that if they're suggesting they're going to

have to go out of business if they don't get an injunction,

that tells me a couple things.

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Bero - cross by Yao

173

It tells me they're heavily reliant or entirely

reliant on these products that we're talking about, and if

that's the case, then they have limited resources to be able

to pay damages in the event that plaintiffs are able to -- or

would be able to subsequently prove damages.

It's a limited amount of information, but that -- I'm

not saying they're being insolvent, but I'm saying that the

limited information is they're dependent on these products,

and without them, there's nothing else to the -- to the

business or limited or else maybe they have other products

they're losing money on. That could be true. It could be as

well. I just don't know.

Q. Well, as you are aware, as you are aware that you were

here since the morning during the opening statements for both

parties, you heard that Gyroor US and the other Gyroor

defendants are still currently in this case, meaning they are

not insolvent or go bankrupt.

Would that -- since the fact that they are not

insolvent or go bankrupt, does that change your position

that -- that they might -- they might not be able to pay any

damages?

A. Not necessarily. It could indicate that they have some

sort of funding and access to cash that -- but we don't know

if they've just been shut down or if they haven't been -- we

don't know if they're owned by -- I don't know if they're all

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Bero - cross by Yao

174

owned by the same company or entity or entities.

But, you know, if you have a company that's a

defendant and they're going to go out of business in a short

period of time if they can't sell the allegedly infringing

products, that doesn't bode well for a plaintiff being able to

collect on damages.

They may have some other -- they may have -- I mean,

there's a lot of different explanations for how they're paying

for this -- you know, these ongoing legal issues, but that

doesn't necessarily mean it's the company that's paying.

Q. But that does indicate that compensatory damages are --

are available in this case instead of a drastic remedy of

preliminary injunction, correct?

A. Well, I'm looking at it from an irreparable harm issue.

I'm not looking at the whole, you know, all these issues. I

know there are a lot of issues to resolve, but, you know, if

you have -- if you have an entity that is -- owns all of these

entities, I don't know, but if you do, you have an entity

that -- or a partial owner in some of these entities that's

willing to fund litigation costs until the case gets resolved,

they don't necessarily have to -- they don't necessarily --

they're not in a position necessarily where they have to pay

if the -- if there are damages awarded against the defendant.

I mean, it's a legal corporate structure kind of

issue. And as I said in my deposition, I brought this point

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Bero - cross by Yao

175

up a couple of years ago in one of my declarations, and I

haven't seen any indication that they do have the ability to

pay. And maybe they do, but given the limited data I have, it

calls it into question.

Q. So just a few more questions.

So let me ask you about third party respondent

Gaodeshang-US.

Do you know Gaodeshang-US is or, I'm sorry, was a

defendant in this case?

A. Which entity?

Q. It's called -- I'll spell it for you --

G-A-O-D-E-S-H-A-N-G-US.

A. Is that one of the ones that we -- I don't remember. I

can't remember the name of the entities.

Q. So if this entity has not sold any of the alleged accused

products in this case, does that change your analysis?

A. If it hasn't sold any accused products?

Q. Yes.

A. I don't know that it changes my analysis, but I don't know

why they'd be -- I mean, there wouldn't be any damages --

well, I suppose there could be potential for damages, but

probably not significant damages, generally speaking.

So if they're out of the case or if they're not

selling products and they likely didn't cause any damages,

it's not a given, but it would tend to certainly suggest that

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Bero - cross by Yao

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that's more likely than not, then defendants wouldn't be

irreparably harmed by them continuing to sell something that

they don't sell in the first place.

MR. YAO: That will be it, your Honor. Nothing

further.

THE COURT: All right. Any redirect examination?

MR. LOMUSCIO: No, your Honor.

THE COURT: All right, sir, you're excused. Thank

you.

All right. Does the plaintiff have any additional

witnesses or evidence to present by way of this hearing?

MR. LOMUSCIO: No, we do not, your Honor.

THE COURT: All right. Well, I've read all the

briefs, many briefs filed, both before and after the Federal

Circuit decisions, and we've heard testimony now from several

witnesses today.

The defendants have another expert they wish to call

next week, but that may be unnecessary.

A plaintiff seeking a preliminary injunction must

establish that he is likely to succeed on the merits, that

he's likely to suffer irreparable harm in the absence of

preliminary relief, and that the balance of equities tips in

his favor, that an injunction is in the public interest.

And in reviewing the grant or denial of a preliminary

injunction, the Fed Circuit looks, at least on the likelihood

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of success analysis, they look at the Federal Circuit law.

To show a likelihood of success on the merits, a

patentee must show that it will likely prove infringement of

the asserted claims. If the defendant raises a substantial

question concerning infringement, the preliminary injunction

should not issue. A substantial issue of infringement is

raised if the defense or if the defense -- let me rephrase

that.

If the defendant raises a substantial question

concerning infringement, the preliminary injunction should not

issue. Here the patentee has not shown that the infringement

defense raised by defendants lacks substantial merit. So for

that reason, because there has been I don't believe on a

preponderance standard a finding that there is likelihood of

success on the merits by the plaintiff, I'm going to deny the

preliminary injunction.

I'm going to issue a written opinion to supplement

this quick oral ruling, but there's no point having you come

into town next week. There's no point having the defendants

bring in another expert witness. I'm satisfied, having heard

the testimony, having seen the actual alleged infringing

products, having read the declarations of the experts and

heard from -- having heard from three of them, I'm satisfied

that an injunction should not issue in this case for the

reasons given.

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I'm going to ask the parties to email to my courtroom

deputy all the PowerPoints used today, and on the issue of the

proper parties being in the case, I'm going to -- is your

motion to clarify, does that sufficiently set forth your

position as to the proper parties, or do you wish to

supplement it?

MR. YAO: Your Honor, I will have to go back and

doublecheck, and we will email the courtroom deputy about the

status, and we can go from there.

THE COURT: If you're going to rest on your motion to

modify, let her know, and then I'd ask the defendants to

respond to it, and I'd give you 14 days to respond.

From the time you learn, if that's what they're going

to rest on, or if you wish to supplement it, you should do so

promptly. Talk to defense counsel and see -- or plaintiffs'

counsel and see what the timeframe can be, but we should

resolve that issue before we take the next steps in the case,

which I assume is summary judgment briefing.

I have no opinion. My review here is limited to

likelihood of success on the merits, and that doesn't prejudge

any summary judgment either party could file and certainly

doesn't prejudge what a jury may decide if there are fact

issues that prevent summary judgment from being granted to

whoever seeks it.

Any questions by plaintiff?

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MR. LOMUSCIO: No, your Honor.

THE COURT: Any questions by defendant?

MR. YAO: No, your Honor.

THE COURT: All right. I'd like the hoverboards that

are up on the bench taken back. We have a hoverboard in

chambers. I believe it was provided by defendants, but does

anyone remember who gave us a hoverboard?

MR. CHENG: Us.

THE COURT: Defendants? You can retrieve it. If not

today, have your local counsel come over and get it in the

next week or so --

MR. CHENG: Okay.

THE COURT: -- from chambers. You don't have to lug

it out today if you don't want to, but it's there if you want

it.

Okay. We won't need the actual products. We've

reviewed them. We don't need those for purposes of issuing a

written opinion, which will follow relatively soon.

All right. Once we clarify the issue of parties,

then I will ask you for a joint status report. Once we rule

on that clarification, perhaps there's no need to clarify once

you've briefed it if there's agreement, but once that has

taken place, I need to know what the next steps are:

Settlement conference or summary judgment briefing.

If it is summary judgment briefing, I need to know --

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hopefully you can come up with an agreed briefing schedule

whether it's one side seeking it, another side not, or whether

it's joint summary judgment motions. Either way, come up with

an agreed briefing schedule.

If you can't reach an agreement, note your

disagreements in an email to my courtroom deputy, and I'll

resolve the disagreements and we'll have a briefing schedule

on summary judgment, and then we'll proceed from here.

Okay. Last chance, any questions by plaintiff?

MR. LOMUSCIO: No, your Honor.

THE COURT: Any questions by defendant?

MR. YAO: No, your Honor.

THE COURT: All right. Thank you all for a very

interesting presentation and for the witnesses and their time.

Thank you all.

(Which were all the proceedings heard.)

C E R T I F I C A T E

We certify that the foregoing is a correct

transcript from the record of proceedings in the

above-entitled matter.

/s/ Kelly M. Fitzgerald

___________________________________

/s/ Kathleen M. Fennell December 3, 2022

___________________________________ _________________

Official Court Reporters Date

United States District Court

Northern District of Illinois

Eastern Division

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