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1974 1 2 3 4 5 6 7 8 9 Defendants. 10 11 12 13 14 15 16 17 JURY TRIAL - Day 12 18 (Pages 1974-2125) 19 20 21 22 23 24 25 Before: THE HONORABLE RAYMOND A. JACKSON United States District Judge TRANSCRIPT OF PROCEEDINGS Norfolk, Virginia November 1, 2012 V. AOL INC., GOOGLE INC., IAC SEARCH & MEDIA, INC., GANNETT CO., INC., and TARGET CORPORATION, I/P ENGINE, INC., Plaintiff, ) ) ) ) ) ) ) ) ) ) ) ) THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA Norfolk Division

CIVIL ACTION 2:11CV512

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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1975 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 * * * QUINN EMANUEL URQUHART OLIVER & HEDGES LLP By: DAVID A. PERLSON, ESQUIRE DAVID L. BILSKER, ESQUIRE DAVID NELSON, ESQUIRE EMILY C. O'BRIEN, ESQUIRE ROBERT A. WILSON, ESQUIRE and KAUFMAN & CANOLES By: STEPHEN E. NOONA, ESQUIRE, Counsel for the Defendants CRENSHAW, WARE & MARTIN, P.L.C. By: W. RYAN SNOW, ESQUIRE DONALD C. SCHULTZ, ESQUIRE and DICKSTEIN SHAPIRO, LLP By: JEFFREY K. SHERWOOD, ESQUIRE FRANK C. CIMINO, JR., ESQUIRE KENNETH W. BROTHERS, ESQUIRE CHARLES J. MONTERIO, JR., ESQUIRE and DAWN RUDENKO, ESQUIRE Counsel for the Plaintiff Appearances:

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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1976 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 (Court convened at 10:50 a.m.) THE COURT: Good morning, ladies and gentlemen.

The Court just concluded a charge conference with the parties. The Court provided the parties with the I am prepared to hear any

proposed charge in this case. objections to the charge.

For the record, if you would

note your objection to the charge on behalf of the plaintiff, Mr. Brothers. MR. BROTHERS: Thank you, your Honor. The

plaintiff objects to Jury Instruction No. 32 with regard to the date of commencement of damages and, specifically, with the limitation of damages for defendant Google to September 15th, 2011, based on the Court's ruling of laches as was discussed several times yesterday. I/P

Engine disagrees with that ruling for the reasons stated on the record yesterday and reiterates and incorporates those objections to the instruction. I/P Engine believes

that damages could be calculated for all defendants as of December 15, 2005. Plaintiff has no other objections to the instructions that were provided to us. THE COURT: objection is noted. Mr. Wilson, on behalf of defendants. MR. WILSON: Yes, your Honor. Thank you. We All right. I thank you. Your

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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1977 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 have three objections to your Honor's charge. First,

with respect to Jury Instruction No. 22 on the Doctrine of Equivalents. As stated on the record in connection

with our judgment as a matter of law, we do not believe there is adequate evidence of Doctrine of Equivalents to go to the jury and this instruction will, therefore, be confusing and really beyond the scope of what the jury has to decide in the case. With respect to proposed instruction or Instruction No. 23 from the Court on active inducement, our objection is similar, your Honor, based on judgment as a matter of law motion. Again, we do not believe that

this issue should go to the jury and that the instruction on it will be confusing. Finally, with respect to Instruction 32 from your Honor, defendants object to the second portion of your proposed instruction in which you will instruct the jury with respect to the other defendants and the starting point for damages with respect to each of the other defendants besides Google. Then with respect to defendants' proposed instructions, your Honor has indicated that you are not going to instruct the jury according to three of defendants' proposed instructions, and so I would look like to state our objection to those on the record.

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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1978 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 The three proposed instructions that defendants submitted were 4.6 regarding the entire market value rule, and defendants understand that your Honor is not going to instruct the jury specifically with respect to the entire market value rule, and defendants believe that an instruction is appropriate in order to make sure that the damages instructions are up-to-date with respect to the current Federal Circuit standards of the law and that it's necessary to be the complete instruction. Similarly, defendants' proposed Instruction 4.7 relates to comparable licenses, and again, defendants propose that instruction to be consistent and up-to-date with current Federal Circuit law and we understand your Honor is not going to charge the jury with respect to that particular instruction. And then, finally, with respect to proposed Instruction 4.8 on apportionment, the objection is the same. Defendants believe that this is necessary in order

to fully charge the jury as to damages with respect to current Federal Circuit law and we understand your Honor is not going to instruct the jury in accordance with that proposed instruction. THE COURT: Would you please tender to the court I know you gave the Court an

those three instructions?

instruction packet, but I want you to tender to the Court

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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1979 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 those three instructions that the Court has refused here. Would you pull them out there? MR. WILSON: Yes, your Honor. I have them here

and I can tender them to the clerk. of my packet. THE COURT:

Let me pull them out

While you are doing that, let the

Court indicate that the Court had reviewed those instructions and the Court believes under the circumstances the way this case has evolved, those instructions are not appropriate and not necessary. number of those instructions regarding the confidentiality of the patents and the licensing agreement pertain to matters within the scope of the Court's responsibility to guide the parties during the trial, so there's really no need to give the jury instructions on those issues. Now, regarding your objections to the instructions the Court is giving, the Court believes the Doctrine of Equivalents is reasonably raised by the testimony of Dr. Frieder in the case and also believes the other instructions are appropriate as having been reasonably raised by evidence in the case. So that's the A

Court's position on the matter of instructions. May I see those? You also tendered a laches instruction, 4.9.

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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1980 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 question? packet. MR. WILSON: I believe that's on the back of the

I intended to tender to the Court 4.6, 4.7 and

4.8, that's all. THE COURT: back on that again. MR. WILSON: double-sided copy. THE COURT: Okay. Fine. The No, your Honor. It's just a I didn't think you wanted me to go

Gentlemen, here's where we stand.

Court understands that each party has an hour to argue. I think what the Court is going to do is take something like a ten-minute break in between these arguments so we won't go two hours. A ten-minute break, and then we are Then what we are going

going to do the second argument.

to do, if the jury is able to tolerate it, we are going to do the charge, which means the lunch break will be later than usual. But we are not going to take the hour

and-a-half lunch break and then come back and do the charge. That's the Court's plan this time. MR. SHERWOOD: Your Honor, may I ask one

I think when we talked before, the Court

indicated the plaintiff could reserve a certain amount of time for rebuttal. THE COURT: That's true. The amount of time you

wish to reserve of the time you have been allocated.

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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1981 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 in. (Jury in.) THE COURT: You may be seated. Honor. THE COURT: Okay. Then, fine. Bring the jury Honor. THE COURT: want to reserve it. MR. SHERWOOD: THE COURT: Thank you, your Honor. Are we going to need that All right. That's fine, however you MR. SHERWOOD: I think about ten minutes, your

Okay.

easel in the middle of your arguments? MR. SHERWOOD: I don't intend to use it, your

Good morning, ladies and gentlemen. THE JURY: THE COURT: jurors are present. Good morning. Let the record reflect that all Does counsel agree? Yes, your Honor. Agreed, your Honor. Ladies and gentlemen, we have been

MR. SHERWOOD: MR. NELSON: THE COURT:

at it since 9:00 this morning, and we are now at the point where we are prepared to go forward with the closing arguments. You will remember that I told you the closing arguments of counsel do not represent evidence in the

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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1982 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 case. It's simply their outline of what they believe

they have shown through the witnesses and documents they have produced. We will first have a closing statement by counsel for plaintiff, then counsel for the defendants, and then a short rebuttal or closing argument by the plaintiff. All right. MR. SHERWOOD: THE COURT: May I proceed, your Honor?

You may. Good morning, ladies and This

MR. SHERWOOD: gentlemen.

I want to thank you for your service.

has been a long trial and you have had to listen to a lot of technical testimony, and we are very appreciative for all the effort and attentiveness that you have put into this task. You are going to get a verdict form from the Court that is going to explain -- that you are going to use to complete to explain your verdict. When I come

back up here on rebuttal, I will talk about that for a few minutes. One of the things you are also going to get from the Court are instructions, instructions on the law that you will use to apply to the facts that you find to make your decision. Your decision is something that will be

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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1983 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 reflected in the verdict form. And the instructions will

explain who has the burden of proof on which issues. IPE, as the plaintiff, has the burden of proof with respect to infringement and damages, and that burden is more probable than not; whereas, Google and the other defendants have the burden with respect to invalidity, and the standard for that, as the Court will instruct you, is clear and convincing evidence. Now, before we get into a more detailed discussion about the evidence, I want to suggest to you a couple of ways to think about what you have heard over the last few weeks. First, I want to suggest to you that

you can trust the documents that were written without regard to this lawsuit. That means that every document

written by Google before this lawsuit was filed in 2011 will probably be the most reliable, trustworthy evidence of the issues that are before you, and I suggest to you that you can trust them. Witnesses may disagree, and you did hear some disagreement between the witnesses, but the documents are what they are, no matter when they are used during the course of their existence. When you are in the jury room you will have all of the exhibits that were admitted into evidence, all the documents and other things that were admitted into the

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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1984 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 case. I suggest that you review them. See if they are

consistent, see what they tell you about the evidence and the issues in this case. I'm going to try to remember, as I go through my presentation this morning, to call out the exhibit numbers, so you may want to write them down. And, by the way, PX, I don't know if we ever explained this to you, refers to plaintiff's exhibit that was admitted into evidence and DX refers to defendant's exhibit that was admitted into evidence, and you will have a binder, I believe, that will show the PX and DX documents. So when you look at the documents you will see that IPE introduced into evidence about 22 Google documents that showed how the Google system worked. Don't take my word for it in the jury room. Look at the

exhibits, look at the binder, and come to your own conclusion with respect to that. In contrast, you will see that Google only introduced one document to explain how its system worked, and that document, it was a prelitigation document, Mr. Alferness said what incorrect, you may recall when he came here and testified before you. I want you to think about. Think also about the promises that were made So that's one thing

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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1985 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 about the evidence in the openings. We promised to

provide you evidence from multiple sources to show infringement of each and every element in all the claims that have been asserted. In other words, we showed you

all the legs of the chair, not just one leg of the chair. So you heard testimony from Google witnesses about the presence of infringing elements. That's why we

played all that video testimony earlier on in the trial. You heard evidence about Google documents, the very same documents that I encourage you to review in the jury room. You heard testimony from Dr. Frieder about the source code, which he testified is consistent with those documents, and he said, by the way, that the relevant parts to that code appear repeatedly, not just a few times, as Google suggested. You had the benefit of highly qualified expert testimony from IPE. I told you in opening that a Google witness would testify that the alleged inaccuracies in these documents are confidential. who testified by videotape. I told you there was no dispute between the parties that the patents taught how to practice the You heard that from Mr. Fox,

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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1986 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 inventions that they disclosed, the Ken and Don inventions. There was no dispute about that.

And I told you there would be evidence that when Google introduced its infringing products, there was a 20 percent increase in Smart Ads revenue, at least. And you

saw evidence about that, evidence that will be with you in the jury room, including by video and audio. Third, I want you to think as another way to think about the evidence about what promises Google made at the beginning of its case when it made its opening. They said you would hear about the development of Smart Ads, but they didn't bring anyone to court to tell you that story. They didn't bring any Google employee who

could testify about the effects of Smart Ads on Google's revenue, but you did hear by video testimony that IPE offered that there was, in fact, an impact on revenue, a significant impact on revenue, and none of that was rebutted by any Google witness. If Google had other evidence to offer you with respect to that, then it was incumbent upon Google to bring that evidence to court for you to consider. suggest to you that when they didn't provide that evidence on these points to you, it meant they had nothing else to say, that there was no Google development story, that there were no patents on the Smart Ads that I

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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1987 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 are relevant, and, in fact, there was that increase in revenue when Smart Ads came online. Now, what did Google bring here? Well, when you

get right down to it, they offered you the one document that was technically inaccurate, what they say, and two experts: Dr. Ungar, who is a former Google employee, and

Dr. Ugone, who expresses his opinion about the structure of the royalty agreement depending on who he's working for. You heard him testify that when he works for a He admitted

plaintiff, it's always running royalty rate. it right there on the witness stand.

Google also brought lots of arguments.

They

said they don't do anything that's described in the patents. They don't do content filtering, they don't do

collaborative filtering, even though they watch and report everything that everybody does online. They argue

that there are all kinds of documents that invalidate these patents. They say that four different patent

examiners made a mistake when they allowed these patents. They have argued they could have put a different system in place easily and at no cost, but they didn't do that. They argued every reason you could imagine as to

why they don't think they have any responsibility. Their idea seems to be if you can come up with enough poor arguments, maybe it all adds up to one good

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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1988 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 argument. It doesn't work that way, ladies and

gentlemen, and I would like to suggest to you when you think about this evidence that when you hear somebody give you a whole string of non-persuasive arguments, usually it means they don't have one good argument. What else did they bring? Well, they brought

their name, and it is certainly a famous name, and they told you about the free stuff they offer, as if that's a defense to patent infringement. Why talk about free Simple.

stuff and Google charities in a patent case? Because you don't want to talk about patent infringement.

It reminds me of some politicians who

never seem to be able to answer the question that they are actually asked. The fourth thing I want you to think about when you deliberate on the evidence, is think about the motivation for why you heard certain evidence. For

example, if Google clearly infringes a patent and it doesn't want to pay money for that infringement, then they are going to be motivated to say that that patent is invalid. heard. A second example, Google elicited testimony about mind pools. Mind pools are not in this case. It Those arguments are standard practice, as you

is a concept that's disclosed in the patents and it does

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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1989 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 appear in other claims, none of which have been asserted in this case. issue? Why talk about a term that's not at

Again, it's a misdirection. In sum, ladies and gentlemen, Google has

infringed these patents and it has been caught in the act. That's why they are so eager for you to take away That's the motivation behind

Ken's and Don's patents.

the evidence on invalidity. So with that background, I would like to talk a minute about the inventor's story, and you heard some evidence with respect to that. You will remember Ken

Lang was a brilliant young mathematician coming out of Duke who pursued a life-long passion with respect to machine learning and intellectual intelligence. He chose to enter Carnegie Mellon, which was renown for its superior program on machine learning. Carnegie Mellon is also where Lycos was born, well before Google existed, and it's where Dr. Carbonell, one of the preeminent machine learning scholars in the world, teaches. Some of his former students, he told you, now

work at Google. As a result of his early work at Carnegie Mellon, Ken formed a company called WiseWire, and that began his collaboration with Don Kosak in October 1995. Their work led to the first patent, the '799,

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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1990 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 which is a parent patent that's not asserted in this case. And from the beginning Ken was focused on how his

company was going to make money, how it was going to generate revenue. He was focused on generating revenue And

because, as you have heard, he always pays his way.

he learned that Lycos was using advertising and search engines to generate revenue. He thought it would be a

good idea to do that, too, with respect to his company. PX-218, which was a document admitted into evidence, you will remember, was the investor summary that Ken prepared in an effort to raise capital, and that document talks about advertising. business model. In fact, it was Ken's

You will remember, I took him through

that diagram that is on about the fifth page. Advertising was an important part of the plan. Back then Ken was already thinking as well that you would only charge advertisers who actually clicked on the ad, and you will see that at PX-218 also. another example of Ken being ahead of his time. Well, as you heard, the WiseWire technology was so successful that Lycos decided it had to buy them, and this gave Ken and Don the opportunity to develop patented technology, which is what's at issue here, the '420 and the '664 patents, to apply to search engines, something that Ken, Don and Dr. Carbonell all told you had not been It's

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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1991 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 done. This technology included filtering for advertisements, finding high quality advertisements for users to click on. Mr. Nelson asked you in opening to

open the binder and see if you could find advertisements anywhere in the binders -- I mean, in the patents. And

I'm going to show you in a minute that the evidence is there that it is in both of the patents. Ken and Don also told you how hard they worked, how they had white boards filled with equations, working late hours. And the way Ken described it was it was like

peeling an onion, there was one challenge after another that had to be resolved. There wasn't a Eureka moment.

This was too complex a problem for there to be one Eureka moment. But when they got there, there was a problem, and the problem was with Lycos. Lycos didn't have the

machines to implement this invention and it wasn't willing to spend the money to buy the machines. Lycos

had large main frame computers which were ill-suited to the invention, and it wasn't going to buy new ones. The

investors at Lycos, in fact, wanted to sell the company, they wanted to move on, and there was nothing that Ken could do about that. leave. So he decided shortly afterwards to

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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1992 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Lycos. Don stayed for almost ten years and he was able, as you heard, to implement some of the technology in parts of the Lycos system, but not in the main search engine because they didn't have the machines and where it would have had the biggest impact for Lycos. In hindsight, maybe that was a mistake for Don explained how he had tried to address that Google may tell you that because Lycos didn't

situation.

implement this technology in its search engine, it couldn't have been very important. But remember, Lycos

was sold to a series of foreign investors, including a Korean company named Daum. And the testimony with

respect to that was Daum didn't know what it was doing. It was a dark and difficult time for Lycos, and I don't think that you can take anything out of Lycos's difficulties in trying to assess the importance of the inventions that are here. Remember, I told you in the opening a patent is a property right. Whether you build a building on it or

not, it's still your property. And you will recall that Ken has testified that since the '420 issued it has been referred to or cited by other inventors or the Patent Office 165 times. that is some evidence of importance, ladies and gentlemen. I think

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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1993 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 This is Ken's and Don's last chance to get rewarded for their great work in this area. The patents

will expire in four years and then they will be public property, free for anyone to use for any purpose that they want, including Google. If there's no award in this

case, it means that Google has used the technology without having to pay for it, and Ken and Don and IPE did not get the benefit of a bargain that is established in our Constitution. And, by the way, I don't know whether you are going to hear any arguments about IPE and Vringo, but don't be misled by that. Few companies or people could

be here today if they didn't have banks, investors, sources of capital in order to pursue things they want to pursue. So don't hold it against them that they went to

a source of capital to be able to pursue enforcement of these patent rights. By the way, they are shareholders and they will be rewarded for their work should you find for IPE in this case. Okay. Let's turn to the key issue in this case, And I want to restate the

whether Google infringes.

problem that I told you about in opening in the Google context. I want to explain to you how Google had the

problem that I described.

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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1994 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Let's remember, on a big picture level, Google told you that it had 10 billion ads in its inventory. That's too much information. As my kids say, TMI. So

the challenge for Google is to find the best ad out of that 10 billion to put in the top spot for each set of query results, and the reason for that is that that top slot is the money ad, the top spot where 70 percent of Google's advertising revenues come from. Mr. Alferness testified for Google that Google needed a system that would predict the right results, something he testified that Google calls both Quality Score and pCTR. And remember, pCTR means predicted

click-through rate. He also told you that Quality Score is an overloaded term. different things. In other words, Google used it to mean One of the things it uses the Quality That's

Score for is to communicate with its advertisers. ranking of 1 to 10 is not accused in this case, and

Mr. Alferness admitted that on cross-examination on the witness stand. What is accused is Quality Score 1 and

Quality Score 2, which is what Google uses to resolve its 10 billion ad problem. And why did Google need this system? Mr. Alferness told us the answer to that, too. Well, He said

if the users don't get useful ads, they might stop

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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1995 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 coming, and that would be a real problem and it would be a real problem since that's where almost all of Google's revenues come from. So it was hugely important for

Google to have this system that would predict quality results, to go from 10 billion ultimately to that top ad which I'm calling the money ad. And that technology,

ladies and gentlemen, is in the '420 and the '664 patents. You heard testimony about Fig. 6 in this case. It is an illustration of how to practice the claims here. As you can see from the yellow highlighted boxes,

Fig. 6 takes structured and unstructured feature information, which is content. It has a learning

function, what Google calls training on the data, and it learns what to do with that data. And further down in the third yellow box you will see it says collaborative input. users think. That's what other

And you see it learns or trains on that.

And then all of that is combined into what's called complete rating predictor. Notice the similarity between what Google does, predicted click-through, and what's disclosed in Fig. 6, a complete rating predictor, which is the combination of both content and collaborative. So, here's the process, if we can go to the next

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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1996 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 slide. It's described in the Google documents. And you

can see here at the top there are ads quality levers targeting, that's filtering for relevance to the query; disabling, that's filtering; prediction, that's filtering, pCTR, disabling again; promotion, another filtering; and then finally, the only thing that's not accused here is ranking and pricing. But I would point

out to you that, as you saw in the testimony of Dr. Ugone, you need to have pCTR to even rank or price. This is exactly what Google needed for it 10 billion ad problem. And, by the way, Mr. Alferness has also told us it was important that Google have results very, very fast. I think he said 200 milliseconds. So the

computers have to do the work.

That's what's in the '420

and '664 patents, the computers do the work, not human beings. Now, we know where Don and Ken's patented system came from. It started with Ken's hard work at Carnegie

Mellon, progressing to WiseWire, and ultimately the work they did at Lycos with respect to the search engines. But where did Google's systems come from? hear anything about that. Mr. Nelson told you in the opening he would provide testimony and evidence of Google's development of You didn't

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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1997 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 its own system to solve this problem, including patents on the system. Next slide. He promised you that you would hear

about the efforts from Google witnesses to develop the Google system. this trial. Here are seven witnesses who testified in

None of them described that story to you,

ladies and gentlemen. Mr. Nelson also told you that you would hear about a Google patent with respect to the development of Smart Ads. too. Remember, there was testimony about that,

Mr. Furrow said he wasn't aware of any such patent,

and so did Mr. Holt. Only one Google patent is going to be in the binders that you have back in the jury room, and that's a patent that IPE offered into evidence, and IPE offered that patent into evidence to show that Google's patent lawyers actually knew about the '420 patent. That reminds me of something else. Mr. Nelson

also complained that IPE never called Google about patent infringement. call Lycos? Well, what about Google? Why didn't it

Its patent lawyers knew about the '420

patent because the Patent Office cited it to them. That's why we moved to admit PX-416 in your binders into evidence to show that the Google patent owners knew about the '420 patent. That patent has nothing to do with the

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1998 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Smart Ads development story, and you know that's true because no Google witness testified about that patent. Not only did Google know about the '420 patent, but you also heard from Mr. Alferness that Google has this vast database called Google patents. Anyone can use it, even Google. It's free.

And you can search for

any U.S. patent, and yet having this database, Google never picked up the phone, called Lycos to discuss either of these patents. And remember the testimony of Dr. Ugone. In

2004, February 2004, Google and Lycos were neck-and-neck competitors in the Internet. They had very close number So, no

of visits from Internet users at that time.

development story from Google at all and no patent. So what were some of Google's responses to these arguments? Well, as an example, Mr. Nelson encouraged

you to open the binder, as I said, and try to find where there's any reference to advertising. He said we were

trying to stretch the patents, that they don't apply to advertising. Well, as you see on this slide, his own He agreed that when the

expert disagreed with him.

patent talked about informons, it included an advertisement. And what about claim 5 of the '664 patent? invention expressly claims advertisement. This

Could there be

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1999 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 any doubt that this patent encompasses claim for advertising? There's no stretching here, at least by

IPE, ladies and gentlemen. Another response that I told you about in opening was that Google has two-stories about what it does, the story that it tells its customers and the story they want to tell you here in court. Remember, Mr. Fox testified that these technical inaccuracies in these documents are confidential. He

said that the English language documents that describe how the system works and are supposedly inaccurate are confidential. sense? Use your common sense. Does that make

Year after year of the same public statements by

Google as to how the system works, which I'm going to go through it for you in a few minutes. Ladies and gentlemen, the technical inaccuracy issue only came up after this lawsuit was filed. a gotcha argument, and this is how it goes: This is

For years

they tell the world, including their own internal engineers, how their advertising system works, but during all that time they say it was all wrong, not technically accurate, to use their phrase. According to this argument, the Google computers actually do something different, which makes all those Google documents wrong. It's a very convenient argument

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2000 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 if you are defending a lawsuit and you don't want to take responsibility and pay your fair share, pay your royalty, but the documents are only wrong for the purposes of this lawsuit, because Mr. Fox testified they have no plans to correct them. Why would that be? Wouldn't a company

like Google want to do the responsible thing and correct its documents? There's a simple answer for this, ladies and gentlemen. The documents are correct, they are not

wrong, and that's why there is no plan to correct them. They accurately describe the system, just as Dr. Frieder told you after he reviewed the source code. Another response Google made was source code. Their position was when you go back into the jury room, that's all you are going to have to rely upon. That's

going to be the only evidence you can look at, evidence that, I fear, you may not really be able to understand. I can tell you that I don't understand it. computer scientist. I'm not a

I can't read source code.

When you are sitting back there with the source code, I want you to think about this. If their version

of the truth with respect to technical inaccuracy was correct, don't you think that somewhere along the line in the trial of this case you would have seen an e-mail, a document, something that some Google engineer wrote that

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2001 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 argument. said, hey, you know what, we can't describe this system accurately, so let's just agree we are going to describe it inaccurately? it. This technical inaccuracy argument is a lawyer's Go back and look at those documents that you Where was that document? I never saw

are going to have in the jury room and see where you find them. In addition, it seems like not all the Google witnesses got the litigation story. the testimony of Mr. Diorio. good sense. isn't true? You will remember

It seems like he has pretty

He said, why would you write something that It doesn't make sense. Exactly. What they The

wrote was true.

Dr. Frieder testified about it.

consistency of the documents tells you that that's true. And what does it tell you when we use their documents to prove infringement and they don't? In his

testimony, Dr. Ungar, their expert, never relied on a single Google document. He played this legal gotcha game

of saying disregard all the documents and focus only on source code, and he read from the slides when he was up there on the witness stand that had been prepared for him. Okay. So let's look at the documents, and we

are going to begin by going through a couple of them, and

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2002 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 then I'm going to very quickly go through the slides that my partner, Frank Cimino, put up during his examination of Dr. Frieder. So, the first one you saw was PX-228, and this one shows that the targeting or scanning a network to find the relevant informon relevant to the query is met. In other words, look for the best high quality ads. If we can go the to next slide, PX-338. One of

the things they do in that regard is look for content. Next slide, please. PX-338 again,

collaborative, feedback from the users. And then they combine. They calculate a Quality

Score based upon both the collaborative and the content as a part of solving their 10 billion ad problem. Now, IPE offered more than just Google documents. We showed you the testimony of Mr. Furrow.

I'm sorry, we played the testimony of Mr. Furrow, and he said with respect to content that what the source code was doing was getting at the textual similarity between the query and the creative. the advertisement. And for collaborative he said, the major input is historical data. And then he explained that they Creative, you may recall, is

combined and filter as well. You, I'm sure, remember Mr. Furrow also came

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2003 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 here to testify, and he actually had another document that he said he had prepared in ten minutes two nights before his testimony to explain the system, but he had to admit that he had forgotten something, he had left something out, and that was the query, an extremely important component of the Google system. Apart from source code, this is all Google offered you. IPE, on the other hand, offered you a lot

of other documents with respect to the Google system. So, for example, if we can look at PX-231 written in 2005, you see the same thing. Next slide, please. 302, same thing. The

Official Textbook from Google AdWords is the title of this document. PX-52, in 2007, same thing all over again. PX-156, August 2008, content and collaborative. PX-232, content and collaborative. PX-357, content and collaborative. PX-112. These are all statements made before Updated

the lawsuit was filed, ladies and gentlemen. 2011, content and collaborative. AdWords, forgive me.

Actually that one was

But even afterwards, in November of 2011, PX-21, same message, same accurate message. technical inaccuracy here. There's no

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2004 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 PX-338 is the last one. Okay. So we proved infringement by source code,

by Google internal documents, by testimony of Google engineers like Mr. Furrow and Gary Holt who didn't come to trial, but he testified by videotape, and by a truly qualified expert, Dr. Frieder, who is an award-winning computer scientist, chair of a department in Georgetown, a full professor, has every credential you could imagine with respect to computer science in contrast to Dr. Ungar, who has no degree in computer science and is not even a full professor at his university. One last point with respect to this. As part of

Google's damages case, Google's expert, Dr. Ungar, testified that Google would have chosen a different path to avoid infringement. He said, and I quote, it would be

easy to go in a different way. That's not true. Dr. Frieder testified that In fact,

that's not true and Dr. Carbonell agreed.

Dr. Carbonell told you he tried to do that, and even he couldn't do it. This case has been pending for over a year. it was so easy, why didn't Google do it? If

The reason is

that this predictive tool that Ken and Don developed is very, very special. Very hard to create, and yet vital

to the money ad that generates most all of Google's

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2005 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 revenue. Nothing else produces the same quality as that

machine process that's described in the patents. So in summary, the infringement evidence, you saw the check board, shows that all the elements of the claim are satisfied, and that means that there is infringement. And there's not only infringement of claim

10, but you are actually going to be asked in the verdict for to check a box with respect to every claim that's asserted in this case and that evidence applies to every claim. And so what I'm suggesting to you is that you

would check the box to show that every one of those claims is infringed. Okay. Damages. I need to start by explaining

to you that Judge Jackson has issued a ruling that is limiting the recovery with respect to Google from the period from September 15, 2011 to the present. So what I

say to you about damages with respect to the amount that's recoverable against Google is going to be different than what I told you and what testimony you heard about that during the course of the trial. ruling only applies to Google, though. to the other defendants. You know, Google is a company that believes in mathematics, but when it brought its damages model to you in this court, they didn't use any math to calculate a The

It does not apply

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2006 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 math. royalty. Think about it, a math-driven company using no Dr. Ugone, their damages expert, admits that he

uses math to calculate a reasonable royalty in every case when he works for the patent owner, but he didn't do that here because he's not working for the patent owner. brought no math to the table. IPE did bring math to the table. straightforward, actually. It was pretty He

Look at the increase in

revenue associated with infringement -- not anything else, just what's associated with infringement -- and apply a royalty rate to it. For that purpose he used a pretty simple formula, which is right here on the next slide. Take the

percentage of increase in revenue -- you heard testimony from Dr. Becker about that -- apply the rate as he determined to be customary in the industry, and you come up with a number. So let's talk about it. each defendant. And he did that for How

Let's talk about the rate first. Where did it come from?

did Dr. Becker do that?

Well, he looked for licenses that would demonstrate a customary rate in the industry pursuant to something known as Georgia-Pacific Factor 12, and he found three such licenses. Licenses to Marchex, eXact

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2007 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 and Interchange, and they had a range of rates from 3 percent at the low end to 5 percent at the high end. chose a rate that's towards the lower end. And, by the way, I believe the Court is going to ask you -- I'm not quite sure about this, actually -- to identify a rate in your verdict. If he does, then I He

suggest to you that 3.5 percent would be the appropriate running royalty rate to enter, if that's on your verdict form. How did Dr. Becker get to the base, now? he relied on Google documents and Google employees. First of all, he used the only Google apportionment document that was available to him, the revenue force document from Google's own file, and that's PX-64. That's in evidence. you. That will be in the jury room with Well,

You can look at that, too. There was a lot of criticism about that.

Dr. Becker did, but, by the way, remember, the testimony was the (e) on the right stood for estimated from which you can infer what didn't have an (e) was actual data, not estimated data. When there was no more data for Dr. Becker to use, in other words, after 2007, he assumed the growth was flat so he used the 20.9 percent. And remember, for Google recovery is only

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2008 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 limited to the last four quarters, so back to the fourth quarter of last year. So those are the only rates from

here that are relevant to your determinations when you retire to deliberate. And you will recall that Dr. Becker confirmed that there had actually been this much increase in revenue from other sources. For example, you heard the

Ben Love video, as we called it, in which Google explained that turning on Smart Ads gave an immediate 20 percent gain in revenue in clicks, and that then subsequently the difference is probably even higher than that, maybe as high as 40 percent. use any higher number than that. But Dr. Becker didn't That's PX-34.

There are other documents and presentations in evidence as well. to the base. royalties. PX-32, PX-337. So that's how we got

And then he applied 3.5 percent to identify And you will remember that he calculated

royalties on a quarterly basis. Well, as a result of the ruling, the only royalties that are at issue here are the ones that are represented by the four bars on the far right. will need to rely on your memory and judgment to determine based upon that what's a reasonable royalty for Google to pay after September 15, 2011. Now, with respect to the other defendants, you And you

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2009 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 may recall Dr. Becker offered specific numbers, and here they are, for a total of $42,416,561. Let me just summarize for you what his analysis was for you quickly. He established a trend line for Everything that's

Google revenue unrelated to Smart Ads.

below that line in the green, that's a hundred percent Google. If you looked only at the 20 percent Smart Ads

increase in revenue that's above the red line, and he calculated a royalty based upon that of 3.5 percent. Now, Dr. Ugone in his testimony said, well, Google contributed a whole bunch of things to this. That's absolutely right. That's absolutely right. And

this slide down at the right was Dr. Ugone's explanation to you on that. gentlemen. That's the 96.5 percent, ladies and Nobody is asking for a

That's all to Google.

royalty on any of that, just on the impact that the patented technology made with respect to Google's revenues. Now, Dr. Ugone and Google made several arguments, including Dr. Becker shouldn't have relied upon PX-64, and there they go again running away from their own documents. If they had something better, if

they had other numbers to provide, they should have brought them to court. There was no witness who came here from Google

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2010 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 and testified that those numbers were wrong. There was

no witness from Google that gave you any better data, and I suggest you can conclude, you can infer from that those numbers are right and that all those confirmatory things that are in evidence that you will have in the jury room are correct. Another argument was that Lycos and Google would have agreed to a lump sum. And underneath that is the

idea that a lump sum is a far, far smaller number than a running royalty. and he said no. I asked Dr. Becker if that was correct, And Dr. Ugone didn't agree with that, And it wouldn't make

that I heard from his testimony. sense, ladies and gentlemen.

Why would the price be so

different based upon the structure of the transaction? And if it was true, why would any patent owner ever agree to a lump sum? It would just be giving money away.

In that hypothetical negotiation Lycos would have known that Google was going to use its technology in all of its advertising products. And Don Kosak, one of

the inventors here, was on the executive team at Lycos. He would have been at that table and he would never have licensed out that technology so cheap to a close competitor. Google also relied on the Meyer purchase agreement. These are the patents that Dr. Ugone admitted

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2011 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 he knows only they have been used to try to push down damages amounts payable in patent cases. There's no

evidence in the record that those Meyer patents have been used by Google for any other purpose. You know, the beauty of running royalty is that both sides get to share in the risk and you only pay for what you use. And as you heard, that's how Google

structures its agreements with its partners, including all the defendants in this case, a revenue sharing kind of thing. And Dr. Ugone gave you a bunch of explanations about the administrative burdens of that. what? Well, guess

Google already has a system called Administrative

Console to take care of all that, including the sharing of confidential information. Dr. Ugone also relied upon the sale of Lycos after the hypothetical negotiation, but he admitted he knows nothing about that transaction other than the sale price. And he didn't even include it in his

Georgia-Pacific analysis, as he told you. He also relies on the sale of the patents after the hypothetical negotiation date. But the evidence is

that Lycos had no idea whether Google was infringing. Don Kosak testified that when he asked Google -- he asked Google what they were doing. Lycos had no information

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2012 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 validity. burden. about Google's use and profit from the use of this patented technology and, therefore, the sale of the patents is irrelevant, just like the Carl Meyer transaction. Ladies and gentlemen, Google's use and profits from this technology must be considered in calculating a royalty because it is this technology that drives those increases in revenue, as we have talked about. Let me talk to you for a few minutes about First of all, remember that Google has the Google is arguing, in effect, that four

examiners at different points in time made mistakes in allowing these two patents. Google showed you a slide in opening that seemed to suggest that Ken didn't think he had invented the combination of content and collaborative filtering. fact, what Ken testified was he invented every way he could think to do it. When he was asked have you invented every conceivable way to do it? answer that question. He said, I don't know how to In

How could you know every

conceivable, every possible way of doing it? And you remember, Google kept asking what's innovative about the patent, not what's innovative about the invention. Ken's not a bad word. You can talk about

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2013 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Honor. his invention, but you can't talk about the patent system. You remember the video that you were shown at the beginning of this case from the Federal Judicial Center? It explained when a person thinks he has an That's what Ken

invention, it goes to a patent lawyer. did.

There are four parts to this invention and, as you heard Dr. Carbonell say, they are all tightly integrated. They are a very significant tightly

integrated, I don't know how better to say it, invention. And this next slide is the last element of

two claims, one from the '420, one from the '664, and you can see all these things are working together like gears in an engine and none of the prior art that you saw discloses these elements, all of them working together like gears in an engine. So these claims say the search system must filter, the filter must combine content and collaborative data related to the query and filter it in. THE COURT: You have 14 minutes remaining. I'm sorry, your Honor?

MR. SHERWOOD: THE COURT:

14 minutes. 14. Thank you very much, your

MR. SHERWOOD:

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2014 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 So the defendants showed you the slew of prior art references, but not a single one of them describes that invention. Let's look at the next slide. Rose, Lashkari

and Fab, two separate systems, a profile system and search system. Dr. Carbonell explained that at length in

his over-the-wall slide that you are looking at here. These profile systems, which are Fab, Lashkari and Rose, they don't have a query. They have a profile.

That's a persistent long-term information interest. That's where Ken started at WiseWire, make no mistake about it. Lycos. There were two references that defendants claimed were anticipatory, Bowman and Culliss. And That's not where he ended up when he was at

Dr. Carbonell explained to you that those references are missing, again, important parts of the gears to make the system work. They do not filter for relevance to the I mean, they do rank. They

query and they don't rank. don't filter.

Dr. Carbonell went through this in detail yesterday, so I'm not going to go through it again. I do want to point out to you something that's in the Bowman reference where he says, "By ordering and/or subsetting the items in the query result in this way in But

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2015 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Honor. accordance with collective and individual user behavior--" that's the collaborative, "--rather than in accordance with the attributes of the items." Content.

So what he's saying is do collaborative, not content. And finally, with respect to Culliss, I want to point out to you that this is something that the patent examiners did consider. front page of the patent. It's before them. It's on the

And as you heard testimony,

the examiners actually initialed to show that they had looked at this reference. It has the same defects as

Dr. Carbonell described during his testimony. So, ladies and gentlemen, under our Constitution Lang and Kosak, or whoever owns these patents, are entitled to enforce them during the limited time period that they are in effect, and that's what brings us here today, the enforcement of those rights. And I will reserve the rest of my time, your How many minutes do I have left, Judge? THE COURT: Approximately ten. Thank you.

MR. SHERWOOD: THE COURT: MR. NELSON:

You can go forward. You want me to go, or I believe you

said you wanted to take a break after -THE COURT: Oh, yes.

Ladies and gentlemen, we are going to take a

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2016 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 ten-minute break and then we will go forward with the next argument. (Jury out.) (A recess was taken at 11:48 a.m., after which court reconvened at 12:11 p.m.) THE COURT: I believe you just brought a case

that says laches applies to the codefendants of Google. I just checked the cases, and it is here in the cases in Virginia. It's certainly reasonable and makes sense. My concern is, Gentlemen, with all the lawyers in this case, what is the problem that you cannot get to the Court the proper law before the Court rules? you know, it's amazing. I mean,

We went over this in the charge

conference this morning and when Mr. Brothers raised the proposition that laches was a personal defense -MR. NELSON: THE COURT: MR. NELSON: THE COURT: Can I address that? No, you wait. Okay. Sorry.

You did not say at that time, but,

Judge-- even if you had put it before me --the codefendants are entitled to the benefit of laches also, and give me this case so the Court could consider it before it prepared the Instruction No. 32 on Date of Commencement of Damages. now it's raised. Mr. Sherwood has argued, and

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2017 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 it quick. MR. NELSON: Your Honor, because of this, What do you have to say, Mr. Nelson? Let's make

pursuant to your Honor's instructions, we e-mailed them at 5:00. We said what are you going to do with damages? We followed up at 6:30, we We didn't get

What are you going to claim?

followed up at 8, we followed up at 10:00. anything.

They walked into the charge conference this

morning and gave your Honor the cases. THE COURT: Now, why didn't someone give me this

case this morning at the charge conference? MR. NELSON: Because we didn't know they were They have never raised

going to make this argument. this.

Mr. Brothers came back in and tried five times to

get your Honor to change its ruling, which was tossing out all the damages prior to September 15th, 2011. Now they come into the charge conference and dropped the case on you. argument. to do? We didn't know this was even an

That's why we asked them, what are you going Not

What are you going to do respect to damages?

only did they refuse to tell us, they didn't even acknowledge the e-mail. THE COURT: All right. Thank you. Mr. Sherwood and Mr. Brothers, I

will hear from you briefly and then the Court is going to

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2018 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 rule. You have one more issue you gentlemen can take up Come on.

with the Federal Circuit. MR. BROTHERS: that case, your Honor.

We have not been provided with I will note that we in our

filings -- I don't know what case you are referring to because they didn't give me a copy. THE COURT: of the case? MR. NELSON: I had a citation. Now I have a copy. MR. BROTHERS: THE COURT: Thank you. I didn't have a copy of the case. You mean, you didn't give him a copy

It's the case of Odetics versus

Storage Technology Corporation at 919 Fed.Supp. 911, and the case does stand for the proposition that the codefendants or the customers of one who benefits from laches should be entitled to receive the benefit of laches because if they cannot receive the benefit of laches, the possibility is they could come back on Google. And then what it boils down to is if they can

recover from Google, then Google has been stripped of the benefit of laches. MR. BROTHERS: I understand. So the question is

whether there's any evidence from, and I'm listening to your Honor in the description of it, of whether there was

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2019 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 now. an indemnification here. There's no evidence here. No

evidence has been provided that Google or the other defendants are seeking indemnification. And to the point

that is the distinction here, that assertion is simply not in evidence. I/P Engine has the right to sue each of these individual defendants and make its recovery independent of its claims of Google because they all are accused directly of infringement. And so absent any evidence to

that extent, the general proposition, which we provided to you, which was both Fourth Circuit and Federal Circuit post-dating this case, is that laches is a personal defense and to the extent there is an exception that is being asserted here, there is no evidence that that exception is provided. I would also note that we provided to the defendants when we filed at about 2:00 this morning our proffer with regard to the laches defense exactly the cases that we cited to your Honor this morning. THE COURT: Mr. Nelson, so back to the record This thing flips both

We are back to the record.

ways in terms of what's in the record. This case does talk about some type of indemnification. Are there any type of indemnification

agreements between Google and all the rest of the

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2020 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 them. evidence. codefendants? it. MR. NELSON: There are. They are the very It's not before this Court. I don't have

service agreements that he just talked about that they put into evidence and he just argued were a basis for the running royalties. So the service agreements they put

into evidence, those provided the indemnity. I might add on this point, your Honor, on our memorandum in support of our motion for judgment as a matter of law to the matter of laches, we moved as to all those things. That was out there. They were on notice.

So this whole thing that came up this morning and with this proffer was again, as your Honor said yesterday, backfilling by them after the fact. THE COURT: Okay. In the case that it's in the

service agreements that have already been put into the evidence, do you dispute that proposition that it's in the service agreements? MR. BROTHERS: There are service agreements in

I don't believe that they have the The first -Somebody give me one of

indemnification language. THE COURT: Show it to me.

All right.

Mr. Taylor, we may have to change what we were going to do here. Have them eat in lunch before we go to

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2021 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the charge. do. MR. NELSON: Your Honor, so for example, The time is all off. We will see what we

Plaintiff's Exhibit 260, this is the agreement with Target. THE COURT: MR. NELSON: last numbers. Okay. It's TAR-IPE Bates No. 0208, the "Google will

Indemnification Rule:

defend, indemnify and hold harmless Customer, its affiliates (defined below in Section 11.3), and their respective directors, officers and employees --" I should slow down. THE COURT: MR. NELSON: THE COURT: The Court just read it. Okay. Here's where we are. Have a seat.

The Court finds, in reading the case the Court just cited in the record, that the codefendants should be able to benefit from the Court's ruling on laches. The

Court cited Odetics versus Storage Technology Corporation at 919 Fed.Supp. 911, a 1996 case. The Court has gone back and looked at the service agreement with Target. There's a service

agreement also in here for one of the other codefendants at another exhibit, and they do provide for indemnification against any lawsuits to the extent it's

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2022 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 record. brought into question the question of the patents or trademarks, etc., that's being used. Under those circumstances the Court would have to find that the laches ruling also applies to the codefendants. That being the case, the damages will have

to be calculated in the same manner for the codefendants as they are for Google, and the Court originally had an instruction running those damage calculations to the date of filing the lawsuit and so we are going right back to that instruction, give them the copy I originally had in there. We are going back to that language and what the

parties can do. Mr. Brothers, you-all can object to it for the You can object to it for the record. MR. BROTHERS: to the Instruction -THE COURT: 32. -- 32 as revised by the Court. I Thank you, your Honor. We object

MR. BROTHERS:

would note that the indemnification referenced is not specific to patent infringement, and there is case law that unless there is specific indemnification to patent infringement in general, that the indemnity reference does not apply. And I would also note that the customer

agreements are different with respect to each of the defendants, and I do not believe that even the

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2023 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 stand. Mr. Sherwood, in view of the Court's ruling -by the way, I have redistributed to you the new damages instruction and the proposed verdict form. have it. The Court will give you an additional five minutes, if you need it. You have got 15 minutes on You should indemnification language that was referenced for Target is in, for example, the AOL or the IAC agreements. in the process of reviewing that right now. an additional basis for the objection. MR. NELSON: Just for the record and to make it I am

So that is

clear, they do refer to those patents specifically, which I think your Honor already read. THE COURT: Okay. Gentlemen, that's where we

rebuttal since you need to deal with the issue of damages in view of the Court's ruling. MR. SHERWOOD: That's all I will say. There is

Thank you, your Honor.

one other thing I think your Honor might have been alerted that there was an issue about one of the exhibits. THE COURT: I thought we resolved all questions

of any exhibits, demonstrative exhibits, in the charge conference. MR. SHERWOOD: Right.

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2024 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 do. MR. NELSON: Your Honor, you know what? This

had to do with damages because they hadn't told us the number. mark. We were going to replace it with a question We will just take that all out. We don't even

need to worry about it. THE COURT: Thank you, sir.

On second thought -MR. NELSON: No, no. This just has to do with

your Honor's ruling about how we are going to deal with they gave them numbers of $44 million for those previous defendants, which, obviously, is not correct. THE COURT: Okay. Well, I tell you what you can

I am giving him a chance to go over on rebuttal to

try to address the issue of damages, and you have a chance to argue it, that they are incorrect. MR. NELSON: THE COURT: Okay. Now, you have a chance to also And to

argue -- that's why you have the instructions.

the extent that he had an instruction that to a certain extent misdirected the parties' argument, that's why I'm giving you the opportunity to go back because he has an opportunity to go back, understanding the Court has ruled that the damages are going to run for all the parties from September 15 forward. I think the Court, before you go back on

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2025 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 rebuttal, Mr. Sherwood, in the interest of fairness, has to let the jury know that because of a Court ruling, you have been given an opportunity to re-address the argument you made regarding damages. MR. SHERWOOD: THE COURT: I will just have to do that.

Thank you, your Honor.

Okay.

Bring the jury back. (Jury in.) THE COURT: You may be seated.

The record will reflect all yours are present in the courtroom. Does counsel agree? Yes, your Honor. Agreed. All right. We will now hear closing

MR. SHERWOOD: MR. NELSON: THE COURT:

argument from the defendants. MR. NELSON: THE COURT: MR. NELSON: May I proceed, your Honor? You may. I will move back a little bit-- the

monitor is here --so I can see what you are seeing. All right. Well, thank you. I mean, before I

get started to talk to you about the evidence, I do want to thank you. I have done several of these, and the

attentiveness and the effort that you guys have put into listening to the witnesses, looking at the evidence, taking notes, is really appreciated because one of the

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2026 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 things that we are counting on in this case is that you get the facts, right? That's what we have been here for,

that's what we have been trying to give you, the facts. Now, we just got accused in their opening statements of trying to hide the facts from you, to try to say, well, wait a minute, these documents, these marketing documents are wrong. That's not right. You

listened to the facts in this case. witnesses.

We brought in the

We brought Mr. Furrow in here to talk to you, We made all these

to tell you how the system worked. people available. depositions. What did Dr. Frieder say?

That's why they showed you-all the

Dr. Frieder said he

flew out to San Francisco, right, because he wanted to sit in the deposition of Mr. Furrow because Mr. Furrow was the one who knew how the system worked. those people available. We made all He told

We brought him in here.

you how that system worked.

He told you how they had 27

models of the previous source code that they had worked on and how that was written, and we made him available for cross-examination. They had every opportunity to ask We don't have anything to

him any questions they wanted. hide in this case. anything.

We are not running away from

Now, let me talk about these documents, these

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2027 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 marketing documents. It was amazing to me. Counsel says

the most important thing is infringement, and then he breezed through it. He didn't talk about the claims, he

didn't talk about how the systems actually work, what the evidence is that you are going to be asked to consider here. So let's think about who really is running away They showed you all of

from these marketing documents.

these marketing documents during Dr. Frieder's testimony, and they had these colored documents, right, because they wanted you to look at the colors. is collaborative. This is content, this

But they didn't explain anything.

They didn't say, wait a minute, how does this tie to how the system works? for advertisers. Because, remember, these documents are They are high-level descriptions so

that they can use the system better, but they don't get in and tell you how the system actually works and that's what you are after here today. And let's think about what happened with some of those documents. You remember on Dr. Frieder's direct

examination he went through a number of these things, and they had the colors on there and said, Look at this. This is what I want you to look at. But even here, PX-338, that's the first one. Counsel went through and showed that to you and said, This is one I want you to focus on. Remember PX-338?

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2028 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 They had a little excerpt during Dr. Frieder's testimony, that said, Here's what Quality Score is and we have our colors on there, and you should look at that document. But then when I actually showed him the document and said, What does it say right above that? a Quality Score of 1 to 10. that on cross-examination. It talks about

And Dr. Frieder acknowledged He says this document is

talking about a Quality Score from 1 to 10. And what did he say about that? not what I'm relying on. He said this is

That's not something that's So if he's not relying

used in the product to serve ads.

on it and that's not what he's relying on for the purposes of infringement because it's not how the product works, why are they showing it? What is the purpose of

that other than to distract and direct your attention elsewhere besides how the product actually works. Now, what else did they show you? There was a

big aha a moment during their opening statement where they showed you that video from Mr. Varian, you might recall that, and that was also something they showed during Dr. Frieder's direct examination. But then on

cross-examination I played the rest of it, you know, the next section that they didn't play? And that was also

talking about a Quality Score from 1 to 10 they showed to advertisers which Dr. Frieder acknowledged. Again, not

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2029 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 something that he's relying on for the purposes of his opinions. So why are they spending the time on that if it doesn't describe things that he's relying on for the purposes of his opinions in this case? Now, it doesn't stop there, though. through more. And we went

You will recall we went through more

documents and showed how they were referring to Quality Score, showing to advertisers Quality Scores of 1 to 10, things he was not relying on for the purposes of his opinion. But there was more, because even if we look under the actual highlighting -- like here. another document they showed. Here's

This is actually PX-338

again, the same one counsel talked about during closing arguments. rate, CTR. It says, Your keywords past click-through That's what they have highlighted in But I asked them, There is no keywords That's

collaborative.

click-through rate used in Smart Ads, correct? correct, right?

And, furthermore, asked him whether he He says he's not

was relying on CTR for collaborative. for the purposes of his opinion.

So why are they

highlighting those things in green and saying, Look at this, when those things are in the product and those things are not things that he's relying on for the

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2030 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 purposes of his opinion? So it didn't stop with the green. I mean, on

the blue you notice here, PX-338 again, and this is something counsel highlighted during his closing argument. keywords. Here we have in blue the keyword, your And I asked him, You agree keywords is not He says yes. So, again, he's not He's not

content, correct?

relying on that for the purposes of opinion. saying that keywords are content.

Remember, the keywords

in this system are the ones that the advertisers provide. They are just words with the ads. They are not

extracted from the content, so he wasn't relying on that at all. In fact, he was not relying on the keyword

matching for the purposes of the content filtering elements at all in this particular case. So, again, why are they showing you those documents when he has said that's not what I'm relying on for the purposes of my opinion? Now, when I confronted -- maybe that's too strong a word. When I asked Dr. Frieder on

cross-examination why that was the case, you remember his response? His response was, I didn't read all the

documents that were presented during my direct examination, I just skimmed them. Well, you are here. You can see

You have spent three weeks of your time.

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2031 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 that this is a case of a big magnitude. Don't you think

that we are owed something more than just skimming the documents that the expert is going to come in and tell you show infringement in the case? But further than that, there's no real dispute about how these products actually work, right? Mr. Furrow came in, Dr. Frieder on cross-examination, which I'm going to show you in a minute and go through. He agreed how the system worked, and Dr. Ungar as well. There was no disagreement, no factual disagreement about how the system worked. And that's the important thing, Don't get

that's what you are supposed to be focused on.

distracted by the colors without a description of how the system actually works. So let me go through. I gave you four reasons I'm

in opening statement why there's no infringement. going to talk about those same four reasons. actually going to put two of them together. I'm

You will

remember in opening statement I had content, no content filtering and no combining separate? But during this

case we kind of talked about those things together, so I think it's easier for presentation the way the evidence came out if I talk to you about those two issues with one. And then there's one other thing that came up

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2032 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 based on some admissions during this case that I want to highlight for you. one. So let's talk about those. The first

The patents required combining feedback data with We all know that. We have heard that a number

content. of times.

Well, here the fact of the matter is they do not do that, and that is the undisputed evidence. You recall

I asked Dr. Frieder very clearly on cross-examination what it was in AdWords, the accused product here, that he was contending to be the content data required by the asserted claims, right? If you go back, we can see that

that's one of the things in that first element is the content profile data. What did he say? It's these templates, right?

He identified three of them during his examination, but it's these templates. saying. Well, there was also no dispute that those templates are used to generate attributes for the current query Adware. Everybody agrees on that, right? Okay, fine. That's what you are

Now, it's also the case that nobody disputes those attributes then are used to look up an odds multiplier, right? And Dr. Frieder and everyone else --

Dr. Frieder said those odds multipliers, those are all feedback data, right? You recall that testimony.

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2033 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 But what does he say? I asked him, I said,

Well, is that attribute merged with this feedback data with the odds multiplier? merged. He said, No, they are not They don't He said

They are not merged at all, right?

come together.

They don't combine and be one.

that, but he says, Nonetheless, I say they are combined. Well, that's not an explanation of things, that is simply a conclusory statement. trust me. combined. He said, You should

They are combined because I said they are But they are not merged, and that's the

important thing here. Now, let's talk about it in terms of Fig. 6. You recall that Dr. Frieder said that Fig. 6 is the heart and soul of this patent. That's what he showed. And This

here, this is one of his figures, this is PDX-94.

is where he went and tried to explain to you how the accused products do this. But recall, I asked him, is And he

there any content score in the accused product? said, No, there is isn't. here.

And that's what he's showing You

You generate a content score, remember?

generate a collaborative score, and you do some kind of mathematical averaging. That's what he said, but when I

asked him on cross-examination he said that doesn't happen, there his no content score in the accused products.

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2034 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Now, furthermore, if we look up here in the corner, what do we see on this slide again? This is what This is

he's trying to show you in the accused products.

I am matching it up to a figure in the patent, which you are supposed to match it to the claim, so let's let that go for right now. rate. Your keyword's past click-through I

Well, we just talked about that a minute ago. He said that doesn't exist in the accused

showed you. products.

There is no keyword's past click-through rate So how is it that this figure

in the accused product. shows infringement?

Furthermore, he's talking about keyword as content again. question. But, remember, I asked him that Keywords

I just showed you that a minute ago. He's not relying on that.

are not content.

So he tried to show you Fig. 6 to support his infringement opinion, but in fact in cross-examination it became clear that it doesn't support his infringement opinion at all. Now, here it's a little bit different format then I saw before, so I apologize for the delay, but this is testimony yesterday from Dr. Carbonell and this is important. I want to spend a little time on this. You

recall with respect to the Culliss reference he walked through what the Culliss reference was and how those key

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2035 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 term tables were generated. Remember, they were They had

generated based upon word in the article.

extracted words from the article in order to generate those key terms. And you have a query come in and it's

matched to those key terms, which Dr. Carbonell said that's a content analysis when you do that. He said, though, there's no content filtering in Culliss, that was his contention, because what that content analysis, that matching is used to look up, right, the key term score, the appropriate feedback. I asked him, you don't think, then, doing an operation where I match the query terms to key terms, content analysis is what he said, and use that to access a feedback score meets the content-based filter limitation in this patent? That's right. So Dr. Carbonell agrees that taking that attribute and doing a look-up of some feedback data is not content-based filtering. Now, with respect to collaborative filtering, I want to talk about that for a moment. to mention one other thing. Actually, I want So

You also heard on

Dr. Carbonell's cross-examination that he never -- he didn't know anything about Dr. Frieder's infringement opinions. He didn't see the report. He didn't read the

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2036 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 report. He didn't look at it. He wasn't here for his

testimony in open court.

So why was it that the

plaintiff, I/P Engine, wanted to keep those guys apart, right? Why was it that they wanted to allow them to That's something that you

offer inconsistent opinions?

are going to have to decide when you go back there based on the facts and the testimony that you saw. Now, let's talk about collaborative filtering. That's obviously another thing that we have heard a lot about during this case. So, the accused products don't

do collaborative filtering either. Now, there's been some question and some testimony about whether collaborative filtering is required in the '664 patent. Nobody has any doubt that I/P Engine has

it was required in the '420 patent.

suggested perhaps that it's not required because the word "collaborative" doesn't appear there in the claim. But look at this testimony from Dr. Frieder. This is in description of the slide PDX-141 that I have at the top of the screen where he's talking about claim 6 of the '664 patent. collaborative, right? And from Dr. Carbonell's testimony yesterday, he puts up this slide here with the colors, the invention of the '420 and the '664, both patents, saying it's He says that it requires

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2037 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 shown. collaborative and content. that's the case. Now let me talk about what the evidence has In Smart Ads there's no question that there's no Nobody disputes that. Everybody So the experts all agree that

grouping of users. admitted that.

The feedback data that's used, remember

we had that cube that we showed in opening statement and how that's popular? right? So here counsel chastised us for looking at this figure from the patent, but it's important to look at the figures in the patent because you've got to get an understanding of what the patent is based upon the description. Now, we never suggested that the patent is That comes from data from all users,

limited to this implementation, but it in fact is the only embodiment that describes how you do the collaborative filtering in the patent. You didn't hear They never

any evidence from I/P Engine to the contrary.

came to you and said, Here's a different way to do it then what the patent shows. What it shows here and what's important is the way the collaborative feedback is done is by breaking the users down to communities, communities that have similar interests or needs. Then what you do, is when you are

using the collaborative feedback aspect of the filtering,

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2038 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 you take the feedback from only members of that community. Remember, that's the whole idea behind this.

Now, I/P Engine, of course, doesn't like this figure because it doesn't support their theory. their theory in the case? collaborative filtering? What's

What did they say about Well, what they said about

collaborative filtering is you can determine users with similar interests or needs based upon whether they've run the same query in the past. Well, first of all, they didn't point you to anything in the patent suggesting that was the case, right? They never said that. They never pointed to

anything.

There is no such description in the patent. But, furthermore, it doesn't make any sense.

Remember Dr. Ungar explained this.

The idea behind the

patent was to give you additional information with this collaborative filtering to provide better filtering. Well, this goes back to something we saw in opening and we saw during Dr. Ungar's testimony about different users, people that have different interests, right? And here when they brought in the search Jaguar

in this example, they are going to get pages back for cars or travel, and they are going to get pages back for the football as well. Well, if you only take feedback data from people

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2039 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 who run the same queries, as Dr. Ungar explained, it doesn't solve this problem, because you just get the same data back again. It's going to be data from all of those

people so you are not going to be able to differentiate one from the other. So that theory doesn't make any

sense and it's not discussed in the patent. Now, one other thing that's important here, and let me go back to this slide, setting that issue aside I/P Engine has provided no evidence that the accused products do that. They have provided no evidence that

the accused products segregate feedback by what query users have run in the past. no evidence. They don't do that. There's He

Dr. Frieder never testified to that.

never told you here's how Smart Ads segregates feedback data by users who have run the same query. He simply

said, Well, you can tell if users have run the same query in the past, that that's similar interests or needs. In fact, Mr. Furrow when he was describing the system, and again that's who Dr. Frieder said was the expert on the system, he explained that feedback data from users who ran one query like flowers, for example, is going to affect all the attributes in the system, including those regarding queries like hiatus, right? So the feedback data affects everything, and that's the undisputed testimony. There's no segregation

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2040 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 of this. There's nothing that they have shown that

indicates that the Smart Ad system takes information from some community of users and uses that to train the odds multiplier, which Dr. Frieder is claiming is the feedback data. So what's the next one? Scanning. This the

Court construed, scanning a network.

You remember we

talked about this at the beginning in opening statements. So let's just take that first construction,

scanning a network, looking for or examining items in a network. Now, Dr. Ungar explained, and there's no dispute that the way that the accused products work is that the ads are in the database, they are provided by the advertisers along with keywords and some landing pages. Nobody disputes that. Then there is a database look-up, and Dr. Frieder -- excuse me, not Dr. Frieder, Dr. Ungar explained the fundamental difference. You recall there

was about 45 minutes of cross-examination where he explained this and the fundamental difference between a database look-up and going out and scanning for unknown information on a network. Now, I/P Engine, and I think you heard here, oh, that's frivolous. That's a frivolous argument. Well,

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2041 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 it's not a frivolous argument, and, furthermore, we know from I/P Engine's own conduct in this case that they don't believe it's a frivolous argument either. Remember when they cross-examined Dr. Ungar, what did they do? They put up a slide where they

purported to insert the Court's construction here, AdWords does a database look-up, it does not look... in a network. right? If they thought the Court's construction supported their argument, why would they edit it out? Now, I think the excuse was made that, oh, there wasn't enough room here. Well, it's two or three more words. They edited out the Court's construction,

There's plenty of room on that slide to put that up there. So now let's talk about one we haven't talked about before, and this came up based upon the admissions of Dr. Frieder regarding the '664 patent. Now, that last

element of the '664 patent, and you will have this when you go back there, it's the same in claim 1 as it is in claim 26. So here it says, "filtering the combined

information for relevance to at least one of the query and the first user." Well, Dr. Frieder on cross-examination very clearly said that what he was contending was the combined

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2042 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 information was the predicted click-through rate, pCTR, that we have talked about a number of times. But when I

asked him whether pCTR was filtered, he said, no, it's not filtered. argument. Instead adds a filter. That was his

So right there, based upon those admissions,

we know, he says that pCTR is the combined information. The claim requires filtering the combined information. He says it's not filtering. claim element is not met. And you know, and you will hear from the judge's instructions, that if any element is not present, then there's no infringement of that claim. So what does he say? filtered based on pCTR. pCTR. He said, Well, it's That's an admission. The

The ads are filtered based on It doesn't say

That's not what the claim says.

filtered based on. language.

They are changing the claim

And the claim language is important because it's the claim language that defines what counsel said is the property right, right? is. That tells you where the deed

It doesn't -- you can't open it up and say, okay,

well I'm going to change the claim a little bit and now I'm going to move on to my neighbor's yard. the way it works. claim language. That's not

That's what the purpose is of the

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2043 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 validity. So I/P Engine started out this case by telling you our invention, the solution to this problem was to combine content data with collaborative analysis to produce an overall score. That's what they said, right? So, you know, I spent time talking about these things, and I have gone through these things and I understand there's heaps of it, but those are the facts. Nobody disputes how these things operate, and that's what you are going to be asked to do when you go back in there, look at the facts and compare those to the claims. Don't be distracted by colors that say, oh,

well, this is content, this is collaborative, particularly when you have looked at the admissions where he doesn't even -- he agrees that those things aren't in the accused products. He agrees that those things are

not what he's relying on for the purposes of his opinion. So let me now switch gears and talk about

Well, we showed you the testimony from the inventors that they didn't invent all those things. All

the things that are in the claim were in the prior art before. We have talked about these various things. And, furthermore, we know from the inventors they couldn't identify any technical barriers that they encountered to put these elements together, right? They

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2044 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 couldn't even identify when they conceived of the invention or what led them to this particular invention. So here what we see is plaintiff's color coding, right? They went through and they color coded all the various claims and the documents. Now, interestingly, if you go back and you look at some of those documents, you will see the color coding. Not only are they coding things that Dr. Frieder

has already said he's not relying on are not in the product, but the words "collaborative," the words "content," they don't appear there, right? They don't

talk about those in these documents that they are relying upon. But they do appear in a prior art, right? we showed you that. And

The Fab article, for example, talks

specifically about combining content and collaborative-based filtering in order to have an improved approach. prior art. Now, the WebHound reference, that's another one which was not before the Patent Office, by the way. talked about that. The WebHound reference shows the It We That was out there. That was in the

combination of content and collaborative filtering.

says that explicitly, and it also talks about taking that and combining that with a search engine. It says that

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2045 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 this. Now, what's the response to that? Well, what explicitly. The Rose reference, the same. We talked about

Dr. Carbonell said yesterday is these prior art systems don't show a tight integration. Well, the words "tight

integration" don't ever appear in the claims and he couldn't ever identify them in the patent; they are not there. So this is an after-the-fact explanation. And what else did he say? He said there's no

place in the prior art that discloses filtering for relevance to the query. That was his big thing on

direct, to say this is what these guys really invented and this is what nobody had before. Well, the patent says differently, right? showed this on cross-examination. We

The patent itself -He acknowledged

this is isn't the background section.

this is in the prior art, describes, "Whereas conventional search engines initiate a search in response to an individual user's query and use content-based filtering to compare the query to accessed network informons." So right there the patent is telling us that filtering for relevance to the query was in the prior art, in the prior art search engines. Yet somehow we are

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2046 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 supposed to believe that where the prior art says combine the content with collaborative filtering with the search engine, that nobody is going to know that I should use filtering with respect to relevance to the query that are already in these search engine technologies. we are being asked to believe . Now, furthermore -- and before I go to that let me talk about the inventors' story a little bit here. So, we know that the inventors decided to combine their previous content and collaborative-based filtering work with search when they joined Lycos, which was a search company, okay? That happened, according to the That's what

testimony, sometime in mid to fall 1998. We also know that prior to joining Lycos there's no evidence that either of the inventors had experience in search technology, no prior experience. Yet between

the few months when they joined Lycos and the time the patents were filed, December 3rd, 1998, so it's about a three or four-month period, they apparently figured out all these hurdles Dr. Carbonell described and combined these things together, with no prior experience in three month's time, no ability to identify the technical hurdles that they encountered to do this, and no ability to identify when they conceived any of the inventions or what led them to these inventions.

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2047 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Now let's talk about the Culliss reference. the Culliss reference, Dr. Ungar explained, meets the asserted claims, but he was very up front. It meets the So

asserted claims based on how Dr. Frieder is stretching these claims for the purposes of his infringement opinions. And recall, I mentioned this but it's worth repeating, Dr. Carbonell didn't have Dr. Frieder's infringement opinions. He didn't look at them, did not

compare things for consistency, he didn't come into open court to see what he was testifying about. So let's just talk about his opinion on no content-based. Remember, there were two things he He said there's no content-based

identified in Culliss.

filtering and there is no filtering separately. So on the content-based we walked through, and I talked about this a little bit earlier, the idea with the key term tables. The key terms are generated from words

in the article and when a query comes in, you match those to words in the article. That's what he said. And he

said that that matching between the query and the key terms was a content-based analysis. But he had there, nonetheless, there is no content-based filtering in the accused products because he said that over time the content-based initialization

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2048 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 will get overwhelmed by the feedback. So, in other

words, it will most that score that will mostly be feedback and there won't be much content. Well, a couple things about that. First, that

is completely inconsistent with Dr. Frieder's infringement opinion. He says that you take the template

and compare the query to content in the ad you get an attribute. Now you take that attribute and look up an He says

odds multiplier, which he says is feedback data.

that's the combination of content and collaborative to give you the content-based filtering. Dr. Carbonell says, No, that isn't. exactly the same functionality. They can't have it both ways. It's important. You It's

That's why we put the prior art out there for you. can't stretch your claims when you come in for an

infringement case after you have negotiated your patent with the patent office and say, Here's what I want them to mean now, but when we talk about the prior art let's shrink them down. It's got to be the same for both.

Now, the other thing he said was there's no filtering in there. Well, that's just not the case. I

mean, we showed this ratings filtering, right?

And that

rating is initially based on someone's evaluation of the content in the article and then there's feedback based

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2049 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 upon users putting in either a G-rated key term or an adult-rated key term and, that feedback says when you have a high score from the adult-rated content, when somebody puts in a G-rated rating term in their search query, we are not going to show that, right? one by one, that's filtering. His only real response to that was, well, I don't think it would work in the context of the other things. It's disclosed. It's there, and the fact that That's a

it would or would not work, it was a United States patent, right? It was granted by the Patent Office. A

patent examiner looked at it and decided it would work because that's one of the requirements of getting a patent. So let's leave that for what it is. Now let's talk about Bowman. Now, Bowman,

again, there were two things about Bowman, what he said. First he had it didn't do filtering and then he said there was no content analysis. So his opinion, and I

walked him through this yesterday during cross-examination, so some of you might remember this. His opinion was, Well, you always rank in Bowman, no matter what. So in order to do the subsetting, in order

to determine this threshold value, there's always ranking, right? But in order to get there, there's this sentence

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2050 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 that has an and or or in it, which means you can do the previous thing and what comes next, or you can do the other thing, right, you don't have to do both? So I also walked him through an example of how that would work and we went through Fig. 6, and you can look this up when you go back there. score for one item. We added up the

It came up -- I did the math wrong. And he said, Yes, the way

It was supposed to be 327.

Bowman works is if you set a threshold value at 300 and it scores 327, it will be shown. If you set the But

threshold value at 350, it won't be shown.

nonetheless, he says that's not filtering, but that's exactly what they are accusing of infringement. I mean, remember, it's this LTV score that we have talked about you have seen a few times where you have the bid, you have the predicted click-through rate, you have the creative quality and the landing page quality, right? And those things will generate a If that

long-term value for that particular ad.

long-term value is above a certain threshold, it will make it into the auction; if it's below the certain threshold, it won't. So, again, we have a complete

inconsistency between what they are accusing of infringement and what they are saying about the prior art.

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2051 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Now, the only other thing that he says about Bowman is that there is no content analysis. Now, you

recall yesterday, and you can go back and look at this, there's a description in the background section where it talks about matching query terms to words in the book title, right? And he agreed that was a content-based

matching and he agreed where that talked about adjusting the score based upon how many words in the item matched the query terms, he agreed that that was a content-based analysis. Well, in that section we were reading in column 9 yesterday, that same language appears, but there he says it means something different. It's not a content You only adjust

analysis now; it's something different.

it to determine or based upon which key terms, I think he said, are in the ranking table that he had. But think about that. Remember we walked

through and we said here's how you generate the score. You look at the first word in the query and you see whether that matches an item in the ranking table, and you give it a score, right? And then you go through all

the query terms and you do that, and you give it a score. Then right after that it said you can adjust that score based upon how many terms match the item, right, how many query terms matched the item? He said,

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2052 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Well, that's an adjustment based upon how many are in the ranking table itself. But that doesn't make any sense

because you already gave the score to it based upon how many of those terms show up in the ranking table. how the score is generated in the first place. That's

So if

there's more terms, you are going to get a higher score. If there are less terms, you are going to get a lower score. So that explanation doesn't make any sense. And here, you know, you keep hearing, well, Culliss was before the Patent Office, and we've never disputed it was before the Patent Office. But, remember,

they didn't have the infringement allegations in this case when they looked at Culliss. They didn't know how

these claims were going to be stretched. And, in fact, the party that prosecuted this patent, Lycos, they don't own it anymore. Engine. It's somebody else. It's now I/P

It's not the party that It's somebody else

negotiated with the Patent Office.

trying to stretch the claims of those patents. But all those other references we showed, it wasn't before the Patent Office. The Patent Office never

had the opportunity to consider any of these things. So let me step back a little bit and just talk about some of the facts we have learned during this case concerning these patents. So I think counsel said during

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2053 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 his closing argument that Mr. Lang and Mr. Kosak, they are here in this case because they need to be rewarded for these inventions. But you heard Mr. Lang's When

testimony, they already sold these patents once.

they sold their company, the WiseWire company, to Lycos, they received money for that, and part of what they sold, as Mr. Lang testified to, were the rights to these particular patents. I think Mr. Lang said that they got

several million dollars for this. Now, counsel may get back up here and say the patents were actually filed after they went to Lycos. That may be true, but it's a continuation. They date

back to this '799 patent that was in there, and Mr. Lang testified my agreement assigned anything that arose out of that. time. Now, Mr. Kosak testified that once he got to Lycos he urged Lycos to implement, you know, commercial embodiment. Let's implement this in the system. And I So these patents have already been sold one

think he said they actually tested something, right? They put something together and tested it. decided not to do it, right? Mr. Kosak then said he continued to urge people to do this, but he was there through 2009, think was the testimony. It might have been 2008, but right around But Lycos

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2054 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 anything. that time period. embodiment of this. Never did Lycos implement a commercial They didn't think that it was worth In other words, they are a

their efforts to do that. company.

They are out there trying to make a profit like

any other company, and they didn't think that this was going to do it for them. Now, you have heard from them, well, they were owned by a Korean company. I mean, come on. How many

times did we hear that during the cross-examination of -or excuse me, it wasn't cross-examination, the direct examination of Mr. Kosak, the references, the repeated references to this foreign company owned this, and this foreign company owned that. these days. I mean, it's world economy

To come in to court and try to think that

you are going to make a decision if they keep saying this is a foreign company over and over again? right. Now, we also heard from Dr. Carbonell who has been in this industry a long time, but he couldn't identify any industry praise ever for these patents. Nothing out there. 11 years. These patents have been out there 10, Instead, that's It's just not

No industry praise ever.

patents sat on the shelf for 10 years, right? And the testimony was, so Lycos didn't do They sat on the shelf until one of IP's

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2055 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 of 2001. current lawyers-- this was Mr. Lang's testimony on direct --the current lawyers in the case set up a meeting between Mr. Lang and representatives from Hudson Bay to discuss buying the patents from Lycos. deal together. Shortly after that they had this meeting in June They purchased the patents-in-suit. I think So they put this

you heard it was a couple hundred dollars or a few hundred dollars, I believe, from Mr. Lang, $12.50 from Mr. Kosak, and $3.2 million from Hudson Bay. turn around. They buy these patents. Then -So they

Excuse me, your Honor? Oh, I thought you were asking me something. Then without contacting Google or any of the other defendants, not even a phone call, they filed this lawsuit. That's the history of these patents. And amazingly, this suit was filed without the named inventor, Mr. Lang, and he was the CEO, remember, of I/P Engine at the time, ever reading the patents. Right? He testified I haven't read these patents in over I haven't looked at them. So apparently he

ten years.

bought the patents. Came in for his deposition to testify. He

testified that the lawyers told him not to read the patent. He testified he didn't read it before the case,

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2056 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 that? before he came in to testify because, I believe, they were more important things to focus on. testimony we have from him. Now, maybe that was an effort to turn his patent into something it wasn't. Now, I have been yelled at Yet that's the

here a couple of times because I said that this patent is about search engines. right? It is about search engines, That's what it

That's the title of the patent.

talks about.

That's what the present invention is.

Contrary to what counsel said, I never said it mentioned advertisement. In fact, I was the one that brought out That's what

the fact that it did mention advertisement. I'm showing here in this slide.

It recites the word advertisement once, and it does it with respect to this "preference cohort" and "preselected consumer preference criteria" that Dr. Frieder said on cross-examination don't have anything to do with the asserted claims. Now, counsel points to one dependent claim in the '664 and said, See, it says advertisement. patents are all about advertisement. Well, the '420 was issued first. You remember These

There were no claims in the '420 that mentioned So if that's what these were

advertisements, right?

really about and it was so important, wouldn't you have

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2057 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 here. 218? claims in your initial patent that deal with that? Now, in here even again during his closing argument, counsel references Exhibit 218, PX-218. This

was that WiseWire document from 1995 that talked about advertising, right? Now, he wants to say this shows that that's what these patents are about, that Mr. Lang was working on these things. But, remember, Mr. Lang testified that I

gave all the documents that I thought were relevant to the invention of the '420 patent to my patent lawyer. Counsel referenced that. And I asked him, Did you give them this Exhibit He said, No. So he didn't even give it to them. He

He didn't think it was relevant to this patent.

didn't think it was relevant to the inventions in this patent. So make no mistake about it, this case is not about a company trying to protect its inventions from a competitor. This case is about a few individuals trying

to use the court system for a windfall. So let me talk about I/P Engine's damages claims The primary problem is Dr. Becker, that was I/P

Engine's damages expert, he just ignores all the real-world facts. Anything that's not convenient with

the number he wants to get to, he just ignores.

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2058 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 So he says that this hypothetical negotiation would have taken place in 2004 between Lycos and Google, right? Everybody agrees with that. Now, the first thing he says the parties would have come out of that with a running royalty agreement. But what's the evidence on that? Well, the only evidence

that we've heard is that around the time of the hypothetical negotiation Lycos had no preference. had no preference one way or the other. Dr. Becker agreed that Google had a strong preference for a lump sum. In other words, you have an Yet They

amount where you pay one time and you are licensed. he says the parties would have walked out of that negotiation with a running royalty agreement. doesn't make any sense in light of the facts. evidence to support that. Now, he also says, this is Dr. Becker, that That

There's no

Lycos and Google would have used these three agreements between Yahoo and three small companies to set the rate, but the only evidence there is that Lycos never used those agreements to value the patents, including when they sold them in 2011. So how is it that we get to the

point where Lycos would have used these as a value when they said they didn't? Now, he also showed -- with respect to those

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2059 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 agreements, you know, he used them, they are small companies. He likes the royalty rate. He testified he

doesn't know how much was ever paid under those agreements. That's the important thing, how much is

going to be paid, and there wasn't anything paid under -excuse me, I shouldn't say that. paid under those agreements. He also said that Lycos would have viewed Google as being an attractive licensee. He acknowledged that. He didn't know what was

Yet somehow that doesn't have any bearing on this hypothetical negotiation. And then finally, you know, the Carl Meyer agreement. That shows Google what they purchased

comparable technology for and it shows that it was a lump sum payment. So that's Google's mindset. That's

important to this hypothetical negotiation. Now, instead counsel wants to keep directing you to the use, the use by Google. But Dr. Becker, he

acknowledged that there's all sorts of things that he is claiming in Smart Ads that are Google inventions, Google developments, that are not part of the patented technology. In fact, here I have a quote from

Dr. Frieder on his cross-examination where he acknowledges that the predicted click-through rate, that was developed by Google. It's not talked about in the

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2060 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 those. patent. It's not in there. He had the same thing with

the attribute templates and everything else. Furthermore, there's all this other technology that Dr. Becker acknowledged here on cross-examination that he's including in his revenue base. just not right. Well, that's

You are supposed to get to what it is And he acknowledges he

that the patent invention brings. has this 20 percent.

He acknowledges that that 20

percent includes all sorts of things that are beyond the patented invention. So this use is overstated.

Now, in addition, I/P Engine's counsel wants you to refer to these services agreements, you know, the Google services agreement with some of the customers in the case and says, well, that shows that they would have agreed to a reasonable royalty. Well, first of all, Dr. Becker never relied on Never once did he rely on those agreements, so But, furthermore,

it's not relevant to your analysis. remember what those were for.

Those are for people using Google brings the

the entire Google system, right?

systems for AdSense for Search and AdSense for Mobile Search, and these customers use that. They don't have to take a patent that has none of the other parts, provide the infrastructure, provide the know-how, provide all the things that make the system

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2061 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Engine. work. So those things are not at all comparable. Now, rather than have an effort here to properly assess damages, what you have here is the owner setting an amount that they want and then backing into it. think, very telling of that, it happened on the cross-examination of Dr. Ugone and it happened here again today. Counsel said that Mr. Kosak would have been at Remember, he was And I

the bargaining table in 2004 for Lycos. CTO of Lycos.

He said he would have been at the So obviously we know this hypothetical

bargaining table.

negotiation is very important, right, in order to assess the damages. Now, Mr. Kosak, he's a consultant of I/P He testified for them. He went out there on

direct examination.

Did they ask Mr. Kosak what he would

have done in a hypothetical negotiation with Google in 2004? No. They didn't ask him that question.

Did they ask him whether he would have used the Yahoo agreements, these Overture agreements as a measure of value in this negotiation? that question. Did they ask him if he would have demanded a running royalty as opposed to some lump sum payment? they didn't ask him that question. Did they ask him if he would have demanded 3.5 No, No, they didn't ask him

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2062 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 percent and no less? question either. So counsel for I/P Engine has said, well, Google could have come in and told you some things and brought some witnesses. Well, they had the witness here. They No, they didn't ask him that

had him up on the stand and they didn't ask him any of these questions. You can infer from that that they would

not have liked the answers to those questions. So, as I told you here on the first day, we would focus your attention on the facts, which we have tried to do, and prove that these patents aren't infringed. We have done that, and the facts are

important here. Now, counsel for I/P Engine is going to get up and he's going to have his attempt at rebuttal and he's going to say things I don't get to stand up again, I don't get to respond to those things. things. things. He may raise new

He's not supposed to, but he may raise new I don't get to respond to those either. But

don't take that as a fact that I don't have a response. I just don't have the opportunity. So when you go back in that room to deliberate, remember the facts, apply the facts, listen to the judge's instructions, apply them. That's all we can ask

from you and that's all we have asked from you from the

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2063 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 beginning of this case. And on that, think about what you are being asked to do with respect to this damages claim right now. I/P Engine has the burden of proof on that, and They haven't told you what the

they have no evidence. amount is.

They haven't told you how to calculate it. Use your memory.

Just use your memory, right?

There was no testimony from Dr. Becker about what that should be. Remember that $493 million they That's off the table, Just

have been telling you about? right?

So what are you supposed to do with that? Just make something up?

speculate?

No, that's not what

the instructions are.

You need to apply the facts that

have been provided to you and the evidence when you go back in that room. your verdict. Thank you. THE COURT: All right. Ladies and gentlemen, And if you do that, I look forward to

because of certain rulings of the Court, the Court has given Mr. Sherwood probably an extra five minutes to address some matters that the Court has ruled on pertaining to the damages. Mr. Sherwood. MR. SHERWOOD: Thank you, your Honor. I'll try

not to use all of my time.

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2064 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 First of all, to comment on a couple of things that you heard about from Mr. Nelson. This slide that he

started by putting up, it only shows half of the documents that I/P Engine put into evidence with respect to how the system works. The half that are not on this

slide are the Google internal technical documents that they used to educate their personnel as to how the system works. You can look at those in addition to these. When you look at these, though, look for the word "eligibility" because eligibility means that it's described the process by which an ad has been filtered is now eligible to be in the auction. All of these slides, or several of them anyway, were misdirection about what is and what is not accused. Remember there was testimony from Mr. Alferness about Quality Score 1 through 10 and he said not accused? That's what these slides are about, ladies and I agree with that. But

gentlemen, and it isn't accused.

wherever eligibility is talked about, that's talking about filtering and that is accused. Dr. Carbonell's testimony with respect to Culliss, he testified Culliss has no content. get the article that's being filtered. It doesn't

Therefore, he

gave the only answer to this question that he could

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2065 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 give. It's the only logical response. This is the mind

pool picture. room.

Go back and look at this in the jury

You will see the word "mind pool" is right here. How are similar Based on the query.

It's not at issue in this case. interests or needs determined? Dr. Ungar admitted that.

And, look, here's a real simple example.

If you

type into Google Norfolk Airport rental cars, and then a couple hours later I came along and I typed the same thing in, we would have the same interest or need, and that's evidenced by the fact that we have asked Google to give us information about the same thing. interests or needs. That's similar

That meets the claim construction.

That meets the requirements of the claim. There is no grouping like mind pools because if it was, this claim would be in the case, too. Database retrieval is not a search engine. This

argument says there's a difference between look for and look up. Come on, there's no difference there. Google

has 10 billion ads.

The system has to go out and find Look up, look for, it's

the ones to serve to the user. the same thing.

There was argument that Dr. Becker didn't allocate for all of Google's contributions. The

magnifying glass slide shows you 96.5 percent stays with

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2066 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Google. system. Google definitely makes contributions to its Nobody is disputing that and nobody is asking

for a royalty on those contributions, just on the contributions of these patents. So I also heard him say that Dr. Frieder agrees, in effect, that there's no infringement. testimony I heard. And he had the '420 patent doesn't disclose advertisements. Informons, Mr. Lang testified, was a That's not the

catch-all phrase that the patent lawyer came up to capture all of that stuff, all that stuff that's out rattling around in the Internet that people are trying to figure out, well, what is it I really want? I want to

get rid of all the junk, all the spam, all the things that I don't want to look at. So he used this term

"informon," and Dr. Ungar agreed that included advertisements. There was a lot of argument, I would say, about, well, the Google system is very complex. understand it. You don't

It's a lot more complex than the

plaintiff would have you think. Remember my example in opening where I said suppose you had a patent where you had a pencil and somebody put an eraser on top of it, and I explained to you, okay, what if you put a gripper on that pencil.

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2067 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Would that somehow cure the problem of infringement? it doesn't, and you will see that in the jury instructions the judge will give you. Well, Mr. Nelson No,

has just given you a very elaborate pencil gripper argument. Mr. Nelson told you that the patents themselves actually disclosed that they were invalid. There were I don't And

four examiners who looked at this technology.

think they got it that wrong, ladies and gentlemen.

here's what the last two examiners with the '664 patent had to say. They said, and this is important, I'm going

to read it to you, "The prior arts--" which means everything that was before them, including Culliss "--do not fairly teach or suggest the teaching of information filtering through a combination of data from a first user and data from feedback by other users." So there was argument about how there were no technological hurdles. Here's the testimony. Let's see

if I can zoom in. Mr. Lang testified, "It was an onion of problems. You would learn, okay, this works well for

this number of user, but then you have to go on and solve another problem. And every time we would solve a It was a struggle. It

problem, another would pop up. was a long time."

And then about the question with respect to what

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2068 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 with you. did you invent? "And you didn't invent every possible system that combines content-based with collaborative-based?" What are you going to say? "No, I couldn't have imagined every conceivable thing, everything that's possible under the sun." He testified, in fact, "Do you believe that you invented that combination in the search engine context"? That is unrebutted testimony, ladies and gentlemen. And

it's testimony that was supported by Dr. Carbonell, an expert in his field, who, as I said earlier, tried himself to do this and he couldn't do it. And about the question of hypothetical negotiation and who asked what questions, Google never asked Mr. Kosak any of those questions. deposition. They knew where he was. They took his

One of the first

things they asked him was, Where did you work and how long did you work there? So this little game of who asked what questions, that doesn't get us anywhere. inquiry at all. Okay. So, lastly, I want to talk about damages That doesn't advance the

Google told you that a lump sum payment was In effect, it's the cheap way out, And I ask you again,

the right structure.

is the way I would characterize it.

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2069 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 that. think about when in your experience the structure of how you pay for something changes the price as dramatically as they are trying to suggest here? The point about revenue sharing agreements, which applies equally to a licensing agreement, is that the revenue stream is shared; the risk is shared. the point. And you are right, Dr. Becker didn't rely upon He had his own independent reasons for what he But Dr. Ugone told you, oh, all the That's

concluded.

administrative difficulties of having revenue sharing, Google would never have agreed to that. Well, in fact, Log in and

they have an administrative system online. you can get all of that information. plausible.

That's just not

The Carl Meyer agreement, just to reiterate this point because I think it's really an important point, it is the only Google transaction that Dr. Ugone used to rely on his opinion and it has never in this case been used for any other purpose except to try the drive down payment of damages of royalties in patent cases. So when it comes to determining a royalty, as you have heard the Court has made a ruling, an additional ruling since I was up here before, with respect to what the scope of recovery is. And the scope of recovery is

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2070 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 yes. Secondly, I want to point out to you page 7, and going to be limited for all defendants to the period September 15 forward to the present day. 2011, excuse me. So this is what you have to look at with respect to how to calculate the damages in this case, which is the last four quarters, and these amounts are cumulative. In other words, each bar on here reflects a September 15,

different amount of money, a per quarter cumulation of revenue as a result of using the infringing system. So, lastly, if I could have the Elmo, please, I want to introduce up with more document to you, and that is the verdict form, the ultimate statement that you will make with respect to your decisions in this case. And I'm not going to go through all the pages, but I'm going to point out a couple of things here. First of all, you are going to be asked a series of questions, in effect, about whether Google infringed any one of the claims in this patent. And if you answer yes,

which I suggest to you the evidence will require you to do, if you answer yes to any one of these, then you have determined that Google infringes at least one claim in one of these two patents. I think you should answer all of these questions

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2071 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 I want to remind you that when you get to these questions which relate to invalidity that your obligation is to be satisfied by clear and convincing evidence that, in effect, the Patent Office made a mistake when it granted or allowed each claim, not just the patent, but each claim that's been asserted in this case. And, lastly, with respect to damages, you will be asked -- I wasn't a hundred percent sure about this when I got up before, but you will be asked to enter a royalty rate if you believe that a running royalty is the right structure. I suggest to you that the number you

should enter in that box is 3.5 percent and you should check running royalty, not lump sum royalty. And then with respect to the amount of money, that will be determined by your judgment with respect to the four quarters of financial data that I have talked about earlier. So, ladies and gentlemen, I want to echo one thing that Mr. Nelson said. I've tried a lot of cases.

I think you have been the most attentive jury I have ever seen and I really thank you for your attention and your hard work, and we look forward to your verdict, too. Thank you. THE COURT: All right. Ladies and gentlemen,

the Court had anticipated that it would get an

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2072 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 room. opportunity to give you your final charge before lunch so the Court had lunch ordered in. Since we cannot do that,

reading you these final instructions will take approximately an hour, what the Court's going to do is have you to recess now to take advantage of the lunch that has been provided for you in the jury room, and we are going to come back in here at 2:45 and the Court will read to you your final charge and then give you this case to deliberate. So at this time you can retire to the jury You cannot discuss the case because you haven't

gotten the final instructions, but you simply take advantage of the lunch that's been provided and come back at 2:45 and then I will read the instructions. The Court just doesn't believe we should stay here for another hour before you get a chance to eat lunch. All rise. (Jury out.) THE COURT: The Court has tendered to you the

revised verdict form and the revised instruction on -the revised instruction should be given to you on damages. Recess until 2:45. (A luncheon recess was taken at 1:32 p.m., after

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2073 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 MR. NOONA: your Honor. which court reconvened at 2:55 p.m.) AFTERNOON SESSION One very minor thing this afternoon,

Steve Noona on behalf of the defendants.

Plaintiff's Exhibit 228, which has been admitted into evidence, contains at least one page of source code. Each side have agreed we can place it in an envelope, and we spoke with your clerk and wanted to clear it with you before doing so. THE COURT: MR. NOONA: THE COURT: trial, Mr. Noona. Okay. Bring them in. That would be fine. Thank you, your Honor. That's the easiest stop I've had all

(Jury in.) THE COURT: You may be seated.

The record will reflect that all jurors are present in the courtroom. MR. SHERWOOD: MR. NELSON: THE COURT: Does counsel agree?

Yes, your Honor. Agreed, your Honor.

All right.

Ladies and gentlemen, I

will be reading to you the final instructions in this case, but I will give you the index stack of everything that I have read to you. So if you want to go back and

find a definition that the Court has read or something,

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2074 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 you will be able to read it and review it at your pace. Now that you have heard all of the evidence, it is my duty to give you the instructions of the Court concerning the law applicable to this case. It is your duty as jurors to follow the law as the Court shall state it to you and to apply the law to the facts as you find them from evidence in the case. Now, counsel may quite properly have referred to some of the governing rules of law in their arguments. If, however, any difference appears to you between the law as stated by counsel and the law as stated by the Court in these instructions, you, of course, are to be governed by the instructions as given to you by the Court. You are not to single out one instruction alone as completely stating the law but consider the instructions as a whole. Neither are you to be concerned

with the wisdom of any rules of law stated by the Court. Regardless of any opinion you may have as to what the law is or ought to be, it would be a violation of your sworn duty to base a verdict upon any view of the law other than that given in the instructions of the Court, just as it would also be a violation of your sworn duty as judges of the facts to base a verdict upon anything else other than the evidence in this case.

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2075 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Now, in deciding the facts of this case you must not be swayed by sympathy for any party nor bias or prejudice or favor as to any party, because our system of law does not permit jurors to be governed by prejudice or sympathy, bias, guesswork or speculation. Justice through trial by jury must always depend upon the willingness of each individual juror to seek the truth as to the facts from the same evidence presented to all the jurors and to arrive at a verdict by applying the same rules of law as given in the instructions of the Court. You must consider and decide this case as an action between parties of equal standing in the community, of equal worth and holding the same or similar stations in life. A corporation is entitled to the same All

fair trial at your hands as a private individual.

persons, including corporations, stand equal before the law and are to be dealt with as equals in a court of justice. The evidence in the case, as I told you when we began, consists of the sworn testimony of the witnesses, regardless of who may have called them; all exhibits received in evidence, regardless of who may have produced them; and all facts which have been admitted or stipulated.

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2076 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Statements and argument of counsel are not evidence in the case unless made as an admission or stipulation of fact. When the attorneys on both sides

stipulate or agree as to the existence of a fact, however, you must, unless otherwise instructed, accept the stipulation as evidence and regard that fact as proved. Any evidence as to which an objection was sustained by the Court and any evidence ordered stricken by the Court must be entirely disregarded. You will

recall that the Court struck the testimony of Dr. Becker regarding the Google Disney agreement. The Court took

this action for legal reasons having nothing to do with any improper conduct of Dr. Becker. In other words,

there was no improper conduct by him for the reason the Court struck the evidence. You will also recall the Court struck some testimony regarding the Google Overture agreement. What

it means, ladies and gentlemen, when the Court strikes the testimony, is you must entirely disregard that testimony in arriving at a verdict in this case. Anything you may have seen or heard outside of this courtroom is not evidence and must be entirely disregarded. the case. You are to consider only the evidence in

In your consideration of the evidence,

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2077 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 however, you are not limited to the bald statements of the witnesses. In other words, you are not limited

solely to what you see and hear as a witness testifies. You are permitted to draw, from facts which you find have been proved, such reasonable inferences as you feel are justified in the light of experience. Before the trial of this case the Court held a conference with the attorneys for all parties. At that

conference the parties entered into certain stipulations or agreements in which they agreed that facts could be taken as true without any further proof. By this Certain I'm simply

procedure it is often possible to save time. facts have been stipulated to in this case. going to go on and read them.

They are not that long.

Now, the United States patent -- I'm going to give you the abbreviated form -- '420, titled "Collaborative/Adaptive Search Engine" and issued on November 6th, 2001. The application issued as the '420

patent was filed on December 3rd, 1998. Claims 10, 14, 15, 25, 27 and 28 of the '420 patent are asserted. Claims 1, 5, 6, 21, 22, 26, 28 and 38 of the '664 patent are asserted. And the '664 patent, which is entitled "Information Filter System and Method for Integrated

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2078 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Content-Based and Collaborative/Adaptive Feedback Queries," was issued on August 10th, 2004. The application that issued there in the '664 patent is a continuation of the '420 patent and was filed on October 22nd, 2001. Andrew K. Lang and Donald Kosak are the named inventors of the '420 patent. Andrew Lang and Donald Kosak are also the named inventors of the '664 patent. United States Patent No. 6,202,058, called the Rose patent or '058 patent, is entitled "System for Ranking the Relevance of Information Objects Accessed by Computer Users." systems by Internet users.

The Rose patent was issued by the United States Patent & Trademark Office on March 13th, 2001. The application that issued as the Rose '058 patent was filed on April 25th, 1994. United States Patent No. 6,006,222, the Culliss '222 patent, is entitled "Method for Organizing Information." The Culliss patent was issued by the United States Patent & Trademark Office on December 21st, 1999. The application that issued as the Culliss or '222 patent was filed on August 1st, 1997 and is a continuation of Application No. 08,840,922, filed April

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2079 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 25th, 1997. The United States Patent No. 185,558, the Bowman or '558 patent, is entitled "Identifying the Items Most Relevant to a Current Query Based on Items Selected in Connection with Similar Queries." Now, this Bowman patent, the '558 patent, was issued by the United States Patent & Trademark Office on February 6th, 2001, and the application for the Bowman patent was filed on March 10th, 1998 and is a continuation of Application No. 09,033,824, filed on March 3rd, 1998. The statements I read are listed right here in the instructions. So to continue with what you may consider, while you should consider only the evidence in the case, you are permitted to draw such reasonable inferences from the testimony and exhibits that you feel are justified in light of your common experience. In other words, you may

reach deductions and conclusions which reason and common sense lead you to draw from the facts which have been established by the testimony and evidence in this case. You may also consider either direct or circumstantial evidence. Direct evidence, ladies and

gentlemen, is the testimony by one who asserts actual knowledge of a fact, such as an eyewitness. And

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2080 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 circumstantial evidence is proof of a chain of facts and circumstances. The law makes no distinction between the

weight to be given either direct or circumstantial evidence. It requires only that you weigh all of the

evidence and be convinced of the defendant's infringement before you can find for the plaintiff. Now, the burden is on the plaintiff in a civil case, a civil action such as this, to prove every essential element of his or her claim -- or its claim since we are talking about a corporation -- by a preponderance of the evidence. If the proof should fail

to establish any essential element of plaintiff's claim by a preponderance of the evidence in this case, the jury should find for the defendant as to that claim. To establish by a preponderance of the evidence, ladies and gentlemen, means to prove that something is more likely so than not so. In other words, a

preponderance of the evidence in the case means such evidence as, when considered and compared with evidence opposed to it, has more convincing force and produces in your minds a belief that what is sought to be proved is more likely true than not true. This rule does not, of

course, require proof to an absolute certainty since proof to an absolute certainty requires -- I mean, is seldom possible in any case.

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2081 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 In determining whether any fact in issue has been proven by a preponderance of the evidence you may, unless otherwise instructed, consider the testimony of all witnesses, regardless of who may have called them; all exhibits received in evidence, regardless of who produced them. It does not make any difference whether

the exhibits are marked for the defendants or for the plaintiff. The test is not which side brings the greater number of witnesses or presents the greater quantity of evidence, but which witnesses and which evidence appears to your mind as being most accurate and otherwise trustworthy. Now, you have heard some reference to the defendants having to prove invalidity by clear and convincing evidence. Clear and convincing evidence is

evidence that produces in your mind a firm belief or conviction as to the matter at issue. Clear and

convincing evidence involves a greater degree of persuasion that is necessary to meet the preponderance of the evidence standard. This standard does not require

proof to an absolute certainty, again, since proof to an absolute certainty is seldom possible in any case. Now, here's another instruction on credibility of the witnesses:

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2082 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 You, as judges, jurors, are the sole judges of the credibility of the witnesses and the weight their testimony deserves. I told you this in the beginning.

You may be guided by the appearance and conduct of the witnesses or by the manner in which the witness has testified or by the character of the testimony given or by the evidence to the contrary of the testimony given. You should carefully scrutinize all the testimony given, the circumstances under which each witness has testified, and every matter in evidence which tends to show whether the witness is worthy of belief. Consider each witness's intelligence, motive and state of mind and demeanor or manner while on the stand. Consider

the witness's ability to observe the matters as to which he or she has testified and whether he or she impresses you as having an accurate recollection of these matters. Consider also any relation each witness may bear to either side of the case, the manner in which each witness might be affected by the verdict and the extent to which, if at all, each witness is either supported or contradicted by other evidence in the case. Now, inconsistencies or discrepancies in the testimony of a witness or between the testimony of different witnesses may or may not cause you, as a juror, to discredit such testimony. Two or more persons

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2083 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 witnessing an incident or transaction may see or hear it differently. An innocent misrecollection, like a failure

of recollection, is not an uncommon experience. In weighing the effect of a discrepancy always consider whether it pertains to a matter of importance or an unimportant detail, whether the discrepancy results from innocent error or deliberate, intentional falsehood. After making your own judgment, you are to give the testimony of each witness such weight, if any, as you think it deserves. You may, in short, accept or reject

the testimony of any witness in whole or in part. Also, the weight of the evidence is not necessarily determined, again, by the number of witnesses testifying to the existence or the nonexistence of any fact. You may find that the testimony of a small number

of witnesses as to any fact is more credible than the testimony of a larger number of witnesses to the contrary. Now, we have had multiple experts in this case. The rules of evidence may limit the ability of witnesses to testify as to opinions or conclusions, but greater latitude, ladies and gentlemen, is given to those we call "expert witnesses." Witnesses who by education or

experience have become an expert in some art, science, profession or calling may give an opinion as to relevant

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2084 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 and material matter as to which they possess experience and may also state their reasons for the opinion. Now, opinion testimony by a qualified expert witness is competent evidence. You should consider each

expert opinion received as evidence in this case and give it give each such opinion the weight you find it deserves. If you should decide the opinion of an expert

witness or his or her qualification is not supported by sufficient education or experience, or if you should conclude the reasons given in support of the opinion are not sound or that the opinion is outweighed by other evidence, you may disregard the opinion entirely. Now, during the trial of this case certain testimony has been presented to you by way of depositions, video depositions or other depositions consisting of sworn, recorded answers asked of the witness in advance of the trial by one or more of the attorneys for the parties to this case. The testimony of

a witness who for some reason cannot be present to testify from the witness stand may be presented in writing under oath, as you had happen here. Now, such

testimony is entitled to the same consideration and is to be judged as to credibility and weighed and otherwise considered by the jury, insofar as possible, in the same way as if the witness had been present and had testified

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2085 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 from the witness stand. You have also heard certain answers given in response to written questions submitted by the other side. The written questions are called interrogatories.

The written answers were given in writing and under oath before trial, and you must consider these answers to interrogatories in the same manner as if the answers were made from the witness stand. Now, ladies and gentlemen, I'm going to talk about impeachment. A witness may be discredited or

impeached by contradictory evidence or by evidence that at some other time the witness has said or done something or has failed to say or do something which is inconsistent with the witness's present testimony; that is, the witness's testimony here in court. If you believe any witness has been impeached and thus discredited, it is your exclusive province to give the testimony of that witness the weight you think that witness's testimony deserves. If a witness is shown knowingly to have testified falsely concerning any material matter, you have a right to distrust such witness's testimony in other particulars, and you may reject all the testimony of that witness or give it such credibility as you think it deserves.

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2086 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 An act or omission is knowingly done, if voluntarily and intentionally and not because of mistake or accident or some other innocent reason. Now, evidence that at some other time a witness, not a party to this action, has said or done something which is inconsistent with the witness's testimony at trial may be considered for the sole purpose of judging the credibility of the witness but may never be considered as evidence of the proof of the truth of any such statement. Where, however, the witness is a party to this case and by such statement or other conduct admits some fact or facts against his or her interest or its interest, then such statement or other conduct, if knowingly made or done, may be considered as evidence of the truth of the facts or the facts so admitted by such a party as well as for the purpose of judging the credibility of the party as a witness. Once again, an act or omission is knowingly done if done voluntarily and intentionally and not because of mistake or accident or some other innocent reason. Sometimes in a jury case you are concerned with the intent of a witness or a party, and this next instruction deals with intent. Intent ordinarily may not be proved directly

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2087 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 case. As I did at the start of this case, I will first give you a summary of each side's contentions in this case. I will then provide you with detailed instructions because there is no way of fathoming or scrutinizing the human mind, but you may infer a person's intent from surrounding circumstances. You may consider any

statement made or act done or omitted by a party whose intent is in issue and all other facts and circumstances to indicate his state of mind. You may consider it reasonable to draw an inference to find a person intends the natural and probable consequences of acts knowingly done or knowingly omitted. It is for you to decide, ladies and gentlemen,

what facts have been established by the evidence. Now let's turn to the issues at hand in this

on what each side must prove to win on each of its contentions. As I previously told you, plaintiff, I/P Engine, Inc., contends that the defendants Google, Inc., AOL, Inc., IAC Search and Media, Inc., Gannett Company, Inc., and Target Corporation infringed claims 10, 14, 15, 25, 27 and 28 of the '420 patent, which has been referred to as "the '420 patent," and claims 1, 5, 6, 21, 22, 26, 28 and 38 of the '664 patent. Specifically, I/P Engine

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2088 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 contends that Google's AdWords directly infringes the asserted claims and that AOL, Inc., IAC, Gannett and Target infringed through their use of Google's AdWords system. I/P Engine has the burden of proving the

defendants infringed any of these claims by a preponderance of the evidence. That means that I/P

Engine must show that it is more likely than not that Google's AdWords infringes the claims. Now, the defendants deny that they infringed any claims of the '420 or the '664 patent. Defendants also

contend that the asserted claims of the '424 patent and the '664 patent are invalid. patent infringement. Invalidity is a defense to

Even though the United States

Patent & Trademark Office has allowed the claims of the '420 and '664 patent, you, the jury, are responsible for deciding whether the claims of the patent are valid. Your job is to decide whether or not the asserted claims of the '420 patent or the '664 patent have been infringed and whether or not those claims are invalid. If you decide that any claim of the '420 patent

or the '664 patent has been infringed and also that an infringed claim is not invalid, then you will then need to decide money damages to be awarded to I/P Engine. I/P

Engine has the burden of proving that it is entitled to the damages it seeks by a preponderance of the evidence.

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2089 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 I will now give you instructions and definitions to help you in answering the questions that follow: Before you can decide many of the issues in this case, you will need to understand the role of patent claims. And I know you were given a little introduction

three weeks ago to a patent case, so we are going to go through it again. The patent claims are the numbered sentences at the end of each patent. the jury room. You will have those patents in

The claims are important because the

words of the claim define what a patent covers. The figures and texts in the rest of the patent provide a description and/or examples of the invention and provide a context for the claims, but it is the claims that define the breadth of the patent's coverage. Each claim is effectively treated as if it were a separate patent, and each claim covers more or less than another claim. Therefore, what a patent covers depends,

in turn, on what each of its claims cover. You will first need to understand what each claim covers in order to decide whether or not there is infringement of a claim. The law says that it is my role

to define the terms of the claims and it is your role to apply my definitions to the issues that you are asked to decide in this case. Therefore, as I explained to you at

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2090 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 the start of the case, I have determined the meaning of certain of the terms in the claims and have already provided to you my definitions of certain claim terms in the notebooks that you have there. You must accept my

definitions of these words and the claims as being correct. It is your job to take these definitions and

apply them to the issues that you are deciding, including the issue of infringement. Now, this next instruction is entitled "How a Claim Defines What It Covers." claim defines what it covers. A claim sets forth in words a set of requirements. Each claim sets forth its requirements in If a device or a method satisfies I will now explain how a

a single sentence.

each of these requirements, then it is covered by the claim. There can be several claims in a patent, and I just listed several claims in these various patents. Each claim may be narrower or broader than another claim by setting forth more or fewer requirements. The In

coverage of a patent is assessed claim by claim.

patent law the requirements of a claim are often referred to as "claim elements" or "claim limitations." When a

thing such as a product or process meets all of the requirements of a claim, the claim is said to cover that

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2091 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 thing, and that thing is said to fall within the scope of that claim. In other words, a claim covers a product or

process where each of the claim requirements is present in that product or that process. Sometimes the words in a patent claim are difficult to understand and, therefore, it is difficult to understand what requirements these words impose. It

is my job to explain to you the meaning of the words in the claims and the requirements these words impose. As I just instructed you, there are certain specific terms that I have defined, and you are to apply these definitions that I provide to you. By understanding the meaning of the words in a claim and by understanding the words in a claim set forth the requirements that a product or a process must meet in order to be covered by that claim, you will be able to understand the scope of coverage for each claim. Once

you understand what each claim covers, then you are prepared to decide the issues that you will be asked to decide, such as infringement. This case involves two types of patent claims, ladies and gentlemen: claims. An independent claim sets forth all of the requirements that must be met to be covered by that Independent claims and dependent

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2092 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 claim. Thus, it is not necessary to look at any other In

claim to determine what an independent claim covers. this case claims 10 and 25 of the '420 patent are each

independent claims, and claim 1 and 26 of the '664 patent are each independent claims. The remainder of the

asserted claims are dependent claims. A dependent claim does not itself recite all of the requirements of the claim but refers to another claim or claims for some of its requirements. claim depends on another claim or claims. In this way the In this case

claims 14, 15, 27 and 28 of the '420 patent are each dependent claims. Claims 5, 6, 21, 22, 28 and 38 of the

'664 patent are each dependent claims. A dependent claim incorporates all of the requirements of the claims to which it refers. The

dependent claim then adds its own additional requirements to determine what a dependent claim covers. It is

necessary to look at both the dependent claim and any other claim to which it refers. A product or process

that meets all of the requirements of both the dependent claim and the claims to which it refers is covered by that dependent claim. I will now explain to you the meaning of some of the words of the claims in this case. In doing so, I As

will explain some of the requirements of the claims.

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2093 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 I have previously instructed you, you must accept the Court's definition of these words in the claims as correct. You should not take my definitions of the

language of the claims as an indication that I have a view regarding how you should decide the issues that you are being asked to decide, such as infringement. issues are yours to decide. I will now instruct you how those words are to be construed and understood when deciding the issues of infringement and validity. You have been provided with These

written copies of the '420 patent and the '664 patent, and you may use them during your deliberations. Now, ladies and gentlemen and counsel, you have been provided pretrial all of the terms the Court is about to read. The Court doesn't see any need to read

these terms because the Court has provided these terms to you. Do each of you have your notebooks? Unless there's an objection, I'm not going to read every definition that has previously been provided. MR. SHERWOOD: MR. NELSON: THE COURT: No objection, your Honor. No objection, your Honor. All right. So you will look in your

notebook and you will find the Court's definition of the terms of "collaborative feedback data," "scanning a network," "demand search," "informon," "user," for both

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2094 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 basis. basis. patents, "relevance to the query," "query," and "order of the steps," "order of steps." That's in the notebook,

and you can go to those definitions and use them in reaching your verdict. Let's talk about infringement generally. are we talking about here? I will now instruct you on how to decide whether or not the defendants have infringed the '420 patent or the '664 patent. Infringement is assessed on a claim-by-claim Therefore, there may be infringement as to one In this case What

claim but no infringement as to another.

I/P Engine has alleged that the defendant directly infringed, again, claims 10, 14, 15, 25, 27 or 28 of the '420 patent and claims 1, 5, 6, 21, 22, 26, 28 or 38 of the '664 patent. In addition, I/P Engine has alleged

that the third parties directly infringed -- that is, other defendants, directly infringed -- the '420 patent and the '664 patent and the defendants are liable for actively inducing or contributing to that direct infringement by those third parties. When I say "those

third parties," I'm really talking about the other defendants. Infringement is assessed on a claim-by-claim Therefore, there may be infringement as to one

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2095 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 claim but no infringement as to another. twice. In this case there are two possible ways that a claim may be infringed. The two types of infringement I said that

are called direct infringement and active inducement. Active inducement is referred to as indirect infringement. There cannot be indirect infringement without someone else engaging in direct infringement. To prove

the indirect infringement the patent holder must also prove that the accused infringer's indirect infringement caused direct infringement. In this case I/P Engine has alleged that Google, Inc. directly infringes the '420 and the '664 patent. addition, I/P Engine has alleged that the other defendants directly infringed the '420 patent and '664 patent and they are liable for actively inducing or contributing to that direct infringement by those third parties -- I say by the other defendants. In order to prove infringement the patent holder, that is I/P Engine, must prove that the requirement for one or more of these types of infringement are met by a preponderance of the evidence; that is, that it's more likely than not that all of the requirements of one or more of each of these types of In

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2096 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 infringement have been proved. I will now explain each of these types of infringement in more detail. To prove direct infringement, the patent holder, I/P Engine, must prove by a preponderance of the evidence that it is more likely than not that the alleged infringer, that is Google, made, used, sold or offered for sale within the United States a product or used a process that meets all of the requirements of a claim and did so without the permission of I/P Engine during the time the patent was in force. You must compare each and every one of the requirements of the claim with the product or process to determine whether all of the requirements of that claim are met. You must determine separately for each asserted

claim whether or not there is infringement. There is one exception to this rule. If you

find that a claim on which other claims depend is not infringed -- that is, one of those independent claims -there cannot be infringement of any dependent claim that refers directly or indirectly to that independent claim. On the other hand, if you find that an independent claim has been infringed, you must still decide separately whether the product or the process meets additional requirements of any claims that depend from the

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2097 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 independent claim; thus, whether those claims have also been infringed. A dependent claim includes all of the

requirements of any of the claims to which it refers plus additional requirements of its own. The next instruction is entitled "Direct Infringement Doctrine of Equivalents." If a company makes, uses, sells or offers to sell or imports from the United States a product or uses a process that does not meet all the requirements of the claim and, thus, does not literally infringe that claim, there can still be direct infringement if that product satisfies that claim under the Doctrine of Equivalents. Under the Doctrine of Equivalents, ladies and gentlemen, a product or process infringes a claim if the accused product or process contains the elements or performs the steps corresponding to each and every requirement of the claim that it is equivalent to, even though not literally met by the accused product or process. You may find that an element or a step is equivalent to a requirement of a claim that is not met literally if a person having ordinary skill in the field of technology of the patent would have considered the differences between them to be insubstantial or would have found that the structure or action performed

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2098 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 substantially the same function, works in substantially the same way, to achieve substantially the same result as the requirement of the claim. In order for the structure or action to be considered interchangeable, the structure or action must have been known at the time of the alleged infringement to a person having ordinary skill in the field of technology of that patent. Interchangeability at the present time is not sufficient. In order to prove infringement by

equivalents I/P Engine must prove the equivalency of the structure or action to a claim element by a preponderance of the evidence. On the other hand, if you find that the accused product or process has no corresponding structure or set of structures or action or set of actions to any of the steps or structures or action that I defined as performing that function, then you must find that there is no infringement under the Doctrine of Equivalents. Indirect infringement or active inducement. I/P

Engine alleges that Google is liable for infringement by actively inducing the other four defendants to directly infringe the '420 patent and the '664 patent. As with

direct infringement, you must determine whether there has been active inducement on a claim-by-claim basis.

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2099 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 The defendants are liable for active inducement of a claim only if I/P Engine proves by a preponderance of the evidence that the acts are actually carried out by the third parties and directly infringe that claim; defendants took action during the time the '420 patent and the '664 patent were in force, intending to cause the infringement acts of third parties, again, I'm saying the other defendants; defendants were aware of the '420 patent and the '664 patent and knew the actions taken would constitute infringement of that patent. In order to establish active inducement of infringement it is not sufficient that the other defendants themselves directly infringed the claim, nor is it sufficient that Google was aware of the acts of the other defendants that allegedly constitute the direct infringement. Rather, you must find that Google

specifically intended the other defendants to infringe the '420 patent and the '664 patent. Now let's talk about invalidity generally. Patent invalidity, as I told you, is a defense to patent infringement. I will now instruct you on the rules you

must follow in deciding whether or not the defendants have proved that these claims 10, 14, 15, 25, 27 or 28 of the '420 patent and claims 1, 5, 6, 21, 22, 26 or 38 of the '664 patent are invalid. To prove that any claim of

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2100 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 a patent is invalid the defendants must persuade you by clear and convincing evidence. Now, invalidity based on prior art. Prior art may include items that were publicly known or that have been used or offered for sale, publications or patents that disclose the claimed invention or elements of the claimed invention. To be

prior art the item or reference must have been made, known, used, published or patented either before the invention was made or more than one year before the filing date of the patent application. However, prior

art does not include a publication that describes the inventor's own work and was published less than one year before the date of the invention. For the claim to be invalid because it is not new the defendants must show that all other requirements of that claim were present in a single previous device or method that was known or used -- known of, used or described in a single previous printed publication or patent. We call these things anticipating prior art. To anticipate the invention, the prior art does not have to use the same words as the claim, but all of the requirements of the claim must have been disclosed, either stated expressly or implied to a person having ordinary skill in the art in the technology of the

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2101 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Nobody? invention, so that looking at that one reference that person could make and use the claimed invention. In order for someone to be entitled to a patent the invention must actually be new and the inventor must not have lost his or her rights by delaying the filing of an application claimed to the invention. In general,

inventions are new when the identical product or process has not been made, used or disclosed before. Anticipation must be determined on a claim-by-claim basis. Defendants contend that the asserted claims of

the patents-in-suit, that is the '664 patent and the '420 patent, are invalid because the claimed inventions are anticipated. Defendants must convince you of this by

clear and convincing evidence; that is, that the evidence highly probably demonstrates the claims are invalid. Here are the ways defendants showed the patent claim was not new or the patentee lost the right to patent the claims. Anybody want to stand up and take a stretch? All right. We will keep pushing. I have at

least another 15 minutes, at a minimum. All right.

You are okay?

An invention is not new if it was

known to or used by others in the United States before the inventor's invention. An invention is known when the

information about it was reasonably accessible to the

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2102 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 public on that date. An invention is not new if it was already patented or described in a printed publication anywhere in the world before the inventor's invention. I/P Engine has lost its rights if the claimed invention was already printed or described in a printed publication anywhere in the world by the inventors or anyone else more than a year before December 3rd, 1998, which is the effective filing date of the application for the '420 patent and the '664 patent. An invention was patented by another if the other patent describes the same invention claimed by I/P Engine to a person having ordinary skill in the technology. I/P Engine has lost its rights if the claimed invention was publicly used or sold or offered for sale in the United States more than one year before December 3rd, 1998, again, which is the effective filing date of the application for the '420 patent. An invention was publicly used when it was either accessible to the public or commercially exploited. An invention was sold or offered for sale

when it was offered commercially and what was offered was ready to be patented; that is, a description to one having ordinary skill in the field of the technology

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2103 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 ground. could have made and used the claimed invention, even if it was not yet reduced to practice. Again, an invention is not new if it was described in a published patent application filed by another in the United States before the effective filing date of the patent, in this case December 3rd, 1998. An invention is not new if the claimed invention was described in a patent granted on an application for a patent by another filed in the United States and the application was filed before the effective filing date of the patent, in this case December 3rd, 1998. Now we have reached invalidity on another You heard testimony about obviousness. Now, I want you to pay careful attention to this instruction because on this instruction as a juror you will have to make certain special findings on the issue of obviousness. There will be questions on the verdict

form that you will have to answer on this issue. Even though an invention may not have been identically disclosed or described before it was made by an inventor, in order to be patentable the invention must also not have been obvious to a person of ordinary skill in the field of technology of the patent at the time the invention was made. The defendants contend that claims 10, 14, 15,

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2104 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 25, 27 or 28 of the '420 patent and claims 1, 5, 6, 21, 22, 26, 28 or 38 of the '664 patent are invalid because the invention was obvious. Defendants may establish that

a patent claim is invalid by showing that the claimed invention would have been obvious to persons having ordinary skill in the art at the time the invention was made in the field of the invention. In determining whether a claimed invention is obvious you must consider the level of ordinary skill in the field of the invention that someone would have had at the time the claimed invention was made, the scope and content of the prior art, and any differences between the prior art and the claimed invention. things you will have to answer. Keep in mind that the existence of each and every element of the claimed invention in the prior art does not necessarily prove obviousness. Most, if not In Those are the

all, inventions rely on building blocks of prior art. considering whether a claimed invention is obvious, you may, but are not required, to find obviousness if you find at the time of the claimed invention there was a reason that would have prompted the person having ordinary skill in the field of the invention to combine

the known elements in the way the claimed invention does, taking into account such factors as whether the claimed

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2105 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 invention was merely the predictable result of using prior art elements according to their known function; whether a claimed invention provides an obvious solution to a known problem in the relevant field; whether the prior art teaches or suggests the desirability of combining elements claimed in the claimed invention; whether the prior art teaches away from combining elements in the claimed invention; whether it would have been obvious to try the combination of elements, such as when there is a design need or market pressure to solve a problem and there are a finite number of identified, predictable solutions; and whether the change resulted more from design incentives or other market forces to find it rendered the invention obvious, you must find that the prior art provided a reasonable expectation of success. Obvious to try is not sufficient in

unpredictable technologies -- obvious to try is not sufficient in unpredictable technologies. In determining whether the claimed invention was obvious, consider each claim separately. Do not use

hindsight, that is, consider only what was known at the time of the invention. In making these assessments you

should take into consideration the things sometimes called secondary considerations that were made at the time of the invention and afterwards that may shed light

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2106 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 on the obviousness or not of the claimed invention, such as -- and here's another list: Whether the invention was commercially successful as a result of the merits of the claimed invention rather than a result of design needs or market pressure; whether the invention satisfied a long-felt need; whether others had tried and failed to make the invention; whether others invented the invention at roughly the same time; whether others copied the invention; whether there were changes or related technologies or market needs contemporaneous with the invention; whether the invention achieved unexpected results; whether others in the field praised the invention; whether persons having ordinary skill in the art of the invention expressed surprise or disbelief regarding the invention; whether others sought or obtained rights to the patent from the patent holder; whether the inventor proceeded contrary to accepted wisdom in the field. Those are some of the considerations you need to look at in trying to determine whether these inventions were obvious. Now we turn to the question of damages. There's

a lot of discussion about damages in this case, ladies and gentlemen, and damages will probably be one of the

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2107 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 last things you get to, depending upon what your findings are as you go through the verdict form. If you find that the defendants infringed any valid claim of the '420 patent or the '664 patent, you must then consider what amount of damages to award to I/P Engine. damages. I will now instruct you about the measure of By instructing you on damages, I'm not

suggesting which party should win this case, on any issue. These instructions are provided to guide you on

the calculation of damages in the event you find infringement of a valid patent claim and thus must address the damages issue. The damages you award must be adequate to compensate the patent holder, that is I/P Engine, for the infringement. infringer. They are not meant to punish an

Your damages award, if you reach this issue,

should put I/P Engine in approximately the same financial position that it would have been in had the infringement not occurred. The patent holder-- every time I say patent holder, I'm talking about I/P Engine here, --has the burden to establish the amount of its damages by a preponderance of the evidence. In other words, you

should award only those damages that the patent holder establishes that its more likely than not suffered.

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2108 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 There are different types of damages that the patent holder may be entitled to recover. I/P Engine seeks a reasonable royalty. In this case

A reasonable

royalty is defined as the money amount the patent holder and the infringer would have agreed upon as a fee for use of the invention at the time prior to when infringement began. I will give you more detailed instructions regarding damages shortly. Note, however, that I/P

Engine is entitled to recover no less than a reasonable royalty for each infringing act. If you find that I/P Engine has established infringement, I/P Engine is entitled to at least a reasonable royalty to compensate it for the infringement. Now, what is a reasonable royalty and what does that mean? A royalty is a payment, ladies and gentlemen,

made to a patent holder in exchange for the right to make, use, or sell the claimed invention. A reasonable

royalty is the amount of royalty payment that a patent holder and the infringer would have agreed to in a hypothetical negotiation taking place at a time prior to when the infringement first began. In considering this

hypothetical negotiation, you should focus on what the expectations of the patent holder and the infringer would have been had they entered into an agreement at that

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2109 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 time, and had they acted reasonably in their negotiations. In determining this, you must assume that both parties believed the patent was valid and infringed and the patent holder and infringer were willing to enter into an agreement. The reasonable royalty you determine

must be a royalty that would have resulted from the hypothetical negotiation, and not simply a royalty either party would have preferred. Evidence of things that

happened after the infringement first began can be considered in evaluating the reasonable royalty only to the extent that the evidence aids in assessing what royalty would have resulted from a hypothetical negotiation. back up. Although evidence of the profits -- let me

Although evidence of the actual profits an

alleged infringer made may be used to determine the anticipated profits at the time of the hypothetical negotiation, the royalty may not be limited or increased based on the actual profits the alleged infringer made. Now, here are some of the things you look at in trying to determine what a reasonable royalty is. called reasonable royalty relevant factors. It's

Here are

some reference to the Georgia-Pacific factors in here used. A lot of these factors are the Georgia-Pacific

factors.

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2110 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 In determining the reasonable royalty, you should consider all the facts known and available to the parties at the time infringement began. Some of the

kinds of factors that you may consider in making your determination are: The royalties received by the patentee for the licensing of the patents-in-suit, that is the '664 and the '420 patents, proving or intending to prove an established royalty. The rates paid by the licensee for the use of other patents comparable to a patent-in-suit. The nature and scope of the license, as exclusive or nonexclusive, or as restricted or nonrestricted in terms of territory or with respect to whom the manufactured product may be sold. The licensor's established policy and marketing program to maintain his or her patent monopoly by not licensing others to use the invention or by granting licenses under special conditions designed to preserve that monopoly. The commercial relationship between the licensor and a licensee. When I say licensor or licensee, as an

example, the commercial relationship between the parties here, Google and Lycos or I/P Engine, such as whether they are competitors in the same territory in the same

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2111 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 license. No. 8. The established profitability of the product made under the patents, its commercial success, and its current popularity. No. 9. The utility and advantages of the patented property over the old modes or devices, if any, that had been used for working out similar results. No. 10. The nature of the patented invention, line of business, or whether they are inventor and promoter. The effect of selling the patented specialty in promoting sales of other products of the licensee, the existing value of the invention to the licensor as a generator of sales of his nonpatented items, and the extent of such derivative or convoyed sales. The duration of the patent and the terms of the

the character of the commercial embodiment of it as owned and produced by the licensor, and the benefits to those who have used the invention. No. 11. The extent to which the infringer has

made use of the invention and any evidence probative of the value of that use. The portion of the profit or of the selling price that may be customary in the particular business or in comparable business to allow for the use of the

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2112 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 experts. 15. The amount that a licensor (such as the invention or analogous inventions. No. 13. The portion of the realizable profits

that should be credited to the invention as distinguished from unpatented elements, the manufacturing process, business risks, or significant features or improvements added by the infringer. No. 14. The opinion and testimony of qualified

patentee) and a licensee (such as the infringer) would have agreed upon (at the time the infringement began) if both had been reasonably and voluntarily trying to reach an agreement; that is, the amount which a prudent licensee who desired, as a business proposition, to obtain a license to manufacture and sell a particular article embodying in the patented invention, would have been willing to pay as a royalty and yet be able to make a reasonable profit and which amount would have been acceptable by a prudent patentee who was willing to grant a license. That's the hypothetical negotiation we are talking about. No one factor is dispositive, ladies and gentlemen, and you can and should consider the evidence that has been presented to you in this case on each of

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2113 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 these factors. You may also consider any other factors

which in your mind would have increased or decreased the royalty of the infringer -- would have increased or decreased the royalty Google would have been willing to pay and I/P Engine would have been willing to accept, acting as normally prudent business people or entities. The final factor establishes the framework which you should use in determining a reasonable royalty, that is, the payment that would have resulted from a negotiation between the patent holder, that is I/P Engine, and Google taking place at a time prior to when the infringement began. Now, in determining the amount of damages, you must have a starting point for your determination, in other words, what date should these damages run. Because

of a ruling of the Court that the Court has made for all the defendants, if you reach the question of damages, damages commence on the date that the lawsuit was filed, September 15th, 2011. Now, I have permitted you to take notes during the course of this trial, ladies and gentlemen, and the Court will say you have been unusually attentive and the Court looks at a jury all the time. The Court has permitted you to take notes during the trial. Your notes should be used only as memory

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2114 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 aids. You should not give your notes precedence over If you

your independent recollection of the evidence. did not take notes, you should rely on your own

independent recollection of the proceedings and you should not be influenced by notes of your fellow jurors. I emphasize that notes are not entitled to any great weight than the recollection or impression of each juror as to what the testimony may have been. Now, your verdict must represent the considered judgment of each juror. must be unanimous. verdict. Each of you must decide this case for yourself, but only after an impartial consideration of all the evidence in the case with your fellow jurors. It is your duty as jurors to consult with one another and to deliberate with a view to reaching an agreement if you can do so without violence to individual judgment. In the course of your deliberations, do not In other words, your verdict

All nine of you must agree to the

hesitate to re-examine your own views and change your opinion, if you are convinced it is erroneous. But do

not surrender your independent, honest convictions as to the weight or effect of the evidence solely because of the opinion of your fellow jurors or for the mere purpose of returning a verdict.

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2115 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Remember one thing. You are not partisans.

You are judges of the facts. Your sole interest so to seek the truth from the evidence in the case. Now, upon retiring to the jury room you must select one of your members to serve as your foreperson who will preside over your deliberations and will be your spokesperson here in court. A form of verdict has been

prepared for your convenience. You will take the exhibits and the form of verdict to the jury room and when you have reached a unanimous verdict, you will have the foreperson be sure it's filled out, date and sign it, and you will notify the court security officer that you have a verdict. Now, if during your deliberations, you should desire to communicate with the Court, your message or question must be in writing and signed by the foreperson. I want you to fold it up. And you will then

give the note to the court security officer who will bring it to my attention. Now, the Court will respond promptly, either in writing, if there's any space left on the bottom of the page, or either bring you back to the courtroom to give you an oral response. If you do transmit a message, the

Court does not want to know what your numerical division

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2116 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 is, or who is for what or who's against what, so do not specify any numerical division. Finally, do not interpret anything the Court has said or done during the course of this trial as indicating what the verdict should be. That's your responsibility. within your domain. Now, let me say a word about this verdict sheet. This is the verdict form. I don't want to scare It's exclusively

you to death, but the verdict form is 11 pages long. That's so you can indicate what your decisions are. You take this verdict form and you will go through it to deliberate. You can start on page 1 and as

you go through deliberating, you record your determinations on that sheet. And then you move to page 2 and 3, and you work your way through the sheet, okay? The Court clearly understands that depending upon what you find on the first five pages, you may not get to -- first 6 pages, you may not get to the balance of the form. But you will have to determine your verdict

based upon going through this sheet, as the Court has indicated, taking it page by page and recording your decisions after you have engaged in some deliberations. Now, ladies and gentlemen, I'm going to have

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2117 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 about. counsel to examine the charge and the exhibits and the verdict form, and then we will send those items in to you so you can begin your deliberations. Now, the Court recognizes you have been here all day and this has been a three-week trial, so the Court is going to follow suit as it's usually done. You go in and

you can get started, select your foreperson and get yourself organized, but the Court is going to terminate today at 5:00 and bring you back in here tomorrow morning and let you commence your deliberations fresh at 10:00. Okay? So you may retire to the jury room. (Jury out.) THE COURT: You need to wait until we send in

everything before you do anything. You may have a seat. Perhaps I should have done

this before they were released, but if I have to bring them back, I will. Are there any questions or objections

to the charge as read? MR. BROTHERS: Your Honor, I/P Engine renews its

objections to Instruction 32 for the reasons previously stated. THE COURT: Oh, no, that's not what I'm talking

That's noted for the record. MR. BROTHERS: Oh, okay.

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2118 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 there. All right. Is there any objection to the I mean other than in there? THE COURT: They will have a cleared laptop in THE COURT: The Court wants to know if there's

any objections to the charge as read by the Court? MR. BROTHERS: your Honor. MR. NELSON: THE COURT: No, sir. All right. I want you to step No objections by the plaintiff,

forward and look at the jury charge, the verdict form, all exhibits. not already. THE DEPUTY CLERK: THE COURT: Okay. No. You need to step forward, I don't know whether you have done it or

Mr. Brothers, Mr. Nelson, those who are going to represent the various parties. you-all. (Counsel conferred with the deputy clerk over the charge, verdict form and the admitted exhibits.) MR. BROTHERS: Will the jury have a video player I only need a couple of

exhibits, charge or verdict form?

what's been lodged regarding the substance or the form? MR. BROTHERS: MR. NELSON: None by plaintiffs, your Honor. No, your Honor.

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2119 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 lodge -MR. PERLSON: Yes, demonstratives that were THE COURT: All right. Mr. Taylor, if you would

take these items into the jury room. Yes, sir. MR. PERLSON: Your Honor, we just have some

demonstratives we wanted to lodge objections to just for the record. THE COURT: Some demonstratives you wanted to

either objected to or sustained that we wanted to put in and weren't allowed, just for the record. THE COURT: The proper thing probably to have

been done is to do that as we were going along so the Court could see exactly what you were offering, putting into the record. context. on? MR. PERLSON: I don't know the exact number, Now they come in totally out of

Just how many are you getting ready to do that

but -- well, there's a fair amount of them because most of them are related to the marketing documents that we had that long list. I mean, we went through it on the

record and stated for the record the long list of objections. THE COURT: So you want to offer into the record

demonstrative exhibits?

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2120 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 stack. THE COURT: Well, I want you to look at them, record. MR. PERLSON: get the record -THE COURT: No. Demonstrative exhibits, if you Just for the purposes of appeal to

check your rules of evidence, are ordinarily not admissible in the first place, so why are we putting demonstrative exhibits into the record? MR. PERLSON: Well, if they were demonstratives

that shown to the jury that we have an objection to and they were allowed and still shown, then we want to be able to preserve our objection. THE COURT: All right. Put them on into the

Give them to me by number. Is that a stack, or is that a single one? THE DEPUTY CLERK: MR. PERLSON: It's a stack.

There's a cover pleading and a

Counsel, to be sure they were ever even shown in the first place. I don't want something coming in here that

never even came into the courtroom in the first place. The Court really has no independent recollection of every demonstrative exhibit that you stood up here with, and that's the problem with giving me a stack at the end of the case. MR. BROTHERS: Your Honor, I would ask that we

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2121 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 saying. be given a chance to go back and compare these because, you know, this is a stack of what looks like over 50 demonstratives that, you know, just flipping through I can't tell you whether they were all in there. THE COURT: case is over. We will deal with that before the

But I can tell you, I want you to do this:

I want you to go back and read your rules of evidence and go through those demonstrative exhibits, and surely there are not 50 demonstrative exhibits that probably should have come into the record that the Court held out. MR. PERLSON: No, no, that's not what we are

There are some of them that they showed to the

jury and we objected to it. THE COURT: MR. PERLSON: THE COURT: That you have objected to? Yes. Well, I'm saying I doubt that there

are 50 of them that you objected to that were admissible anyway, so go back and take a look at them and you will know exactly what I'm saying. MR. BROTHERS: Your Honor, the first one I saw

is the Constitution of the United States. THE COURT: MR. PERLSON: Really? You can't be serious.

Well, that was one of the

objections that was made that was overruled. THE COURT: That's right, I overruled that

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2122 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 say. objection. MR. PERLSON: THE COURT: Okay. All right, fine. I still say what I

You go back and look at them tonight and you think

about it, and we will come back and see if that list gets whittled down substantially from the 50 demonstrative exhibits. paper. Court will be in recess until 5:00. MR. SHERWOOD: Your Honor, should we stay in the I'm just telling you that you are wasting

courthouse, or what's the Court's advice with respect to that? THE COURT: Here's the situation. They may have

a question, so you need to be close by so it won't take long to get everyone here. If they have a question, we

are not going to spend ten minutes looking for counsel, so you need to be close by if they come back with a question so we can address it. MR. SHERWOOD: THE COURT: Thank you, your Honor.

I know these are not the greatest

facilities in the world, but you can find someplace to camp out so that we can get to you quickly to answer any questions they may have. next hour, but who knows? MR. SHERWOOD: They may not have any in the Stay close by, please. Yes, your Honor, of

Thank you.

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2123 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 present. course. THE COURT: Recess court.

(A recess was taken at 4:09 p.m., after which court reconvened at 5:02 p.m.) (Jury in.) THE COURT: You may be seated.

The record will reflect that all jurors are Does counsel agree? MR. SHERWOOD: MR. NELSON: THE COURT: Yes, your Honor. Agreed, your Honor. All right. Ladies and gentlemen, I

think that's it for the day.

We are simply going to have Although you,

you go out and come back tomorrow.

perhaps, have chosen your foreperson and you have started to deliberate, do not discuss the case outside the presence of the jury when you come in tomorrow morning and get started. The Court can have you in here as early as you want to get in here and get started tomorrow morning. What the Court will do is the Court will simply have you come in tomorrow morning at 9:30 and start your deliberations. I think that will give you enough time to 9:30.

do what you need to do. All right. (Jury out.)

See you in the morning.

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2124 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 * * * Honor. THE COURT: All right. Court will be in recess THE COURT: You can have a seat up with second

after they leave, please. Who is your technology representative, your computer specialist? MR. PERLSON: THE COURT: Yusef. I don't know who I am referring to,

but one of your folks had the computer back there on the computers. The computers were permitted to come into the

courtroom merely for the purposes of aiding you in putting on exhibits, not for them to be on the computer and communicating or doing anything, other than using those computers for the purposes of putting on your evidence. And I don't want that happening again. So

whoever it is, you find them and you tell them that's it, don't come in here and get on a computer for any other purpose than for presenting your evidence. MR. PERLSON: We will make that clear, your

until tomorrow morning at 9:30. (Court adjourned for the evening recess at 5:05 p.m.)

SHARON B. BORDEN, OFFICIAL COURT REPORTER

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2125 1 2 3 4 5 X 6 Sharon B. Borden, RMR, FCRR 7 X November 1, 2012 X 8 Date 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 /s/ Sharon B. Borden X CERTIFICATION I certify that the foregoing is a correct transcript from the record of proceedings in the above-entitled matter.

SHARON B. BORDEN, OFFICIAL COURT REPORTER

I/P Engine, Inc. v. AOL, Inc. et al, Docket No. 2:11-cv-00512 (E.D. Va. Sept 15, 2011), Court Docket

General Information

Case Name Docket Number Court Nature of Suit Related Opinion(s)

I/P Engine, Inc. v. AOL, Inc. et al 2:11-cv-00512 United States District Court for the Eastern District of Virginia Property Rights: Patent 283 F.R.D. 322 874 F. Supp. 2d 510 2012 BL 329705

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