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Subpoenas in SCEA v. Hotz Issue, Subject to Motions to Quash - Updated
Friday, March 11 2011 @ 11:04 AM EST

The telephone conference with the parties in Sony Computer Entertainment America v. Hotz and the magistrate judge, Hon. Joseph Spero, went off as scheduled, and the sparse minutes are now available. The subpoenas are issuing now.

The transcript won't be available until June 8, unfortunately. I wish the courts would consider a shorter time period of embargo. Here's the operative bit from the minutes:

Pursuant to the Order signed on 3/3/11, docket no. 90, it is ordered that the issuance of the subpoenas is without prejudice to the subpoenaed party to file a Motion to Quash. Any information provided pursuant to the subpoena shall be provided on an “Attorneys’ Eyes” only.

Court issued rulings on the record as to docket nos. 85 and 86. Plaintiff to prepare Order, with agreed to form by Defendant, no later than the close of business on 3/14/11.

No.85 was the joint letter to the judge about discovery, with some issues not resolved by the parties, and No. 86 was the joint letter regarding impoundment issues. So the judge has now decided those issues, and since Sony is doing the order, it won more than Hotz, I gather. We'll find out when Sony files the orders by the 14th of this month.

Here are the filings:

03/10/2011 - 92 - Minute Entry: Telephonic Discovery Hearing held on 3/10/2011 before Joseph C. Spero. (Court Reporter Lydia Zinn.) (klh, COURT STAFF) (Date Filed: 3/10/2011) (Entered: 03/10/2011)

03/10/2011 - 93 - Transcript of Proceedings held on 03/10/2011, before Judge Joseph C. Spero. Court Reporter/Transcriber Lydia Zinn, Telephone number (415) 531-6587. Per General Order No. 59 and Judicial Conference policy, this transcript may be viewed only at the Clerks Office public terminal or may be purchased through the Court Reporter/Transcriber until the deadline for the Release of Transcript Restriction.After that date it may be obtained through PACER. Any Notice of Intent to Request Redaction, if required, is due no later than 5 business days from date of this filing. Release of Transcript Restriction set for 6/8/2011. (Zinn, Lydia) (Filed on 3/10/2011) (Entered: 03/10/2011)

[ Update: The judge has issued an order on March 15, allowing SCEA to get information from PayPal on source of funds between January 1, 2009, to February 1, 2011. And here is the docket entry of the order, with related filings:

03/14/2011 - 94 - Letter from [Joint] Plaintiff SCEA and Defendant George Hotz re Proposed Order for March 10, 2011 Hearing. (Attachments: # 1 Exhibit 1, # 2 Exhibit 2, # 3 Exhibit 3, # 4 Exhibit 4, # 5 Exhibit 5, # 6 Exhibit 6, # 7 Exhibit 7, # 8 Exhibit 8, # 9 Exhibit 9, # 10 Exhibit A)(Smith, Mehrnaz) (Filed on 3/14/2011) (Entered: 03/14/2011)

03/14/2011 - 95 - MOTION for leave to appear in Pro Hac Vice of Yasha Heidari ( Filing fee $ 275, receipt number 34611057493.) filed by George Hotz. (Attachments: # 1 receipt, # 2 proposed order)(ys, COURT STAFF) (Filed on 3/14/2011) (Entered: 03/15/2011)

03/15/2011 - 96 - ORDER RE MARCH 10, 2011 TELEPHONIC HEARING RE JONT LETTER ON IMPOUNDMENT ISSUES AND JOINT LETTER ON DISCOVERY. Signed by Judge Joseph C. Spero on 3/15/11. **Please note change on page 3, line 12**(klh, COURT STAFF) (Filed on 3/15/2011) (Entered: 03/15/2011)

So, another lawyer for Hotz, and the Paypal issue is resolved. Note that Exhibit 2 attached to #94 is a transcript of the telephonic hearing. It's fascinating, in that it was the judge that says, before the parties even speak a substantive word, that he requires Sony to add information to the subpoenas advising the parties being subpoenaed that they have the right to file a motion to quash:
I did sign the order authorizing the issuance of the subpoenas that you both agreed that should be issued. And we'll deal with the rest of the discovery disputes today. I did want to emphasize two things about the subpoenas that were issued; and also, to the extent I authorize a PayPal subpoena, what my intent is with respect to those.

And my intent, number one, is that the information that's produced pursuant to those subpoenas will be attorneys' eyes only, under the protective order; and second, that it will be without prejudice, obviously, to the subpoenaed parties or anyone else who's got standings, prejudice -- without prejudice to their right to file a motion to quash. And what I would order you to do is make sure, when you serve those subpoenas or any other subpoenas I authorize, that you make sure you advise the subpoenaed parties that they have the right to file a motion to quash.

On the discovery disputes, I thought we'd just go down them, one by one.

The first is a PayPal subpoena. This is -- it seems to me the relevancy of the PayPal information is limited to whether or not the source of funds that are paid into the PayPal account associated with the "geohot" g-mail address the location from which those funds are paid may be of some relevance, but the documents, beyond that narrow scope, I don't see particularly interesting, because we want to find out whether or not it's being paid by California residents.

And so my thought was I would authorize a subpoena to the PayPal account only to the extent that you could obtain documents sufficient to identify the source of funds, including location of the source of those funds deposited into a PayPal account -- any PayPal account associated with the from January of 2009 to the present; but otherwise, narrow it to that, but no further....

MS. SMITH [SCEA]: One concern I have with the proposal that you're making is that PayPal may have difficulty providing us information limited to -- in other words, it may be easier for PayPal to give us all of the information, rather than the information limited to the California residents.

THE COURT: Yeah. Well, easier is one issue. Easier doesn't necessarily cut it. There are lots of things that are easier, and it may or may not be easier. It may or may not be impossible. It depends on -- it's a matter of degree. So I don't know about easier; whether that would justify getting information; but you agree that the question that is relevant is -- is to identify whether or not, and how much, and how many California residents paid into that account?

MS. SMITH: Yes, your Honor. We agree with that.

THE COURT: Okay. All right. Well, then, I'll limit it, as requested. I will limit it to documents sufficient to identify any source of funds in California that went into that PayPal account -- any PayPal account associated with for the period January 1, '09, to February 1, '11. And ask the plaintiff to redraft their subpoena accordingly. So that's the PayPal account.

So it was the judge who thought about the recipients of the subpoenas, not the parties. That's what judges are for, of course, but it's nice to see. It's also relevant to a later argument between the parties. Hotz insists the subpoenas have to be redone, while SCEA argues they don't, but this indicates to me that they do. The cutoff date for PayPal ended up being February 1, because Hotz set up a legal defense fund in February, whereas Sony had asked for it to be all the way to the present. As you see, the judge is genuinely trying to be fair to both parties, not just Sony. - End update.]

Meanwhile, Sony has prevailed against LG in the Netherlands, getting the court to lift the seizure order, according to

It was revealed today that the court order had been lifted, with LG being fined USD$180,000 in legal fees and an additional $275,000 for every day that they fail to pay up. While this only concerns the prejudgement order and not the actual Blu-Ray Disc patents case, it is still good news for Sony, who can now continue shipping and distributing PS3s across Europe.

Sony's lawyer said that they are willing negotiate with LG to settle the patent dispute, as well as all other cases with the company, including a clash with subsidiary, Zenith, over digital TV patents; as well as claims Sony made against LG, alleging that some LG smartphones infringe on Sony patents - "but not with a knife at the throat," supposedly referring to the prejudgement seizure order. The first hearing for the Blu-Ray Disc case is currently scheduled for November 18 this year.

The Daily Mail confirms:
As it now stands, LG could be facing a large claim for damages.

A Sony spokesman said today: 'At a court hearing in the Hague yesterday, Sony's arguments were accepted and the seizure order was lifted. We understand that there will now be no problem re-starting imports of the PlayStation 3 to Europe.'

The scary part of this story is that according to the Guardian's account, the police not only were authorized by the now-lifted order to seize PS3s in warehouses and stores but they had authority to enter private homes to grab purchased products:
Dutch police have seized several thousand PlayStation 3s at Sony's biggest European warehouse in the latest stage of its acrimonious patent battle with LG.

LG has won a court order enabling it to seize all new PS3 across the Netherlands – including those already in Dutch homes – in a dispute that centres on Sony's allegedly infringing use of Blu-ray technology belonging to LG.

Time to buy only with cash, I guess. Patent law has gone nuclear. These laws really don't believe that when you pay for something, it belongs to you after the sale. I know. They see patent infringement like robbing a liquor store. They might want to read this scholarly paper [PDF] on how patents lead to stagnation. The abstract:
A country's most talented people typically organize production by others, so they can spread their ability advantage over a larger scale. When they start firms, they innovate and foster growth, but when they become rent seekers, they only redistribute wealth and reduce growth. Occupational choice depends on returns to ability and to scale in each sector, on market size, and on compensation contracts. In most countries, rent seeking rewards talent more than entrepreneurship does, leading to stagnation. Our evidence shows that countries with a higher proportion of engineering college majors grows faster; whereas countries with a higher proportion of law concentrators grows more slowly.
Do you not see that in the current patent wars?

And the other news in this picture is that the plaintiffs in the class action regarding OtherOS being removed from PS3 have filed their amended complaint. We're working on a text version for you.

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