Leader v. Facebook - Doc. No. 627-19, Excerpt of DTX-725, (Dr.) Vincent (J.) Russo NDA, Apr. 2, 2001

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Leader v. Facebook - Doc. No. 627-19, Excerpt of DTX-725, (Dr.) Vincent (J.) Russo NDA, Apr. 2, 2001 Powered By Docstoc
					Case 1:08-cv-00862-LPS Document 627-19   Filed 08/25/10 Page 1 of 4 PageID #: 11765

                           EXHIBIT 19
Case 1:08-cv-00862-LPS Document 627-19   Filed 08/25/10 Page 2 of 4 PageID #: 11766
Case 1:08-cv-00862-LPS Document 627-19   Filed 08/25/10 Page 3 of 4 PageID #: 11767
Case 1:08-cv-00862-LPS Document 627-19   Filed 08/25/10 Page 4 of 4 PageID #: 11768
eader Technologies,
                                                                                                                    Inc. v. Facebook, Inc.,
                                                                                                                    08-cv-862 (D.Del. 2008)

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                                WBNS-10TV (CBS)
                                investigative report by
                                Paul Aker, Aug. 29, 2011                                                            ««« TABLE OF POSTS

                                                                                                                      11/28/2011 - Leader's
                                                                                                                    lawyers dismantle
                                                                                                                    "schizophrenic" response

                                                                                                                      Click here for
 © WBNS The fight goes on. Click to read Leader's Federal Circuit Opening Brief. The trial resulted in a split      SUMMARY "Bottom Line:
 verdict. Leader won on "literal infringement" of 11 of 11 claims and no prior art. Facebook won on a               American Innovation is on
 technicality called on sale bar that "invalidates" the patent for this trial only if not overturned. Leader says   the line"
 Facebook confused the jury with attorney "trial theater" instead of "clear and convincing" evidence.
                                                                                                                    1. Mark Zuckerberg used
                                                                                                                    Leader white paper to
                                                                                                                    build Facebook
 Click here for an HTML version of this post
                                                                                                                    2. Jury transforms
 Monday, November 28, 2011                                                                                          disbelief into evidence

                                                                                                                    3. No evidence? No
 Leader's lawyers dismantle Facebook’s                                                                              problem. Fabricate it.
 "schizophrenic” response brief                                                                                     4. Facebook’s' trial
 OPINION: One blogger's perspective                                                                                 5. Facebook's "court
                                                                                                                    room theater"
 Oral arguments will now be scheduled in front of a 3-
                                                                                                                    6. Facebook's "I'm tired"
 judge panel at the Federal Circuit Court of Appeals                                                                tactic

                                                                                                                    7. Missing Facebook
 In a recondite rebuff of Facebook's legal arguments,                                                               Documents
 Leader lawyers take Facebook to the proverbial
                                                                                                                    8. Expert witness
 woodshed. The stage is now set for a showdown on legal                                                             practices "dark arts"
 matters that will affect American innovation and                                                                   9. Patent Office records
 jurisprudence for many years, if not decades. If Leader                                                            disprove Facebook
 prevails it will support the American inventor and                                                                 10. Facebook's jury
 entrepreneurial spirit. If Facebook prevails it will                                                               binder innuendo

 encourage big infringers/counterfeiters to steal
 inventions and use their ill-gotten gain from the
                                                                                                                    Share/Print this blog
 inventions to fend off their day of reckoning.

 November 28, 2011 — Leader Technologies today filed its reply brief (Fig. 3, below)
 following Facebook's response brief (Fig. 2, below) to Leader's opening appeal brief
 (Fig. 1, below) in Leader Technologies, Inc. v. Facebook, Inc., 08-CV-862-JJF-LPS
 (D.Del. 2008). Fed. Cir. Case No. 2011-1366. This was the final brief before oral                                  Subscribe to this blog
 arguments. The U.S. District Court trial resulted in a split verdict. Leader won the meat
 of the trial: Leader won on "literal infringement" of 11 of 11 patent claims and no
 published prior art regarding Leader's U.S. Patent No. 7,139,761. In other words, the
                                                                                                                                       Generated using
published prior art regarding Leader's U.S. Patent No. 7,139,761. In other words, the
engine running Facebook is Leader's invention. Facebook won on an esoteric law called
"on sale bar and public disclosure." On appeal to the Federal Circuit Court of Appeals
in Washington D.C., Leader argues that Facebook had no evidence of sale/public
disclosure and confused the jury with court room theatrics. Facebook says their
evidence was "substantial." The evidence appears to be fatal to Facebook.
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Fig. 1 - Leader O PENING        Fig. 2 - Facebook RESPO NSE Fig. 3 - Leader REPLY
White Brief, Jul. 25, 2011,     Red Brief, O ct. 24, 2011.      Gray Brief, Nov. 28, 2011.
Fed. C ir. C ase No. 2011-1366. Fed. C ir. C ase No. 2011-1366. Fed. C ir. C ase No. 2011-1366.

Leader shows that Facebook's response is riddled with inconsistencies,
misrepresentations, misdirection, weak or non-existent legal argument and pointless
invectives. Among the highlights are these:

   1.   "Sole question for the jury" sidelined: After making inventor
        Michael McKibben's credibility the "sole question for the jury" at trial, Facebook
        now sidelines this argument in favor of new arguments that were not presented
        to the jury or in post-trial motions, sort of. (Perhaps because Facebook knows
        that appeals judges, unlike a jury, are not misled by trial theater.)

   2.   "Muckracking:" While sidelining McKibben's credibility as their main
        argument, Facebook schizophrenically trash-talks McKibben on no fewer than
        17 pages of its brief (e.g., "McKibben lied," "McKibben's lies," "McKibben's
        guilty knowledge," "McKibben's falsehoods"). See Fig. 2.1.

        Fig. 2.1 - Vitriolic references to Leader inventor Michael McKibben in Facebook's Oct. 24,
        2011 Red Brief in Leader's appeal to the Federal Circuit Court of Appeals of Leader
        Technologies, Inc. v. Facebook, Inc., 08-862-JJF-LPS (D.Del. 2008); Fed. Cir. Case No.

   3.   Attacking inventors to create opposite-evidence: After relying
        on the idea that disbelief of an inventor's testimony is affirmative evidence of
        the opposite, Facebook feebly defended this "general principle;" as if they don't
        really believe it themselves. Leader's lawyers pointed out (and Facebook
        ignored) that the federal circuit is split on this issue. The "general principle" may
        apply in cases where the scales of evidence are otherwise weighted more or
        less evenly. However, in this case, there is no other evidence on either scale.
        Getting the jury to disbelieve McKibben's testimony was Facebook's entire on
        sale/public disclosure case. No source code. No engineering drawings. No third
        party testimony. No expert testimony. No technical information at all. The
        implications of this argument, if it prevails, are profound on all law since it will

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     implications of this argument, if it prevails, are profound on all law since it will
     open the door for the guilty to encourage their victims to testify truthfully, then
     use "dark arts" tactics to encourage the jury to disbelieve that testimony. This
     was Facebook's evident tactic at this trial.

4.   Ignored Legal Argument: Facebook ignored (failed to "differentiate")
     most of the legal arguments Leader made in its opening White Brief. Such
     conduct signals a lack of belief in one’s key lower court arguments. More
     damaging to Facebook, by not arguing the law, they waive their defenses under
     those laws.

     Some examples: (a) Facebook failed to argue why they are permitted to ignore
     the jury's instructions to perform an element-by-element comparison of the
     claims against the alleged sale/public disclosures. (b) Instead, they just repeat
     the mantra that McKibben lied and that the jury's disbelief cannot be questioned.
     However, such circumstances are why the appeals process exists—to correct
     misapplications of the law. (c) Facebook then failed to argue why they are
     permitted to ignore the district court's opinion focusing the question of law on
     Interrogatory No. 9 as the "sole question" for the jury. (d) Following that,
     Facebook ignored Leader's argument that a 2009 present tense answer to an
     interrogatory about the components of Leader2Leader® in 2009, by the plain
     English, cannot apply to the components in 2002. (e) Then, Facebook argued
     that the courts are not permitted to take judicial notice of registered trademark
     dates at the U.S. Patent Office for the combined marks Leader2Leader® and
     Digital Leaderboard®—the prima facie combination of which puts Interrogatory
     No. 9 outside the critical date. (f) Facebook's argument focused instead on the
     Leader2Leader® mark and ignored completely the Digital Leaderboard® mark
     award date of Dec. 16, 2003—another elephant in the room that is fatal to

     Without bogging down this article with too many legal citations, the following
     relate to the subject matter of the previous paragraph: Scaltech Inc. v.
     Retec/Tetra, L.L.C. (Fed. Cir. 1999) ("first determination" in any on sale bar
     "analysis must be whether the subject of the barring activity met each and every
     limitation of the claim, and thus was an embodiment of the claimed invention");
     Carr v. United States (U.S. 2010) (use of present tense in statute does not
     include past actions); Helifix Ltd. v. Blok-Lok, Ltd. (Fed. Cir. 2000) (mere
     mention of the "DryFix" brand name in a trade show brochure and other letters
     failed to show a tool that met all the limitations; "there were many tools that had
     been called 'DryFix tools'"); Federal Rules of Evidence 201 (b)(2) ("The court
     may judicially notice a fact that is not subject to reasonable dispute because it:
     . . . (2) can be accurately and readily determined from sources whose accuracy
     cannot reasonably be questioned).

5.   New "Phantom NDA" Debunked: In a myopic interlude, Facebook
     consumes an entire page of its Red Brief accusing McKibben of lying about an
     April 2, 2001 NDA—calling it a "phantom NDA" (non-disclosure agreement).
     Facebook's new argument (not made to the jury) is that the first Wright-
     Patterson Air Force Base ("WPAFB") NDA did not occur until Apr. 10, 2001.
     Ostensibly, Facebook claims that this proves: (1) McKibben is a liar with "guilty
     knowledge" and the jury was right to disbelieve him, and (2) the invention was
     publicly disclosed. Facebook repeated the phrase "guilty knowledge" seven

     Facebook's "McKibben lies" epithets turn on an internal Apr. 3, 2001 email from
     Leader engineer Steve Hanna to Leader's developers in which he mentions a
     presentation on Apr. 2, 2001 attended by an unnamed person who was "the
     number one ranking civilian at WPAFB - Executive Director of Aeronautical
     Systems Center." See Fig. 5.1.

     Fig. 5.1 – Internal Apr. 3, 2001 Leader email (composite graphic) written by engineer
     Steve Hanna confirming attendance by a WPAFB participant at a University of Dayton
     presentation on Apr. 2, 2001. This evidence was actually submitted by Facebook as
     DTX-1348, Trial Doc. No. 675-25.

     Facebook's new argument is that McKibben lied when he testified at trial that
     "Vincent Russo" was the WPAFB person at that meeting. Facebook Red Br. 40,
     44; Trial Tr. 10805:24-10806:3. Facebook now floats the story that the first
     WPAFB NDA did not occur until the Douglas W. Fleser NDA on Apr. 10, 2001.

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WPAFB NDA did not occur until the Douglas W. Fleser NDA on Apr. 10, 2001.
This new argument was never presented to the jury or in post-trial motions.
McKibben's testimony is the only evidence on point. See Fig. 5.2.

Facebook appears to be attempting to expand its "opposite of testimony" theory
to new facts never before contested. In other words, McKibben testified that the
WPAFB person on Apr. 2, 2011 was Vincent Russo. But, if Facebook can
convince the court that the jury did not believe him (and absent any other proof
of Russo's association with WPAFB), then maybe they could prevail on the
"opposites" theory that Russo was not associated with WPAFB, and therefore,
an unidentified third party from WPAFB was the recipient of the allegedly
invalidating public disclosure; notwithstanding an entire body of patent and trade
secret law in Leader's favor as well.

Fig. 5.2 – WPAFB fax cover page header, and Leader NDA signature block (composite
graphic) signed by Douglas W. Fleser on Apr. 10, 2001. PTX-1058, Trial Doc. 628-9.

The Russo NDA (signature block shown below) did not explicitly identify his
association with WPAFB. So, Facebook evidently decided to disbelieve
McKibben's testimony about the association (with no proof to the contrary). See
Fig. 5.3; Leader Reply 13.

Fig. 5.3 – Signature block from the Leader NDA signed by (Dr.) Vincent J. Russo on Apr.
2, 2001. This document was submitted into evidence by Facebook. Excerpt of DTX-725,
Trial Doc. No. 627-19.

However, a quick Google search of the Congressional Record proves fatal
to Facebook. It confirms that "Dr. Vincent J. Russo" was, indeed, the top
civilian at Wright-Patterson Air Force Base between at least 1999 and 2003,
which would include Apr. 2, 2001. See Fig. 5.4.

Fig. 5.4 – Senate Hearing, S. Hrg. 108-100, including testimony by Dr. Vincent J. Russo,
Executive Director, Aeronautical Systems Center, U.S. Air Force (WPAFB), S. Hrg. 108-
100, 108th Cong. III, p. 11 (2003) (testimony of Dr. Vincent J. Russo) (6 MB). See Text
Version (170K). Dr. Russo's testimony places him temporally at WPAFB on Apr. 2, 2001.
Graphic: composite of the Senate Hearing title page.

McKibben testified at trial (See Trial Tr. 10805:24-10806:3):

       Q. The meeting you had on April 2nd, 2001, was it with Mr.
       A. No. I had not met him yet.

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            A. No. I had not met him yet.
            Q. Okay. Who was at that meeting?
            A. The person at that meeting was invited by the senior people
            from the University of Dayton to attend. And was the top civilian at
            Wright Patterson Air Force Base. His name was Vincent Russo.
            Q. Did you obtain an NDA from Mr. Russo?
            A. I did.

     Fig. 5.5 – Correlation of evidence which proves incontestably that Michael McKibben's
     testimony about the Apr. 2, 2001 presentation at the University of Dayton was truthful.

     Therefore, (a) the Congressional Record provides irrefutable proof that Dr.
     Vincent J. Russo was associated with WPAFB on Apr. 2, 2001, (b) McKibben's
     testimony was accurate, (c) any jury disbelief of McKibben in this matter was
     legal error, and (d) Facebook’s new "phantom NDA" accusation is wrong—and
     knowingly so. Model Rules of Professional Conduct 3.3, Candor Toward The
     Tribunal ("(a) A lawyer shall not knowingly: (1) make a false statement of fact or
     law to a tribunal").

6.   Both cannot be true: Facebook used Leader's provisional patent source
     code to successfully invalidate Leader’s earlier provisional patent priority date—
     based on the testimony of Facebook's expert witness Dr. Saul Greenberg. Dr.
     Greenberg testified that the invention was not present in the source code.

     However, Facebook then argued the polar opposite when trying to prove on
     sale/public disclosure. For on sale/public disclosure bar, Facebook ignored Dr.
     Greenberg's testimony, and argued that days earlier the full invention was
     present, was disclosed and was offered for sale. Facebook's problem here is
     that while they were able to produce Leader source code to disprove the
     presence of the invention in the provisional patent, they did not produce Leader
     source code to prove on sale/public disclosure bar. Both claims cannot be true.
     The absence of Leader source code proof in their on sale/public disclosure bar
     argument is fatal. See Fig. 6.1; See also Expert witness practices "dark arts."

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     Fig. 6.1 - Excerpts from the testimony of Facebook expert witness Dr. Saul Greenberg
     regarding the only Leader source code placed into evidence in the trial. This source code
     was contained in the provisional patent application. Dr. Greenberg testified that this source
     code did not disclosure the '761 invention. However, regarding the on sale/public disclosure
     claim, Facebook argued that the entire invention was ready for patenting (without showing
     any additional source code). Trial Doc. No. 623. Tr. 10903-10908.

     Note that Dr. Greenberg was not an expert witness for on sale/public disclosure
     bar, but rather for prior art and enablement of the provisional patent. Facebook
     did not proffer an expert for on sale/public disclosure bar. Therefore, the only
     Facebook expert testimony at trial on the subject of Leader's source code is Dr.
     Greenberg's which is fatal to Facebook.

7.   Ignoring the "clear and convincing standard" legal
     argument; re-arguing trial evidence instead: Facebook spends
     11 pages re-arguing its trial evidence. Leader's appeal argument is on the "clear
     and convincing evidence" legal standard. Facebook largely ignored that question
     of law and merely re-argued its trial case. This could prove fatal since hard
     evidence of the kind that only source code could provide was glaringly missing.

8.   Smoking Gun: In fact, the trial record reveals a Facebook "smoking gun."
     Even Facebook's own attorney argued to the trial court that the only way they
     could tell if Leader2Leader practiced the invention was to study the source code.

     See Facebook Cooley Godward LLP attorney Mark Weinstein's letter to Judge
     Stark citing his Jan. 27, 2010 letter to Leader attorney James Hannah 6 months
     before trial:

             "in order to analyze whether or not it practices the '761 patent...
             Facebook would require... the source code for Leader2Leader."
             See Fig. 8.1.

     Fig. 8.1 – Facebook's attorney, Cooley Godward LLP Attorney Mark Weinstein's Feb. 27,
     2010 statement to Judge Leonard Stark that Facebook needed access to the
     Leader2Leader source code in order to prove whether or not the back end components
     practiced the '761 invention (six months before trial). Trial Doc. No.283, Ex. 3, PDF p. 11..

     The judge was persuaded and gave Facebook access, but tellingly, none of the

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      The judge was persuaded and gave Facebook access, but tellingly, none of the
      source code was produced at trial so prove sale/public disclosure.

      Facebook's argument that they provided "substantial" evidence to meet their
      "clear and convincing" burden of proof is disingenuous. It contradicts Mark
      Weinstein's earlier statements to the district court. Reason, common sense and
      the law all say this should be fatal.

 9.   New arguments: Facebook's brief argued "alternative grounds for
      affirmance." This means that Facebook made new arguments to the court on
      appeal that it did not make in the lower court. Such tactics signal lack of belief
      in the strength of one’s case, and appeals courts rarely give such "Hail Mary"
      arguments much weight, if any.

10.   No expert testimony: Facebook makes brand new arguments about
      Leader’s patent claims that it did not argue to the jury, nor did it argue in post-
      trial motions. The arguments are too technical for discussion here since they
      address esoteric areas of patent law like "infringement theories," "limitations,"
      "claim construction," "indefiniteness" and "presumption of validity." These new
      Facebook arguments are likely out-of-order since they are normally the subject
      of extensive pre-trial expert witness reports and testimony that are dictated by
      well-settled law called the Markman Hearing and Daubert Motions. The expert
      testimony from both sides would have been presented to the jury. None of this
      happened with these new arguments.

11.   Haughtiness in the face of "literal infringement:" Facebook's
      flippancy gets even more strange when—in the face of a "literal infringement"
      verdict against them on 11 of 11 Leader claims and no published prior art—they
      state in their first footnote on page 4 that they don't think that the technology
      that Leader invented is anything special (and by inference neither is their
      technology). Such haughty statements may come back to haunt them.

             Facebook does not believe that the '761 patent reflects a
             significant advance or solves any significant problem. The terms
             "inventor" and "invention" are used merely for convenience."
             Facebook Red Brief, fn. 1.

      Fig. 11.1 - Facebook's footnote 1 in its appeal reply brief. This comment belies the verdict
      against them of "literal infringement" of 11 of 11 claims in Leader Technologies, Inc. v.
      Facebook, Inc., 08-862-JJF-LPS (D.Del. 2008). In other words, the engine running the
      Facebook website is Leader's invention. See U.S. Patent No. 7,139,761; Fed. Cir. Case No.

      This is surreal comment given the frenzy with which Mark Zuckerberg is being
      listed as inventor on inventions around the planet—54 at last count—using
      Leader's patent as the foundation. All this Facebook activity to protect its
      intellectual property contradicts their self-confessed hacker culture and their
      disrespect for the privacy and property rights of others—as exposed by the
      recent Federal Trade Commission sanction of Facebook for deceptive privacy
      practices and Mark Zuckerberg's vacuous mea culpa. See Achohido, Byron.
      "Facebook settles with FTC over deception charges," USA Today, Dec. 2, 2011.
      Last accessed Dec. 3, 2011.

             Mark Zuckerberg: "one good hacker can be as good as 10 or 20
             engineers." Wired, Apr. 19, 2010; Hollywood Reporter, Jun. 28,

      Hacker/Thief/Counterfeiter . . . or Inventor? Facebook's pretentiousness in
      the face of a verdict of literal infringement of Leader's U.S. Patent No. 7,139,761
      against them could prove highly problematic for their other acquired patents and
      patent applications—all technologies operating within the Facebook framework.
      See U.S. Patent Nos. 7,669,123; 7,725,492; 7,788,260; 7,797,256; 7,809,805;
      7,827,208; 7,827,265; 7,890,501; 7,933,810; 7,945,653; 7,970,657; 8,010,458;
      8,027,943; 8,037,093; U.S. Patent App. Nos. US 2011/0264736 A1; US
      2011/0231747 A1; US 2011/0225481 A1; US 2011/0202531 A1; US
      2011/0202822 A1; US 2011/0087526 A1; US 2011/0029388 A1; US
      2011/0004831 A1; US 2010/0199192 A1; US 2010/0146443 A1; US
      2009/0182589 A1; US 2009/0119167 A1; US 2009/0037277 A1; US
      2008/0091723 A1; US 2008/0046976 A1; US 2008/0040474 A1; US

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       2008/0091723 A1; US 2008/0046976 A1; US 2008/0040474 A1; US
       2008/0040673 A1; US 2008/0033739 A1; US 2007/0214141 A1; US
       2007/0192299 A1; US 2004/0230672 A1; PRC 101849229 A; PRC 101495991;
       PRC 101366029; EP 2210185 A1; EP 1971911 A2; EP 1964003 A2; EP
       1682089 A2; CA 2704680 A1; CA 2703851 A1; CA 2660539 A1; CA 2660459
       A1; CA 2634961 A1; CA 2634928 A1; CA 2633512 A1; CN 101495991; CN
       101366029; CN 101849229 A. See "Mark Zuckerberg's Patents," Last
       accessed Dec. 3, 2011; See also Inequitable Conduct.

More review of this Federal Circuit appeal will be forthcoming now that all the legal
arguments are in.

Reckless Modus Operandi

The elephant-in-the-room question for Facebook is their motivation for not settling this
case. The engine running their site is Leader's invention. Facebook "literally infringes"
Leader U.S. Patent No. 7,139,761—that is now proven and will most likely be affirmed
on appeal.

Fig. 12 - Facebook's Public Offering Elephant-in-the-Room: Literal infringement of 11 of 11 claims of U.S.
Patent No. 7,139,761 invented by Leader Technologies.

Given a pending damages, willfulness and injunction trial in this case, one cannot
imagine Facebook going public with this risk disclosure embedded in a prospectus.
Another theory endorsed by some pundits familiar with this case is that Facebook has
adopted a "lawfare" posture against all those from whom they have stolen intellectual
property. PhD candidate, Christi Scott Bartman, recently wrote on this subject.
Facebook's convoluted arguments in this case consume enormous amounts of limited
judicial resources, their privacy deceptions triggering FTC investigations consume
limited regulatory resources, and Mr. Zuckerberg's flurry of patent applications
worldwide consume even more limited regulatory resources. All this conduct lends
credence to the view that Facebook is practicing lawfare.

Whatever the motivation for continuing to press convoluted arguments, Facebook's
legal case appears to have no legs. American inventor-ship is on trial here. Will it back
the innovation horses, or the leg-less horsemen? Time will tell.


Posted by Patent Blogger 4 at 4:05 PM

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Other posts in this series of blogs about Leader v. Facebook

  Leader's lawyers dismantle Facebook's "schizophrenic" response brief
  SUMMARY - Leader v. Facebook trial analysis--American Innovation is on the line
1. Mark Zuckerberg used Leader white paper to build Facebook
2. Jury transforms disbelief into evidence
3. No evidence? No problem. Fabricate it.
4. Facebook's trial conduct
5. Facebook's "court room theater"
6. Facebook's "I'm tired" tactic
7. Missing Facebook Documents
8. Expert witness practices "dark arts"
9. Patent Office records disprove Facebook


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Description: Facebook attempts to ignore this NDA and asserts that Vincent Russo was not associated with Wright-Patterson, and therefore, Leader made a public disclosure to an unidetified party from Wright Patterson on Apr. 2, 2001 without the protection of a non-disclosure agreement. Inventor Michael McKibben testified at trial that a Vincent Russo attended this meeting as WPAFB and signed an NDA on Apr. 2, 2001. Facebook's appeal Red Brief accused McKibben of inventing this "phantom NDA," however, the Congressional Record proves that McKibben testified truthfully. S. Hrg. 108-100.