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					               Case 9:11-cv-00120-RC                     Document 1              Filed 07/20/11           Page      1 of 17




                                                 United States District Court
                                                  Eastern District of Texas
                                                       Lufkin Division



Personal Audio, LLC,


               Plaintiff,

     v.

                                                                                                  Case No.
Apple Inc.,
                                                                                                 Jury Trial Demanded
               Defendant.




                                            Complaint for Patent Infringement

Plaintiff Personal Audio, LLC               (“Personal Audio”)              states   and   alleges as follows:

                                                              Introduction

          1.         In Personal        Audio, LLC           v.   Apple Inc.,    et    al., Case Number 9:09-CV-00111-RC

(“Personal Audio            v.   Apple I”), Apple             Inc.    (“Apple”)       and Personal Audio entered into two


stipulations expressly reserving newly released products                             for   a   second lawsuit. Personal Audio is


bringing that       suit with the present         Complaint. Apple has argued that the July 8,                      2011   jury verdict

awarding       a   lump   sum     applies   to   all   Apple products regardless                of whether   they   were    included in

that trial     or even    that lawsuit. However,             as    explained in more           detail in Personal Audio’s letter to

the Court      on   July 14,     2011   (attached       to   this   Complaint     as   Exhibit A), Personal Audio is entitled

to pursue       this action      against Apple         for   infringing     conduct not considered           by   the   jury.   The trial

between the         parties      that occurred between June 23, 2011 and                           July 8,   2011    only    concerned


infringement by iPod             Classic Generations 1              through 6,   iPod Mini Generations 1 and 2, and iPod

Nano Generations 1               through    5. The     jury       instructions   given by        the Court   specifically     instructed




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the    jury    to   disregard   any evidence that Personal Audio                 was    entitled to    damages relating     to


products not        accused in that    litigation. Furthermore,        the verdict form instructed the jury to award


damages only          for the conduct the         jury   found to     infringe. Consequently,          the   damages    award

issued by the jury       on   July 8, 2011,     does not   cover    any other products.

          2.          The accused      products    in this    Complaint        are   the iPod Nano Generation 6, iPod

Shuffle Generation 4, iPod Touch Generation 4, iPhone 4, and iPad 2. All of these                             products   were



the    subject of Apple’s stipulations          to reserve   these   products    for this lawsuit with the        exception of

the iPad 2, which        was    released after both      stipulations.

                                                             Parties

          3.          Personal Audio is     a   Texas limited       liability company.

          4.          Apple is   a   California   corporation,      with its   principal place    of business at 1 Infinite


Loop, Cupertino, California, 95014,                 and    doing     business    throughout     this   judicial   district and


throughout the United States.

                                                         Jurisdiction

          5.          This Court has     subject    matter   jurisdiction      over   this action pursuant to 28 U.S.C.

      1331 and      1338(a), in that this action arises under the federal patent statutes, 35 U.S.C.                      271

and 281-285.

          6.          This Court has      personal jurisdiction         over    Apple      because it has committed acts


giving    rise to this action within Texas and within this                       judicial    district and has established

minimum contacts within the forum such that the exercise of jurisdiction                           over   Apple     would not

offend traditional notions of fair          play   and substantial       justice.    For   example, Apple has      committed

acts   of infringement in this District,          by   among others      things, offering to     sell and    selling products

that    infringe     the asserted patent,       including portable       music       players. Apple    is authorized to do




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business in Texas and maintains               an   agent for service of process, CT Corporation System,                           at   350

N. St. Paul     Street, Dallas, Texas, 75201.

                                                                 Venue

         7.           Venue in the Eastern District of Texas is proper pursuant to 28 U.S.C.                                   1391(b),

(c) and 1400(b) because Apple has committed                           acts     within this   judicial    district   giving rise   to   this


action, and Apple has and continues                 to   conduct business in this judicial district,                 including    one or



more    acts   of   selling, using, importing            and/or   offering        for sale   infringing products         or   providing

service and support to           Apple’s customers in this District.

         8.           Venue in the Eastern District of Texas is also proper because Personal Audio is


organized      and    governed by        the LLC laws of Texas and is                     subject   to taxes in Texas.        Personal

Audio maintains         a   registered agent        for service of process in Texas. Personal Audio maintains

office space in Beaumont, Texas, within this District, at 550 Fannin Street, Suite 500, where

Personal Audio maintains              originals    and    copies      of its documents. Personal Audio also maintains

other contacts within this District, such                as a   bank account.

         9.           Venue in the Eastern District of Texas is also proper because of judicial economy.


Judge   Ron Clark          presided   over    Personal Audio              v.   Apple   I. Over the   course     of that case,     Judge

Clark issued        numerous       pretrial   orders and        presided         over a   jury   trial   lasting    three weeks. The


allegations     set   forth below include          common       issues of law and fact, which               Judge    Clark is   already

familiar with.

         10.          On   July 9, 2010, Judge Clark appointed Dr.                     Frank     Shipman     as a   technical advisor

in Personal Audio           v.   Apple   I. Dr.    Shipman       is   a   professor     of computer science at Texas A&M


University.     As part of his duties         as   technical advisor, Dr.              Shipman analyzed the           asserted patent,

the   parties’ pertinent briefs,              and relevant declarations in order to assist the Court in




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understanding         the   technology       involved in the asserted patent from the                       point   of view of   one



skilled in the art.

          11.         As part of Personal Audio             v.   Apple I, Judge         Clark issued      multiple complex orders

construing       the terms of United States Patent No. 6, 199, 076, entitled “Audio                                 Program Player

Including a Dynamic Program Selection Controller” (“the                                ’076   patent”).   On December      21, 2010,

Judge     Clark issued          a   detailed order   construing       the       non-means-plus-function          terms   of the ’076


patent. On January 31, 2011, Judge Clark issued                             a   second order in which he denied               Apple’s

motion for summary judgment of indefiniteness and construed the                                   means-plus-function terms        of

the ’076 patent. For each              means-plus-function term, Judge Clark identified the disclosed function

and   corresponding             structure. For    each    means-plus-function             term    for which the      corresponding

structure      included     a   computer processor, Judge Clark identified the algorithmic steps disclosed in

the   specification that corresponded to that means-plus-function term.

          12.         Judge         Clark also had the      opportunity          to   evaluate   Apple’s    defenses in Personal

Audio     v.   Apple     I. On        January 31, 2011, Judge             Clark denied           Apple’s    motion for summary


judgment       of indefiniteness. On June 21, 2011,                Judge        Clark denied     Apple’s    motions for summary


judgment        of   noninfringement        and    invalidity.     On    July 5, 2011, Judge          Clark ruled that        Apple’s

written   description and marking defenses                  failed   as a   matter     of law.

          13.         Judge         Clark also   presided    over a      jury     trial between Personal Audio and             Apple

lasting   ten    days.   At the conclusion of that               trial, the jury found that Apple infringed the ’076

patent, and that the 076 patent was                not   anticipated or obvious.

          14.         In addition to the          jury trial, Judge         Clark conducted          a    bench trial    on   Apple’s

inequitable conduct defense. The Court rejected that defense.




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                                                  Background

Personal Audio

         15.     James D.   Logan (“Logan”)       founded Personal Audio.

         16.     Logan,    Charlie G. Call, and Daniel F.                 Goessling    are   co-inventors of the ’076


patent. The three inventors filed their patent application                 on   October 2, 1996. The United States

Patent Office   duly issued the   ’076 patent    on   March 6, 2001.

         17.     The     076 patent claims, among other inventions,                    an     audio   player capable       of


downloading or receiving a navigable playlist.

         18.     Personal Audio        owns   the ’076 patent. Personal Audio maintains all                       rights   to


enforce the 076 patent.


Apple

         19.     Apple sells the popular iPod, iPhone,              and iPad devices.

         20.     Apple    did not start work     on   the iPod line of          products     until 2001. This     was over



four years after the inventors    on   the ’076 patent filed their patent           application.

         21.     Apple    does not have any patents          on an    audio     player that can    receive   or   download

a   navigable playlist. Apple   does not have any patents that would be considered material to the

076 patent.

         22.     Apple    considers the       ability   to       receive   or   download       a   navigable playlist      a



“competitive necessity”     for the iPod.

         23.     Apple    has not considered      removing         the   ability   for iPods to receive      or   download


navigable playlists.

         24.     Steve    Jobs, Apple’s CEO, has recognized the importance of downloadable

navigable playlists.     Mr. Jobs has      publicly     stated that        “Nobody      thinks of albums anymore,




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              Case 9:11-cv-00120-RC                         Document 1           Filed 07/20/11            Page   6 of 17




anyway.      People         think of     playlists   and mixes. We’ll still sell albums               as   artists put them out, but

for most     consumers             of   popular music,         we   think   they’ll   more   likely buy single      tracks that         they

like. And then          they’ll organize           them into customized           playlists    in their computers and              on   their

iPods.”

           25.         Apple        has stressed the           importance      of iPod       functionality,     and of       playlists    in


particular,      to   the iPhone 4. In         a   national television        advertising campaign, Apple               stated: “If you

don’t have       an   iPhone,       you don’t have         an   iPod in your     phone with your music           and your      playlists.

And you don’t have iTunes                    on    your   phone,     the world’s number          one   music store, with Genius,

that recommends              new        music based      on    the songs you      already     have.    Yep,   if you don’t have           an



iPhone, well,         you don’t have         an    iPhone.”

           26.         On     or   around    September 1, 2010,             Steve Jobs stressed the         importance       of   playlists

to   the iPod Shuffle Generation 4,                       stating:    “So    [consumers] love the buttons of the second

generation       but   they loved VoiceOver                and   having playlists      on    their iPod from the third. So what

are we      going      to   do? Let’s make the best of both. The                      new    iPod Shuffle          It’s got        buttons,

VoiceOver, and playlists                     It’s easy to      use   with the buttons, you       never     have to look down at the


product to change its volume or go to the next                         or   previous   song. It’s got      playlists,   so   you   can   ask

it to   speak the playlist and it’ll speak through just like the third generation                             iPod Shuffle and you

can     pick a playlist that you want,              so   you   can   have   multiple playlists on your iPod Shuffle.”




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           Case 9:11-cv-00120-RC                    Document 1                   Filed 07/20/11             Page       7 of 17




         27.     Upon being activated,         the iPod Nano Generation 6                            displays "Playlists"        in the top


left   corner   of the first   menu      screen.           A   representative                menu        screen   is   pictured     below:




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         28.     Within the "iPod"       application on the iPhone 4, "Playlists" is one of four items

displayed on the lower toolbar. A representative menu                           screen       is   pictured below:


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                                                                7
          Case 9:11-cv-00120-RC                               Document 1                        Filed 07/20/11      Page       8 of 17




       29.       Within the "Music"               application                  on    the iPod Touch Generation 4,               "Playlists   is   one



of four items   displayed on the lower toolbar. A representative menu                                          screen   is   pictured below:




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                                                                               8
            Case 9:11-cv-00120-RC                             Document 1                             Filed 07/20/11                    Page   9 of 17




       30.        Within the "iPod"                     application          on      the iPad 2,             a   user's      playlists are displayed under

"Library"   on   the left side of the               screen.   A    representative menu                            screen         is   pictured below:

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                                                                                    9
                   Case 9:11-cv-00120-RC                                       Document 1               Filed 07/20/11                   Page           10 of 17




              31.                Apple                 has      emphasized     to consumers          the    ability      of iPod Shuffle Generation 4 to

download               or      receive                multiple playlists.      For   example, Apple's website                        states         the   following:

          Play lists..
                                                                                          Sync      to your heart's content.


                                                      1.111111Milik                       iTu nes an your Mac or PC makes it easy to load up yOU r iPod
                                                                                          shuffle. just choose the       playlists,    audio books,        padcasts,    and
                                                                                          other aucl io files you want, then sync.
                                                 c.




ft,b^..   ar•ro.       IT...
                                'b.                    ....I.                             When        one     playlist   isn't      enough.
                                           sy,

               frl'I‘1,                                                                   You      probably   have   multiple playlists    in Tunes on you r computer.

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                                                                                          One for your COMITII/te. One for the gym. One for                     just chiiiaxing.
                                                                                          Sync all those playlists     iPad shuffle, and you can play the
                                                                                                                        to

                                                                                          perfect    rnix for whatever mood strikes you. VoiceOver tells you
     b
             ill
                                                      5,
                                                                                          the   name    of each   playlist,   so   it's easy   to   switch between them and

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                                                                                          find the    one   you want without         looking.
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                                                                                          T                                                         of music   on   iPod shuffle:
                                                                                          Let Genius do the work. Activate Genius in 'Tunes                     an    your
                                                                                          computer, and it automatically finds songs that sound great
                                                                                          together. Then it creates Genius Mixes, which you can easily sync
                                                                                          toyour Wad shuffle. It's the perfect way to rediscover songs you
                                             M.--                                         haven't listened to in, like, forever.




                                                                                A,
Personal Audio                        v.     Apple I

              32.                Personal Audio sued                      Apple for patent infringement on June 25,                                    2009. This lawsuit

covered Personal Audio' s                                        allegations   that the   following           iPod      products infringed:                         iPod Classic

Generations 1                   through 6,                      iPod Mini Generations 1 and 2, and iPod Nano Generations 1                                                   through

5; the following iPhone products infringed: iPhone, iPhone 3G, and iPhone 3G5; and the first

iPad      infringed.

              33.                The             parties        entered into    stipulations       on   July 22,        2010        (attached             to   this    Complaint

as   Exhibit B) and                         September 20,              2010    (attached      to   this    Complaint as              Exhibit C), that any                     Apple


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product      released after      January 27,      2010 would not be included in the Personal Audio                             v.   Apple    I


suit   so   long   as   the   parties    did not agree that its relevant           functionality was substantially the                 same



as   that of a    product accused in that lawsuit.

            34.         Specifically,     the   parties agreed     that   “Apple        would not argue that Personal Audio

could   or   should have added such unannounced                    product to the above-captioned lawsuit.”

            35.         The   parties’ stipulation       covers    at   least the iPod Nano Generation 6, iPod Shuffle

Generation 4, iPod Touch Generation 4, iPhone 4, and iPad 2, which                                               Apple     released after


January 27,        2010.      By    virtue of the        parties’ stipulation,          these      products      could not have been


brought in the Personal Audio v. Apple I suit.

            36.         The    parties specifically agreed              that “Personal Audio may initiate                     a     separate

lawsuit     accusing the New Products              of infringement of the Patents.”

            37.         In Personal Audio           v.    Apple I, Apple           raised defenses of:              non-infringement,

invalidity (anticipation, obviousness,                      written      description, enablement,                  and     best      mode),

unenforceability (inequitable conduct, equitable estoppel,                                  and   prosecution laches), laches,             and

failure to mark.

            38.         During   the jury trial for Personal Audio                v.   Apple I, Apple       called    Anthony Fadell,

its former Senior Vice President for the iPod Division and                                   one   of the creators of the iPod, to


testify on its behalf.         Mr. Fadell testified that he         never    considered removing the                ability   of the iPod

to   download      playlists,      because “if    we     removed that, it would be                 a   problem   for the   product     to   be


competitive        in the      marketplace.”       Mr. Fadell further testified that the                    ability   to   download         or



receive     playlists was a“competitive necessity.”

            39.         During     the   jury   trial for Personal Audio               v.   Apple I, Apple        called Stan        Ng,    its

Senior Director for Worldwide                   Marketing,    to   testify   on   its behalf. Mr.         Ng   testified that he      never




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considered      removing      the   ability   to    download   or   receive      playlists   from the iPod. Mr.         Ng    also

testified that he     never   considered      removing the ability to navigate within a playlist from the iPod.

When asked what features he would                    remove    from   an   iPod if asked, Mr.         Ng    identified alarms,


calendars, contacts, the ability to reorganize the menu,                   games, and the         ability to use the iPod as      a



hard drive. He did not         identify the ability     to   download      or    receive   navigable playlists     as a     feature

he would    remove.



          40.      During     the   jury   trial for Personal Audio         v.   Apple I, Apple      called Dave Heller, its


corporate representative and Director of Engineering for the iTunes desktop application software.

When asked what features he would                   remove   from   an   iPod if asked, Mr. Heller identified games,


contacts, and calendars. He did not             identify the ability to download             or   receive   navigable playlists

as a   feature he would       remove.      Mr. Heller further testified that he would                 never   suggest that the

ability to receive or download navigable playlists be removed from the iPod.

          41.      Judge      Clark held      as a    matter   of law that        Apple     failed to establish its written


description     and   marking    defenses.     Judge    Clark also found that         Apple       abandoned its enablement

and best mode defenses.             Apple     withdrew its      equitable estoppel           defense in December 2010.


Apple     withdrew its   prosecution        laches and most of its         inequitable conduct allegations            on    July 4,

2011.   Judge Clark held that Apple failed to establish inequitable conduct.

          42.      In Personal Audio           v.   Apple I, Apple       raised both         anticipation    and obviousness

defenses.    Specifically, Apple           asserted that the        076 patent      was     anticipated by      the DAD486x


Digital    Audio      Delivery System Operation Manual,                      version 6.0A (“DAD                manual”), and

DAD486x system.          Apple      also asserted that the 076 patent              was     rendered obvious      by   numerous



combinations of the DAD manual, DAD486x system, Sound Blaster 16 User’s Guide for

Windows 95,        “Architecting       Personalized       Delivery       of Multimedia Information”              by    S.    Loeb,




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Audioshop Manual, Sony Discman,                      and Windows 95 Resource Kit. The                   jury rejected     all of


Apple’s anticipation and obviousness                 defenses.

           43.        The   jury   determined that the iPod Classic Generation 3, iPod Classic Generation


4, iPod Classic Generation 5, iPod Classic Generation 6, iPod Mini Generation 1, iPod Mini

Generation 2, iPod Nano Generation 1, iPod Nano Generation 2, iPod Nano Generation 3, iPod

Nano Generation         4, and iPod Nano Generation 5 infringed claims 1, 3, and 15 of the 076 patent.

           44.        The   jury    awarded Personal Audio                  $8, 000, 000     in   damages    for the    specific

infringement the jury found.           The jury      was   instructed to consider          only the following eight groups

of   products    in   assessing damages: Group              1: iPod Classic Generation              3; Group 2: iPod Mini

Generations 1 and 2, and iPod Classic Generation 4;                         Group   3: iPod Classic Generation         5; Group

4: iPod Nano Generation             1; Group 5: iPod Nano Generation 2; Group 6: iPod Nano Generation 3

and iPod Classic Generation 6;                Group     7: iPod Nano Generation               4; and Group 8: iPod Nano

Generation 5. The Court further instructed the                    jury      to   disregard   any evidence about        products

outside these     eight     groups in      assessing damages.         None of the       products    accused of infringement

below falls within these           eight groups.

                                        Apple’s Willful Patent Infringement

           45.        Apple   has and/or continues to make, use, sell, and offer to sell the iPod Nano

Generation 6, iPod Shuffle Generation 4, iPod Touch Generation 4, iPhone 4, and iPad 2.

           46.        Apple   has   infringed   and continues to            infringe   the 076 patent       by making, using,

selling,   and/or     offering to    sell within the United States            products     that   embody   one or more    of the

claims of the 076 patent,             or   by contributing       to   the   infringement      of the 076 patent,       inducing

others to    infringe    the 076 patent,        or   carrying    out   other acts      constituting infringement       under 35

U.S.C.      271(f). Such infringing conduct includes, but is not limited to, making, using, operating,



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selling,   or    offering   to   sell at least the iPod Nano Generation 6, iPod Shuffle Generation 4, iPod

Touch Generation 4, iPhone 4, and iPad 2.

           47.       Apple       does not have     a   license   or   permission    to use      the claimed    subject   matter in


the 076 patent.

           48.       Due to      Apple’s infringing          and unauthorized      use        of the claimed   subject   matter in


the 076 patent,       Apple has captured and dominated the mobile player market.

           49.       As     a   direct and   proximate        result of    Apple’s infringement           of the ’076 patent,

Personal Audio has been             injured and has been caused significant financial damage.

           50.       Apple’s infringement of the              ’076 patent has been and is willful.

           51.       Apple knew       or   should have known of the 076 patent at least                   as   early   as   October

2001.

           52.       Apple disregarded        an   objectively high        likelihood that        making, using, selling,      and


offering    to   sell the iPod Nano Generation 6, iPod Shuffle Generation 4, iPod Touch Generation


4, iPhone 4, and iPad 2 infringed the 076 patent.

           53.       Apple has      known of its actual          infringement      at   least since Personal Audio filed its


complaint in Personal Audio v. Apple I on June 25,                      2009.

           54.       Personal Audio        provided      a   detailed   explanation       of    Apple’s infringement        when it

served its   infringement contentions in Personal Audio v. Apple I on February 1,                              2010.

           55.       Apple has been an adjudged infringer since July 8,                        2011.

           56.       Apple       will continue to         willfully infringe            the     076 patent, and thus          cause



irreparable injury and damage to Personal Audio,                       unless   enjoined by this court.

                                                        Prayer for Relief

Wherefore, Personal Audio              prays for the      following relief:



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          1.        A declaration that      Apple infringed the            076 patent, and is liable to Personal Audio

for infringement.

          2.        A declaration that      Apple’s infringement has been willful.

          3.        An award of          damages adequate             to   compensate Personal Audio for Apple’s

infringement of the           076 patent.

          4.        An award of treble            damages pursuant            to   35 U.S.C. §284 for         Apple’s        willful


infringement.

          5.        A post -judgment        equitable accounting           of   damages   for the    period    of infringement

of the ’076 patent       following the period of damages established by Personal Audio                         at   trial.

          6.        An order        enjoining Apple           from     infringing, inducing          others to      infringe,     or



contributing to the infringement of the              076 patent.

          7.        If   a   permanent injunction is     not     granted, a judicial      determination of the conditions

for future      infringement      such   as a   royalty bearing compulsory            license   or   such other relief       as   the

Court deems       appropriate.

          8.        An order      requiring Apple      to   deliver for destruction all         infringing products           in its


possession.

          9.        A    finding that this case is exceptional pursuant to 35               U.S.C.      285.

          10.       An award of prejudgment           interest,       costs   and disbursements, and attorney fees.

          11.       Such other and further relief           as   the Court deems Personal Audio may be entitled

to in   law and   equity.

                                                Demand for Trial           by Jury

          A jury trial is demanded          on   all issues   so   triable, pursuant to Rule 38 of the Federal Rules

of Civil Procedure.




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           Case 9:11-cv-00120-RC   Document 1    Filed 07/20/11     Page   16 of 17




Dated:   July 20,   2011               Respectfully submitted,

                                       By:     /s/ Charles W. Goehringer Jr.
                                       Robins, Kaplan, Miller & Ciresi L.L.P.
                                       Ronald J. Schutz (MN Bar No. 130849)
                                       (Eastern District of Texas Member)
                                       (Lead Counsel)
                                       Jake M. Holdreith (MN Bar No. 211011)
                                       (Eastern District of Texas Member)
                                       Cyrus A. Morton (MN Bar No. 287325)
                                       (Eastern District of Texas Member)
                                       David A. Prange (MN Bar No. 329976)
                                       (Eastern District of Texas Member)
                                       Patrick M. Arenz (MN Bar No. 0386537)
                                       (Eastern District of Texas Member)
                                       Daniel R. Burgess (MN Bar No. 0389976)
                                       (Eastern District of Texas Member)
                                       800 LaSalle   Avenue, Suite 2800
                                       Minneapolis, Minnesota 55402
                                       Telephone: (612) 349-8500
                                       Facsimile: (612) 339-4181
                                       E-mail:   RJSchutz@rkmc.com
                                                 JMHoldreith@rkmc.com
                                                 CAMorton@rkmc.com
                                                 DAPrange@rkmc.com
                                                 PMArenz@rkmc.com
                                                 DRBurgess@rkmc.com

                                       Annie  Huang         (MN Bar No. 0327979)
                                       (Eastern District of Texas Member)
                                       601 Lexington Avenue, Suite 3400
                                       New York, NY 10022
                                       Telephone: (212) 980-7400
                                       Facsimile: (212) 339-4181
                                       E-mail:      AHuang@rkmc.com

                                       Germer Gertz, L.L.P.
                                       Lawrence Louis Germer
                                       (TX Bar 07824000)
                                       Charles W. Goehringer, Jr.
                                       (TX Bar 00793817)
                                       550 Fannin, Suite 400
                                       P.O. Box 4915
                                       Beaumont, Texas 77701
                                       Telephone: (409) 654-6700


                                          16
Case 9:11-cv-00120-RC   Document 1   Filed 07/20/11   Page   17 of 17




                            Telecopier: (409) 835-2115
                            E-Mail: llgermer@germer.com
                                     cwgoehringer@germer.com

                            Attorneys for Plaintiff Personal Audio, LLC




                               17
Case 9:11-cv-00120-RC   Document 1-1   Filed 07/20/11   Page   1 of 6




           EXHIBIT A
                             alasE99391GrA00012CREC Mocureetit480-1 FlTddc0072041111                        PlEigge2lob65
                                                                                                                      SUITE 3400
                                                                                                                      601 LEXINGTON AVENUE
                                                                                                                      NEW YORK, NY 10022-4611
                                                                                                                      TEL: 212-980-7400 FAX: 212-980-7499
                                                                                                                      www.rknic, corn

                                                                                             ATTORNEYS AT LAW




                                                                                                         RONALD J. SCHUTZ
                                                                                                            (612) 349-8435
                                                                                                         RJSchutz@rkmc.com



                                                                     July 14, 2011


                                                                                                                  VIA E-FILING

                The Honorable Ron Clark
                United States District Court Eastern District of Texas
                The Jack Brooks Federal Building and United States Courthouse
                300 Willow Street, Suite 221
                Beaumont, TX 77701

                             Re:         Personal Audio, LLC v.   Apple Inc.,   et   al., Case No. 9:09-cv-00111-RC

                Dear   Judge         Clark:

                         Plaintiff Personal Audio writes to reiterate our request that the trial on the remaining
                Apple accused products proceed in August as previously scheduled. Personal Audio respectfully
                submits that this request should be granted in light of the infringement proof, jury instructions,
                and verdict form that only addressed the eight groups of products that the jury found to infringe
                in the first trial. In addition, we believe that fairness and justice also support this request.

                        More specifically, Personal Audio requests a ruling that the damages found in the first
                trial apply only to the iPod products actually tried, and resetting the second trial as planned. If the
                Court is inclined to deny this request, then Personal Audio respectfully requests a new trial on
                damages   for the eight iPod product groups for many of the same reasons, and additional reasons.
                This new trial on damages for the iPod products could also be held in August. These issues will
                shortly be the subject of more formal motions, but Personal Audio raises the issues by letter now
                due to the short time until the August trial block, and in light of the Court's staffing concerns.


                         Apple's theory of the case is that any lump sum royalty constitutes a freedom to operate
                license, but Apple did not propose that the jury be instructed on this theory. In fact, this theory
                was nowhere set forth in the jury instructions or the special verdict form.
                                                                                                Apple should not now
                be allowed to argue that the lump sum award acts as a "freedom-to-operate" license when they
                failed to obtain jury instructions or a jury verdict faun setting forth this theory.


                           Further, this theory was
                                                never set forth in any hearing or briefing before the Court
                                                                                                             leading
                up to the Court dividing up the products alleged to infringe into two separate trials. In fact, in all
                of the proceedings leading up to trial, the only fair conclusion to be drawn was that even if there
                were a lump sum verdict in the first trial, it would not
                                                                         preclude the second trial.


                82354433.1
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             0@aeE99391GrA00012CREC MoomeetitI8C11-1 FiTtdc0072041111                                 PlEigge32t65
The Honorable Ron Clark
July 14,      2011
Page 2

             A review of the     jury   instructions shows that the only reasonable interpretation that the
jury could have drawn was             that any award of damages be limited to the actual products accused
to infringe in the first trial.


             First, the jury   was   specifically told what products were             at   issue in the first trial:

                 Personal Audio contends that the following                 Apple products infringe the
                 asserted claims of the patents-in-suit:

                 Group    1:   iPod Classic Generation 3             (1, 627, 691 units sold);
                 Group    2: iPod Mini Generations 1 and 2, and iPod Classic Generation 4
                             (11, 433, 022 units sold);
                 Group 3:      iPod Classic Generation 5             (15, 219, 066 units sold);
                 Group 4:      iPod Nano Generation 1              (10, 673, 749   units   sold);
                 Group    5:   iPod Nano Generation 2              (13, 379, 878   units   sold);
                Group     6:   iPod Nano Generation 3 and iPod Classic Generation 6
                               (21, 872, 953 units sold);
                Group     7: iPod Nano Generation 4                (10, 946, 988 units sold); and
                Group     8:   iPod Nano Generation 5              (8, 642, 082   units   sold).

Doc. #469 at 8. Next, the jury             was   told that   an   award of damages would be for "the          infringement."

                If you find by a preponderance of evidence that a claim has been infringed
                and you do not find by clear and convincing evidence that the same claim
                is invalid, then Personal Audio is entitled to an award of damages
                adequate to compensate for the infringement, but in no event less than a
                reasonable royalty for the use made of the invention by Apple.

Doc. #469 at 30. This          point was     reiterated later in the instructions:

                If you find that Personal Audio has established infringement, it is entitled
                to at least a reasonable royalty to compensate for that infringement.


Doc. #469 at 31. Then, after explaining the difference between a running royalty and                              a    lump   sum
the Court reiterated that damages were for "any infringement you have found."

                You must first decide whether            a   running royalty or a lump sum royalty
                will be   adequate    to   compensate for any       infringement you have found.

Doc. #469 at 32. Again, there was no mention or hint that the jury could consider anything other
than damages for the eight iPod product groups. The Court then instructed the jury on
apportionment, again focusing on "accused products."


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The Honorable Ron Clark
July 14,      2011
Page 3

                  You may not base the amount of a reasonable royalty on the total sales of,
                  total profits from, or entire market value of, the accused products. Instead,
                  if you find that a patent claim is infringed and do not find that claim
                  invalid, Personal Audio may only recover based on the value added to an
                  accused product by that claim. In other words, the amount of the
                  reasonable royalty that you determine may not be greater than the portion
                  of the value of the accused products that is attributable to the claimed
                  invention(s).

Doc. #469 at 36.          Then,   in the last   paragraph   on   reasonable   royalty damages, the    Court instructed
the jury that:

                  You must disregard any testimony or evidence that Personal Audio is
                  entitled to any damages based on technology incorporated in, or profits
                  received from, iTunes or any other Apple product that is not included in
                  the eight groups of accused products that I listed for you above.

Doc. #469 at 37. In addition, the jury verdict form                   (Question    No.   8),   limited the   damages   to
"conduct you found to infringe." Doc. #470 at 10.


       Although Apple may assert that Personal Audio argued in closing that a lump sum                           would
prevent any future damages or damages for other products, the jury instructions were                             to the
contrary. In addition, at the beginning of the instructions to the jury, the Court stated:

                  After I instruct you on the law, the attorneys will have an opportunity to
                  make their closing arguments. Statements and arguments of the attorneys
                  are not evidence and are not instructions on the law. They are intended

                  only to assist the jury in understanding the evidence and the parties'
                  contentions.

7/7/11 Trial Tr. at 2924:5-10.

             To   place   the fairness issue in context, Personal Audio here reviews for the Court the
events that led to the current situation.


        One unified trial in this case was originally scheduled to commence on March 14, 2011 in
Lufkin, Texas. Doc. #62 at 6. As the March trial date approached, on January 11, 2011, the Court
held a status conference with the parties to address several motions, but also directed the parties to
meet and confer regarding how to proceed in a manner that would simplify trial given the number
of asserted claims and accused products. Doc. #305 at 52-53. The parties then each submitted
letter proposals to the Court on January 18, 2011. While Apple's letter contained multiple
proposals, for the proposal involving two trials, Apple specifically stated the following regarding
damages:




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The Honorable Ron Clark
July 14, 2011
Page 4


                  All of the relevant licenses in evidence are lump-sum, paid-up licenses
                  that permit the licensee freedom to operate under the licensed patents.
                  Accordingly, Apple will seek a verdict form in each trial that includes a
                  question for an award of a lump sum covering all past and future sales of
                  all accused devices.

Ex. A, 1/18/11 Stephens Letter to the Court at 6 (emphasis added). Personal Audio proposed two
trials identifying damages as an issue that would be tried in both trials. Ex. B, 1/18/11 Morton
Letter to the Court at 1.


            January 20, 2011, the Court held a hearing to address the parties' respective trial
             On
proposals. Doc. #306. At no point during the hearing was there any suggestion raised about the
damages case in the first trial having a preclusive effect on the second trial where different
accused products would be at issue. On January 25, 2011, another hearing was held where the
location of trial was discussed and Personal Audio agreed to have the trial in either Lufkin or
Beaumont. Doc. #304 at 12-13. Apple agreed to trial in Beaumont on January 27, 2011. Ex. C,
1/27/11 Stephens Letter to Court.

        After the parties' submissions and multiple hearings, on February 2, 2011, the Court
modified the Scheduling Order and ordered that this case be tried in two parts divided along
product lines with the iPod Classic, iPod Mini, iPod Nano, and iPod Shuffle' in the first trial and
iPhone, iPad, and iPod Touch in the second trial. Doc. #293. The Court also ordered that
Personal Audio's infringement claims and Apple's invalidity and unenforceability claims would
be tried in the first trial while the second trial would then address Personal Audio's infringement
                                                                2
claims related to the iPhone, iPad, and iPod Touch products. Doc. #293. Again, at no time was
there any suggestion that a second trial might not be necessary if the jury awarded a lump sum in
the first trial. Personal Audio relied on Apple's representation to the Court that it would be
seeking a lump sum in each trial.

        During the exchange of pretrial materials, in response to Personal Audio's Trial Exhibit
List, Apple objected to all of Personal Audio's exhibits that referenced the iPhone, iPad or iPod
Touch products. See Ex. D, Excerpts of Apple's Objections to Personal Audio's Trial Exhibits
("Documents relating to iOS products not in the first trial would be confusing to the jury and a
waste of time."). In response, Personal Audio agreed that iOS products that were not accused in
the first trial would "not be the subject of evidence of infringement or damages." Ex. D
(emphasis added). Then, during trial when Personal Audio disclosed exhibits to be used during
direct examination, Apple again objected to any exhibits that referenced the iPhone, iPad or iPod
Touch products and requested that references to products in the second trial be redacted. See,



         Personal Audio did not seek any damages for the iPod Shuffle at trial.
2
         Notably, the parties have already also had to enter into two stipulations regarding new
generations of products that were introduced during the pendency of this litigation, but are not currently
part of either trial. Doc. #181, 205 (Stipulations regarding iPhone 4, iPod Nano Generation 6, iPod
Shuffle Generation 4, and iPod Touch Generation 4). Apple has also released the iPad 2 and will continue
to release new products.



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The Honorable Ron Clark
July 14, 2011
Page   5



e.g., Ex.   E, 6/28/11 Chen e-mail requesting redaction of "products that are not accused in this
first trial"; see also PX-640a (with iPhone, iPad, iPod Touch references redacted).

             In the  parties' June 7, 2011 Joint Proposed Final Jury Instructions,        Personal Audio
objected      to   Apple's proposal regarding a lump sum jury instruction:

                   Personal Audio also objects to Apple's proposal that a lump sum royalty
                   would release Apple from liability on "all Apple products." The only
                   devices accused of infringement in this case are the iPod classic, iPod mini,
                   and iPod nano. Any suggestion that a damages award applies to unaccused
                   products is improper and violates Personal Audio's due process rights.

Doc. #410 at 27, n. 30. The Court's final jury instructions did not incorporate Apple's proposed
language. In fact, nowhere in the Court's final jury instructions or in the jury verdict form is
there any reference to "all Apple products."

                the charge conference on July 6, 2011, Apple never objected to the language in
             During
the Court's final jury instructions limiting the jury's consideration of infringement and damages
to the eight product groupings that had been discussed throughout trial. Doc. #469 at 8, 37. Nor
did Apple ever object to the language in the jury verdict form referring to "the conduct you
found to infringe" in determining damages. Doc. #470 at 10. Apple also did not propose any
language for the Court's jury instructions or the verdict form that referred to a "freedom-to-
operate" or "clearance" license that Apple argued would apply to products that were never at
issue in the first trial. Indeed, this was consistent with Apple's numerous objections that any
reference to "products not in the first trial would be confusing to the jury and a waste of time."


        Accordingly, the limiting instructions to the jury and the language in the jury verdict
form was the direct result of Apple's objections to all evidence and discussion of any products
other than the iPod Classic, iPod Mini, and iPod Nano and Apple's earlier representation to the
Court and Personal Audio that it would be seeking a lump sum in each trial. Moreover, it is of
course well settled that "ffiuries are presumed to follow the instructions of the court." Russell v.

Plano Bank & Trust, 130 F.3d 715, 721 (5th Cir. 1997) (citing United States v. Fletcher, 121
F.3d 187, 197 (5th Cir. 1997)).

       Given that the Court already scheduled a trial to commence on August 9, 2011, Personal
Audio respectfully requests that either a second trial concerning the iPhone, iPad, and iPod
Touch take place as originally scheduled or a new trial on damages take place during this time
period. Counsel is available at the Court's convenience to address any questions the Court may
have regarding this issue.

                                                     Respectfully submitted,

                                                     ROBINS, KAPLAN, MILLER & CIRESI L.L.P.
                                                     /s/ Ronald „I Schutz

                                                     Ronald J. Schutz



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           EXHIBIT B
              Case 09119:11-cv-001
                                20-RC            Document 1-2
                                                           81        ilFiled 07/22/1 0
                                                                                 01          Page 2 of 4
                                                                                                  1    3




                                   UNITED STATES DISTRICT COURT
                                    EASTERN DISTRICT OF TEXAS
                                          LUFKIN DIVISION



Personal Audio, LLC,


              Plaintiff,

       v.



Apple Inc.,                                                                   Case 9:09-cv-00111-RC

Sirius XM Radio, Inc.,                                             STIPULATION REGARDING
                                                                   UNANNOUNCED PRODUCTS
Coby Electronics, Corp.,

Archos, Inc.,

              Defendants.




            WHEREAS, Plaintiff Personal Audio, LLC (“Personal Audio”) and Defendant Apple

Inc.   (“Apple”) currently are parties in the above-captioned litigation in which Personal Audio has
asserted U.S. Patent Nos. 6, 199, 076 and 7, 509, 178         (collectively “the Patents”);
            WHEREAS, Personal Audio has accused several Apple products of infringing the

Patents, including the original iPhone, the iPhone 3G, and the iPhone 3GS (collectively “the

iPhone      Products”);

            WHEREAS,       on or   about   February 24, 2010, Personal Audio         and   Apple agreed that for
any    Apple product announced subsequent to the announcement of the iPad (January 27, 2010)
(hereinafter an “unannounced product”) that,            in the event the   parties   did not agree such

unannounced       product’s   relevant     functionality is substantially the same as that of an accused
product,     and that Personal Audio decides to initiate      a   separate suit accusing the unannounced




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product of infringement of the Patents, Apple would not argue that Personal Audio could or
should have added such unannounced                  product to the above-captioned lawsuit;
            WHEREAS, after Personal Audio identified the iPhone Products                     as   accused products,

and after it announced release of the iPad,             Apple announced release of the iPhone 4;
            WHEREAS, Apple released the iPhone 4 for public sale                  on or   about June 24, 2010;

            WHEREAS, the parties have met and conferred regarding inclusion of the iPhone 4 in the

above-captioned lawsuit,            and   Apple represented that the relevant functionality of the iPhone 4 is
not   substantially the       same as    the   functionality of the accused iPhone Products;
            WHEREAS, the parties agree, in the interest of judicial economy, that the iPhone 4

should not be included in the             above-captioned lawsuit as      an   accused   product.
            NOW THEREFORE THE PARTIES HEREBY STIPULATE:

            1.           Personal Audio shall not move to amend its         infringement contentions to add the
iPhone 4         as an   accused   product;
            2.           At Personal Audio’s sole     option, Personal Audio may initiate a separate lawsuit
accusing the iPhone 4 of infringement of the Patents;
            3.           Apple agrees   and consents to not file    a   separate action for declaratory judgment,

or   otherwise, in any court for a period of six months following the entry of a final,                 non-



appealable judgment in the above-captioned litigation;
            4.           Apple agrees to waive and hereby waives and relinquishes any argument or
affirmative defense that Personal Audio could               or   should have added the iPhone 4 to the above-

captioned litigation,         and is   hereby precluded from asserting the same in any future litigation.




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Respectfully submitted:
Date:   July 22, 2010                          Date:July 22, 2010
GERMER       GERTZ, L.L.P.                         FISH & RICHARDSON P.C.



By: /s/ Charles W. Goehringer                      By:/s/ Garland T. Stephens
Lawrence Louis Germer                              Garland T. Stephens (24053910)
(TX Bar 07824000)                                  David J Healey (09327980)
Charles W. Goehringer, Jr.                         John R. Lane (24057958)
(TX Bar 00793817)                                  Benjamin C. Elacqua (24055443)
550 Fannin, Suite 400                              Fish & Richardson PC
P.O. Box 4915                                      1221 McKinney Street
Beaumont, Texas 77701                              Ste 2800
Tel:   (409) 654-6700                              Houston, TX 77010
Fax:   (409) 835-2115                              713/652-0115
E-Mail:       llgermer@germer.com                  Fax: 713-652-0109
                     cwgoehringer@germer.com       healey@fr.com
                                                    stephens@fr.com
ROBINS, KAPLAN, MILLER & CIRESI                    jlane@fr.com
L.L.P.                                             elacqua@fr.com
Ronald J. Schutz (MN Bar No. 130849)
(Eastern District of Texas Member) (Lead           Attorneys for Defendant Apple Inc.
Counsel)
Jake M. Holdreith (MN Bar No. 211011)
(Eastern District of Texas Member)
Cyrus A. Morton (MN Bar No. 287325)
(Eastern District of Texas Member)
Patrick M. Arenz (MN Bar No. 0386537)
(Eastern District of Texas Member)

800 LaSalle        Avenue, Suite 2800
Minneapolis, Minnesota 55402
Tel:  (612) 349-8500
Fax:  (612) 339-4181
E-mail: RJSchutz@rkmc.com
       JMHoldreith@rkmc.com
       CAMorton@rkmc.com
       PMArenz@rkmc.com


Attorneys for Plaintiff Personal Audio, LLC




81573059.   13
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           EXHIBIT C
                                20-RC
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                                                          1-3                 71
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                                                                                                  1    4




                                    UNITED STATES DISTRICT COURT
                                     EASTERN DISTRICT OF TEXAS
                                          LUFKIN DIVISION



Personal Audio, LLC,


              Plaintiff,

       v.



Apple Inc.,                                                                   Case 9:09-cv-00111-RC

Sirius XM Radio, Inc.,                                             SECOND STIPULATION
                                                                   REGARDING UNANNOUNCED
Coby Electronics, Corp.,                                           PRODUCTS


Archos, Inc.,

              Defendants.




            WHEREAS, Plaintiff Personal Audio, LLC (“Personal Audio”) and Defendant Apple

Inc.   (“Apple”) currently are parties in the above-captioned litigation in which Personal Audio has
asserted U.S. Patent Nos. 6, 199, 076 and 7, 509, 178         (collectively “the Patents”);
            WHEREAS, Personal Audio has accused several Apple products of infringing the

Patents, including the iPod Nano, iPod Shuffle, and iPod Touch (collectively “the iPod

Products”);

            WHEREAS,       on or   about   February 24, 2010, Personal Audio         and   Apple agreed that for
any    Apple product announced subsequent to the announcement of the iPad (January 27, 2010)
(hereinafter an “unannounced product”) that,            in the event the   parties   did not agree such

unannounced       product’s   relevant     functionality is substantially the same as that of an accused
product,     and that Personal Audio decides to initiate      a   separate suit accusing the unannounced

product of infringement of the Patents, Apple would not argue that Personal Audio                    could   or


should have added such unannounced              product to the above-captioned lawsuit;
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          WHEREAS, in view of the February 24, 2010 agreement, and Apple’s                      announcement

and offer for sale of the iPhone 4 after its announced release of the iPad, the               parties stipulated to
not   include the iPhone 4 in the present       litigation on or about July 22, 2010;
          WHEREAS, after Personal Audio identified the iPod Products                 as    accused products, and

after   Apple announced release of the iPad,        on   September 1, 2010, Apple announced release           of

the iPod Nano Generation 6, iPod Shuffle Generation 4, and iPod Touch Generation 4

(collectively the “New Products”);
          WHEREAS, since September 1, 2010, Apple has sold or offered for sale the New

Products to the     public;
          WHEREAS, the parties have met and conferred regarding inclusion of the New Products

in the   above-captioned lawsuit;
          WHEREAS, the parties agree, in the interest of judicial economy, that the New Products

should not be included in the        above-captioned lawsuit as       accused products.

          NOW THEREFORE THE PARTIES HEREBY STIPULATE:

          1.       Personal Audio shall not move to amend its           infringement contentions to add the
New Products       as   accused   products;
          2.       At Personal Audio’s sole       option, Personal Audio may initiate a separate lawsuit
accusing the New Products          of infringement of the Patents;

          3.       Apple agrees     and consents to not file    a   separate action for declaratory judgment,

or   otherwise, in any court for a period of six months following the entry of a final,             non-



appealable judgment in the above-captioned litigation;
          4.       Apple agrees to waive and hereby waives and relinquishes any argument or
affirmative defense that Personal Audio could            or   should have added the New Products to the

above-captioned litigation,        and is   hereby precluded from asserting the      same    in any future

litigation.




                                                          2
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Respectfully submitted:
Date:   September 20,   2010                      Date:   September 20,    2010


By: /s/ Charles W. Goehringer, Jr.                By: /s/ Benjamin C. Elacqua
ROBINS, KAPLAN, MILLER &           CIRESI         FISH & RICHARDSON P.C.
L.L.P.                                            Garland T. Stephens (24053910)
Ronald J. Schutz (MN Bar No. 130849)              David J Healey (09327980)
(Eastern District of Texas Member) (Lead          John R. Lane (24057958)
Counsel)                                          Benjamin C. Elacqua (24055443)
Jake M. Holdreith (MN Bar No. 211011)             1221 McKinney Street
(Eastern District of Texas Member)                Ste 2800
Cyrus A. Morton (MN Bar No. 287325)               Houston, TX 77010
(Eastern District of Texas Member)                Telephone: (713) 652-0115
David A. Prange (MN Bar No. 329976)               Facsimile: (713) 652-0109
(Eastern District of Texas Member)                E-Mail: healey@fr.com
Patrick M. Arenz (MN Bar No. 0386537)                      stephens@fr.com
(Eastern District of Texas Member)                        jlane@fr.com
Daniel R. Burgess (MN Bar No. 0389976)                     elacqua@fr.com
(Eastern District of Texas Member)
800 LaSalle Avenue, Suite 2800                    ATTORNEYS FOR DEFENDANT
Minneapolis, Minnesota 55402                      APPLE, INC.
Telephone: (612) 349-8500
Facsimile: (612) 339-4181
E-mail: RJSchutz@rkmc.com
          JMHoldreith@rkmc.com
          CAMorton@rkmc.com
             DAPrange@rkmc.com
             PMArenz@rkmc.com
             DRBurgess@rkmc.com

GERMER GERTZ, L.L.P.
Lawrence Louis Germer (TX Bar 07824000)
Charles W. Goehringer, Jr. (TX Bar 00793817)
550 Fannin, Suite 400
P.O. Box 4915
Beaumont, Texas 77701
Telephone: (409) 654-6700
Telecopier: (409) 835-2115
E-Mail: llgermer@germer.com
             cwgoehringer@germer.com

ATTORNEYS FOR PLAINTIFF
PERSONAL AUDIO, LLC




                                              3
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                                CERTIFICATE OF SERVICE

        Ihereby certify that on September 20, 2010, I caused a true and correct copy of this
document (Second Stipulation regarding Unannounced Products) to be served on all counsel of
record via Electronic Case Filing (ECF) pursuant to Local Rule CV-5.



Date:    September 20,   2010              /s/ Charles W. Goehringer Jr.
                                           Charles W. Goehringer, Jr.




                                              4
81738062.1
                                      Case 9:11-cv-00120-RC                                                    Document 1-4                      Filed 07/20/11                   Page       1 of 1
 44...1S 44    (Rev. 12/07)                                                                          CIVIL COVER SHEET
 The JS 44 civil cover sheet and the information contained herein neither replace nor supplement the filing and service ofpleadings or other papers as required by law, except as provided
 by local rules of court. This form, approved by the Judicial Conference of the United States in September 1974, is required for the use of the Clerk of Court for the purpose of initiating
 the civil docket sheet. (SEE INSTRUCTIONS ON THE REVERSE OF THE FORM.)

 I.      (a)    PLAINTIFFS                                                                                                          DEFENDANTS
                Personal Audio, LLC,             a   Texas limited               [lability company                                  Apple, Inc., a California corporation


         (b) County of Residence of First Listed       Plaintiff Jefferson                                                          County of Residence of First Listed Defendant                     Santa Clara
                                      (EXCEPT IN U.S. PLAINTIFF CASES)                                                                                                (IN US. PLAINTIFF CASES ONLY)
                                                                                                                                                NOTE: IN LAND CONDEMNATION CASES, USE THE LOCATION OF THE
                                                                                                                                                          LAND INVOLVED.


            Attorney's (Firm Name, Address and Telephone Number)                                                                    Attorneys (If Known)
            Lawrence L. Germer & Charles W. Goehringer, Jr.                                                                        Garland Stephens & Benjamin Elacqua, Fish & Richardson, PC,
         Germer Gertz, L.L.P., 550 Fannin, Ste. 400, Beaumont, Tx 77701                                                            One Houston Center, 1221 McKinney, Ste. 2800, Houston, Tx 77010

 IL BASIS OF JURISDICTION                                     (Place   an   "X" in One Box Only)                         III. CITIZENSHIP OF PRINCIPAL PARTIES(Plece an                                       "X" in One Box for Plaintiff
                                                                                                                                 (For Diversity Cases Only)                                            and One Box for Defendant)
 CI 1       U.S. Government                 X 3 Federal Question                                                                                                PTP     DEE                                            PTF      DEF
               Plaintiff                          (U.S. Government Not                          a   Party)                  Citizen of This State               0 1     0 1       Incorporated or Principal Place       0 4      0 4
                                                                                                                                                                                  of Business In This State

 0 2        U.S. Government                 0 4        Diversity                                                            Citizen of Another State            0 2     CI    2                            Place
                                                                                                                                                                                  Incorporated and Principal               0     5     o 5
               Defendant                                                                                                                                                            of Business In Another State
                                                         (Indicate   Citizenship of Parties in Item Ill)
                                                                                                                            Citizen or   Subject of a           0 3     CI    3   Foreign Nation                           0     6     0 6
                                                                                                                              Foreign Country
 TV         N A TT RR rIF SUIT                                                       (-1,11u1


itA::::"!-CON.TRAOT.I-11''...           :I::.1..;-1-4IIMMI:34:1:IsTORT,SIT1I:PMPI:tIII:IVI-M:N-:::::,                         FORFEITURE1PENIAUPY                 I';I:Inn1:ITTANKRUPTCYbIngI :-IRII4LIOTHERISTATUTESIi:W
 O    110 Insurance                         PERSONAL INJURY                                 PERSONAL INJURY                 CI 610 Agriculture                    0 422 Appeal 28 USC 158             0 400 State      Reapportionment
 O    120 Marine                        0   310      Airplane                            CI 362 Personal Injury             0 620 Other Food & Drug               CI 423 Withdrawal                   0   410   Antitrust
 O    130 Miller Act                    0   315      Airplane Product                           Med. Malpractice            0 625 Drug Related Seizure                   28 USC 157                   0   430   Banks and Banking
 CI   140 Negotiable Instrument                      Liability                           0 365 Personal Injury                     of Property 21 USC 881                                             0   450   Commerce
 O    150 Recovery of Overpayment 0         320 Assault, Libel &                                Product Liability           0 630 Liquor Laws                         PROlRTY.BR*1TSr                 0   460   Deportation
      &Enforcement ofludgrnent                  Slander                                  0 368 Asbestos Personal            0 640 R.R. & Truck                    0 820 Copyrights                    0   470   Racketeer Influenced and
O 151 Medicare Act               0          330 Federal Employers'                              Injury Product              0 650 Airline Regs.                   X 830 Patent                                  Corrupt Organizations
O 152 Recovery of Defaulted                          Liability                                          Liability           0 660 Occupational                    0 840 Trademark 0                       480 Consumer Credit
      Student Loans              0          340 Marine                                    PERSONAL PROPERTY                        Safety/Health                                  0                       490 Cable/Sat TV
      (Excl. Veterans)           0          345 Marine Product                           0 370 Other Fraud        0 690 Other                                                     CI                      810 Selective Service
O 153 Recovety of Overpayment                        Liability                           0 371 Truth in Lending           :tV,ILABORI.:".:I:H:/..:-.. ::!::.:SOCIALSECURIIIY::: 0                         850   Securities/Commodities/
      of Veteran's Benefits      0          350 Motor Vehicle                            CI 380 Other Personal    0 710 Fair Labor Standards          0 861 H1A (1395ft)                                        Exchange
O 160 Stockholders' Suits        0          355 Motor Vehicle                                   Property Damage         Act                           0 862 Black Lung (923)      0                       875 Customer Challenge
O 190 Other Contract                            Product Liability                        Et 385 Property Damage   0 720 Labor/Mgmt. Relations          CI 863 DIWCIDIWW (405(g))                              12 USC 3410
O 195 Contract Product Liability 0          360 Other Personal                                  Product Liability 0 730 Labor/Mgint.Reporting         0 864 SSID Title XVI        0                       890 Other Statutory Actions
O 196 Franchise                                      Injury                                                            & Disclosure Act               0 865 RSI (405(g))          0                       891 Agricultural Acts
IL:4:,
  -.MREALTROPERTYNOW                             CIYIDRIGHTSM,                           i'PRISONERADIMITIONS9 0 740 Railway Labor Act                .N'€'..:TEDERALTMCSUITSit   0                       892 Economic Stabilization Act
0 210 Land Condemnation          0          441      Voting                              0 510 Motions to Vacate  0 790 Other Labor Litigation        0 870 Taxes (U.S. Plaintiff 0                       893 Environmental Matters
0 220       Foreclosure                 0   442      Employment                                 Sentence          0 791 Empl. Ret. Inc.                        or Defendant)      0                       894 Energy Allocation Act
0 230       Rent Lease & Ejectment      0   443      Housing/                                Habeas Corpus:             Security Act                  I:1 871 IRS—Third Party     0                       895 Freedom of Information
0 240       Torts to Land                         Accommodations                         0 530 General                                                         26 USC 7609                                      Act
0 245       Tort Product Liability      0   444 Welfare                                  0 535 Death Penalty      •IXrIMMIGRATION-WV                                              0                       900Appeal     of Fee Determination
0 290       All Other Real Property     0   445 Amer. w/Disabilities                     0 540 Mandamus & Other 0 462 Naturalization Application                                                                Under Equal Access
                                                  Employment                             0 550 Civil Rights       0 463 Habeas Corpus                                                                           to Justice
                                        O   446 Amer. w/Disabilities                     0 555 Prison Condition        Alien Detainee                                             0                       950   Constitutionality of
                                               Other                                                              0 465 Other Immigration                                                                       State Statutes
                                        O   440 Other Civil Rights                                                     Actions




V. ORIGIN                       (Place an "X" in One Box Only)                                                                                                                                                         Appeal to District
IR 1 Original                 CI 2 Removed from             0 3                        Remanded from                0 4 Reinstated         or    0
                                                                                                                                                          Transferred from
                                                                                                                                                                                  El 6 Multidistrict                   Judge from
                                                                                                                                                          another district                                             Magistrate
            Proceeding               State Court                                       Appellate Court                      Reopened                      faneciM                        Litigation                    Judgment
                                                                                                                                                                                      diversity):
VI. CAUSE OF ACTION
                                             I'1c
                                             I
                                               Cite the U.S. Civil Statute under which you are
                                                     II Cr RR 971 and 281.-285
                                                                            .P-• I        kJ.
                                                                                                                          filing (Do   not cite jurisdictional statutes unless


                                             I Brief description of cause:
                                             I    Infrinaement of United States Patent No. 6.199.076 and United States Patent No. 7.509.178
VII.           REQUESTED IN                      U CHECK IF MIS IS A CLASS ACTION           DEMAND                      CHECK YES only if demanded in complaint:

            COMPLAINT:                                  UNDER F.R.C.P. 23                                                                                                     JURY DEMAND:                 PC    Yes       0 No

VIII. RELATED                   CASE(S)              (See instructions):
               IF ANY                                                                   JUDGE                Ron Clark                                                DOCKET NUMBER                Case No. 9:09-cv-00111-RC

DATE                                                                                                SIGNATURE OF ATTO Z,IEY OF RECORD

   07/2012011
FOR OFFICE USE ONLY


      RECEIPT 4                       AMOUNT                                                         APPLYING IFP                                       JUDGE                             MAG. JUDGE

				
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