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UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA ALEXANDRIA DIVISION AOL LLC and PLATFORM-A, INC., . . Plaintiffs, . . vs. . . ADVERTISE.COM, INC. f/k/a . INTERNEXT MEDIA CORP., . . Defendant. . . . . . . . . . . . . . Civil Action No. 1:09cv910

Alexandria, Virginia September 18, 2009 10:20 a.m.

TRANSCRIPT OF MOTION HEARING BEFORE THE HONORABLE LEONIE M. BRINKEMA UNITED STATES DISTRICT JUDGE APPEARANCES: FOR THE PLAINTIFFS: LEE J. EULGEN, ESQ. Neal, Gerber & Eisenberg LLP 2 N. LaSalle Street, Suite 1700 Chicago, IL 60602-3801 and ROBERT M. TYLER, ESQ. McGuireWoods LLP One James Center 901 East Cary Street Richmond, VA 23219-4030 and JODIE HERRMANN, ESQ. McGuireWoods LLP 1750 Tysons Blvd., Suite 1800 McLean, VA 22102

(APPEARANCES CONT'D. ON PAGE 2)

(Pages 1 - 16) COMPUTERIZED TRANSCRIPTION OF STENOGRAPHIC NOTES

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APPEARANCES:

(Cont'd.) ANDREW H. SELESNICK, ESQ. BRETT A. GARNER, ESQ. (by telephone) TORIN A. DORROS, ESQ. (by telephone) Michelman & Robinson, LLP 15760 Ventura Boulevard, 5th Floor Encino, CA 91436 and RAJESH C. NORONHA, ESQ. S. LLOYD SMITH, ESQ. Buchanan Ingersoll & Rooney, PC 1737 King Street, Suite 500 Alexandria, VA 22314-2727 ANNELIESE J. THOMSON, RDR, CRR U.S. District Court, Fifth Floor 401 Courthouse Square Alexandria, VA 22314 (703)299-8595

FOR THE DEFENDANT:

OFFICIAL COURT REPORTER: 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Robinson. THE COURT: THE CLERK: Advertise.com, Inc. for the record. THE COURT:

P R O C E E D I N G S Civil Action 09-910, AOL LLC, et al. v. Would counsel please note their appearances

All right.

Now, counsel for AOL should be

over here on my left, counsel for the defendant on the right. MR. EULGEN: Good morning, Your Honor. Lee Eulgen from

Neal, Gerber & Eisenberg, admitted pro hac vice, on behalf of AOL. THE COURT: THE CLERK: MR. GARNER: Wait just one second. Hello? Yes. This is Brett Garner from Michelman &

All right.

Now, hold on again.

Now,

counsel for plaintiffs, reintroduce yourselves, please. MR. GARNER: THE COURT: Yes. No.

Is it working or not? THE CLERK: THE COURT: introduce yourselves. MR. EULGEN: THE COURT: the microphone. MR. EULGEN: admitted pro hac vice. My name is Lee Eulgen, Your Honor. I'm Thanks, Your Honor. And at the lectern. You need to be up by Yes. All right. Counsel for AOL, please

I'm from a firm called Neal, Gerber &

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Eisenberg in Chicago. THE COURT: MR. TYLER:

I'm representing AOL. All right. Anybody else for AOL? Robert Tyler from

Good morning, Your Honor.

the law firm of McGuireWoods. THE COURT:

With me is Jodie Herrmann.

Good morning.

All right, now for the defendant, Advertise.com, Inc., who's local counsel? MR. NORONHA: Good morning, Your Honor. I'm Rajesh

Noronha from Buchanan Ingersoll & Rooney. THE COURT: MR. NORONHA: All right. I'm here with my colleagues, Lloyd Smith

from Buchanan Ingersoll, admitted pro hac vice, and Mr. Andrew Selesnick from Michelman & Robinson, also admitted pro hac vice. THE COURT: MR. GARNER: THE COURT: MR. GARNER: MR. DORROS: THE COURT: All right. And counsel from California?

Yes, Your Honor. All right. We need you to --

It's Greg Garner from Michelman & Robinson. And Torin Dorros. All right. Now, gentlemen, it's a little Can you hear us?

difficult hearing you, so you need to speak up. MR. GARNER: THE COURT: Yes, we can. All right, very good.

All right, counsel, you can have a seat. The motion that we have on the docket today is the plaintiffs' motion for a permanent injunction against the

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proceeding with the later-filed California action.

Before I even

address the motion, I want to know how close, if at all, you-all came this summer to resolving the dispute that ultimately has wound up in two federal courts. I mean, I know from your papers

that there was an attempt after a cease and desist letter was communicated, you-all got together, you had an agreement that nothing would be filed in court until a certain date this summer, and then there were efforts made to resolve whatever the dispute is here. Did you get close to resolution? MR. EULGEN: THE COURT: May I address that, Your Honor? Yes. And because we have counsel

participating by phone, give your name again for the record so they know who's speaking. MR. EULGEN: Of course, Your Honor. Lee Eulgen again

from Neal, Gerber & Eisenberg. not that close.

Candidly, Your Honor, I would say

I mean, we certainly made a good faith effort to You know, Mr. Garner, who's also on the

resolve the matter.

phone, he and I had several conversations during that forbearance period that you spoke of. Unfortunately, we weren't able to

achieve very much traction. You know, a significant issue for AOL, Your Honor, has been all the while that, you know, we were talking settlement, additional instances of actual confusion were popping up. Subsequently, we tried to put our parties together. We had a

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further conversation between counsel and parties that proved to be unfruitful as well, Your Honor. THE COURT: All right. Well, now, I'm rather curious.

From the pleadings that I've read, unless I misunderstand the record, is it correct that Advertise.com has been around for a while? MR. SMITH: Yes, Your Honor. If you're asking if

Advertise.com in its -- I'm Lloyd Smith for, obviously, for Advertise.com. THE COURT: MR. SMITH: All right. If you're asking if Advertise.com in its

current incarnation has been around for a long time, the answer to that is that our client rolled out Advertise.com in April of this year, but Advertise.com as far as the domain name has been around for more than a decade. THE COURT: All right. So the domain name was

registered over a decade ago. MR. SMITH: Yes, Your Honor. California counsel can

correct me if I misunderstand the fact pattern, but I believe it was registered in the mid-'90s. THE COURT: Was it used? Was there an actual Web site

where it was being used, there was business being conducted using that name? MR. SMITH: Yes, Your Honor. I do believe there was

some use, although I cannot represent to the Court the nature of

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that use. THE COURT: All right. So then, so that I understand

the record, Advertise.com as an active Web site, that is, where business is being conducted, services are being sold or offered or whatever, did not actually get up and running until the spring of 2009? MR. SMITH: question, Your Honor. I want to make sure I understand your Our -- Advertise.com, the current

defendant, was previously ABCSearch.com, in business -- in the advertising business as ABCSearch.com, then purchased the domain name Advertise.com and rolled out as, under the new name in, I believe, April of this year. So if that answers your question, Your Honor, those are the facts. THE COURT: All right. And then the cease and desist

letter from AOL came when? MR. SMITH: The cease and desist letter, Your Honor, I

believe, is dated July 13. THE COURT: MR. SMITH: All right. And I don't know if there's any evidence in

the record as of yet, but it appears to be pretty clear that we will have evidence that AOL employees attended the Advertise.com roll-out party in April. THE COURT: All right. The problem we have here is at

the end of the day, we're not going to have two federal district

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courts looking at the same case. resources.

It's a total waste of judicial

The only real question is which court is going to do

this case, all right? Now, the only motion, the narrow motion we have on today's docket is the plaintiffs' motion to enjoin defendant from pursuing the case in California. Pending for future resolution

are multiple motions, including a motion to dismiss for lack of personal jurisdiction, but the personal jurisdiction issues, in my view, to a significant degree do inform the environment in deciding the current motion, so in some respects, the case is in a strange posture. The district where the defendant's litigation is currently pending, what's the time frame in terms of how cases are resolved? How is the civil caseload over there, and -- what is

it, it's the Middle District of California -- Central District, right? Central District? (Counsel nodding heads.) THE COURT: All right. Well, how fast is that docket?

What's the likelihood of that case going to trial within the next 12 months? MR. SMITH: on that issue. MR. SELESNICK: Thank you, Your Honor. Andrew Your Honor, I'll defer to California counsel

Selesnick, admitted pro hac vice.

It depends, Your Honor, in I

large part on the particular judge that we're assigned to.

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think 12 to 18 months is probably a reasonable approximation of when the case would end up at trial. depends. It could be longer. It just

But there is a very heavy caseload in the Central

District of California. THE COURT: All right. Now, you understand most likely

this Court would finish the case before California. MR. SELESNICK: understand. THE COURT: That's a strategic decision the defendants I do understand, Your Honor. I do

might want to be thinking about, all right? MR. SELESNICK: THE COURT: Yes, Your Honor. I have another case just

I'm a pragmatist.

like this where I've got two mirror image cases, one here and one in another district, and I made the same spiel to them that I'm going to make to you-all, all right? I think what you should be doing at attorneys is sitting down realistically and looking at where is the best for multiple reasons forum in which to get this issue resolved. both real entities. extortion. You-all are

I don't have a case here of, you know, cyber

I mean, I have apparently a company that's real, that

has been in business, is taking a mark that's been registered for some time, is now using it. I have, of course, AOL, which has been in this court many, many times. There's a real commercial dispute here. It's

not at all inconceivable that you won't ultimately settle, but the

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bottom line is you ought to think about where is the smartest place to get this thing litigated. I'm not going to rule on the plaintiffs' motion today. What I really wanted you-all here for today was to sort of tee this case up and get you-all starting to think realistically about this case. And I'm not trying to hijack a case from California, we're busy enough, but I like to get with attorneys especially when you represent, you know, real ongoing commercial entities and see if we can help you in resolving your dispute, and certainly I would think both sides would have an interest in getting this matter resolved as quickly as possible. It doesn't sound as

though there's a benefit to either side in having this thing, you know, wait. Certainly AOL has been pressing for all sorts of expedited matters, and I've, you know, denied that request at this point, but it might at the end of the day make sense for the defense to consider dismissing the case in California and joining the issues here with a counterclaim or whatever. possibility. If not, what AOL has to think about is I'm intrigued by the personal jurisdiction issues that have been raised by the defense. I'm not -- I haven't prejudged the issue yet, but in That's a

having looked at the papers submitted, so I've looked at what's in the pipeline, I think that's going to be a very interesting

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argument, in particular whether or not this defendant has availed itself purposely sufficiently of this forum to justify being dragged from California here. I don't know much about your client. is your client? MR. SELESNICK: Your Honor, they're expected to -- this How big a company

year I think their projected revenue is about 25 million. THE COURT: Well, compared to AOL then, I mean, it's a

little bit of a David and Goliath, although again, it's not a mom-and-pop shop, either. MR. SELESNICK: THE COURT: Correct.

I would assume that, you know, it's not an

absolute hardship to come to Virginia if it has to to litigate, but it would be less of a hardship for AOL, which has a worldwide presence, to go to California. In any case, I'm giving you some things to think about. If you-all can't come to a resolution, then I'm going to rule at the next hearing, which is sometime in October, when you have the motion to dismiss docketed, I'll rule on this motion as well as those motions. In other words, you'll get a final view of the

case at that point. But what I'm encouraging you-all to do is to think about strategically where you really want to be. you're not going to be in two courts. The bottom line is

At the end of the day,

that's not going to happen, because it's absolutely ridiculous.

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You'd have two courts looking at many of the same issues. There may be some slightly different ones as well in two jurisdictions, but the core of this case, it seems to me, is going to be whether or not the intellectual property which the plaintiff is alleging you are improperly using, whether that's properly registered, whether it belongs to them, whether you're infringing. Those are going to be the same issues in both cases, and it just isn't going to happen that way, all right? MR. SELESNICK: THE COURT: I understand, Your Honor. So is there anything else? I

All right.

think I've made it clear to you what I want you to be thinking about. Yes. MR. EULGEN: May I address a couple of the issues raised

by the Court very quickly, Your Honor? THE COURT: MR. EULGEN: Yes. You asked a question before about timing I mean, I agree with what

regarding their use of the mark. counsel said. in late April. at that time.

Their adoption of Advertise.com as a mark occurred They rolled it out at a trade show in California

I mean, one thing that's important to note is that although the domain name had been registered for some time before that, they didn't own it, and Advertise.com was not being used in a trademark capacity by the prior owners. They acquired the

domain name in or about January of this year and then ultimately

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rebranded themselves as Advertise.com in April, but I think that's a critical distinction, because we're not suing over the domain name. We're suing over their use of Advertise.com as a mark.

That's what's causing confusion in the marketplace. THE COURT: MR. EULGEN: All right. It's a very important distinction and, I

think, a distinction that is given credence under the law. THE COURT: I think you should also think about I don't see

"advertise" and "advertising" may be pretty close. the Ad.com at all.

So again, in thinking about how to tee up this

litigation, you know, that's not before me, but I suggest you take a careful look at that particular issue as well. MR. EULGEN: Thank you, Your Honor. We will.

If I can just address personal jurisdiction, one question you raised before is whether their Web site is interactive. Obviously, we haven't had the opportunity to respond

to their motion to dismiss for lack of personal jurisdiction yet. THE COURT: MR. EULGEN: Right. We will in due course. Today we're serving

them with discovery to try to resolve that issue once and for all. I mean, two really important points, Your Honor, with respect to their moving papers, well, both with respect to this motion and with respect to their motion to dismiss for lack of personal jurisdiction: They've provided a couple evidentiary

affidavits in support of those motions, in support of the notion

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that somehow they're not subject to jurisdiction here in Virginia. Two really, really critical admissions -THE COURT: I don't mean to argue with you, but we're

going to address the motion to dismiss for lack of personal jurisdiction in a week or two. I have other matters pending, and

there's no sense in arguing it now, because it's not been fully teed up. I'm not ruling on your current motion that's noticed for today, because it's too interwoven, in my view, with personal jurisdiction issues, and furthermore, strategically, as I said earlier, you-all need to sit and think about whether you can even resolve this issue as to where the case is going to be litigated; that's all. If you can't, then one of us -- you know, I'll have

to rule on it next week or in two weeks. Thank you. MR. EULGEN: MR. SMITH: Understood, Your Honor. Thank you.

Your Honor, I understand that you don't want

to hear any comment on substantive issues. THE COURT: this morning. MR. SMITH: Yes, Your Honor. We'd just like to briefly I don't. I have other things I've got to do

address scheduling, because right now the preliminary injunction motion and the motion to dismiss are currently scheduled to be heard the same day, October 29, and we believe that the personal jurisdiction issues are threshold issues that should be heard

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first, and we would ask the Court to continue the date for the preliminary injunction motion hearing by a week or two so that we could focus on the personal jurisdiction issues, the threshold issues before this Court, and then also we'd like to not waste judicial resources or the client's resources. We'd like to respond to their motion for a preliminary injunction a few days after the Court's ruling on the personal jurisdiction issues, if Your Honor would be open to accepting such a schedule. THE COURT: California litigation? MR. SMITH: Is there a similar pending motion in the Has AOL answered in that litigation? No, they have not, Your Honor. There are no

pending motions in the California litigation. THE COURT: of resources. I think that makes sense. It's a good use

You work it out among yourselves when to re-notice

the preliminary injunction motion, all right? MR. SMITH: Would it also be acceptable to stretch out

the briefing schedule a little bit, Your Honor, for -THE COURT: MR. SMITH: For what? For the preliminary injunction motion until

after the motion to dismiss has been heard? THE COURT: No, because, I mean, if the case stays here,

the plaintiffs' argument is that, you know, each day that the Web site is up, it may be suffering irreparable injuries, although at the same time, we have to look at the new approach to preliminary

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injunctions. There's -- the clear signals from the Supreme Court of the United States are that they're not going to be as easily attainable as they perhaps used to be in the past, although again this is an area of the law where there is a lot of case law that indicates, you know, if you're inappropriately using the mark with another party, that that's beyond just a monetary damage issue, and it may be the area where there still really is no change in the landscape for preliminary injunctions. You-all work it out, see if you can. I'm really going

to encourage you to try to work things out as responsible counsel. I really need to keep this docket moving on. MR. SMITH: I understand, Your Honor. Thank you.

(Which were all the proceedings had at this time.)

CERTIFICATE OF THE REPORTER I certify that the foregoing is a correct transcript of the record of proceedings in the above-entitled matter.

/s/ Anneliese J. Thomson


				
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