alg Doc 3784 Filed 05/24/13 Entered 05/24/13 15:01:12 Main Document Pg 1 of 37 ) ) ) ) ) ) )

Transcription

1 Pg 1 of 37 UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK In re: EASTMAN KODAK COMPANY, et al., 1 Debtors. ) ) ) ) ) ) ) Bankruptcy Case No (ALG) DECLARATION OF TIMOTHY Q. DELANEY IN SUPPORT OF DEBTORS OBJECTION TO THE MOTION OF GLOBAL DIGITAL FORENSICS, INC. FOR ENTRY OF AN ORDER ALLOWING AND COMPELLING IMMEDIATE PAYMENT OF AN ADMINISTRATIVE EXPENSE CLAIM PURSUANT TO 11 U.S.C. 105(a), 503(b) AND 507(a) TIMOTHY Q. DELANEY declares: 1. I am a member of the Bar of the State of Illinois and an employee of Brinks Hofer Gilson & Lione ( Brinks ). I served as lead counsel for Eastman Kodak Company ( Kodak ) in several patent infringement actions pertaining to smartphones and tablets against Apple Inc. and HTC Corporation in the U.S. District Court for the Western District of New York and the U.S. International Trade Commission ( ITC ) and against Samsung Electronics Company, Ltd. in the U.S. District Court for the Western District of New York. Eastman Kodak Co. v. Apple Inc., No. 6:12-cv MAT (W.D.N.Y. filed Jan. 10, 2012); Eastman Kodak Co. v. HTC Corp., No. 6:12-cv MAT (W.D.N.Y. filed Jan. 10, 2012); Eastman Kodak Co. v. 1 The Debtors in these chapter 11 cases, along with the last four digits of each Debtor s federal tax identification number, are: Eastman Kodak Company (7150); Creo Manufacturing America LLC (4412); Eastman Kodak International Capital Company, Inc. (2341); Far East Development Ltd. (2300); FPC Inc. (9183); Kodak (Near East), Inc. (7936); Kodak Americas, Ltd. (6256); Kodak Aviation Leasing LLC (5224); Kodak Imaging Network, Inc. (4107); Kodak Philippines, Ltd. (7862); Kodak Portuguesa Limited (9171); Kodak Realty, Inc. (2045); Laser-Pacific Media Corporation (4617); NPEC Inc. (5677); Pakon, Inc. (3462); and Qualex Inc. (6019). The location of the Debtors corporate headquarters is: 343 State Street, Rochester, NY SC1:

2 Pg 2 of 37 Samsung Electronics Co., Ltd., 6:12-cv MAT (W.D.N.Y. filed Jan. 18, 2012); In the Matter of Certain Devices for Capturing and Transmitting Images and Components Thereof, ITC Inv. No. 337-TA-831 (ITC filed Jan. 10, 2012) (the ITC 831 Investigation ). 2. I submit this declaration in support of the Debtors Objection to the Motion of Global Digital Forensics, Inc. ( GDF ) for Entry of an Order Allowing and Compelling Immediate Payment of an Administrative Expense Claim Pursuant to 11 U.S.C. 105(a), 503(b) and 507(a) [Docket No. 3691]. 3. The facts and statements set forth in this declaration, unless otherwise indicated, are based upon my personal knowledge, my review of relevant documents and information provided to me or verified by the Debtors or the Debtors other professional advisors. 2 If called upon to testify, I would testify competently to the facts set forth herein. Retention of GDF 4. In August 2012, Brinks retained certain experts at GDF, on behalf of Kodak, to perform certain expert services in connection with then pending district court and ITC actions involving Apple Inc. and HTC Corporation, and a pending district court action against Samsung Electronics Company, Ltd. Brinks entered into two agreements with GDF retaining a total of three experts (together, the Engagement Letters ). The first agreement was dated August 7, 2012 and signed August 9, This agreement is attached hereto as Exhibit 1. The second agreement was dated August 29, 2012 and signed August 30, 2012 and September 4, This agreement is attached hereto as Exhibit 2. 2 Certain statements herein relate to matters within the personal knowledge of other Brinks attorneys and are based on information provided by them. -2- SC1:

3 Pg 3 of 37 GDF s Untimely and Unusable Work Product 5. GDF was retained to provide two expert reports regarding the source code of devices that allegedly infringed Kodak s patents. The first report concerned U.S. Patent No. 6,292,218 (the 218 Patent ). The second report concerned U.S. Patent Nos. 7,210,161, 7,453,605, 7,742,084 and 7,936,391 (the ITP Patents ). The initial deadline for the expert reports in the ITC 831 Investigation was October 24, In order to permit sufficient time for attorney review, Brinks directed GDF to provide a draft of the expert reports in early October Neither report was completed nor was Brinks or Kodak ever provided usable work product. GDF failed to perform as agreed with Brinks in accordance with the terms of the Engagement Letters. A. Expert Report for the 218 Patent 6. GDF failed to deliver a draft of the expert report for the 218 Patent in early October When confronted by Brinks, GDF promised Brinks on October 11, 2012 a draft of the report by October 17 and a final version of the report by October 19. GDF did not deliver the expert report on either date. While it had become clear that GDF would not be able to deliver the expert report for the 218 Patent in time for the October 24 deadline, GDF obtained a temporary reprieve when the ITC extended the October 24 deadline first until November 14 and then until November 26. Yet, even with these extensions, GDF still failed to deliver a complete, accurate and timely work product. 7. GDF finally provided Brinks with a draft of the expert report for the 218 Patent on November 8, The report was severely deficient and required a significant amount of revision. Given that the draft report was unusable, on November 16, Brinks requested that GDF focus only on two particular issues (a subset of the original analysis) with respect to -3- SC1:

4 Pg 4 of 37 the 218 Patent expert report. GDF did not provide Brinks with its detailed analysis on those two limited issues until just two hours before the filing deadline on November 26. The analysis was woefully deficient and was provided far too late to be useful. Ultimately, GDF s work with respect to the 218 Patent could not be (and was not) submitted to the ITC. B. Expert Report for the ITP Patents 8. GDF s work on the expert report for the ITP Patents was similarly unacceptable. On September 10, 2012, GDF threatened a work stoppage and walked off the assignment in the evening because they insisted on a purchase order to authorize additional hours of work. The following day, on September 11, GDF informed Brinks that GDF would return to the assignment in a day or two. Shortly after GDF returned to the assignment, on September 19, Brinks learned that one of the GDF experts tasked with writing the expert report for the ITP Patents, Vincent Risalvato, arrived late each day, sometimes by hours, to a source code review room set up by Microsoft Corporation ( Microsoft ). Brinks also learned that Mr. Risalvato spent a significant amount of time away from a computer that Microsoft made available to him to review source code. Brinks later had trouble convincing the ITC and Microsoft that GDF needed additional time with the source code when Mr. Risalvato had not used all of his allotted time to review the source code. 9. On October 8, 2012, GDF promised to deliver a draft of the expert report for the ITP Patents on the evening of October 9. On October 10, after failing to deliver a draft of the report on October 9, GDF threatened a second work stoppage on the basis that GDF spent the hours in the first purchase order and needed a new purchase order to authorize additional hours. Brinks subsequently learned that GDF was far behind on both expert reports and could not have provided a draft report on October 9, SC1:

5 Pg 5 of In view of the pending October 24 deadline for expert reports, Brinks requested a draft of the ITP Patents expert report on October 17. No draft report was received on October 17. After more than another two weeks of delay, on November 2, 2012, David Bluestone, a Brinks attorney, demanded that Mr. Risalvato provide any existing draft ITP Patents report that day, noting [i]f I do not receive anything, I will understand that there is no work product from your company. (Exhibit 3, Bluestone Nov. 2, at 12:45 p.m.) Nothing was received. Ultimately, Brinks did not receive a draft of the ITP Patents expert report until November 7, 2012, two weeks after the original October 24 deadline. The continual delay contributed to Kodak seeking an extension from the ITC. When finally received, the report was severely deficient and failed to include key pieces of information that Brinks discussed with GDF in early October. 11. At that point it became clear that Brinks would need to seek assistance from another expert who was working on other expert tasks in the ITC matter, Frank Zdybel from Johnson Laird Inc. On November 7, a Brinks attorney traveled with Mr. Zdybel to San Francisco to facilitate completing the report in the limited time remaining. From November 7 through November 12, the second expert traced the source code that GDF failed to trace. GDF s repeated failures to execute on the tasks it was retained to perform caused Kodak to incur supplemental expert fees and expenses by having to engage a second expert to perform the same work, as well as increased legal fees from Brinks attorneys required to intervene. 12. On November 14 and 15, GDF provided Brinks with several flow charts for the expert report. The flow charts could not be used, however, because GDF failed to provide usable narratives for the flow charts. On November 20, GDF provided additional flowcharts and narratives. The materials contained numerous errors and GDF had still failed to -5- SC1:

6 Pg 6 of 37

7 Pg 7 of 37

8 Pg 8 of 37

9 Pg 9 of 37

10 Pg 10 of 37

11 Pg 11 of 37

12 Pg 12 of 37

13 Pg 13 of 37

14 Pg 14 of 37

15 Pg 15 of 37

16 Pg 16 of 37

17 Pg 17 of 37

18 Pg 18 of 37

19 Pg 19 of 37

20 Pg 20 of 37

21 Pg 21 of 37

22 Pg 22 of 37

23 Pg 23 of 37

24 Pg 24 of 37

25 Pg 25 of 37

26 Pg 26 of 37

27 Pg 27 of 37

28 Pg 28 of 37

29 Pg 29 of 37

30 Pg 30 of 37

31 Pg 31 of 37

32 Pg 32 of 37

33 Pg 33 of 37

34 Pg 34 of 37

35 Pg 35 of 37

36 Pg 36 of 37

37 Pg 37 of 37