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UNITED STATES DISTRICT COURT EASTERN DISTRICT OF TEXAS SHERMAN DIVISION FRITO-LAY NORTH AMERICA, INC., Plaintiff, v. MEDALLION FOODS, INC. and RALCORP HOLDINGS, INC., Defendants. Case No. 4:12-CV-00074-ALM

JOINT FINAL PRE-TRIAL ORDER This cause came before the court at a pre-trial management conference held on February 8, 2013, pursuant to Local Rule CV-16 and Rule 16 of the Federal Rules of Civil Procedure. A. COUNSEL FOR THE PARTIES Plaintiff Frito-Lay North America, Inc.: Timothy S. Durst (State Bar No. 00786924), Russell J. Crain (State Bar No. 24045717), Susan Cannon Kennedy (State Bar No. 24051663) of BAKER BOTTS L.L.P.; and Clyde M. Siebman (State Bar No. 18341600) of SIEBMAN, BURG, PHILLIPS & SMITH, LLP. Defendants Medallion Foods, Inc. and Ralcorp Holdings, Inc.: David W. Harlan, B. Scott Eidson, and Mark A. Thomas of ARMSTRONG TEASDALE LLP; T. John Ward, Jr. (State Bar No. 00794818) and Wesley Hill (State Bar No. 24032294) of WARD & SMITH LAW FIRM.

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B.

STATEMENT OF JURISDICTION This Court has concluded that it has personal jurisdiction over Defendants. See Order

Denying Defendants Motion to Dismiss (March 30, 2012) (Dkt. 42). Defendants have disputed personal jurisdiction. The Court has subject matter jurisdiction under 15 U.S.C. 1121 and 28 U.S.C. 1331, 1332, and 1338 over causes of action that arise under federal law and supplemental jurisdiction under 28 U.S.C. 1367 over the state law causes of action. C. NATURE OF ACTION Frito-Lay asserts claims in this action for trademark infringement, trade dress infringement, unfair competition and dilution under the United States Trademark (Lanham) Act, 15 U.S.C. 1051, et seq. (as amended); for willful patent infringement under the patent laws of the United States, 35 U.S.C. 271 et seq.; for trademark dilution under Texas Business and Commerce Code 16.29; for trademark infringement, misappropriation of trade secrets, unfair competition by simulation of appearance of goods, misappropriation of time, labor, skill, and money, and unjust enrichment under common law; and for misappropriation of trade secrets in violation of Texas Civil Practice and Remedies Code 134.002(2). Defendants bring counterclaims for inequitable conduct in the prosecution of the patentin-suit and for declaratory judgments that Frito-Lays asserted registered trademark should be canceled as functional and/or abandoned, that Frito-Lays asserted patent is not infringed, that Frito-Lays asserted patent is invalid, and that there has been no federal or Texas common law trademark dilution, trademark or trade dress infringement, unfair competition, unjust enrichment, or trade secret misappropriation.

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D.

CONTENTIONS OF THE PARTIES The parties set forth below a summary of their contentions for trial. The parties do not

necessarily agree with each others contentions and reserve all objections. Frito-Lay contends: 1. Defendants have misappropriated Frito-Lays trade secrets under common law. 2. Defendants have misappropriated Frito-Lays time, labor, skill, and money under common law. 3. Defendants have misappropriated Frito-Lays confidential, proprietary, and trade secret information by unlawfully appropriating property. Tex. Civ. Prac. & Rem. Code 134.002(2). 4. Defendants have committed theft of trade secrets as defined in the Act and Texas Penal Code 31.05(b). 5. Defendants infringed Frito-Lays federally registered TOSTITOS SCOOPS! product design in violation of 15 U.S.C. 1114. 6. Defendants trademark infringement has been willful and in bad faith, making this an exceptional case under 15 U.S.C. 1117. 7. Defendants overall chip design and BOWLZ packaging constitute trade dress infringement and unfair competition in violation of 15 U.S.C. 1125(a). 8. Defendants trade dress infringement has been willful and in bad faith, making this an exceptional case under 15 U.S.C. 1117. 9. Defendants overall chip design constitutes a likelihood of dilution of the distinctive quality of the TOSTITOS SCOOPS! shape in violation of 15 U.S.C. 1125(c).

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10. Defendants have infringed Frito-Lays U.S. Patent No. 6,610,344 (the 344 Patent) under 35 U.S.C. 271. 11. Defendants patent infringement has been willful, entitling Frito-Lay to enhanced damages under 35 U.S.C. 284. 12. Defendants overall chip design and BOWLZ packaging constitute trademark infringement under the common law of Texas. 13. Defendants conduct constitutes trademark dilution under the common law of Texas, as it is likely to dilute, blur and/or tarnish the distinctive qualities of the TOSTITOS SCOOPS! product design in violation of Section 16.29 of the Business and Commerce Code of the State of Texas. 14. Defendants acts constitute unfair competition by simulation of appearance of goods under common law. 15. Because of their unlawful conduct, Defendants hold in constructive trust for Frito-Lay all issued patents, patent applications, trade secrets, and other assignable intellectual property that were derived, in whole or in part, from Frito-Lays technology, trade secrets, or other proprietary information. Frito-Lay asks the Court to order Defendants to assign to Frito-Lay any issued patents, patent applications, trade secrets, and other assignable intellectual property that were derived, in whole or in part, from Frito-Lays technology, trade secrets, or other proprietary information. 16. Defendants have been unjustly enriched at Frito-Lays expense. 17. The Court should enjoin Defendants from using or licensing or authorizing others to use Defendants Design and Trade Dress or any other mark or trade dress that is confusingly similar to Frito-Lays TOSTITOS SCOOPS! product design and/or packaging in

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connection with the promotion, advertising, manufacture, distribution, offering for sale, or sale of any tortilla chips, including any further manufacture, sale, or distribution of BOWLZ tortilla chips. Frito-Lay also asks the Court to enjoin Defendants from using manufacturing processes that infringe the 344 Patent. 18. Defendants should be preliminarily and permanently enjoined and restrained from using, licensing or authorizing the use of, or seeking to register any mark or dress that is confusingly similar to the TOSTITOS SCOOPS! product design or packaging, or any other symbols or indicia associated with Frito-Lay and/or confusingly similar to the TOSTITOS SCOOPS! product design or packaging, or likely to dilute the distinctiveness thereof, as, or as part of, a trademark, trade dress, or other identifier, including any further manufacture, sale, or distribution of BOWLZ or CUPZ tortilla chips, regardless of the packaging. 19. Defendants should be preliminarily and permanently enjoined and restrained from using manufacturing processes that infringe the 344 Patent. 20. Defendants should be ordered to file with the Court and serve upon Frito-Lays counsel within thirty (30) days after entry and service on Defendants of an injunction, a report in writing under oath setting forth in detail the manner and form in which Defendants have complied with the requirements of the injunction. 21. Unless enjoined, Defendants will continue to infringe Frito-Lays trademark-in-suit, trade dress, and patent-in-suit, and misappropriate Frito-Lays trade secrets and an injunction to prevent Defendants continued infringement and misappropriation is warranted. 22. Frito-Lay should recover actual and punitive damages from Defendants. 23. This is an exceptional case entitling Frito-Lay to enhanced damages.

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24. An equitable accounting should be directed to determine Defendants profits resulting from their infringement and other activities complained of herein, and that such profits be paid over to Frito-Lay, increased as the Court finds to be just under the circumstances of this case. 25. Frito-Lay is entitled to submit and recover its reasonable attorneys fees as well as the costs of this action upon the conclusion of the jury trial. 26. Frito-Lay is entitled to recover pre- and post-judgment interest and such other and further relief as the Court may deem just and proper. Defendants contend: 1. Frito-Lays product shape trademark is functional and therefore unenforceable under 15 U.S.C. 1115(b)(8) and subject to cancellation under 15 U.S.C. 1064(3). 2. Frito-Lay has abandoned its product shape trademark, and it is therefore unenforceable under 15 U.S.C. 1115(b)(2) and subject to cancellation under 15 U.S.C. 1064(3). 3. Medallions sales of bowl-shaped tortilla chips and its use of the BOWLZ packaging are lawful and do not constitute trademark or trade dress infringement (willful or otherwise), trademark or trade dress dilution, unfair competition, unlawful simulation of appearance of goods, or unjust enrichment under federal and/or Texas law. 4. Medallions manufacturing process for bowl-shaped tortilla chips and the chips it produces do not infringe Frito-Lays 344 Patent, willfully or otherwise. 5. Frito-Lays 344 Patent is invalid, in whole or in part, because the invention claimed in the patent is not patentable under 35 U.S.C. 102 and/or 103. 6. Frito-Lays 344 Patent is unenforceable because Frito-Lay engaged in inequitable conduct before the U.S. Patent and Trademark Office by withholding material

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information about the patentability of the invention claimed in the patent with the specific intent to deceive the U.S. Patent and Trademark Office. 7. Frito-Lay has not properly disclosed a protectable trade secret. 8. Defendants did not misappropriate or use a protectable Frito-Lay trade secret, nor did Defendants engage in any conduct that constitutes misappropriation of Frito-Lays time, labor, skill, and money or a violation of the Texas Theft Liability Act. 9. None of Defendants intellectual property was derived unlawfully from Frito-Lays technology, trade secrets, or other proprietary information. 10. Defendants are entitled to recover reasonable attorneys fees and costs. 11. Defendants are not liable to Frito-Lay under any cause of action or legal theory asserted by Frito-Lay. E. STIPULATIONS AND UNCONTESTED FACTS 1. The 344 Patent, entitled Process for Making a Shaped Snack Chip, was issued by the United States Patent and Trademark Office on August 26, 2003. 2. The asserted claims of the 344 Patent are claims 1, 5-8, 12, and 16. 3. Frito-Lay practices at least one claim of the 344 Patent. 4. United States Trademark Registration No. 2,766,278 (the 278 mark) was issued by the United States Patent and Trademark Office on September 23, 2003. 5. Defendants BOWLZ and CUPZ tortilla chips are sold in Texas. 6. RALMED 287328-337, RALMED 290973, and RALMED 291057-065 are photographs Defendants' counsel took during an inspection of a bag of chips from 1997 like the bags of chips Frito-Lay sold in a BehaviorScan test market in 1997 and made with a process disclosed in U.S. Patent No. 6,129,939.

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7. RALMED 290985-291056 are photographs Defendants' counsel took during an inspection of two bags of TOSTITOS SCOOPS! reference chips on December 19, 2012. F. CONTESTED ISSUES OF FACT AND LAW The parties set forth below their contested issues of fact and law. The parties do not agree that each contested issue listed may be properly raised. The parties reserve all objections. 1. Whether Defendants infringed Frito-Lays 278 mark. 2. Whether Defendants alleged trademark infringement was willful. 3. Whether Frito-Lays 278 mark or trade dress is functional. 4. Whether Frito-Lays 278 mark has been abandoned. 5. Whether Defendants infringed Frito-Lays trade dress. 6. Whether Defendants alleged trade dress infringement was willful. 7. Whether Frito-Lay has protectable rights in its trade dress. 8. Whether Defendants infringed Frito-Lays 344 Patent. 9. Whether Frito-Lay may argue that Defendants infringed the 344 Patent under the Doctrine of Equivalents. 10. Whether Defendants alleged patent infringement was willful. 11. Whether Frito-Lays evidence of alleged willful patent, trademark, or trade dress infringement is sufficient for submission to the jury. 12. Whether Frito-Lays 344 Patent is invalid, in whole or in part, under 35 U.S.C. 102 and/or 103. 13. Whether Frito-Lays 344 Patent is unenforceable as a result of any inequitable conduct. 14. Whether Defendants misappropriated any trade secrets of Frito-Lay. 15. What information Frito-Lay claims is protectable as a trade secret.

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16. Whether whatever information Frito-Lay claims is protectable as a trade secret is protectable as a trade secret. 17. Whether any of the acts Defendants are alleged to have committed constituted misappropriation of Frito-Lays time, labor, skill, and money, unfair competition, theft of trade secrets under the Texas penal code, trademark dilution, unjust enrichment, or any other cause of action or legal theory asserted by Frito-Lay. 18. Whether and to what extent Frito-Lay is entitled to actual, punitive, equitable, enhanced, or other damages. 19. Whether Frito-Lay is entitled to injunctive relief. 20. Whether Defendants are entitled to declaratory relief. 21. Whether Frito-Lay is entitled to recover pre- and post-judgment interest. 22. Whether Frito-Lay is entitled to recover reasonable attorneys fees and costs and, if so, in what amount. 23. Whether Defendants are entitled to recover reasonable attorneys fees and costs and, if so, in what amount. For purposes of narrowing issues for trial, Frito-Lay does not intend to assert that Defendants misappropriated the following information: (1) the percentage of moisture of Frito-Lays tortilla chips going into the oven; (2) the information discernible from the nutritional panel of TOSTITOS SCOOPS!; (3) how Frito-Lay sets the cook times for its tortilla chips; (4) the type of process control sensors used by Frito-Lay to make tortilla chips; (5) the vendor that supplies Frito-Lays process control sensors; and (6) that Frito-Lay uses near infrared technology on its corn processing lines. The parties dispute whether Defendants may introduce evidence and

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cross-examine witnesses concerning Frito-Lays change of position regarding the foregoing items. G. LIST OF WITNESSES Frito-Lays witness list is attached as Exhibit A and deposition designations are attached as Exhibit B. Defendants witness list is attached as Exhibit C, their deposition designations as Exhibit D, and their designations of discovery responses as Exhibit E. H. LIST OF EXHIBITS Frito-Lays exhibit list is attached as Exhibit F. Defendants exhibit list is attached as Exhibit G. I. LIST OF ANY PENDING MOTIONS Defendants Motion for Leave to File Daubert Motion (filed January 9, 2013) (Dkt. 190). J. PROBABLE LENGTH OF TRIAL The probable length of trial is 10-12 days. K. MANAGEMENT CONFERENCE LIMITATIONS The following limitations were agreed upon by the parties and are reflected in the Joint Conference Report (filed May 14, 2013) (Dkt. 61). Exhibits: Each side is limited to designating 250 exhibits for trial absent a showing of good cause. The parties recently agreed to change this limitation to 275 exhibits per side for trial absent a showing of good cause. Deposition Designations: Each side is limited to designating no more than 10 hours of

deposition testimony for use at trial absent a showing of good cause. As trial approaches, if

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either side needs to designate more than 10 hours, the party may file a motion for leave and show good cause. Witness Lists: In addition to identifying witnesses as will call, may call, or probably will not call, each side shall identify the witnesss employer and topic the witness will address, e.g., John Doe, Acme Corp., invalidity. L. CERTIFICATIONS The undersigned counsel for each of the parties in this action do hereby certify and acknowledge the following. (1) (2) . (3) Full and complete disclosure has been made in accordance with the Federal Rules of Civil Procedure and the Courts orders; Discovery limitations set forth in the Federal Rules of Civil Procedure, the Local Rules, and the Courts orders have been complied with and not altered by agreement or otherwise; Each exhibit in the List of Exhibits herein: (a) (b) (c) is in existence; is numbered; and has been disclosed and shown to opposing counsel

SIGNED this 8th day of February, 2013.

___________________________________ AMOS L. MAZZANT UNITED STATES MAGISTRATE JUDGE

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Date: January 22, 2013

Respectfully submitted, /s/_Timothy S. Durst Timothy S. Durst State Bar No. 00786924 tim.durst@bakerbotts.com Russell J. Crain State Bar No. 24045717 russ.crain@bakerbotts.com Susan Cannon Kennedy State Bar No. 24051663 susan.kennedy@bakerbotts.com BAKER BOTTS L.L.P. 2001 Ross Avenue, Suite 600 Dallas, Texas 75201 Telephone: 214-953-6500 Facsimile: 214-953-6503 Clyde M. Siebman SIEBMAN, BURG, PHILLIPS & SMITH, LLP Federal Courthouse Square 300 N. Travis St. Sherman, TX 75090 Telephone: 903-870-0070 Facsimile: 903-870-0066 ATTORNEYS FOR PLAINTIFF FRITO-LAY NORTH AMERICA, INC.

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Respectfully submitted, By: /s/ David Harlan (by permission)________ David W. Harlan LEAD ATTORNEY dharlan@armstrongteasdale.com Jennifer E. Hoekel jhoekel@armstrongteasdale.com B. Scott Eidson seidson@armstrongteasdale.com Daniel E. Sakaguchi dsakaguchi@armstrongteasdale.com Mark A. Thomas mathomas@armstrongteasdale.com Timothy D. Krieger tkrieger@armstrongteasdale.com Zachary C. Howenstine zhowenstine@armstrongteasdale.com ARMSTRONG TEASDALE LLP 7700 Forsyth Blvd., Suite 1800 St. Louis, Missouri 63105 (314) 621-5070 (telephone) (314) 621-5065 (facsimile) and

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T. John Ward State Bar No. 20848000 tjw@wsfirm.com T. John Ward, Jr. State Bar No. 00794818 jw@wsfirm.com Wesley Hill State Bar No. 24032294 wh@wsfirm.com Claire Abernathy Henry State Bar No. 24053063 claire@wsfirm.com WARD & SMITH LAW FIRM 1127 Judson Rd., Ste. 220 Longview, Texas 75601 (903) 757-6400 (telephone) (903) 757-2323 (facsimile ATTORNEYS FOR DEFENDANTS MEDALLION FOODS, INC. AND RALCORP HOLDINGS, INC.

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