[00:00:04] Speaker 01: Good morning, everyone. [00:00:05] Speaker 01: We have decided that Boeing is the appellate for purposes of this argument today. [00:00:12] Speaker 01: This is the time and place set for argument in Zoom Arrow versus the Boeing Company. [00:00:18] Speaker 01: So, counsel, could you please proceed? [00:00:21] Speaker 03: Good morning, and may it please the court. [00:00:23] Speaker 03: I'm Don Verilli for Boeing. [00:00:25] Speaker 03: And let me say at the outset that we're grateful for the opportunity [00:00:30] Speaker 03: to be here this morning because we recognize that the court does not normally hold oral argument on rehearing petitions, so we want to make sure you understand that we thank you for that. [00:00:40] Speaker 03: The court has asked us to focus on two questions, whether this circuit's law or the federal circuit's law answers the jurisdictionally dispositive question whether Boeing's patent counterclaim is compulsory under 28 USC 1295A, [00:00:57] Speaker 03: And second, whether this court can transfer the appeal to the Federal Circuit under 28 U.S.C. [00:01:03] Speaker 03: 1631 if it concludes that our counterclaim is compulsory and therefore the Federal Circuit has exclusive jurisdiction. [00:01:10] Speaker 03: If I could maybe I'd just summarize quickly our position and then elaborate. [00:01:16] Speaker 03: First, this circuit's law applies to the question of what counts as a compulsory counterclaim under 1295 as it does to all questions concerning [00:01:26] Speaker 03: whether this court has jurisdiction over an appeal. [00:01:29] Speaker 03: Second, our patent inventorship counterclaim is definitely compulsory under this circuit's law because it arises out of the same operative facts that are the subject matter of Zunum's complaint and because the Zunum's complaint activates an otherwise dormant right that Boeing has to establish exclusive inventorship under the Patent Act. [00:01:52] Speaker 03: And third, [00:01:53] Speaker 03: We don't think there should be any concern about whether the appeal can be transferred to the Federal Circuit under section 1631. [00:02:01] Speaker 03: We think that's true for two reasons. [00:02:03] Speaker 03: First, that the Federal Circuit would conclude that this is a compulsory counterclaim under its law. [00:02:09] Speaker 03: But second, and more importantly, and I think dispositively, the Supreme Court's Christensen decision, which I think plays a very important role in how this matter should be resolved, dictates that [00:02:21] Speaker 03: the federal circuit must apply law of the case principles to give dispositive effect to this court's jurisdictional ruling under 1295A unless the federal circuit concludes that this court's ruling is implausible. [00:02:37] Speaker 03: And I don't think given the [00:02:39] Speaker 03: the issues before the court that there's any basis to conclude that a finding that this is a compulsory counterclaim would be implausible. [00:02:47] Speaker 03: So I do think that the law of the case doctrine would resolve any concern over whether the case could be transferred to the Federal Circuit. [00:02:57] Speaker 00: Can we address the same operative facts [00:03:01] Speaker 00: The challenge here is that the district court granted Boeing's motion for summary judgment on the patent inventorship claims, but then the jury ruled in favor of Zunum on the misappropriation of trade secret claims. [00:03:15] Speaker 00: So that seems the best evidence that whether you look at any of the tests, [00:03:21] Speaker 00: other under either federal circuit or nine circuit law that it's not the same aggregate core facts it's not the same operative facts it's not the same evidence you have to prove for a counterclaim as you have to prove for a claim respectfully i i don't think that's right your honor i understand the point and it's the argument my friends on the other side of making but i think the right way to think about this is that when zunin brought his complaint [00:03:48] Speaker 03: It alleged numerous theories that they claim could have resulted in a misappropriation, finding that their trade secrets were misappropriated. [00:04:01] Speaker 03: One of those theories, and this was adjudicated, one of those theories was that they shared their inventions with us on a confidential basis, that we took that information [00:04:17] Speaker 03: and patented their inventions ourselves and claimed ourselves to be the inventors. [00:04:22] Speaker 03: That was, in fact, their primary theory of misappropriation. [00:04:26] Speaker 03: Now, they also had other ones. [00:04:28] Speaker 03: But I think the text of Rule 13 tells us that the question is whether a counterclaim is compulsory, whether at the time of service the pleader has against an opposing party [00:04:41] Speaker 03: a claim that arises out of the transaction or occurrence that is the subject matter of the opposing party's claim. [00:04:47] Speaker 01: But no claim was made at that time. [00:04:50] Speaker 01: No counterclaim was made at that time, correct? [00:04:53] Speaker 03: No, we did make a counterclaim at that time. [00:04:55] Speaker 01: And what was the counterclaim? [00:04:56] Speaker 03: The counterclaim that we made at that time was under the Patent Act that we were, that they had put inventorship of the patents at issue with their misappropriation claim and that we counterclaimed for declaratory judgment. [00:05:11] Speaker 01: But that wasn't, go ahead, go ahead. [00:05:13] Speaker 01: But that wasn't the same [00:05:14] Speaker 03: I think it's exactly the same set of operative facts, Your Honor, respectfully. [00:05:20] Speaker 03: I just point the court to a few things. [00:05:24] Speaker 03: First, this is, and I apologize because none of this is in the appendix, of course, because this issue has come up now, but Zuna made a remand motion. [00:05:34] Speaker 03: They made a remand motion. [00:05:38] Speaker 03: on the ground that our patent counterclaim was untimely? [00:05:42] Speaker 00: Because you didn't counterclaim based on the complaint. [00:05:45] Speaker 00: You actually said we didn't get notice based on Zunom's complaint. [00:05:49] Speaker 00: We only got notice based on their response interrogatory number six. [00:05:54] Speaker 00: And so Boeing consistently disclaimed [00:05:57] Speaker 00: that the complaint actually gave Boeing notice of its counterclaim, which you had to do in order to make your counterclaim timely. [00:06:03] Speaker 03: Respectfully, I don't think that's right in two respects, Your Honor. [00:06:07] Speaker 03: First respect is that we said your complaint appears to be alleging that you're the inventor and challenging our patents, but it's not clear. [00:06:18] Speaker 03: So we served interrogatories for clarity. [00:06:21] Speaker 03: We got interrogatory responses, which I'll be happy to share with the court in a moment. [00:06:26] Speaker 03: But then the second reason is that... I'm sorry. [00:06:30] Speaker 00: I'm looking at the joint opposition to remand motion. [00:06:32] Speaker 00: It specifically says the allegation does not convey that the inventorship of the active voltage patent is at issue. [00:06:38] Speaker 00: Boeing could not have pursued a declaratory judgment claim on the active voltage patent based exclusively on the first amended complaints allegations. [00:06:48] Speaker 00: But prior to its interrogatory responses, Zunom never claimed it was the correct inventor of the active voltage patent. [00:06:56] Speaker 00: I beg to differ on that, but the more important thing is none of the case law says that you look at theories. [00:07:03] Speaker 00: It all says you look at claims, right? [00:07:06] Speaker 00: I haven't found either Federal Circuit, Ninth Circuit, Supreme Court case that says, oh, you look at whether theories have overlapping facts. [00:07:15] Speaker 00: It all says claim, counterclaim, claims, right? [00:07:18] Speaker 03: I think fair enough, Your Honor, but only because I don't think this precise issue has ever come up before. [00:07:24] Speaker 03: But I do think, thinking about this and applying fundamental principles here, the rule itself says that it is a compulsory counterclaim if it arises out of the transaction or occurrence that is the subject matter of the complaint. [00:07:46] Speaker 03: whatever might have been the case with respect to the ambiguous language in the First Amendment complaint, and I could, as Your Honor quoted some things that we said about it, I can quote you back what Zunum said about it, the First Amendment complaint, which is that Zunum specifically identified two Boeing patents in the First Amendment complaint, giving Boeing notice that the inventorship of one of the identified patents was at issue. [00:08:08] Speaker 03: Then their interrogatories made absolutely clear that was the case. [00:08:11] Speaker 03: So the subject matter of the complaint, [00:08:15] Speaker 03: includes their allegation that they are the inventor of the patent and that we are not the inventor of the patent. [00:08:21] Speaker 03: And that's what Rule 13 tells the court to look to. [00:08:25] Speaker 03: The subject matter of the complaint, those are the words of the rule. [00:08:29] Speaker 03: Now, and I think maybe a couple of other ways of thinking about it that may also help illuminate why I think we're correct about this. [00:08:36] Speaker 00: The first one- Do you not look at interrogatory responses? [00:08:38] Speaker 00: Do you only look at the allegations in the complaint? [00:08:41] Speaker 03: Well, I think in a situation like this one, it's perfectly appropriate to look at both where the interrogatory responses are clarifying what the allegation and the complaint was. [00:08:49] Speaker 03: Interrogatory responses could not be clearer that they are challenging inventorship. [00:08:54] Speaker 03: And I think this is a couple of other ways to think about why this is important. [00:08:58] Speaker 03: Let's say that they had, as they could have structured their complaint differently, that claim one misappropriation with respect to patent inventorship, claim two misappropriation theory B, claim three misappropriation theory C. I don't think anybody would have any doubt that this is a compulsory counterclaim because claim one separately denominated would be about the patents. [00:09:20] Speaker 03: It can't be any different because they lumped them all together in one claim and not all. [00:09:25] Speaker 02: If this is a compulsory counterclaim, then if you had not, if Boeing had not asserted it, then are you saying they would be barred from ever [00:09:35] Speaker 03: That's the risk. [00:09:36] Speaker 03: That's precisely the problem here. [00:09:37] Speaker 02: So you would agree that if they had not asserted it here, they would lose the ability to assert ownership of the patent forever after. [00:09:45] Speaker 03: That's precisely why we asserted it. [00:09:46] Speaker 03: It's a very serious risk. [00:09:48] Speaker 03: If it's a compulsory counterclaim and we don't assert it, then we would be precluded from asserting it later. [00:09:55] Speaker 02: But how do we reconcile that with the district court's [00:09:59] Speaker 02: discretion to hear the declaratory judgment claim? [00:10:03] Speaker 02: I mean, what if the district court just said, I'm not going to consider this claim? [00:10:08] Speaker 02: Would Boeing then still be barred from asserting ownership? [00:10:11] Speaker 03: If the district court ruled that it wasn't a compulsory counterclaim, then that would be one thing, but the district court did, you know, we made the claim, the district court heard it, it was adjudicated, and I do think that gets to another point. [00:10:23] Speaker 03: Now, we did prevail on this claim in summary judgment, and this [00:10:27] Speaker 03: It's another point I wanted to make also in response to a question Judge Koh asked earlier that it is true that we prevail on this claim on summary judgment and Zunom went to trial on other claims, but they went to trial on other claims of different theories that did not involve the patent. [00:10:43] Speaker 03: They dropped the patent out of the case entirely when they went to trial because they had lost it because it was adjudicated on summary judgment. [00:10:50] Speaker 03: But then I think in terms of thinking about why this is a case that triggers 1295A, [00:10:57] Speaker 03: that they chose not to appeal their summary judgment loss on the question of whether they or we invented the patent. [00:11:06] Speaker 03: But that was their discretionary choice made way after trial. [00:11:10] Speaker 03: They could have appealed it. [00:11:11] Speaker 03: Then there would have been a patent question before this court on the initial appeal. [00:11:19] Speaker 03: But they just chose not to. [00:11:21] Speaker 03: But this is what I think is an important reason why this court said what it said in Breed, that these issues get determined at the pleading stage. [00:11:30] Speaker 03: And I do think Breed's language is really quite important and instructive there. [00:11:35] Speaker 03: This is a case that we cite in our papers. [00:11:38] Speaker 03: What Breed says is that the existence of a single claim created by federal patent law triggers federal circuit jurisdiction over the entire case. [00:11:48] Speaker 03: And it's immaterial, Breed says, [00:11:51] Speaker 03: that the complaint asserts non-patent claims or that the non-patent claims predominate. [00:11:58] Speaker 03: So long as there is a patent claim in the case, 1295 is triggered. [00:12:03] Speaker 03: And there was a patent claim in the case, and we wanted it summary judgment, and the fact that they chose not to appeal it doesn't make it any less true that there was a patent claim in the case. [00:12:14] Speaker 02: So do we need to distinguish hydronautics to get to your conclusion? [00:12:23] Speaker 03: They make a big deal about hydronautics, I realize that. [00:12:27] Speaker 03: This is this very odd Merricord doctrine in which the Supreme Court [00:12:35] Speaker 03: long ago said that there's an exception to the usual rule of compulsory counterclaims in a patent case for antitrust counterclaims in a situation in which the antitrust claim is that the very act of bringing the patent litigation is an antitrust violation. [00:12:54] Speaker 03: The court has said in those circumstances the defendant doesn't have to bring that as a compulsory counterclaim, the defendant can wait. [00:13:01] Speaker 03: and bring it later, but that Mercoid thing has been confined to its facts. [00:13:07] Speaker 03: It doesn't apply generally. [00:13:09] Speaker 03: It doesn't apply to the 1295 question that is before the court now. [00:13:13] Speaker 03: The question here, before the court now, is whether the operative facts out of which our patent misuse counterclaim arose were a subject matter of the complaint. [00:13:26] Speaker 03: And they were. [00:13:27] Speaker 03: And that's true even though the complaint had other claims that were subject matters of it too. [00:13:31] Speaker 03: This was a subject matter of a complaint within the plain meaning of rule 13. [00:13:37] Speaker 03: It's covered. [00:13:39] Speaker 03: And so I do think that that has to be the analysis. [00:13:45] Speaker 03: And, you know, another way of thinking about it, I guess, is let's say we had lost at summary judgment. [00:13:54] Speaker 03: on this claim, and they had gone to trial and they had gotten a verdict that they were the inventor. [00:14:03] Speaker 03: And then we would have appealed, right? [00:14:05] Speaker 03: And we would have said, no, we're the inventor under the patent laws. [00:14:09] Speaker 03: And that would go to the Federal Circuit. [00:14:11] Speaker 03: And the fact that they lost instead of winning at summary judgment and then chose not to appeal, it doesn't change that. [00:14:17] Speaker 03: There was an essential issue of patent law in this case raised by a counterclaim that we had to raise under the text of Rule 13 and under this Court's precedence. [00:14:28] Speaker 03: And the reason was because, as Your Honor suggested, because of the risk that we would have faced of being precluded in the future from being able to assert inventorship had we not raised it and had they prevailed on that issue. [00:14:41] Speaker 03: so i know uh... i don't think you were representing boeing we came in at the rehearing stage that's right your honor so uh... why did boeing never raise this issue before i don't know here's what i can tell you i understand it's regrettable no one it's not good for the court that we're in this situation i completely appreciate that it's regrettable what i can tell you is we came in we saw this [00:15:11] Speaker 03: We ran it to ground. [00:15:14] Speaker 03: We believe that is a strong issue. [00:15:16] Speaker 03: We believe we're right about it. [00:15:17] Speaker 03: And we believe that in this situation, we should raise it. [00:15:21] Speaker 03: In fact, I don't want to get on my high horse here because this is a regrettable situation, but we thought we had an obligation to raise it because it's jurisdictional. [00:15:28] Speaker 03: And so we raised it. [00:15:29] Speaker 03: And you're right, it would have certainly been better had this been identified earlier. [00:15:35] Speaker 03: But the mandate hasn't issued, so the court has to satisfy itself with its jurisdiction. [00:15:41] Speaker 03: And we do think it's appropriate for us to have raised it in the way that we did. [00:15:46] Speaker 01: All right. [00:15:46] Speaker 01: Thank you, counsel. [00:15:47] Speaker 01: You've exceeded your time. [00:15:48] Speaker 01: We'll give you a minute or two for rebuttal. [00:15:49] Speaker 03: Thank you. [00:16:09] Speaker 01: Good morning, counsel. [00:16:10] Speaker 04: Good morning, and may it please the court, Vincent Levion, on behalf of ZUNOM. [00:16:15] Speaker 04: Your Honor, I think the question before the court is whether the counterclaim that Boeing brought is compulsory or permissive. [00:16:24] Speaker 04: Counsel said that it is enough there was a patent issue in the case. [00:16:28] Speaker 04: Congress made very clear that to implicate the exclusive jurisdiction of the Federal Circuit, the counterclaim has to be compulsory. [00:16:35] Speaker 04: The Federal Circuit explained in the Riordan case [00:16:38] Speaker 04: that Congress made a decision to do that in order to make sure that litigants wouldn't manipulate the appellate rules of the court to try to get into the federal circuit cases that should probably belong in the regional circuits, even if those implicated and sometimes concerned and issues. [00:16:55] Speaker 04: This case, no matter whether the court applies federal circuit or nine circuit law, the counterclaim is permissive and not compulsory. [00:17:04] Speaker 04: I do want to underscore. [00:17:06] Speaker 04: Council, why is it permissive rather than compulsory? [00:17:10] Speaker 04: Well, none of the tests that this circuit or the federal circuit has announced for determining whether a counterclaim is permissive or compulsory, or is compulsory rather, is satisfied. [00:17:21] Speaker 04: I think Boeing relies on the logical relationship test only. [00:17:25] Speaker 04: But it's important to look at all the tests because they are of a piece with one another. [00:17:29] Speaker 04: So number one, the first test is whether substantially the same elements and facts are at issue. [00:17:37] Speaker 04: They are not. [00:17:37] Speaker 04: The facts underlying our claims for trade secret violations was whether we had information that was secret, novel, and derived value from being secret, and whether they took that information. [00:17:48] Speaker 04: That's what we had to prove to set a claim. [00:17:51] Speaker 04: And that's irrespective of the patent ownership. [00:17:54] Speaker 04: That's correct, Your Honor. [00:17:55] Speaker 04: And I think the summary judgment ruling and the summary judgment briefing that Boeing put in in advance of that makes very clear why the two claims are distinct here. [00:18:05] Speaker 04: They had, in order to prevail on their claim, all they had to show really was that they had a patent. [00:18:11] Speaker 04: And they had to say they invented it. [00:18:12] Speaker 04: Then we had to defend against that by establishing that someone on our side invented one of the specific claims that are set forth in the patent. [00:18:23] Speaker 04: Those are very different issues. [00:18:25] Speaker 04: The Federal Circuit made that clear in the Intelsoft case and some of the other cases we cite in our brief. [00:18:30] Speaker 04: And as a matter of doctrine, [00:18:34] Speaker 04: We could prevail in our claim and they could prevail on their counterclaim, which is exactly what happened. [00:18:39] Speaker 04: So the elements and the facts are distinct. [00:18:43] Speaker 04: The evidence supporting our claim and their counterclaim were distinct. [00:18:46] Speaker 04: Again, summary judgment proved that. [00:18:48] Speaker 04: And the logical relationship test is not met. [00:18:50] Speaker 00: Well, what about your opposing counsel's statement that if you had appealed the summary judgment of inventorship ruling, then that patent claim would have been before the Ninth Circuit? [00:19:01] Speaker 04: That's true, but that's what Congress intended because it only intended for compulsory counterclaims to be sent to the federal circuit. [00:19:14] Speaker 02: Could there be a split appeal? [00:19:17] Speaker 02: If you had appealed the summary judgment ruling on patent ownership and then also appealed on the merits in the district court [00:19:28] Speaker 02: awarding a new trial? [00:19:30] Speaker 02: Could part of it have gone to the Ninth Circuit and part to the Federal Circuit? [00:19:33] Speaker 04: Well, I think both issues would have come here, and that happened in the ABS case from the Seventh Circuit, where there was an antitrust case, an antitrust claim on the plaintiff's side and a counterclaim sounding in patent. [00:19:46] Speaker 04: The Seventh Circuit ruled that that patent counterclaim was permissive and not compulsory, stressed that ruling otherwise would seriously unsettle patent rights, [00:19:55] Speaker 04: and federal policy and determined that the claim was permissive and went on to address the patent issues on the merits. [00:20:03] Speaker 04: And the court noted that it was unusual for a regional circuit to address patent claims, but that's what Congress intended here, and Reardon makes clear why that is. [00:20:12] Speaker 04: So that's what would have happened. [00:20:15] Speaker 04: I do want to pause on the, or spend a little time on the logical relationship test, which is the test that they're focusing on. [00:20:23] Speaker 04: I think it's fairly clear that the test is not met in the federal circuit. [00:20:27] Speaker 04: They don't try all that hard. [00:20:28] Speaker 04: They rely on the Reardon case, which is, in which, [00:20:34] Speaker 04: The court was very clear that the claims were contingent on one another, and in particular at pages 1332 to 1333, [00:20:44] Speaker 04: The court said that the two claims shared a critical factual dispute, that the success on the plaintiff's state law claims will depend on... So the logical relationship test in the Ninth Circuit would still require the same aggregate operative facts. [00:20:59] Speaker 00: So I think that addresses that issue, but under even the Federal Circuit law, [00:21:04] Speaker 00: In Nassau Law, the court said that under any of those three tests, including logical relationship tests, you still have to have overlap in the facts between what has to be proven on a counterclaim and a claim. [00:21:15] Speaker 00: So my question for you is, under Supreme Court and Ninth Circuit law, Rule 13A standard for transaction occurrence has to be read broadly. [00:21:24] Speaker 00: How is your position consistent with that? [00:21:27] Speaker 04: Well, it has to be read broadly, but also consistent. [00:21:30] Speaker 04: Well, I think I'll start with the way the Federal Circuit looks at it, which is to take, in this particular context, where Congress drew a line between permissive and compulsory counterclaim, it does have to be read in line with Federal patent law and the fact that here, if no claim were asserted as to patent inventorship, [00:21:50] Speaker 04: that the pattern would remain valid under federal statute. [00:21:55] Speaker 04: There was no use it or lose it consequence, and it's therefore just like hydronautics. [00:22:00] Speaker 04: So I think our approach is entirely consistent with hydronautics. [00:22:06] Speaker 04: We are advocating a reading of the test that is entirely consistent with [00:22:12] Speaker 04: like this court's decision in Mattel, this court's decision in Hydrononics, and I don't think they can square their position with either of those tests. [00:22:20] Speaker 04: The court still must look at the facts, the operative facts, the essential facts. [00:22:26] Speaker 04: Those are the facts that matter for purposes of applying this test, and that's the way the Supreme Court looked at it. [00:22:33] Speaker 04: I know they're relying on the theory about the part of the logical relationship test where in Pegasus the court said it might be satisfied where the subject matter of a claim activates otherwise dormant [00:22:49] Speaker 04: So if we trace that doctrine, first of all in Pegasus it was a dictum because Pegasus actually ruled that the counterclaim was permissive. [00:22:57] Speaker 04: But if we trace it back to its origin. [00:22:59] Speaker 00: Can you comment on the language of your own, I guess it was your motion to remand that says that your first amended complaint expressly alleged that the thin-haul patent, active voltage control patent were based on information [00:23:18] Speaker 00: that Zunom disclosed. [00:23:20] Speaker 04: Right. [00:23:21] Speaker 04: So I think we have, this was also prior counsel, but obviously this is a position that we took, said that the complaint did put at issue for purposes of the Declaratory Judgment Act the question of inventorship. [00:23:37] Speaker 04: That is a different standard than the standard we're dealing with here. [00:23:41] Speaker 04: The standard for a declaratory judgment act is whether there is a threat of an action, a litigation. [00:23:47] Speaker 04: What we're talking about here, for purposes of the compulsory counterclaim test, is whether the claim and the counterclaim are based on the same facts, evidence, elements. [00:23:58] Speaker 04: And really on the logical relationship test, it's whether it's possible or not to prevail on both the claim [00:24:03] Speaker 04: and the counterclaim. [00:24:05] Speaker 04: That's really the test under the logical relationship test. [00:24:08] Speaker 04: And we never said, we never conceded otherwise. [00:24:11] Speaker 04: And of course, as Judge Koh, as you noted, in their briefing below, they consistently said that the complaint itself did not put the subject, the inventorship in issue, and they didn't know they had a counterclaim. [00:24:25] Speaker 04: And the district court below didn't really address the point. [00:24:28] Speaker 04: And if the court looks to what's pleaded in the actual complaint, [00:24:32] Speaker 04: What it says is that the fact of these patents being filed by Boeing suggests that in the background, Boeing was working on technology that was animated by... And ZUNOM never moved for like an interference proceeding before the patent trial and appeal board, right, to try to... [00:24:51] Speaker 04: contest interventorship that's that's correct to pens did you we do any administrative proceedings before the people you have never claimed a claim regarding the pounds anywhere in any court or any any uh... administrative proceeding which is why under federal statute uh... no matter what would happen to our for invalidity on into inventorship ring or on any other basis we have never filed a business novelty whatever we have never filed a any any claims that have been court order proceed [00:25:20] Speaker 02: Can I ask you two questions? [00:25:23] Speaker 02: The first is, for this activation test, do you assert that the activation is from the facts, the underlying facts, or is it from the action of filing a claim? [00:25:38] Speaker 02: So the claim, the misappropriation claim that triggers the declaratory judgment claim, would that be sufficient to meet the activation test? [00:25:46] Speaker 02: And then my second question is, what do you do with Porchiro with our case, our decision from 1987 in Porchiro? [00:25:53] Speaker 02: How do you distinguish that? [00:25:56] Speaker 04: So in terms of the activation test, I think the way it's framed is that it's the underlying subject matter. [00:26:03] Speaker 04: That's the way the test is stated. [00:26:06] Speaker 04: But it is important, I think, to go back to [00:26:10] Speaker 04: where this test came from because, again, in Pegasus, it's just a dictum. [00:26:16] Speaker 04: And so, as I was saying, it traces its route back to Revere Copper and Brass Incorporated case from the Fifth Circuit from 1970. [00:26:23] Speaker 04: And there, the court made clear that the reason it was finding that the counter-claim was compulsory [00:26:31] Speaker 04: and that there was a dormant right activated was because the claim and counterclaims were, quote, two sides of the same coin. [00:26:39] Speaker 04: It said, and this is on page 715 to 716, that so close is the connection between the case sought to be stated in the complaint and that set up in the counterclaim that it only needs the failure of the former to establish the foundation of the latter. [00:26:55] Speaker 04: So that's the test, and it looks, and that's really just not met here, not even close. [00:27:00] Speaker 02: So in other words, [00:27:03] Speaker 02: You couldn't win one and lose the other. [00:27:05] Speaker 04: I think that's the upshot. [00:27:09] Speaker 04: And that's what Revere said. [00:27:10] Speaker 04: They also cite Crossroad Partners, which is an unpublished decision from before 2000, so it's not... [00:27:16] Speaker 04: um, citable authority, but there as well, the court set the same thing. [00:27:20] Speaker 04: There, there was a, a claim that was set forth, and the counterclaim was, um, for release on the liability that was asserted. [00:27:28] Speaker 04: And it was impossible for the plaintiff to win on the contract claim and for the defendant to win on the release. [00:27:34] Speaker 04: And the same, that, that's the test. [00:27:36] Speaker 04: Is it possible to win on both? [00:27:38] Speaker 04: And it's not met here. [00:27:39] Speaker 04: Pinkstaff, it's the same thing. [00:27:41] Speaker 04: That's the other case they cite. [00:27:43] Speaker 04: So, um, your honor also asked about, [00:27:46] Speaker 04: I think it's important to read Pochiro also alongside hydronautics because I don't think it's possible to square what they're saying with hydronautics or with Mattel, frankly. [00:27:56] Speaker 04: Pochiro and hydronautics both entailed counterclaims for malicious prosecution. [00:28:04] Speaker 04: I think my friend pointed out that in hydronautics, there was a federal policy stating that the claim wouldn't be res judicata. [00:28:12] Speaker 04: The counterclaim wouldn't be res judicata. [00:28:14] Speaker 04: Exactly the same is true here under federal statute. [00:28:17] Speaker 04: Because there has been no claim for patent invalidity, no claims related to the patent, if no counterclaim were filed, [00:28:25] Speaker 04: no declaratory judgment were filed, or if the district court declined to exercise jurisdiction, their patent rights would remain, presumptively valid by statute forevermore." [00:28:35] Speaker 04: So I think that's the dispositive point. [00:28:39] Speaker 04: And it's important to pause on the implications of the rule that they are sponsoring here, which is entirely untethered to any of the tests that this court has articulated. [00:28:48] Speaker 04: They're saying, effectively, if a defendant scours a response in an interrogatory and there's a statement putting a claim in issue, [00:28:58] Speaker 04: That triggers an obligation to bring a counterclaim. [00:29:02] Speaker 04: No matter what the facts that are alleged, no matter what the elements of the claim, that can't be the law. [00:29:09] Speaker 04: Hydrononics, Mattel, Nusselhock, all those cases would have turned down differently. [00:29:13] Speaker 04: The test for declaratory judgment action is entirely distinct from the test for compulsory counterclaim. [00:29:20] Speaker 04: And their test would just swallow the rule. [00:29:23] Speaker 04: And it's not the law. [00:29:24] Speaker 04: And it would completely unsettle patent rights. [00:29:27] Speaker 04: It would turn most claims involving intellectual property. [00:29:32] Speaker 04: It would require people who have patents to just assert patent claims left and right. [00:29:36] Speaker 04: That's surely not what Congress intended. [00:29:38] Speaker 04: That's surely not what Rule 13 requires. [00:29:40] Speaker 04: That's surely not required here. [00:29:43] Speaker 04: So I'm happy to address other questions. [00:29:45] Speaker 04: I did want to pause briefly on choice of law, which my friends did not address. [00:29:49] Speaker 04: I think the question is academic here, but the court did ask. [00:29:56] Speaker 04: My friends missed state a number of the cases that they discussed in their brief. [00:30:02] Speaker 00: Let me ask you, if we were to find that under Ninth Circuit law, the counterclaim were compulsory, then how would this three-judge panel be able to overrule any of those precedents to apply Federal Circuit law? [00:30:17] Speaker 00: If we were to find that Ninth Circuit precedents say that the inventorship counter, declaratory judgment counterclaim were compulsory, then this three-judge panel under Miller v. Gamey wouldn't be able to overrule those, would we? [00:30:32] Speaker 04: Well, I think the way it would work is, I'm not sure that it's particularly probative as to which law applies, Your Honor, and maybe I'm missing the point of your question. [00:30:47] Speaker 00: The question is whether... I mean, I guess your point is really on the if, right? [00:30:54] Speaker 00: Whether we find Ninth Circuit law precedent applies here and would find the claim compulsory, the counterclaim compulsory. [00:31:01] Speaker 00: But if we were to find that, then we would be bound by that. [00:31:04] Speaker 00: It's really the question. [00:31:05] Speaker 04: If you were to find that, then you would place the question of whether you should transfer it. [00:31:10] Speaker 04: I think the way the courts look at it, so we cited the only case that we found in the federal circuits that any party has cited is a case from the Second Circuit called Dorff, where there was, in fact, a distinction between their Second Circuit law and Federal Circuit law. [00:31:26] Speaker 04: And the Second Circuit applied Federal Circuit law, because even though there was a difference between Federal Circuit law and Second Circuit law, [00:31:35] Speaker 04: Because if the Federal Circuit wouldn't take the case, then it made no sense to send it over there and conversely. [00:31:42] Speaker 01: So where would that leave Boeing then if we determined that Ninth Circuit law said that it's a compulsory counterclaim that belongs in the Federal Circuit and we didn't transfer it? [00:31:54] Speaker 01: Where would that leave Boeing? [00:31:56] Speaker 04: Well, I think the court would look at both Federal Circuit and Ninth Circuit law. [00:32:00] Speaker 01: Well, but I'm asking you the specific scenario. [00:32:02] Speaker 01: Right. [00:32:03] Speaker 01: if we determine that it is a compulsory counterclaim, but we didn't transfer it to the Federal Circuit, what would Boeing's options be at that point? [00:32:13] Speaker 04: Well, if the court determined that it was compulsory under both Federal Circuit and Ninth Circuit. [00:32:18] Speaker 01: Under either. [00:32:19] Speaker 04: Well, then it should transfer, Your Honor. [00:32:21] Speaker 04: But the question that's posed, Boeing says that the court should apply only Ninth Circuit law, incites a number of cases supporting that position. [00:32:31] Speaker 04: We just think the cases are miscited, misstated. [00:32:35] Speaker 04: So, for example, the ICQ case that they cite where they say this court has determined that a certain issue doesn't implicate the jurisdiction of the Federal Circuit. [00:32:49] Speaker 04: If the court traces back, it's citing Amity, which is another Ninth Circuit case. [00:32:52] Speaker 01: We understand that argument. [00:32:54] Speaker 01: You're saying that it shouldn't under Ninth Circuit law, but we were asking a different question about if we ruled differently from what you're arguing. [00:33:01] Speaker 04: I understand, Your Honor. [00:33:02] Speaker 04: Obviously, if the Court determined it were compulsory, then it should transfer. [00:33:06] Speaker 04: Unless the Court has no questions. [00:33:08] Speaker 01: It appears not. [00:33:09] Speaker 04: Thank you, Your Honor. [00:33:09] Speaker 01: Let's have two minutes for rebuttal. [00:33:16] Speaker 03: Thank you, Your Honor. [00:33:17] Speaker 03: Just a technical point first, but I think it's important in response to some questions from Judge Koh earlier. [00:33:22] Speaker 03: What Your Honor asked Judge Koh was correct about the First Amendment complaint, but [00:33:28] Speaker 03: The plaintiffs filed a second amendment complaint after the interrogatory responses, at which point we knew exactly what those complaint allegations were alleging. [00:33:37] Speaker 03: We filed a counterclaim to that. [00:33:39] Speaker 03: Those are the obvious. [00:33:40] Speaker 00: But that was a different patent, right? [00:33:41] Speaker 00: That was a thin-haul patent. [00:33:43] Speaker 00: The first patent was the active voltage control patent in the first amendment. [00:33:47] Speaker 00: It was about both patents. [00:33:49] Speaker 00: But that's less important for me. [00:33:51] Speaker 00: I want to ask you, you make an argument that in your briefs, [00:33:55] Speaker 00: that the test of the federal circuit that the question of the extent of overlap between what the plaintiff must establish to prove its claim and what the defendant must establish to prove its counterclaim [00:34:09] Speaker 00: is dicta in Nassau Lock, and that's based on Judge Newman's concurrence. [00:34:15] Speaker 00: Is that still your position? [00:34:17] Speaker 00: You want us to ignore what the majority published in that decision, Judge Gehars and Judge Dyke? [00:34:22] Speaker 03: No, I think our principle, forgive me, Your Honor, our principle argument is not that. [00:34:25] Speaker 03: Our principle argument is that my friends on the other side are misreading the import of that sentence. [00:34:32] Speaker 03: What that sentence is saying is that to decide whether a counterclaim is compulsory, one looks at [00:34:38] Speaker 03: What would the plaintiff have to establish in order to establish the plaintiff's claim? [00:34:42] Speaker 03: And then what would the defendant have to establish in order to establish the defendant's claim? [00:34:47] Speaker 03: And how much factual overlap is there between the two? [00:34:50] Speaker 03: Now, in that case, there was none. [00:34:52] Speaker 03: It was a trademark infringement claim. [00:34:55] Speaker 00: Okay. [00:34:55] Speaker 00: Sorry, since my time is limited. [00:34:57] Speaker 00: I think, Judge, you said two minutes? [00:35:00] Speaker 00: Okay. [00:35:00] Speaker 00: As long as you have questions, we're fine. [00:35:02] Speaker 00: Okay. [00:35:02] Speaker 00: I just want to make sure you're not arguing still that that's dicta and that that's not law of the Federal Circuit. [00:35:07] Speaker 00: That was really just my question. [00:35:08] Speaker 03: So all we did was point out that that was Judge Newman's view. [00:35:12] Speaker 03: I think the most important point is that they're, I think, grossly over-reading that decision. [00:35:18] Speaker 03: I point that my friends on the other side brought up Reardon. [00:35:21] Speaker 03: Reardon specifically says in the Federal Circuit that compulsory counterclaim law should be read liberally to advance the pro-efficiency objectives of it. [00:35:30] Speaker 00: Okay. [00:35:30] Speaker 00: Let me ask you another question. [00:35:32] Speaker 00: I'm sorry. [00:35:33] Speaker 00: I want to observe our presiding judge's time limit. [00:35:37] Speaker 00: Is it possible to activate a dormant legal right, but not on the basis of the aggregate core of facts? [00:35:45] Speaker 03: It might be theoretically possible to do so, but here the aggregate core of facts are the same with respect to inventorship. [00:35:53] Speaker 03: And I think one helpful place to look for that is the district court's ruling rejecting the second remand motion, which is docket entry 114. [00:36:03] Speaker 03: And if the court would permit me, I'll just read a couple of sentences because I think it answers it pretty definitively. [00:36:09] Speaker 03: The district court said Zunum's allegations and discovery responses make clear that it would prove misappropriation at least in part by challenging the inventorship of any patents filed by Boeing units that derive from the unique hybrid electric architecture of the Zunum aircraft. [00:36:27] Speaker 03: And that was the holding of the district court in rejecting the remand motion. [00:36:32] Speaker 03: The language there is important. [00:36:34] Speaker 03: The word derived actually comes from the interrogatory response and derivation is a... I understand. [00:36:38] Speaker 00: I'm sorry. [00:36:38] Speaker 00: Can I just ask one last question? [00:36:40] Speaker 00: Of course. [00:36:41] Speaker 00: Okay. [00:36:42] Speaker 00: So in patent litigation district court, inventorship doesn't really come up that often, right? [00:36:46] Speaker 00: In the invalidity claims, it's usually, you know, lack of disclosure, novelty, obviousness, other bases. [00:36:54] Speaker 00: So it does seem a little bit strange that race judicata would apply on inventorship [00:37:01] Speaker 00: if it hadn't been raised just because, you know, inventorship is so rarely litigated in the district courts. [00:37:08] Speaker 00: You know, if anything, you go to PTAB and do an interference proceeding. [00:37:11] Speaker 00: So, I'm a little bit having difficulty with the raised judicata because it is true, you would have had a presumption of validity if you hadn't brought the counterclaim and to say that you'd be precluded forever from litigating the inventorship of your own patent seems [00:37:31] Speaker 00: Well, a little bit hard. [00:37:32] Speaker 03: I'm going to try to make a few points in responding to that question. [00:37:37] Speaker 03: First, the district court specifically found that their misappropriation claim challenged our inventorship. [00:37:47] Speaker 03: And had they prevailed on it, there would have been a factual finding [00:37:51] Speaker 03: that they were the inventor and we weren't. [00:37:53] Speaker 03: This is a two sides of the same coin issue with respect to inventorship. [00:37:57] Speaker 03: It absolutely is. [00:37:58] Speaker 03: Either they invented it and we misappropriated it and patented it or we invented it separately and patented it. [00:38:05] Speaker 03: Those are two sides of the same coin. [00:38:07] Speaker 00: They didn't bring an invalidity claim though in district court. [00:38:09] Speaker 03: They made a misappropriation claim based on [00:38:13] Speaker 03: that exact allegation that they invented it and not us. [00:38:17] Speaker 03: And so there, I think we would have been at very great, maybe we could have made an argument along the lines your honor is saying, had we not raised this kind of claim, but we would have been at very grave risk of them saying later, that patents, you don't own that patent anymore, we do because we're the inventors under 256 and our name should be substituted in for your names and that's our patent now. [00:38:38] Speaker 03: We have been at very grave risk of that because they specifically, specifically alleged that exact thing, that they invented it, not us, that we stole it and we patented it. [00:38:49] Speaker 03: It was a challenge to inventorship. [00:38:50] Speaker 03: The district court recognized it. [00:38:52] Speaker 03: They described it themselves. [00:38:54] Speaker 03: in that plea that your honor quoted earlier. [00:38:56] Speaker 03: It's exactly what they said in their interrogatory response. [00:38:59] Speaker 03: Their interrogatory response says that our patents derived from the information that they shared with us. [00:39:08] Speaker 03: And derivation is like the classic inventorship challenge, that we invented it, we shared it with you. [00:39:15] Speaker 03: You derived your patents from what we shared. [00:39:18] Speaker 03: That's the classic inventorship challenge. [00:39:20] Speaker 03: It's absolutely two sides of the same coin here. [00:39:24] Speaker 03: And that is why we would definitely have been at significant risk that we not brought this as a compulsory counterclaim at the time we did. [00:39:31] Speaker 03: We definitely would have. [00:39:33] Speaker 01: All right. [00:39:33] Speaker 01: Thank you, counsel. [00:39:34] Speaker 01: Thank you to both counsel for your helpful arguments. [00:39:37] Speaker 01: The case just argued is submitted for decision by the court. [00:39:40] Speaker 01: We are adjourned.