[00:00:54] Speaker 01:
Please proceed whenever you're ready.

[00:00:57] Speaker 01:
If you wouldn't mind, because we're at a different venue, if you want to start with the first minute, just giving a bit of a background about the story of this case, that would be nice, having you do it rather than our having to do it.

[00:01:08] Speaker 01:
Sure, Your Honor.

[00:01:08] Speaker 01:
Thank you.

[00:01:16] Speaker 04:
Good morning, Your Honors.

[00:01:17] Speaker 04:
May it please the Court?

[00:01:19] Speaker 04:
Thank you to the City of Dallas and the State of Texas for hosting us today.

[00:01:24] Speaker 04:
I'm here today on behalf of Blackbird Technologies, a company based out of Boston, Massachusetts.

[00:01:31] Speaker 04:
This case involves a patent dealing with fitness equipment, basically pieces of equipment where users can have a free range of motion in exercising.

[00:01:47] Speaker 04:
Why we're here today

[00:01:49] Speaker 03:
The record will reflect that counsel was moving his arms.

[00:01:55] Speaker 04:
A short workout for the court.

[00:01:58] Speaker 04:
We're here today because the Central District of California, after this case was dismissed by Blackbird, entertained HIMs, who was the defendant in that case, the motion for fees, that this case was exceptional.

[00:02:16] Speaker 04:
In the amount of $363,000 in attorney's fees, awarded the full amount to HIM, finding that this case was exceptional, and Blackburn appealed.

[00:02:29] Speaker 01:
And the fee, shockingly, that amount seems relatively small to what we see in most patent cases, but that's simply because the case was fairly litigated.

[00:02:37] Speaker 04:
That's correct, Your Honor.

[00:02:39] Speaker 04:
Yes, and that's a good point because I don't want that to be lost throughout this argument that 363,000 may seem like a small amount of patent litigation, but for what was actually done in this case, which wasn't a lot, and also why that expense was incurred is very important, too.

[00:02:58] Speaker 03:
Lightward admits to having filed over 100 losses since its inception in 2014.

[00:03:06] Speaker 03:
What percentage of those lawsuits were settled before a decision on the merits?

[00:03:12] Speaker 04:
Your Honor, I'm not sure.

[00:03:14] Speaker 04:
We may have had those percentages in our brief.

[00:03:16] Speaker 04:
I think it's a majority of them have been settled prior to a decision on the merits.

[00:03:22] Speaker 04:
That does not mean that decisions on the merits have not happened.

[00:03:25] Speaker 04:
There was plenty of IPRs.

[00:03:26] Speaker 04:
That's my next question.

[00:03:27] Speaker 03:
How many were decided on the merits?

[00:03:31] Speaker 03:
Offhand, I don't know, Your Honor.

[00:03:33] Speaker 03:
Really?

[00:03:34] Speaker 03:
Was it more than 10?

[00:03:37] Speaker 04:
Again, Your Honor, I don't know the specific amount.

[00:03:41] Speaker 04:
Was it more than two?

[00:03:44] Speaker 04:
When you say decided on the merits, do you mean a full final decision on the merits?

[00:03:48] Speaker 04:
I don't believe any of them have reached a full final decision on the merits.

[00:03:51] Speaker 04:
Yeah, that's my understanding.

[00:03:54] Speaker 03:
Appellees describe Blackwood as, quote, an all-in-one affair in which employee attorneys

[00:04:04] Speaker 03:
possess the documents subject to discovery in this case.

[00:04:09] Speaker 03:
Is that true?

[00:04:10] Speaker 04:
That, so attorneys are the main employees of the firm Blackbird and we represent, so yes, we have the documents in-house and we do consist of all attorneys.

[00:04:26] Speaker 03:
Well then how on earth did Blackbird fail to timely produce and indeed withhold

[00:04:33] Speaker 03:
responsive documents when appellees learned of them during depositions.

[00:04:39] Speaker 03:
I mean, what did they have to do?

[00:04:42] Speaker 03:
Go talk to your client?

[00:04:43] Speaker 03:
Wait.

[00:04:44] Speaker 03:
You are your client.

[00:04:46] Speaker 04:
Understood, Your Honor.

[00:04:47] Speaker 04:
And frankly, I'll be honest that I was not at the firm at this point, at the company at this point.

[00:04:53] Speaker 04:
So I don't know exactly why that didn't happen.

[00:04:56] Speaker 04:
All I know that it was inadvertent.

[00:04:57] Speaker 04:
Didn't you ask him when you were preparing for this argument?

[00:05:01] Speaker 04:
All I know is that it was inadvertent.

[00:05:04] Speaker 04:
I believe in any case it was inadvertent.

[00:05:06] Speaker 04:
How do you know it was inadvertent?

[00:05:09] Speaker 04:
Because that's what I was told here.

[00:05:11] Speaker 04:
That it was inadvertent, that they weren't produced at the time, and they were immediately produced.

[00:05:15] Speaker 04:
I think that's why that suggests to me it was inadvertent, is that there was nothing too high at that point.

[00:05:21] Speaker 04:
It was, oh, OK, we found these documents.

[00:05:24] Speaker 04:
Let's produce them.

[00:05:26] Speaker 04:
There was no prejudice.

[00:05:27] Speaker 03:
What's that?

[00:05:28] Speaker 03:
We found them.

[00:05:29] Speaker 03:
We are there.

[00:05:30] Speaker 03:
I mean, it's not like your client produces boxes of information and you go through them and somebody says something and you go, geez, maybe it's in there and go back and find it.

[00:05:43] Speaker 03:
You're attorneys.

[00:05:44] Speaker 03:
You know what.

[00:05:45] Speaker 03:
And you're the client.

[00:05:47] Speaker 03:
You know what you have.

[00:05:49] Speaker 03:
If so, back up.

[00:05:51] Speaker 03:
If you don't, there's a problem with the practice of law.

[00:05:56] Speaker 04:
Understood, Your Honor.

[00:05:57] Speaker 04:
I understand that point.

[00:05:59] Speaker 04:
It's hard for me to address that without having been on the ground at the time that whatever happened happened.

[00:06:06] Speaker 04:
Then all I can say is that I think the act of preparing those documents and producing them well before the end of discovery and then having HIM really raise no issue with that suggests that, okay, maybe if there was an oversight, maybe it was an oversight that should not have happened.

[00:06:26] Speaker 04:
Either way,

[00:06:27] Speaker 04:
There was no prejudice ever raised about what happened.

[00:06:31] Speaker 04:
H.I.

[00:06:32] Speaker 04:
never asked to oppose Blackburn again because of these documents or raise any other issue with the court about it.

[00:06:38] Speaker 01:
Let me just add, on page three of the grade review, you say, this is the real reason the parties continued to litigate this case unnecessarily and the reason why Blackburn was forced to either dismiss the case on its own or proceed to trial on a claim

[00:06:56] Speaker 01:
that had no justifiable value.

[00:07:00] Speaker 01:
How can you say that this is a situation you did not create when you're the plaintiff and you admit the claim that you were pursuing had no justifiable value?

[00:07:12] Speaker 04:
Well, first, Your Honor, until we received the financials from HIM, we didn't know the value of the kids.

[00:07:18] Speaker 04:
And when they did make those initial productions of those numbers,

[00:07:26] Speaker 04:
because when you compared them with some of the distributor's margins, things didn't add up.

[00:07:31] Speaker 04:
So we wanted to litigate the case to figure that out.

[00:07:34] Speaker 04:
What happened is that the case progressed for, I think, another year until January 2018, where more disclosures were made regarding financials.

[00:07:43] Speaker 04:
At that point, Blackbrook realized that the case had little value.

[00:07:49] Speaker 04:
At that point also, excuse me, and even before then, Blackbrook

[00:07:54] Speaker 04:
made attempts to reasonably settle the case.

[00:07:57] Speaker 04:
You kept lowering the demand, is what you did.

[00:08:00] Speaker 04:
Right, which is perfectly reasonable, I think, under this course of precedent, that you can reduce those demands as the case is starting to get to a point that's becoming more expensive.

[00:08:09] Speaker 04:
And this case, in particular, was on a speeding freight train to trough.

[00:08:13] Speaker 03:
And so we made a very... You're familiar with rule one, federal rules to settle the procedure.

[00:08:18] Speaker 03:
Excuse me.

[00:08:19] Speaker 03:
I said you're familiar, you have to be, with rule one of the federal rules of civil procedure, which requires just and speedy determination.

[00:08:30] Speaker 04:
Yes, Your Honor.

[00:08:31] Speaker 04:
And I'm not, the reason I'm not saying that because this was on a fast pace to trial, that that's, you know, a reason to reverse this case.

[00:08:39] Speaker 04:
What I'm saying is that, is that Blackburn saw what was coming.

[00:08:44] Speaker 04:
And so... It's true, it's true.

[00:08:46] Speaker 04:
Right.

[00:08:46] Speaker 04:
And the problem was, we were trying to reasonably resolve it,

[00:08:50] Speaker 04:
But it was H.I.M.

[00:08:50] Speaker 04:
who wouldn't let that happen.

[00:08:52] Speaker 03:
Wait a minute.

[00:08:54] Speaker 03:
Wait a minute.

[00:08:54] Speaker 03:
What you're saying in general is if a lawyer sues somebody, a part of the suit, sues somebody with a meritless case, and the other side doesn't say, well, this is meritless.

[00:09:11] Speaker 03:
I'm not going to litigate it.

[00:09:13] Speaker 03:
I'll just let you move ahead.

[00:09:15] Speaker 03:
Or if they don't say, jeez, this is meritless,

[00:09:20] Speaker 03:
You're sending me for $10 million and I'll offer you five so you'll walk away.

[00:09:26] Speaker 03:
That they're somehow in the wrong for not folding or for not accepting a de minimis offer.

[00:09:35] Speaker 03:
Once you suit them, don't they have a right to get a judgment in their favor?

[00:09:41] Speaker 03:
Or have you dismissed the lawsuit?

[00:09:46] Speaker 04:
They do, Your Honor.

[00:09:46] Speaker 04:
In the first instance, I don't think

[00:09:48] Speaker 04:
First, there was never some sort of acknowledgement or capitulation that this was America's case at any point.

[00:09:55] Speaker 03:
And second, on the flip side of that, we can go through the merits of your patent if you like.

[00:10:04] Speaker 04:
Well, Your Honor, I can get to the merits of our infringement position.

[00:10:09] Speaker 04:
But at no time did we ever believe that our case was meritless and then decide to get out of it.

[00:10:18] Speaker 04:
I think that's the narrative, the false narrative that was being pushed here was that we believed our case was meritless, so let's try to get out of this thing as fast as possible before a summary judgment issue could order or trial was coming.

[00:10:29] Speaker 04:
That was never the case.

[00:10:30] Speaker 04:
That never was the case.

[00:10:31] Speaker 03:
And we still believe in that.

[00:10:33] Speaker 03:
How do you demonstrate the value when you never litigated one of these things to a complete conclusion?

[00:10:39] Speaker 03:
with over 100 lawsuits filed.

[00:10:42] Speaker 04:
Well, we assess the value by doing, you know, by understanding damages calculations, a reasonable royalty.

[00:10:48] Speaker 03:
So if they give us their numbers, also HIM had... Isn't there a reasonable implication on the part of a reviewing court that in fact what you're assessing is a nuisance value?

[00:11:01] Speaker 03:
That is the cost of litigation for the defendant and their willingness to cut that cost

[00:11:09] Speaker 03:
by offering you something.

[00:11:11] Speaker 04:
In this case, Your Honor, that's not at all what happened.

[00:11:14] Speaker 04:
Those numbers were directly based... I didn't ask you that.

[00:11:17] Speaker 04:
I asked you about your business model.

[00:11:21] Speaker 04:
No, Your Honor, I disagree completely.

[00:11:23] Speaker 04:
In every instance in our business model, we attempt to assess the actual sales numbers from defendants and then try to apply a reasonable royalty based on either other rates we have settled... In this case, I don't understand.

[00:11:36] Speaker 01:
In this case, you started with

[00:11:39] Speaker 01:
a number and then you kept on coming back and you kept on decreasing.

[00:11:43] Speaker 01:
So what was it based on other than you're just wanting to get rid of this case and try to extract whatever amount you could from the defendant?

[00:11:53] Speaker 04:
Your Honor, if you can keep in context the fact that we still believed our case to have merit, that those decreasing amounts were to resolve the case while still believing in our case,

[00:12:04] Speaker 04:
but not wanting to expend the money to go to trial for something that was going to result in a royalty that was going to be far less than the cost of going to trial.

[00:12:12] Speaker 01:
It seems to me like a portion at least of the amount was sort of almost your fault because you didn't, my understanding, so you can correct me if I'm wrong on the facts, we have a lot of cases this week, is that the day before or the day of

[00:12:29] Speaker 01:
some submissions being due on their part, which obviously they incurred fees in preparing.

[00:12:34] Speaker 01:
It was only then that you told them, oh, we're done.

[00:12:38] Speaker 01:
We don't want anything.

[00:12:39] Speaker 01:
We're just going to move to dismiss with prejudice and a covenant not to sue.

[00:12:43] Speaker 01:
If you had done that perhaps two, three, four weeks before, you could have saved some of the money.

[00:12:50] Speaker 01:
You're now liable.

[00:12:51] Speaker 01:
Am I right about how this all went down?

[00:12:54] Speaker 04:
That's a slice of it, but there's actually context to all of that and to why it led to that final point, because we were being put in that position.

[00:13:03] Speaker 05:
Well, it led to that final point because they wouldn't agree to walk away without attorney's fees, and you knew you were going to lose and get slapped with the big attorney's fees reward, so you entered the covenant not to sue.

[00:13:14] Speaker 05:
Isn't that the district court's view of what the situation was here?

[00:13:19] Speaker 05:
That's not why we dismissed the case.

[00:13:22] Speaker 05:
I'm not asking you what you think you did.

[00:13:24] Speaker 05:
It's the district court's view that you engaged in that kind of abusive settlement process.

[00:13:29] Speaker 05:
Isn't that what's in this decision as one of the grounds for an exceptional circumstance?

[00:13:34] Speaker 04:
Yes, Your Honor, that does appear to be one of the grounds.

[00:13:36] Speaker 04:
Of course, there's not a lot of analysis behind that or any sort of acknowledgement as to what led to that point.

[00:13:45] Speaker 04:
But yes, you're right.

[00:13:45] Speaker 05:
What's your standard of review here?

[00:13:47] Speaker 05:
So he has to make factual findings.

[00:13:52] Speaker 05:
Yes, he did.

[00:13:53] Speaker 05:
He made two different factual findings about what it was entitled to.

[00:13:57] Speaker 05:
We don't have to have him show his work in exact detail with this analysis, as long as we have factual findings that are in some way not an abuse of discretion.

[00:14:07] Speaker 04:
That's correct, Your Honor, but in this instance, those factual findings are not consistent with the actual record.

[00:14:12] Speaker 04:
The district court judge points to those settlement numbers as being just nuisance value settlements, and that's wrong.

[00:14:18] Speaker 04:
The record does not support that.

[00:14:20] Speaker 04:
That's one of the reasons.

[00:14:21] Speaker 05:
Isn't that an inference when you start with 80, then you go to 50, then you go to 15, and then when you can't get anything at all and are about to get slapped with the summary judgment motion, go to zero and a covenant not to sue?

[00:14:33] Speaker 05:
Can't he make that inference?

[00:14:37] Speaker 04:
I don't believe so, and that starting number is actually coming from real data, and a real royalty license.

[00:14:42] Speaker 05:
Maybe the 80 was, but the 50 to the 15 to the zero sure seems like abusive settlement practices to me.

[00:14:51] Speaker 05:
I don't see why he can't draw that inference.

[00:14:53] Speaker 04:
I think that inference could be drawn only where there was some indication that our merits were weak.

[00:14:58] Speaker 04:
And up until that point, there was absolutely no indication that the merits were weak.

[00:15:02] Speaker 04:
He also made the finding that your merits were weak, and that you should have known that.

[00:15:05] Speaker 04:
Well, we think that finding is definitely an error because there is no analysis in that section.

[00:15:10] Speaker 04:
And there is no finding in that section other than our plane constructions were flawed.

[00:15:15] Speaker 04:
And that's not even the test.

[00:15:16] Speaker 04:
The test is not whether it's flawed, it's whether it's objectively baseless.

[00:15:20] Speaker 05:
And in that sense, Your Honor, the Court said it was frivolous.

[00:15:23] Speaker 05:
I mean, he viewed it as not just flawed, he viewed it as frivolous.

[00:15:27] Speaker 04:
But that's the only reasoning the court provided this incident.

[00:15:31] Speaker 04:
So what?

[00:15:31] Speaker 05:
I mean, that's a factual finding.

[00:15:33] Speaker 05:
If we look at the record and we don't find any abuse of discretion in that finding, then we can affirm, can't we?

[00:15:39] Speaker 05:
Even if we disagree with this finding, that doesn't make it an abuse of discretion.

[00:15:45] Speaker 03:
Let me put it this way.

[00:15:47] Speaker ?:
You've joined the firm later.

[00:15:50] Speaker 03:
It's safe to presume that you're familiar with your firm's practices in general?

[00:15:55] Speaker 03:
Yes, sir.

[00:15:56] Speaker 03:
Do you have a standard number that you seek when you file a lawsuit?

[00:15:59] Speaker 03:
Absolutely not, Your Honor.

[00:16:00] Speaker 03:
So it varies from the size of the defendant?

[00:16:04] Speaker 04:
It varies specifically on the accused product and the sales of the accused product and a reasonable royalty applied to those sales.

[00:16:10] Speaker 04:
But you don't know in advance, do you?

[00:16:13] Speaker 04:
No.

[00:16:13] Speaker 04:
So what do you start with?

[00:16:16] Speaker 04:
We don't start with anything, Your Honor.

[00:16:18] Speaker 04:
We start with attempting to get, early on in the case, trying to get sales numbers.

[00:16:22] Speaker 03:
But you file a complaint, do you not?

[00:16:24] Speaker 03:
Yes, we do.

[00:16:24] Speaker 03:
Does the complaint seek a number, or does it just say damages?

[00:16:28] Speaker 04:
No.

[00:16:29] Speaker 04:
Most complaints, Your Honor, just see damages at the beginning, because we just don't know.

[00:16:33] Speaker 04:
How do you get your stationing?

[00:16:36] Speaker 04:
We don't know the specific amounts of numbers, Your Honors, but we do claim damages under Section 284, I believe.

[00:16:44] Speaker 01:
We've exceeded our time.

[00:16:46] Speaker 01:
We're still a little on the edge.

[00:16:48] Speaker 01:
Thank you, Your Honor.

[00:17:01] Speaker 02:
You may have pleased the court, Your Honor.

[00:17:03] Speaker ?:
Bill Holbrook, on behalf of the Pelley.

[00:17:06] Speaker 03:
Mr. Holbrook, I have a question for you.

[00:17:08] Speaker 03:
Yes, sir.

[00:17:09] Speaker 03:
In your request for attorney's fees and expenses,

[00:17:12] Speaker 03:
You included 40 hours as an estimate of future services to be performed in replying to Blackboard's opposition to your request.

[00:17:22] Speaker 03:
Were those 40 hours actually performed?

[00:17:25] Speaker 02:
Actually, we exceeded the 40 hours.

[00:17:28] Speaker 02:
Thank you, sir.

[00:17:30] Speaker 02:
And as the court's alluded to and was previously discussed, my client side of it

[00:17:37] Speaker 02:
It's 30 employees.

[00:17:38] Speaker 02:
It's got a lot of overhead.

[00:17:40] Speaker 02:
It's got a lot of marketing expenses.

[00:17:42] Speaker 02:
So to get sued on a patent infringement case is debilitating.

[00:17:46] Speaker 02:
It takes a lot of money and resources.

[00:17:48] Speaker 02:
And I understand that everyone's got a right to conduct the business the way they want.

[00:17:55] Speaker 02:
But the way that Black lives is not true.

[00:17:58] Speaker 02:
Well, within reason, within the law, I guess.

[00:18:03] Speaker 02:
But the way Blackbird has set up its business is to, has patent attorneys that are both the company and the law firm.

[00:18:13] Speaker 02:
So they can cut back on overhead and make some, so it's two things.

[00:18:16] Speaker 02:
It makes it very easy for them to sue companies.

[00:18:21] Speaker 02:
And it also makes it very challenging to get any, makes it challenging

[00:18:32] Speaker 02:
to, for defendants in our position for adequately being on the same playing field.

[00:18:38] Speaker 02:
Because one side's spending a lot of fees.

[00:18:40] Speaker 01:
No, we understand that.

[00:18:41] Speaker 01:
But the challenge for the judiciary in these kinds of attorneys' fees cases, and it's been expressed by some of the district court judges, is happily, best for everyone involved, a lot of these cases go away early, as this one did.

[00:18:56] Speaker 01:
But then in reviewing the attorneys' fees request,

[00:19:00] Speaker 01:
you've gotta make some assessment of the merits of the case.

[00:19:03] Speaker 01:
One judge has complained in writing, one retired, not retired judge.

[00:19:08] Speaker 01:
I got rid of this case on a 12B6.

[00:19:10] Speaker 01:
I don't wanna re-litigate the case in order to be able to provide attorney's fees.

[00:19:16] Speaker 01:
So one of the arguments in this case is it was too thin.

[00:19:20] Speaker 01:
I mean, at this juncture, the case had not been litigated.

[00:19:23] Speaker 01:
And what the judge said, which we have to have a record to review,

[00:19:28] Speaker 01:
even under a loose, abusive discretion standard, it was thin, right?

[00:19:33] Speaker 01:
So where's the line between too thin and just thin when we're dealing with a case that was dismissed before it was actually litigated and involved?

[00:19:43] Speaker 02:
Well, it was litigated, and all discovery was completed.

[00:19:47] Speaker 02:
Motion for summary judgment was fully briefed.

[00:19:52] Speaker 02:
In fact, when the judge ordered granting fees, he needed comments that

[00:19:57] Speaker 02:
Blackbird dismissed the case on the verge of the decision coming out in the summary judgment motion.

[00:20:02] Speaker 02:
So there was a lot to this case.

[00:20:04] Speaker 02:
In fact, as the court discussed earlier, we were weeks away from trial.

[00:20:09] Speaker 02:
We were preparing exhibit lists, preparing witness lists, preparing all the other documents that are necessary to prepare for trial.

[00:20:19] Speaker 02:
On the Monday that a lot of these documents were due, we didn't even get a call from Blackburn.

[00:20:24] Speaker 02:
We just saw on the ECF that they had filed these documents dismissing the case, coming in not to sue.

[00:20:32] Speaker 02:
And then subsequently, later that afternoon, got an email saying, the case is over.

[00:20:37] Speaker 02:
And so we had spent a lot of time developing, preparing for trial.

[00:20:44] Speaker 02:
The judge was aware, because the judge had had the most of the summary judgment fully briefed,

[00:20:48] Speaker 02:
for over a month before he made the decision granting the fee motion.

[00:20:54] Speaker 02:
And the judge does give a very detailed explanation on why under octane fees were awarded in this case.

[00:21:05] Speaker 02:
And they order on appendix 18 and 19, group preferences, flawed claim construction, flawed infringement protections, Blackbird made settlement payments far less than the

[00:21:17] Speaker 02:
delayed in producing documents.

[00:21:18] Speaker 02:
Blackburn withheld documents after the deposition.

[00:21:21] Speaker 02:
Blackburn completely failed to produce other documents.

[00:21:25] Speaker 02:
Blackburn filed a notice of dismissal, covenant not to sue, and motion to dismiss without first noting by defendant's counsel.

[00:21:31] Speaker 03:
Is the court in error about that?

[00:21:34] Speaker 03:
Your opposing counsel says that they voluntarily produced everything.

[00:21:40] Speaker 02:
No, no, Your Honor.

[00:21:41] Speaker 02:
I was there.

[00:21:42] Speaker 02:
And I was taking the deposition of the 30B6 witness and several documents were identified that had not been produced.

[00:21:51] Speaker 02:
I offered to stay to continue the deposition until they could be produced, and they said they produced them down the road, so of course I was unable to depose the witness on those documents.

[00:22:03] Speaker 02:
And then the next day, I took the deposition of the inventor in the case, who interestingly enough,

[00:22:08] Speaker 02:
as we lay out in our papers, had entirely disagreed with Blackbird's entrenchment position.

[00:22:19] Speaker 02:
And he testified that they had exchanged some documents with the Blackbird attorneys.

[00:22:24] Speaker 02:
And those weren't produced.

[00:22:26] Speaker 02:
We asked for those to be produced.

[00:22:28] Speaker 02:
And they weren't produced.

[00:22:29] Speaker 02:
And then at the end of the day... Were they ever produced?

[00:22:33] Speaker 02:
No.

[00:22:33] Speaker 02:
No, they were never produced.

[00:22:35] Speaker 02:
They subsequently claimed their privilege

[00:22:38] Speaker 02:
without providing a privilege law or any explanations.

[00:22:42] Speaker 02:
Privilege because their communications with themselves.

[00:22:46] Speaker 02:
Well these are the ones I claim privilege were the communications between them and the third party inventor.

[00:22:52] Speaker 02:
Were they the inventor's attorneys?

[00:22:56] Speaker 02:
So I'm sorry, they have their local counsel, Stamos Stamalopoulos is on the brief here and has been part of the case.

[00:23:02] Speaker 02:
He was representing the inventor.

[00:23:06] Speaker 02:
So it was unclear

[00:23:08] Speaker 02:
Did the inventor's attorney assert that privilege?

[00:23:12] Speaker 02:
No, they didn't assert that until after that position there.

[00:23:23] Speaker 02:
So I think, unless the court has any other questions, we'll submit on the papers.

[00:23:32] Speaker 02:
Thank you for your time.

[00:23:33] Speaker 05:
Did you ask for attorney's fees for this appeal?

[00:23:36] Speaker 02:
Not yet, Your Honor.

[00:23:37] Speaker 02:
That's... It's still out there though.

[00:23:40] Speaker 02:
It is still out there.

[00:23:43] Speaker 02:
The discussions with the client who's not familiar with patent negation cases and the fact that when we get the attorney's fee award, thought that they would be able to replenish some of their funds and now almost a year and a half, two years later, still hasn't happened and they've been incurring additional fees is problematic.

[00:24:04] Speaker 02:
Thank you very much.

[00:24:07] Speaker 03:
we're we're we're we're we're we're we're we're we're

[00:24:37] Speaker 03:
suspend the deposition to allow them to be presented, and that was declined, and that there were other documents identifying that deposition, and those were not produced.

[00:24:48] Speaker 03:
Is that true or not true?

[00:24:49] Speaker 03:
That is true, Your Honor.

[00:24:51] Speaker 04:
And it's directly contrary to what you told me.

[00:24:54] Speaker 04:
Well, maybe it was my misunderstanding of your question, Your Honor, because there are two sets of documents here.

[00:24:59] Speaker 04:
The first set of documents are those documents that were being prepared

[00:25:03] Speaker 04:
for production at the time of that deposition and were produced after.

[00:25:07] Speaker 04:
And I'm not entirely clear, but I think those have to do with communications between the inventor and Blackbird prior to acquisition, which we do not have a claim of privilege to.

[00:25:17] Speaker 04:
There are a group of documents... Wait, stop.

[00:25:19] Speaker 04:
You say you do not have a claim of privilege.

[00:25:22] Speaker 04:
Well, for communications between Blackbird and the inventor up until the acquisition of the patent, we do not typically claim privilege for those.

[00:25:32] Speaker 04:
At the point of acquisition after communications, we do claim a privilege of those.

[00:25:38] Speaker 03:
And at that point you became the Avengers attorneys?

[00:25:43] Speaker 04:
I think in terms of there would be a common interest work product claim at that point since we were pursuing litigation.

[00:25:53] Speaker 04:
So I think that's kind of where we draw that line.

[00:25:55] Speaker 04:
Because up until acquisition, I don't think there's any sort of relationship there.

[00:25:59] Speaker 04:
But no, I'm not saying that we are representing the inventor at that point, but there's a common interest at that point.

[00:26:07] Speaker 03:
And did you assert that privilege against the inventor?

[00:26:12] Speaker 03:
I don't believe we did, Your Honor.

[00:26:14] Speaker 03:
So the inventor could waive that privilege, could he not?

[00:26:22] Speaker 04:
I don't know if the inventor could waive the privilege without our say-so either.

[00:26:27] Speaker 04:
I don't believe he did waive the privilege in any way during those depositions.

[00:26:31] Speaker 04:
I don't think that's what was being claimed by counsel, is that he waived that privilege.

[00:26:36] Speaker 04:
So I don't know, Your Honor.

[00:26:39] Speaker 04:
And I just want to clarify a few things.

[00:26:41] Speaker 04:
And one, I know we were talking about the inference of whether the court could figure out that our case was frivolous.

[00:26:49] Speaker 04:
We, again, the actions that we took would never indicate that.

[00:26:53] Speaker 04:
it was Blackburn who wanted to ask to stay the case so that summary judgment could be decided.

[00:26:59] Speaker 04:
That was what we requested, so that we could get a decision on the merits to evaluate the strength of the party.

[00:27:06] Speaker 01:
I'm not even sure if your sentence was just convoluted or maybe it's me.

[00:27:09] Speaker 01:
Can you repeat what you're saying?

[00:27:12] Speaker 01:
You said it was us, it was them.

[00:27:13] Speaker 04:
No, it was Blackburn who requested they stay so that the court could decide the summary judgment motion so that the parties would not have to incur additional fees.

[00:27:22] Speaker 04:
So you weren't prepared for trial.

[00:27:24] Speaker 05:
The court denied that.

[00:27:26] Speaker 04:
The court denied that.

[00:27:27] Speaker 04:
That's correct.

[00:27:27] Speaker 04:
The court's allowed to do that.

[00:27:29] Speaker 04:
That's correct.

[00:27:30] Speaker 04:
My point is that we were not running from the parents of the case.

[00:27:34] Speaker 04:
We wanted them decided in some way just so that we would not have to expend unnecessary expense to go to trial.

[00:27:41] Speaker 04:
Say the case have the court decide on the merits, and we reserve their rights to be able to still seek attorney's fees.

[00:27:48] Speaker 04:
So we weren't running from this case.

[00:27:49] Speaker 04:
We weren't running from the merits.

[00:27:51] Speaker 04:
And just to address Chief Judge Crust's question earlier about the fees at the time of dismissal, when we dismissed the case, it was HIM who refused to stipulate to that dismissal.

[00:28:05] Speaker 04:
And during that window up until they eventually did, it was when a lot of that pretrial work was being done.

[00:28:11] Speaker 05:
Well, they didn't stipulate to dismissal because they didn't want to agree to walk away without preserving the right to get attorney's fees.

[00:28:19] Speaker 04:
Right, I think there was another discussion about, there was some other discussion about who was the prevailing party or something like that, Your Honor.

[00:28:27] Speaker 04:
But yes, but still, they could have stipulated that, and I think we were still agreeing to allow them to move for attorneys.

[00:28:33] Speaker 04:
Wouldn't it have been a different reason?

[00:28:37] Speaker 03:
You say you were agreeing to allow them to move for attorneys, but it is.

[00:28:41] Speaker 05:
Yes, we were here.

[00:28:42] Speaker 05:
Where in the record, before your covenant not to sue and your motion to dismiss, did you say you would walk away and allow them to preserve their right to seek attorneys fees?

[00:28:52] Speaker 05:
My understanding, at what point was it after the $80,000 offer, or the $50,000 offer, or the 15, or the zero?

[00:29:00] Speaker 04:
I think it was after the zero.

[00:29:04] Speaker 04:
During the walk away offer, I think also involved allowing them to move for attorneys fees.

[00:29:11] Speaker 03:
Show us where in the record that is, please.

[00:29:39] Speaker 04:
Give me one moment, Your Honors.

[00:29:52] Speaker 04:
Yes, Your Honors, that would be APPS 2539.

[00:29:55] Speaker 04:
It's also on the blue brief pages 7 and 8.

[00:30:04] Speaker 04:
And it reflects Blackbird's final offer by phone and email on May 24, 2018, where it's a walk-away settlement.

[00:30:12] Speaker 04:
And it also says, we are willing to preserve HIM's ability to file a motion seeking exceptional case fees under Section 25 after the case is dismissed.

[00:30:21] Speaker 04:
What date is that in relation to the dismissal?

[00:30:25] Speaker 04:
I believe that was a day or so before.

[00:30:27] Speaker 04:
It was four days.

[00:30:28] Speaker 05:
So all the litigation costs had already been incurred by this anyway.

[00:30:32] Speaker 05:
This is a couple days before you issued the covenant and not to sue.

[00:30:35] Speaker 05:
Well, a day before, you say.

[00:30:37] Speaker 04:
So one day.

[00:30:40] Speaker 04:
It was four days, Your Honor.

[00:30:41] Speaker 04:
Sorry.

[00:30:42] Speaker 04:
May 28th was four days later.

[00:30:44] Speaker 04:
Yes.

[00:30:46] Speaker 05:
What difference does it make that you did that four days before moving to dismiss?

[00:30:50] Speaker 05:
It's not like you saved them any attorney's fees at that point.

[00:30:55] Speaker 05:
I mean, if you would have done this well before and offered to walk away and they hadn't expended

[00:31:00] Speaker 05:
almost $400,000 in attorney's fees, and it might be a different scenario.

[00:31:04] Speaker 03:
Your board, to alter that, where prior to this did you offer 211 attorney's fees?

[00:31:13] Speaker 04:
Is there an earlier date?

[00:31:16] Speaker 04:
I don't believe there's an early date on that one, but I'm not sure.

[00:31:20] Speaker 05:
All the other walk-away offers were for them to forego the right to seek fees one day.

[00:31:27] Speaker 01:
Yes, sir.

[00:31:29] Speaker 01:
Thank you.

[00:31:29] Speaker 01:
We thank both sides.