[00:00:53] Speaker 03:
We will hear argument next in CRIMAR Systems against ALE USA number 182420.

[00:01:03] Speaker 03:
Peschel?

[00:01:07] Speaker 01:
Yes.

[00:01:08] Speaker 01:
May it please the court.

[00:01:09] Speaker 01:
Lisa Talbert Peschel on behalf of Defendant Appellant ALE USA Inc.

[00:01:15] Speaker 01:
As this court just heard in the appeal before us, all asserted claims in the ALE case have been invalidated by the board in final written decisions.

[00:01:25] Speaker 01:
In the ALE case, CRIMAR continues to pursue ongoing royalties on asserted claims that have been found invalid.

[00:01:32] Speaker 01:
That leaves a controversy between the parties as to the equity of that award.

[00:01:37] Speaker 01:
The district court below abused its discretion

[00:01:40] Speaker 01:
in refusing to substantively consider ALE's request under both Rule 60 and its request to stay the case, pending this Court's review of those final written decisions.

[00:01:49] Speaker 03:
And do I remember right that the request to stay the case kind of in the alternative was, everybody seems to agree it was presented, but that was in a footnote in that opening filing, which was mostly about suspending the ongoing royalties?

[00:02:07] Speaker 01:
Right, so Your Honor, at Appendix 336, there was a request to either set the ongoing royalty rate to zero or stay the case.

[00:02:16] Speaker 01:
And then as a follow-up to that, at Appendix 338, Ailey requested that if the, in the footnote nine, I believe, that to the extent that Cramer was going to argue that the prior ongoing royalty rate applied, that the court would reconsider its decision and that Ailey was moving under Rule 60 to set aside that prior judgment.

[00:02:38] Speaker 03:
With respect to AOA... I'm sorry, and so your position on the stay is that the district court declined to consider it simply on the basis of what you say is a legally incorrect determination that he didn't have the power to do it, and what he should have done is to recognize the power and exercise the usual consideration of relevant equitable factors.

[00:03:04] Speaker 01:
Yes, Your Honor, with respect to the issue of the ongoing royalties and the request for the stay.

[00:03:08] Speaker 01:
But the district court also aired in its consideration of the remanded 012 patent issue as well.

[00:03:17] Speaker 01:
With respect to the rule 60 motion, I want to be very clear with the record.

[00:03:21] Speaker 06:
But if the district court was correct that the issue was moved, the 012 was moved.

[00:03:28] Speaker 01:
Well, Your Honor,

[00:03:29] Speaker 01:
Even if we set aside the 012 issue, the district court needed to consider the equity of rewarding those ongoing royalties, the change in circumstance of the final written decision, because it invoked its equitable authority to issue those post verdict ongoing royalties, and it didn't even substantively consider the change in circumstances.

[00:03:50] Speaker 01:
So irrespective of whether the district court was right on the 012 issue, the district court needed to analyze the final written decisions.

[00:04:00] Speaker 01:
Those final written decisions came after the, let me be clear, the last final written decision, which was the final written decision on the 760 patent, was the only decision after the other final written decisions had come out

[00:04:14] Speaker 01:
all of the accused products out of the case.

[00:04:18] Speaker 01:
Because the 760 patent is a system patent.

[00:04:21] Speaker 01:
And so there would have been no change to liability until each of the prior patents and then the 760 final written decision came out.

[00:04:28] Speaker 01:
That decision came out on April 26th of 2018 after ALE had already argued in the first appeal.

[00:04:36] Speaker 01:
When this court issued its May 8th

[00:04:40] Speaker 01:
opinion in the crime R1 appeal, the court noted that it was going to remand the case.

[00:04:46] Speaker 01:
And so its very first opportunity in the status conference before the district court, Ailey stood up and said, your honor, there has been a change in circumstances.

[00:04:55] Speaker 01:
Final written decisions have been validated all asserted claims in this case, and that needs to be addressed in this proceeding below in the district court.

[00:05:02] Speaker 03:
And at that point, putting aside the 012, there were still about 10 months of life left on the other three patents?

[00:05:09] Speaker 00:
Yes, your honor.

[00:05:15] Speaker 03:
I can ask you, I know this is not something that both parties have fully briefed, but the relationship between this case and the one that we just heard.

[00:05:28] Speaker 03:
Taking as a premise, just for purposes of this question, that those final written decisions are affirmed, what do we do in this case?

[00:05:39] Speaker 01:
If those final written decisions are affirmed, it has an immediate percolative effect on Ailey's case.

[00:05:43] Speaker 01:
that will render the judgment.

[00:05:47] Speaker 01:
This court needs to vacate the judgment in the area.

[00:05:50] Speaker 03:
In order to dismissal of the case.

[00:05:52] Speaker 01:
Right.

[00:05:53] Speaker 01:
And well, Your Honor, we would ask for a remand to the district court for a reassessment of costs.

[00:05:59] Speaker 01:
Because there's been a change to the prevailing party adaption.

[00:06:02] Speaker 04:
That wipes out the damages.

[00:06:05] Speaker 04:
Yes, Your Honor.

[00:06:05] Speaker 04:
Had the damages been paid?

[00:06:07] Speaker 01:
No.

[00:06:08] Speaker 03:
What was happening to the ongoing royalties during the period that they were in effect, or I guess it's before the patents expired?

[00:06:18] Speaker 01:
As part of the original judgment in the original case, at docket 445 in the district court docket, the parties entered into a stipulation that there would be no execution on the judgment

[00:06:29] Speaker 01:
30 jours after all appeals have been finalized.

[00:06:33] Speaker 03:
Including as to the ongoing royalties?

[00:06:36] Speaker 03:
Yes, Your Honor.

[00:06:36] Speaker 03:
So those have not been moved out of your pocket into even an escrow pocket?

[00:06:42] Speaker 03:
Correct, Your Honor.

[00:06:46] Speaker 03:
Your second ground for challenging what the District Court did had to do with the counterclaim that ALE was not an infringer.

[00:06:59] Speaker 01:
Yes, your honor.

[00:07:02] Speaker 01:
So with respect to the 012 patent, which was remanded by this court after a change in construction, the district court determined that upon Kramer's motion to dismiss that the 012 patent issue had been completely abrogated.

[00:07:21] Speaker 01:
Now, what Ailey argued was that no, in fact, Ailey still had a pending counterclaim with respect to the 012 patent.

[00:07:28] Speaker 01:
and that Kramer's covenant not to sue, the original covenant not to sue before the district court, did not extend to Ailey's distributors and customers.

[00:07:36] Speaker 01:
And that left open an open question.

[00:07:38] Speaker 01:
And it left open an open question because we knew from the record that was presented to the district court that certain distributors and customers to whom Ailey had an obligation to identify were on lists excluded from their licenses.

[00:07:51] Speaker 03:
Can I just ask you two questions about that?

[00:07:55] Speaker 03:
One is your counterclaim

[00:07:57] Speaker 03:
specifically is about whether, I think in the counterclaims called enterprise, enterprise infringed.

[00:08:05] Speaker 03:
What does the possible infringement of customers or distributors have to do with that?

[00:08:10] Speaker 03:
And then I'll have a second question in a minute.

[00:08:13] Speaker 01:
Yeah, so the counterclaim at issue, so if you focus, that is a little bit focused on the second half of that counterclaim.

[00:08:20] Speaker 01:
The beginning is talking about what ALE's rights and obligations are.

[00:08:26] Speaker 01:
Ailey had an obligation to indemnify some distribution customers that would have been impacted by Kramer's continued assertion of the 012 patent against power over evenness industry members.

[00:08:37] Speaker 03:
What do you want me to look at when you talk about the first half and the second half?

[00:08:41] Speaker 03:
I guess I'm looking at A996, which is the first count of the counterclaim, the one for declaratory judgment of non-infringement of the 012 patent.

[00:08:56] Speaker 03:
Only about eight lines, well, ten lines total.

[00:09:05] Speaker 03:
That's the counterclaim that we're talking about, right?

[00:09:09] Speaker 01:
Yes.

[00:09:10] Speaker 03:
Well... The incorporation of 67 paragraphs, is that what you're referring to?

[00:09:16] Speaker 01:
No, no, Your Honor.

[00:09:20] Speaker 01:
Paragraph 60 on 8, APPX 997.

[00:09:26] Speaker 01:
The second sentence accordingly, Enterprise requested judicial determination of its rights, duties and obligations with regard to the 012 patent.

[00:09:36] Speaker 03:
Yes, but I mean, how is that reasonably read as having anything other to do with paragraph 69 in the first sentence of 70?

[00:09:47] Speaker 03:
It was all about whether Enterprise has infringed or doesn't infringe.

[00:09:52] Speaker 01:
Well, again, and I think you pointed to the very first part of paragraph 69 where it says, by virtue of primer suing enterprise in this action and as described above, and as described above includes a description of its suing.

[00:10:06] Speaker 03:
Right, there exists an actual and justiciable controversy regarding the non-infringement of O-1-2 patent by enterprise.

[00:10:14] Speaker 03:
It doesn't say by enterprises, customers and distributors.

[00:10:18] Speaker 01:
Well, if you look at paragraph 66 on APPX 996, you know, crime risk conduct demonstrates it will seek to prevent enterprise from manufacturing and importing offerings for sale or selling products with POE functionality.

[00:10:34] Speaker 01:
That included, that includes crime risk actions and course of conduct against other manufacturers of products with POE functionality.

[00:10:41] Speaker 03:
But, Kate, can, so my, let me ask you my, the second question about this counterclaim.

[00:10:49] Speaker 03:
If enterprise has been given a covenant not to be sued, why doesn't exhaustion doctrine fully protect its customers and distributors?

[00:11:04] Speaker 01:
Well, there was a dispute in the district court below as to

[00:11:09] Speaker 01:
ALE supplier, licensed ALE supplier.

[00:11:12] Speaker 03:
No, no, not suppliers.

[00:11:14] Speaker 03:
And you haven't relied in your brief on suppliers.

[00:11:16] Speaker 01:
Right, no, we have not relied on suppliers.

[00:11:18] Speaker 01:
Only customers and distributors, so the product is still moving toward them.

[00:11:26] Speaker 01:
Right.

[00:11:26] Speaker 01:
Because of the system claims and combining these things into systems, there was an argument in the district court that exhaustion would not apply to other members of the supply chain.

[00:11:38] Speaker 01:
And so that left a substantial issue in Ali's mind about whether or not exhaustion would apply to his customers and distributors.

[00:11:53] Speaker 03:
You are into your rebuttal time since you've reserved a full five minutes, but you can decide how to use it.

[00:11:59] Speaker 01:
I'll reserve the remaining time.

[00:12:13] Speaker 03:
Can you start?

[00:12:14] Speaker 03:
I realize this is getting ahead of where we are with the question I asked Ms.

[00:12:20] Speaker 03:
Heschel about what happens to this case if the one that we just heard argument in is affirmed.

[00:12:28] Speaker 02:
Yes, Your Honor.

[00:12:29] Speaker 02:
We believe under this court's precedent the judgment

[00:12:31] Speaker 02:
that this court has already affirmed with respect to damages and infringement for three patents that have already expired was final and remains final, so that a later determination by the PTO that is subsequently affirmed by this court would not and should not disturb the final judgment below.

[00:12:48] Speaker 05:
How does Fresenius impact that argument?

[00:12:52] Speaker 05:
I mean doesn't, this seems to me like

[00:12:54] Speaker 05:
Well, Your Honor.

[00:12:57] Speaker 05:
Well, that's correct, Your Honor, but finality isn't determined by whether or not the infringer has paid.

[00:13:16] Speaker 02:
This court's precedent says, is there a justifiable controversy between the parties?

[00:13:21] Speaker 02:
Is there anything left for the district court to resolve in terms of a dispute?

[00:13:26] Speaker 02:
And once CRIMAR here provided ALE with a covenant not to sue and move to dismiss the 012 patent, as the district court found,

[00:13:33] Speaker 02:
There was nothing left of this case other than to enter the final judgment.

[00:13:38] Speaker 05:
But it hasn't been entered yet.

[00:13:40] Speaker 02:
The amended final judgment has been entered.

[00:13:42] Speaker 02:
But it's not effective.

[00:13:43] Speaker 06:
That's assuming the judge had no obligation to consider the ongoing royalty issue.

[00:13:48] Speaker 02:
Well, Your Honor, on that, we believe the district court's attempt to reconsider the ongoing royalty would have violated this court's mandate rule.

[00:13:57] Speaker 02:
the damages and the ongoing royalty were encompassed in this court's mandate.

[00:14:03] Speaker 06:
We have case law that says the mandate rule doesn't stand in the way of prospective relief.

[00:14:07] Speaker 02:
Well, Your Honor, I think that is really the right question, because had ALE asked for prospective relief below and a Rule 60B5 motion, meaning, Dear Judge, the equities have changed now that the PTO has issued final decisions.

[00:14:24] Speaker 02:
We want relief from ongoing royalties from July 2018 forward.

[00:14:29] Speaker 02:
That would have been a different issue, that would have been properly asking for prospective relief.

[00:14:34] Speaker 02:
What Ailey asks this court, starting with what Ailey asked the district court was for a stay, to stay the case pending resolution of the 012 patent.

[00:14:43] Speaker 03:
Well, principally it asked for a suspension of the payment of the ongoing royalties and a stay of the whole case and the alternative.

[00:14:50] Speaker 02:
It asked for a stay of the whole case or to sever all ongoing royalties, meaning post-verdict ongoing royalties.

[00:14:57] Speaker 02:
It's asked for retrospective relief throughout.

[00:15:00] Speaker 02:
Dr. Peschel has asked for retrospective relief in this court to vacate the entirety of the jury's verdict on damages and the entirety of the ongoing royalties post-verdict forward.

[00:15:10] Speaker 02:
So I believe under this court's precedent.

[00:15:14] Speaker 05:
You still haven't explained to me why this is distinguishable from Fresenia.

[00:15:17] Speaker 05:
It seems like the same thing happened here, that we affirmed in part

[00:15:22] Speaker 05:
Including the part that affected the judgment, and we remanded it on a separate part.

[00:15:27] Speaker 05:
There was no further action on the judgment part, but when it came back up on appeal, because the case was still alive, looking at the case as a whole, not just specific parts, that we vacated the judgment.

[00:15:40] Speaker 02:
Well, this court in Fresenius, this case is distinguishable from Fresenius for two reasons.

[00:15:44] Speaker 02:
First in Fresenius, the infringement action was live.

[00:15:48] Speaker 02:
The case was remanded for determination of damages below.

[00:15:51] Speaker 02:
In the meantime, this court affirmed the PTO's judgment of invalidity, meaning there was a final decision from this court on invalidity before the district court had a chance to reevaluate damages.

[00:16:02] Speaker 05:
Sure, but what difference does that make?

[00:16:06] Speaker 05:
I mean, if we affirm before or after the district court made its decision.

[00:16:11] Speaker 02:
This court's precedent.

[00:16:12] Speaker 05:
I mean, they sell the right to appeal.

[00:16:14] Speaker 02:
That's a good question.

[00:16:16] Speaker 02:
Meaning that ALE has a right to appeal.

[00:16:19] Speaker 02:
And there would be seemingly nothing stopping ALE from appealing indefinitely and repeatedly.

[00:16:26] Speaker 03:
There probably ought to be some kind of threshold precondition of non-frivolousness.

[00:16:35] Speaker 03:
I have a hard time putting aside the question whether the district court was wrong and if there were no IPRs, what we would do

[00:16:44] Speaker 03:
in ruling on the merits of their counterclaim argument or maybe even and their argument about whether a final written decision, though it certainly doesn't require, it's not given immediate effect, preclusive effect, but as a matter of equitable discretion to either suspend the ongoing royalties or to stay the case,

[00:17:13] Speaker 03:
Certainly the contention that is non-frivolous that the district court should have considered that on its merits rather than saying I have no power to do it.

[00:17:27] Speaker 02:
The district court in the record below considered exactly what ALE requested which is to stay the case or sever the ongoing royalties depending on the determination later for the 012 patent issue.

[00:17:40] Speaker 02:
The district court found that once CRIMAR

[00:17:43] Speaker 02:
moved to dismiss the 012 patent, provided a sufficient covenant not to sue, there was nothing left for the court to resolve per the mandate.

[00:17:51] Speaker 02:
The only mandate from this court was to resolve infringement of the 012 patent.

[00:17:56] Speaker 03:
Okay, there's an additional non-frivolous contention, which is whether the mandate actually, which did not address the IPRs, which did not have effect yet, and yet there were ongoing royalties.

[00:18:14] Speaker 03:
Certainly a non-frivolous contention that the mandate, that the district court was wrong about the mandate too.

[00:18:22] Speaker 02:
I don't believe ALE has ever made an argument that

[00:18:25] Speaker 02:
the district court aired in reviewing its mandate.

[00:18:29] Speaker 02:
But the key issue was that the district court has equitable powers and discretion.

[00:18:34] Speaker 02:
And in every case that this court has reviewed, in every case that Ailey has cited, there has never been an abuse of discretion reviewing a Rule 60B5 motion.

[00:18:43] Speaker 03:
Can I get back a little bit to what Judge Hughes was talking about, Fresenius.

[00:18:47] Speaker 03:
One of the key cases Fresenius relies on is a Supreme Court case called Simmons.

[00:18:53] Speaker 03:
In Simmons,

[00:18:54] Speaker 03:
which I think this has not been true of our subsequent cases, but in Simmons, the Supreme Court said that even when the only issues left in the case that kept it alive were not patent issues at all, but an unfair competition question, the case was still live enough that when the Supreme Court later

[00:19:24] Speaker 03:
revivified the patent at issue, the previous otherwise final invalidation of that very patent in the case had to be reconsidered.

[00:19:37] Speaker 03:
Why is this not the mirror image of that?

[00:19:40] Speaker 03:
So that as long as there was something

[00:19:43] Speaker 03:
still non-frivolously live in the dispute between the parties so that ALE wasn't just keeping the case alive on frivolous grounds, but was keeping the case alive but on non-frivolous grounds, why doesn't Simmons require that?

[00:20:02] Speaker 03:
Again, all still by the assumption we're talking about.

[00:20:05] Speaker 03:
in validation of the claims at issue here in the IDRs being affirmed, why doesn't that mean that has to be given effect?

[00:20:15] Speaker 02:
Because that wouldn't be a final judgment under Rule 60B5.

[00:20:19] Speaker 02:
For Rule 60B5 relief, there must be a final judgment.

[00:20:23] Speaker 02:
ALE has argued that the judgment was non-final and therefore could be stayed.

[00:20:27] Speaker 02:
Subsequently, after the

[00:20:28] Speaker 02:
district court entered the amended final judgment they renewed their motion for procedural reasons but the real reason is that was the final judgment and there's nothing left for the district court to resolve matter of fact sitting here today there's no case or controversy between the parties because with respect to the 012 patent which was the basis for jurisdiction and

[00:20:48] Speaker 02:
to establish a case of controversy.

[00:20:51] Speaker 02:
ALE has received the exact covenant not to sue that it wanted.

[00:20:54] Speaker 02:
It included its distributors and customers.

[00:20:57] Speaker 03:
Therefore, the relief that ALE was seeking... Are you telling us something that we haven't been told until just this moment?

[00:21:04] Speaker 02:
No, that was in crime our second motion to dismiss.

[00:21:08] Speaker 02:
That what had changed... That the covenant not to sue was expanded?

[00:21:12] Speaker 02:
Correct, Your Honor.

[00:21:13] Speaker 02:
In addition, the asserted claims of the 012 were dedicated to the public and disclaimed.

[00:21:19] Speaker 02:
So there is no jurisdictional basis on the 012 patent anymore, even if there was an argument at the outset regarding the distributors

[00:21:27] Speaker 02:
and suppliers issue, which we disagreed.

[00:21:30] Speaker 03:
So that leaves the question whether there was a non-frivolously live dispute about various forms of stay, whether it's the ongoing royalties or the entire case.

[00:21:44] Speaker 02:
And the district court rightly found there was nothing left of the case, there was nothing left for the district court to do, other than to enter the final judgment, which it did, which is why there was no basis for a stay.

[00:21:56] Speaker 02:
Each factor to consider in looking at a stay weighed against a stay.

[00:22:01] Speaker 02:
Crime R would be prejudiced.

[00:22:02] Speaker 02:
The case was completed.

[00:22:04] Speaker 02:
There was nothing left to resolve.

[00:22:05] Speaker 03:
Where is that reasoning in the District Court's opinion?

[00:22:09] Speaker 02:
That, Your Honor, that's Appendix 31.

[00:22:20] Speaker 02:
Starting at 33 and 34, District Court found there were no more counterclaims.

[00:22:36] Speaker 06:
Well, this is before the covenant not to sue was expanded.

[00:22:41] Speaker 02:
Well, that's correct, Your Honor.

[00:22:43] Speaker 06:
And before the dedication of the public.

[00:22:45] Speaker 06:
Those two acts took place later.

[00:22:47] Speaker 02:
That's correct, Your Honor.

[00:22:49] Speaker 02:
But on Appendix 35 and 36, the District Court analyzed the exact relief that ALA requested to stay the case, to stay the ongoing royalties.

[00:23:00] Speaker 02:
The District Court found, number one, there's no basis for a stay, and number two, it'd be beyond the mandate.

[00:23:06] Speaker 03:
And this court has likewise found in cases like Versada, retractable technologies, Tronzo, that to review has relieved... I guess I'm having a hard time seeing, and there's one paragraph here, right, from 35 to 36, seeing an exercise of discretion as opposed to I am disempowered to even consider the question.

[00:23:33] Speaker 02:
Well, I believe in Appendix 35, the first sentence

[00:23:37] Speaker 02:
that once having dismissed the O-12PAT from this action with prejudice, there is nothing left for the court to resolve.

[00:23:43] Speaker 02:
ALE has filed a motion to stay and or sever the ongoing royalties pending appeal.

[00:23:47] Speaker 02:
But given that the sole basis for this court's jurisdiction on remand has been resolved by voluntary dismissal, there's nothing left to stay.

[00:23:55] Speaker 04:
Doesn't a court always have jurisdiction to reconsider equitable relief that's prospective?

[00:24:03] Speaker 02:
I think that is true.

[00:24:04] Speaker 02:
And had ALE requested that, that would be a different issue here on appeal.

[00:24:08] Speaker 06:
I thought they were making a request, generally in equity as well as what we heard in Rule 60.

[00:24:14] Speaker 02:
Yeah, I think the major issue and the problem with Ailey's position is they want to assign error to the district court for not considering something that Ailey did not request, namely relief from the judgment under Rule 60 because the equities have changed.

[00:24:31] Speaker 06:
Why do they have to ask under 60 what can they just say as a matter of the court's equitable powers?

[00:24:36] Speaker 02:
Well, I think they can, but the proper vehicle would be Rule 60B5 in this case.

[00:24:41] Speaker 06:
Why is that necessary?

[00:24:42] Speaker 02:
I think this court has said that other issues are beyond, are encompassed in the mandate.

[00:24:48] Speaker 06:
The mandate would prevent... What can only do with equity under Rule 60?

[00:24:52] Speaker 02:
I believe that's correct, Your Honor.

[00:24:54] Speaker 02:
So our final judgment to essentially modify or relieve a party from liability under the final judgment, Ailey would have had to have moved under Rule 60B5 properly.

[00:25:05] Speaker 02:
File that motion.

[00:25:06] Speaker 06:
Aren't they asking for that relief before there is a final judgment?

[00:25:09] Speaker 02:
they were and then they renewed that motion later so procedurally isn't their request for equitable relief before the final judgment is entered sufficient to preserve the issue of equity i think it it would be possibly had they asked for that relief and the key here your honor is that the relief they requested was a stay well i mean everybody knew what was going on the patents had been invalidated there was an ongoing royalty

[00:25:35] Speaker 06:
The strikes one is strange that anyone would be required to pay a royalty on an invalid patent going forward.

[00:25:43] Speaker 06:
And there was a prayer for give us some relief.

[00:25:47] Speaker 06:
They cite real 60B6.

[00:25:48] Speaker 06:
They also say, of course, you've got equitable powers.

[00:25:51] Speaker 06:
Chancellor sitting on the wool sack.

[00:25:53] Speaker 06:
Relieve us and stay this case so we find out whether or not these claims really are invalid.

[00:25:59] Speaker 06:
And if they're finally invalid, why should no one would argue that we should have to pay an ongoing royalty?

[00:26:05] Speaker 06:
Well, in your honor, I think there's that argument as I understood it was presented to the judge and the judge said I don't that too late.

[00:26:13] Speaker 06:
I have now dismissed the part of the case that was sent back.

[00:26:18] Speaker 06:
I have no power to address anything else.

[00:26:20] Speaker 02:
Well, no power and, you know, also the court has the discretion of whether or not to exercise its equitable powers.

[00:26:28] Speaker 03:
Right, but it's not clear that the judge exercised the discretion because it's not clear that the judge recognized that he had it.

[00:26:35] Speaker 02:
Well, it's also because the relief requested was not under Rule 60B-5 for modification of the judgment.

[00:26:42] Speaker 06:
So, assuming he did exercise the discretion, what would stop us from saying he made a mistake?

[00:26:47] Speaker 06:
The world knew what was on the table.

[00:26:49] Speaker 06:
Everybody knows about Simmons.

[00:26:51] Speaker 06:
Everybody knows about Fresenius.

[00:26:53] Speaker 06:
It's not like we're naive here.

[00:26:58] Speaker 06:
And the notion you would think probably a person who's paying royalties in the future on an appendix invalidated could come into the court years later and say, please stop it.

[00:27:07] Speaker 02:
They could.

[00:27:08] Speaker 02:
And I think once under Fresenius, this court has affirmed the PTO's decision of invalidity, a later motion for Rule 60B-5 relief, prospective royalties, would make sense.

[00:27:20] Speaker 02:
And you'd be more under the Fresenius framework.

[00:27:22] Speaker 02:
Looking at this case from the district court's perspective, what is the district court supposed to do when this court has said it is under the mandate unable to modify the judgment?

[00:27:31] Speaker 06:
The district court has read Simmons.

[00:27:32] Speaker 06:
The district court says, I'll just stay this and wait and see what happens, because if the Federal Circuit

[00:27:38] Speaker 06:
But at the same time, Your Honor, in this... I mean, that's what...

[00:27:48] Speaker 06:
That was in the air, it could not possibly have not been in the air and it would have consequences.

[00:27:53] Speaker 02:
It was in the air, but this court in crime R1 affirmed the totality of the damages while noting in footnote 2 of the crime R1 decision that these patents have been held invalid by a final decision from the PTO.

[00:28:08] Speaker 02:
So between this court's May 2018 decision and the district courts looking at it in July 2018 on Ailey's motion to stay, nothing had changed.

[00:28:18] Speaker 02:
There were no changed circumstances.

[00:28:20] Speaker 06:
There were no appeals pending in this court from the invalidity, just termination by the board.

[00:28:24] Speaker 02:
Well, correct.

[00:28:25] Speaker 06:
But what this court... Of the judge, I mean, Wright and Miller tells everybody, well, in these circumstances, ask the judge to stay because the judge doesn't want to get aggressive and do a Simmons ruling when it was in front of him when the Federal Circuit might flip the board on the invalidity.

[00:28:43] Speaker 06:
So you just close the book and wait and see what happens and then you follow the Supreme Court law.

[00:28:48] Speaker 02:
But there's no bright line rule for the district court to follow.

[00:28:51] Speaker 02:
There are bright line rules on the mandate in retractable technologies, Tronzo.

[00:28:57] Speaker 02:
This court has said that the district court is unable to go back and look at retrospective relief.

[00:29:03] Speaker 02:
The Amado v. Microsoft is probably most on point, where this court made a point.

[00:29:08] Speaker 03:
The problem is that if there had never been a Simmons case,

[00:29:16] Speaker 03:
that there could be a doctrine that says those aspects of a case that are unaffectable by the remaining, the still live aspects, the first aspects were over and done with.

[00:29:34] Speaker 03:
They are never subject to later reconsideration.

[00:29:38] Speaker 03:
But Simmons is just flatly to the contrary.

[00:29:41] Speaker 03:
The unfair competition claim kept the Pennsylvania case alive to undo the previously final patent validity ruling.

[00:29:50] Speaker 02:
There was a case or controversy between the parties that remained live, and that's not true here.

[00:29:56] Speaker 02:
The 012 patent is no longer a live issue.

[00:29:58] Speaker 02:
Even though there were ongoing royalties.

[00:29:59] Speaker 02:
Well, there are no longer ongoing royalties because these patents have expired as of April.

[00:30:05] Speaker 02:
So whatever damages this court has affirmed from the jury's verdict and post-trial, post-verdict royalties are set.

[00:30:12] Speaker 02:
They are fixed in a final judgment that this court has already affirmed that should not be disturbed by a later decision of the PTO, even if this court does affirm it.

[00:30:24] Speaker 02:
We have a problem with balancing Article III jurisdiction and finality versus later decisions by the PTO, which this court has looked at as recently as in vernetics.

[00:30:34] Speaker 02:
and found that this court's rulings should stand.

[00:30:39] Speaker 02:
Thank you, Your Honors.

[00:30:46] Speaker 01:
Let me address that last point first.

[00:30:49] Speaker 01:
The Supreme Court in oil states clarified what happens in IPR proceedings that is a constitutional exercise of the congressionally delegated authority of the Patent Office to reconsider its grant of patents.

[00:31:04] Speaker 01:
When it did so in this case, it determined that CRIMA has no legitimate scope to the asserted claims that it has used against ALE.

[00:31:14] Speaker 01:
That demanded reconsideration by the district court.

[00:31:17] Speaker 01:
The district court should have either stayed the case or entered an ongoing royalty rate of zero, which is what ALE requested in the briefing of the motion to stay at Appendix 336.

[00:31:31] Speaker 01:
ALE requested to stay or set the ongoing royalty rate to zero.

[00:31:35] Speaker 01:
There was also the request in the footnote with respect to Rule 60, which was re-urged after the district court entered the final judgment.

[00:31:45] Speaker 01:
Any arguments that Mr. Cohen made with respect to the finality and the mandate rule were correctly responded to by this court.

[00:31:55] Speaker 01:
Simmons demands this is still a live case in controversy on whether it is equitable to award ongoing royalties on patents that have been held invalid by the Patent Office.

[00:32:05] Speaker 03:
It is not equitable to require ALE to be... So it certainly was before April 18th, 2019, right?

[00:32:18] Speaker 03:
That's when the three non-012 patents expired.

[00:32:21] Speaker 01:
Yes, Your Honor.

[00:32:22] Speaker 03:
Why is it now?

[00:32:24] Speaker 01:
So the award of ongoing royalties that the district court entered in the amended final judgment was as part of its equitable discretion.

[00:32:34] Speaker 01:
It is the same thing that happened in Fresnius.

[00:32:36] Speaker 01:
The patents had expired when the district court entered the post-ferdict ongoing royalties and when this court applied collateral estoppel to render the Fresnius to move.

[00:32:53] Speaker 01:
It is only by its equitable discretion that the district court can award ongoing royalties.

[00:33:00] Speaker 01:
And when it revisited those ongoing royalties in the amended final judgment, it had to revisit the ongoing royalties to remove the scope of the 012 patent, because if this court will remember, the 012 patent is the only one of the four assertive patents that had an extra year of life on it.

[00:33:16] Speaker 01:
And so the district court revisited the ongoing royalties to remove the term attributable to the 012 patent, but declined to even consider that there had been a change in equities between the parties as a result of the final written decisions.

[00:33:30] Speaker 06:
I assume, just as a hypothesis, the district court had granted your request for an ongoing royalty rate of zero, and in order to that effect.

[00:33:42] Speaker 06:
Would you still be arguing here on Simmons that you're entitled to get rid of the damages award as well?

[00:33:49] Speaker 01:
Well, I have two responses to that, Your Honor.

[00:33:52] Speaker 01:
First, it is a hypothetical, and it's unclear

[00:33:55] Speaker 01:
whether ALE would have pursued an appeal at that point, because the ongoing royalties are certainly... Right.

[00:34:00] Speaker 06:
Part of what you're asking us is to decide that the district court erred in not having given you a zero royalty rate.

[00:34:07] Speaker 06:
So assume we agree with you, and there was an abuse of discretion or error of law or something, should have done that.

[00:34:15] Speaker 06:
So no pro-talk, enter that order.

[00:34:17] Speaker 06:
What's that do to your Simmons argument?

[00:34:19] Speaker 01:
Well, so with respect to separating the ongoing royalties from the judgment at this point in time, Ailey requested in its motion to stay as part of that request to sever and stay the ongoing royalty part of the case.

[00:34:33] Speaker 01:
Kramer opposed that severance.

[00:34:35] Speaker 01:
They waived the argument to separate the judgment from the award of ongoing royalties and the application of collateral stoppable to the judgment and the ongoing royalties in this case.

[00:34:44] Speaker 06:
The reason why I ask the question is it seems to me as a practical matter that it's the $325,000 plus in damages that's at stake here.

[00:34:55] Speaker 06:
I can't believe there's going to be an ongoing royalty paid when the patents expired and invalidated.

[00:35:04] Speaker 03:
Does the record tell us anything about roughly how much the ongoing royalties were?

[00:35:08] Speaker 03:
The $325,000 was the retrospective, right?

[00:35:10] Speaker 01:
Right.

[00:35:11] Speaker 01:
And the ongoing royalties would have been the jury rate of $1.2067 per POE port for the number of ports through the patent expiration.

[00:35:21] Speaker 01:
So it's orders of magnitude above what the jury's verdict was.

[00:35:28] Speaker 01:
Thank you.

[00:35:29] Speaker 03:
Thank you.

[00:35:29] Speaker 03:
Case is submitted.