[00:00:00] Speaker 03:
The first is number 18-1376, Cobalt Bolts versus Brunswick Corporation, Mr. O'Quinn.

[00:00:17] Speaker 00:
Thank you, Judge Dyke.

[00:00:17] Speaker 00:
May it please the court, John O'Quinn on behalf of Brunswick.

[00:00:21] Speaker 00:
I intend to focus much of my argument this morning on the district court's claim construction and the improper damages award.

[00:00:27] Speaker 00:
But let me start first with venue.

[00:00:29] Speaker 00:
After TC Heartland, there should be no reasonable dispute that venue was improper in the Eastern District of Virginia.

[00:00:34] Speaker 00:
And even the district court seemed to acknowledge that in Appendix 678.

[00:00:38] Speaker 03:
Do we know what is meant by separate entity here as to whether that means separate corporation?

[00:00:44] Speaker 00:
My understanding, that's right, my understanding is that would be a separate corporate subsidiary.

[00:00:49] Speaker 00:
With respect to the entity that owns the warehouse within the district, my understanding is that it's a separate corporate entity that's not simply just a... Does the record show that?

[00:01:01] Speaker 00:
I'm not sure off the top of my head, Judge Dyke, whether it does.

[00:01:06] Speaker 00:
I certainly can see if I can try to ascertain that today.

[00:01:09] Speaker 02:
Do you know what's stored in the warehouse?

[00:01:12] Speaker 00:
Judge Raina, I don't know what is stored in the warehouse.

[00:01:16] Speaker 02:
We don't know.

[00:01:16] Speaker 02:
It could be boat trailers for all we know.

[00:01:18] Speaker 00:
It could be.

[00:01:20] Speaker 00:
It could be any type of equipment.

[00:01:21] Speaker 00:
My understanding is that the warehouse is not related to the issues in dispute in this case, and that it is a separately owned entity.

[00:01:32] Speaker 05:
Is there anything in the record that shows us that?

[00:01:34] Speaker 05:
Because that's an interesting question.

[00:01:37] Speaker 00:
Well, I understand that it is.

[00:01:39] Speaker 00:
Now, that's obviously not the grounds on which the district court decided this, Judge Wallach.

[00:01:42] Speaker 00:
And so obviously, that's potentially grounds for a remand.

[00:01:48] Speaker 00:
Obviously, I think that if the record demonstrates that what you're dealing with is a separate corporate entity, and I believe that it does, and I'll see if I can confirm that for you today, then the mere fact that a parent corporation owns a subsidiary operating in the district can't be enough to establish it under Supreme Court precedent.

[00:02:05] Speaker 05:
If venue isn't proper in the Eastern District, what authority from this court, as opposed to a bunch of others, says the remedy for a case tried in the wrong venue is vacatur?

[00:02:18] Speaker 00:
I think that's right, Judge Wallach.

[00:02:19] Speaker 05:
No, but what from this court?

[00:02:22] Speaker 05:
I've seen lots from other courts.

[00:02:26] Speaker 05:
Sure.

[00:02:27] Speaker 00:
Sure.

[00:02:27] Speaker 00:
Well, I think that the authority from the Supreme Court, the Olberding case, 346 U.S.

[00:02:34] Speaker 00:
at 340, which reversed the jury verdict because it was tried in the improper venue, Lexicon versus Milberg Weiss, 523 U.S.

[00:02:41] Speaker 00:
at 41, saying reversal with a new trial is required where venue is precluded by governing statute.

[00:02:46] Speaker 00:
So I think that's governed by the Supreme Court precedent.

[00:02:49] Speaker 02:
There's cases that go the other way, too, right?

[00:02:52] Speaker 00:
I'm not aware of cases where you're dealing with improper venue in the sense of not a matter of convenience but actually as a matter of law being improper where the proceedings were allowed to stand because after all, as I think Judge Newman noted in her dissent when this issue was before this Court in the context of the mandamus petition,

[00:03:12] Speaker 00:
The trial is certainly a very important aspect of venue.

[00:03:18] Speaker 00:
That is to say that having trial in the right venue is a large portion of what venue is all about.

[00:03:24] Speaker 00:
And I think that's certainly true here where you have the patent-specific venue staff.

[00:03:28] Speaker 05:
If we decide to vacate based on venue, do we need to address any of the other issues at this point?

[00:03:35] Speaker 00:
Well, Judge Wallach, I think you can.

[00:03:37] Speaker 00:
And a different way of putting that is, venue- We can do lots of things.

[00:03:41] Speaker 05:
The question was, do we need to?

[00:03:43] Speaker 00:
Well, I think it would be appropriate for the court to address the other issues.

[00:03:48] Speaker 00:
For starters, venue is not an issue like subject matter jurisdiction that goes to the power of the court.

[00:03:54] Speaker 00:
Indeed, there are courts, I'll give you an example, that have said that venue is not a mandatory threshold issue.

[00:04:01] Speaker 00:
So Hanley versus Powell-Goldstein

[00:04:03] Speaker 00:
From the Second Circuit 2008, it's at 290 Federal Appendix 435, footnote 2, is a case where the court went on to reach the merits and reverse.

[00:04:13] Speaker 00:
And I think you could do that here, for example.

[00:04:15] Speaker 00:
I think it would be entirely appropriate to decide the claim construction and the infringement issue.

[00:04:19] Speaker 00:
And that actually would then moot the venue issue.

[00:04:21] Speaker 00:
Now, if you don't do that, then you would have to decide the venue issue.

[00:04:26] Speaker 00:
And I think that in so doing, it would certainly be appropriate for this court to give guidance, whether it is to the lower court in this case

[00:04:33] Speaker 00:
or a court that would ultimately- And advisory?

[00:04:36] Speaker 00:
Well, I don't know that it would be advisory, Judge Wallach, in the sense that, again, since venue is not jurisdictional, these issues are all present and live before the court.

[00:04:44] Speaker 00:
And just like this court will decide an issue of infringement or invalidity and then reach out and decide the other, even though after having decided the one, it might not- I'm comfortable with sending it back to a different judge in a different jurisdiction.

[00:05:00] Speaker 05:
and telling them, well, this is from the top, this is how you do it, because somebody may have done it wrong.

[00:05:10] Speaker 05:
You see what I'm saying?

[00:05:11] Speaker 00:
Well, I think, for example, it certainly wouldn't be unusual for this court to decide claim construction and tell whatever court would ultimately have this case, this is a appropriate claim construction.

[00:05:23] Speaker 00:
And similarly, I think that what happened here vis-a-vis damages is violation of

[00:05:27] Speaker 00:
every single one of the cases that this court has decided in the last decade addressing apportionment, the entire market value rule, the small assailable unit principle, and I think that this court would certainly benefit whatever court receives this case and district courts writ large to understand that from this court.

[00:05:46] Speaker 03:
Why don't you address the climate construction issue?

[00:05:48] Speaker 00:
Thank you, Judge Dyke.

[00:05:50] Speaker 00:
So turning to the issue of claim construction, the question is whether capable of being rotated 180 degrees means 180 degrees or something less than that.

[00:06:01] Speaker 00:
And I think it's important to note the claims here don't say about 180, and they don't use the kind of broadening language that this court has blessed for indicating an approximation.

[00:06:11] Speaker 00:
And as this court has said in generic, generic with a J,

[00:06:14] Speaker 00:
quote, without broadening words that ordinarily receive some leeway, the precise weight ranges do not avoid a strict numerical boundary to the specified parameter.

[00:06:25] Speaker 00:
And I think that similarly in U.S.

[00:06:27] Speaker 00:
Phillips, this court recognized that the use of ordinary numbers

[00:06:30] Speaker 00:
does not suggest an approximation and that's what you have here is the use of ordinary numbers 180 degrees and the approach that is urged by cobalt

[00:06:45] Speaker 00:
It's not discussed in the specification, Judge Dyk, and the reason for that is because this was added as an amendment to overcome prior art.

[00:06:52] Speaker 00:
And I think that even further demonstrates why it should be read strictly to mean what it says, 180 degrees.

[00:06:59] Speaker 00:
They specifically argued in order to overcome prior art,

[00:07:04] Speaker 00:
That quote, the prior doesn't teach a step capable of being rotated 180 degrees and that one piece of prior taught away from a step being capable of being rotated 180 degrees and that's an appendix 980 to 981.

[00:07:17] Speaker 00:
And I think that in light of that prosecution history,

[00:07:21] Speaker 00:
It is especially appropriate to apply the principle articulated in generic and US Phillips and hold them to the number because otherwise, if you don't, you will literally have vitiated the 180 degree limitation.

[00:07:34] Speaker 00:
Their argument is this is just an expression of flipping.

[00:07:37] Speaker 00:
We'll look at the claim language and just ignore the 180 and it's still an expression of flipping.

[00:07:42] Speaker 00:
It says it would say capable of being rotated between a stored position wherein said underside is exposed and a deployed position wherein said topside is exposed.

[00:07:52] Speaker 00:
The 180 would be doing no work.

[00:07:54] Speaker 03:
Both of those were added at the same time?

[00:07:56] Speaker 00:
They were added at the same time in the prosecution history to overcome prior art, some of which rotated less than 180 degrees.

[00:08:07] Speaker 00:
And of course, as this court said in

[00:08:10] Speaker 00:
in Norian, there's no principle of patent law that the scope of surrender during prosecution is limited to what is absolutely necessary to avoid a prior art reference that was the basis for rejection.

[00:08:21] Speaker 00:
So I think it would be appropriate and indeed required by this court's precedents to hold them to exactly what they said during prosecution of the patent and not give them something

[00:08:32] Speaker 00:
There's also, of course, the fact that the district court here did not even engage in a proper claim construction, just applying a plain and ordinary meaning analysis.

[00:08:42] Speaker 00:
But I think that certainly we argued at claim construction and at other points in the case for this construction, and that issues properly before the court.

[00:08:51] Speaker 00:
We don't have to worry about anything that's at 181 degrees.

[00:08:54] Speaker 00:
That's right, because the idea is if it's... You've designed around, or you've tried to design around.

[00:08:59] Speaker 00:
Well, that's right.

[00:09:02] Speaker 00:
Rotating less than 180 degrees doesn't meet the claim limitation.

[00:09:07] Speaker 00:
If something is capable of rotating 180 degrees, then it could go more.

[00:09:10] Speaker 00:
Just like if you're driving a car and it's capable of going 55 miles an hour, it means it's got to be able to go at least 55.

[00:09:17] Speaker 00:
Whether it can go 65, 75 is really neither here nor there.

[00:09:21] Speaker 02:
Were there opposing opinions posed by the experts before the jury as to the meaning of the 180-degree term?

[00:09:31] Speaker 00:
Well, Judge Raina, I think that what ended up happening is exactly what this Court has said in O2 micro and in other cases where the experts ended up arguing effectively about claim scope

[00:09:46] Speaker 00:
in front of the jury as to what it would mean.

[00:09:49] Speaker 00:
And so, yes, you did have arguments in front of the jury about what this ultimately would mean.

[00:09:55] Speaker 00:
And the district court said very explicitly that he was leaving it for the jury at Appendix 676.

[00:10:01] Speaker 00:
He said, quote, the experts differ on what he was referring to 180 degrees means, and I think the jury could differ on it.

[00:10:08] Speaker 00:
So I think that's an issue that's going to have to be resolved by the finder of fact.

[00:10:11] Speaker 00:
And similarly, at appendix 3049, quote, I think 180 degrees can arguably mean exactly that or not exactly that.

[00:10:19] Speaker 00:
Each side can take their positions on it.

[00:10:21] Speaker 00:
And that's, again, exactly what this court in 02 Micro and in Noble Biz has said that you're not supposed to do, which is allow the experts.

[00:10:31] Speaker 02:
02 Micro, if I remember correctly, there was no jury instruction.

[00:10:34] Speaker 02:
In this case, there is a jury instruction.

[00:10:37] Speaker 00:
Well, there was a jury instruction as to plain and ordinary meaning.

[00:10:41] Speaker 00:
And that is, the jury was instructed that it was plain and ordinary meaning.

[00:10:45] Speaker 00:
And with respect to the purported waiver argument that they make, which is not a waiver at all, it's just like what happened in PAP's licensing, shortly before the issue went to the jury, there were questions about clarifying the context of plain and ordinary meaning.

[00:11:02] Speaker 00:
And yes, we said that plain and ordinary meaning, the jury should be instructed that that means plain and ordinary meaning to a person of ordinary skill in the art with respect to all of the terms that he had construed to mean plain and ordinary meaning.

[00:11:14] Speaker 00:
And so certainly the claim construction is not waived.

[00:11:17] Speaker 00:
And the fact that he told the jury plain and ordinary meaning is not enough for the reasons this court has said in 02 micro.

[00:11:23] Speaker 00:
Now, if there are more questions on this.

[00:11:24] Speaker 05:
Your time's short.

[00:11:26] Speaker 05:
I'd like you to address at least a little.

[00:11:28] Speaker 00:
I would like to address it a little bit as well Judge Wallach I appreciate that because I do think that the award here violates principles articulated in cases like laser dynamics, vernetics, Erickson and of course most recently power integrations because the expert did exactly

[00:11:45] Speaker 00:
what this court has said you cannot do in a jury trial and they say this in their brief at page 54 that is use the quote profit margin of the boats sold with swim steps rather than the swim step alone and the methodology that they use does not attempt to determine the incremental value of the patented features compared to the countless non-patented features instead it starts literally with the entire market value of boats

[00:12:10] Speaker 00:
And then says, well, we're going to use 100% of the value of boats for 29% of boat sales.

[00:12:19] Speaker 00:
And by its own terms, those 29% are merely sales that were influenced by the swim step, not even that the swim step alone resulted in those steps.

[00:12:28] Speaker 00:
And you can see that at appendix 2356 to 57.

[00:12:32] Speaker 00:
And they used this number, this 29% of the entire value of the boat

[00:12:38] Speaker 00:
to come up with a high end for a range that they put in front of the jury of 5,400 and precisely to skew the damages horizon.

[00:12:45] Speaker 00:
And you can see them laying out the range using 29% of entire boat value at appendix 2671.

[00:12:53] Speaker 00:
And that is exactly what this court has said that you cannot do

[00:12:56] Speaker 00:
in Laser Dynamics, in Ericsson, and of course, most recently, in Power Integrations, where the court said, quote, where multiple component products are accused of infringement, the royalty base should not be larger than the smallest saleable unit embodying the patented invention.

[00:13:12] Speaker 00:
And this is the situation exactly that was contemplated in the Commonwealth Scientific case or the Syro case, where you have a damages model that, quote, apportions from a royalty base

[00:13:22] Speaker 00:
And if you were apportioning from a royalty base, quote, the model should use the smallest saleable patent practicing unit as the base.

[00:13:28] Speaker 00:
And they didn't precisely in order to be able to try to claim a piece of the boat and to put in front of the jury a theory that was 10 times their own profits when it came to swim steps.

[00:13:41] Speaker 00:
Didn't even try to apportion down to the specific patented feature of their particular swim step.

[00:13:45] Speaker 00:
Now, I see I'm well into my rebuttal, but I'm happy to answer further questions.

[00:13:49] Speaker 03:
We'll give you two minutes for rebuttal.

[00:13:51] Speaker 00:
Thank you, Judge Dyke.

[00:14:02] Speaker 01:
Thank you, Your Honor.

[00:14:03] Speaker 01:
May I please?

[00:14:03] Speaker 02:
If we wanted to, would we be able to decide the venue issue here, or is that something that we should send back to have the court review anew?

[00:14:12] Speaker 01:
Judge Rainey, you can decide the venue issue here.

[00:14:16] Speaker 01:
The record supports venue under the patent statute 1400 to address Judge Dyke's question about the separate entity in the warehouse issue.

[00:14:24] Speaker 01:
If you look in the record at appendix 152, Mr. Anderson's declaration, paragraph 15, he does call it a separate entity.

[00:14:33] Speaker 01:
The record is silent on whether it's a subsidiary, but if you look at paragraph 16,

[00:14:38] Speaker 01:
Whenever he wants to call it a subsidiary, when he's talking about a separate Brunswick entity, C-Ray, he does say a wholly owned subsidiary.

[00:14:47] Speaker 01:
The distinction that Brunswick is trying to make in their briefing with the warehouse that's in the district that's wholly owned by the defendant under Cray factor three is that the boat group, which is the group that's responsible for designing the infringing boats in this case, or swim steps,

[00:15:01] Speaker 01:
doesn't do business in the district.

[00:15:03] Speaker 01:
But that puts another requirement into the venue statute when you're trying to figure out what a regular and established place of business is of a defendant.

[00:15:11] Speaker 01:
You're adding an additional requirement which would then be a regular and established place of the defendant by which the business unit within that defendant has conducted the infringing activity.

[00:15:21] Speaker 01:
And that's just not the requirement.

[00:15:24] Speaker 05:
Well, you're drawing a distinction between 15, paragraphs 15 and 16.

[00:15:31] Speaker 05:
But one of them says, and it seems to be what you're talking about as whole ownership, but one says a separate entity owned by Brunswick, and one says a wholly owned subsidiary of Brunswick.

[00:15:48] Speaker 05:
How does that distinction work?

[00:15:51] Speaker 01:
Well, it shows that whenever they want to determine whether it's a subsidiary versus just merely a division,

[00:15:57] Speaker 01:
or another entity, which the record is silent on when you're talking about the warehouse.

[00:16:02] Speaker 01:
They knew how to make that distinction.

[00:16:03] Speaker 05:
They made a distinction between a wholly owned subsidiary, and a subsidiary is a specific entity.

[00:16:10] Speaker 01:
It is.

[00:16:11] Speaker 05:
It is, Your Honor.

[00:16:11] Speaker 05:
And a different kind of entity.

[00:16:13] Speaker 01:
It is.

[00:16:15] Speaker 01:
And the record in this case, one, is silent on what the warehouse is.

[00:16:20] Speaker 01:
There's no doubt that under Cray Factor III that it's owned by Brunswick.

[00:16:24] Speaker 01:
it's a place of the defendant and that they're doing business.

[00:16:26] Speaker 03:
If this is a separate subsidiary, that isn't sufficient for venue, right?

[00:16:31] Speaker 01:
I don't agree.

[00:16:33] Speaker 03:
Really?

[00:16:33] Speaker 03:
What possible case can you cite that support that proposition?

[00:16:37] Speaker 01:
They are conflating the jurisdictional analysis with the venue analysis.

[00:16:41] Speaker 01:
Brunswick relies on the Cannon case from the Supreme Court.

[00:16:44] Speaker 03:
What case suggests that the fact that a separate subsidiary is doing business in the district, as a regular place of business in the district, is sufficient for venue?

[00:16:54] Speaker 01:
The only cases I have, Your Honor, are not from this court and are district court opinions in the copyright context, whenever they're talking about subsidiaries sufficient to establish venue for the copyright statute, the Southern District of New York.

[00:17:08] Speaker 01:
But in this context... You don't contest that Brunswick's incorporated in Delaware.

[00:17:14] Speaker 01:
No.

[00:17:15] Speaker 01:
No.

[00:17:16] Speaker 01:
There's no issue about the first part of 1400B.

[00:17:19] Speaker 01:
We're talking about regular and established place of business, and specifically Cray Factor III.

[00:17:26] Speaker 01:
And the reason that the canon authority that they cite is inapplicable here, one, it's a Supreme Court case from 1925, well before the patent venue statute was created.

[00:17:35] Speaker 01:
But two, they're dealing with issues of jurisdiction there.

[00:17:39] Speaker 01:
And in Cray, this court cautioned about conflating issues of jurisdiction and patent venue.

[00:17:45] Speaker 03:
The Supreme Court has said that if there's improper venue after a trial, that's a ground for setting aside the judgment, right?

[00:17:54] Speaker 01:
yes but in this instance fourteen hundred has to be read in connection with fourteen oh six uh... which is what this court advised in micron and it's something that runs with doesn't consider in their briefing or in their argument what do you know i don't understand what you're talking about are you saying there's a waiver here i'm trying to say there there is a waiver under fourteen oh six and that the court had the inherent waiver under fourteen oh six of the supreme court in Dietz says that uh...

[00:18:21] Speaker 01:
the court does not have the inherent power to deprive a party of its statutory rights.

[00:18:25] Speaker 01:
We agree with that.

[00:18:26] Speaker 01:
However, the statute 1406, which is a statutory right, says that nothing in this chapter shall impair the jurisdiction of a district court of any matter involving a party who does not interpose timely and sufficient objections to venue.

[00:18:40] Speaker 01:
And that's exactly what this court considered in mind.

[00:18:45] Speaker 05:
They made an, when they answered, as I recall, when they answered the complaint, they objected to venue.

[00:18:50] Speaker 05:
Is that not correct?

[00:18:51] Speaker 01:
Yes.

[00:18:52] Speaker 05:
Okay.

[00:18:53] Speaker 05:
Yes, it is correct.

[00:18:54] Speaker 01:
Yes, you are.

[00:18:54] Speaker 05:
Okay.

[00:18:55] Speaker 05:
When, uh, when, uh, the Supreme court came down within what, a day they notified the, the, the district court.

[00:19:05] Speaker 00:
I don't know.

[00:19:05] Speaker 05:
And then they filed their motion within three days.

[00:19:07] Speaker 05:
Three days.

[00:19:10] Speaker 05:
They, they, they very quickly filed their motion.

[00:19:12] Speaker 05:
Yes, your honor.

[00:19:13] Speaker 05:
And then.

[00:19:14] Speaker 05:
And the district court said, no, no, it's not retroactive.

[00:19:19] Speaker 05:
And then when we came down and said, yes, it is retroactive, they notified the court again.

[00:19:26] Speaker 05:
And at that point, the court said,

[00:19:27] Speaker 05:
waiver because you've dithered.

[00:19:31] Speaker 05:
And it lists the three things I've just talked about, that you objected to venue when you answered the complaint, and then you filed these two venue motions.

[00:19:43] Speaker 05:
How is that waiver?

[00:19:46] Speaker 01:
Your Honor, the statute talks about timely and sufficient.

[00:19:50] Speaker 01:
And we're on the eve of- Well, how is it not timely?

[00:19:52] Speaker 04:
They did it.

[00:19:54] Speaker 04:
in the eyes of lawyers and the law, instantly.

[00:20:00] Speaker 01:
Your Honor, I don't dispute that they moved quickly.

[00:20:02] Speaker 01:
And I think you have to look at the circumstances of this case, a case that is, on the eve of trial, one of the first cases after T.C.

[00:20:10] Speaker 01:
Hartline.

[00:20:11] Speaker 05:
So what?

[00:20:12] Speaker 05:
The Supreme Court comes down, and then we come down.

[00:20:16] Speaker 05:
I don't care if it's in the middle of the trial.

[00:20:19] Speaker 05:
If a superior court

[00:20:24] Speaker 05:
uh... enters a presidential decision which is binding on the district court are you saying that the district court point in time simply ignore it no no i'm not your honor but i'm saying at the time the court did not have the benefit of this court's uh... in remicron decision

[00:20:40] Speaker 05:
And the court did when it ignored in-ring micron.

[00:20:44] Speaker 01:
Well, the court in that case, though, says.

[00:20:47] Speaker 03:
Well, micron doesn't suggest that you can find waiver just because it's on the eve of trial, does it?

[00:20:51] Speaker 03:
There has to be some delay in addition to it being on the eve of trial.

[00:20:55] Speaker 03:
Isn't that correct?

[00:20:57] Speaker 01:
Micron is silent on the issue.

[00:20:59] Speaker 01:
Micron, when they remanded the case back, the court didn't remand for consideration only under $1,400.

[00:21:06] Speaker 01:
They didn't remand in order for the court to transfer.

[00:21:08] Speaker 03:
So you agree that Micron does not hold it just because it's on the eve of trial and you can find a waiver if they were otherwise prompt, right?

[00:21:19] Speaker 01:
I don't know if Micron goes that far.

[00:21:20] Speaker 01:
I think Micron leaves open the question of considerations that the court can

[00:21:26] Speaker 01:
under 1406 factual considerations to determine whether a transfer should be denied.

[00:21:31] Speaker 03:
A 30-day delay six months before trial might not be significant.

[00:21:36] Speaker 03:
A 30-day delay six weeks before trial might be significant.

[00:21:40] Speaker 03:
In that sense, you can take account of how near the trial is.

[00:21:44] Speaker 03:
But you've got to find some delay, some undue delay.

[00:21:49] Speaker 03:
And like Judge Wallach, I'm having difficulty seeing where the undue delay was here.

[00:21:55] Speaker 01:
And I think that it goes to the timely and sufficient aspect of the statute under 1406.

[00:22:00] Speaker 01:
And two weeks before trial, considering 1406, Federal Rule of Civil Procedure 1, where litigants should be given a just and inexpensive determination of their dispute, that is a timely, is perhaps on the facts of this case, something that the court in its discretion decided that it could not transfer the case.

[00:22:24] Speaker 05:
Why don't you talk about your damages issue?

[00:22:26] Speaker 05:
Yes, Your Honor.

[00:22:27] Speaker 05:
Because I think you have real problems with that.

[00:22:31] Speaker 05:
On page 55 of the red brief, you say, Mr. Walsh, not Wallach, Mr. Walsh's estimate that the swim step generated 25% to 33% of boat sales was based on substantial evidence, including information Mr. Walsh received as Cobalt's chief financial officer from salesmen, independent dealers, and customers.

[00:22:53] Speaker 05:
Is that hearsay?

[00:22:54] Speaker 01:
No, Your Honor.

[00:22:56] Speaker 01:
Why not?

[00:22:57] Speaker 01:
He is a layperson.

[00:22:59] Speaker 01:
He is the executive of the company.

[00:23:01] Speaker 01:
He had personal interaction with the dealers.

[00:23:04] Speaker 01:
He had interaction with the sales team.

[00:23:07] Speaker 05:
Are other court statements being asserted for the truth of the matter contained therein?

[00:23:10] Speaker 01:
That is the definition of hearsay, Your Honor.

[00:23:13] Speaker 01:
Yes, it is.

[00:23:14] Speaker 01:
I agree with that.

[00:23:16] Speaker 05:
So it is hearsay.

[00:23:18] Speaker 05:
Then the question is, is there an exception?

[00:23:20] Speaker 05:
Will you agree to say yes, no no I agree to say okay.

[00:23:24] Speaker 05:
Is there an exception and if so what is it does he have any business records?

[00:23:29] Speaker 01:
He had those conversations he did not with that that is not in the record here your honor The two points that were made by Mr.. Quinn one on the entire market value rule issue and

[00:23:44] Speaker 01:
Cobalt's expert very clearly here invoked the Georgia-Pacific factors and apportioned the rate, just like this court said you could do in Exmark, to reach his conclusion.

[00:23:56] Speaker 01:
He systematically walked through each of the Georgia-Pacific factors.

[00:24:00] Speaker 01:
He tied the factors to the evidence.

[00:24:03] Speaker 01:
And unlike the expert in Exmark, Mr. Hoffman and Cobalt's expert, he said the net effect of each factor up or down on the rate

[00:24:13] Speaker 03:
x marks the lawnmower case, right?

[00:24:15] Speaker 03:
Yes, your honor.

[00:24:16] Speaker 03:
But there the patent was on the entire item.

[00:24:20] Speaker 03:
Here the patent is only on the step.

[00:24:23] Speaker 03:
That's the problem.

[00:24:26] Speaker 01:
I think that reads too much into x mark as being a requirement.

[00:24:29] Speaker 01:
The court there notes that that's why having the entire lawnmower as the SSPPU is a reason for it being appropriate.

[00:24:39] Speaker 01:
But here the claim also

[00:24:43] Speaker 01:
The patent is not usable unless it's on a boat.

[00:24:47] Speaker 01:
The claim says a retractable step for use with a boat in water.

[00:24:51] Speaker 01:
The claim limitations talk about taking the step and rotating it above the surface of the water to below the surface of the water.

[00:24:58] Speaker 01:
The step by itself... Does a boat work without a step?

[00:25:01] Speaker 01:
The boat works without the step, but the step doesn't work without the boat, and that's why the boat is the SSPPU.

[00:25:07] Speaker 03:
Could you address the claim construction issue?

[00:25:10] Speaker 03:
I find your suggestion that there was a waiver of the claim construction argument to be somewhat misleading.

[00:25:17] Speaker 03:
At the Markman hearing, they specifically urged the claim construction that they're urging now about the 180 degree limitation.

[00:25:27] Speaker 03:
What basis do you have for suggesting that they gave that up later on?

[00:25:34] Speaker 03:
Yes.

[00:25:36] Speaker 03:
They did raise it, right, at the Markman hearing, right?

[00:25:40] Speaker 03:
Yes.

[00:25:40] Speaker 03:
And the judge ruled against them.

[00:25:42] Speaker 03:
He said, I'm not going to do that.

[00:25:43] Speaker 03:
I'm going to say plain and ordinary meaning.

[00:25:45] Speaker 01:
You're right, Your Honor.

[00:25:46] Speaker 01:
And I don't disagree that once you raise something in a Markman hearing, you don't have to keep raising it again to preserve your right to it.

[00:25:52] Speaker 03:
So there's no waiver here?

[00:25:54] Speaker 01:
No.

[00:25:54] Speaker 03:
Yes or no?

[00:25:56] Speaker 01:
There is a waiver.

[00:25:57] Speaker 01:
There's invited error.

[00:25:59] Speaker 01:
And here's how we get there.

[00:26:00] Speaker 03:
OK.

[00:26:01] Speaker 01:
Here's how we get there.

[00:26:02] Speaker 01:
At the jury instruction conference, sensing that there might be a dispute on this issue, Cobalt's counsel specifically raised and cited O2 micro to the court and said, Your Honor, we may be heading down a path that we shouldn't head down.

[00:26:18] Speaker 01:
There's an O2 issue here regarding this 180 degree limitation term, appendix 3200 to 3201.

[00:26:31] Speaker 01:
And I encourage the court to don't take my word for it, don't take Brunswick's word for it.

[00:26:35] Speaker 01:
Please take a look at it.

[00:26:36] Speaker 01:
Cites the case by name.

[00:26:39] Speaker 01:
goes on a little further, and then says, but I don't know if Brunswick thinks we have an 02 issue.

[00:26:43] Speaker 01:
Brunswick's counsel gets up and distinguishes the current situation here from an 02 situation, and then engages in a dialogue back and forth with the clerk to amend the construction.

[00:26:56] Speaker 01:
And then says, after the amendment is adopted by the court, Brunswick's proposal says, so I think we can resolve this dispute by saying, and that's at the appendix at 3202,

[00:27:07] Speaker 01:
gives a proposal and the court agrees and Brunswick agrees that that resolves the dispute.

[00:27:13] Speaker 03:
Dispute about the plain and ordinary meaning instruction, not the dispute about whether there should be a 180 degree limitation instruction.

[00:27:24] Speaker 01:
Well, they were arguing for a construction for 180 degrees that means at least 180 degrees.

[00:27:31] Speaker 01:
There was a dispute about whether the term needed to be constructed, which is their O2 argument.

[00:27:36] Speaker 05:
Let me ask you a couple of questions.

[00:27:37] Speaker 05:
One, is the value of the swim step equivalent to the value of the boat?

[00:27:41] Speaker 05:
It's not the same.

[00:27:42] Speaker 05:
No, Your Honor.

[00:27:44] Speaker 05:
Second, on page 36 of the red brief, you say, I'm trying to do a little housekeeping here.

[00:27:50] Speaker 05:
You say, as this court has stated,

[00:27:54] Speaker 05:
And I'm going to insert, the district court rightly found forfeiture under its inherent power.

[00:28:03] Speaker 05:
That ruling was not unreasonable or an abuse of discretion, period.

[00:28:09] Speaker 05:
No citation.

[00:28:10] Speaker 05:
To what were you speaking?

[00:28:12] Speaker 05:
Because I couldn't find anything where we said that.

[00:28:19] Speaker 05:
Bottom of page 36, last sentence.

[00:28:24] Speaker 05:
See what I'm saying?

[00:28:26] Speaker 05:
But you don't cite anything.

[00:28:36] Speaker 01:
We don't cite anything.

[00:28:38] Speaker 01:
So where did we say that?

[00:28:53] Speaker 01:
I believe it's intended to refer to the mandamus petition in Ray C. Ray, where the court ruled that the judge shouldn't have tried to... But of course we didn't have the benefit of later law, did we?

[00:29:11] Speaker 01:
No, Your Honor, you did not.

[00:29:13] Speaker 01:
Your Honor, I see that I'm over time.

[00:29:14] Speaker 03:
Yeah, but you're not going to sit down, because there's still questions.

[00:29:19] Speaker 03:
Excellent.

[00:29:19] Speaker 03:
On the claim construction issue, if we get past the question of waiver, we hold that there's no waiver.

[00:29:23] Speaker 03:
Why is it that the appellant's claim construction isn't correct under the generic case?

[00:29:31] Speaker 03:
This is not an about limitation.

[00:29:33] Speaker 03:
It's a specific limitation.

[00:29:35] Speaker 03:
Why shouldn't we read it as a specific limitation?

[00:29:39] Speaker 01:
Two reasons.

[00:29:41] Speaker 01:
you correctly noted earlier, the specification is silent as to 180 degree limitations.

[00:29:47] Speaker 01:
When you look at the intrinsic record here, the claim amendment was added during prosecution in connection with a topside and underside limitation.

[00:29:56] Speaker 01:
This is not like a chemical case, generic where you've got

[00:30:01] Speaker 01:
claimed ranges and concentrations in a specification and you're trying to talk about the most effective concentration of a chemical.

[00:30:10] Speaker 01:
This is a simple case where you had a step and you've got prior art where a step goes from horizontal to vertical.

[00:30:17] Speaker 03:
But essentially you're asking us to construe it as though the language was about 180 degrees, right?

[00:30:23] Speaker 01:
I'm actually going to construe it as it means to flip, and whatever 180 degrees would mean to one of ordinary skill in the art.

[00:30:31] Speaker 05:
Well, why isn't Mr. Aucoin right that you could delete 180 degrees from that language, and it would still mean to flip?

[00:30:39] Speaker 05:
So is that just extraneous language?

[00:30:42] Speaker 01:
No.

[00:30:43] Speaker 01:
The step, the top side and the underside limitations were added to distribute wear and tear on a step.

[00:30:49] Speaker 03:
But they show flipping, right?

[00:30:51] Speaker 03:
They require flipping.

[00:30:53] Speaker 01:
the top side and the underside?

[00:30:54] Speaker 01:
Yes.

[00:30:55] Speaker 01:
They require flipping, but they don't necessarily show how that's going to be done.

[00:31:00] Speaker 01:
The top side, the step could go from here to here.

[00:31:05] Speaker 01:
But this step goes from here.

[00:31:06] Speaker 01:
It could go from a horizontal upward-facing position to below the surface of the water where the top side remains the same.

[00:31:16] Speaker 01:
But here, the step

[00:31:18] Speaker 01:
has a top side that becomes an underside, and vice versa, as the step is moved from the stored to the deployed position.

[00:31:26] Speaker 01:
And this court has also said.

[00:31:27] Speaker 03:
But if we construe this as the flipping limitation being there without the 180 degree language, doesn't that addition of the 180 degree language become significant?

[00:31:43] Speaker 01:
It shows how the step is moving from a store to deployed.

[00:31:46] Speaker 01:
The topside and underside limitations show the interchangeability of the topside and the underside as it's moving.

[00:31:52] Speaker 03:
But if you wanted to have 180 degrees mean about 183s, why didn't you say so?

[00:32:00] Speaker 01:
It could have been drafted better.

[00:32:02] Speaker 01:
I don't dispute that.

[00:32:03] Speaker 05:
But from the context of the- If you had it at 270 degrees,

[00:32:07] Speaker 05:
kept going.

[00:32:08] Speaker 05:
It wouldn't work, would it?

[00:32:10] Speaker 01:
No.

[00:32:10] Speaker 01:
And that's not the context of the invention.

[00:32:11] Speaker 05:
If you had it at 90 degrees, it wouldn't work, right?

[00:32:13] Speaker 05:
No.

[00:32:14] Speaker 05:
OK.

[00:32:15] Speaker 05:
So you could have said about 180, but didn't.

[00:32:19] Speaker 05:
You specifically said it's got to be completely flat.

[00:32:24] Speaker 01:
Yes.

[00:32:24] Speaker 01:
In the context of the invention, it flips over.

[00:32:27] Speaker 05:
To be exactly 180 degrees?

[00:32:29] Speaker 05:
No, Your Honor.

[00:32:31] Speaker 05:
From the position in which it was then standing?

[00:32:36] Speaker 01:
I think that ignores the evidence in the record, in the intrinsic record, and reads too much into the amendment of the 180 degrees, which is distinguishing from art that has a step that goes from horizontal to vertical.

[00:32:48] Speaker 05:
Yeah.

[00:32:49] Speaker 05:
I mean, I'm concerned with the actual real world issue there.

[00:32:53] Speaker 05:
If it was at 175, it would be a slight slope.

[00:32:56] Speaker 05:
And if it was at 185, it would be a slight slope.

[00:32:58] Speaker 05:
And that might be dangerous.

[00:33:00] Speaker 05:
We don't know.

[00:33:01] Speaker 05:
It says 180.

[00:33:06] Speaker 05:
We can at least presume there's a reason for that.

[00:33:11] Speaker 01:
Your Honor, the evidence in the case, as one of ordinary skills in the art would understand the term, whenever the step is on a boat and the platform is there, the platform sits down at a little bit of an angle in the water.

[00:33:23] Speaker 01:
And the rotation, depending on how the step is mounted on the boat,

[00:33:26] Speaker 01:
with the platform is not going to be a perfect 180 degrees because when you put these things in the water they sag a little bit and that's what one of ordinary skill in the art Mr. Dyer testified about.

[00:33:37] Speaker 01:
It's what Mr. Berman testified about in the appendix at page 2773 talking about the varying angles of the step as the boat sits in the water.

[00:33:50] Speaker 03:
That's just an argument you should have written it differently.

[00:33:52] Speaker 03:
It's not an argument that

[00:33:54] Speaker 03:
A specific reference to 180 degrees should somehow mean about 180 degrees when you didn't use that language.

[00:34:02] Speaker 01:
It's an argument that one of ordinary skill in the art in the context of this invention and the intrinsic record of this case would understand the 180 degrees to mean to flip it over or about 180 degrees.

[00:34:15] Speaker 02:
Going back to the venue issue, your opponent, Mr. Quinn, says that if we were to send it back

[00:34:24] Speaker 02:
for a venue decision that we could nonetheless decide some of these other issues.

[00:34:30] Speaker 02:
What's your view on that?

[00:34:32] Speaker 01:
If you send it back to the venue, send it back to the district court for the venue, you could decide some of these other issues.

[00:34:43] Speaker 01:
I think the court certainly could.

[00:34:48] Speaker 01:
But if you send it back to a venue, I guess it just depends on how the court sends it back.

[00:34:53] Speaker 01:
sends it back with considerations under 1406.

[00:34:56] Speaker 01:
So we vacate.

[00:34:57] Speaker 01:
You vacate.

[00:34:58] Speaker 05:
And we say, wrong venue.

[00:35:02] Speaker 05:
The question is, do we tell the new court, wherever they are, Delaware or wherever, here's our instructions about how to decide this case?

[00:35:12] Speaker 05:
That's the question you're being asked.

[00:35:16] Speaker 01:
Your Honor, I'm sure the court certainly could.

[00:35:18] Speaker 01:
I don't have any good authority for you right now to determine whether you should do that or not.

[00:35:24] Speaker 03:
OK.

[00:35:26] Speaker 01:
Thank you.

[00:35:26] Speaker 01:
Your Honor, thank you very much for your time.

[00:35:29] Speaker 01:
May I briefly conclude?

[00:35:31] Speaker 01:
No, I think we're out of time.

[00:35:32] Speaker 01:
Thank you.

[00:35:33] Speaker 01:
Thank you.

[00:35:40] Speaker 00:
Mr. O'Klin?

[00:35:44] Speaker 00:
Thank you, Judge Dyke.

[00:35:45] Speaker 00:
Judge Raina, with respect to your last question, again, this is not a steel co-situation where it's a question of the court's jurisdiction.

[00:35:51] Speaker 00:
You can decide the claim construction and the infringement issue, and if you do, that would moot the venue issue.

[00:35:57] Speaker 03:
In addition to the Second Circuit case that I cited, let me also- There are cases where we've remanded for further proceedings where we've

[00:36:05] Speaker 03:
Provided plain construction or other guidance.

[00:36:08] Speaker 00:
Absolutely, Judge Dank.

[00:36:10] Speaker 00:
Absolutely.

[00:36:11] Speaker 00:
And the only thing I was going to do was refer you.

[00:36:12] Speaker 00:
There's a Ninth Circuit case that assumed personal jurisdiction much in the same way vis-a-vis venue, SMEMA versus U.S.

[00:36:19] Speaker 00:
Air Force 147 F-3rd, 1148 at Footnote 1.

[00:36:23] Speaker 00:
Turning to the dispute at the charge conference that my colleague was referring to as your honor noted, Judge Dyke, the dispute was over the plain and ordinary meaning construction.

[00:36:34] Speaker 00:
They were suggesting glomming some things onto that.

[00:36:37] Speaker 00:
We didn't agree with the things they wanted to glom on.

[00:36:39] Speaker 00:
We offered a different suggestion of things to glom on.

[00:36:44] Speaker 00:
But we never waved or gave up the argument that we made that about 180

[00:36:48] Speaker 00:
what one eighty should be and of course the district court knew that the district court said that appendix ten that there is no waiver here and the district court if you look at the charge conference in context starts out at appendix thirty one eighty seven saying I'm not going to define a hundred eighty as I said before that's a matter on which the experts disagree and both sides can argue their case

[00:37:08] Speaker 00:
But I'm not going to amend my definition.

[00:37:10] Speaker 00:
So that was the context in which that discussion was taking place.

[00:37:14] Speaker 00:
With respect to the limitation here, Judge Dyke, they are trying to turn the 180 into about 180.

[00:37:20] Speaker 00:
They didn't claim about 180.

[00:37:22] Speaker 00:
And indeed, this court has said in cases like Quantum Corp versus Rotemi, 65 F3rd at 1577, this court has invalidated patents that came out of a re-exam

[00:37:33] Speaker 00:
where parties have added terms like approximately or about in front of a numerical limitation, precisely because it was broadening.

[00:37:41] Speaker 00:
And that's what they're trying to do here during claim construction, having surrendered that territory during prosecution of the patent.

[00:37:48] Speaker 00:
One final point with respect to the venue issue, and that's this.

[00:37:52] Speaker 00:
The argument, of course, the argument about waiver is inconsistent with this court's en banc decision in for she versus principi.

[00:38:01] Speaker 00:
where this court held, quoting the D.C.

[00:38:04] Speaker 00:
Circuit, that appellate courts will consider an issue not even raised at trial, where a supervening decision has changed the law in appellant's favor, and the law before that was so well settled at the time of trial that any attempt to challenge it would have appeared pointless.

[00:38:17] Speaker 00:
And that's 284 F.3.1356.

[00:38:19] Speaker 00:
Thank you, Judge Dyke.

[00:38:20] Speaker 03:
Thank you.

[00:38:21] Speaker 03:
Thank both counsel.

[00:38:22] Speaker 03:
The case is submitted.