[00:00:08] Speaker 04:
We have five cases on our calendar this morning.

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Four patent cases, two from district courts, two from the feet tab, and a veteran's case which has been submitted on the briefs and will therefore not be argued.

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Our first case is Columbia Sportswear versus Cirrus Innovative Accessories.

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2018-13-29.

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Mr. Aldrich.

[00:00:42] Speaker 04:
Aldrich?

[00:00:43] Speaker 00:
Aldrich.

[00:00:44] Speaker 00:
Aldrich.

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Judge Laurie, Judge Moore, Judge Stoll.

[00:00:50] Speaker 00:
My name is Niko Aldrich.

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I represent Columbia Sportswear.

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There are two critical and distinct sets of issues in this appeal.

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Columbia's appeal focuses on the utility patent and the district court's improper transfer of venue.

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Sears' appeal focuses on the design patent.

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I intend to rest on my papers with respect to most of the issues concerning the utility patent.

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I'll focus here solely on the new trial issue and will save the remainder of my time to discuss the important matters of first impression raised with respect to the design patent.

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The patent here claims a 30% to 70% coverage of heat directing elements over the inside of a garment.

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After a nine-day trial, a jury was asked to consider whether a patent was anticipated by or obvious in light of prior art that disclosed no more than 5% to 40% coverage and taught away from any additional coverage.

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That is a quintessential overlapping range, which this court has addressed in numerous cases and is a somewhat specialized area of this court's jurisprudence.

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The district court chose not to give Columbia's instruction number 33 to properly inform the jury how it was to consider the issue of overlapping ranges.

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Cirrus has identified no flaw in that instruction.

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Instead, the jury was given only a single instruction on the law of overlapping ranges.

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That was an erroneous explication of the law provided by Sirius's expert from the witness stand.

[00:02:26] Speaker 04:
But we have overlapping ranges.

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There's sort of a presumption of obviousness unless there's criticality shown, right?

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That's correct.

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There's a presumption of obvious which can be rebutted by a showing of criticality and there was numerous, numerous evidence in the case about criticality.

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This was a nine-day jury trial that really only had two issues.

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It had the validity of this patent and it had damages on the other patent.

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There were days of testimony on criticality.

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Instead, as I said, the jury was given only a single instruction, and that was an erroneous instruction, an erroneous explication of the law, by Cyrus's expert.

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That same expert put false information before the jury testifying that Fadunjer disclosed a single embodiment with 36% coverage.

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Thus, the jury was not appropriately instructed on the critical issue of how to address overlapping ranges.

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But more importantly, the jury's verdict was tainted by the false evidence submitted by Cirrus and its expert.

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Everyone agrees to the critical facts on that issue.

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Dr. Block never provided an opinion that Fadinger disclosed a particular percent coverage.

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Cirrus was asked at trial whether Dr. Block planned on providing such an opinion.

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Cirrus dodged the question and told the judge that it was math any high schooler could do.

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Dr. Block testified from the witness stand

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that Fondager disclosed.

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Sirius said at that hearing that Dr. Block, the demonstrative that they were seeking to enter into evidence and the testimony that would support it would not exceed his expert report.

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That's what they expressly told the court.

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Now, I think the testimony with the 36% actually did exceed his expert report for sure, but you didn't subsequently object.

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You said nothing.

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You cross-examined him.

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You did not do the most brilliant job either, despite how outrageous the mistakes were.

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But you didn't object thereafter.

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We objected to the entire line of questioning.

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You objected in advance of his questions.

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Yes, absolutely.

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Not to the line of questioning.

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You objected.

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And they represented to the court that he would not testify beyond the scope of the expert report.

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He clearly did, and the court said, okay, well, if he's not going to go beyond the report, I'm going to let it in.

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He then clearly did, during the trial, go beyond the report.

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But you didn't object.

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It's your obligation at that point to object and preserve it for appeal.

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You didn't.

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Respectfully I disagree.

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I think when we object, pardon?

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You disagree with the facts?

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You did object?

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No, no, I disagree that we had an obligation to object after the testimony was provided when we objected clearly before the testimony was provided.

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You didn't know what the testimony was going to be.

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You objected since it's a demonstrative.

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Well, we objected to all testimony.

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And associated technology.

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And the court said, well, what's this associated testimony going to be?

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And they said, he will not exceed his expert report.

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And the court said, OK, then go ahead.

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So the court was of the belief he was not going to exceed the expert report.

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The court doesn't.

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Come on.

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Do you think the district court is going to have read all these expert reports and listen question by question to see if he exceeds the scope of it?

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That's not the court's role.

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It's your role to object when they actually do what they told the court they're not going to do.

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It's not the district court judge's job to figure out question by question whether they've exceeded his expert report.

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You didn't bring it to the court's attention.

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And now you're complaining about it.

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So I mean, I'm sorry.

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But look, I think what he did was wrong.

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I find it repulsive.

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I read the whole transcript.

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I think he exceeded his expert report.

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And I think it was nonsense.

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And I don't know how you didn't absolutely nail him to a cross.

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Maybe that's a bad example.

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But nail him to something on cross-examination.

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He was belligerent.

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I don't know why the jury could have liked him based on what I read.

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But they did.

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And you didn't object.

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So there we have it.

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They were asked.

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in advance of the testimony, are you going to put on an additional number?

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And they said, well, he's going to provide math that any high schooler could do.

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And we objected on that basis.

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I don't think we had a duty to, after the testimony was provided, go back and object again.

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At that point, it would be a motion to strike.

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I mean, the information has already been given to the court.

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And so I think that the objection that we raised before the fact

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And I don't think that waiver has ever been raised by Cirrus with respect to the timing of our objection.

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I think that our objection was preserved by objecting to the slide and any testimony related to the slide, and that was clearly testimony related to the slide.

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which was false, which did not satisfy the standards, which Colombia never had a chance to challenge his opinions before they were provided.

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And it was an issue that went to the heart of both anticipation and obviousness.

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Against that background, we would offer that, respectfully, a new trial is required.

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And with that, I'll rest, unless there are further questions on my opening appeal.

[00:07:23] Speaker 04:
We'll save the rest of your time for you.

[00:07:25] Speaker 00:
Thank you kindly.

[00:07:30] Speaker 04:
Mr. Sproul.

[00:07:39] Speaker 02:
Your honors, may it please the court, Seth Sproul on behalf of Cirrus.

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I'd like to address, first of all, this particular issue with respect to Dr. Block's testimony regarding the coverage ratio of the example in Pfottinger's.

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Do you disagree that Dr. Block exceeded his expert report when he testified that the specific example in Pfottinger disclosed 36%, which would be squarely within the range as a matter of concrete and specific example?

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Dr. Block's expert report did not recite 36%.

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we were relying on was the answer yes the answer your honor is yes doctor blocks report did not contain that thirty six percent and so what we were offering to the court was

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And we said, this is high school math.

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I refer the court to page 22.

[00:08:31] Speaker 01:
But not only that, the 36% was wrong, right?

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As a matter of fact, it's not accurate.

[00:08:35] Speaker 02:
No, the 36%, as Dr. Block offered it, was correct.

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His math was correct for the area that he offered.

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And this is an important distinction.

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And why, among many other reasons, this testimony was not false.

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This is not false.

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We take umbrage with that characterization.

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The record doesn't support it.

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If you look at page 22, where you can see the picture of the area presented by Dr. Block, you see what we offered was a very simple square with four circles on it.

[00:09:05] Speaker 01:
But it was 36% of the diagram he drew.

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It wasn't 36% of the example in Thottinger, correct?

[00:09:11] Speaker 02:
No.

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It was his representation of the example from Thottinger.

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And I will get to the distinction and the difference between what they crossed him with and what their view

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You are arguing anticipation based on Pfottinger.

[00:09:25] Speaker 02:
Yes.

[00:09:25] Speaker 01:
So he draws a picture, which is not from Pfottinger.

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He then says, my picture shows 36%.

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Therefore, there's anticipation.

[00:09:32] Speaker 02:
Your Honor, it was from Pfottinger.

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And if I may explain, if you look at page 22, there's a picture.

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It's the best way to see it.

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There's no dispute that this is an accurate representation of Pfottinger's dots.

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And you have four circles and one square.

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You can figure out the coverage ratio based on that.

[00:09:50] Speaker 01:
I'm sorry, page 22 of your red brief.

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22 of our opening brief.

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22 of your red brief.

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Of our red brief, yes, Your Honor.

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There's no picture on page 22.

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Excuse me.

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I'm sorry.

[00:09:59] Speaker 02:
22 of Columbia's brief.

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My apologies.

[00:10:03] Speaker 02:
The blue brief.

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Four circles and a square.

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You can figure out the areas of the circles.

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figure out the area of the square, you can figure out the coverage percentage very easily based on that high school math.

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What Columbia was prepared to do and what they did was they crossed him on a different area of this.

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Columbia's theory was that that, as represented by Dr. Block, is accurate but does not represent what we would refer to as the unit cell, the repeatable unit over the entire surface of Pfottinger's fabric that he created.

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And so if you turn to page 26, what you see is the diagram that Columbia crossed Dr. Bloch with.

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This picture, which uses the dimensions that Dr. Bloch drew based on Fondre's description, but is a smaller area, Columbia- Look, 30% to 70% is not the same as 5% to 40%, right?

[00:11:08] Speaker 02:
That's right, Your Honor.

[00:11:09] Speaker 04:
So it doesn't sound like anticipation to me.

[00:11:13] Speaker 04:
But isn't your best argument that there's a presumption of obviousness and no showing of criticality?

[00:11:22] Speaker 02:
Certainly, Your Honor.

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That is a very strong argument here, especially where there was no showing of criticality.

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And I think we have substantial evidence in the record to show that, in fact, this claimed range was not critical.

[00:11:36] Speaker 04:
Why don't you address the cross-appeal?

[00:11:39] Speaker 02:
Very well, Your Honor.

[00:11:41] Speaker 02:
There are three primary issues in our cross-appeal.

[00:11:50] Speaker 02:
I'd like to start with the summary judgment.

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The district court erred in at least four ways by granting summary judgment against Sears in this case.

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First,

[00:12:00] Speaker 02:
The court found that the Cirrus logo appearing in the heat wave design.

[00:12:05] Speaker 04:
Your view, presumably, is that the fabric, the design is on the fabric, not the product.

[00:12:13] Speaker 02:
That's right, Your Honor.

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That's an issue in the article of manufacture.

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And we offered significant evidence.

[00:12:20] Speaker 04:
But that goes to the heart of determination of damages.

[00:12:23] Speaker 02:
Yes, Your Honor.

[00:12:27] Speaker 02:
I can move to that.

[00:12:28] Speaker 02:
We were the first district court to address the article of manufacture after the Supreme Court came down with its opinion in Samsung v. Apple.

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And the district court here largely adopted the recommended jury instructions from the Department of Justice with minor modifications.

[00:12:50] Speaker 03:
And that's because the parties don't appeal that, right?

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Do the parties agree that that's the proper test, or is it simply a matter of this is how the jury was instructed and we're not challenging it?

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I don't believe it's challenged here on appeal.

[00:13:05] Speaker 02:
It was down below in various aspects.

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Except that we do challenge the burden shift that the district court imposed on Cirrus.

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And that is a primary basis for our appeal here.

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Two other district courts, to my knowledge, have also addressed this same issue under Samson v. Apple.

[00:13:24] Speaker 02:
Judge Lucy Koh in the Northern District of California on remand and a judge in Eastern District of Wisconsin.

[00:13:31] Speaker 04:
But there really is no law on the issue.

[00:13:32] Speaker 04:
The SG's views are not law, right?

[00:13:34] Speaker 02:
That's right.

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However, Your Honor.

[00:13:39] Speaker 04:
So we can decide this based on what appears before us, right?

[00:13:46] Speaker 04:
You've got a design.

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which was on a number of products.

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And it seems rather strange then to say the design is the product.

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Which product?

[00:14:00] Speaker 02:
Yes, Your Honor.

[00:14:03] Speaker 04:
So that would support your view.

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that the design is distinct from the product and damages should be determined based on the value of the design rather than multiplicity of products.

[00:14:20] Speaker 02:
That's correct.

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Certainly under the facts of this case, we have a multi-component product that's accused of infringement.

[00:14:28] Speaker 02:
Under Samsung v. Apple, you didn't go through these.

[00:14:30] Speaker 04:
Multi-component of multiple products.

[00:14:32] Speaker 02:
We both, in fact, there's a large amount of variety amongst the various accused products.

[00:14:41] Speaker 02:
The court, in its summary judgment opinion, finding infringement, didn't identify which products infringed.

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It simply referred to the fact.

[00:14:48] Speaker 01:
I don't understand, because in some products, if I understand it right, the heat wave will be vertical.

[00:14:53] Speaker 01:
In other products, it'll be horizontal.

[00:14:55] Speaker 01:
Well, certainly if it's horizontal, it's starting to look more like Columbia's design than vertical.

[00:14:59] Speaker 01:
Why wouldn't there be a parsing for both infringement and potentially for damages for article manufacture between the different products?

[00:15:06] Speaker 01:
Like, let me give you an example.

[00:15:08] Speaker 01:
You have some gloves where the lining is sort of integral with the glove and that's where it is, but then you have others

[00:15:13] Speaker 01:
where the lining is both on the exterior, the images, the design, are both on the exterior and the interior.

[00:15:20] Speaker 01:
It seems to me like fact-finders could reach different impressions for both infringement and then ultimately for damages.

[00:15:27] Speaker 01:
What is the article based on?

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What are meaningful differences between the various accused embodiments in this case?

[00:15:34] Speaker 02:
Absolutely your honor and that is one of the errors Committed by the district court judge here is he took that away from the jury.

[00:15:41] Speaker 03:
What about damages?

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Do you think damages should be decided by the jury or by the court?

[00:15:46] Speaker 03:
I mean not damages, but what the article of manufacture is.

[00:15:49] Speaker 02:
Certainly here I think the balance of case law suggests that

[00:15:54] Speaker 02:
the determination of the article manufacturer certainly is an issue that should go to the jury it's it's part of the damages determination damages are what case law says typically legal uh... are you just talking about the idea that damages are generally a question of fact that go to the jury generally yes your honor and here uh... nothing suggests that uh...

[00:16:23] Speaker 02:
we should treat this any differently.

[00:16:26] Speaker 02:
I'd refer the court to Nike v. Walmart, which had a slightly different context, but there the court went through a sort of exhaustive analysis of whether or not Section 289, disgorgement of profits under Section 289, was properly considered damages or something other than that in terms of the marking statute.

[00:16:47] Speaker 02:
And the court found

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based on an Eighth Circuit survey of old case law that, in fact, profits under Section 289 were damages, and damages typically go to the jury.

[00:16:57] Speaker 01:
So can I ask you, I understand your appeal on damages to be largely a constitutional argument, a dispute between the parties about whether they should go to the jury or not, which is really a question of Seventh Amendment of the Constitution.

[00:17:10] Speaker 01:
Is that fair?

[00:17:12] Speaker 02:
Yes, Your Honor.

[00:17:12] Speaker 01:
OK.

[00:17:13] Speaker 01:
So if I were to agree with you,

[00:17:16] Speaker 01:
that I think that summary judgment of infringement were improper because there are a lot of different accused products which manifest the design in a lot of different ways, and arguably some could result in infringement and some might not, and that should go to a jury, then there's no, we would affirmatively should not reach damages, right?

[00:17:35] Speaker 01:
Because constitutional avoidance says, if you don't have to reach a constitutional issue, you shouldn't.

[00:17:40] Speaker 01:
And so if I were to agree with you on summary judgment and say, that shouldn't have been a matter of,

[00:17:45] Speaker 01:
summary judgment on infringement, it should have gone to a jury, then we shouldn't be touching that damages issue.

[00:17:51] Speaker 01:
Is that correct?

[00:17:53] Speaker 02:
I think there are reasons why it would be prudent to do so here, Your Honor.

[00:17:58] Speaker 01:
Do you know what the doctrine of constitutional avoidance is?

[00:18:01] Speaker 02:
I do understand that.

[00:18:02] Speaker 01:
What does that doctrine say?

[00:18:02] Speaker 01:
What does the Supreme Court consistently, in over 50 cases, said about the doctrine of constitutional avoidance?

[00:18:09] Speaker 02:
I have a general understanding that one shouldn't reach issues that aren't necessary for its determination.

[00:18:16] Speaker 01:
The doctrine of constitutional avoidance isn't one shouldn't generally reach issues that aren't necessary for their avoidance.

[00:18:20] Speaker 01:
That's a general matter of jurisprudence, judicial restraint, generally.

[00:18:25] Speaker 01:
Constitutional avoidance says if there's any way to decide the case other than the constitutional issues, the Supreme Court says you should choose that way.

[00:18:31] Speaker 01:
Because you should always, constitutional issues are just so important and so profound, and it guarantees the Supreme Court has to take the case.

[00:18:37] Speaker 01:
Which I'm sure you would love, because maybe you haven't argued in front of the Supreme Court, so that would be fun.

[00:18:41] Speaker 01:
I could see why you might enjoy that.

[00:18:42] Speaker 01:
But that's why they say to the appellate courts, don't do it.

[00:18:46] Speaker 01:
If there's any way to decide a case that does not necessitate resolving the constitutional issue, you should do that.

[00:18:52] Speaker 01:
Don't force us to take cases.

[00:18:54] Speaker 03:
So because your damages question for us includes the question of whether this issue should be decided by a judge or jury.

[00:19:03] Speaker 03:
Does it include that?

[00:19:04] Speaker 03:
Do we have to address that issue in order to be able to provide advice on damages in this case?

[00:19:11] Speaker 02:
No, Your Honor, I don't believe so.

[00:19:12] Speaker 02:
I think the court can address a smaller question that would actually be beneficial for other courts who are going to have to go through the same process again.

[00:19:20] Speaker 02:
And even the parties before you now, we will go back on remand, ideally, if you were to overturn the summary judgment, and then potentially come back up on this very same issue that's now before you.

[00:19:32] Speaker 03:
What is that smaller question?

[00:19:35] Speaker 02:
who gets to decide, and how you decide the article of manufacture.

[00:19:38] Speaker 02:
Where does the burden lie?

[00:19:41] Speaker 03:
That's judge or jury.

[00:19:42] Speaker 03:
Are you sure the two choices are jury or judge?

[00:19:44] Speaker 02:
Am I wrong?

[00:19:44] Speaker 02:
I'm sorry.

[00:19:44] Speaker 02:
I misspoke.

[00:19:46] Speaker 02:
And I didn't mean to address it in that form.

[00:19:49] Speaker 02:
Whether the burden should rest.

[00:19:52] Speaker 02:
So I shouldn't have said who gets to decide.

[00:19:55] Speaker 02:
Whether the burden should rest with the plaintiff in the first instance.

[00:19:58] Speaker 02:
The ultimate question, whether that should rest with the plaintiff, or whether that should be shifted

[00:20:03] Speaker 02:
to the defendant as the judge did here.

[00:20:05] Speaker 02:
And we think that question is not a jurisdictional question that touches the Seventh Amendment issue.

[00:20:10] Speaker 02:
That issue you can decide, and I think is properly before you.

[00:20:15] Speaker 03:
What else?

[00:20:15] Speaker 03:
Is there anything else, or is it just that issue?

[00:20:18] Speaker 03:
I mean, because the other questions that have to be grappled with at some point are, what is the test?

[00:20:24] Speaker 03:
Who decides what the article of manufacture is?

[00:20:29] Speaker 03:
We've already talked about the doctrine of constitutional avoidance on that one.

[00:20:33] Speaker 03:
But there's no challenge to the test.

[00:20:35] Speaker 03:
So is there anything else?

[00:20:39] Speaker 02:
Yes, Your Honor.

[00:20:41] Speaker 02:
Well, I take that back.

[00:20:43] Speaker 02:
Here, the parties are not disputing the jury instructions.

[00:20:47] Speaker 02:
And so I don't believe that that issue is necessarily before you, except to the extent of the question of the burden shift.

[00:20:55] Speaker 02:
And at least as far as whether or not this is an acceptable jury instruction, I think the fact that parties have agreed to it.

[00:21:04] Speaker 02:
District courts have now adopted it.

[00:21:08] Speaker 02:
is not insignificant.

[00:21:10] Speaker 04:
Chancellor, you wanted to save a little time to reply on your cross-appeal?

[00:21:15] Speaker 02:
Yes, Your Honor.

[00:21:15] Speaker 04:
We'll give you two minutes response time on your cross-appeal.

[00:21:18] Speaker 00:
Thank you.

[00:21:22] Speaker 00:
Thank you, Your Honor.

[00:21:24] Speaker 00:
Judge Moore, I wanted to just briefly address the waiver issue that Your Honor addressed in my opening remarks.

[00:21:33] Speaker 00:
Dr. Block had the slide in front of him, and he was asked to describe the slide.

[00:21:38] Speaker 00:
And in his three paragraph answer at the bottom of it, he said, and that gives us 36% coverage.

[00:21:46] Speaker 00:
So there was no specific question that I could have objected to, because he wasn't asked what is the percent coverage, which would give me the opportunity to object.

[00:21:53] Speaker 01:
So you're saying that if an expert dramatically exceeds his expert report, even if not somehow in response to a question,

[00:22:00] Speaker 01:
That you can't stand up and say, objection, your honor, we ask that that be stricken because the expert has exceeded his expert report.

[00:22:07] Speaker 01:
That's not something you could do.

[00:22:08] Speaker 00:
I mean, objection has to come before the answer.

[00:22:10] Speaker 00:
So at that point, I believe it's a motion to strike.

[00:22:12] Speaker 00:
And so if the concern is that we didn't move to strike after the false testimony was provided... Or ask for a curative instruction or ask for any other type of remedy... Again, I think we preserved our objection to the entire line of questioning and what we heard just now actually is, well, the math was actually right, but the demonstrative was completely wrong.

[00:22:33] Speaker 00:
It didn't show a unit cell, in which case our objection was... That's not what he said.

[00:22:36] Speaker 01:
Don't mischaracterize what the opposing counsel says.

[00:22:39] Speaker 01:
He did not stand up and say, our demonstrator was completely wrong.

[00:22:41] Speaker 01:
It didn't show a unit cell.

[00:22:43] Speaker 01:
He said, that's what you disputed.

[00:22:45] Speaker 00:
That it showed a unit cell.

[00:22:46] Speaker 01:
Don't overstate.

[00:22:47] Speaker 00:
I apologize.

[00:22:49] Speaker 00:
So just with that, I wanted to move on to the issue of the design patent.

[00:22:57] Speaker 00:
And I'm not sure, it sounds like the panel has a number of questions on process with respect to the design patent.

[00:23:02] Speaker 00:
To answer one of the questions, we did object to this particular jury instruction, but we are not raising that issue on appeal.

[00:23:10] Speaker 00:
One of the points that we thought was important is that the

[00:23:16] Speaker 00:
more than hundred-year-old doctrine that's now referred to as the entire market value rule is perfectly applicable in the design patent context.

[00:23:25] Speaker 00:
The court and Congress have been clear that when you're looking at a design patent, you're not supposed to apportion the design from the functionality of whatever it's applied to.

[00:23:36] Speaker 00:
The Dobson case

[00:23:38] Speaker 00:
And then the statute revision that came after the Dobson cases from the US Supreme Court made expressly clear that the entire purpose of Section 289 is to avoid having the design itself and the value of the design be the value that's dealt with in the context of design patent damages.

[00:23:59] Speaker 00:
Instead, whatever the design is applied to, you figure out the damages from that.

[00:24:04] Speaker 00:
And here, their argument is that the design was simply applied to a fabric.

[00:24:10] Speaker 00:
Well, the issue is that that fabric is the name of the product, right?

[00:24:15] Speaker 00:
The heat wave product is a heat wave design with wavy lines in the design.

[00:24:21] Speaker 00:
And then all of their logos and all of their marketing materials all emphasize heat wave.

[00:24:27] Speaker 00:
That fabric that is the distinguishing element

[00:24:31] Speaker 00:
all of their marketing materials drive consumer demand for their products based on the functionality of that fabric.

[00:24:40] Speaker 00:
So our argument to the jury on closing argument was, look, these are single component products and you're well within your rights to find that they're single component products and that's the end of it.

[00:24:50] Speaker 00:
But if you find that they're multi-component products,

[00:24:54] Speaker 00:
We believe that the article of manufacture to which the design is applied are the, I mean obviously on the ones that are made 100% from heatwave fabric, that's the article of manufacture.

[00:25:06] Speaker 00:
But even on the gloves, the article of manufacture is the glove as a whole and there's substantial evidence to support that.

[00:25:12] Speaker 00:
But even if you don't go there, even if you find that the fabric itself is the article of manufacture,

[00:25:21] Speaker 00:
We said that the profits that are earned on the gloves are the profits for that article, for that fabric, because that fabric is the distinguishing element.

[00:25:31] Speaker 00:
It is the sole source of consumer demand for those products.

[00:25:36] Speaker 00:
It is the source of their marketing.

[00:25:38] Speaker 04:
But without that design, the product may still have useful value.

[00:25:44] Speaker 00:
Without that fabric?

[00:25:45] Speaker 04:
without that particular fabric.

[00:25:48] Speaker 04:
Without the fabric with that design.

[00:25:52] Speaker 00:
Without the fabric that has the design.

[00:25:55] Speaker 00:
I mean, if they replace that fabric with some other fabric, they can sell gloves.

[00:26:00] Speaker 00:
And in fact, they did.

[00:26:02] Speaker 00:
And they've pointed this out.

[00:26:03] Speaker 00:
There are gloves that they sold that don't have it.

[00:26:05] Speaker 00:
And then there are gloves that they sold that did have it.

[00:26:07] Speaker 04:
The glove is an object of utility.

[00:26:12] Speaker 00:
Absolutely.

[00:26:13] Speaker 04:
Keeps hands warm.

[00:26:14] Speaker 00:
That's correct.

[00:26:15] Speaker 04:
Irrespective of the design, the wavy design.

[00:26:18] Speaker 03:
That is correct.

[00:26:19] Speaker 03:
And the material is a product of utility, irrespective of the design.

[00:26:23] Speaker 00:
The fabric itself is a... The fabric itself.

[00:26:25] Speaker 00:
Yeah, the fabric itself is a utilitarian product.

[00:26:27] Speaker 00:
That's correct.

[00:26:28] Speaker 01:
And so if they... But you just stressed that what they did in their advertising campaign, the reason people buy this is the heat wave product, the insulating product, the fabric.

[00:26:39] Speaker 01:
That's the utility of the product.

[00:26:41] Speaker 01:
What you didn't suggest to us is the reason people buy this is because it's got cool wavy lines on it.

[00:26:46] Speaker 01:
Because you can't claim anything useful in the design patent.

[00:26:49] Speaker 01:
You can only claim the appearance of it.

[00:26:51] Speaker 01:
And so what you have not suggested to us at all is that there are evidence that consumers wanted to purchase this or that they sold it based on the pretty design as opposed to the useful fabric.

[00:27:01] Speaker 00:
Yes, correct.

[00:27:02] Speaker 00:
But I don't think that that's the obligation.

[00:27:04] Speaker 00:
The obligation is to show what the damages, what the profits were for the article of manufacture to which it was applied.

[00:27:11] Speaker 03:
So the question now, though, is what is the article of manufacture?

[00:27:13] Speaker 03:
That's the first part of the damages inquiry, right?

[00:27:17] Speaker 00:
That's correct.

[00:27:18] Speaker 03:
Which doesn't really have anything to do with the entire market value rule.

[00:27:21] Speaker 00:
That's correct, too.

[00:27:22] Speaker 00:
I mean, well, at least as it was framed to the jury, it doesn't have anything to do with that.

[00:27:25] Speaker 00:
But our third argument was, if you should find

[00:27:29] Speaker 00:
that the article manufacturer is the fabric itself, the profits that they've earned for the fabric, if you have to figure out what the profits are that they've earned on the fabric, it is frankly the profits that they've earned on the gloves because the fabric is what sells the gloves.

[00:27:42] Speaker 00:
Right, we're not there.

[00:27:43] Speaker 03:
That's not before us and that's really purely hypothetical anyway because nobody's challenged the test here, right?

[00:27:51] Speaker 03:
There's only a challenge to the jury's, there's a challenge to the jury's determination of damages

[00:27:58] Speaker 03:
which is based on a determination that the article of fit manufacturers, the glove itself, regardless of whether it comprises, you know, you can see the lining or not, for example, right?

[00:28:09] Speaker 03:
It's all of their entire products.

[00:28:11] Speaker 03:
That's what the jury's damages award was based on, was profits on their full product.

[00:28:16] Speaker 00:
The profits on the full product.

[00:28:17] Speaker 00:
Yeah, that was the jury's determination.

[00:28:19] Speaker 03:
And we are going to... So would you have, do you think this is a question for a jury or for the court?

[00:28:25] Speaker 00:
Which question?

[00:28:26] Speaker 03:
The question of what is the article of manufacture?

[00:28:28] Speaker 00:
We believe that it's appropriately a question for... We believe it goes with the ultimate question of damages, the ultimate question of profits, the calculation of profits.

[00:28:38] Speaker 03:
And so that should be determined by who?

[00:28:40] Speaker 03:
And because we believe... Is it a question for the court or for the jury?

[00:28:44] Speaker 00:
Right, we believe that both are questions for the court.

[00:28:47] Speaker 03:
For the judge to decide.

[00:28:48] Speaker 00:
For the judge to decide, correct.

[00:28:52] Speaker 00:
So because the ultimate question, which is what are the profits, is a question for the court to decide, we believe that the subsidiary questions to that ultimate determination are also for the court to decide.

[00:29:03] Speaker 03:
How do you respond to the doctrine of constitutional avoidance point, which is that let's assume hypothetically that we make a determination that the district court erred by granting summary judgment of infringement, and we think it should be vacated.

[00:29:17] Speaker 03:
Then how do we address and provide advice on who should be deciding questions of damages in the design patent context?

[00:29:27] Speaker 00:
I mean, it's possible that the court doesn't get there.

[00:29:32] Speaker 00:
I don't have an idea if the court reverses on the issue of infringement, which we don't believe would be proper.

[00:29:39] Speaker 00:
I don't have a suggestion about how the court avoids the avoidance issue and gets to the question or instructs the courts about who's supposed to handle the issue going forward.

[00:29:50] Speaker 00:
We believe that the hard candy case provides exceptional guidance to that and perhaps the lower courts will be persuaded by the rationale provided by the 11th Circuit in that case going forward, but maybe it's beyond the purview of this court in those circumstances.

[00:30:04] Speaker 00:
I don't know.

[00:30:05] Speaker 02:
thank you counsel thank you very kindly thank you your honor I'd like to very briefly address this entire market value rule question first of all

[00:30:20] Speaker 02:
It's unclear and it's likely that the entire market value rule doesn't apply here.

[00:30:25] Speaker 02:
The guidance from the Supreme Court in Samsung v. Apple sets out a separate allocation structure where you look at the article of manufacture and then you determine the profits attributable to that article of manufacture.

[00:30:37] Speaker 02:
If it's less than the entire component, then you figure out some lesser profit.

[00:30:42] Speaker 02:
The standard for finding entire or for applying the entire market value rule is very, very high.

[00:30:48] Speaker 02:
Our integrations, 2018, you have to find that the patented feature was the sole driver.

[00:30:53] Speaker 02:
The evidence doesn't support that here.

[00:30:54] Speaker 01:
And it's the patented feature, which in this case is a design.

[00:30:57] Speaker 01:
So I guess what I don't understand is why does that mean if the design is placed on a useful component, people buy it because of the utility, not the design.

[00:31:10] Speaker 01:
does that mean a design patentee gets to claim the entire product?

[00:31:14] Speaker 01:
It doesn't.

[00:31:15] Speaker 01:
That application makes no sense to me.

[00:31:18] Speaker 01:
It's not for the fabric.

[00:31:20] Speaker 01:
It's but for the design in the damages world, right?

[00:31:23] Speaker 02:
That's absolutely correct, Your Honor.

[00:31:24] Speaker 02:
And it doesn't make sense legally or under the circumstances here.

[00:31:28] Speaker 02:
There was significant testimony that there were many other factors that users or customers would consider.

[00:31:34] Speaker 01:
Can you please turn to infringement, though?

[00:31:35] Speaker 01:
Because I don't know that we reach any of that if we're with you on infringement.

[00:31:40] Speaker 02:
I'm sorry.

[00:31:41] Speaker 01:
Infringement, can you turn to your position on infringement, your cross-appeal on infringement?

[00:31:45] Speaker 02:
Yes, Your Honor.

[00:31:46] Speaker 02:
Very briefly, I think there were at least four grounds on which the district court erred.

[00:31:51] Speaker 02:
First ground was to ignore the logo.

[00:31:54] Speaker 02:
relying primarily on the L.A.

[00:31:56] Speaker 02:
gear case.

[00:31:57] Speaker 01:
And all of those cases were about labels that were affixed really more so than designs which incorporated logos throughout and repeatedly, right?

[00:32:07] Speaker 02:
That's exactly right.

[00:32:08] Speaker 02:
Here we have an integrated logo that's visually disruptive to the underlying

[00:32:14] Speaker 02:
wave pattern.

[00:32:15] Speaker 01:
Repeated throughout the entire fabric.

[00:32:17] Speaker 02:
Within a square foot there are 58 separate series logos.

[00:32:20] Speaker 01:
This isn't like a little holo on your shirt which is just one little thing right here.

[00:32:23] Speaker 01:
It's all throughout.

[00:32:25] Speaker 02:
No, that's exactly right, your honor.

[00:32:26] Speaker 02:
LA Gear dealt with a complex 3D shoe where there was an admitted copy of the shoe design.

[00:32:32] Speaker 02:
And on that admitted copy was placed a logo.

[00:32:34] Speaker 02:
And the court said, no, you don't get out of infringement, admitted infringement, just by placing the logo.

[00:32:39] Speaker 02:
But that is not what we have here, where you have a relatively simple two-dimensional design interspersed with an ornamental logo.

[00:32:47] Speaker 02:
The test for determining infringement under design patent law is

[00:32:52] Speaker 02:
Would an ordinary observer find substantial similarity between the two designs?

[00:32:57] Speaker 02:
And what is the overall visual impression?

[00:33:00] Speaker 02:
And there's no question that at least the jury should have been able to decide whether or not that logo, that ornamental logo, repeated throughout the design was, in fact, or created some distinction, some dissimilarity in the overall visual impression.

[00:33:16] Speaker 02:
In addition, also disregarded the wave thickness.

[00:33:19] Speaker 04:
Of course, aside from the Lobo, turn it 90 degrees and it's the same, right?

[00:33:23] Speaker 02:
Well, that's not true.

[00:33:24] Speaker 02:
And it's a big step to get aside from the logo, because to do that, you need to remove the logo.

[00:33:28] Speaker 04:
So you're saying the logo is it?

[00:33:30] Speaker 02:
I'm saying the logo is the most important.

[00:33:32] Speaker 02:
But orientation, one way I've had it presented to me was there's a difference between prisoners and referees, right?

[00:33:39] Speaker 02:
And it's orientation.

[00:33:40] Speaker 02:
One's vertical, one's horizontal.

[00:33:42] Speaker 02:
We can't say it doesn't make a difference, or if a referee's lying on his side, he's a prisoner.

[00:33:46] Speaker 02:
That doesn't make any sense.

[00:33:47] Speaker 04:
I'll have to think about that.

[00:33:50] Speaker 04:
We'll take the case under advisement.

[00:33:52] Speaker 04:
Thank you, Your Honor.

[00:33:57] Speaker 04:
I think your argument is concluded.

[00:34:00] Speaker 00:
I believe I'm done.

[00:34:00] Speaker 04:
Yes, I think so too.

[00:34:02] Speaker 00:
Thank you, Your Honors.