[00:00:00] Speaker 03: versus merch. [00:00:49] Speaker 00: Good morning. [00:00:50] Speaker 03: We're ready to proceed. [00:00:54] Speaker 00: Good morning. [00:00:55] Speaker 00: May it please the court? [00:00:56] Speaker 00: Kyle Fleming for MercSource. [00:00:59] Speaker 00: I guess I would start by maybe giving a little bit of the background of the case for our viewers here. [00:01:06] Speaker 00: In 2016, MercSource entered into a license agreement for several patents with Dodo Case. [00:01:13] Speaker 00: Could you speak up? [00:01:14] Speaker 00: Oh, I'm sorry. [00:01:16] Speaker 00: The patents relate to virtual reality headsets where you slip your mobile phone in and look through a viewer and you can experience 3D viewing. [00:01:27] Speaker 00: Unfortunately, the party's relationship deteriorated. [00:01:30] Speaker 00: So when was the license agreement? [00:01:33] Speaker 00: In 2016. [00:01:35] Speaker 00: In December 2017, Dodo Case filed a district court action in San Francisco against MercSource, and approximately one month later, [00:01:45] Speaker 00: Merck Source filed an IPR and two PGRs against three of the patents that it had licensed. [00:01:52] Speaker 00: Shortly thereafter, the district court entered a preliminary injunction against Merck Source, ordering it to effectively ask the PTAB to withdraw those petitions from consideration. [00:02:06] Speaker 03: So nothing's been happening? [00:02:08] Speaker 03: Has anything happened in the district court? [00:02:10] Speaker 03: I mean, are they free to proceed back to the merits? [00:02:13] Speaker 03: We're still in a P.I. [00:02:14] Speaker 03: case, a preliminary injunction case here. [00:02:17] Speaker 03: But has the underlying merits case proceeded? [00:02:20] Speaker 00: No. [00:02:21] Speaker 00: So this court granted an emergency motion to stay the preliminary injunction. [00:02:30] Speaker 00: And in June, I believe of last year, the district court [00:02:34] Speaker 00: state the district court proceedings pending the PTAB proceedings. [00:02:39] Speaker 00: And what's the status of the PTAB proceedings? [00:02:44] Speaker 00: The briefing is nearly done, and I believe argument is scheduled for late May. [00:02:48] Speaker 00: So they were instituted. [00:02:49] Speaker 00: They were instituted. [00:02:50] Speaker 00: And when is argument scheduled for? [00:02:52] Speaker 00: I believe it's May 21st. [00:02:54] Speaker 03: And when does it? [00:02:55] Speaker 03: I mean, they've got a year. [00:02:56] Speaker 03: They've got a clock running. [00:02:57] Speaker 03: So are we getting close to the clock? [00:02:59] Speaker 00: The clock has expired. [00:03:00] Speaker 00: Or I'm sorry. [00:03:03] Speaker 00: I'm sorry, I was talking about a different one-year provision. [00:03:05] Speaker 00: Yes. [00:03:06] Speaker 01: So what precisely is being enjoined by the preliminary injunction? [00:03:09] Speaker 01: I understand that the preliminary injunction orders the email that you're talking about to the PTAB, asking the PTAB to shut down the case, essentially. [00:03:21] Speaker 01: Yes, that's correct. [00:03:24] Speaker 01: That seems to me to be more compelling somebody than enjoining somebody. [00:03:30] Speaker 01: Does it tell? [00:03:33] Speaker 01: Does it tell the case not to take any further action in the IPR? [00:03:41] Speaker 00: What's the enjoyment? [00:03:43] Speaker 00: Yeah, so the injunction ordered Merck's source or the parties to jointly contact the PTAB and to indicate that the court had issued an injunction under this venue or forum selection clause. [00:04:01] Speaker 04: What page of the record are you referring to? [00:04:04] Speaker 04: I assume it's in, I know it's in the record. [00:04:06] Speaker 04: Can you just refer us to the page where the order is? [00:04:09] Speaker 04: Sure. [00:04:10] Speaker 04: Page 24. [00:04:15] Speaker 03: So the order went to, just ordering you to ask the PTABs to withdraw. [00:04:28] Speaker 03: Effectively, yes. [00:04:29] Speaker 03: It didn't go so far, I mean, I think this is odd kind of thing because there's no, the district court has no authority to order the PTAP that I know of to cease proceedings or to dismiss the case. [00:04:42] Speaker 03: I think that's correct. [00:04:43] Speaker 03: So she tells you to go and ask for, file a motion to dismiss. [00:04:50] Speaker 03: Yes. [00:04:50] Speaker 03: And seek dismissal. [00:04:52] Speaker 03: There's nothing further right. [00:04:54] Speaker 03: She doesn't, I mean, I guess, I don't know what I would have done if I were a district court judge and I wanted to stop the P tab. [00:04:59] Speaker 03: I guess I could have said, ordered you all to not proceed. [00:05:06] Speaker 03: I don't know how else to effectuate this. [00:05:08] Speaker 00: Right, right. [00:05:10] Speaker 00: Yeah, I don't think the order is entered required anything more than just this preliminary contacting of the board. [00:05:16] Speaker 03: Can I ask you, the other oddity about this, a preliminary injunction, we've never seen, I've never seen one like this. [00:05:22] Speaker 03: So the other oddity about issuing a preliminary injunction in this case is if you did what she told you to do, and if you were successful, in other words, if the PTAB granted your motion to dismiss, then that would kind of be, wouldn't that resolve everything about this case? [00:05:41] Speaker 03: Because once you've dismissed the case, even if you were to win below on the merits, [00:05:48] Speaker 03: I think you will have forfeited your ability to go back to the P tab in that circumstances because there would be a time bar. [00:05:54] Speaker 00: That's correct. [00:05:56] Speaker 00: That's correct. [00:05:56] Speaker 00: So the time bar in our queue. [00:05:57] Speaker 03: Effectively, a preliminary injunction, the consequences of this preliminary injunction, one of two. [00:06:04] Speaker 03: Either it's irrelevant because the P tab doesn't listen to you, which they don't have to. [00:06:08] Speaker 03: Correct. [00:06:09] Speaker 03: Or if they listen to you, then it's served effectively as a permanent injunction. [00:06:14] Speaker 03: Correct. [00:06:16] Speaker 04: The same could be true the other way as well, right, from the patent owner's point of view, in that even this preliminary injunction might not stop those proceedings and having the PTO reevaluate the patentability of the patent that they had previously issued. [00:06:36] Speaker 04: Correct. [00:06:36] Speaker 04: I mean, they don't have to, the PTO doesn't have to dismiss the IPR just because you asked. [00:06:42] Speaker 00: That's correct. [00:06:43] Speaker 00: They would not have. [00:06:44] Speaker 03: So what happens next? [00:06:47] Speaker 03: They move forward, let's assume, hypothetically, they issue a final decision in three months, and they invalidate the path. [00:06:56] Speaker 03: So then if the, let's assume the parallel proceeding, the district court, goes to the merits, issues a permanent injunction, and says, no, you have to adjudicate the validity. [00:07:10] Speaker 03: Who wins that fight? [00:07:12] Speaker 03: Who wins that race? [00:07:13] Speaker 00: I assume that if the PTAB [00:07:16] Speaker 00: finds the patents invalid, then that's the end of the inquiry. [00:07:21] Speaker 03: So in a way, there's kind of irreparable harm to both of you in the absence of a final decision, right? [00:07:31] Speaker 00: Yes. [00:07:33] Speaker 00: I'm not sure I would phrase it that way, but of course. [00:07:36] Speaker 00: Well, I'd give you irreparable harm. [00:07:38] Speaker 03: I mean, certainly we think that we... And it's troubling, and I don't, you know, nobody is, I can't point the finger to any one individual and say, you got us into this mess, you got us into this mess, but this seems to be quite a quagmire. [00:07:52] Speaker 00: Yeah, I think perhaps the fundamental problem in this, creating this quagmire, was the district court's view that disputes arising out of or under the license somehow applied to the PTAP proceedings. [00:08:07] Speaker 00: So it wasn't the former venue clause was not all-encompassing. [00:08:12] Speaker 00: It was written to cover only disputes arising out of or under the party's license. [00:08:19] Speaker 03: So what's your best argument? [00:08:19] Speaker 03: Because that kind of language in a license agreement has, in other instances, been construed quite broadly. [00:08:27] Speaker 03: And validity is part and part. [00:08:29] Speaker 03: I mean, it's clearly a factor in any license agreement. [00:08:33] Speaker 03: There's an infringement and there's validity. [00:08:35] Speaker 03: So why isn't she right? [00:08:38] Speaker 03: on that conclusion. [00:08:39] Speaker 00: Yeah, because Manetti-Farrow, which is the Ninth Circuit case that deals with applying a contractual form selection clause to non-contract claims. [00:08:51] Speaker 00: And what Manetti-Farrow says is that we will apply this contractual form selection clause if the non-contract claims either are created by the contract, the rights or duties are created under the contract, [00:09:07] Speaker 00: or you need to interpret some provision in the contract to resolve this other dispute. [00:09:14] Speaker 04: Doesn't our precedent, though, say that there are cases where we've written and we've said the arising out or under in a license agreement includes validity challenges, right? [00:09:24] Speaker 04: So isn't that question pretty answered? [00:09:27] Speaker 00: I don't believe that there's any case out there that says arising out or under a license includes the validity challenge. [00:09:37] Speaker 00: There is the general protect case, which is discussed by the parties, where it was arising out of a settlement agreement, but the dispute there was an infringement action. [00:09:53] Speaker 00: brought in the ITC. [00:09:56] Speaker 03: Well, what about... I'm looking at some. [00:09:58] Speaker 03: It's been a long week. [00:09:59] Speaker 03: Texas Instruments. [00:10:00] Speaker 03: There's some very broad language, in our opinion, in Texas Instruments. [00:10:04] Speaker 03: Texas Instruments versus Tessera. [00:10:08] Speaker 03: Are you familiar with that case? [00:10:10] Speaker 00: Yes. [00:10:13] Speaker 00: Again, I think that looking at the specific language that's at issue and the... [00:10:21] Speaker 03: that's used in this particular license agreement, the arising out of or... Well, the language, I mean, I just have a snippet of a paragraph from that opinion, but it quotes the language which may arise from, under, or out of, or in connection with this agreement. [00:10:39] Speaker 03: That's pretty close to your language, right? [00:10:42] Speaker 00: Well, I guess I would say that maybe in connection with or some of that other language might be broader. [00:10:48] Speaker 00: than the arising out of or under language? [00:10:51] Speaker 03: Well, it went on to say patent infringement disputes do arise from license agreements. [00:10:56] Speaker 03: You would agree with that. [00:10:56] Speaker 00: Patent infringement disputes do. [00:10:59] Speaker 03: There may be an issue as here of whether certain goods are covered by the licensed patents or the licensee may elect to challenge the validity of the licensed patent. [00:11:09] Speaker 03: Thus, the governing clause in the present case, as in any patent license agreement, necessarily covers disputes concerning patent issues. [00:11:17] Speaker 03: So we seem to, unless [00:11:19] Speaker 03: Your argument is the in-connection was what we were really focusing on. [00:11:23] Speaker 03: It seems this arising language has been interpreted very broadly by our court, which we're bound by, right? [00:11:29] Speaker 00: Well, I think this is a matter of Ninth Circuit law. [00:11:32] Speaker 00: The interpretation of a foreign selection clause is a question of... Isn't it? [00:11:37] Speaker 04: But this is a patent issue. [00:11:38] Speaker 04: I mean, this is a patent license involving patent validity. [00:11:43] Speaker 04: So wouldn't the Federal Circuit's law on these specific issues unique to patent law [00:11:48] Speaker 00: Well, I think the general scope of the clause would be Ninth Circuit Law. [00:11:55] Speaker 00: Now, maybe the issue of public policy, can you give up your right to petition the PTAB? [00:12:00] Speaker 00: Or some of these other issues that we raised would be a matter of Federal Circuit Law. [00:12:04] Speaker 00: But I think that the construction of this clause, the scope of this clause is not particularly unique to patent law. [00:12:16] Speaker 00: It just happens to apply. [00:12:17] Speaker 04: Your license agreement specifically says that the agreement shall automatically terminate upon the invalidity of the patent, so then you wouldn't have to pay royalties anymore, right? [00:12:29] Speaker 00: That's correct. [00:12:33] Speaker 04: I think that that was the rationale that the Texas Instruments case was relying on for finding that validity could arise under the agreement is because [00:12:43] Speaker 04: If the licensee, if the patent is found invalid, then the licensee no longer has to pay the royalty amounts. [00:12:49] Speaker 00: Yeah, but I think that the question is, is the dispute, which in this case the dispute is, are the patents valid? [00:12:57] Speaker 00: And that's the issue that the PTAB is addressing. [00:13:01] Speaker 00: Does that issue arise out of or under the license? [00:13:06] Speaker 00: And I think the answer there is no. [00:13:07] Speaker 03: But if you had in connection, [00:13:10] Speaker 00: I think in connection with is broader. [00:13:12] Speaker 00: And there are some cases that talk about in relation to or relating to as being a broader concept than arising out of or under. [00:13:22] Speaker 03: You're not suggesting that a form selection clause that said you can't go to the PTAB, you've got to go to the district court, would be in and of itself a violation of public policy. [00:13:36] Speaker 03: I mean, we, you know, the district court agreed with you, I guess, that under, does it matter to me or none of you, which is for the court case, that you can't have a provision that would preclude you from raising the challenge. [00:13:48] Speaker 03: Correct. [00:13:49] Speaker 03: But you think just a form of, where parties voluntarily, I understand you say that's not this case, but if parties voluntarily say any validity disputes here will not be [00:14:00] Speaker 03: be decided by the PTAP, it will be decided by the state forum case, that would be a violation, null and void is a violation of public policy? [00:14:09] Speaker 00: Yes, I think we would say that that is a violation of public policy because... Well, in all cases, I mean, they have corresponding jurisdiction. [00:14:17] Speaker 03: Nothing in the AIA dislodged the district court's ability to adjudicate patent validity, so there is proper... You have a venue to challenge validity. [00:14:26] Speaker 00: Yeah, that's true, but I think that when we cite the... [00:14:30] Speaker 00: I think the MCM case and some of the other cases where they recognize that the PTAB itself has an interest in being able to review patents that it's already issued. [00:14:41] Speaker 04: But can't two business entities decide that they don't want to go to the PTAB and in determining that this particular patent is going to be licensed for particular royalties, include within that that instead of going to the PTAB or to other places even, that it's going to be in a California district? [00:15:00] Speaker 04: Why can't two parties do that? [00:15:02] Speaker 00: Because I think that the public policy interest that exists in favor of the PTAB reviewing its own agency decision and granting that patent in the first place. [00:15:11] Speaker 03: How can that be? [00:15:12] Speaker 03: That would suggest that parties can never settle a case in the option of if there's some sort of global government interest in reviewing every patent before it's enforced, [00:15:26] Speaker 03: It just can't be. [00:15:27] Speaker 03: That rationale would preclude parties from ever settling a case if that settlement would mean that the PTAP can't review the validity. [00:15:36] Speaker 00: Settlement cases are different, and I think this court's case, Flexfoot, which was a follow-on to the Lear idea that parties couldn't give up the right to challenge the validity of a patent and a license. [00:15:50] Speaker 00: This court carved out an exception, and that is to settle the existing litigation. [00:15:56] Speaker 00: There was already the Lear decision that said parties can't contract away the right to challenge a patent. [00:16:03] Speaker 00: And then FlexFoot says, except in settlement of litigation, because we're going to recognize this countervailing public policy that favors settlements. [00:16:13] Speaker 00: And I think the same logic can apply here. [00:16:18] Speaker 03: We've exceeded your rebuttal, which we'll restore. [00:16:20] Speaker 00: OK, thank you. [00:16:20] Speaker 03: And let's hear from the other side. [00:16:22] Speaker 03: Thank you. [00:16:29] Speaker 02: Good morning, if it may please the court. [00:16:33] Speaker 03: Can I ask you as a threshold matter, who are you representing? [00:16:36] Speaker 02: I represent Dodo Case and DDC at the district court. [00:16:41] Speaker 03: Okay, and Dodo Case no longer exists as a separate entity. [00:16:45] Speaker 03: It's part of the other entity? [00:16:47] Speaker 02: No, that is incorrect. [00:16:48] Speaker 02: Dodo Case still exists as a separate entity. [00:16:51] Speaker 02: Dodo Case transferred the patents at issue in the underlying action, the patents involved in the master licensing agreement, [00:16:59] Speaker 02: to DDC and additionally transferred the causes of action from the district court. [00:17:05] Speaker 03: So why is Dodo case here at all? [00:17:07] Speaker 03: Why isn't it just DDC? [00:17:09] Speaker 02: Where is your standing in this case? [00:17:12] Speaker 02: So originally in October when Dodo made the transfer to DDC and this was raised with opposing counsel, we were exploring because we needed to file a joint status report with the district court to apprise the court of what had been occurring. [00:17:28] Speaker 02: And we had proposed substituting DDC as the new patent owner and holder of the MLA causes of action for DodoCase. [00:17:38] Speaker 02: Opposing counsel had a big problem with this, suggesting that because their counterclaims sought damages against DodoCase for being the prevailing party under the MLA, that DodoCase had a liability. [00:17:55] Speaker 02: So of course we said, fine, we'll leave DodoCase in. [00:17:58] Speaker 02: this case. [00:17:59] Speaker 02: That way there is no concern. [00:18:01] Speaker 02: You have your right. [00:18:03] Speaker 02: And it has created somewhat of a quagmire now. [00:18:05] Speaker 03: And did the same thing happen at the PTAP? [00:18:07] Speaker 03: Who's the party in the PTAP proceedings? [00:18:09] Speaker 02: So the patent owner is DDC. [00:18:12] Speaker 02: Now the PTAP also has the concept of a real party in interest. [00:18:17] Speaker 02: Dodo has not been specifically identified as a real party in interest because as our PTAP counsel understands it, that requires control, which Dodo case does not have. [00:18:25] Speaker 02: They obviously have an interest, as can be seen from the agreement transferring the rights. [00:18:30] Speaker 02: They have a financial interest, and they also have a recapture interest, potentially, in these patents. [00:18:36] Speaker 02: So Dodo is interested, but for all practical purposes... Can you tell us again what's your injury? [00:18:42] Speaker 01: What's your damages in this matter? [00:18:44] Speaker 01: And I'm going back to Chief Judge Pro's question regarding standing. [00:18:49] Speaker 01: I have a difficulty understanding what's your stake in this game. [00:18:54] Speaker 02: The underlying action started as a breach of the master licensing agreement by MerchSource. [00:19:01] Speaker 02: So breach of contract is the underlying aspect. [00:19:06] Speaker 02: And the reason why infringement was not exactly what was pled in the original complaint is because there was a sell-off provision. [00:19:12] Speaker 02: So the exact moment of transferring from a breach of royalties owed under the contract issue to an infringement issue was uncertain. [00:19:21] Speaker 02: But this case was brought as a breach of the contract for failure to pay royalties and other breaches as well. [00:19:29] Speaker 02: At one point, this converts to an infringement case because the MLA has now been terminated. [00:19:35] Speaker 02: It is now, and the sell-off period has expired, it is now an infringement case. [00:19:40] Speaker 02: So there are both damages for breach of the agreement as well as the potential for infringement damages. [00:19:49] Speaker 03: The question we were having earlier, the discussion with your friend about, I use the term irreparable harm and that's not the right term. [00:19:56] Speaker 03: But the district court's preliminary injunction here compelled them to go to the P tab and try to get the case dismissed. [00:20:07] Speaker 03: If in fact that they had been successful, they had complied with the order of the district court, [00:20:15] Speaker 03: Wouldn't that foreclose them from ever, because of the time bar, from ever pursuing a PTAP proceeding so that if ultimately they won on the merits and the district court concluded that this forum selection clause does not include PTAP proceedings, it's moot. [00:20:31] Speaker 03: I mean, because they can't win anyway because effectively this preliminary injunction has precluded [00:20:40] Speaker 03: them from ever going back to the PTAB. [00:20:42] Speaker 03: So how can that be right? [00:20:44] Speaker 03: That just doesn't feel right, does it? [00:20:46] Speaker 02: And I understand the concern. [00:20:48] Speaker 02: And I think the reality is, is that Merck Source, as the defendant, always has the right to challenge the past. [00:20:54] Speaker 02: They can challenge them in the district court and in fact asserted countenance. [00:20:57] Speaker 02: I'm talking about the PTAB proceeding. [00:20:58] Speaker 02: Right. [00:20:59] Speaker 02: And the PTAB proceeding had the one-year time bar. [00:21:01] Speaker 03: Right. [00:21:01] Speaker 03: So that would effectively, if they got the dismissal that the judge, as a preliminary injunction, ordered them to seek here, [00:21:09] Speaker 03: Preliminary injunction is supposed to be temporary. [00:21:12] Speaker 03: They're not supposed to resolve necessarily the underlying case and obviate the need for it. [00:21:20] Speaker 03: But don't you agree that in this circumstance, the preliminary injunction would effectively have been a permanent injunction? [00:21:27] Speaker 02: I think that it goes both ways, as Judge Stowell stated, because... Well, I wanted to answer my question. [00:21:32] Speaker 02: Yes. [00:21:32] Speaker 03: There's another piece to this, I agree with Judge Stowell, but at least looking at this lane, [00:21:37] Speaker 02: Well, and put us back in the time frame of when we were arguing on the emergency motion to stay the district court's order. [00:21:44] Speaker 02: Because at that time, December 13th is the trigger for the one-year statute of limitations under the PTAP. [00:21:52] Speaker 02: They could have sought expedited briefing to go ahead and try and resolve this promptly. [00:21:57] Speaker 02: Instead, they sought the emergency motion. [00:22:00] Speaker 02: And all they stated was they may not reach a decision from this point. [00:22:04] Speaker 03: Are you suggesting they could have, after the PI, [00:22:08] Speaker 03: they could have gone to the PTAB and say, emergency motion to expedite this procedure? [00:22:14] Speaker 02: No, I'm saying that on appeal, they could have sought, this court has a procedure for expedited briefing requests. [00:22:20] Speaker 02: December 13th was their cutoff. [00:22:22] Speaker 02: They could have potentially made the December 13th deadline and received an order from this court by December 13th. [00:22:29] Speaker 02: Instead... Maybe. [00:22:31] Speaker 02: Maybe. [00:22:31] Speaker 02: But the point is, is that irreparable harm requires actual, not speculative, irreparable harm. [00:22:36] Speaker 02: Meanwhile, Dodo case, [00:22:38] Speaker 02: has been forced to litigate on two fronts and did so so much. [00:22:42] Speaker 03: We're forced to... Can I ask you, on that point, I mean, two points on that. [00:22:46] Speaker 03: One is, one of the arguments in this case is now that you've been taken over by a larger entity, a lot of the district court's rationale for the preliminary injunction, which is, you're a small guy, this is gonna be a hardship, yadada, has now disappeared. [00:23:01] Speaker 03: So that's one point. [00:23:02] Speaker 03: But the second point is, even if you were still the party here, [00:23:08] Speaker 03: Welcome to patent land. [00:23:09] Speaker 03: I mean, in every case, given the AIA of parallel proceedings, every patent owner, no matter what the size, is potentially faced with the need to not litigate in two forms. [00:23:22] Speaker 03: I mean, you get a stay, and you don't have to litigate simultaneously. [00:23:25] Speaker 03: But that's the world of patent law now. [00:23:29] Speaker 03: So one, am I right that circumstances have dramatically changed as a basis for what, for her granting the PI in the first instance? [00:23:37] Speaker 03: And secondly, why was that a valid consideration, first instance? [00:23:41] Speaker 02: So first of all, the circumstances with respect to Dodo Case and DDC have not changed significantly. [00:23:48] Speaker 02: DDC is not some multinational corporation like Merck Source. [00:23:52] Speaker 02: But regardless of that, the district court, in relying on irreparable harm, while there was a declaration from the owner of Dodo Case that specifically identified some hardships that they would face, [00:24:03] Speaker 03: because of who they were, what their size was, things that were generic to them, not necessarily to DDC, right? [00:24:10] Speaker 02: Right, but I want to be very clear that the district court ultimately relied on this court's precedent in general protect. [00:24:17] Speaker 04: Are we going to see that in the opinion that we're reviewing or are you talking about something outside of the opinion we're reviewing? [00:24:24] Speaker 04: Because we can look at the opinion that is under review here where she says specifically in talking about irreparable harm, she's clearly talking about [00:24:32] Speaker 04: Dodo case, right? [00:24:33] Speaker 04: She's not talking about DDC. [00:24:35] Speaker 04: Is there some sort of paper where she says, it doesn't matter whether it's Dodo case or it's DDC, I come to the same conclusion? [00:24:43] Speaker 02: No, because Merck Source deprived the district court of that opportunity. [00:24:48] Speaker 04: How? [00:24:48] Speaker 02: Because as soon as Merck Source learned of the transfer of rights to DDC in October or November, they could have raised this issue with the district court and said, Your Honor, pursuant to federal rule of appellate procedure four, [00:25:02] Speaker 02: or pursuant to FRCP 60 or 62.1, there's been a change of circumstances. [00:25:08] Speaker 02: Please modify, suspend the injunction. [00:25:11] Speaker 04: And they haven't done that. [00:25:12] Speaker 04: Have they made that argument to us? [00:25:14] Speaker 04: Because the argument I see them making to us is that the whole thing is moot. [00:25:18] Speaker 04: Correct. [00:25:19] Speaker 04: Because DDC sold the patents. [00:25:22] Speaker 04: I mean, Dodo case sold the patents to DDC. [00:25:25] Speaker 04: I don't see them arguing that the preliminary injunction should be modified or should be sent back. [00:25:30] Speaker 04: for the district court to reconsider under the irreparable harm component. [00:25:34] Speaker 02: But that is, I think, exactly what their motion to dismiss at this court is asking, is saying, dismiss this case, vacate the district court's order, and then the district court can now consider whether DDC would prevail under a motion for preliminary injunction, which is now going to be, however, many more months into the future, at which point the PTAB will probably already reach the decision on the merits of the patent [00:25:57] Speaker 04: Do you know what the cutoff date is? [00:25:59] Speaker 04: So the hearing is scheduled for? [00:26:02] Speaker 02: May 21st, I believe. [00:26:03] Speaker 02: May 21st? [00:26:03] Speaker 02: And the one-year timeline would run from institution is mid-late August of this summer. [00:26:10] Speaker 03: So then getting back to the point that you've still raised, the other side of the coin, which is in the absence of a preliminary injunction, you're likely to put you or FDDC is going to be, let's assume hypothetically, the PTAB invalidates the patents. [00:26:27] Speaker 03: So is your argument that that effectively, in the absence of a preliminary injunction stopping them from doing that, effectively you're going to lose your right, if you prevail on the merits, to have the validity dispute adjudicated exclusively by the district court? [00:26:44] Speaker 02: Well, that's certainly the case. [00:26:46] Speaker 02: If the PTED makes a ruling before this issue, the formal selection clause issue, is decided, then that may be completely lost forever. [00:26:53] Speaker 02: But I would argue that the irreparable harm [00:26:55] Speaker 02: has continued, forced Dodo case to sell its rights in and to the patents and the underlying cause of action because they could no longer fight the fight. [00:27:03] Speaker 03: They call this monetary damages, but you have to have enough money to get to the end to get the- Did anybody go to the district court and say, this is so unusual and these are such strange circumstances, please, please, leaving aside the preliminary injunction, please decide the merits as promptly as possible? [00:27:20] Speaker 03: Has anybody, has any, because this has been pending for a while now, [00:27:24] Speaker 03: And I understand usually you stay everything and the district court doesn't proceed. [00:27:28] Speaker 03: But has anybody tried to get the district court to act on the merits so that we will at least eliminate some of these preliminary issues? [00:27:38] Speaker 02: No, the case was stayed after the preliminary injunction was issued. [00:27:44] Speaker 02: I mean, after it was brought up on appeal on the likelihood of success, it's subsuming the merits into the likelihood of success. [00:27:50] Speaker 02: And I think the court could have been... Yeah, but there's a difference. [00:27:51] Speaker 03: There's been no merit determination here. [00:27:54] Speaker 03: There's been no permanent injunction. [00:27:55] Speaker 03: I mean, part of the quagmire we're in is because this has not been adjudicated, finally, for our review. [00:28:03] Speaker 03: We're only in a preliminary. [00:28:05] Speaker 03: Even if there's a likelihood of success of the merits, I mean, that's not final. [00:28:09] Speaker 02: That's not... And there has not been a request for a permanent injunction on the merits, no. [00:28:15] Speaker 04: that the district court would have to undergo in order to decide whether this forum selection clause is valid and actually would apply and actually would have prevented a merge source from seeking the IPR in the first place. [00:28:33] Speaker 02: I think the court has already undergone that procedure and even though it was a preliminary injunction, the court understood. [00:28:39] Speaker 04: You're saying there doesn't have to be a trial, there doesn't have to be witnesses, there doesn't have to be any extra procedure, there just needs to be a [00:28:45] Speaker 04: summary judgment determination first. [00:28:47] Speaker 02: Merge sources said themselves on this appeal, this is all a matter of law. [00:28:50] Speaker 02: This is just, how do we? [00:28:51] Speaker 03: Is there a pending motion for summary judgment? [00:28:54] Speaker 02: No, there is no pending motion for summary judgment. [00:28:57] Speaker 03: Why not? [00:28:58] Speaker 03: I mean, that's your side. [00:28:59] Speaker 02: Well, the case has been stayed. [00:29:02] Speaker 02: And again, I think that in entering the preliminary injunction, even though titled a preliminary injunction, as you recognize, it would have the effect in some ways of being permanent. [00:29:10] Speaker 04: On whose motion is the case stayed? [00:29:13] Speaker 02: It was on a, I believe it was on a joint agreement of the parties that given the appeal and the PTAB proceedings that we would stay all action of the district court because there's still breach of contract claims that will exist even if the patents are ultimately determined to be invalid. [00:29:27] Speaker 03: If they, let's assume the preliminary injunction lived and they went to the PTAB and the PTAB says forget it. [00:29:34] Speaker 03: We're not dismissing it. [00:29:37] Speaker 03: Then you have to live with that. [00:29:38] Speaker 03: The district court has to live with that. [00:29:42] Speaker 03: What are the rights of the client of the patent owner left here? [00:29:47] Speaker 03: Are they going to say, if the patent is invalidated by the PTO, what's left of this case? [00:29:55] Speaker 02: Well, there are a few things that are left. [00:29:56] Speaker 02: I don't think they matter for this appeal. [00:29:58] Speaker 02: There is a matter of payment of royalties before they actually gave notice of the belief of invalidity. [00:30:05] Speaker 03: Okay, so there's still some money. [00:30:06] Speaker 02: There's still something. [00:30:07] Speaker 02: There's still some money to be gained. [00:30:09] Speaker 02: I want to hop on to this issue again and it was brought up before on the opening. [00:30:14] Speaker 02: What was the district court's order? [00:30:16] Speaker 02: The district court said send an email to the PTAB and if they are willing to hear motions to dismiss, file them. [00:30:25] Speaker 02: This gives two bites at the apple to the PTAB to decide if it wants to dismiss these proceedings. [00:30:32] Speaker 02: It could say, we don't even want to receive motions to dismiss. [00:30:35] Speaker 02: And then it could say, we've received them, but we're not ruling in your favor. [00:30:39] Speaker 05: Sure. [00:30:39] Speaker 02: Right? [00:30:39] Speaker 02: And this leaves all the discretion with the PTAB. [00:30:41] Speaker 02: And there's a lot of public policy argument trying to go ahead and put that through. [00:30:45] Speaker 03: Yeah, but we don't know what, I mean, what is, I don't know. [00:30:48] Speaker 03: I have no idea if I'm a PTAB judge and I'm sitting there. [00:30:52] Speaker 03: I don't know what their rules are dealing with this. [00:30:55] Speaker 03: I don't know what standard they use. [00:30:57] Speaker 03: I have no idea whether they would have to look into the underlying merits of this and see whether they agree. [00:31:03] Speaker 03: I mean, this is just a whole new world. [00:31:06] Speaker 04: I don't know what they look at. [00:31:08] Speaker 02: And I think this is exactly. [00:31:09] Speaker 02: I think the first thing is you don't know what they look at. [00:31:12] Speaker 02: What better person to tell us what they look at than them? [00:31:14] Speaker 04: Just for a minute. [00:31:16] Speaker 04: When someone files a motion to dismiss an IPR, [00:31:20] Speaker 04: What usually happens? [00:31:22] Speaker 04: Do you know? [00:31:23] Speaker 04: I mean, because it's not always in this circumstance that somebody would file a motion to dismiss an IPR. [00:31:29] Speaker 04: For example, there might be a settlement or other reasons why a party would move to dismiss. [00:31:33] Speaker 04: So do you have a general answer to that question? [00:31:36] Speaker 02: Yes, discretion at the P tab. [00:31:38] Speaker 02: And I want to use this as a... [00:31:40] Speaker 02: I don't know exactly. [00:31:41] Speaker 04: Even discretion requires some criteria. [00:31:44] Speaker 04: I mean, is the criteria, you know what, we've got a lot of cases and the party is saying that they don't want to pursue this anymore and so we're done. [00:31:51] Speaker 04: I mean, do you have any view at all on this? [00:31:53] Speaker 02: Well, I'll tell you my discussion. [00:31:55] Speaker 02: I'm not PTAP counsel. [00:31:56] Speaker 02: My discussion with PTAP counsel is on the eve of a decision from the PTAP, you could say we've settled our case and the PTAP could say, okay, we're done with it. [00:32:05] Speaker 02: They have discretion all the way through, which is one of the things that distinguishes this case. [00:32:08] Speaker 03: But they have discretion, yeah. [00:32:10] Speaker 03: And that's kind of different. [00:32:11] Speaker 03: They get to decide under the statute, right, whether they think the public policy of invalidating an invalid patent transcends a settlement. [00:32:20] Speaker 03: They get to pursue cases that are settled. [00:32:23] Speaker 03: They get to try to enforce them on their own, right? [00:32:25] Speaker 02: My understanding is they have that discretion, yes. [00:32:27] Speaker 03: Okay, but this is kind of a different kind of circumstance. [00:32:30] Speaker 02: It is, and obviously the timing has put us in a precarious position because when we first received the preliminary injunction order from the district court, they had not instituted the proceedings yet. [00:32:38] Speaker 02: They instituted those proceedings in August. [00:32:41] Speaker 03: So who knows what the PTAB would... What if they decide that the patent is valid? [00:32:46] Speaker 03: Does that move this whole case, too? [00:32:49] Speaker 03: Because you're not going to invite re-litigation of the validity issue before the district court if you've got a valid pack. [00:32:57] Speaker 02: No, but I can assure you that the defendant will go to the district court and change their claim constructions and argue new grounds for invalidity. [00:33:05] Speaker 02: And we will be fighting this front again after having already been successful with the project. [00:33:09] Speaker 02: You don't think they'll be stopped? [00:33:10] Speaker 02: You know you've got new grounds. [00:33:11] Speaker 02: There are some estoppel issues of raise or could have raised. [00:33:13] Speaker 02: But they've already said in phone calls with counsel that they will be proposing a narrower claim construction. [00:33:21] Speaker 02: Well, the point is that they get two bites at the apple. [00:33:25] Speaker 02: In one case, they can go broadest reasonable interpretation at the PTAB and then come back to the district court if they've lost at the PTAB and say, look how narrow these claims are. [00:33:33] Speaker 02: They don't cover our product. [00:33:34] Speaker 03: Yeah, but they can't come back to the district court and say, never mind. [00:33:37] Speaker 03: We think this form selection clause [00:33:40] Speaker 03: is really broad and gives you exclusive jurisdiction versus the PTA. [00:33:45] Speaker 03: The district court is not going to let them change, shift gears. [00:33:48] Speaker 02: Not on the forum selection clause, but on the merits of the invalidity issue. [00:33:52] Speaker 03: So if you prevail on the forum selection clause, then they get to adjudicate this. [00:33:57] Speaker 02: If we prevail on the forum selection clause, let's keep in mind two clear things. [00:34:01] Speaker 02: The whole world can go ahead and file PTAB petitions. [00:34:04] Speaker 02: MerchSource acknowledges that. [00:34:05] Speaker 02: Anybody can file them. [00:34:06] Speaker 02: You don't need standing to file a PTAB petition. [00:34:09] Speaker 02: And Merch Source has the Northern District. [00:34:11] Speaker 03: Yeah, but nobody has. [00:34:13] Speaker 03: That's a little weird though, because we are, you know, the privity issues and acting on behalf of someone are getting pretty tight. [00:34:21] Speaker 03: So they can't just wink, wink, nod, nod, have their friends across the street do it on their behalf. [00:34:28] Speaker 02: Certainly. [00:34:28] Speaker 02: Merch Source cannot have a proxy file for them. [00:34:31] Speaker 02: But Company X that doesn't like these patents can file at the PTEP. [00:34:35] Speaker 02: They are not a stop. [00:34:37] Speaker 02: Merge Source has filed counterclaims in the District Court, Northern District of California, Local Patent Rules, Tech Hub of the United States. [00:34:46] Speaker 02: They have filed counterclaims for invalidity. [00:34:48] Speaker 02: They can pursue their invalidity defense in a perfectly appropriate form. [00:34:51] Speaker 04: Their view is that they can pursue it in both forms, just like anybody else, notwithstanding the Forum Selection Clause and the MLA. [00:34:59] Speaker 04: One question I have, it's a small housekeeping question, one of the arguments made was that [00:35:04] Speaker 04: Dodo case didn't transfer its rights and obligations under the MLA to DDC. [00:35:12] Speaker 04: But isn't that taken care of by clause 13.13 in the MLA, which specifically says that the Dodo case can transfer its, can sell its patent if it chooses to, but all rights and obligations under the MLA will flow to the new owner of the patent? [00:35:29] Speaker 02: Yes, that is exactly right. [00:35:31] Speaker 02: And I believe that the exact language of 1313 is [00:35:34] Speaker 02: that the transfer can occur provided that the rights and obligations set forth in this agreement shall run with the title to the licensed IP. [00:35:42] Speaker 02: So they're arguing there wasn't an assignment of the MLA officially. [00:35:46] Speaker 02: It was the causes of action. [00:35:47] Speaker 02: What does that mean? [00:35:49] Speaker 02: We think the causes of action assignment was enough, but 13.13 confirms that transferring the IP, the patents, which is undoubtedly transferred, necessarily transfers the encumbrance to the patents, i.e. [00:35:59] Speaker 02: the MLA, and therefore there is that assignment. [00:36:02] Speaker 02: So I think 1313 conclusively defeats the motion to dismiss on that ground. [00:36:07] Speaker 03: I know your time is up, but I want to pursue just a little bit kind of the precise issue we pursued with your friend with regard to precedent. [00:36:15] Speaker 03: So there's a two-part question. [00:36:16] Speaker 03: One is does Ninth Circuit law apply or does our circuit law apply? [00:36:22] Speaker 03: And then second, assuming your argument is that our law applies, [00:36:26] Speaker 03: What is there about Texas instruments and their argument about differentiating that case and why that case does not control? [00:36:35] Speaker 02: So I think, first of all, even Manetti-Farrows says federal law applies to the construction of a forum selection clause. [00:36:42] Speaker 02: And then, of course, goes on to review Ninth Circuit law. [00:36:46] Speaker 02: I believe that there should be, especially in the patent context, resolution to the extent there's any circuit splits. [00:36:52] Speaker 02: And we've seen the Second Circuit [00:36:54] Speaker 02: We rely on the Phillips test looking at a dictionary definition. [00:36:57] Speaker 02: We see the Ninth Circuit, maybe looking back at Manetti v. Farrow. [00:37:01] Speaker 02: If there's any difference between these, and I'd suggest there may be because Merck source in their briefing has a very shifting position on exactly what arising out of or under means. [00:37:11] Speaker 02: Does it mean strictly interpretation of the contract? [00:37:15] Speaker 02: Does it mean arising out of the duties, obligations, and rights under the contract? [00:37:21] Speaker 02: But I think, getting to your second point, [00:37:24] Speaker 02: is that your law would apply and that Texas Instruments would be sound law in this regard. [00:37:35] Speaker 02: And I would suggest that in connection with, as a preliminary matter, this was never raised at the district court. [00:37:40] Speaker 02: The district court had no opportunity to consider this. [00:37:45] Speaker 02: The issue of arising out of or under having some magical meaning in law. [00:37:51] Speaker 02: What they did was say, here is Manetti v. Farrow. [00:37:55] Speaker 02: I think a rising out of honor appears once in their response brief. [00:37:59] Speaker 02: They cite 37 cases. [00:38:00] Speaker 02: They don't cite Bagdasarian. [00:38:01] Speaker 02: And they accused the district court and plaintiff in their appeal briefing saying, ignored this large body of case law, including Bagdasarian. [00:38:09] Speaker 02: Bagdasarian was never cited. [00:38:11] Speaker 02: It was never cited below. [00:38:13] Speaker 02: So the district court is not omniscient. [00:38:15] Speaker 02: They're capable, the court is capable of considering the facts. [00:38:19] Speaker 03: Did the district court rely on Texas Instruments? [00:38:22] Speaker 03: I can't remember at this juncture. [00:38:23] Speaker 02: I do not believe that the district court relying on Texas Instruments. [00:38:26] Speaker 02: I know the district court relied heavily on GenProtect from the irreparable harm stance. [00:38:32] Speaker 02: But I do not remember off the top of my head if the court relied upon Texas Instruments. [00:38:37] Speaker 02: But, so I think first of all is that Merge Source waived the issue about a rising out of her under having some magical language. [00:38:45] Speaker 02: Because we can't go back and now argue this. [00:38:48] Speaker 02: Plaintiff could have made the arguments below for the district court based on some narrower interpretation. [00:38:54] Speaker 03: But I will suggest that... Wait, you're not suggesting that when they get to the merits, they could raise this, right? [00:39:00] Speaker 02: I'm saying that, yes, they could certainly raise it on the merits. [00:39:02] Speaker 02: I'm just saying that they raved... Here we are in appeal kind of fighting a new target that wasn't below. [00:39:09] Speaker 04: Well, okay, so let's assume that we disagree with you, just for a minute. [00:39:13] Speaker 04: So your argument is that for purges of the preliminary injunction, they did make this argument, so they waived it. [00:39:19] Speaker 04: But even assuming, just for a minute, that that's not so, then what is your response? [00:39:24] Speaker 02: We win. [00:39:25] Speaker 02: And the reason why is interpretation of the contract is the strictest proposal that's been offered by Merck's source as to what arising out of her under means. [00:39:34] Speaker 02: This is inextricably intertwined, the invalidity argument [00:39:39] Speaker 02: Let me go back. [00:39:40] Speaker 02: This is how this case started for the law students here. [00:39:43] Speaker 02: MerchSource came to DodoCase asking for a license. [00:39:47] Speaker 02: They got a license in 2016. [00:39:49] Speaker 02: In 2017, MerchSource said to DodoCase, there is a dispute. [00:39:57] Speaker 02: Their words, not ours. [00:39:58] Speaker 02: There is a dispute over the royalty rate and royalties owed under the agreement. [00:40:05] Speaker 04: DodoCase is- That is because the patent is invalid. [00:40:07] Speaker 02: They didn't say that. [00:40:09] Speaker 02: But Dodo Case filed a lawsuit and said, we're not going to sit here and have to deal with this every quarter when royalties are due. [00:40:14] Speaker 02: Are you going to pay or not? [00:40:17] Speaker 02: We are filing, in the Northern District of California, per the Forum Selection Clause, a breach of contract for breach of the MLA. [00:40:25] Speaker 02: What is the defense to the breach of the MLA? [00:40:28] Speaker 02: Invalidity. [00:40:29] Speaker 02: Section 6.4, 8.2, 10.4, 10.6 of the MLA all talk about validity. [00:40:39] Speaker 02: The only consideration Dodo case brings to the table as a patent owner, licenser, is having valid patents. [00:40:45] Speaker 02: And the agreement acknowledges this. [00:40:47] Speaker 02: It says in the term sheet, this agreement is contingent on a valid patent. [00:40:52] Speaker 02: Elsewhere, it says that if ever these patents are determined invalid, the license terminates. [00:40:57] Speaker 02: 6.4 says you shall never challenge the validity. [00:41:00] Speaker 02: They took their defense to breach of contract. [00:41:03] Speaker 02: Their only defense, their only counterclaims in the district court are for invalidity. [00:41:07] Speaker 02: Not for non-infringement, only for invalidity. [00:41:09] Speaker 02: their only defense to breach of contract, they ran to the PTAB instead of resolving it in the district court. [00:41:15] Speaker 02: That's unlike any other case that is before this court on the appeal. [00:41:19] Speaker 03: What about their secondary argument, which is that even if the Forum Selection Clause has been correctly construed broadly, there's a public policy argument that parties should not be forfeiting their rights or agreeing to forfeit their rights. [00:41:35] Speaker 02: And what I heard counsel say earlier of [00:41:38] Speaker 02: A true forum selection clause that says you can never go to the P tab, agree two by two parties would be invalid and enforceable would be taking Lear to a new level, Lear 2.0. [00:41:48] Speaker 02: A massive extension of Lear, which by the way, Lear, as evidenced in TMI products, is not a bright line rule. [00:41:55] Speaker 02: It never has been. [00:41:55] Speaker 02: There's always been a balancing test in Lear. [00:41:58] Speaker 02: Settlement agreements avoid the Lear distinction. [00:42:01] Speaker 02: There might be others. [00:42:02] Speaker 02: For example, when a party comes to another patent owner and says, we would like to license your patents, does that create [00:42:08] Speaker 04: the PTO's right to consider its own patents? [00:42:12] Speaker 04: I think that's what I heard them just say, that there's a public policy right in allowing the agency to reconsider a patent that it issued. [00:42:20] Speaker 04: But aren't there other ways that the PTO could reconsider? [00:42:23] Speaker 04: Could they do a suespante re-exam or something like that? [00:42:27] Speaker 02: Well, I think two things. [00:42:28] Speaker 02: First of all, is that the only case they cite for this, you know, the PTO should be able to review its patents is Callaway. [00:42:36] Speaker 02: Callaway was based on the old pre-AIA re-examination procedure. [00:42:40] Speaker 02: This is now PTAB post-AIA inter partes review procedure. [00:42:44] Speaker 02: Completely different statute. [00:42:46] Speaker 02: And I think what's important to note is that the PTAB in this case said, we will accept, we are prepared, we are authorized, we are authorized to accept filing of the motions to dismiss. [00:43:02] Speaker 02: It was in our response to the emergency motion originally. [00:43:05] Speaker 02: The PTAB, when confronted with this, said, we are prepared to authorize the filing of the motions to dismiss. [00:43:11] Speaker 02: They said, bring it. [00:43:13] Speaker 02: So if we're worried about the public policy from the PTO's perspective, what better entity to determine the PTO's public policy perspective than the PTO or the PTAB? [00:43:21] Speaker 03: Can I just take one minute to ask you one final question? [00:43:24] Speaker 03: I'm going to let your friend respond to this too. [00:43:27] Speaker 03: You know, we've described this, I've described this as kind of a quagmire that we're in now because we've got only the preliminary injunction in front of us and it inures kind of weirdly harming you permanently and harming the other side potentially permanently. [00:43:42] Speaker 03: Would there be anything improper or would we have authority to simply say in this case, we've already stayed the preliminary injunction so it's on hold and to just try to [00:43:54] Speaker 03: tell the judge, we're keeping this on hold because we think at a preliminary stage resolving this really has unavoidable, irretrievable consequences. [00:44:05] Speaker 03: Go decide the merits. [00:44:09] Speaker 03: Would there be anything wrong or improper? [00:44:12] Speaker 03: I mean, you might not like that, but in certain respects, [00:44:15] Speaker 03: That kind of saves you some time, too. [00:44:17] Speaker 02: Well, I think if what you're talking about is converting the preliminary injunction to a permanent injunction, it's just going to be appealed. [00:44:24] Speaker 02: We're not. [00:44:25] Speaker 03: We're just holding the preliminary injunction and saying, [00:44:28] Speaker 03: Look, there's too much going on here to be resolved at a preliminary stage that would not effectively finally resolve what's going to happen here. [00:44:37] Speaker 03: So we're going to stay the preliminary injunction, and you guys just hurry up and decide the merits so one can review them. [00:44:46] Speaker 02: I hate to break it to the lawyers to be in the room, but the courts don't move that fast. [00:44:50] Speaker 02: If this goes back to the district court for any purpose, the PTAB will have ruled effectively by the time. [00:44:55] Speaker 02: They're going to appeal. [00:44:55] Speaker 02: If this gets converted to a permanent injunction on the merits, they're going to appeal that as well. [00:45:00] Speaker 03: They're going to ask for an emergency stay of the... Yeah, but you're still in a kind of a quandary because even if we let the preliminary injunction go, you still may lose... I mean, the PTAB may refuse to hold that, so... [00:45:14] Speaker 02: And again, I think that the district court understood in entering the preliminary injunction, the effect it was going to have, and in fact said, because they raised the issue, Merck source, raised the issue of, well, what about our one-year bar? [00:45:27] Speaker 02: And they said, you can't be complaining of a hardship that may occur to you when you voluntarily agree to the Forum Selection Clause. [00:45:36] Speaker 03: Yeah, but that's kind of, I'm not sure what the authority is of the district court to say effectively, wink, wink, nod, nod, [00:45:42] Speaker 03: We know that the preliminary injunction is going to effectively be a permanent injunction. [00:45:48] Speaker 03: That kind of messes things up for us in terms of review. [00:45:51] Speaker 03: It wasn't a full record. [00:45:54] Speaker 03: So it's a problem. [00:45:55] Speaker 02: Well, and again, the merge sources argue this is a matter of law. [00:45:58] Speaker 02: That is their entire appeal brief, other than their motion to dismiss that now starts raising facts that were never raised on appeal. [00:46:04] Speaker 02: They have said this is a matter of law. [00:46:06] Speaker 02: So I don't think that there needs to be evidentiary hearings, motions for some [00:46:11] Speaker 02: The judge can make the decision. [00:46:12] Speaker 02: In effect, the judge's preliminary injunction is the decision that permanent or not. [00:46:18] Speaker 01: So in view of the arguments and all we've heard here, which is hasn't been entirely a process of clarity for me, tell me exactly what your relief is. [00:46:34] Speaker 01: How do you view that? [00:46:35] Speaker 01: What is it we should do? [00:46:37] Speaker 02: Simply affirm the district court's order. [00:46:39] Speaker 02: Again, the district court order was as narrowly tailored. [00:46:42] Speaker 02: I think the district court perfectly balanced the issues and kicked this decision to the PTAB. [00:46:49] Speaker 02: Said send an email to the PTAB and request to file motions to withdraw. [00:46:54] Speaker 02: But that's happened, hasn't it? [00:46:56] Speaker 02: No, they sent an email and the PTAB said we're prepared to accept them. [00:47:00] Speaker 02: The second step that now was nullified by the... No, we stay, but the answer, Judge Reynolds, we stay in that. [00:47:05] Speaker 02: The emergency stay in this court [00:47:07] Speaker 02: prevented the next step, which is actually filing the motion to dismiss. [00:47:11] Speaker 04: The PTAB proceedings are marching forward, right? [00:47:16] Speaker 04: Now, let me ask you, have you asked, has anybody told the PTAB about what's going on in this court and about this proceeding? [00:47:24] Speaker 02: They were informed, obviously, up until the early stages when there was the stay, but I think after that point, other than in passing, and again, I'm not PTAB counsel. [00:47:33] Speaker 04: I'm not involved on... I understand, but I imagine you must have to do some coordination. [00:47:38] Speaker 04: So what about, I know that there's some authority on behalf of the PTAB to extend these proceedings beyond a year to a year and a half. [00:47:45] Speaker 04: Has anybody looked into doing that? [00:47:48] Speaker 02: I am not sure. [00:47:49] Speaker 02: This case was already extended. [00:47:51] Speaker 02: So when the petitions were filed in January, set a triggering deadline for the patent owner responses, that was already extended. [00:47:59] Speaker 02: This case is already behind the track that the PTAB sets. [00:48:02] Speaker 02: I'm not sure how flexible the one year from institution [00:48:07] Speaker 02: And this is what I believe is a beautiful thing about the district court's order is let the PTAB, who knows its proceedings, make this decision. [00:48:23] Speaker 01: Why would the PTAB listen to the district court? [00:48:27] Speaker 01: Wouldn't that open the doors for district courts to kind of control PTAB proceedings? [00:48:32] Speaker 02: Well, I think this is an extremely rare circumstance where a defendant takes the defense to a breach of contract claim to the PTAB in violation of a forum selection clause. [00:48:41] Speaker 02: This situation will only have the interplay between a district court and the PTAB when there is a forum selection clause that says, by the way, you have to bring your case in the district court. [00:48:52] Speaker 02: If there was no MLA, if there was no agreement between MerchSource and Dodo, or now DDC, they could have brought the PTAB proceedings. [00:49:02] Speaker 02: If we had threatened them of we're going to sue you, they could have gone to the PTAB. [00:49:07] Speaker 02: If we'd sued them, they could have gone to the PTAB. [00:49:09] Speaker 02: It's only the existence of the agreement that prevents them from going to the PTAB. [00:49:14] Speaker 03: Thank you. [00:49:14] Speaker 02: Thank you very much. [00:49:15] Speaker 04: One of the questions that was asked was what proceedings would have to occur below in order to be able to determine whether a permanent injunction should issue. [00:49:31] Speaker 04: a final determination whether the forum selection clause actually would prohibit your client from filing an IPR. [00:49:40] Speaker 04: What further proceedings do you think would have to be undertaken? [00:49:44] Speaker 04: Would it be something where it would just be decided on summary judgment, or what else would have to occur? [00:49:51] Speaker 00: I think that the legal issue about the scope of the forum selection clause could be decided on summary judgment. [00:49:59] Speaker 04: Do you think the court has already heard everything relevant to that? [00:50:04] Speaker 00: No. [00:50:05] Speaker 00: I mean, I think that the briefing on the preliminary injunction was relatively short. [00:50:14] Speaker 00: To be honest, I mean, we've written a lot more briefs on the issue here than we ever did before the district court. [00:50:21] Speaker 00: For example, the district court, we did raise the Minetti-Farrow decision [00:50:27] Speaker 00: with the district court prior to the preliminary injunction. [00:50:31] Speaker 00: And I think that that was pretty much the only case that the court had before it going into the preliminary injunction hearing in terms of the scope of the forum selection clause. [00:50:43] Speaker 00: The court did its own research and found some of these arbitration cases that were cited in her opinion. [00:50:50] Speaker 00: But like, for example, the Texas Instruments case, this court was never briefed or discussed below. [00:50:57] Speaker 00: And the court, I think, started from the premise that the MLA says that the contract will be interpreted pursuant to California law, so it looked to California and Ninth Circuit law. [00:51:09] Speaker 00: And so the idea that the Federal Circuit law might apply to interpreting the Forum Selection Clause wasn't briefed or raised below. [00:51:20] Speaker 03: If the reason that we agreed with you is narrow enough [00:51:27] Speaker 03: of change because there's a different party here. [00:51:34] Speaker 03: Isn't that seem absurd? [00:51:36] Speaker 03: I mean, we're fighting over something that has nothing to do with the merits. [00:51:40] Speaker 03: I mean, if we were to send it back to the district court that she ought to re-evaluate her preliminary injunction, I mean, isn't it time to move on? [00:51:50] Speaker 03: and for her to decide the merits. [00:51:52] Speaker 03: I mean, going through another proceeding on a preliminary injunction would certainly not be in anybody's interest. [00:51:58] Speaker 00: I agree with that. [00:52:02] Speaker 00: Say it so it'll be on the tank. [00:52:05] Speaker 00: You can indicate that I nodded. [00:52:09] Speaker 00: I mean, I think we raised the mootness issue out of an abundance of caution. [00:52:12] Speaker 03: I don't even understand the mootness issue. [00:52:15] Speaker 03: You're saying it's moot, and then you say vacate, sort of like the case doesn't exist anymore, but we should vacate it and do something about an appeal that doesn't even exist. [00:52:27] Speaker 03: So I frankly didn't even get what you were asking for. [00:52:31] Speaker 00: It seemed to us that the issue on appeal was moot because Dodo case is no longer a party to the PTAB proceedings. [00:52:39] Speaker 03: So we don't even know. [00:52:41] Speaker 03: We don't know. [00:52:42] Speaker 03: We're not in charge of the PTAC proceedings either. [00:52:44] Speaker 03: We don't get to decide, at least at this juncture, who's the party there. [00:52:50] Speaker 00: I appreciate that. [00:52:51] Speaker 00: I think that we did not want to not mention it and then have it come out and be criticized or blamed for not having brought it to the court's attention. [00:53:01] Speaker 04: On your policy argument about how it could run against policy, [00:53:07] Speaker 04: in order for private parties to be able to enter into contracts in which they agree that they're going to go to the district court instead of the PTAB. [00:53:16] Speaker 04: Do you think that's undermined at all by the fact that the agency can on its own initiative seek re-exam of any patent that it wants to? [00:53:27] Speaker 00: Is that true? [00:53:28] Speaker 00: I'm not aware of the agency being able to sue us. [00:53:30] Speaker 04: It used to be able to, and it's impossible I'm wrong, but when it used to be that pre-AIA, [00:53:37] Speaker 04: the director had sui sponte power to bring post issuance proceedings usually in re-examination in order to challenge the validity of the patent. [00:53:47] Speaker 04: I don't know if for sure whether that was changed by the AIA, but if it did exist, let's say hypothetically, if there was that power, do you think that that would undermine your concern about the agency's ability to consider the validity of its own patents that it issued? [00:54:04] Speaker 00: I don't think so because I think it's a practical matter. [00:54:06] Speaker 00: Someone has to come forward to the agency and present some kind of art. [00:54:09] Speaker 03: But even if that's true, even if so, and I don't know the answer to Judge Searle's question either. [00:54:13] Speaker 03: I think the AIA may have obliterated that, but I don't know. [00:54:17] Speaker 03: But what the AIA affirmatively did was say that any member of the public, you know, any member can come in and challenge it. [00:54:25] Speaker 03: So if we're trying to protect the public interest in not being subject to patents that should have never issued in the first place, [00:54:33] Speaker 03: that right of the public has not been affected. [00:54:36] Speaker 03: And somebody could come in tomorrow, certainly somebody who's ever sued by these patents or thinks they might be liable, any interest in public party is not, they have the right to go to the PTAB. [00:54:49] Speaker 03: So why isn't that enough to satisfy the public policy concerns? [00:54:53] Speaker 00: Because I think that, and this is the policy that the Supreme Court talked about in Lear, and that is that licensees are often the only practical parties with the [00:55:02] Speaker 00: with the interest, both academic, not just academic, but... I'm sorry. [00:55:12] Speaker 03: And you agree, I understand you're taking a position, but that Lear doesn't answer the question. [00:55:17] Speaker 03: You're arguing for an expansion of what Lear said, right? [00:55:23] Speaker 00: Yes, Lear just said that you could not contract away your right to challenge [00:55:32] Speaker 00: that challenge. [00:55:36] Speaker 00: So I guess in a way it is an expansion of Lear, or a focusing of Lear if you prefer. [00:55:45] Speaker 03: Thank you very much. [00:55:46] Speaker 03: We thank both parties. [00:55:47] Speaker 03: You've really been helpful to our