[00:00:01] Speaker 04:
The first case for argument this morning is 181775 MI Drilling versus Dynamic Air.

[00:00:09] Speaker 04:
Mr. Cross, I want to be ready.

[00:00:17] Speaker 02:
Good morning.

[00:00:18] Speaker 02:
May it please the court?

[00:00:20] Speaker 02:
This is the patent case where the district court awarded the defendant, my client, its attorney's fees in connection with an exceptional district court action, but denied its attorney's fees in connection with the IPR.

[00:00:35] Speaker 02:
And it said it did this because the IPR related to validity, whereas the district court action was exceptional because of infringement issues.

[00:00:46] Speaker 03:
So what case supports the award of fees for the IPR here?

[00:00:53] Speaker 03:
The PPG case doesn't really seem to support you.

[00:00:57] Speaker 03:
The Supreme Court decision in Willis, which

[00:01:01] Speaker 03:
startlingly neither side cites or discusses doesn't really help you.

[00:01:07] Speaker 03:
What authority, other than the district court cases that you cite, would suggest that fees should be awarded?

[00:01:15] Speaker 02:
Fees should be awarded because the Supreme Court and Federal Circuit cases say that a butt-forth test should have been applied.

[00:01:23] Speaker 03:
Well, that's too general.

[00:01:24] Speaker 03:
What cases say that you can get an award for administrative proceedings under these circumstances?

[00:01:31] Speaker 02:
Well, no cases say you can or you can't.

[00:01:34] Speaker 02:
What the cases say is that you should get your fees that were incurred but for the exceptional conduct.

[00:01:43] Speaker 02:
No case has ever said that you can't get those fees.

[00:01:46] Speaker 02:
And as you say, PPG is an example where the Federal Circuit awarded attorney's fees in connection with a patent office proceeding.

[00:01:56] Speaker 02:
So there is no basis whatsoever.

[00:02:00] Speaker 03:
PPG said that was because it wasn't an optional proceeding.

[00:02:04] Speaker 03:
Because it was not optional.

[00:02:08] Speaker 02:
Well, it was optional there.

[00:02:11] Speaker 02:
The party moved to stay the action, and they then went to the Patent Office.

[00:02:17] Speaker 02:
But I don't think that matters, because the Supreme Court and all the authority from this court says that you should be entitled to the fees that you incurred having to defend an exceptional case.

[00:02:30] Speaker 02:
That is the authority.

[00:02:32] Speaker 02:
Well, the Supreme Court's decision in Willis doesn't say that.

[00:02:36] Speaker 02:
Which case?

[00:02:37] Speaker 02:
Willis.

[00:02:38] Speaker 02:
I'm not familiar with Willis.

[00:02:39] Speaker 02:
I'm sorry.

[00:02:39] Speaker 02:
Was that cited?

[00:02:40] Speaker 03:
It's the Supreme Court case dealing with fees for administrative proceedings.

[00:02:49] Speaker 03:
Well, I don't believe it was cited.

[00:02:51] Speaker 03:
No, it wasn't.

[00:02:53] Speaker 03:
Webb.

[00:02:54] Speaker 03:
I'm sorry.

[00:02:55] Speaker 03:
Not Willis.

[00:02:55] Speaker 02:
Webb.

[00:02:56] Speaker 02:
Webb?

[00:02:57] Speaker 02:
Yeah.

[00:02:58] Speaker 02:
I don't know that case either.

[00:03:00] Speaker 02:
I'm sorry.

[00:03:02] Speaker 02:
I'd be surprised if the Supreme Court has said you can't get attorney's fees in connection with an administrative proceeding if that administrative proceeding was caused by and was necessary to defend an exceptional case.

[00:03:18] Speaker 02:
That's the key.

[00:03:20] Speaker 02:
Was this an exceptional case?

[00:03:22] Speaker 02:
And if it was, what did you have to do to defend it?

[00:03:25] Speaker 02:
I don't think you can conclude that there are some fees that are just off limits, such as an administrative proceeding.

[00:03:36] Speaker 02:
And in fact, as we said, in the PPG case, fees were awarded for an administrative proceeding.

[00:03:43] Speaker 02:
So we rely upon the but four cases.

[00:03:48] Speaker 02:
And in this case, but four, they're filing these 16 false allegations in the complaint.

[00:03:56] Speaker 02:
There wouldn't have been a case.

[00:03:58] Speaker 02:
The district court said the case was exceptional from the very beginning.

[00:04:03] Speaker 02:
And as a result of that, the IPRs were filed.

[00:04:09] Speaker 02:
And I'd like to make three points about the IPRs.

[00:04:12] Speaker 02:
One is that our president testified that but for the litigation, he wouldn't have filed those.

[00:04:19] Speaker 02:
And two is they're totally foreseeable.

[00:04:22] Speaker 02:
In today's environment, they are part and parcel of district court litigation.

[00:04:28] Speaker 02:
They were designed to be that.

[00:04:31] Speaker 02:
And I don't think there is a case I'm aware of recently where, in connection with the district court action, the parties haven't filed an IPR.

[00:04:42] Speaker 02:
It is just the rigor today.

[00:04:43] Speaker 02:
So the third point I want to make is that neither the court nor MI argue that it was unreasonable for DAI to file those IPRs.

[00:04:57] Speaker 02:
Look at the position they were in at that time.

[00:05:01] Speaker 02:
The chances of getting the case dismissed on account of the fact that there were false allegations looked bleak.

[00:05:10] Speaker 02:
As soon as the case was filed, DAI, in its answer and Rule 26 statements, in the interrogatory answers under oath, in depositions, in declarations, said, we had nothing to do with what was going on down in Brazil with our subsidiary, DAL.

[00:05:31] Speaker 02:
We didn't take part in the decision to do that kind of a pneumatic conveying system.

[00:05:38] Speaker 02:
We didn't design it.

[00:05:39] Speaker 02:
We didn't manufacture it.

[00:05:42] Speaker 02:
We didn't install it.

[00:05:43] Speaker 02:
We didn't operate it.

[00:05:44] Speaker 02:
We didn't do any of those things.

[00:05:46] Speaker 01:
The fact is the IPI was a different proceeding.

[00:05:49] Speaker 01:
I'm sorry.

[00:05:50] Speaker 01:
My hearing is not very good, Your Honor.

[00:05:52] Speaker 01:
The fact is that the IPI is a different proceeding.

[00:05:55] Speaker 02:
It was a different proceeding.

[00:05:57] Speaker 02:
No question about that.

[00:05:59] Speaker 02:
But there is no authority for the proposition that because it's a different proceeding, you can't get attorney's fees for it.

[00:06:06] Speaker 02:
And as we have said, it's been done in the PPG case, and it's been done and is going on in district court today.

[00:06:14] Speaker 03:
I don't understand how you could not find the Webb case, which is cited in PPG and discusses this issue by the Supreme Court.

[00:06:24] Speaker 03:
And there are other circuit decisions about this also.

[00:06:27] Speaker 03:
and you offer us district court authority, which is not binding or even particularly persuasive?

[00:06:34] Speaker 02:
Well, I can only say I didn't find it.

[00:06:38] Speaker 02:
And of course, counsel for the plaintiff apparently didn't find it either and cite it as the authority for denying us our attorney's fees.

[00:06:48] Speaker 02:
The cases we found said we're entitled to attorney's fees that but for the exceptional case, we would not have incurred.

[00:06:55] Speaker 01:
Attorney fees aren't granted for an IPR proceeding by itself, are they?

[00:07:02] Speaker 02:
No.

[00:07:03] Speaker 02:
If, for instance, you just filed an IPR, as far as I know, they haven't been so far.

[00:07:10] Speaker 01:
So you're trying to piggyback.

[00:07:12] Speaker 02:
Well, this was not an IPR proceeding per se.

[00:07:15] Speaker 02:
This was a civil court litigation where they... Yeah, but Congress contemplated that this would be an alternative.

[00:07:23] Speaker 04:
When Congress enacted the AIA, the notion was that this would correspond to district court proceedings and that what is happening would happen.

[00:07:33] Speaker 04:
which is to move the validity issues up there.

[00:07:37] Speaker 04:
And this is what's going on in the real world.

[00:07:39] Speaker 04:
But there was no provision made in the AIA for any kind of attorney's fees awards in connection with IPR proceedings, right?

[00:07:45] Speaker 02:
I think that's probably true.

[00:07:46] Speaker 02:
I haven't studied that.

[00:07:48] Speaker 02:
I'm not sure if anybody has asked for attorney's fees.

[00:07:51] Speaker 02:
But as you point out, this is what's going on in the real world.

[00:07:55] Speaker 02:
When people are in civil court, district court litigation, they file IPRs.

[00:08:00] Speaker 02:
And I don't know.

[00:08:02] Speaker 04:
I don't want to... Yeah, but the most typical case where people have gone in for attorney's fees and they've gotten exceptional awards, in my historical memory, which is purely anecdotal, it comes when they're broad, expansive infringement allegations and there's been the absence of any investigation with regard to the products being accused, etc.

[00:08:22] Speaker 04:
So that's a standard one.

[00:08:24] Speaker 04:
The only other one is the 101 space.

[00:08:27] Speaker 04:
which is a bit different than your normal IPR because you've got a lot of 12b6 issued under the 101.

[00:08:35] Speaker 04:
But those are the only two that seem where, you know, I've not seen this come up.

[00:08:40] Speaker 02:
Well, this is more egregious than those situations.

[00:08:43] Speaker 02:
This is a case where in 2003 they got their complaint dismissed.

[00:08:48] Speaker 02:
And it was dismissed because the court said they did not plead factual allegations.

[00:08:52] Speaker 02:
And our district court here said that they learned as well that you can't rely upon supposition.

[00:08:58] Speaker 02:
So what did they do?

[00:08:59] Speaker 02:
They filed a 2014 complaint, and they made up 16 allegations so that we couldn't get the case dismissed on a 12b6 motion.

[00:09:08] Speaker 02:
They made up 16 allegations, all of which were untrue.

[00:09:12] Speaker 04:
But the whole gravamen of the complaint, though, dealt with the infringement piece of it, right?

[00:09:18] Speaker 04:
I mean, the made-up allegations all deal with the infringement side of the case.

[00:09:21] Speaker 02:
Well, that's all a plaintiff pleads is infringement, yes.

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

[00:09:26] Speaker 02:
But we pleaded invalidity as well as non-infringement.

[00:09:30] Speaker 02:
And when it got to the invalidity issue, we had, I think, about 1,000 pages of contentions.

[00:09:39] Speaker 02:
But the deadline was coming up for filing IPRs.

[00:09:42] Speaker 02:
So we filed the IPRs.

[00:09:45] Speaker 01:
What you'll have is a case of first impression.

[00:09:49] Speaker 01:
Your Honor, I need hearing aids.

[00:09:51] Speaker 01:
I'm so sorry.

[00:09:52] Speaker 01:
What do you have as a case of first impression regarding IPRs?

[00:09:55] Speaker 02:
Well, I think that's fair to say.

[00:09:57] Speaker 02:
There isn't a case saying you can do it or that you can't do it.

[00:10:02] Speaker 02:
There are cases that do it.

[00:10:04] Speaker 02:
We have plenty of district court cases that grant attorneys fees in connection with IPRs.

[00:10:10] Speaker 02:
The district courts are doing it.

[00:10:12] Speaker 02:
And I guess this is the first one that's come up.

[00:10:15] Speaker 01:
Are they cited in your brief?

[00:10:17] Speaker 01:
Yes.

[00:10:18] Speaker 01:
District court cases?

[00:10:19] Speaker 01:
Yes.

[00:10:22] Speaker 01:
Nothing here.

[00:10:23] Speaker 01:
We haven't decided it.

[00:10:25] Speaker 02:
Well, except for the PPG case.

[00:10:26] Speaker 02:
That's the only one where you awarded attorney's fees that were in connection with a reissue.

[00:10:35] Speaker 02:
A reissue from years ago.

[00:10:37] Speaker 02:
Whereas today, we have IPRs which are meant to be part and parcel of the district court proceeding.

[00:10:45] Speaker 02:
We want people to go to the IPRs.

[00:10:47] Speaker 02:
That was the whole purpose.

[00:10:49] Speaker 02:
And it seems to me that there's a far greater reason to award attorney's fees in connection with an IPR than there was in connection with the reissue in the PPG case.

[00:11:01] Speaker 02:
Well, unless there are more questions, I'll sit down for a while.

[00:11:06] Speaker 02:
OK, thank you.

[00:11:07] Speaker 02:
Thank you.

[00:11:19] Speaker 00:
May it please the court.

[00:11:21] Speaker 00:
One thing we didn't hear.

[00:11:22] Speaker 03:
Are you unfamiliar with the Webb case also?

[00:11:24] Speaker 00:
I'm not, Your Honor, because to us, the Supreme Court's case in Highmark.

[00:11:28] Speaker 03:
We don't care what the Supreme Court said?

[00:11:30] Speaker 00:
We do, your honor.

[00:11:31] Speaker 00:
In Highmark, the court said in a Section 285 setting, when we're looking at fees, the matter is a matter completely within the discretion of the district court reviewed by this court for an abusive discretion.

[00:11:42] Speaker 03:
Does that mean that the district court would have discretion to award fees for IPRs as some district courts have done?

[00:11:50] Speaker 00:
Yes, Your Honor, the district court would have that discretion in the right circumstances, such as where the IPR work or other PTO work substitute for the work that occurred in the district court.

[00:12:02] Speaker 00:
When that happens, when there's a stay in the district court and the IPR work substitutes entirely, for example, for the invalidity contentions, there have been district courts that have awarded fees in their discretion.

[00:12:14] Speaker 00:
Here, the district court, acting well within its discretion, said that's not proper.

[00:12:19] Speaker 00:
and we don't need to.

[00:12:20] Speaker 00:
The district court found that the IPRs were entirely unrelated to the reason for the dismissal.

[00:12:28] Speaker 03:
So if the award of fees were based on a frivolous

[00:12:36] Speaker 03:
a claim based on a invalid patent and the patent had been declared invalid in an IPR.

[00:12:44] Speaker 03:
They could recover the attorney's fees under 285 if the district court decided to award them.

[00:12:50] Speaker 00:
The district court in my view would have discretion to award attorney's fees both for that invalidity work in the district court and perhaps for the PTO work, particularly as courts have found, where that PTO work substitutes for the district court invalidity work.

[00:13:05] Speaker 00:
But here we have none of that.

[00:13:07] Speaker 00:
The district court in its discretion determined, and reasonably so, that the IPRs were irrelevant.

[00:13:13] Speaker 00:
They did not substitute for that work.

[00:13:15] Speaker 00:
And even more importantly, the district court

[00:13:20] Speaker 00:
We should not even really be reaching this issue because the district court abused its discretion in finding this case to be exceptional to begin with.

[00:13:29] Speaker 00:
And going back to Highmark, that case says, dealing with 285, that case says that a district court, quote, necessarily abuses its discretion

[00:13:38] Speaker 00:
if it bases its ruling on an erroneous view of the law or on a clearly erroneous assessment of the evidence.

[00:13:45] Speaker 00:
Here, the district court committed both of those faults.

[00:13:48] Speaker 00:
First, on the law, octane fitness requires the court to consider the totality of the circumstances.

[00:13:55] Speaker 00:
Here the district court refused to consider and to weigh the evidence we obtained post filing showing that DAI was involved in the infringing conduct.

[00:14:06] Speaker 00:
That post filing evidence completely supported the wealth of evidence we had pre filing.

[00:14:12] Speaker 00:
We all knew

[00:14:13] Speaker 00:
We knew that dynamic air was the infringer of our patents.

[00:14:17] Speaker 00:
The question to us is, which entities are responsible?

[00:14:21] Speaker 00:
Which dynamic air entities?

[00:14:22] Speaker 00:
Is it the parent?

[00:14:24] Speaker 03:
But the district court said, as I read it, is that you might have had a basis for filing some complaint, but the detailed allegations of this complaint were not supported by what you knew, and that that was the reason for the award of fees.

[00:14:40] Speaker 03:
Do you read it that way also?

[00:14:42] Speaker 00:
Yes, Your Honor, the district court based its ruling on only our pre-filing conduct and then the district court's assessment.

[00:14:49] Speaker 03:
So what's wrong with that?

[00:14:50] Speaker 03:
I mean, it's not the case that these very detailed allegations that you made were supported by the information that you now rely on, right?

[00:15:02] Speaker 00:
No, Your Honor, that is not correct.

[00:15:03] Speaker 00:
The information we had pre-filing repeatedly and consistently pointed to DAI.

[00:15:09] Speaker 03:
Yeah, yeah.

[00:15:10] Speaker 03:
But that's a different question as to whether you could file some complaint accusing DAI.

[00:15:16] Speaker 03:
But what was the basis for making the detailed allegations that the district court found not supported by what you knew?

[00:15:26] Speaker 00:
When we look at the framework of what we alleged in the complaint, the district court took excerpts.

[00:15:31] Speaker 00:
There's 16 excerpts from the complaint.

[00:15:34] Speaker 00:
When you actually read the complaint and put them in context,

[00:15:37] Speaker 00:
It's very clear that what we were alleging was DAI has done this for decades.

[00:15:42] Speaker 00:
DAL, it was its first foray into this adventure, into this sort of technology.

[00:15:48] Speaker 00:
DAL had admitted in the Brazilian tribunal.

[00:15:50] Speaker 04:
The problem with this argument, if you're just looking at it from 30,000 feet, is we're not going to relitigate this case for you and the merits.

[00:15:59] Speaker 04:
You know, there's a highly deferential standard applied to what the district court did.

[00:16:04] Speaker 04:
And it kind of proves the point.

[00:16:05] Speaker 04:
because your analysis and your complaint here and your re-arguing the facts and want us to look back at the complaint and look back at the whole record.

[00:16:14] Speaker 04:
Do you really think that's our job in reviewing the district court's discretionary ruling with respect to attorneys used here?

[00:16:21] Speaker 00:
This court absolutely reviews for an abuse of discretion here.

[00:16:25] Speaker 00:
But there's two ways for the court here to abuse its discretion.

[00:16:29] Speaker 00:
One is under the clearly erroneous assessment of the evidence.

[00:16:32] Speaker 00:
That's what I was just describing.

[00:16:33] Speaker 00:
There's also the legal side of it.

[00:16:35] Speaker 00:
Highmark says it's necessarily an abuse of discretion if the court bases its ruling on an erroneous view of the law.

[00:16:42] Speaker 00:
The law requires, under the Supreme Court's case in Octane Fitness, requires the court to consider the totality of the circumstances.

[00:16:50] Speaker 00:
When we're looking at awarding fees for the entirety of the litigation, the district court refused to consider our post-filing conduct and our post-filing evidence repeatedly showing that DAI was involved.

[00:17:04] Speaker 00:
We recognize our duty to continuously assess our position.

[00:17:08] Speaker 04:
Our pre-filing evidence... What did she say about that evidence?

[00:17:11] Speaker 04:
Or what did the special master say about that?

[00:17:13] Speaker 04:
Did they say, we will not consider it because it was post-filing?

[00:17:16] Speaker 00:
yes your honor it says the district court said evidence found after filing is not the basis for the court's exceptionality finding and based on that the court said that the technical drawings for the accused system that said this is the design of dynamic air inc that's what the technical drawing said the district court said we're not going to consider that because that's post filing also the district court said

[00:17:40] Speaker 00:
that the court bases its exceptionality determination on the inadequacy of MI's pre-filing investigation.

[00:17:47] Speaker 00:
For that reason, MI's other objections.

[00:17:51] Speaker 04:
Well, there are lots of cases where the award of attorney's fees is predicated on the pre-filing investigation.

[00:17:57] Speaker 04:
That's a large component in terms of an assessment of the exceptional case.

[00:18:01] Speaker 04:
Is it not?

[00:18:03] Speaker 00:
It is when that is the totality of the circumstances.

[00:18:05] Speaker 00:
Here we had many circumstances beyond that post-filing

[00:18:10] Speaker 00:
There was repeated information pointing continuously back to DAI as a technology provider.

[00:18:17] Speaker 03:
Post filing information doesn't support the detailed allegations that the district court taxed you for.

[00:18:24] Speaker 00:
It does, Your Honor.

[00:18:25] Speaker 00:
It repeatedly says, just as we put in the complaint, we allege that DAL had admitted, the subsidiary admitted, that it gets its technology from the parent DAI.

[00:18:36] Speaker 00:
That's a huge admission, and it completely supports the complaint.

[00:18:39] Speaker 00:
And then post-filing, the technical drawings for the accused systems said, this design is the property of Dynamic Air, Inc.

[00:18:48] Speaker 00:
That further supported what we already undercover during our pre-filing investigation.

[00:18:54] Speaker 00:
The district court found that we did conduct a pre-filing investigation.

[00:18:58] Speaker 00:
And the district court found, importantly, quote, DAI has not pointed to information that MI had or could have reasonably uncovered in a diligent pre-suit investigation that would have definitively demonstrated their lack of involvement.

[00:19:13] Speaker 00:
There was nothing more we could have done.

[00:19:14] Speaker 00:
The district court said, yes, you did an investigation.

[00:19:18] Speaker 00:
There's nothing more you could have done.

[00:19:19] Speaker 00:
But I'm finding it exceptional anyway.

[00:19:21] Speaker 00:
And the district court did not

[00:19:23] Speaker 00:
give credence to the post-filing evidence showing that the technical drawings said this is the product and design of DAI, which supported the original allegations where DAO had admitted that they get their technologies from DAI.

[00:19:38] Speaker 00:
All of these things pointed to DAI.

[00:19:41] Speaker 00:
It would have been wild for us not to allege this infringement against both DAO and DAI when DAI is the admitted technology provider.

[00:19:52] Speaker 00:
That's what all the evidence showed.

[00:19:53] Speaker 00:
The Petrobras contract that led to the accused systems, it said DAL is entering into this contract, but we do so with DAI as its partner.

[00:20:03] Speaker 00:
And when we saw that, we knew between that and DAL's admission that it gets this technology from DAI.

[00:20:10] Speaker 00:
We knew DAI is a technology provider.

[00:20:14] Speaker 00:
When you go look at DAI's website, the parent's website, it identifies the subsidiary as an international sales office.

[00:20:22] Speaker 00:
It's a sales office for buying DAI products.

[00:20:25] Speaker 00:
All of this together, the totality of the circumstances, told us, go, and we need to sue.

[00:20:31] Speaker 00:
We had the right entity.

[00:20:32] Speaker 00:
It's dynamic here.

[00:20:33] Speaker 00:
Which branch?

[00:20:34] Speaker 00:
Is it Brazil?

[00:20:35] Speaker 00:
Is it China?

[00:20:36] Speaker 00:
Is it Australia?

[00:20:37] Speaker 00:
Is it Inc?

[00:20:38] Speaker 00:
And we correctly sued both Inc and Limitata.

[00:20:43] Speaker 00:
And when that happened, the evidence repeatedly pointed back to it.

[00:20:49] Speaker 00:
Their evidence, they provided.

[00:20:51] Speaker 00:
They provided a declaration about a year into the litigation saying, no, DAI is entirely uninvolved.

[00:20:57] Speaker 00:
But we knew that was not true.

[00:20:58] Speaker 00:
It turns out, also discovered post-filing, that DAI, who's proclaiming no involvement, was actually supplying components to its subsidiary for the accused products.

[00:21:10] Speaker 00:
That, again, told us DAI is involved.

[00:21:13] Speaker 00:
Eventually, we asked for the deposition of DAI's executive vice president.

[00:21:19] Speaker 00:
On the org chart, DAL directly reports to this gentleman at DAI, and he's the one that oversees DAL.

[00:21:27] Speaker 00:
We asked for his deposition.

[00:21:29] Speaker 00:
We finally got it after they resisted.

[00:21:31] Speaker 00:
We got the deposition.

[00:21:32] Speaker 00:
He answered questions to our satisfaction, and 10 days later,

[00:21:36] Speaker 00:
We dismissed, on our own volition, in good faith, dismissed the complaint.

[00:21:40] Speaker 00:
This is not an exceptional case.

[00:21:42] Speaker 00:
Exceptional cases, like you said, Chief Judge Prost, when it's based on a pre-filing investigation, it's because somebody didn't go by the widget and look at it, and that they had just done it and run a simple test.

[00:21:53] Speaker 00:
They could have figured that out.

[00:21:55] Speaker 00:
Here, we did a pre-filing investigation.

[00:21:57] Speaker 00:
The district court found that we did.

[00:21:59] Speaker 00:
The district court found that we believed in our allegations and did not act in bad faith.

[00:22:04] Speaker 00:
And yet, with all of this together, the district court found that this case to be exceptional.

[00:22:09] Speaker 00:
Under Highmark, this court can reverse neither of two paths.

[00:22:14] Speaker 00:
One, because the court erred in its analysis of octane fitness in the totality of the circumstances.

[00:22:20] Speaker 00:
The district court was obligated to look and see, why are you continuing with this suit?

[00:22:25] Speaker 00:
And the reason we continued with it is because it continuously pointed to DAI.

[00:22:30] Speaker 00:
supporting what we already found in the pre-filing investigation.

[00:22:34] Speaker 00:
That was clear enough.

[00:22:35] Speaker 00:
The second thing Highmark says is if there's a clearly erroneous assessment of the evidence, that's necessarily an abuse of discretion.

[00:22:43] Speaker 00:
And that happened here.

[00:22:44] Speaker 00:
I realize your honor says we're not going to reweigh the evidence, but when it's so clear, that's an abuse of discretion.

[00:22:51] Speaker 00:
The evidence repeatedly pointed to DAI.

[00:22:56] Speaker 00:
When they say DAI is entirely uninvolved, here's who's entirely uninvolved.

[00:23:01] Speaker 00:
IBM, Starbucks.

[00:23:03] Speaker 00:
Starbucks is entirely uninvolved in this.

[00:23:05] Speaker 00:
They're claiming they're entirely uninvolved, when yet we have design drawings saying this is the design of DAI.

[00:23:12] Speaker 00:
We have admissions by the subsidiary saying we get our designs from the parent.

[00:23:18] Speaker 00:
We have website information showing that DAL is just a sales office.

[00:23:27] Speaker 00:
When we have all of that put together, especially with the district court's findings saying there's nothing more you could have done during pre-filing, they never pointed to something saying that DAI was not involved, that sort of finding is irreconcilable with the district court's ultimate finding of exceptionality.

[00:23:46] Speaker 00:
This does not fit.

[00:23:48] Speaker 00:
in the cases this court has considered before, where this court has found an exceptional case.

[00:23:54] Speaker 00:
I realize the abuse of discretion standard is high, but when the court errors in law in its application of octane fitness, and when it errors in its assessment of the evidence, this court should reverse.

[00:24:04] Speaker 00:
I'll reserve the room and your time.

[00:24:05] Speaker 00:
Thank you.

[00:24:17] Speaker 02:
Regarding the IPR, he noted that the IPRs did not substitute for district court litigation.

[00:24:24] Speaker 02:
That's because about a month after we filed them, they dismissed the case.

[00:24:31] Speaker 02:
They filed an exceptional case.

[00:24:35] Speaker 02:
We battled it.

[00:24:36] Speaker 03:
We could not get it dismissed based upon the order of attorney's fees here had absolutely nothing to do.

[00:24:43] Speaker 03:
with the question of patent validity or patentability, right?

[00:24:51] Speaker 03:
I'm sorry, the what?

[00:24:53] Speaker 03:
The award of attorney's fees here was completely unrelated to the question of patent validity.

[00:24:59] Speaker 03:
Well, look.

[00:25:01] Speaker 03:
Yes?

[00:25:02] Speaker 03:
The court awarded attorney's fees on account of the fact... Was it related to the question of patent validity?

[00:25:10] Speaker 03:
The award of attorney's fees.

[00:25:13] Speaker 02:
Yes, in the sense that attorney's fees are awarded because they filed an exceptional case.

[00:25:21] Speaker 02:
All of the attorney's fees came out of that, including the attorney's fees for validity in the district court.

[00:25:28] Speaker 02:
We got those.

[00:25:31] Speaker 02:
but we didn't get the validity fees in the IPR.

[00:25:34] Speaker 02:
So it all came out of the pleading of the exceptional case.

[00:25:41] Speaker 02:
But for doing that, we wouldn't have had any of those attorney's fees in the district court for validity or in the IPR for validity.

[00:25:50] Speaker 02:
So it didn't turn on validity, really, in the real world.

[00:25:54] Speaker 02:
It turned on the fact that the

[00:25:57] Speaker 02:
The IPR was in a different venue.

[00:26:00] Speaker 02:
That's really the only distinction that exists here.

[00:26:06] Speaker 02:
He refers to a pre-filing investigation.

[00:26:09] Speaker 02:
There is no evidence of a pre-filing investigation that they did.

[00:26:12] Speaker 02:
We don't know who did it, who he talked to, what documents they looked at, what they considered.

[00:26:17] Speaker 02:
They put in no evidence of a pre-filing investigation.

[00:26:21] Speaker 02:
What they did is they said, we did one.

[00:26:23] Speaker 02:
That's all they did.

[00:26:25] Speaker 04:
And then they said, what about his argument, which he frames as a legal argument under Highmark, that failure to apply the totality of the circumstances approach if you're refusing to look at what happened post-filing?

[00:26:39] Speaker 02:
OK.

[00:26:40] Speaker 02:
The court did look at what happened post-filing.

[00:26:43] Speaker 02:
He is incorrect about that.

[00:26:45] Speaker 02:
If you look at appendix at 7321, note 7, the court specifically talks about this drawing where there's a legend that said that the design is the property of DAI.

[00:27:01] Speaker 02:
The court specifically deals with that.

[00:27:05] Speaker 02:
he overstates the post-filing evidence.

[00:27:09] Speaker 02:
All there was was the one drawing that they found and the components, which I'm going to get to in a minute.

[00:27:15] Speaker 02:
But the court dealt with that.

[00:27:17] Speaker 02:
And they said, that's not persuasive whatsoever.

[00:27:20] Speaker 02:
Now, post-filing, as the court noted, though, doesn't go to the complaint in the first instance.

[00:27:31] Speaker 02:
They filed a complaint in the first instance based upon

[00:27:34] Speaker 02:
supposedly, four things that they knew that were totally unrelated to what they pleaded.

[00:27:43] Speaker 02:
My uncle used to say about lawyers that had an inflated and undeserved reputation that if that lawyer ever met his reputation on the street, they wouldn't recognize each other.

[00:27:57] Speaker 02:
If those 16 allegations ever met the four things they knew on the street, they wouldn't have recognized each other.

[00:28:04] Speaker 02:
They are of a different world.

[00:28:06] Speaker 02:
And the court specifically said there is a gaping hole between them.

[00:28:12] Speaker 02:
So that was why the case was deemed to be exceptional.

[00:28:17] Speaker 02:
And things that they learned post-filing really didn't go to why they filed it in the first instance.

[00:28:24] Speaker 02:
Let me comment on the post filing.

[00:28:32] Speaker 02:
Take that in the context of what DAI did when it was sued.

[00:28:37] Speaker 02:
We have four pages in our brief of all the things that DAI said in its depositions, in its declarations.

[00:28:49] Speaker 04:
Well, as you noted, we have the benefit of your brief.

[00:28:51] Speaker 02:
Yes.

[00:28:52] Speaker 02:
And so I won't go into that.

[00:28:54] Speaker 02:
But my point is that every time that DAI had a chance to talk about the fact that it wasn't involved in Brazil, it did that.

[00:29:02] Speaker 02:
And when they were looking at post-filing facts, which is one drawing, take that in the context of everything that DAI was telling them about the fact of no involvement in Brazil.

[00:29:14] Speaker 04:
OK.

[00:29:15] Speaker 04:
We thank you.

[00:29:16] Speaker 04:
All right.

[00:29:16] Speaker 02:
Thank you, Your Honor.

[00:29:24] Speaker 00:
We heard again a proclamation of no involvement.

[00:29:27] Speaker 00:
We learned during the case that is just simply not true.

[00:29:30] Speaker 00:
They were coming forward to us and saying, you need to dismiss this case because we're entirely uninvolved.

[00:29:36] Speaker 00:
And yet we had design drawings showing that this is the design of DAI.

[00:29:40] Speaker 00:
We had admissions by DAL that it gets its technology from DAI.

[00:29:45] Speaker 00:
We had other information.

[00:29:46] Speaker 00:
We had information that DAI was providing components

[00:29:50] Speaker 00:
to DAL.

[00:29:52] Speaker 00:
That is not entirely uninvolved.

[00:29:54] Speaker 00:
We were permitted and did pursue discovery.

[00:29:57] Speaker 00:
The court granted us motions to compel, to make them produce it.

[00:30:00] Speaker 00:
When we finally got that deposition that I mentioned that told us what was going on, ten days later in good faith we dismissed the complaint.

[00:30:09] Speaker 00:
The post-filing evidence on which we relied completely supported the pre-filing.

[00:30:14] Speaker 00:
Mr. Carlson just mentioned that the district court's opinion in that footnote seven on seven three two one.

[00:30:21] Speaker 00:
addressed those technical drawings that said this is the design of DAI.

[00:30:25] Speaker 00:
The district court did address it.

[00:30:27] Speaker 00:
And in the very next sentence in the footnote says, quote, evidence found after filing is not the basis for the court's exceptionality finding, close quote.

[00:30:35] Speaker 00:
The court refused to consider it, saying my finding of exceptionality is based on the pre-filing investigation.

[00:30:43] Speaker 00:
Quit talking to me about everything else.

[00:30:45] Speaker 00:
That is not what Octane Fitness says to do.

[00:30:47] Speaker 00:
Octane Fitness says it's a matter of law

[00:30:52] Speaker 00:
the court must consider the totality of the circumstances.

[00:30:55] Speaker 00:
Highmark by the Supreme Court says that the court necessarily abuses its discretion if it bases its ruling on an erroneous view of the law.

[00:31:05] Speaker 00:
That's what we have here.

[00:31:07] Speaker 00:
This court should reverse.

[00:31:09] Speaker 04:
Thank you very much.

[00:31:10] Speaker 04:
Thank you.

[00:31:10] Speaker 04:
We thank both sides, and the case is submitted.

[00:31:13] Speaker 04:
We're going to call a brief recess now for just a couple minutes while you all get organized in terms of your seat.