[00:00:00] Speaker 04:
309 Omega patents versus Cal F.

[00:00:41] Speaker 00:
Good morning, and may it please the court.

[00:00:44] Speaker 00:
The judgment in this case is the result of a number of errors starting with claim construction.

[00:00:50] Speaker 00:
The district court construed two claim limitations, the data bus and transmitter receiver limitations, too narrowly by reading in requirements that are not there.

[00:01:02] Speaker 00:
That restricted KLM's invalidity defenses by narrowing the scope of the prior art that was relevant.

[00:01:08] Speaker 01:
The court refused.

[00:01:09] Speaker 01:
On page eight of the blue break,

[00:01:11] Speaker 01:
You state that Omega also repeatedly noted that it had sued Directed Electronics, which is an company, you could say, unrelated to Calliam, and that the jury found well-funded information in that case.

[00:01:26] Speaker 01:
Was that information before the jury?

[00:01:28] Speaker 01:
And if so, how was it admitted into evidence?

[00:01:32] Speaker 00:
It was before the jury.

[00:01:35] Speaker 00:
I will confess that I don't believe we objected to it.

[00:01:38] Speaker 00:
Probably should have, but didn't, which is why we didn't raise it on appeal.

[00:01:42] Speaker 00:
But it came out in the testimony of the inventor, Mr. Fleck.

[00:01:46] Speaker 01:
I see.

[00:01:47] Speaker 00:
OK.

[00:01:49] Speaker 00:
The court refused to construe a third term that appears in all of the asserted claims vehicle device, even though it acknowledged that the term is defined in the specifications and that Cal Am's proposed construction

[00:02:01] Speaker 00:
was verbatim, I think is the word the court used, taken from the specification.

[00:02:06] Speaker 00:
That allowed Omega and its expert to spin out an infringement theory that really turned the claims upside down and turned what should have been clear evidence of non-infringement into an entirely new theory.

[00:02:19] Speaker 00:
The claim constructions, at a minimum, require a new trial.

[00:02:22] Speaker 00:
And we actually believe Omega failed to prove infringement.

[00:02:25] Speaker 00:
even as construed.

[00:02:26] Speaker 04:
Do you want us to interrupt you as you go along or you have a summary you're going to finish momentarily?

[00:02:32] Speaker 00:
I want you to interrupt me.

[00:02:33] Speaker 04:
OK, I'm going to interrupt you.

[00:02:34] Speaker 04:
On that point, I understand what you're saying, but you offered a claim construction.

[00:02:38] Speaker 04:
And do you make an argument in your briefs how even if the court had adopted the claim construction that you proposed, it wouldn't?

[00:02:50] Speaker 04:
Well, why can't under your claim construction, the LMU,

[00:02:53] Speaker 04:
still be a vehicle device, which is, I think, at the heart of what I understand your argument to be about vehicle.

[00:03:00] Speaker 00:
Yes, as to that term.

[00:03:01] Speaker 00:
Well, the LMU under Omega's infringement theory is that all the clients require a multi-vehicle compatible controller.

[00:03:10] Speaker 00:
According to Omega, that's the LMU.

[00:03:12] Speaker 00:
That's our product.

[00:03:14] Speaker 00:
And the way vehicle device is defined in the specifications is it is the device that is to be controlled or have the status thereof read.

[00:03:24] Speaker 00:
And the controller is what is doing the controlling.

[00:03:28] Speaker 00:
So you can't be both the controller and the thing the controller is controlling.

[00:03:34] Speaker 00:
The other place it enters into is I think three of the patents require particular use of device codes.

[00:03:43] Speaker 00:
Device codes was construed by the district court to mean signals from a vehicle device.

[00:03:50] Speaker 00:
And what Omega's infringement theory, infringement expert, continually referred to was signals from the LMU, which is the controller, as being these device codes when they can't be given that construction unless you improperly say the LMU is a vehicle device, which had that term been construed as it was defined in the patents could not be the case.

[00:04:13] Speaker 02:
So it seems to me that this word vehicle device comes up

[00:04:17] Speaker 02:
in their phrase vehicle device comes up in different claims.

[00:04:20] Speaker 02:
In some claims it's used with vehicle device code and in other claims it's used without vehicle device code, correct?

[00:04:28] Speaker 02:
Correct.

[00:04:29] Speaker 02:
And it seems to me that you have a pretty good argument that with respect to the vehicle device code claims that their primary reliance was on the signal coming from the LMU.

[00:04:41] Speaker 02:
So if the LMU is not a vehicle device,

[00:04:45] Speaker 02:
That's not a tenable infringement theory.

[00:04:48] Speaker 02:
I understand that.

[00:04:49] Speaker 02:
Address for me the claims that don't talk about vehicle device code, but just about vehicle device, where it seems to me that the primary theory was that the EMU was the vehicle device rather than the LMU.

[00:05:09] Speaker 00:
The ECU.

[00:05:09] Speaker 00:
The engine control unit.

[00:05:14] Speaker 00:
The vehicle device claim construction issue affects claims in the 278, 876, and 885 patents that have the device code limitation as well.

[00:05:27] Speaker 00:
It doesn't affect claims.

[00:05:29] Speaker 00:
And I think this is where you're going.

[00:05:33] Speaker 00:
There are a couple of claims in the 876 and the claims in the 727 that don't require the use of device codes.

[00:05:40] Speaker 00:
So even though vehicle device appears in those patents,

[00:05:44] Speaker 00:
I don't think you have the same infringement-related problem as to those.

[00:05:48] Speaker 02:
So your argument is only with respect to the claims that have vehicle device coded?

[00:05:53] Speaker 00:
As to that claim term.

[00:05:54] Speaker 00:
Yeah, correct.

[00:05:55] Speaker 00:
I understand.

[00:05:56] Speaker 01:
As to vehicle device, you argued that the court erroneously refused to construe it.

[00:06:04] Speaker 01:
But the colloquy about that doesn't seem to be in the record.

[00:06:11] Speaker 01:
Why not?

[00:06:12] Speaker 00:
Well, it was in the Markman.

[00:06:13] Speaker 00:
It was in the market.

[00:06:16] Speaker 00:
And where the judge laid out, Cal-Anne proposes its construction.

[00:06:20] Speaker 00:
It comes directly from the specifications.

[00:06:22] Speaker 00:
And therefore, I don't need to construe it.

[00:06:25] Speaker 01:
In the JA, it's 18621 to 18674.

[00:06:34] Speaker 01:
But it's incomplete.

[00:06:35] Speaker 01:
There's pages missing and so on.

[00:06:38] Speaker 01:
It doesn't seem that the parties include the discussion with the district court about vehicle device.

[00:06:47] Speaker 00:
Yeah, apparently we must not have cited that passage in the briefs.

[00:06:50] Speaker 00:
But it seemed it was... Is it in the record?

[00:06:53] Speaker 00:
I mean, because I couldn't... Oh, well, yes, it certainly is in the record.

[00:06:57] Speaker 00:
The entire transcript's in the record, so it's in there.

[00:06:59] Speaker 00:
It just didn't get reproduced in the joint appendix.

[00:07:02] Speaker 01:
Right, that's what I'm saying.

[00:07:03] Speaker 01:
It's not in the JA, though.

[00:07:04] Speaker 00:
Right, right.

[00:07:05] Speaker 00:
No, that's correct, Your Honor.

[00:07:07] Speaker 00:
But it was discussed at the Markman hearing that's in the transcript.

[00:07:10] Speaker 00:
And it's reflected in the Markman order, where the judge basically recounts the arguments and says, I'm not going to consider it.

[00:07:15] Speaker 04:
I actually do think it's in the appendix at 146.

[00:07:19] Speaker 04:
Oh, that's the actual Markman ruling, Your Honor.

[00:07:23] Speaker 00:
I think what Judge Wallach was referring to was the colloquy at the hearing, the actual transcript.

[00:07:30] Speaker 00:
Now, as Omega acknowledges in its brief,

[00:07:34] Speaker 00:
If any of the underlying liability findings is set aside, the willful infringement finding needs to be reconsidered as well.

[00:07:42] Speaker 04:
But before we get to willful infringement, can we deal with damages?

[00:07:45] Speaker 04:
Is that not the case on damages?

[00:07:47] Speaker 04:
Is it not true that on the record, if there's an indication that one of the many claims was infringed,

[00:07:56] Speaker 04:
than the royalty rate and the damages would hold, assuming that they hold up for other reasons, but that the damages all or nothing kind of thing that was one expert, only one expert he testified to that seems to be clear, right?

[00:08:09] Speaker 00:
Well, he testified that a single royalty would apply across the board.

[00:08:15] Speaker 00:
We believe that if any of the underlying infringement findings are disturbed, damages need to be reconsidered, because it was basically a general verdict as to damages.

[00:08:23] Speaker 00:
It wasn't broken down by patent.

[00:08:26] Speaker 00:
If you undercut the infringement findings as to any of these, we think damages need to be reconsidered.

[00:08:35] Speaker 04:
I mean, I'll ask the other side.

[00:08:37] Speaker 04:
But I thought there was unrebutted testimony by an expert that said that all or nothing kind of, if anyone is applied, regardless of how many claims were infringed.

[00:08:49] Speaker 04:
So even if you find one infringed claim, the damages hold.

[00:08:52] Speaker 00:
Well, I think it's important to focus on what he said was,

[00:08:57] Speaker 00:
Omega's position in negotiating licenses is to ask for a single royalty across the board.

[00:09:03] Speaker 00:
He didn't say, as a matter of economic analysis, this is where I came out.

[00:09:06] Speaker 00:
This would be their negotiating position.

[00:09:08] Speaker 00:
And it is refuted by their own license agreements, which are in the record, which provide different royalty rates for different patents.

[00:09:15] Speaker 04:
But isn't it, there's a jury charge transcript, 16497 of the JA, and didn't the court

[00:09:22] Speaker 04:
say that all the evidence at trial was that the royalty would be the same whether one patent was infringed or whether all were infringed.

[00:09:33] Speaker 04:
And the parties agree to that.

[00:09:34] Speaker 04:
That's the only point I'm making.

[00:09:35] Speaker 00:
And you're certainly right about what the trial court said.

[00:09:39] Speaker 00:
And my point is that what the trial court was referring to was their expert getting up and saying, yeah, that's what Omega wants.

[00:09:46] Speaker 00:
That's what they would ask for.

[00:09:47] Speaker 00:
but with no underlying analysis, and the actual evidence of the agreements themselves actually provide different royalty rates for different products and different patents.

[00:09:56] Speaker 02:
So the jury didn't have to agree with that presentation, is what you're saying.

[00:10:01] Speaker 00:
Yes, correct.

[00:10:02] Speaker 02:
And we don't know... So we can't be sure that the jury reached the result for which they were arguing.

[00:10:08] Speaker 00:
Exactly, Your Honor.

[00:10:09] Speaker 00:
Exactly.

[00:10:10] Speaker 00:
Now, if I could turn, with the Court's permission, to willful infringement.

[00:10:14] Speaker 04:
Although, one more question on damages.

[00:10:15] Speaker 04:
Sorry about that.

[00:10:18] Speaker 04:
I was going to say comparable licenses, but obviously your view is that they weren't comparable.

[00:10:23] Speaker 04:
Why didn't you do a dollar motion?

[00:10:25] Speaker 04:
I mean, so you didn't.

[00:10:27] Speaker 04:
The licenses were in.

[00:10:29] Speaker 04:
And then why is it not?

[00:10:32] Speaker 04:
I mean, even if I might find your arguments to the lack of comparability very compelling, I wasn't on the jury.

[00:10:39] Speaker 04:
So why, given that the evidence comes in, is allowed in, given that you have the opportunity to cross-examine

[00:10:46] Speaker 04:
or put on your own witness, which I guess you didn't because your expert was excluded.

[00:10:51] Speaker 04:
Why do we still have to go along with the jury?

[00:10:54] Speaker 00:
Well, Your Honor, I think evidence can come in with or without an objection.

[00:11:00] Speaker 00:
That doesn't make it sufficient.

[00:11:02] Speaker 00:
There's still a separate question about whether it's sufficient.

[00:11:04] Speaker 00:
And here, the evidence of non-comparability is really compelling because you're dealing with their two main licenses.

[00:11:12] Speaker 00:
One of them covered 47 patents.

[00:11:14] Speaker 00:
The other one covered, I think, 86 patents.

[00:11:16] Speaker 00:
disparate technologies with different royalty rates for things like remote start capability, which we don't have, alarm systems, which we don't have.

[00:11:25] Speaker 04:
Well, you made all those arguments to the jury.

[00:11:28] Speaker 00:
We made those arguments.

[00:11:30] Speaker 00:
But on this record, we think the evidence is clearly insufficient because these are not comparable.

[00:11:37] Speaker 02:
Didn't they have something more than those licenses?

[00:11:41] Speaker 00:
They had a basket of other than those two, sure.

[00:11:44] Speaker 00:
They referred generally to some other licenses.

[00:11:47] Speaker 00:
But they have the same problems.

[00:11:48] Speaker 00:
There are dozens of patents.

[00:11:50] Speaker 00:
All of them were litigation settlements.

[00:11:52] Speaker 00:
And they also show that different royalty rates apply to different kinds of patents and different products.

[00:11:58] Speaker 00:
So they were not a focus of trial, but all the same arguments apply to them.

[00:12:02] Speaker 02:
So what you're saying is the only damages support was these licenses which you argue are noncomparable?

[00:12:09] Speaker 00:
Correct.

[00:12:10] Speaker 00:
Correct, Your Honor.

[00:12:11] Speaker 00:
Now you can turn to willfulness.

[00:12:12] Speaker 00:
Now onto willfulness.

[00:12:15] Speaker 00:
Willfulness would need to be reconsidered.

[00:12:17] Speaker 00:
I think Omega concedes if any of the underlying findings are disturbed.

[00:12:21] Speaker 00:
But even apart from that, the serious problem here is that the facts are that Cal Amp did exactly what a responsible company should do when it's considering introducing a new product.

[00:12:31] Speaker 00:
It identified the relevant field of art, did its own internal examination,

[00:12:36] Speaker 00:
Hired outside counsel to take an independent look.

[00:12:38] Speaker 04:
OK, so could we get cut to the chase?

[00:12:40] Speaker 04:
Sure.

[00:12:40] Speaker 04:
So I want to understand what your main concerns are with that, because we've got Chen and we've got Bailey.

[00:12:46] Speaker 04:
Right.

[00:12:47] Speaker 04:
And so why don't you go through those in order of what you think is the worst part.

[00:12:53] Speaker 00:
OK, so we got oral opinions before we introduced the products.

[00:12:56] Speaker 00:
Now, the trial was before Halo.

[00:12:59] Speaker 00:
But obviously, in the wake of Halo, what we knew at the time of working on the products is crucial.

[00:13:04] Speaker 00:
We got oral opinions beforehand.

[00:13:06] Speaker 00:
Chen was allowed to describe.

[00:13:08] Speaker 00:
We hired counsel.

[00:13:09] Speaker 00:
He looked at all these opinions.

[00:13:10] Speaker 00:
Is Chen an engineer?

[00:13:12] Speaker 00:
He is an engineer.

[00:13:12] Speaker 00:
He was a senior engineer at KELM.

[00:13:15] Speaker 00:
We looked at all these patents.

[00:13:18] Speaker 00:
He gave us opinions, asked, OK, what did counsel tell you?

[00:13:21] Speaker 00:
What was your understanding based on counsel?

[00:13:24] Speaker 00:
Wait, I'm sorry.

[00:13:26] Speaker 00:
Are you talking about Chen's testimony?

[00:13:27] Speaker 00:
Chen's testimony, yes, Your Honor.

[00:13:29] Speaker 00:
And objection here say, and the judge sustained the objection.

[00:13:32] Speaker 00:
He would not allow Chen to testify about the oral opinions.

[00:13:36] Speaker 00:
And also, Chen couldn't testify about his own analysis.

[00:13:41] Speaker 04:
Could I ask you about that, though?

[00:13:43] Speaker 04:
Because it came up in Bailey, too.

[00:13:45] Speaker 04:
What the judge allowed for Dr. Bailey was that he could testify about the ultimate conclusion he reached, but not the guts of the basis for that conclusion.

[00:13:54] Speaker 04:
Was that the same deal he reached with Chen, or he wasn't letting Chen even talk about what the conclusion was?

[00:14:00] Speaker 00:
Chen couldn't even talk about what the conclusion was.

[00:14:03] Speaker 00:
And with respect to Bailey, I think it's debatable exactly what Bailey was allowed to say.

[00:14:09] Speaker 00:
He did say an opinion as to invalidity and an opinion as to not.

[00:14:15] Speaker 00:
But the judge had instructed that he was not to testify about the substance of his opinions.

[00:14:20] Speaker 00:
The jury heard that.

[00:14:22] Speaker 00:
It's questionable what the jury may have even understood Bailey was telling.

[00:14:25] Speaker 00:
And that was about the written opinions, not the oral opinions.

[00:14:28] Speaker 00:
And it's clear that that was excluded because, first of all, the judge at appendix page 17 says that vice of counsel was not allowed into evidence.

[00:14:37] Speaker 00:
At appendix page 46, note 14, he says the court is unaware of the substance of the oral opinions allegedly provided prior to the introduction of the products.

[00:14:47] Speaker 00:
Well, that confirms that.

[00:14:50] Speaker 00:
Those bottom lines were not presented.

[00:14:52] Speaker 00:
The jury heard, the jury didn't hear anything the judge didn't hear.

[00:14:56] Speaker 00:
So if the judge was unaware of it, for sure the jury was unaware of it.

[00:14:59] Speaker 02:
OK, so what's a judge to do in these circumstances?

[00:15:02] Speaker 02:
Because it does seem to me that if he allows extensive opinions about invalidity to be introduced in the guise of advice that they received about whether they could go forward with their product launch or whatever it was,

[00:15:17] Speaker 02:
that there's a risk of prejudice.

[00:15:19] Speaker 02:
So surely the district court has some control over the amount of testimony that's given about these oral and written opinions that occur before the event.

[00:15:31] Speaker 00:
Sure.

[00:15:32] Speaker 00:
Absolutely, Your Honor, but complete exclusion is not appropriate.

[00:15:37] Speaker 04:
I'm looking at some of the testimony that's exerted from this.

[00:15:41] Speaker 04:
I thought that Dr. Bailey did test, Mr. Bailey did testify

[00:15:46] Speaker 04:
when he was talking about the conclusion reached by the written opinion, that that was reflected what his prior oral opinions were.

[00:15:57] Speaker 04:
So that testimony got in, right?

[00:15:59] Speaker 00:
Well, he was allowed to say that much, but apparently the judge didn't think that

[00:16:04] Speaker 00:
reveal the substance of the oral opinion.

[00:16:06] Speaker 01:
Well, the judge didn't let him say what it was.

[00:16:08] Speaker 00:
Exactly.

[00:16:08] Speaker 04:
Not the substance, but the result.

[00:16:11] Speaker 04:
That was true of the written opinions, and it wasn't that also true of the oral opinion, that he was allowed to say, I gave them information that based on my considered opinion, the claims were valid.

[00:16:24] Speaker 00:
Well, the way that Bailey tested when he came in was,

[00:16:28] Speaker 00:
They handed him the written opinions, and those were excluded on hearsay grounds.

[00:16:33] Speaker 00:
But they were allowed to show him the written opinions.

[00:16:38] Speaker 00:
And he was able to say, yes, this is a document reflecting my opinion.

[00:16:44] Speaker 00:
which I also had previously given of invalidity or of non-infringement, period, with no one else.

[00:16:50] Speaker 04:
And it's important to note that in the- With no analysis, you mean no analysis is how he reached themselves?

[00:16:55] Speaker 00:
Right.

[00:16:55] Speaker 00:
And no even reflection that there was no indication that there was any sort of considered judgment.

[00:17:01] Speaker 00:
And it's important- Considered judgment by whom?

[00:17:03] Speaker 00:
By Bailey in providing the opinions.

[00:17:06] Speaker 00:
And it's important, Your Honor, because in closing,

[00:17:08] Speaker 00:
Omega made a big deal out of the fact that to the jury that, well, you heard all about these stacks of patents, a big stack and a little stack.

[00:17:16] Speaker 00:
But you heard no analysis from Chen or from Bailey.

[00:17:21] Speaker 00:
So given this context, and Judge Dyke, to your question certainly, a district court can exercise

[00:17:27] Speaker 00:
some control, and you don't want a trial devolving into just reading pages and pages of attorney opinions, but to completely cut it off the way the judge did.

[00:17:34] Speaker 02:
Could you show me where that closing argument appears?

[00:17:39] Speaker 02:
Is that with respect to the advice of counsel point?

[00:17:43] Speaker 00:
It is Omega's argument on willfulness, on willful infringement.

[00:17:49] Speaker 00:
Where is it?

[00:17:50] Speaker 00:
Hang on.

[00:17:51] Speaker 00:
I can dig that up for you.

[00:18:06] Speaker 00:
I would refer the court to the appendix pages 16, 7, 20.

[00:18:10] Speaker 02:
Which volume is this?

[00:18:12] Speaker 00:
I'm sorry?

[00:18:12] Speaker 00:
Which volume?

[00:18:14] Speaker 00:
Oh, good question.

[00:18:18] Speaker 01:
6, 2, 3.

[00:18:20] Speaker 00:
Volume 3 of 4, Your Honor.

[00:18:22] Speaker 00:
And it's 16, 7, 20 to 7, 22 is where this is being discussed.

[00:18:28] Speaker 00:
And this is Omega's argument on willful infringement.

[00:18:31] Speaker 00:
And what they say basically is, you know.

[00:18:32] Speaker 00:
You've got to give us the second place.

[00:18:34] Speaker 00:
Oh, sure.

[00:18:34] Speaker 00:
Sorry.

[00:18:34] Speaker 04:
16-7-20.

[00:18:35] Speaker 04:
OK, go ahead.

[00:18:38] Speaker 00:
And what they're saying, what Omega's saying is, you didn't hear any analysis from Chen.

[00:18:44] Speaker 00:
So which line is this on?

[00:18:46] Speaker 01:
18.

[00:18:48] Speaker 00:
18.

[00:18:53] Speaker 00:
Didn't hear any analysis of those patents.

[00:18:55] Speaker 00:
I did a bunch of work.

[00:18:56] Speaker 00:
I worked really hard.

[00:18:58] Speaker 00:
And also, they underscored the fact, they actually turned this what should have been exculpatory testimony on its head, because of the inability to explain it, saying they knew about the patents, they looked at them, but you didn't hear any analysis, and they forged ahead anyway.

[00:19:14] Speaker 00:
And then at 722, I think it's 722, and this is at line 15.

[00:19:21] Speaker 00:
So then they brought in Mr. Bailey, their attorney.

[00:19:23] Speaker 00:
Mr. Bailey came in and said, yeah, I've been working with Mr. Chen.

[00:19:26] Speaker 00:
I've been working on this big stack, little stack.

[00:19:28] Speaker 00:
And I agree.

[00:19:29] Speaker 00:
I agree with my partner referring to trial counsel, who was from the same firm, that all these things must be either invalid or infringed.

[00:19:35] Speaker 00:
So they dismissed this precisely because the judge didn't allow any explanation.

[00:19:40] Speaker 04:
Can I ask you, was there a distinction between what was allowed?

[00:19:43] Speaker 04:
And I apologize if you've already said this.

[00:19:46] Speaker 04:
The difference between what he allowed for Chen and what he allowed for Bailey.

[00:19:50] Speaker 04:
Chen, was Chen allowed to do at least as much as Bailey did, which is to say what the results of the opinion were?

[00:19:57] Speaker 00:
No, Chen was cut off completely on that subject, both as to Bailey's opinions and as to his own conclusions based on his review of the prior himself.

[00:20:08] Speaker 04:
Well, could I ask you, I don't want to be making your argument for you, but isn't that, I mean, if we're talking about willfulness, fine, whatever Mr. Bailey has to say.

[00:20:16] Speaker 04:
But at the end of the day, the only inquiry in willfulness

[00:20:20] Speaker 04:
is what your client knew and thought.

[00:20:24] Speaker 04:
So no matter how much Bailey said, you needed to tie that into willfulness by having Chen acknowledge that he sought and agreed with it, right?

[00:20:35] Speaker 04:
Exactly, Your Honor.

[00:20:35] Speaker 00:
And that's the heart of the problem.

[00:20:38] Speaker 00:
So I'm way over my time.

[00:20:39] Speaker 00:
I apologize for that.

[00:20:41] Speaker 04:
Okay, let me just check if there any, was that the end of your numerous issues?

[00:20:45] Speaker 00:
Well, there are numerous of them, but we'd be here too long.

[00:20:49] Speaker 00:
Okay, all right, thank you.

[00:20:50] Speaker 04:
We'll restore some rebuttal time.

[00:21:00] Speaker 03:
May it please the Court, Brian Gilchrist on behalf of Omega Patents.

[00:21:04] Speaker 01:
Mr. Gilchrist, on page five of the red brick, I have a little marginal note in there.

[00:21:09] Speaker 01:
You say

[00:21:09] Speaker 01:
Cal Amph failed to offer a live testimony of its engineers at trial.

[00:21:16] Speaker 01:
That's why I asked Mr. Trellick, Mr. Chen's an engineer, isn't he?

[00:21:21] Speaker 01:
Yes, sir.

[00:21:22] Speaker 01:
So they did offer a live testimony of an engineer.

[00:21:24] Speaker 03:
Not as to the engineer, of course.

[00:21:25] Speaker 03:
Mr. Chen was through videotaped deposition and he came later after the fact to offer the analysis-type testimony, the expert testimony that was excluded, not as to the engineering elements.

[00:21:41] Speaker 01:
I mean, the reason I have a marginal note is it says, when you said that, I wrote a marginal note, isn't Chen an engineer?

[00:21:49] Speaker 01:
You have to be accurate in those statements.

[00:21:51] Speaker 03:
Fair enough.

[00:21:52] Speaker 03:
I understand the court's concern with that.

[00:21:54] Speaker 04:
So since we're talking about Mr. Chen, why don't you start with the willfulness issue that we discussed with Mr. Trela?

[00:22:00] Speaker 03:
Absolutely.

[00:22:01] Speaker 03:
Mr. Chen, and I think it's one of the key elements, and I think the court was addressing it, is whether

[00:22:10] Speaker 03:
Italian relied upon any such statement and what Mr. Chen Indicated was he was not the one making the decision to move forward with the product So there's a lack of foundation that anybody relied upon any analysis in order to make the decision to move forward with the product boys that wasn't the judge's ground for Refusing to permit chin to testify his ground was hearsay which seems to be wrong.

[00:22:36] Speaker 02:
I think wait wait wait He should not have excluded

[00:22:40] Speaker 02:
Chen's testimony about the opinion of counsel is hearsay, right?

[00:22:45] Speaker 02:
I disagree.

[00:22:47] Speaker 02:
Really?

[00:22:47] Speaker 03:
How could that be an appropriate reason for... It goes down to the details of how it was asked.

[00:22:54] Speaker 03:
I think what the court said was he agreed it could be offered for the state of mind in 16301.

[00:23:01] Speaker 03:
It could be offered for the state of mind, but the question that was asked in 16300

[00:23:07] Speaker 03:
is do you have an opinion as to whether counsel believed they were infringed, which is absolutely a hearsay question and an appropriate objection.

[00:23:18] Speaker 03:
In the court, as he was discussing this analysis.

[00:23:21] Speaker 04:
Counsel being who?

[00:23:23] Speaker 04:
Inside counsel?

[00:23:23] Speaker 03:
Mr. Bailey.

[00:23:24] Speaker 04:
Mr. Bailey.

[00:23:25] Speaker 03:
OK.

[00:23:25] Speaker 03:
And so he was asking Mr. Chin what Mr. Bailey thought.

[00:23:30] Speaker 02:
Where is this question?

[00:23:31] Speaker 02:
Is this in 16301?

[00:23:33] Speaker 02:
16300.

[00:23:33] Speaker 02:
300.

[00:23:35] Speaker 02:
What line?

[00:23:41] Speaker 03:
I'll get some lines from my colleague.

[00:24:16] Speaker 02:
Should not come as a surprise that we're going to ask you questions about that.

[00:24:20] Speaker 02:
I just don't have the line for you.

[00:24:21] Speaker 02:
Well, that's the problem.

[00:24:22] Speaker 02:
You're supposed to know it.

[00:24:33] Speaker 03:
It begins at 16, 299 line.

[00:24:35] Speaker 03:
16, 299?

[00:24:35] Speaker 02:
Yes, sir.

[00:24:37] Speaker 02:
Line what?

[00:24:39] Speaker 03:
Line 21.

[00:24:47] Speaker 04:
And this is Chen's testimony?

[00:24:49] Speaker 02:
Yes, ma'am.

[00:24:51] Speaker 02:
Well, but he says, did you have an understanding whether counsel believed?

[00:24:54] Speaker 02:
Right.

[00:24:54] Speaker 02:
In other words, what did he understand that counsel's belief was?

[00:24:58] Speaker 02:
Correct.

[00:24:59] Speaker 03:
And I believe that's an appropriate hearsay objection.

[00:25:01] Speaker 03:
That's Mr. Chen, what Mr. Bailey's opinions were.

[00:25:05] Speaker 02:
No, he asked him what his understanding of those opinions were.

[00:25:10] Speaker 03:
But Mr. Chen was not the person making the ultimate decision

[00:25:15] Speaker 02:
But that's my point.

[00:25:16] Speaker 02:
It's not a proper hearsay objection.

[00:25:19] Speaker 02:
The question is, could it have been excluded on some other ground, right?

[00:25:24] Speaker 03:
Yes.

[00:25:25] Speaker 03:
Yes, sir.

[00:25:25] Speaker 03:
It could have been excluded on lack of foundation.

[00:25:28] Speaker 03:
But nobody argued that.

[00:25:29] Speaker 03:
You didn't argue that.

[00:25:30] Speaker 03:
I did not argue at the time that the question was objected to on the basis of hearsay and not reworded.

[00:25:37] Speaker 02:
Well, if it had been objected to on lack of foundation,

[00:25:40] Speaker 02:
than they could have laid the foundation for.

[00:25:42] Speaker 02:
But they didn't have the opportunity to do that because he never made such an objection.

[00:25:48] Speaker 03:
Well, I think at 16301, the court explains his concern and constraints.

[00:25:58] Speaker 03:
And he says... The court, and I agree with that, my concern is that under 801-42,

[00:26:09] Speaker 03:
The opposing party statement may be offered against the opposing party if it were made by the party in an individual or representative capacity.

[00:26:23] Speaker 04:
Yeah.

[00:26:24] Speaker 04:
Is one that the party has adopted or believed to be true or is made by the party's agent.

[00:26:28] Speaker 04:
Right.

[00:26:29] Speaker 03:
So the lawyer would be perhaps an agent of the party, but it's not being offered against the opponent.

[00:26:37] Speaker 03:
So it would be, my concern is it's a hearsay statement, the statements we have in this case.

[00:26:44] Speaker 01:
But it's offered to show Chen's state of mind.

[00:26:46] Speaker 03:
But Chen would not be the proper person whose state of mind would be relevant to the willfulness of the inquiry.

[00:26:53] Speaker 02:
But that objection wasn't made.

[00:26:56] Speaker 02:
Well, I understand that.

[00:26:58] Speaker 02:
Well, how can you come here and say, well,

[00:27:02] Speaker 02:
Maybe the judge was wrong to exclude his hearsay, but there was another basis for excluding it that the judge didn't rely on and that you didn't argue.

[00:27:09] Speaker 03:
Well, again, I don't think the question was appropriate.

[00:27:14] Speaker 03:
As hearsay, what did Mr. Bailey say to you?

[00:27:19] Speaker 01:
Well, isn't this sort of mooted by page 31 of the red brief at the bottom, where you say Cal-Emp engaged in detailed review of Omega patents?

[00:27:32] Speaker 03:
Yes, sir.

[00:27:35] Speaker 03:
They did review the patents and that was brought out there in trial.

[00:27:42] Speaker 01:
That's what Bailey's testifying, isn't it?

[00:27:45] Speaker 03:
Yes, sir.

[00:27:46] Speaker 03:
That he had the opportunity to review it and that he reached conclusions about the review and what's missing from any analysis and what's missing from the heart of this willfulness dispute.

[00:27:59] Speaker 03:
is what did Cal Amp rely upon when it moved forward with the decision to offer the LMUs for sale?

[00:28:06] Speaker 03:
And we don't have any testimony in that regard.

[00:28:09] Speaker 01:
You don't have testimony because Chen wasn't permitted to testify.

[00:28:13] Speaker 03:
Chen testified that he wasn't the one that made the ultimate decision.

[00:28:17] Speaker 03:
He did offer that testimony.

[00:28:18] Speaker 03:
So we're missing the next step.

[00:28:21] Speaker 03:
Who made the decision to move forward on the willfulness claim in light of whatever opinions they had, and what were those

[00:28:29] Speaker 03:
decisions based upon.

[00:28:34] Speaker 02:
On the willfulness thing, you agree that if we hold that there has to be a new trial on any of these claims, or the JMO should have been granted on any of these claims, that the willfulness conclusion has to be set aside, right?

[00:28:51] Speaker 03:
I believe that according to what the decisions of this court are, that is accurate.

[00:28:58] Speaker 03:
I don't necessarily agree with those decisions, but I live with those decisions, and I agree with that aspect of it.

[00:29:06] Speaker 01:
On page 43 of the red brief, you say Cal-EMF does not contest that the excluded testimony falls within the disclosure requirements of Rule 26 in the court's big trial orders.

[00:29:17] Speaker 01:
What's the record basis for this statement that they don't contest it?

[00:29:22] Speaker 03:
That they had not raised it in their initial brief.

[00:29:27] Speaker 03:
They did not contend

[00:29:28] Speaker 03:
At the time that Chen was offered, that he had been identified as a Rule 26 expert.

[00:29:36] Speaker 03:
There was no Rule 26 expert disclosure in the pretrial statement.

[00:29:40] Speaker 03:
He was not identified as an expert in the Rule 26 pretrial statement.

[00:29:45] Speaker 02:
So what?

[00:29:46] Speaker 02:
He's not being offered as an expert.

[00:29:47] Speaker 02:
He's being offered as a corporate representative.

[00:29:50] Speaker 02:
And the question is, what did he understand about infringement and validity?

[00:29:55] Speaker 03:
I believe he was being

[00:29:57] Speaker 03:
offered as an expert.

[00:29:58] Speaker 03:
I think that was the underlying problem.

[00:30:00] Speaker 03:
His analysis of certain patents and a lot of the patents that were precluded from their expert.

[00:30:09] Speaker 02:
He was going to talk about his analysis of the patent to show this company's state of mind that existed before the infringement, right?

[00:30:20] Speaker 03:
I do not believe that's why he was offered for that purpose.

[00:30:22] Speaker 03:
He didn't put a date or time frame

[00:30:24] Speaker 03:
Where does it say for what purpose he was offered?

[00:30:28] Speaker 03:
There was no explanation on behalf of the defendant on why he was offered.

[00:30:34] Speaker 03:
There's an objection made that... He wasn't offered as an expert then.

[00:30:37] Speaker 03:
I believe he was.

[00:30:38] Speaker 03:
I think that was unfortunate.

[00:30:39] Speaker 03:
They didn't say he was being offered as an expert.

[00:30:41] Speaker 03:
He wasn't being offered as an expert.

[00:30:42] Speaker 03:
When the objection as to the expert was raised, that he was being offered as an expert, they didn't come back and say, no, he's not being offered as an expert.

[00:30:50] Speaker 03:
Where do we find that?

[00:30:53] Speaker 03:
And I don't have the site for that, sir.

[00:30:56] Speaker 02:
You should know your record when you come here.

[00:30:58] Speaker 02:
Yes, sir.

[00:31:13] Speaker 03:
It would be in 16297 is what my notes reflect.

[00:31:17] Speaker 03:
But I don't have an accurate citation for the court.

[00:31:36] Speaker 01:
You have an argument at page 54 of your brief that says, I'm going to read the whole paragraph.

[00:31:50] Speaker 01:
After Mr. Flick met with representatives of Cal Amp in 2009 and advised Cal Amp it was infringing Omega's patents, Mr. Chen requested a license agreement.

[00:32:01] Speaker 01:
A fact finder could infer

[00:32:06] Speaker 01:
Cal Amp's analysis at that time was infringing and needed a license.

[00:32:11] Speaker 01:
Cal Amp thereafter refused to sign the license, not because the patents were invalid or not infringed, but because Cal Amp falsely claimed it did not program the systems.

[00:32:22] Speaker 01:
A fact finder could interpret Cal Amp's false claim as a reaction to counsel's oral conclusion, the patents were valid and infringed.

[00:32:33] Speaker 01:
What's your basis for that, other than your speculation?

[00:32:36] Speaker 01:
You're saying the jury might have?

[00:32:38] Speaker 03:
Certainly, yeah.

[00:32:39] Speaker 03:
I'm entitled to the reasonable inferences on what the evidence revealed.

[00:32:44] Speaker 03:
And I'm discussing what the evidence was and what a reasonable jury could infer from that evidence to reach their ultimate conclusions.

[00:32:55] Speaker 01:
Kellan says on page 57 of the blue brief,

[00:33:00] Speaker 01:
The court never explained the basis of its theory that although Bailey reviewed the patents, he gave his clients no opinion about them.

[00:33:08] Speaker 01:
Is there any basis in the record?

[00:33:12] Speaker 01:
I'm sorry, page 57.

[00:33:13] Speaker 01:
Of the blue brief, yeah.

[00:33:17] Speaker 01:
I'm giving you a chance to say they're wrong.

[00:33:20] Speaker 03:
OK, if I could find where the court was looking again, I'll say they're wrong.

[00:33:25] Speaker 03:
I'm sorry.

[00:33:26] Speaker 03:
The portion that they're saying.

[00:33:28] Speaker 01:
I'm saying that

[00:33:30] Speaker 01:
If you look at page 57 of the blue brief, they say the court never explained.

[00:33:35] Speaker 01:
Where did the court explain?

[00:33:38] Speaker 01:
I'm not asking you for a flip answer.

[00:33:47] Speaker 01:
I'm giving you an opportunity.

[00:33:48] Speaker 01:
Yes, sir, I understand.

[00:34:03] Speaker 03:
I'm not sure I have an opposition to that, sir.

[00:34:11] Speaker ?:
All right.

[00:34:11] Speaker 03:
If there are no other questions, I'll see the rest of my time.

[00:34:15] Speaker 01:
Well, I have some other questions.

[00:34:16] Speaker 01:
Okay.

[00:34:18] Speaker 01:
Cal Amps says on 58, it would have been enormously expensive to commission formal opinions about every one of the 300 patents.

[00:34:27] Speaker 01:
Cites to Halo, which says opinions of counsel can easily cost up to $100,000 per patent.

[00:34:35] Speaker 01:
I'm told that might even be low.

[00:34:37] Speaker 01:
Do you agree with that number, $100,000 per patent?

[00:34:40] Speaker 03:
I don't agree that it's $100,000 per patent, but I have no record citation.

[00:34:45] Speaker 03:
But the point that I would make is that if Mr. Bailey had conducted that analysis, that money was already sunk.

[00:34:53] Speaker 03:
It takes very little additional

[00:34:55] Speaker 03:
time or effort to put such an analysis into a written format.

[00:35:00] Speaker 03:
That's the point I think the court was trying to make.

[00:35:03] Speaker 01:
I don't know.

[00:35:04] Speaker 01:
I practiced law.

[00:35:06] Speaker 01:
Getting a written opinion is quite a bit different.

[00:35:12] Speaker 04:
Fair enough.

[00:35:17] Speaker 04:
Thank you.

[00:35:25] Speaker 04:
We'll give you a couple minutes.

[00:35:28] Speaker 04:
I have one question just based on what the discussion was here on Mr. Chen.

[00:35:34] Speaker 04:
So the argument seems to be that since he wasn't identified as the decision maker for your client, then we don't care what he knew, what he thought, because he wasn't deciding anyway.

[00:35:48] Speaker 04:
So it's not probative of willfulness.

[00:35:50] Speaker 04:
What's your response to that?

[00:35:51] Speaker 00:
My response is that that's completely made up.

[00:35:53] Speaker 00:
You didn't hear a record site here.

[00:35:57] Speaker 00:
If you look in their brief where they make that argument, you're not going to find a record site, because it's not true.

[00:36:01] Speaker 00:
There is no nothing in this.

[00:36:02] Speaker 04:
Where is the record site where he describes what he does and suggests that he has some decision-making authority with respect to what the company does?

[00:36:10] Speaker 00:
I'd refer the court to page 28 of the Gray brief.

[00:36:13] Speaker 00:
And I'm not going to read all the record sites.

[00:36:15] Speaker 00:
But he was the senior engineer.

[00:36:17] Speaker 00:
He testified that he was directly involved in the decision-making process.

[00:36:20] Speaker 00:
He testified that he's the one the company dispatched to look at this to find out what the company thought about it.

[00:36:27] Speaker 00:
So this notion that somehow this evidence could be excluded, because he's just some foreigner to this process, it just completely made up.

[00:36:35] Speaker 00:
He was integral to the process.

[00:36:37] Speaker 00:
And to suggest that at a corporation, non-engineers are going to be making the decision completely independent of the advice the engineers are giving them,

[00:36:47] Speaker 00:
It's completely illogical besides being unsupported by the record.

[00:36:52] Speaker 00:
A couple of other points.

[00:36:53] Speaker 00:
Judge Wallach, you asked about, I think, a reference at page 54 of the red brief.

[00:36:59] Speaker 00:
Among other problems, all of that stuff refers to actions in 2009 involving different patents and different products.

[00:37:07] Speaker 00:
That had to do with this unrelated Sky Patrol matter.

[00:37:10] Speaker 00:
It was a KLM customer, so I shouldn't say completely unrelated.

[00:37:14] Speaker 00:
But different products, the LNUs that issue here, weren't even introduced until 2011.

[00:37:19] Speaker 00:
Bailey didn't even look at these patents until 2010.

[00:37:22] Speaker 00:
One of them didn't even issue until after that.

[00:37:24] Speaker 00:
So not only are there other problems with it, but it's completely irrelevant to this case.

[00:37:30] Speaker 00:
There was a question about whether Cal Amp ever explained the purpose for which Chen was being offered.

[00:37:38] Speaker 00:
I referred the court to appendix pages 16, 211 to 213, where trial counsel explained

[00:37:44] Speaker 00:
We're not presenting him as an expert.

[00:37:46] Speaker 00:
It's offered to show state of mind.

[00:37:47] Speaker 00:
It's not offered to show that the patents are, in fact, invalid or not infringed.

[00:37:54] Speaker 00:
We didn't identify him as an expert.

[00:37:56] Speaker 01:
Well, there you go.

[00:37:58] Speaker 00:
We did identify him as a witness.

[00:38:00] Speaker 00:
And so this notion that we didn't give the judge a clue of what we were doing, that's just, again, made up.

[00:38:06] Speaker 00:
If the court has no other questions.

[00:38:08] Speaker 00:
Thank you.

[00:38:08] Speaker 00:
We thank both sides, and the case is submitted.