[00:00:00] Speaker 02:
in the first of two power integrations against semiconductor components cases, 181602.

[00:00:10] Speaker 04:
Good morning.

[00:00:11] Speaker 04:
Good morning.

[00:00:12] Speaker 04:
May it please the court, Frank Schurkenbach, for power integrations.

[00:00:15] Speaker 04:
I'd like to spend the majority of my time on the privity issue, the 315B issue, but of course we'll answer whatever questions the court may have on the merits as well.

[00:00:25] Speaker 04:
And first, this is an initial matter, is the court may be aware of this, substantially this identical issue was argued last month in the 1607 case.

[00:00:32] Speaker 04:
I assume your honors are aware of that.

[00:00:34] Speaker 04:
And so it's really pending then before two panels of the court.

[00:00:41] Speaker 04:
Since the briefing was completed on this appeal, there have been two additional cases from this court that have come out on 315B that I think are important in understanding what the landscape is here legally.

[00:00:55] Speaker 04:
The first is applications and internet time.

[00:00:59] Speaker 04:
And that case analyzes 315B in detail.

[00:01:05] Speaker 02:
Is that mostly a real party interest case rather than a privity case?

[00:01:08] Speaker 04:
That was the specific issue to be decided in the case, but there's really a very fulsome analysis of the statute overall, what it is, why it is, what the legislative history of the statute is.

[00:01:21] Speaker 04:
And a fundamental point made in that case

[00:01:24] Speaker 04:
is that the test under 315b for privity or real party interest is broad and common sense.

[00:01:32] Speaker 04:
The focus is on who would benefit from a practical and equitable point of view.

[00:01:38] Speaker 02:
Can I ask you this question?

[00:01:39] Speaker 02:
Yes.

[00:01:41] Speaker 02:
Putting aside for a minute the language of 315b, about which we've seen some arguments, this kind of situation could come up in, let's call them, common law estoppel doctrines.

[00:01:55] Speaker 02:
You have case number one, after case number one goes to judgment.

[00:02:00] Speaker 02:
the losing party gets acquired by somebody else.

[00:02:05] Speaker 02:
And then there's a case number two.

[00:02:07] Speaker 02:
What is the law on the time at which you identify relevant privity to decide whether either claim or issue preclusion in case number two is going to be given to case number one?

[00:02:22] Speaker 04:
Well, in the district court context, we made this point in our brief.

[00:02:26] Speaker 04:
A court addressing the situation would consider all irrelevant facts up to and including the time at which the court makes the decision.

[00:02:35] Speaker 02:
So if the acquisition was, let's say, a year and a half into the litigation of case number two and privity arises then, then preclusion would arise?

[00:02:48] Speaker 04:
Yes, yes.

[00:02:49] Speaker 02:
And what's the best case for that proposition?

[00:02:54] Speaker 04:
I believe Closter.

[00:02:56] Speaker 04:
You can look at Closter.

[00:02:57] Speaker 02:
A Closter, I think, was a case about encompassing within the injunction a successor.

[00:03:06] Speaker 02:
And it talked about some underlying privity concepts, but it wasn't itself a preclusion case, I don't think.

[00:03:15] Speaker 04:
Well, it did hold that the party acquiring the assets of a party who had... Was legitimately a successor a subject to the injunction, no?

[00:03:27] Speaker 04:
Yes, but on the basis of being precluded as a result of having acquired the assets at issue in the case.

[00:03:33] Speaker 04:
That's right.

[00:03:35] Speaker 04:
I don't believe there's a case.

[00:03:36] Speaker 04:
And maybe I can answer the question conversely as well, Your Honor.

[00:03:40] Speaker 04:
I don't believe there is a case cited by either party that says in the district court context that a court would put the blinders on, as it were.

[00:03:48] Speaker 04:
and assess the situation only at some artificial point in time.

[00:03:53] Speaker 02:
Well, I felt a little bit at a loss in the briefing altogether for a discussion of how the counterpart situation in common law preclusion would work, because that would seem to me to be extremely relevant to how one resolved any ambiguity one might find in 350 itself.

[00:04:13] Speaker 04:
Well, maybe I can put a couple of stakes in the ground on that.

[00:04:18] Speaker 04:
I mean, there is no dispute that 315B was adopted against the backdrop of common law issue preclusion and claim preclusion.

[00:04:26] Speaker 04:
There's no dispute about that.

[00:04:28] Speaker 04:
Nor is there any dispute that the policy underlying the statute favors preclusion.

[00:04:35] Speaker 04:
And so there wasn't any dispute as far as we're aware by on.

[00:04:41] Speaker 04:
We made the point in our brief that a court would not, unlike the PTO, a court would not assess privity at merely an artificial point in time.

[00:04:49] Speaker 04:
They didn't come back and cite a case and said, well, yes, they would.

[00:04:52] Speaker 04:
So I don't believe it's a disputed issue on the record.

[00:04:55] Speaker 03:
But is Closter your best authority for

[00:05:00] Speaker 03:
arguing that there was a firmly established fixed principle and background common law, preclusion law, that you can consider the timing of the privity at any time during the course of a district court proceeding.

[00:05:17] Speaker 03:
as opposed to at the time of the complaint, or at the time of answer, or some other time.

[00:05:23] Speaker 04:
On this record, I think the answer is yes, Your Honor.

[00:05:25] Speaker 04:
I mean, we didn't.

[00:05:26] Speaker 04:
With all candor, as Judge Toronto says, this was not an issue that was briefed in any detail on this record, because it actually wasn't disputed.

[00:05:36] Speaker 03:
Well, I'm just trying to understand.

[00:05:38] Speaker 03:
If the words of 315B are something that's less than clear, then there could be an argument then

[00:05:46] Speaker 03:
that whatever 315b says and does doesn't displace some established common law principle for preclusion.

[00:05:57] Speaker 03:
And if there was some very established principle that you can consider the question of privity at any time during the course of a proceeding, then

[00:06:07] Speaker 03:
then maybe that would be something that would inform how we should understand 315B.

[00:06:11] Speaker 04:
Well, you say displace.

[00:06:13] Speaker 04:
I mean, of course, the language of the statute itself, 315B, says it refers to the time of institution.

[00:06:21] Speaker 04:
Review may not be instituted if, right?

[00:06:26] Speaker 04:
So it's not talking.

[00:06:28] Speaker 04:
And with all due respect, I think this is an area where the PTO went on, get it wrong.

[00:06:32] Speaker 04:
They want to talk about filing of the petition and only filing date of the petition matters.

[00:06:36] Speaker 04:
But the statute actually says review may not be instituted if.

[00:06:40] Speaker 04:
So the board, in its role, cannot do something as of a certain time, namely institution.

[00:06:48] Speaker 04:
if this prior condition has been satisfied.

[00:06:52] Speaker 04:
So we think it answers the question, actually, that at least you have to consider what happens at institution.

[00:06:58] Speaker 04:
Now, can you also?

[00:06:59] Speaker 03:
But what if the condition that you're referring to demands that any privity relationship has to exist at the time of filing the petition?

[00:07:10] Speaker 03:
Then you don't win.

[00:07:11] Speaker 03:
You lose.

[00:07:13] Speaker 04:
If the statute said that, I'd agree with you.

[00:07:16] Speaker 04:
But of course, it doesn't say that.

[00:07:17] Speaker 04:
And that really is our point.

[00:07:19] Speaker 04:
The statute certainly doesn't say what evidence can or should the board consider or not consider.

[00:07:26] Speaker 04:
And more to the point, can the board only make this assessment at a particular instant in time that, by definition, will predate the decision point, the point at which the board is actually assessing the evidence and making the decision?

[00:07:41] Speaker 02:
I mean, if there were a rule that said a district court shall grant a motion to dismiss for lack of jurisdiction,

[00:07:50] Speaker 02:
the forelack of jurisdiction would still, subject to certain exceptions, be measured not at the time the district court was acting on the motion, but at the time of the filing, because there's a very strong background rule that says that.

[00:08:03] Speaker 02:
So I think all that Judge Chen was suggesting, as I understood it, is that the fact that this says the

[00:08:17] Speaker 02:
The review shall not be instituted doesn't automatically mean that the condition is assessed at the time of the decision on institution.

[00:08:27] Speaker 02:
You have a further argument that the condition, as stated, doesn't itself point to a earlier date.

[00:08:35] Speaker 02:
But that's the point, I guess, at which common law background seems at least relevant to understanding what the default assumption might have been.

[00:08:45] Speaker 04:
I don't dispute the common law is relevant.

[00:08:49] Speaker 04:
It certainly is relevant.

[00:08:50] Speaker 04:
But just to go to your analogy to subject matter jurisdiction, well, I think that proves our point.

[00:08:56] Speaker 04:
The PTO tries to embrace that and draw an analogy to the time of filing cases.

[00:09:01] Speaker 04:
The reason a district court, when faced, for example, with a motion to dismiss implicit in your question, is for lack of subject matter jurisdiction or jurisdiction of some sort, is that

[00:09:12] Speaker 04:
jurisdiction has to exist as of the time of the filing of the complaint.

[00:09:16] Speaker 04:
And that is why.

[00:09:17] Speaker 04:
So there is a very clear rule on that issue, in that context, that that is when you assess when jurisdiction exists, and that you don't revisit it subsequently on Tuesday and then Wednesday and Thursday and Friday for the reasons explained in the time of filing cases.

[00:09:34] Speaker 04:
But that isn't the situation at all.

[00:09:36] Speaker 04:
In fact, if anything, it's the converse.

[00:09:38] Speaker 04:
Again, the statute says,

[00:09:41] Speaker 04:
that review may not be instituted.

[00:09:44] Speaker 04:
The focus is on institution.

[00:09:46] Speaker 04:
It's not on what the state of the world was at some earlier arbitrary time.

[00:09:51] Speaker 04:
Now, of course, if it's true at that earlier time that there is privity, or you can conclude there's a proxy relationship,

[00:09:59] Speaker 04:
Well, then you don't have to revisit it at an institution.

[00:10:01] Speaker 02:
And that would be sufficient.

[00:10:02] Speaker 02:
Can I slightly switch stuff?

[00:10:04] Speaker 02:
Yes, of course.

[00:10:04] Speaker 02:
But still within the realm of 315B.

[00:10:07] Speaker 02:
What is your argument under the heading, this IPR is likewise barred by issue preclusion?

[00:10:15] Speaker 02:
You have a two and a half page argument.

[00:10:18] Speaker 02:
Can you tell me what that argument is?

[00:10:20] Speaker 04:
That the issue of the validity of the patent

[00:10:29] Speaker 02:
Decided under a different burden of persuasion and it's ancient law that when That you if you lose under a high burden of persuasion that does not preclude you from Litigating the same issue under a lower burden of persuasion, which is what we have here.

[00:10:45] Speaker 02:
The burdens are different true right so issue preclusion would not in fact apply

[00:10:53] Speaker 04:
Fair enough, if you assume the outcome would be different under the different burdens of proof.

[00:11:02] Speaker 03:
Just to follow up, it's different prior art that was mitigated in the earlier district court case, right?

[00:11:10] Speaker 03:
It is.

[00:11:10] Speaker 03:
So I'm just trying to figure out if maybe your argument would fit better under a claim preclusion theory than it

[00:11:19] Speaker 03:
than an issue preclusion theory?

[00:11:21] Speaker 04:
It would.

[00:11:22] Speaker 04:
And I think, with all due respect, that may have been a misnomer in the briefing, that it really is a claim preclusion issue, which is a whole other kettle of fish, because, of course, having litigated and lost in district court, it's a separate issue as to whether a party or a privy can come in and not know this.

[00:11:43] Speaker 03:
Going back to the 315B time bar, you said something, and I just want to make sure I understand it.

[00:11:48] Speaker 03:
I thought your position at all along had been that you judge the preclusion question as to whether there was privity at the time of institution or not.

[00:11:59] Speaker 03:
But then I heard you say something like, if at any time there was privity, then that would be sufficient for a bar.

[00:12:06] Speaker 03:
So for example, what if On and Fairchild, hypothetically, had been

[00:12:12] Speaker 03:
in privity with each other at the time of filing of the petition, but then for whatever reason, it gets extinguished two months later.

[00:12:20] Speaker 03:
So they're no longer in privity.

[00:12:22] Speaker 03:
And now at the time of institution, you can't say that they were in privity.

[00:12:25] Speaker 03:
You still would consider institution.

[00:12:27] Speaker 03:
And in my, the scenario.

[00:12:28] Speaker 03:
You would still consider what?

[00:12:29] Speaker 04:
That they can still consider them as being barred.

[00:12:34] Speaker 04:
Not necessarily.

[00:12:35] Speaker 04:
I guess my point is, in my hypothetical, I was assuming if you had privity or proxy relationship at the time of the filing of the petition, that then, barring change in circumstance, that would, of course, also be true in institutions.

[00:12:52] Speaker 04:
So then you wouldn't have to revisit it.

[00:12:53] Speaker 04:
at institution, you could fully assess it at the time of the filing of the petition.

[00:12:57] Speaker 04:
In your hypothetical, the world changes, and something is true at the first point and not true at the second.

[00:13:03] Speaker 04:
Well, then I think the PTAB should take that into account, just as the court would.

[00:13:08] Speaker 03:
The point is that- But as a legal matter, would you still say that the petitioner should be barred?

[00:13:15] Speaker 03:
Because once upon a time, it was in privity with that barred party?

[00:13:21] Speaker 03:
Or would you say no?

[00:13:23] Speaker 03:
the petition would no longer be a bar.

[00:13:26] Speaker 04:
Well, that's an open question.

[00:13:29] Speaker 04:
I think the way the statute, well, the way the PTO itself interprets the statute, the answer to the question is there would be a bar regardless if the world changed later.

[00:13:39] Speaker 04:
Because of course, in their view, it's all about only what happens at this time of the filing of the petition.

[00:13:44] Speaker 04:
Did Congress speak to this directly?

[00:13:46] Speaker 04:
No.

[00:13:47] Speaker 04:
Is there a regulation on that?

[00:13:49] Speaker 04:
No.

[00:13:49] Speaker 04:
In other words, as to what happens if the facts change.

[00:13:54] Speaker 04:
And so that would be a different issue.

[00:13:56] Speaker 04:
It's not presented in this case.

[00:13:59] Speaker 02:
You have used most of your rebuttal time.

[00:14:01] Speaker 02:
You can save the rest, and I might restore a little bit.

[00:14:04] Speaker 04:
I think I will save the rest of my time.

[00:14:06] Speaker 02:
Thank you.

[00:14:06] Speaker 02:
We'll give you three minutes.

[00:14:07] Speaker 04:
Appreciate it.

[00:14:08] Speaker 04:
Thank you.

[00:14:27] Speaker 01:
Good morning, Your Honors, and may it please the court.

[00:14:29] Speaker 01:
The director intervened in this case to address the statutory construction of Section 315B.

[00:14:35] Speaker 01:
The statutory language here is clear.

[00:14:37] Speaker 01:
It is the petition, and when it is filed, that triggers when the time bar applies.

[00:14:43] Speaker 01:
And as it was clear during my friend's opening argument... I'm curious if it's not clear.

[00:14:48] Speaker 03:
Is the agency making any kind of argument that it's entitled to some kind of deference?

[00:14:55] Speaker 01:
If this court finds that the statutory language is not clear and there is an ambiguity, then the board's construction here of the statute that it administers is entitled to Chevron deference.

[00:15:08] Speaker 03:
But the board decision is a non-precedential decision, first of all.

[00:15:13] Speaker 01:
The board decision is a non-precedential decision.

[00:15:15] Speaker 03:
And second of all, the board's decision seemed to

[00:15:20] Speaker 03:
be based on a view that the statute is clear and unambiguous.

[00:15:25] Speaker 03:
It wasn't making some kind of analysis of, well, first the statute is ambiguous, and now we have to figure out what would be a reasonable construction and have to consider all kinds of interesting questions before we decide what would be a reasonable construction.

[00:15:42] Speaker 03:
That's not how the non-precedential board decision is written, is that right?

[00:15:45] Speaker 01:
That's correct.

[00:15:46] Speaker 01:
The board decision is written.

[00:15:47] Speaker 03:
So then why would we give deference to that if their decision is based on a mistaken view that the statute was clear and they're bound to follow that very clear, unambiguous understanding of the words?

[00:16:02] Speaker 01:
If this court finds that the statute is ambiguous, the board's decision does reflect that it does have the authority to promulgate regulations regarding

[00:16:14] Speaker 01:
the procedures of the Interparties Review proceeding.

[00:16:17] Speaker 02:
The question would be whether, A, a non-precedential decision is an authorized means of exercising the interpretive authority, and B, whether the board, particular board, actually did exercise discretion, having decided that there was no discretion to exercise.

[00:16:35] Speaker 01:
So as to your first point, whether a non-precedential decision should be entitled to deference.

[00:16:43] Speaker 01:
As to that issue, that issue here, it's relevant.

[00:16:49] Speaker 01:
But at the same time, that decision does actually reflect that the agency has issued regulations that interpret the statute at issue here.

[00:17:02] Speaker 01:
And what that decision?

[00:17:03] Speaker 03:
I'm lost by this.

[00:17:04] Speaker 03:
Even your own board administrative patent judges are not bound by any lone non-precedential board opinion, correct?

[00:17:13] Speaker 01:
That's correct.

[00:17:14] Speaker 01:
But the decision itself bolsters what the agency's interpretation of the statute would be.

[00:17:23] Speaker 01:
And maybe it's not entitled to Chevron deference because it is non-precedential, but it should be at least entitled to some persuasive deference

[00:17:30] Speaker 01:
because the agency is interpreting the statute it self-administers.

[00:17:34] Speaker 01:
And here the agency's interpretation of the statute is that the determination is made at the time that the petition is filed.

[00:17:41] Speaker 02:
Why is that a relevant background rule for privity and preclusion as opposed to court jurisdiction?

[00:17:54] Speaker 02:
This just gets back to the discussion we were having with Mr. Schurkenbach.

[00:17:59] Speaker 02:
There is an obvious counterpart to this in the world of common law preclusion, about which we haven't been given very much information.

[00:18:07] Speaker 02:
The cluster is at least indirectly relevant.

[00:18:11] Speaker 02:
But in general, preclusion can attach at five minutes before midnight in a seven-year litigation.

[00:18:19] Speaker 01:
Well, I think one of the questions you directed to Power Integrations Council is relevant here.

[00:18:24] Speaker 01:
And that is what the common law decisions as to time of filing and how they apply in determining a course jurisdiction.

[00:18:33] Speaker 01:
And what the time of filing rule indicates is that it is the time that the complaint is filed that is relevant in determining whether that complaint is proper.

[00:18:41] Speaker 01:
And here, it is the time that the petition is filed that determines whether or not the institution is barred.

[00:18:49] Speaker 01:
And so it makes sense that the board's construction of the statute is in compliance with such provisions in common law as the time of filing rule.

[00:18:59] Speaker 01:
And therefore, the board's construction of the statute should be considered to be permissible.

[00:19:03] Speaker 01:
The board's construction of the statute also makes sense in view of Congress's intent that's shown here

[00:19:09] Speaker 01:
through 315B as well as other provisions of the statutes.

[00:19:13] Speaker 01:
Under 315B, it is clear that it is the petition that is filed that is the condition precedent to whether or not the time bar applies.

[00:19:22] Speaker 01:
And the other provisions of the statute, such as 312A2, also make clear that it is the petition that must indicate

[00:19:28] Speaker 01:
whether the real parties of interest are identified.

[00:19:32] Speaker 01:
And so the board's construction here is, if to the extent, first, our primary, oh, I'm sorry, I'm almost out of time.

[00:19:38] Speaker 02:
So why don't you finish the thought.

[00:19:39] Speaker 01:
Sure.

[00:19:39] Speaker 01:
Our primary argument is that the statute is clear.

[00:19:42] Speaker 01:
The plain text applies.

[00:19:44] Speaker 01:
And under step one of Chevron, the construction of the statute should be that it is the petition that triggers whether the time bar applies.

[00:19:51] Speaker 01:
To the extent the court finds there is any ambiguity, the board's construction of the statute is permissible.

[00:19:56] Speaker 01:
And that is because of common law principles showing that the time of filing rule should apply and that it is consistent with Supreme Court cases, such as Grupo, and showing that the policy that the petition is the time that the time bar applies makes sense, because it renders the statute administrable.

[00:20:17] Speaker 01:
And if it wasn't the case, then it would not be a workable statute.

[00:20:20] Speaker 01:
And so that also is

[00:20:22] Speaker 01:
It shows why the board's construction here is permissible under step two.

[00:20:28] Speaker 02:
Okay.

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

[00:20:47] Speaker 00:
Good morning, Your Honors.

[00:20:48] Speaker 00:
Lauren Dreier on behalf of Petitioner Semiconductor Components Industries.

[00:20:52] Speaker 00:
I'd like to help answer a few questions with regard to 315B and privity.

[00:20:57] Speaker 00:
But I understand that this issue has been discussed at length in the previous appeal in April and in our briefing here.

[00:21:05] Speaker 00:
But briefly, to touch on some of your questions that you raised when my colleague was at the podium, the guiding principles here for your colleague

[00:21:16] Speaker 02:
Which of your two colleagues use the same term?

[00:21:18] Speaker 00:
Both colleagues.

[00:21:21] Speaker 00:
Colleagues and friends, Your Honor.

[00:21:23] Speaker 00:
The guiding principles here for assessing privity are the six categories, not exclusive categories, but the six categories outlined in Taylor versus Sturgell, which is incorporated into the Office Trial and Practice Guide and provides a guiding light in terms of when to apply non-party preclusion.

[00:21:43] Speaker 00:
And in those categories,

[00:21:45] Speaker 00:
What we can see here is that non-party preclusion should not be applied here against petitioner semiconductor components industries because it doesn't fit into any of these categories.

[00:21:57] Speaker 00:
The relevant ones may be the second, fourth, and fifth categories.

[00:22:03] Speaker 02:
Are you getting to an issue that is distinct

[00:22:11] Speaker 02:
question of the time at which these standards would be applied.

[00:22:16] Speaker 02:
There's no doubt, right, that by the time of institution, there was privity.

[00:22:23] Speaker 02:
Everybody agrees with that.

[00:22:24] Speaker 02:
There's a dispute about whether, because of the agreement to merge, though the merger hadn't closed yet, there would have been privity at the time of the petition.

[00:22:36] Speaker 02:
But that's not what the board relied on.

[00:22:41] Speaker 02:
And the standards of the sort that you're talking about that the board applied are, let's say, they've been developed in at least two of our cases since then.

[00:22:53] Speaker 02:
And so a remand might well be warranted.

[00:22:57] Speaker 02:
But the principal argument on the other side is that

[00:23:02] Speaker 02:
look at it at the time of institution.

[00:23:04] Speaker 02:
And if you look at it at that time, the facts that were true at that time, then there's undisputed privity.

[00:23:12] Speaker 00:
It's true, Your Honor, that the parties don't dispute that privity existed as of the time of institution.

[00:23:17] Speaker 00:
But our argument is that the common law analysis for issue preclusion can't supplant the statutory scheme here.

[00:23:24] Speaker 00:
And under the statute, it clearly and unambiguously

[00:23:27] Speaker 00:
assesses the privity determination at the time of filing.

[00:23:31] Speaker 02:
Can I ask you the same question that I think we were discussing earlier?

[00:23:35] Speaker 02:
Just for purposes of this question, assume that the statutory language doesn't clearly answer the question, and that it would be relevant to ask what in the common law world of preclusion, issue preclusion, claim preclusion, collateral estoppel, race judicata, et cetera,

[00:23:55] Speaker 02:
What is the time at which privity would be assessed, or as of which it would be assessed?

[00:24:02] Speaker 00:
I'm not sure that there is a definitive point in time under the common law.

[00:24:06] Speaker 00:
The issue is often raised after a first judgment has been rendered, and a non-party who didn't participate in the proceeding that rendered the first judgment is being bound, is being, the party's arguing that they're being bound to that judgment.

[00:24:21] Speaker 00:
And I think what's important to look at in terms of the common law principles is that the non-party needed to have.

[00:24:28] Speaker 02:
There really are not cases of commentary that say that this party who is now alleged to be bound was a complete stranger to proceeding number one, but now

[00:24:41] Speaker 02:
this party actually owns the losing party in case number one.

[00:24:48] Speaker 02:
There's no case law that says the time at which becoming a privy is x or y?

[00:24:56] Speaker 00:
Well, I think the time at which becoming the privity or establishing the relationship between the two parties becomes relevant while the non-party would have a full and fair opportunity to litigate.

[00:25:08] Speaker 00:
We see that in, for example, the AstraZeneca case.

[00:25:11] Speaker 00:
The non-party acquired the party that was a participant to the original litigation during the litigation, so before a jury verdict had been rendered.

[00:25:20] Speaker 00:
And at that point, the court there said, this non-party has a full and fair opportunity to litigate the issues under the elements of issue preclusion law.

[00:25:32] Speaker 00:
and therefore can be bound and held to be bound by that.

[00:25:35] Speaker 02:
Address, I guess, what is at least a policy point made in Closter, quoting an old Supreme Court decision and quoting, I think, a Seventh Circuit decision that says, in effect, whatever closure repose is given by finality really should not be disturbed by the loser selling itself to a new person.

[00:26:02] Speaker 00:
I think that's still bound up with the new person having a full and fair opportunity to litigate.

[00:26:09] Speaker 00:
That's the standard in which we have to govern.

[00:26:12] Speaker 02:
But almost by definition in that circumstance, the new person comes in later.

[00:26:18] Speaker 02:
didn't have a full and fair opportunity, but now comes in and says, you know, you had a five million dollar company and a three million dollar judgment, the company's worth two million, I'm gonna pay, you know, 2.2, and if I suddenly have the opportunity to challenge the liability, which otherwise the loser wouldn't have been, I now have an upside of, I forget what my numbers were, 2.8 million more to get rid of it, minus attorney's fees cost.

[00:26:44] Speaker 02:
There's a kind of arbitrage going on about

[00:26:47] Speaker 02:
you know, buying the opportunity to undo what would otherwise be settled.

[00:26:52] Speaker 00:
In that circumstance, there may be, but the distinction here, Your Honor, is that On Semiconductor had its own products and was a participant in this industry.

[00:27:02] Speaker 00:
They made competing products.

[00:27:04] Speaker 00:
They were aware of the ongoing litigation between power integrations, asserting a massive patent litigation campaign, and so they were concerned

[00:27:14] Speaker 00:
legitimately about the validity of these patents from the perspective of having their own products and being a market player.

[00:27:21] Speaker 00:
And we can see that as reflected in the merger agreement itself, which required antitrust approval in order to close, that On Semi Conductor here and Fairchild were both market participants in this industry.

[00:27:33] Speaker 02:
I think I read in the merger agreement this was a fixed price, $20 a share.

[00:27:41] Speaker 00:
I'll take your word for it, Your Honor.

[00:27:43] Speaker 02:
That's what it says.

[00:27:44] Speaker 02:
So at that point, you, Ann, has every interest in trying to increase the value of the asset it's buying by trying to shed a liability.

[00:28:00] Speaker 00:
Certainly, ON has an interest in the value of its merger agreement with Fairchild here, but I don't believe that that particular argument was raised in part of the record below in terms of ON's interest in the share price that you mentioned, Your Honor.

[00:28:18] Speaker 00:
Certainly, they had an independent interest as one of these.

[00:28:21] Speaker 02:
That would have gone to the question of whether the pre-petition agreement to merge not yet closed would matter.

[00:28:32] Speaker 02:
At least, the principal question we have in front of us is whether institution time is the time as of which

[00:28:39] Speaker 02:
Yes, Your Honor.

[00:28:41] Speaker 00:
And I want to draw on one of the hypotheticals or one of the examples that you raised earlier, which is that the reason why privity needs to be assessed here at the time of the petition is because

[00:28:56] Speaker 00:
As my colleague alluded to, the circumstances can change.

[00:29:00] Speaker 00:
The world can change.

[00:29:01] Speaker 00:
And so what could happen here is that we know from the record evidence that the announcement of the merger, which occurred in November of 2015, was a public announcement of a future merger subject to conditions precedent.

[00:29:16] Speaker 00:
What would have happened had the conditions precedent not been satisfied, had they not received antitrust approval?

[00:29:23] Speaker 00:
Under PI's theory, there would have been this

[00:29:26] Speaker 00:
There would have been this first period in time in which on semiconductor and semiconductor components industries were not time barred before the announcement of the merger.

[00:29:34] Speaker 00:
Then there would be this intervening period of time in which, under PI's theory, after the announcement of the merger comes out, on semiconductor and SCIRs all of a sudden time barred.

[00:29:45] Speaker 00:
And then once the merger agreement failed to occur by virtue of not receiving antitrust approval or a number of other things, there would have been this

[00:29:55] Speaker 00:
bookend period of time, in which all of a sudden the petitioners became not time barred again.

[00:30:01] Speaker 00:
And that is contrary to this court's decision in Wi-Fi 1 that assesses the timeliness of the petition.

[00:30:08] Speaker 00:
It would be inconsistent with Wi-Fi 1 to have a later filed petition be timely under 315B, but an earlier filed petition, one filed during that intervening window, be untimely under 315B.

[00:30:23] Speaker 00:
And that's the world we would be living in where PI's position and interpretation of the statute were to be adopted.

[00:30:29] Speaker 00:
I also wanted to point out that the board's interpretation here should be entitled to chevron deference because the board has promulgated a rule.

[00:30:42] Speaker 02:
Does that rule just parrot the statute?

[00:30:47] Speaker 00:
It doesn't, Your Honor.

[00:30:48] Speaker 00:
And the reason why it doesn't just parrot the statute is because

[00:30:51] Speaker 00:
PI's position is that the statute uses the phrase instituted, may not be instituted, and that institution is what governs the time of assessing when the petition is timely.

[00:31:03] Speaker 00:
Importantly here, the rule does not use or mention institution.

[00:31:09] Speaker 00:
It refers to when a petitioner may file a petition, when the petition requesting the proceeding is filed, and refers in no

[00:31:18] Speaker 00:
in no circumstance to the institution date.

[00:31:22] Speaker 00:
So the rule is clarifying that the 315B language should be assessed as of the petition's filing date without referencing in any way the institution date.

[00:31:31] Speaker 00:
I see that I'm over time, if there are any further questions.

[00:31:34] Speaker 00:
Thank you for the argument.

[00:31:35] Speaker 00:
Thank you.

[00:31:41] Speaker 04:
A few very quick points on this issue of deference.

[00:31:44] Speaker 04:
I think the click to call decision has

[00:31:48] Speaker 04:
address this and has made clear that this regulation 101B is not entitled to any deference because it merely parrots the statute.

[00:31:56] Speaker 04:
That's at 899 F 1338 and note 7.

[00:31:59] Speaker 04:
That same case also says, since the regulation is parroting and doesn't get deference, board decisions, especially non-precedential board decisions interpreting the regulation, are even less entitled to deference.

[00:32:14] Speaker 04:
And that's at 899F301341.

[00:32:18] Speaker 04:
So the deference question has been answered.

[00:32:20] Speaker 04:
You don't defer to the Patent Office.

[00:32:22] Speaker 04:
Number two, there was a point made about how ON has its own interests here, and it isn't fair they haven't had their day in court, that sort of thing.

[00:32:31] Speaker 04:
That's not in the record before you.

[00:32:33] Speaker 02:
Can you address yourself to a kind of practicality point that your friends at the other table made about why odd results would follow if privity were assessed at any time other than a petition?

[00:32:55] Speaker 04:
I think it's the opposite.

[00:32:56] Speaker 04:
You don't get odd results.

[00:32:58] Speaker 04:
The decision-maker

[00:32:59] Speaker 04:
In this case, the board, at the time they're deciding to institute, looks at all the relevant facts and makes a decision.

[00:33:05] Speaker 04:
There's no uncertainty.

[00:33:06] Speaker 04:
There's no variability.

[00:33:08] Speaker 04:
There's no decision made at an arbitrary earlier point in time or at some later point in time, and then again at the time of institution.

[00:33:16] Speaker 04:
You look at all the state of the world that exists at the time of institution, because that's what the statute says.

[00:33:22] Speaker 04:
There's no wandering around in the wilderness on this.

[00:33:25] Speaker 04:
to respond to the specific concern council raised about, well gee, what if the conditions of the merger didn't come to fruition?

[00:33:33] Speaker 04:
The answer to that is it isn't even really very relevant to the privity inquiry.

[00:33:37] Speaker 04:
The point is they had a merger agreement.

[00:33:40] Speaker 04:
This is a 136 page definitive agreement.

[00:33:43] Speaker 02:
But that's not the point if the rule is look at the institution time.

[00:33:49] Speaker 02:
But now you're switching into, oh, there should have been privity even at the time of the petition, which is not your primary argument and not mostly what we've been talking about.

[00:33:55] Speaker 04:
Well, it isn't the primary argument, but we certainly do make the argument and we maintain the argument that even if you look at the time just to the filing of the petition, there was privity here.

[00:34:03] Speaker 04:
There was a proxy relationship, no question, between On and Fairchild.

[00:34:08] Speaker 04:
At that time, you consider a confidentiality agreement that said they had a common commercial and legal interest.

[00:34:15] Speaker 04:
You had a definitive merger agreement.

[00:34:17] Speaker 03:
OK, but just getting back to something we talked about earlier, I thought you or we had discussed and you agreed that your position is the trigger point is at the time of institution.

[00:34:28] Speaker 03:
And you determine everything then.

[00:34:31] Speaker 03:
And it doesn't matter if there had been a proxy or privity relationship at some point earlier, including at the time of filing the petition, if all of that relationship had been extinguished and destroyed before the time of institution.

[00:34:45] Speaker 04:
In that world, it may not matter or may not matter as much if there was privity at an earlier point in time.

[00:34:51] Speaker 04:
But again, that's not our world.

[00:34:53] Speaker 04:
What I'm saying is, in this world, the actual world on this record, at the time of the filing of the petition, there was a privity relationship.

[00:35:01] Speaker 04:
There was a proxy relationship.

[00:35:03] Speaker 04:
And that continued and was confirmed by the time of the institution decision.

[00:35:08] Speaker 02:
Thank you.

[00:35:09] Speaker 02:
I think we're about to go again on this.

[00:35:13] Speaker 02:
Round two.