[00:00:00] Speaker 03:
It was number 182380 Presidio Components, Inc.

[00:00:04] Speaker 03:
versus American Technical Ceramics.

[00:00:07] Speaker 03:
Mr. Aherns.

[00:00:12] Speaker 04:
Thank you, your honor.

[00:00:12] Speaker 04:
May it please the court.

[00:00:14] Speaker 04:
This appeal is from a remand that came out of this court.

[00:00:20] Speaker 04:
And the particular topic that Presidio has appealed was the district court's abuse of discretion in the management of the remand on the issue of the reasonable royalty.

[00:00:31] Speaker 04:
This court, when it remanded the case to the district court, was for purposes of

[00:00:39] Speaker 04:
uh... the court conducting a jury trial if necessary.

[00:00:42] Speaker 03:
So why is it that the district court couldn't consider reasonable royalty with respect to all of the sales at once?

[00:00:48] Speaker 03:
What's the matter with that?

[00:00:50] Speaker 04:
Your honor, we believe it is entirely proper for the district court to do one of two things, and we briefed both in the alternative, one of which is just what you identified, and that is a reasonable royalty for the entire duration of the infringing sales.

[00:01:07] Speaker 04:
That was okay.

[00:01:08] Speaker 04:
That was okay.

[00:01:09] Speaker 04:
The error and the abuse of discretion was to not consider the corollary related evidence relating to those same sales.

[00:01:18] Speaker 03:
And that evidence related to the period in which the preliminary injunction was in effect.

[00:01:25] Speaker 04:
Well, it doesn't relate to the period in which the injunction was in effect because during that period there were no sales.

[00:01:31] Speaker 04:
It was the sales that occurred after the original damages trial period and in the periods of time when the injunction was not in effect.

[00:01:39] Speaker 04:
So we have really three different time period segments.

[00:01:43] Speaker 04:
You have the original damages period that the first trial was conducted upon and that was... So December 2015 to February 21, 2016.

[00:01:51] Speaker 04:
Correct.

[00:01:52] Speaker 01:
And then the junction goes into effect in March of 2017.

[00:01:56] Speaker 04:
Correct.

[00:01:57] Speaker 04:
Based on both the district court's deferral of its implementation and then this court's additional deferral of its implementation, there were sales from February 21st of 16 through March 17th of 17, and those were an enormous number of sales, unit sales.

[00:02:14] Speaker 04:
And the district court did allow on remand that evidence.

[00:02:18] Speaker 04:
solely for purposes of an accounting, not for purposes of whether those additional unit sales would drive up the reasonable royalty analysis.

[00:02:29] Speaker 04:
No evidence was permitted as to the average selling price of those additional 15 million units.

[00:02:36] Speaker 01:
And it really, if you look at the... What did you explain to Judge Huff your evidence would be?

[00:02:44] Speaker 01:
Something different from what you said here because as I just correct me my understanding is that you what you have said is ATC raised its price it raised its price by $1.58 precisely so that when the money came in it could turn around and pay it back to you so on a per unit basis putting aside possible cost savings from volume and

[00:03:13] Speaker 01:
that can't possibly change the profit.

[00:03:16] Speaker 01:
In their pocket, out of their pocket.

[00:03:20] Speaker 04:
Theoretically, except that's not what happened, so they did pocket the money because they didn't have to pay presidio the $1.58, which was the lost profit award that this court reversed.

[00:03:30] Speaker 04:
Well, that was later, right?

[00:03:32] Speaker 04:
It was later, but the money never left the pocket of ATC.

[00:03:35] Speaker 04:
They told their customers that they needed to jack the price up by $1.58 to cover the market.

[00:03:41] Speaker 03:
But the market was making an assumption, which eventually proved not to be correct.

[00:03:46] Speaker 03:
But in terms of assessment significance of the market data, you have to view it as the parties viewed it at the time.

[00:03:54] Speaker 04:
Correct, and at the reasonable royalty analysis with looking at what future facts come into being during the course of the infringement, although the analysis would take place at the hypothetical negotiation at the date of first infringement, certainly this dramatic price increase

[00:04:14] Speaker 04:
taking that money under the guise that it was going to have to be paid out, then it wasn't paid out and ATC has now profited by $1.58 per unit times the 92% of their sales.

[00:04:30] Speaker 04:
Punished for pocketing money, but I'm not sure that's relevant Absolutely not punished for pocketing the money but what in the analysis of a reasonable royalty and this all really falls under the scope of the judge just didn't permit this evidence in so she abused her discretion by partially reopening the record ie the additional number of unit sales, but she the mistake was

[00:04:57] Speaker 04:
to not then open up the record in its entirety.

[00:05:00] Speaker 04:
Maybe she could conclude that the additional evidence wasn't all that significant or helpful.

[00:05:08] Speaker 04:
Well, there was no opportunity to define that.

[00:05:12] Speaker 04:
She did not allow Presidio.

[00:05:14] Speaker 04:
We offered to make a proffer from our expert as to what his opinions would be based on the new evidence.

[00:05:20] Speaker 04:
And she denied Presidio's opportunity to make that proffer.

[00:05:27] Speaker 04:
Where did she do that?

[00:05:28] Speaker 04:
She did that.

[00:05:32] Speaker 04:
at Appendix 38, and it's footnote five, and it says in addition.

[00:05:37] Speaker 01:
Is that the reconsideration order?

[00:05:40] Speaker 04:
Yes.

[00:05:41] Speaker 04:
I believe it is.

[00:05:44] Speaker 04:
Yes.

[00:05:44] Speaker 04:
Footnote five at Appendix 38, in addition, the court specifically.

[00:05:48] Speaker 03:
Wait, wait, wait.

[00:05:49] Speaker 04:
Sorry.

[00:05:52] Speaker 04:
OK.

[00:05:59] Speaker 04:
May I quote something?

[00:06:00] Speaker 03:
Yeah, I see it.

[00:06:02] Speaker 04:
specifically rejects Presidio's request to prepare a supplemental report for purposes of the proper to the court.

[00:06:09] Speaker 04:
And so what happened then is, so the district court is going to open up the record to an entire time period of infringement, which back to your original question, Judge Toronto, there was a third period of

[00:06:22] Speaker 04:
sales, which is after the injunction was vacated by this, mostly this panel.

[00:06:30] Speaker 01:
In November of 2017.

[00:06:31] Speaker 04:
In November of 2017, and then between November of 2017 and August of 2018 when the district court ordered or issued another injunction, there was that additional time period of sale.

[00:06:43] Speaker 04:
So there were really three different time segments of sales.

[00:06:47] Speaker 04:
And the court, like I said, was going to allow just simply the number of units for purposes of an accounting.

[00:06:55] Speaker 04:
But a jury trial, juries aren't asked to do accountings.

[00:06:58] Speaker 04:
They're asked to weigh evidence.

[00:06:59] Speaker 04:
And we were hamstrung by not allowing to put in not only the evidence of the increased average selling price, the increased profitability, but in addition, making any

[00:07:10] Speaker 04:
type of factual presentation and through our expert as to just the sheer volume of additional sales and how that would impact the reasonable royalty analysis.

[00:07:20] Speaker 04:
So the court disallowed any of that additional evidence and we believe that is how the court erred and abused her discretion by partially reopening the record, not fully reopening it.

[00:07:33] Speaker 04:
in the alternative.

[00:07:34] Speaker 04:
And of course, this court's mandate in the original appeal could have been taken in an entirely different way, which is to have a new trial on the same period of time as the original trial, the same number of units, and all of the information and evidence that was presented

[00:07:53] Speaker 04:
and then take into account in the context of an ongoing royalty proceeding, which the district court would handle, to take the additional evidence that we've just talked about into account.

[00:08:04] Speaker 04:
Now, the district court didn't follow that potential eventuality from the mandate.

[00:08:11] Speaker 04:
It followed the longer full time period for its analysis, but like I said, limited the evidence that it was going to allow Presidio to present.

[00:08:21] Speaker 04:
If this court has or this panel has a particular view on how its mandate should have been interpreted, i.e., should it have been a new trial for an entire full-blown time period.

[00:08:34] Speaker 01:
As to this, it just says remand for a new trial.

[00:08:38] Speaker 01:
It doesn't our mandate.

[00:08:40] Speaker 01:
It doesn't say one thing or another about

[00:08:46] Speaker 01:
a question that is usually just in the district court's reasonably exercised discretion.

[00:08:53] Speaker 01:
Is there a need for new evidence?

[00:08:58] Speaker 01:
So the judge was not forbidden to reopen, and the judge did not say that she was forbidden.

[00:09:06] Speaker 01:
So as I keep thinking about this, it comes back to what I think Judge Dyke was referring to earlier.

[00:09:14] Speaker 01:
What basis did you provide to indicate that this would be a relevant and fruitful exercise when you point to the addition of $1.58 in terms of a reasonable royalty based on what the parties anticipate

[00:09:35] Speaker 01:
the profits to be, that seems to me to be a complete wash, because the money was going to go in one pocket and out the other.

[00:09:43] Speaker 01:
Whatever happened and fact happened to it later.

[00:09:46] Speaker 01:
And then the only remaining question is, is the increased volume such that their costs on a per unit basis diminished, and therefore their per unit profit increased, and that all of this would have been part of an anticipation in a hypothetical negotiation.

[00:10:05] Speaker 01:
Why couldn't she say, there's just not enough here for that?

[00:10:09] Speaker 04:
Potentially she could have, but she didn't even allow that whole line of discussion through briefing or anything else.

[00:10:16] Speaker 04:
She issued a scheduling order that simply said, we'll get updated sales figures in units.

[00:10:23] Speaker 04:
The expert can't conduct any additional substantive damages analysis.

[00:10:30] Speaker 04:
offered and requested a proffer to present exactly what you were just outlining, which is how this would actually impact the reasonable royalty.

[00:10:40] Speaker 04:
And then she did not allow that.

[00:10:43] Speaker 04:
And so back to

[00:10:45] Speaker 04:
the mandate issue.

[00:10:48] Speaker 04:
Presidio agrees and doesn't take issue with the judge having the choice really between either of the two remedies that we are asking for here which is either the full-blown time period with all the relevant evidence presented to a jury because a jury is the one that finds what a reasonable royalty is not

[00:11:07] Speaker 04:
not the judge uh... or alternatively the other analysis which is having the trial in the same time period but then having ongoing royalty proceeding the fact that she chose the former presidio is perfectly fine with that and does not challenge that decision in other words her interpretation of the mandate to look at a reasonable royalty for all the units and if this court is to

[00:11:31] Speaker 04:
intends to or, I'm sorry, does affirm the injunction, then the time periods for sales, we have a captured number of units that won't change if the injunction is upheld.

[00:11:42] Speaker 04:
So under that scenario, it would probably be the most efficient thing to have a new trial for the captured time period of all the units that are already on the books and won't be changing

[00:11:54] Speaker 04:
and then allowing the presentation through expert testimony and factual evidence of these other facts and circumstances.

[00:12:00] Speaker 01:
What was the per unit figure that your expert testified to on reasonable royalty in the April 2016 trial?

[00:12:09] Speaker 04:
It was 25 cents per unit.

[00:12:11] Speaker 01:
And that's what this award is based on?

[00:12:14] Speaker 04:
That's correct.

[00:12:15] Speaker 01:
It took your figure and then said nothing but the number of units.

[00:12:22] Speaker 01:
There's no reasonable basis for changing anything but the number of units according to how many were sold.

[00:12:30] Speaker 04:
Right.

[00:12:30] Speaker 04:
Well, we stipulated to the 25 cents because based on the inability to present any other evidence of the type we've been discussing.

[00:12:39] Speaker 01:
It seems to me not insignificant that that figure was your figure.

[00:12:43] Speaker 01:
If you stipulated to a compromise figure, then maybe you would have an argument that says the per unit award in this case is wrong.

[00:12:53] Speaker 01:
because we needed new evidence on that that would have changed our evidence from from or even get back to the evidence that we had earlier.

[00:13:04] Speaker 04:
The stipulation, the parties, both experts had agreed, effectively agreed that 25 cents per unit was the appropriate royalty rate for purposes of the trial that encompassed the damages time period from December of 15 through February of 16.

[00:13:21] Speaker 04:
And that's why the parties stipulated.

[00:13:25] Speaker 01:
And do I remember right, that was also your expert's expert report before the trial that was actually held.

[00:13:32] Speaker 01:
his figure for the much longer period that got truncated when the re-exam altered the claims.

[00:13:41] Speaker 04:
That's correct.

[00:13:42] Speaker 01:
So that figure didn't change according, notwithstanding a pretty dramatic difference in number of units actually sold.

[00:13:50] Speaker 04:
Well, if you're referring to the number of units that were sold subsequently, you're talking about the prior, right?

[00:13:58] Speaker 04:
So we actually have a situation where all of the analysis, which not just the number of units, but the average selling price and the profit, that was not a dramatic increase from the longer prior time period to the shorter prior time period.

[00:14:16] Speaker 03:
So why should there be a different wealthy figure for the two periods?

[00:14:19] Speaker 04:
because of the jury?

[00:14:23] Speaker 04:
No, because the fact of the matter is that from after the first trial, 92% of the total number of sales that are now at issue were made.

[00:14:35] Speaker 04:
So effectively the district court would be having a jury

[00:14:41] Speaker 04:
take evidence of average selling price and profits on 8% of a universe of units and apply that to come to a reasonable royalty for the other 92%, but not allowable.

[00:14:55] Speaker 03:
If that answered my question, why should there be a different reasonable royalty for the two periods?

[00:15:01] Speaker 04:
Well, if we're going to have a new trial that encompasses the

[00:15:08] Speaker 04:
period after the first trial and the stipulated amount, the new royalty amount should be different because there's dramatically different evidence that would support it.

[00:15:19] Speaker 00:
Are you relying on the Amado and Activision cases?

[00:15:23] Speaker 00:
Not for this argument?

[00:15:24] Speaker 04:
Not for this argument.

[00:15:25] Speaker 04:
That was in connection with our alternative argument about the

[00:15:29] Speaker 00:
If there was a separate determination post verdict for these particular sales.

[00:15:35] Speaker 04:
That's right.

[00:15:36] Speaker 00:
That's the only thing you're relying on those cases for.

[00:15:38] Speaker 04:
I believe that's right.

[00:15:40] Speaker 00:
And what is the status of the re-examination?

[00:15:42] Speaker 04:
The re-examination is on appeal to the Patent Trial Appeal Board.

[00:15:48] Speaker 03:
Okay.

[00:15:49] Speaker 03:
We're out of time.

[00:15:49] Speaker 03:
We'll give you some time for rebuttal and to address the process.

[00:15:56] Speaker 03:
Thank you.

[00:16:06] Speaker 02:
May it please the court, my name is Ron Cahill and together with my partner Heather Rapicki we represent American Technical Ceramics Corporation.

[00:16:17] Speaker 02:
I only want to touch briefly on the supplemental damages issue and we think it's a supplemental damages issue because that's what Judge Huff ordered in 2016 at Presidio's request.

[00:16:28] Speaker 02:
We don't understand that Presidio actually gets to ask for a new number now because

[00:16:33] Speaker 02:
that became part of the mandate when they didn't appeal it in 2016.

[00:16:39] Speaker 02:
But yes, the number was 25 cents.

[00:16:41] Speaker 01:
I'm sorry, I didn't understand what you just said.

[00:16:43] Speaker 01:
Okay.

[00:16:44] Speaker 01:
There was no reasonable royalty actually awarded last year.

[00:16:48] Speaker 02:
Correct.

[00:16:48] Speaker 03:
And maybe it would help if we walked through... You're saying that our mandate precluded these and put them in the evidence?

[00:16:54] Speaker 02:
That seems pretty hard, aren't you?

[00:16:57] Speaker 02:
So let me walk through the timeline for just a minute.

[00:16:59] Speaker 03:
Is that the argument?

[00:17:00] Speaker 03:
Excuse me.

[00:17:01] Speaker 03:
Is that the argument that the mandate precluded the court?

[00:17:04] Speaker 03:
So this court doesn't have to go that far.

[00:17:07] Speaker 03:
That the mandate precluded the district court from allowing the evidence that they're talking about?

[00:17:14] Speaker 02:
In 2016.

[00:17:15] Speaker 03:
No, answer the question.

[00:17:17] Speaker 02:
Okay.

[00:17:18] Speaker 02:
I believe it does, but this court doesn't have to go that far.

[00:17:23] Speaker 03:
Okay.

[00:17:25] Speaker 03:
Why don't you?

[00:17:25] Speaker 02:
So the timeline worked like this.

[00:17:27] Speaker 02:
So we had a damages period for trial.

[00:17:29] Speaker 02:
As the court correctly noted, it was December to February 2015 to 2016.

[00:17:34] Speaker 02:
We had our trial in April of 2016.

[00:17:38] Speaker 02:
Post trial, we had post trial motions, as one typically does, and in June of 2016, both parties filed motions.

[00:17:46] Speaker 02:
Presidio filed their motion for permanent injunction.

[00:17:50] Speaker 02:
they also filed a motion for supplemental damages.

[00:17:54] Speaker 02:
This was months after the jury verdict and what they asked the court for was a continuation because it was clear it was on the record ATC was continuing to sell the 550s and plan to unless and until the injunction issued.

[00:18:08] Speaker 02:
Customers needed the part.

[00:18:11] Speaker 02:
And

[00:18:12] Speaker 02:
A continuation in terms of the lost profits number or a reasonable royalty number?

[00:18:16] Speaker 02:
It was the lost profits number at the time.

[00:18:19] Speaker 02:
The judge continued.

[00:18:20] Speaker 02:
Presidio asked for and the judge continued the damages number from trial, which was $1.58.

[00:18:28] Speaker 02:
Judge Huff on the same day ordered both the supplemental damages and the injunction with a sunset, a 90-day sunset at that time.

[00:18:35] Speaker 02:
It was extended by this court.

[00:18:38] Speaker 02:
Presidio never at any time said, well, the damages are different after the verdict.

[00:18:44] Speaker 02:
They wanted the damages to be the same after the verdict.

[00:18:48] Speaker 02:
And Judge Huff ordered the damages to be the same after the verdict in her supplemental damages ruling while the injunction was going to go into effect with a sunset.

[00:18:58] Speaker 01:
Right, can I just, I think I understand that point, and that goes to their, I think what they describe as their alternative argument about a split period.

[00:19:07] Speaker 01:
Put that completely to one side.

[00:19:10] Speaker 01:
Why was Judge Huff right in saying, I will not let you put in expert testimony about why the reasonable royalty should be more than 25 cents per unit?

[00:19:26] Speaker 02:
Well, the reasonable royalty is 25 cents per unit because we agreed to it.

[00:19:30] Speaker 01:
After that?

[00:19:31] Speaker 01:
After the ruling saying they couldn't put in any evidence.

[00:19:35] Speaker 02:
Because she was doing the same thing she had done on her supplemental damages.

[00:19:39] Speaker 02:
She had chosen to extend the damages number.

[00:19:42] Speaker 01:
But there was no reasonable royalty damages number from the trial.

[00:19:48] Speaker 02:
There was a damages number from the trial.

[00:19:50] Speaker 02:
She continued the damages.

[00:19:51] Speaker 03:
The same profit situation hadn't changed.

[00:19:56] Speaker 03:
He ruled before the profit situation hadn't changed after the verdict.

[00:20:02] Speaker 03:
And the supplemental evidence here relates to profits insofar as it in turn relates to reasonable wealth.

[00:20:10] Speaker 02:
Well, that is still a work in progress because... Never mind.

[00:20:15] Speaker 02:
My question's too complicated.

[00:20:17] Speaker 02:
Okay.

[00:20:18] Speaker 02:
Um, Judge Huff had it within her discretion to continue the damages.

[00:20:24] Speaker 02:
The damages for the trial period are 25 cents.

[00:20:28] Speaker 02:
And she could, within her discretion, there's no case that says otherwise, continue those damages for the additional sales after the verdict, before the injunction finally went into effect.

[00:20:38] Speaker 02:
And all she did was update the accounting, like she did in 2016.

[00:20:43] Speaker 03:
Okay, unless my colleagues have other questions about them, can we talk about the injunction?

[00:20:48] Speaker 03:
Sure.

[00:20:49] Speaker 03:
It seems to me that one thing that's perhaps a little questionable about what she did is disregarding the non-infringing alternative, the 560.

[00:21:01] Speaker 03:
But I think as I read her opinion, what she's saying

[00:21:05] Speaker 03:
is, well, the test period that you, Federal Circuit, thought you were going to get didn't happen because the 560 wasn't sold during the test period.

[00:21:15] Speaker 03:
But I'm still not going to take it into account because you haven't proved the impact that that would have on irreparable injury.

[00:21:26] Speaker 03:
And it seems to me perhaps she has a point, because while

[00:21:30] Speaker 03:
You brought in evidence that the 560 was now being sold to a couple of customers.

[00:21:36] Speaker 03:
There's no expert testimony that you put in at that point about how the availability of the 560 in the future would show that there was no irreparable injury.

[00:21:49] Speaker 03:
Fair enough?

[00:21:50] Speaker 03:
I mean, you didn't put in any expert testimony, right?

[00:21:53] Speaker 02:
We did not put in expert testimony.

[00:21:55] Speaker 02:
We put in the testimony of an ATC witness who talked about the facts.

[00:22:00] Speaker 02:
But no, I believe there wasn't an opportunity.

[00:22:03] Speaker 02:
There was no expert briefing schedule.

[00:22:06] Speaker 03:
Well, I mean, our opinion said you could put in additional evidence on the irreparable injury, right?

[00:22:13] Speaker 02:
We put in fact evidence, yes.

[00:22:15] Speaker 03:
But not expert evidence?

[00:22:16] Speaker 02:
We did not put in expert testimony, no.

[00:22:19] Speaker 03:
So why wasn't she within her discretion in saying the fact evidence wasn't enough to defeat the irreparable injury?

[00:22:32] Speaker 02:
The 560 was, in fact, available.

[00:22:35] Speaker 02:
And we know that customers have bought it in the past.

[00:22:38] Speaker 02:
And we know that its performance is better than the Presidio capacitor at a lower price.

[00:22:43] Speaker 02:
It only makes sense that it would sell the way it had in the past.

[00:22:48] Speaker 02:
And when it did go back on the market, the data started to show that.

[00:22:57] Speaker 02:
Go ahead.

[00:22:58] Speaker 02:
Okay, I would like to talk about causal nexus for a moment.

[00:23:15] Speaker 02:
We think Judge Huff decided that because the parties compete that in injunction issues.

[00:23:26] Speaker 02:
And when it comes to causal nexus,

[00:23:29] Speaker 02:
The infringement evidence doesn't help to tie the features of the infringing capacitor to demand from customers for capacitors that have a low insertion loss at high frequencies.

[00:23:44] Speaker 02:
The infringement evidence at trial did something else.

[00:23:48] Speaker 02:
And it shows up clearly in the JMOL rulings, for example,

[00:23:53] Speaker 02:
We asked for JML of no infringement because it hadn't been shown that fringe effect capacitance affected insertion loss at high frequencies.

[00:24:03] Speaker 02:
And Presidio's response to that was, well, we didn't have to do that.

[00:24:07] Speaker 02:
It wasn't, oh, we did it.

[00:24:08] Speaker 02:
It was, we didn't have to do that.

[00:24:10] Speaker 02:
The patent doesn't call for it.

[00:24:13] Speaker 02:
And they never had to prove that.

[00:24:15] Speaker 02:
And in fact, they didn't prove it.

[00:24:17] Speaker 02:
the testing was designed to show that one particular form of capacitance that ATC asserted was active in this capacitor wasn't.

[00:24:27] Speaker 02:
That doesn't show that fringe effect capacitance has an impact on the performance that the customers buy.

[00:24:37] Speaker 02:
And so we think there is a lacking entirely

[00:24:42] Speaker 02:
of a link between infringement and why the customers buy the capacitor.

[00:24:49] Speaker 02:
Now Judge Huff's response to this is largely, but they compete.

[00:24:53] Speaker 02:
She actually said, but they compete and cited the Broadcom case.

[00:24:58] Speaker 02:
And we think that doesn't make sense because in the Broadcom case, there was undisputed evidence linking the claimed invention to customer demand.

[00:25:07] Speaker 02:
She also said, well,

[00:25:09] Speaker 02:
You know, you UATC complain about the sales data, but can't deny Presidio sales went up.

[00:25:18] Speaker 02:
But that's not a clear link either, right?

[00:25:21] Speaker 02:
These parties do compete.

[00:25:23] Speaker 02:
If Pepsi took all of their soft drinks off the market, Coke's sales would probably go up.

[00:25:28] Speaker 02:
But that's not evidence that Pepsi infringed something.

[00:25:30] Speaker 02:
That's just evidence that they compete.

[00:25:32] Speaker 02:
And that's what we have here, and Judge Huff relied on that.

[00:25:36] Speaker 02:
And then finally, she relies on this one hypothetical statement that Presidio's expert made at trial.

[00:25:43] Speaker 02:
And it was a mathematical statement that the lowest value capacitance impacts the highest frequencies for capacitor performance.

[00:25:56] Speaker 02:
And that's a mathematical truth.

[00:25:59] Speaker 02:
And Dr. Huebner put it in those mathematical terms.

[00:26:02] Speaker 02:
He said it varies with one over the square root

[00:26:06] Speaker 02:
The problem with that is it's just math.

[00:26:08] Speaker 02:
It's not the 550 capacitor.

[00:26:11] Speaker 02:
There's no evidence that the 550 capacitor had a fringe effect capacitance, because no one measured it, had a fringe effect capacitance that impacted any frequency, whether you do the math or not.

[00:26:24] Speaker 02:
It simply wasn't there.

[00:26:25] Speaker 02:
The value wasn't there.

[00:26:27] Speaker 02:
It couldn't show that the 550 had some impact from fringe effect performance that customers wanted.

[00:26:34] Speaker 02:
And so we think the proof fails entirely and that Judge Huff committed error when she ruled that there was a causal nexus.

[00:26:53] Speaker 02:
I'd also like to speak a minute about the ongoing re-examination.

[00:27:00] Speaker 02:
The re-examination affects this appeal in at least two ways.

[00:27:04] Speaker 02:
One is we now have multiple repeated indications from the PTO that this patent will be found invalid.

[00:27:12] Speaker 02:
We're now past the final rejection and on to appeal of the PTUB.

[00:27:18] Speaker 02:
We think there's plenty of languaging cases.

[00:27:21] Speaker 02:
Well, maybe not plenty, but there's some, including from Justice Kennedy, saying that

[00:27:27] Speaker 02:
Injunctive relief is extreme, and we shouldn't be granting it when patents are of dubious validity.

[00:27:32] Speaker 02:
I think he was particularly concerned about vagueness.

[00:27:36] Speaker 02:
And here, this patent is of dubious validity.

[00:27:40] Speaker 02:
Now, Judge Huff.

[00:27:41] Speaker 03:
Well, if it's held invalid, the injunction will be vacated, right?

[00:27:46] Speaker 02:
It will be.

[00:27:50] Speaker 02:
Well, that will be up to Judge Huff, but I expect it will be.

[00:27:53] Speaker 03:
Well, if it was the final determination of invalidity,

[00:27:56] Speaker 03:
patents going.

[00:27:58] Speaker 01:
It just may take a while.

[00:28:00] Speaker 01:
The board process hasn't even, certainly not been completed.

[00:28:05] Speaker 01:
Maybe it's just gotten started.

[00:28:08] Speaker 02:
The appeal brief was filed in October.

[00:28:12] Speaker 01:
And so... And then it would presumably come here.

[00:28:15] Speaker 01:
I would expect the board... This patent has about two and a half years left on it.

[00:28:21] Speaker 02:
That sounds about right.

[00:28:25] Speaker 02:
The other way it impacts this appeal is the ongoing creation of intrinsic evidence, including statements about the very testing that I was just talking about and how it impacts the causal nexus.

[00:28:39] Speaker 02:
Presidio is characterizing those tests in the reexamination, and we think those characterizations should be considered.

[00:28:49] Speaker 02:
Now, we had asked this court for a stay, and it was denied.

[00:28:53] Speaker 02:
But one possible approach would be to remand it to Judge Huff to have her consider the substance of the reexamination.

[00:29:04] Speaker 01:
Why would that require a remand?

[00:29:06] Speaker 01:
Isn't the judge, a district judge with an outstanding injunction, always have the ability to modify the injunction in light of new circumstances if you met that standard?

[00:29:24] Speaker 01:
And it might simply be premature when all you have is an examiner's decision, which doesn't have final effect until two layers of review are completed or bypassed.

[00:29:43] Speaker 02:
OK.

[00:29:43] Speaker 02:
I was laboring under the understanding that Judge Huff could not do that.

[00:29:49] Speaker 02:
But my understanding isn't conclusive.

[00:29:57] Speaker 03:
Okay, anything further?

[00:29:59] Speaker 03:
Nope, nothing further.

[00:30:06] Speaker 03:
Okay, thank you.

[00:30:07] Speaker 03:
Mr. Ahrens, we'll give you a couple minutes here.

[00:30:10] Speaker 04:
We'll give you three minutes.

[00:30:12] Speaker 04:
Thank you very much, Your Honor.

[00:30:14] Speaker 04:
With respect to the original issue, I meant to point the court to appendix 328 and 331, which happened to be the chart showing the data relative to the selling price and the

[00:30:27] Speaker 04:
issue of the unit sales on the royalty topic.

[00:30:30] Speaker 04:
With regard to the issue of the injunction, this court mandated that the district court reconsider the issue of irreparable harm.

[00:30:39] Speaker 04:
Irreparable harm only, not the other three eBay factors.

[00:30:43] Speaker 04:
And she did that.

[00:30:43] Speaker 04:
And she did that by doing precisely what this court said, which is to look at

[00:30:48] Speaker 04:
quote, consider whether consumers have turned to non-infringing alternatives to the BB capacitor, this is from this court's opinion, such as the 560, after the 550 series capacitors became unavailable, or whether Presidio sales of the BB capacitors have increased because the 550 series is no longer on the market.

[00:31:12] Speaker 04:
That's what this court asked her to do.

[00:31:16] Speaker 04:
kind of in contradistinction to the royalty topic, she did exactly that.

[00:31:21] Speaker 04:
She took all kinds of new evidence, which demonstrated precisely those two points.

[00:31:26] Speaker 04:
ATC for one reason or another chose not to leave the 560 on the market when the 550 was enjoined.

[00:31:34] Speaker 04:
That was their choice.

[00:31:35] Speaker 04:
But the practical fact is that there was therefore zero evidence that sales of capacitors were 560 sales as opposed to BB sales when the 550 was off the market.

[00:31:50] Speaker 03:
But there was evidence in the record that the 560 was competitive, right?

[00:31:54] Speaker 04:
That doesn't undercut the fact of no irreparable harm as somehow being demonstrated because they chose to take the 560 off the market.

[00:32:04] Speaker 04:
They had this, you know, this court's analysis and they decided... They gave up the point by not selling the 560 during the period of the injunction.

[00:32:17] Speaker 03:
The question is, on the record as a whole, does the fact that the

[00:32:21] Speaker 03:
560 will now be available, meaning that there is not a reverberable entry.

[00:32:27] Speaker 04:
Correct.

[00:32:27] Speaker 04:
And in fact, the district court looked at, in her original decision granting the injunction in the first go-round, there were three things that she looked at and cited to.

[00:32:38] Speaker 04:
One is the nature of the direct competition between the parties in the same market with head-to-head products.

[00:32:47] Speaker 04:
The other was the fact that Presidio doesn't license its patent.

[00:32:50] Speaker 04:
And so those are both factors that supported her irreparable harm finding the first time around.

[00:32:55] Speaker 04:
And those were undisturbed on appeal here.

[00:32:57] Speaker 04:
It was only her third stick in the bundle, which was the lost profit analysis that she tacked on as an additional basis for finding irreparable harm.

[00:33:08] Speaker 04:
And that's why when it went back to her to consider, she looked at what happened to Presidio sales when the injunction went into place.

[00:33:14] Speaker 04:
They went up dramatically.

[00:33:16] Speaker 04:
What happened when the injunction was not in effect and 550 was back in the market, Presidio sales decreased.

[00:33:21] Speaker 04:
Those were directly on the issue of what this court asked her to consider.

[00:33:25] Speaker 04:
She did not abuse her discretion by taking that into account.

[00:33:29] Speaker 04:
Thank you so much.

[00:33:31] Speaker 02:
I think I have a minute or so.

[00:33:36] Speaker 02:
May I?

[00:33:37] Speaker 02:
Yes.

[00:33:39] Speaker 02:
This court's mandate on the injunction was broad.

[00:33:42] Speaker 02:
The court asked the district court to consider the appropriateness of the injunction.

[00:33:45] Speaker 02:
She was free to consider whatever she needed to consider, and she did, but she relied almost exclusively on competition.

[00:33:55] Speaker 02:
Now, Mr. Ahrens makes a correct point.

[00:34:00] Speaker 02:
The first time around, Judge Huff's order was based on competition between the parties.

[00:34:04] Speaker 02:
Presidio didn't license its patents and lost profits.

[00:34:08] Speaker 02:
And when this court reversed the lost profits award, it said there isn't enough here for the injunction order and vacated it for reconsideration by the court.

[00:34:21] Speaker 02:
We understand, and we think the court understands, that competition isn't enough.

[00:34:26] Speaker 02:
There's got to be more than competition between the parties to justify irreparable harm.

[00:34:32] Speaker 02:
And here we think that's lacking because there is no causal mix.

[00:34:36] Speaker 03:
Okay, thank you.

[00:34:36] Speaker 03:
Thank court counsel.

[00:34:37] Speaker 03:
The case is submitted.