[00:00:25] Speaker 02:
Next case is SAP America versus invest pick 2019 1338 Mr.. Evans when you were ready I'd like to reserve five minutes for rebuttal

[00:00:53] Speaker 02:
Best way always to reserve five minutes for a vital is to stop at 10.

[00:01:01] Speaker 01:
May it please the court.

[00:01:05] Speaker 01:
The only thing exceptional about this case is that we're sitting here today with a district court opinion that found this case exceptional and awarded attorneys fees to SAP.

[00:01:14] Speaker 01:
This is not a case that was filed by Investpick.

[00:01:19] Speaker 01:
The only action that Investpict took in this case was to send a notice letter to preserve its statutory rights to enforce its patent, and then to oppose a motion for judgment on the pleadings that its patent was invalid under Section 101.

[00:01:32] Speaker 02:
But look, you had a district court to whom we owe deference on an issue like this.

[00:01:39] Speaker 02:
And it found in the words of the Supreme Court that the case stands out.

[00:01:46] Speaker 02:
It referred to the previous statement by the PTO that on the merits you were going to lose, very likely.

[00:01:56] Speaker 02:
And then the court said that the way you litigated the case in particular, that two people high up in your company engaged in contacts with the other party undercover, so to speak.

[00:02:12] Speaker 02:
We owe deference on these findings, don't we?

[00:02:15] Speaker 01:
Yes.

[00:02:18] Speaker 01:
On the second set of deference, all that occurred post-final judgment.

[00:02:22] Speaker 01:
So I believe that this court has held that under those circumstances, less deference is warranted.

[00:02:26] Speaker 01:
But I agree that you do owe deference to those findings.

[00:02:29] Speaker 01:
But let's look at the facts that underpin those findings.

[00:02:31] Speaker 01:
The problem here is what the district court held

[00:02:35] Speaker 01:
His invest pick was specifically warned by the USPTO that it looked very unlikely that these claims were directed toward patentable subject matter and very likely that the claims were invalid.

[00:02:45] Speaker 01:
That's from Appendix 19 in the district court's order finding the case exceptional.

[00:02:53] Speaker 01:
The only fact that underpins that finding

[00:02:55] Speaker 01:
is a footnote from an appellate brief that this court in a case that we won that was coming up from inter-parties and ex-party re-examinations.

[00:03:05] Speaker 01:
Or 101 was not initial.

[00:03:06] Speaker 04:
The district court may have overstated what was in that footnote, but I think his point was you were on notice.

[00:03:13] Speaker 01:
But that notice does not overcome the presumption of validity and patentability.

[00:03:18] Speaker 01:
Now, this court held very recently in Selzfin v. Fitbit this summer that a patent owner is entitled to both presumption of validity and patentability, and that presumption is not overcome until a defendant has proved the patent invalid.

[00:03:32] Speaker 01:
That footnote does not prove the patent invalid, nor does it destroy the presumption of validity.

[00:03:38] Speaker 01:
If it did, there would be no presumption of validity, because I can tell you,

[00:03:41] Speaker 01:
I have yet to litigate a patent case where I was not told that my patents were invalid under 101, 102, and 103 for sure by a defendant.

[00:03:50] Speaker 03:
The district court in this case did not, though, say

[00:03:55] Speaker 03:
I am not presuming the validity.

[00:03:59] Speaker 03:
I thought the district court effectively said the opposite, no?

[00:04:02] Speaker 01:
Well, the district court did cite to Ultramershal and say, typically this creates a presumption of validity of the claims of a patent, but that is not necessarily the case in a court's review of the 101 issue, and then pays a little bit of libs.

[00:04:14] Speaker 01:
That's from Appendix 18.

[00:04:17] Speaker 01:
And then pays a little bit of lip service to say that this is not necessarily the case.

[00:04:21] Speaker 01:
But then he says, because you were warned by the USPTO, you're in essence not in touch.

[00:04:25] Speaker 03:
I'm sorry, but a little bit of lip service, I guess, is what struck me as effectively saying, I will actually presume that it is valid or eligible and that, more to the point, Invespic had a general right reasonably

[00:04:45] Speaker 03:
to rely on the issuance of the patent.

[00:04:48] Speaker 03:
So I didn't see any problem with what the district court said with respect to burdens.

[00:04:57] Speaker 03:
I think there were two things that I guess struck me about the district court opinion.

[00:05:04] Speaker 03:
One is there's no discussion in this opinion about the merits weakness of your eligibility view.

[00:05:13] Speaker 03:
Correct.

[00:05:14] Speaker 03:
And then second, that the district court found that the conduct of Mr. Miller and Mr. Vanda with respect to dealing with the SAP salesman stood out.

[00:05:30] Speaker 03:
I don't remember a specification of what was wrong with the conduct.

[00:05:35] Speaker 01:
Also correct.

[00:05:37] Speaker 01:
So can I address both of those points?

[00:05:39] Speaker 01:
Yes.

[00:05:41] Speaker 01:
So while I agree that the district court

[00:05:43] Speaker 01:
pays lip service to the burden and appears to put it in the right place.

[00:05:48] Speaker 01:
The problem is his application of the burden.

[00:05:50] Speaker 01:
He then says that the USPTO warning created a serious cloud on the claims.

[00:05:55] Speaker 01:
that Investpict had to address before enforcing his demands.

[00:05:59] Speaker 04:
Yeah, but wait a minute.

[00:06:00] Speaker 04:
He went on and he said, one of the reasons that the court found this case exceptional was Investpict's unusually weak validity position under 101.

[00:06:12] Speaker 04:
The Federal Circuit has affirmed the court's 101 invalidity order.

[00:06:18] Speaker 04:
Now, citing to the Federal Circuit can't be all wrong, can it?

[00:06:23] Speaker 04:
No, Your Honor.

[00:06:25] Speaker 04:
No.

[00:06:25] Speaker 04:
So maybe he read what we said about it in an earlier opinion by Judge Toronto.

[00:06:31] Speaker 04:
He goes on to say, this was first affirmed by a three-judge panel decision after request for rehearing.

[00:06:37] Speaker 04:
The panel issued a substitute order, which again affirmed the Court's 101 ruling.

[00:06:42] Speaker 04:
And finally, Investpick's request for rehearing en banc was denied.

[00:06:48] Speaker 04:
So he took what we did seriously.

[00:06:51] Speaker 04:
That's correct, Your Honor.

[00:06:52] Speaker 04:
Too little after the fact, I admit that.

[00:06:54] Speaker 04:
But nevertheless, why couldn't he rely on what we pointed out?

[00:07:01] Speaker 04:
And I think the language of the earlier opinion suggests it was a pretty weak case.

[00:07:07] Speaker 01:
So respectfully, the Honorable Judge Toronto did not say that our arguments were weak in his opinion upholding the district court's case.

[00:07:14] Speaker 01:
Nor did the district court's original opinion on 101 make any comment on the substantive strength of Investpick's arguments.

[00:07:21] Speaker 01:
The language you are reading about the unusually weak validity position came several years after that initial 101 ruling in the order that determined the amount of fees that were to be determined.

[00:07:32] Speaker 01:
It wasn't made in the exceptional case finding nor in the 101 case.

[00:07:36] Speaker 01:
And that was after extensive briefing on the fact that he had not ruled on the substantive strength on the briefing

[00:07:43] Speaker 01:
additional briefing by Invespic in the interim.

[00:07:45] Speaker 01:
So it appears to be him trying to cover his tracks.

[00:07:48] Speaker 01:
But again, absent from that language that you said, there's still no finding on the substantive strength of our arguments or why he believed that they are unusually weak.

[00:07:56] Speaker 01:
There's no citation even to anywhere in his orders.

[00:07:59] Speaker 03:
Why isn't it enough, even if that was a kind of shorthand,

[00:08:05] Speaker 03:
a kind of incorporation by reference.

[00:08:08] Speaker 03:
Look at my earlier opinion, his earlier opinion, which says this is about mathematics and contracts.

[00:08:17] Speaker 03:
And then look at the Federal Circuit's opinion, same thing.

[00:08:21] Speaker 03:
Just as a shorthand, I view this as on the spectrum of 101 issues.

[00:08:29] Speaker 03:
a pretty easy one, without elaborating.

[00:08:32] Speaker 03:
Why would he need to elaborate on that for purposes of our now quite discretionary review?

[00:08:39] Speaker 01:
Well, one, how are we supposed to do an appeal or a ruling where we don't know the basis of it?

[00:08:42] Speaker 01:
I mean, he doesn't give us really any firm foundation for why he thinks it's exceptionally weak.

[00:08:46] Speaker 01:
So it's very difficult to address that, because honestly, I don't know.

[00:08:49] Speaker 01:
The only clue he gives me is in his exceptional case-finding order, he points that we should have known that the case, that the patent was invalid based on the USPTO's footnote.

[00:08:58] Speaker 01:
Which I would like to read, because I think the language is important, since that's what everything hinges on.

[00:09:02] Speaker 01:
It says, although neither the examiner nor the board rejected Investpick's claims under 35 USC 101, the director notes that these claims might

[00:09:12] Speaker 01:
fail to qualify as patent eligible subject matter under case law that is developed after the close of examination in this case.

[00:09:19] Speaker 04:
Council, we've read the footnote, and I conceded earlier in the conversation that the district court may have overstated the impact of that footnote.

[00:09:29] Speaker 04:
You made your point.

[00:09:30] Speaker 02:
OK.

[00:09:31] Speaker 02:
We can also read the claim.

[00:09:32] Speaker 02:
And we have a large body of case law relating to

[00:09:36] Speaker 02:
method claims that don't pass 101 muster.

[00:09:42] Speaker 01:
And respectfully, Your Honor, as the Honorable Judge Pueger has pointed out, the abstract, the idea of what is an abstract patent can barely serve as a rule of law because the cases on it often contradict each other.

[00:10:00] Speaker 01:
I mean, I could put 10 patent lawyers in a room.

[00:10:04] Speaker 01:
We could look at the same patent, and we could have

[00:10:06] Speaker 01:
Probably 10 different opinions about it.

[00:10:09] Speaker 04:
Not to disagree with your point, we don't deal with abstract patents.

[00:10:14] Speaker 04:
We only deal with claims.

[00:10:16] Speaker 04:
Abstract ideas, yes.

[00:10:17] Speaker 01:
Let's stick with the claims.

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

[00:10:20] Speaker 01:
But what this all comes back to is the district court is saying that because the USPTO told us previously that our patent might be invalid under 101, we were no longer entitled to rely on our presumption of validity

[00:10:35] Speaker 01:
in a case that we did not file.

[00:10:37] Speaker 01:
We are the defendant.

[00:10:38] Speaker 01:
All we did was defend the validity of our patent.

[00:10:40] Speaker 01:
So if we are going to move the bar on exceptional case to where a patent owner can no longer defend the validity of his patent in a declaratory judgment action, quite frankly, there's going to be no case that's not exceptional.

[00:10:51] Speaker 01:
I mean, that is so far beyond where any exceptional case finding has ever been made.

[00:10:56] Speaker 01:
And I don't think that there would be anything that wouldn't qualify under that state.

[00:10:59] Speaker 04:
Let me move you to another point that the district court seemed to be concerned about.

[00:11:04] Speaker 04:
He was concerned about the fact that the two inventors or owners of this patent went to see SAP and gathered information from them.

[00:11:16] Speaker 04:
Now, as I understand it, SAP made the first contact with them.

[00:11:23] Speaker 04:
I'm curious from your experience, is that

[00:11:41] Speaker 04:
Here's what we're doing.

[00:11:43] Speaker 04:
Would you have said, good news, keep me informed?

[00:11:46] Speaker 04:
Or would you have said, wait, don't do that.

[00:11:49] Speaker 04:
That'll get us in trouble.

[00:11:50] Speaker 04:
Which way would the bar normally go on something like that?

[00:11:55] Speaker 01:
So to address your hypothetical, lawyers are cautious people.

[00:12:01] Speaker 01:
Out of an abundance of caution, I would probably say, let's not engage in that conduct.

[00:12:05] Speaker 01:
But I would look into it.

[00:12:06] Speaker 01:
And having done the research, I do not believe that there is anything wrong with that conduct.

[00:12:10] Speaker 01:
In fact, there's good public policy reasons to allow you to engage in that type of discovery.

[00:12:15] Speaker 01:
I mean, these are not control group employees.

[00:12:17] Speaker 01:
These are not people that have any knowledge of the case.

[00:12:20] Speaker 01:
These are simply sales people sending you sales material and quoting you sales prices as they would any other customer.

[00:12:27] Speaker 01:
You are entitled to all that information in discovery.

[00:12:30] Speaker 01:
I can tell you we weren't getting it in discovery, and you often don't in these cases.

[00:12:34] Speaker 01:
There are many ethical opinions cited in the briefs where they say that discovery under a pretense is not prohibited.

[00:12:42] Speaker 01:
I think it's very notable that Judge Kincaid cited no authority that said this is wrong.

[00:12:46] Speaker 01:
He cited no ethical rule that was violated.

[00:12:48] Speaker 01:
He cited no rule of civil procedure that was violated.

[00:12:51] Speaker 01:
He just apparently didn't like it.

[00:12:55] Speaker 01:
That's an impossible standard as a litigant to know that you're going to get attorney's fees awarded against you for conduct that has never before been held to be improper.

[00:13:04] Speaker 01:
Now, the purpose of 285 is to give the winning party back the money of these compensatory damages for a case that shouldn't have been brought or for conduct that shouldn't have happened.

[00:13:16] Speaker 01:
Two notable things about this.

[00:13:18] Speaker 01:
There's nothing that holds this conduct was wrong.

[00:13:21] Speaker 01:
Kincaid admits that it didn't violate any rules, ethics, or other legal obligations that Dr. Varma and Mr. Miller had.

[00:13:30] Speaker 01:
Two, and probably most notably, this issue didn't come up in the case.

[00:13:34] Speaker 01:
The materials they received were not used in the case.

[00:13:38] Speaker 01:
There was not a single filing in this case about it.

[00:13:40] Speaker 01:
SAP's lawyers spent no time on this issue during the case.

[00:13:44] Speaker 01:
So what is there to compensate for?

[00:13:46] Speaker 01:
Nothing.

[00:13:47] Speaker 01:
As far as this case is concerned, that conduct didn't even happen.

[00:13:51] Speaker 01:
The only time it came up is when SAP filed its motion to get attorney's fees to try to drum up sympathy from the judge by trying to paint us as bad actors.

[00:13:59] Speaker 01:
And it worked.

[00:14:00] Speaker 01:
And respectfully, I have only two minutes left that I would like to reserve some time.

[00:14:03] Speaker 04:
Are you suggesting that we should issue a presidential opinion saying that that kind of conduct shocks the conscience of the court?

[00:14:11] Speaker 04:
Would that be useful for future behavior?

[00:14:15] Speaker 01:
Not for me, Your Honor.

[00:14:16] Speaker 01:
I would very much hope that you do not issue that opinion.

[00:14:18] Speaker 01:
I'm asking for the opposite.

[00:14:20] Speaker 01:
But I would say that I do believe there should be some concept of notice that what you are doing is wrong before you get hit with an attorney's fee award of multiple hundreds or millions of dollars.

[00:14:30] Speaker 01:
It shouldn't be a guessing game of what conduct is acceptable and what conduct is not.

[00:14:35] Speaker 01:
And here we had no notice that the conduct that we were accused of being exceptional was something that could warrant an exceptional case finding.

[00:14:42] Speaker 02:
Council will save two minutes for a bottle for you.

[00:14:45] Speaker 01:
Thank you, your honor.

[00:14:46] Speaker 02:
Ms.

[00:14:46] Speaker 02:
Vidal.

[00:14:52] Speaker 00:
Thank you, your honor.

[00:14:52] Speaker 00:
Morning.

[00:14:54] Speaker 00:
May it please the court, Kathy Vidal on behalf of SAP.

[00:14:57] Speaker 00:
Your honors, in this case, the district court found that Investpick was advancing, and I'll quote, an unusually weak invalidity position under 101.

[00:15:06] Speaker 00:
And the first time the district court found the position was weak,

[00:15:09] Speaker 00:
was not in the fees motion.

[00:15:11] Speaker 00:
It was in the original 101 decision.

[00:15:13] Speaker 00:
In that decision, the district court said the claims of the 291 patent are difficult to distinguish from the claims in fluke and from the Supreme Court's example of a claim that calculated the circumference of a circle.

[00:15:29] Speaker 00:
That's at Appendix 452.

[00:15:32] Speaker 00:
The court found that the claims were directed to math, as did this court, and that math is per se not patent eligible.

[00:15:40] Speaker 00:
and that the claims, quote, do not contain any substantial limitations besides those that restrict the abstract idea at issue, end quote.

[00:15:50] Speaker 00:
That's at appendix 451.

[00:15:53] Speaker 00:
As to this court's opinion, this court readily found that the claims were directed to, quote, mathematical calculations.

[00:16:01] Speaker 00:
That's at this court's opinion, 898 F third at 1163,

[00:16:05] Speaker 00:
and that they have no plausibly alleged innovation in the non-abstract application realm.

[00:16:13] Speaker 00:
Same site.

[00:16:15] Speaker 00:
This court held that we readily conclude that there is nothing in the claims sufficient to remove them from the class of subject matter ineligible for patenting and transform them into an eligible application.

[00:16:28] Speaker 00:
The law on 101 could not have been clear in this case, and the district court did not err

[00:16:33] Speaker 00:
in finding that the claims were unusually weak.

[00:16:38] Speaker 00:
Now, Investpick cites to a number of opinions by judges on this court where they express some concern about the law around what is and is not an abstract idea.

[00:16:50] Speaker 00:
And in fact, in Mayo v. Athena, 12 of this court's judges expressed opinions on

[00:16:57] Speaker 00:
their concerns about what falls inside or outside of abstract ideas.

[00:17:02] Speaker 00:
In none of those opinions does any judge take the position that mathematics is in question.

[00:17:08] Speaker 02:
Of course, Athena dealt with a different kind of invention.

[00:17:12] Speaker 00:
It did.

[00:17:13] Speaker 00:
It did.

[00:17:13] Speaker 00:
And as did the other opinion cited in Investpix brief.

[00:17:17] Speaker 00:
And yes, there are concerns generally that the meets and bounds of abstract idea is not fully resolved.

[00:17:24] Speaker 00:
But there's no case that says that mathematics is

[00:17:27] Speaker 00:
potentially not an abstract idea.

[00:17:29] Speaker 00:
In fact, the cases say to the contrary.

[00:17:33] Speaker 00:
And on this, I would find inventor Holdings instructive.

[00:17:37] Speaker 00:
In inventor Holdings, the patentee made the very same point.

[00:17:41] Speaker 00:
The patentee before this court in inventor Holdings took the position that the law around abstract idea was too uncertain toward attorney fees.

[00:17:51] Speaker 00:
And in that case, the Federal Circuit held

[00:17:54] Speaker 00:
that while it is sometimes difficult and, quote, sometimes difficult to analyze patent eligibility under the framework prescribed by the Supreme Court in Mayo, end quote, the invention and issue, quote, does not require us to engage in a difficult line drawing exercise for a claimed invention resting on or anywhere near the margins of patent eligibility.

[00:18:18] Speaker 00:
That's at inventor holdings at 1379.

[00:18:21] Speaker 00:
The same holds true here.

[00:18:23] Speaker 00:
that there's nothing about mathematics that brings it close to that line as to what is and is not patent eligible.

[00:18:32] Speaker 00:
And in fact, for the same reasons that this court upheld the district court's finding of exceptional case in inventor holdings, the court should do so here just based on the weakness of the 101 argument.

[00:18:43] Speaker 00:
Can I ask you this?

[00:18:45] Speaker 03:
As I remember it, the district court here did not say that the weakness of the eligibility position was itself a sufficient reason to award fees.

[00:18:59] Speaker 03:
The district court, I thought, pretty conspicuously said these two things together, the second thing being the discovery-related conduct that the district court said stands out.

[00:19:14] Speaker 03:
Suppose, hypothetically, and then I do want to discuss the discovery point, suppose that I thought that the discovery piece of the district court's ruling was insufficiently supported.

[00:19:29] Speaker 03:
Could we affirm anyway?

[00:19:31] Speaker 03:
Should we affirm?

[00:19:32] Speaker 03:
Or are we obliged to say the district court never said, I would exercise my discretion to find this exceptional?

[00:19:41] Speaker 03:
on the 101 weakness alone?

[00:19:45] Speaker 00:
In the district court's opinion, the district court addressed both prongs of octane fitness separately.

[00:19:52] Speaker 00:
And if you look at Appendix 11, the court held the exceptional case finding was based on the fact that this case stands out for the other in both Investpick's litigation position and the manner in which Investpick litigated the case.

[00:20:09] Speaker 00:
The court went on to say, generally, Investpick's weak 35 USC 101 subject matter eligibility position, its notice from the USPTO on this issue, and Investpick's opportunity to address this issue made Investpick's litigation position stand out.

[00:20:28] Speaker 00:
One point, one prong of octane fitness.

[00:20:30] Speaker 00:
The court went on to say, as to Investpick's manner of litigating the case, the court found generally that the case stands out from others

[00:20:39] Speaker 00:
in relation to some pretense self-help discovery conducted by key people at Investpick.

[00:20:45] Speaker 00:
So the court made clear that Octane Fitness has two prongs, and the court could find a case exceptional under either prong.

[00:20:57] Speaker 00:
And in this case, the court found the case exceptional under both prongs.

[00:21:01] Speaker 03:
Can I turn to the other piece now and just ask you, what was wrong with the conduct of Miller and Varma in discussing SAP's products with SAP's salesperson?

[00:21:15] Speaker 00:
So turning to the district court's decision, the district court at Appendix 5 concluded that,

[00:21:22] Speaker 00:
that Lee Miller, who was the operating manager of Investpict, and Samir Varma, who was the inventor, and I'm not sure if he was even affiliated with Regulus, pretended to be potential customers of SAP, SAP's product that is- I think I understand the facts.

[00:21:39] Speaker 03:
What's wrong with that?

[00:21:42] Speaker 00:
They acted under pretense in order- So what?

[00:21:45] Speaker 03:
Really, I just want to know, what is the norm?

[00:21:48] Speaker 03:
the rule norm, the ethics norm, the statutory norm, the something norm that says don't pretend by going to the store and trying to buy the other side's product or ask the salesperson about how this works.

[00:22:11] Speaker 00:
Well, certainly, let's step back to pre-litigation conduct.

[00:22:15] Speaker 00:
So in pre-litigation, you need to satisfy your rule 11 analysis.

[00:22:20] Speaker 00:
And in that context, you could certainly buy a product and analyze it and try and determine whether there's infringement.

[00:22:25] Speaker 00:
And in fact, it's incumbent upon you to do so.

[00:22:28] Speaker 00:
When it comes to litigation and you know that a party is represented by counsel, the rules change.

[00:22:34] Speaker 03:
That's what I'm asking.

[00:22:35] Speaker 03:
Where is the rule that says don't do this post-filing?

[00:22:39] Speaker 03:
post-initiation of litigation.

[00:22:40] Speaker 04:
This was post-litigation conduct.

[00:22:42] Speaker 00:
This was post-litigation conduct, post-litigation.

[00:22:45] Speaker 03:
And I will say, and I'm not actually expressing, I'm not sitting here saying, I don't think it's wrong, but I'm looking for something that says, how do I know that it's wrong?

[00:22:58] Speaker 03:
Maybe it isn't wrong, or maybe it is, but I'm not given any source to look at.

[00:23:04] Speaker 00:
So it would be wrong had the lawyer conducted the conduct directly.

[00:23:10] Speaker 00:
As far as the individuals conducting the conduct, I'm not aware of an ethical rule that was violated.

[00:23:15] Speaker 00:
Now, there doesn't need to be one under octane fitness, but I'm not aware of an ethical rule that was violated.

[00:23:20] Speaker 00:
The judge in this case was considering all of the circumstances, which was even though it was the inventor and the operator who conducted the self-help discovery, that information went directly to the lawyer who then sent a note over to SAP saying, if you don't settle this case,

[00:23:38] Speaker 00:
I'm going to bring these facts before the court.

[00:23:40] Speaker 00:
So there was something fishy there.

[00:23:42] Speaker 00:
Now, was it a direct violation of a rule?

[00:23:44] Speaker 00:
That's yet to be determined.

[00:23:46] Speaker 03:
And if it had been the lawyer, what rule would have been directly violated?

[00:23:51] Speaker 00:
There's ethical rules in the state of Texas or state by state dependent.

[00:23:54] Speaker 00:
But there's ethical rules that say that once you're engaged in litigation, if you know the parties represented by counsel, you have to deal with counsel.

[00:24:00] Speaker 00:
You can't go around counsel and deal with the party directly.

[00:24:03] Speaker 04:
So you made a point that may be significant, which was after these two gentlemen got through gathering their information, they sent it to their lawyer.

[00:24:14] Speaker 04:
And the lawyer then used it in an attempt to influence the party on the other side.

[00:24:21] Speaker 04:
At that point, they're using that information

[00:24:27] Speaker 04:
their lawyer is using that information.

[00:24:29] Speaker 04:
Does that change the fact, the situation?

[00:24:33] Speaker 00:
It's additional facts the district court could rely on to say this case stands out from the others.

[00:24:38] Speaker 00:
Whether or not it reaches the level of an ethical breach, that's not clear.

[00:24:43] Speaker 00:
But the court does not need to decide that it reaches that level in order to find this case exceptional under octane fitness.

[00:24:49] Speaker 00:
And I will say that fact is against the backdrop

[00:24:53] Speaker 00:
of earlier communications from investment counsel to SAP, one of which they threatened millions in attorney fees.

[00:25:01] Speaker 00:
And then later, they brought these facts to SAP saying, OK, you didn't pay these millions.

[00:25:06] Speaker 00:
You're not paying millions in attorney fees, but now we're going to threaten you with discovery that our principals went into your company and gathered.

[00:25:13] Speaker 00:
So the district court, in making his ruling on that prong of octane fitness, considered all of the circumstances.

[00:25:23] Speaker 04:
OK.

[00:25:26] Speaker 00:
And based on the fact that the district court found under both the first prong and the second prong of Octane Fitness that under either prong this case was an exceptional case, we're asking this court to affirm that decision.

[00:25:40] Speaker 00:
And we're asking this court to affirm it as to the full amount of attorney fees that were awarded because it's a district court found

[00:25:47] Speaker 00:
But for the fact that Investpick did not heed the PTO's warning, but for the fact that they didn't investigate the very cases the PTO cited, Fluke and Alice, this case would have never been brought, and none of these attorney fees would have been accrued.

[00:26:03] Speaker 02:
Well, you're alluding to the fact that the court cut back from the requested fees.

[00:26:09] Speaker 00:
That is correct.

[00:26:11] Speaker 00:
The court cut back from the requested fees on a couple different bases.

[00:26:16] Speaker 00:
One, they believed that the attorney fee rates could be lower.

[00:26:19] Speaker 00:
And so they certainly cut those.

[00:26:21] Speaker 03:
You vigorously contested that.

[00:26:23] Speaker 00:
Was that?

[00:26:23] Speaker 00:
You vigorously contested that.

[00:26:25] Speaker 00:
We did.

[00:26:25] Speaker 00:
We did, Your Honor.

[00:26:27] Speaker 00:
That was one basis.

[00:26:28] Speaker 00:
And the other basis was there was certainly activity that SAP was considering in the patent office.

[00:26:33] Speaker 00:
And they cut that as well.

[00:26:34] Speaker 00:
So if you look at the ultimate award, it was a fraction of what SAP was asking for in the first instance.

[00:26:39] Speaker 04:
If I remember right, he reduced the lawyers by about 35%.

[00:26:43] Speaker 00:
about 35% for the partners, less for the associates.

[00:26:47] Speaker 00:
Because apparently lawyers in Texas charge less money.

[00:26:51] Speaker 02:
One was for PTO filing.

[00:26:52] Speaker 02:
It was never made.

[00:26:55] Speaker 02:
That's correct.

[00:26:57] Speaker 02:
You can't really argue against that.

[00:26:59] Speaker 00:
And Your Honor, we are not.

[00:27:00] Speaker 00:
We are not asking for additional attorney fees.

[00:27:02] Speaker 00:
We're just asking this court uphold the finding of the district court.

[00:27:05] Speaker 02:
I see.

[00:27:06] Speaker 02:
OK.

[00:27:06] Speaker 02:
Thank you.

[00:27:07] Speaker 00:
Thank you.

[00:27:11] Speaker 02:
Mr. Evans has a couple of minutes.

[00:27:13] Speaker 01:
Sure.

[00:27:15] Speaker 01:
I just have a couple quick points.

[00:27:16] Speaker 01:
One, I have to respectfully disagree with counsel's statement that if I had contacted the SAP salesman that that would be an ethical violation.

[00:27:25] Speaker 01:
The rules in Texas, in most states, is it's a control group test.

[00:27:29] Speaker 01:
So when you represent a corporation, you don't represent every employee in the corporation.

[00:27:33] Speaker 01:
You don't represent the salespeople who have no involvement

[00:27:36] Speaker 01:
You represent executives and maybe the general counsel, the control group that's controlling the litigation.

[00:27:43] Speaker 01:
And this is a common mistake that defense counsel makes when they say, you cannot contact anyone at my company without contacting me.

[00:27:50] Speaker 01:
That is not the law, and that is not true.

[00:27:52] Speaker 01:
And that is what SAP has said here and told you.

[00:27:55] Speaker 01:
I am allowed to contact low-level employees who are not involved in litigation when I am litigating against companies.

[00:28:02] Speaker 01:
They are not represented by counsel,

[00:28:04] Speaker 01:
unless counsel has gone to each of them individually and they have hired that counsel as their attorney.

[00:28:09] Speaker 01:
Otherwise, they are just people who are not involved in the litigation, third party witnesses who might have information about the facts that everyone is entitled to talk to.

[00:28:18] Speaker 01:
So I disagree strongly that if I had done the conduct that Mr. Lee and Mr. Varma did, that it would be an ethical violation because it would not be under any state standard that I'm aware of and for sure Texas's.

[00:28:29] Speaker 01:
And we have an ethical opinion to that effect that was submitted by Linda Eaves in this case.

[00:28:34] Speaker 04:
You're arguing, I take it, that the district judges' sensitivities to these matters was excessive.

[00:28:41] Speaker 01:
Yes, Your Honor.

[00:28:42] Speaker 01:
Agreed.

[00:28:44] Speaker 04:
That is exactly what we're saying.

[00:28:46] Speaker 04:
What about the fact that the information was used by the company lawyer to try to get SAP to collapse?

[00:28:58] Speaker 01:
There's a lot of emphasis on an email that's sent in the heat of a pretty heavily contested litigation.

[00:29:03] Speaker 01:
Lots of things get said.

[00:29:04] Speaker 01:
Both parties claim they're going to win.

[00:29:06] Speaker 01:
Both parties make statement about evidence.

[00:29:08] Speaker 01:
Both parties say they're going to win on summary judgment.

[00:29:11] Speaker 01:
Both subparties always say they're going to get attorney's fees once they prove how very wrong you are.

[00:29:15] Speaker 01:
That is just patent litigation.

[00:29:17] Speaker 01:
It's bare knuckle bar room brawls.

[00:29:20] Speaker 01:
It's no holds barred.

[00:29:21] Speaker 01:
There was nothing attached to that email.

[00:29:23] Speaker 01:
That information that Mr. Lee and Mr. Varma used was never brought to the district court, nor was it ever sent to SAP.

[00:29:29] Speaker 01:
And to say that we went into the company to get it, I mean, come on.

[00:29:32] Speaker 01:
There was conference calls that were held, and there was emails that were sent by SAP salesmen attaching PowerPoint presentations that should be publicly available that they send to every single customer that they're trying to recruit.

[00:29:43] Speaker 04:
Maybe the district court was quietly trying to elevate the behavior of the bar in Texas, do you think?

[00:29:50] Speaker 01:
Well, if he was doing that, he should have been explicit about it.

[00:29:53] Speaker 01:
And it's not really his.

[00:29:54] Speaker 01:
That's for the Supreme Court of Texas to do, not a district judge, Ed Kincaid.

[00:30:00] Speaker 01:
Now, their ethical rules are in place and promulgated by the Supreme Court of Texas, not by district court judges.

[00:30:05] Speaker 01:
So if that is to be the rule, that would have to come from them.

[00:30:09] Speaker 01:
And I don't think it's enough for an exceptional case to be found because a judge just didn't like what you did.

[00:30:16] Speaker 01:
There needs to be a reason behind it.

[00:30:19] Speaker 01:
If it is just subjective.

[00:30:20] Speaker 01:
judicial opinion that your behavior was wrong, and that can elevate a case to an exceptional case, then there is no guidance to litigants to ever know when they will be subjected to attorney's fees, which is a substantial punitive damage.

[00:30:35] Speaker 01:
And I don't think that is what the purpose of 285 is.

[00:30:37] Speaker 01:
I don't think that's what the law in 285 is.

[00:30:39] Speaker 01:
And I think that would be terrible policy.

[00:30:41] Speaker 01:
And I'm over, Your Honor.

[00:30:42] Speaker 02:
So I thank you.

[00:30:43] Speaker 02:
Counsel, the case is submitted.