[00:00:06] Speaker 01: I didn't get to say thank you very much. [00:00:52] Speaker 01: Thank you. [00:01:02] Speaker 01: Okay, our last case this morning is number 19-1430, Souter Manufacturing Company versus J Squared Inc. [00:01:44] Speaker 02: came to jake morning your honors my name is michael jacob appearing on behalf of the plaintiff in the appellant in this matter uh... we bring appeal from the uh... order denying our motion for contempt in the northern district of ohio as well as a breach of the uh... [00:02:02] Speaker 02: Settlement agreement. [00:02:05] Speaker 02: First, one of the councils that we claimed that the district court erred by allowing UDC to sell its existing inventory of the enjoined shares, which was the wave 2.1, in anything other than the Fred chair configuration. [00:02:22] Speaker 02: I think the language in the contract of the settlement agreement was quite clear. [00:02:26] Speaker 02: Paragraph two says it shall not sell that chair. [00:02:30] Speaker 03: Let me ask you some hypothetical questions. [00:02:31] Speaker ?: Sure. [00:02:32] Speaker 03: Supposing that ULC destroyed each chair and sold it for scrap. [00:02:40] Speaker 03: Do you not have any problem with that? [00:02:42] Speaker 02: That's not a sale. [00:02:43] Speaker 02: That's not a sale of the enjoying product, in my view. [00:02:46] Speaker 02: In other words, they scrap it and they just sell for the scrap value of the plastic. [00:02:52] Speaker 02: That's an interesting question. [00:02:54] Speaker 02: Thank you. [00:02:56] Speaker 02: I guess if they scrap it and give it to [00:02:58] Speaker 02: a junkyard and they give them a penny a pound, it's a plastic chair, I guess I wouldn't be here. [00:03:06] Speaker 02: Because they didn't sell it to a competitor or a customer of ours. [00:03:09] Speaker 02: Obviously that subject matter is not covered in the settlement agreement. [00:03:15] Speaker 03: If they took off the legs and the base of each chair and sold it as a seat on the floor, [00:03:24] Speaker 03: Would that violate the settlement? [00:03:25] Speaker 02: No, because our client did not object to the convertibility of the Fred chair. [00:03:32] Speaker 02: The settlement was all about the rocker rail. [00:03:35] Speaker 02: The picture of the Fred chair that's attached to the settlement. [00:03:40] Speaker 03: Leaving aside your argument about the removability of the studs, they're huge. [00:03:46] Speaker 03: How does ULC physically altering the chair so that it's no longer a convertible chair violate the agreement? [00:03:56] Speaker 02: Because it's all there did. [00:03:58] Speaker 02: Well, what you're saying is they altered the enjoined chair by putting a pin into the thread barrel. [00:04:04] Speaker 02: Is that what you're referring to? [00:04:05] Speaker 02: Yeah. [00:04:06] Speaker 02: Okay, so that's the picture that I have here. [00:04:09] Speaker 02: Okay. [00:04:10] Speaker 02: Which is part of the video at appendix 1533, which is exhibit 33. [00:04:16] Speaker 02: And this is the pin. [00:04:18] Speaker 02: This is the thread barrel. [00:04:20] Speaker 02: And they put this pin in here, which disabled one from turning the barrel to separate or decouple the rocker from the stool base. [00:04:30] Speaker 03: Because the way the chair works is apparently... I said to you, assuming that can't be removed. [00:04:36] Speaker 02: This cannot be removed. [00:04:37] Speaker 02: Right. [00:04:38] Speaker 02: Okay. [00:04:39] Speaker 02: The point being is, it's still about the rocker rail because they brought the picture of what they proposed to do to the settlement conference, which was exhibit C to the settlement agreement. [00:04:49] Speaker 03: How does it violate the settlement agreement if they can't use it as a rocker chair? [00:04:54] Speaker 02: They weren't supposed to use this as a rocker chair. [00:04:57] Speaker 02: That was the reason we let them not scrap the existing inventory. [00:05:01] Speaker 02: They had 900 units. [00:05:02] Speaker 02: We're not saying they can't sell rocking chairs. [00:05:04] Speaker 02: We're saying the 900 units that you had in your inventory on the date of the settlement, scrap them. [00:05:11] Speaker 02: And they said, can we take off the rocker rail? [00:05:14] Speaker 02: Because that's what it was all about. [00:05:16] Speaker 02: And here's a picture. [00:05:17] Speaker 02: And we said, sure. [00:05:20] Speaker 02: Take it, you know, you can still decouple the Fred chair with the four stubby legs and put it on the floor. [00:05:25] Speaker 02: It won't rock. [00:05:26] Speaker 01: How did they violate the injunction, which is 2A of the settlement agreement, when they have made this chair so that it's not convertible? [00:05:36] Speaker 02: Well, because as Mr. Carlson and Mr. Bontrager, they both testified, if you look at the chair, [00:05:44] Speaker 02: it looked like the waves two point one injunction says you cannot sell the waves two point one that is very clear that's why it says make the convertible cheer products known as if they've made it non-convertible is that the convertible cheer product well that's the whole point your honor they have disabled a function that's easily removed by the tension i'm sorry different issue [00:06:09] Speaker 01: No. [00:06:10] Speaker 01: Let's assume, as Judge Wollack said, that it's not convertible anymore, that it's permanent. [00:06:15] Speaker 01: It can't be converted. [00:06:17] Speaker 02: Okay. [00:06:18] Speaker 01: How do they then violate 2A of the settlement agreement by selling the chair? [00:06:24] Speaker 02: because they're selling a chair with a rocker rail, which is part of our design patent, which we got an injunction that they cannot do. [00:06:32] Speaker 02: No one knows that the chair doesn't decouple until they try to separate the two. [00:06:36] Speaker 02: Mr. Bontrager testified at length at the evidentiary hearing that the key factor to him was not the convertibility, but was the ability of this chair to look like our product. [00:06:47] Speaker 02: And that's the reason I wanted to take the deposition of the University of Virginia [00:06:51] Speaker 02: Because we don't know that the product actually delivered to them actually had the pin in it. [00:06:56] Speaker 01: And the University of Virginia... But your problem is that 2A is not framed in terms of what it looks like. [00:07:02] Speaker 01: It says to make the convertible chair product, known as version one. [00:07:08] Speaker 01: If it's not a convertible chair product anymore, it doesn't seem to be within the injunction. [00:07:13] Speaker 02: Well, then you have to... Judge Zahiri said that the... [00:07:20] Speaker 02: The settlement agreement says you can't sell the wave 2.1. [00:07:22] Speaker 02: Now you take the wave 2.1 and you put a pin in it so it still looks like the wave 2.1. [00:07:29] Speaker 02: You just can't decouple it. [00:07:31] Speaker 02: Our position is that's not enough. [00:07:33] Speaker 02: They made the settlement. [00:07:34] Speaker 02: We're going to cut the rocker rail off. [00:07:37] Speaker 02: We're going to make four stubby legs. [00:07:39] Speaker 02: So that's not the wave 2.1. [00:07:41] Speaker 02: You can sell your 900 units that way. [00:07:44] Speaker 02: I mean, how is that any different if someone bolts a door closed and then sells it to a customer and they unbolt the door and they use it as a patented product? [00:07:51] Speaker 02: That is our objection here. [00:07:53] Speaker 02: They weren't supposed to sell the existing inventory with the rocker rail. [00:07:57] Speaker 02: That's the gut of our case about the injunction. [00:07:59] Speaker 00: Have you filed a suit for infringement? [00:08:01] Speaker 02: I'm sorry? [00:08:01] Speaker 00: Have you filed a suit for infringement? [00:08:04] Speaker 00: We did initially, but then we made a settlement, so now this is all about... No, no, I'm wondering, because the settlement agreement, you're arguing for us that there's a violation of the settlement agreement. [00:08:13] Speaker 02: Yes, and the injunction as well. [00:08:15] Speaker 00: But I think the settlement agreement would allow you to still sue for infringement for anything other than the Fred chair. [00:08:23] Speaker 02: That's correct. [00:08:24] Speaker 02: Now, you try to make a settlement to terminate one case, not to have a road map to start another one the next day. [00:08:31] Speaker 00: I understand, but just looking at what the plain language of the agreement is, it doesn't say that they can't sell modifications other than the Fred chair. [00:08:39] Speaker 00: It does say that they can't sell the Wave chair, but it doesn't say that they can't sell some other modification. [00:08:50] Speaker 02: That's correct. [00:08:51] Speaker 02: But they can't sell the Wave 2.1 chair, and if they just put a different ribbon on it, [00:08:56] Speaker 02: and sell it as something else they're still violating the injunction in breaching the settlement now you're correct the judge stole we can start a second patent infringement case when you contacted the university of virginia what they said we didn't contact them so we can ask the court with discovery was over we found a motion for relief from the protective order the discovery order asking for leave of court this is to be in preparation for the evidentiary hearing your lawyer you have a telephone well but they're listed in the [00:09:24] Speaker 02: Well, we didn't contact them. [00:09:27] Speaker 02: We wanted to go take their deposition. [00:09:28] Speaker 02: We found out about them in May. [00:09:30] Speaker 02: We had the evidentiary hearing in October, I believe it was. [00:09:33] Speaker 02: I understand what you're saying. [00:09:34] Speaker 02: I said, we want to go take the deposition. [00:09:37] Speaker 03: They didn't want us to interfere with their... Why take their deposition if nothing bad has happened? [00:09:41] Speaker 02: Well, I want to know if they're using the wave... Why don't you call them and ask them? [00:09:47] Speaker 02: That's probably a good question, right? [00:09:49] Speaker 03: I mean... It is probably a good question, like my last one. [00:09:53] Speaker 02: All right. [00:09:56] Speaker 02: We did not contact them. [00:09:57] Speaker 02: We chose to take discovery from them. [00:10:00] Speaker 02: And the discovery we got by the court order was... It seems like a waste. [00:10:04] Speaker 03: Well, it seems like a violation of rule one is what it seems like. [00:10:07] Speaker 02: I'm sorry. [00:10:08] Speaker 03: rule one of the federal rules of similar procedure. [00:10:12] Speaker 02: I don't have it. [00:10:13] Speaker 02: I don't understand what you're saying. [00:10:16] Speaker 02: We wanted to take discovery. [00:10:18] Speaker 02: We initially sought the discovery from ULC. [00:10:23] Speaker 02: Judge Zuri said you can have the documents, you can't take the deposition. [00:10:27] Speaker 02: He didn't say we couldn't contact them. [00:10:29] Speaker 02: We didn't ask for permission to contact them. [00:10:31] Speaker 02: We didn't want to interfere with their sales contracts either. [00:10:33] Speaker 02: We didn't want to [00:10:34] Speaker 02: have that issue facing us by contacting them and bragging their customer into the litigation without first getting them. [00:10:40] Speaker 03: You were going to depose them? [00:10:41] Speaker 03: Yes. [00:10:42] Speaker 03: And you think that's less disruptive? [00:10:46] Speaker 02: Well, we didn't have an argument. [00:10:49] Speaker 02: We're appealing his order by not allowing us to take the deposition or get discovery directly from the University of Virginia. [00:10:56] Speaker 02: Because we don't know. [00:10:58] Speaker 02: First of all, if they're selling the Wave 2.1 chair, [00:11:01] Speaker 02: to them as an assembled unit. [00:11:02] Speaker 02: They have to buy new cartons because these things come knocked down. [00:11:05] Speaker 02: They have to be assembled. [00:11:07] Speaker 02: And it's very easy to remove the pin. [00:11:09] Speaker 02: We saw the video, which is exhibit 33, I believe. [00:11:12] Speaker 01: Mr. Bontrager. [00:11:13] Speaker 01: You've got a fact finding to the contrary by the district court. [00:11:16] Speaker 01: I'm sorry? [00:11:17] Speaker 01: You have a contrary fact finding by the district court that it's not easy. [00:11:23] Speaker 02: Correct. [00:11:23] Speaker 02: I think the district court abused its discretion by not letting us proceed with a discovery against the third party University of Virginia. [00:11:31] Speaker 02: As I say, we don't know that the University of Virginia didn't remove the pin and is using the wave chair. [00:11:36] Speaker 02: Now, if the University of Virginia removed that pin and they took all those pin chairs and put it into their existing inventory of the wave chair and all the college dormitories, they got a $250 chair for $99 and they're using the wave chair. [00:11:51] Speaker 02: because there's no dispute that the pin-chair is identical in all respects, both in appearance and in function, to the Wave 2.1, which is subject to the injunction. [00:12:02] Speaker 03: You know what the Spartans said to Philip of Macedon? [00:12:06] Speaker 03: If. [00:12:06] Speaker 03: No, I don't. [00:12:09] Speaker 02: I don't know what you're referring to. [00:12:11] Speaker 03: You said if the University of Virginia. [00:12:14] Speaker 03: And then you went off on this parade of horribles. [00:12:16] Speaker 03: If. [00:12:18] Speaker 01: Okay. [00:12:21] Speaker 01: Aside from the sale of the chairs, how did they violate the settlement agreement? [00:12:25] Speaker 02: They violate the settlement agreement because they're selling in a non-authorized computer. [00:12:30] Speaker 02: No, no, no. [00:12:31] Speaker 02: Okay, I'm sorry. [00:12:31] Speaker 01: Aside from the sale of the chairs, what's the violation of the settlement agreement? [00:12:38] Speaker 02: With respect to the sale of the chair? [00:12:41] Speaker 02: No, any violation. [00:12:43] Speaker 02: OK, the other issues we bring here is they didn't delete all the images and references on the internet to all the enjoying chairs. [00:12:50] Speaker 01: OK, so the contract of settlement only requires reasonable efforts. [00:12:55] Speaker 01: What was unreasonable about what they did? [00:12:58] Speaker 02: Why was it not reasonable? [00:12:59] Speaker 02: Because they hired a person who, it's all outlined in the book. [00:13:02] Speaker 02: 20 pages of briefing. [00:13:04] Speaker 02: They had Mr. Shoemaker just look at his own website. [00:13:08] Speaker 02: They didn't go to Google. [00:13:09] Speaker 02: They didn't go to LinkedIn. [00:13:11] Speaker 02: They didn't go to Twitter. [00:13:11] Speaker 02: They didn't go to Facebook. [00:13:13] Speaker 01: No, no. [00:13:13] Speaker 01: You haven't established that. [00:13:15] Speaker 01: The record does not establish that. [00:13:16] Speaker 01: You don't even have any testimony that says that. [00:13:18] Speaker 02: Yes, they do. [00:13:19] Speaker 01: Where? [00:13:19] Speaker 02: It's in the transcript. [00:13:20] Speaker 01: Do you have it in the transcript? [00:13:21] Speaker 01: Where? [00:13:22] Speaker 01: I've read the transcript. [00:13:23] Speaker 01: I don't see it. [00:13:24] Speaker 01: How many images were left up? [00:13:27] Speaker 02: Four months later, we only found four, I believe it was, but they had 150 days from the date of the settlement agreement to wipe everything off the internet. [00:13:38] Speaker 03: How many were taken down? [00:13:40] Speaker 02: We don't know that number because Mr. Shoemaker couldn't tell us. [00:13:44] Speaker 02: We have some data to deposition and we have some data to trial, I believe, as well. [00:13:48] Speaker 01: If you look at the notice of first breach... Where is your evidence that they didn't comply with the settlement agreement with respect to third parties? [00:14:01] Speaker 02: It's in the notice of default and I can get that for you. [00:14:04] Speaker 01: No, I want to see the transcript. [00:14:07] Speaker 01: The notice of default isn't evidence of what they did. [00:14:11] Speaker 01: Where's the testimony that they didn't comply? [00:14:19] Speaker 03: three volumes of evidence. [00:14:21] Speaker 02: Yes, with the transcript of the evidence, it would be Mr. Schumacher's testimony testifying as to what he did and did not do. [00:14:32] Speaker 02: It was quite likely. [00:14:35] Speaker 02: But I'm sure you know it. [00:14:36] Speaker 02: I'm sorry? [00:14:37] Speaker 02: I'm sure you know it. [00:14:40] Speaker 02: I don't know the page numbers, if that's what you're asking for. [00:14:43] Speaker 02: But I know it's in the appendix. [00:14:46] Speaker 01: Yeah, there are three volumes of it. [00:14:50] Speaker 02: You can give me a moment. [00:14:51] Speaker 02: I believe the evidentiary hearing transcript begins on appendix 496. [00:15:10] Speaker 02: And Mr. Schumacher's testimony begins on page [00:15:29] Speaker 02: Let's see [00:15:32] Speaker 02: Mr. Bontrager went first. [00:15:34] Speaker 01: There's 1783. [00:15:35] Speaker 01: This is the testimony of Morsiniak. [00:15:40] Speaker 01: I'm sorry? [00:15:41] Speaker 01: This is the testimony of Morsiniak. [00:15:44] Speaker 01: He's asked a question. [00:15:45] Speaker 02: His was admitted by deposition. [00:15:48] Speaker 01: Okay, this is a deposition. [00:15:49] Speaker 01: All right. [00:15:49] Speaker 01: So, he... He testifies as to what... My question is, did somebody contact Sam's Club to delete the availability of the item? [00:15:55] Speaker 01: My presumption would be yes. [00:15:57] Speaker 01: I didn't follow up with that. [00:15:59] Speaker 01: and he says that Collins would have. [00:16:01] Speaker 01: There's no testimony that Collins didn't follow up. [00:16:06] Speaker 02: That what? [00:16:06] Speaker 02: I'm sorry, I didn't hear you. [00:16:07] Speaker 01: That there's no testimony that Collins didn't follow up with third parties. [00:16:12] Speaker 01: There's no testimony that they didn't contact the third parties. [00:16:16] Speaker 01: The only testimony is from this guy who says, I presume they did follow up with third parties. [00:16:21] Speaker 02: Well, Mr. Schumacher, if I could just find his section. [00:16:31] Speaker 02: I've outlined it in our brief with citations to the specific page. [00:16:35] Speaker 01: Well, maybe you can find it on the reply. [00:16:38] Speaker 02: I'm sorry? [00:16:39] Speaker 01: Find it on your repuddle. [00:16:40] Speaker 02: Okay, I will do that one, Mr. We'll give you two minutes for a repuddle. [00:16:50] Speaker 01: Mr. DeVos? [00:16:50] Speaker 04: Yes, thank you. [00:16:55] Speaker 04: Good morning, Your Honors. [00:16:56] Speaker 04: May it please the Court, my name is Tom DeVoe. [00:16:58] Speaker 04: I represent University Loft Company. [00:17:01] Speaker 04: I request reserve one minute for the cross-appeal on attorney's fees. [00:17:05] Speaker 01: Okay. [00:17:06] Speaker 04: So as we've already discussed here, the issue basically revolves around the sale of this pin chair in this case. [00:17:14] Speaker 04: And the settlement agreement only covers enjoined chairs. [00:17:17] Speaker 04: And the definition of enjoined chair is a convertible chair that qualifies as one of four enumerated versions. [00:17:24] Speaker 04: In other words, if it's a different version that's convertible, it's not covered by the settlement agreement. [00:17:28] Speaker 04: If it's a non-convertible chair, it's not covered by the settlement agreement. [00:17:32] Speaker 04: And the court correctly found, as a matter of fact, [00:17:35] Speaker 04: the pin chair does not qualify as a convertible chair, that it is a fixed chair. [00:17:40] Speaker 04: And that's what the facts established. [00:17:42] Speaker 04: And we're not here to relitigate that issue today, or we shouldn't be here to relitigate that issue today. [00:17:47] Speaker 03: Did both parties prevail? [00:17:49] Speaker 04: No, both parties did not prevail. [00:17:51] Speaker 04: This is a contract provision that says the prevailing party shall be entitled to their attorney's fees. [00:17:56] Speaker 04: It's not a statutory provision. [00:17:58] Speaker 04: It's not something that says may in the court's discretion. [00:18:00] Speaker 04: It's something that was bargained for by two commercial entities that have equal bargaining power. [00:18:06] Speaker 04: And it says the prevailing party gets their attorney's fees. [00:18:09] Speaker 04: And the court concluded that university loft, in good faith, [00:18:13] Speaker 04: complied with the agreement in full. [00:18:15] Speaker 04: And as a result, it was the prevailing party. [00:18:18] Speaker 04: And there is no dispute about that. [00:18:19] Speaker 04: There's no factual dispute about that. [00:18:20] Speaker 03: You say, as a result, the court found it was the prevailing party? [00:18:24] Speaker 04: No, the court found that there wasn't a prevailing party. [00:18:27] Speaker 04: And its reasoning was that both parties are prevailing in the sense that the loss is over. [00:18:34] Speaker 04: Well, that's not. [00:18:35] Speaker 04: That, of course, completely subverts the idea of a prevailing party. [00:18:39] Speaker 00: What is the standard for a prevailing party in Ohio? [00:18:43] Speaker 04: I believe our brief says that it's abuse of discretion. [00:18:46] Speaker 00: No, no. [00:18:46] Speaker 00: I mean, how do you know which party prevailed under Ohio law? [00:18:52] Speaker 04: The cases say that we cited, I believe say that... You both cite Nottingdale. [00:18:59] Speaker 04: If you win the majority of the case, if you win the core part of the case, then you should be the prevailing party. [00:19:07] Speaker 04: But we won the entire case. [00:19:09] Speaker 04: So, so it doesn't, I'm not even sure it really matters what the, what the standard is in terms of whether you win 10% or 20% or 80%, 70% or, or 55%. [00:19:17] Speaker 04: We won 100%. [00:19:18] Speaker 03: Even where there's an attorney's fees provision, the trial judge has a lot of discretion because they're right there, Johnny on the spot. [00:19:32] Speaker 03: And they're able to look at both parties and at least sometime that trial judge says to [00:19:39] Speaker 03: herself, you know, a plague on both your houses. [00:19:45] Speaker 03: Go away. [00:19:48] Speaker 03: And don't they have inherent authority to do that? [00:19:53] Speaker 03: Having been a trial judge for 16 years. [00:19:55] Speaker 03: Understood. [00:19:56] Speaker 04: But in this case, it actually was a provision in the contract the parties agreed to. [00:20:01] Speaker 04: And I would acknowledge that if there were some gray here in terms of who prevailed or who didn't. [00:20:09] Speaker 04: Some of the claims were broad, and it didn't prevail in all of them. [00:20:13] Speaker 04: But in this particular case, university law prevailed in every claim. [00:20:17] Speaker 04: And so I don't think there's any room [00:20:20] Speaker 04: to say that the judge, unless you're going to say the judge retains discretion without having to reference any facts, or it retains discretion apart from the parties have agreed, the prevailing party wins their fees, but the judge can just decide, without any reference to fact, but can just decide that I'm not going to award those fees. [00:20:43] Speaker 04: I would say that is maybe the one instance where you go beyond [00:20:47] Speaker 04: somebody's discretion, you're abusing your discretion. [00:20:49] Speaker 04: Ours is the situation where there really is no room for saying both sides prevailed. [00:20:55] Speaker 04: In most cases, there are. [00:20:57] Speaker 04: In most cases, there's an ability to hang your abuse of discretion hat on some factor of the case. [00:21:10] Speaker 04: Well, if that's the case, that's conjecture. [00:21:13] Speaker 04: Because the court said that the University of Lafayette, in good faith, complied with the agreement. [00:21:17] Speaker 04: And this was in the face of allegations of deliberate, willful, I mean, some pretty hyperbolic types of allegations. [00:21:25] Speaker 04: And the judge came to the exact opposite conclusion. [00:21:27] Speaker 04: The judge said, there's no deliberate violations here. [00:21:29] Speaker 04: There's no willful misconduct here. [00:21:32] Speaker 04: In fact, there's good faith conduct here. [00:21:34] Speaker 04: They did everything they were supposed to do under this agreement, and yet they're dragged to this [00:21:38] Speaker 04: to this forum again and appear on appeal. [00:21:42] Speaker 04: And so in that situation, I do think attorney's fees are warranted. [00:21:46] Speaker 04: And I think the judge's decision that both parties prevailed in the sense the lawsuit is over really is not a standard. [00:21:53] Speaker 04: Because that's true in every instance. [00:21:55] Speaker 04: When any case ends, the case is over. [00:21:58] Speaker 03: I'll say this. [00:21:59] Speaker 03: I think you can make that argument in good faith. [00:22:02] Speaker 03: I do. [00:22:03] Speaker 03: I'd probably make it if I was you. [00:22:06] Speaker 04: But I want to address a couple points made by opposing counsel, Sauter's counsel, in terms of the pin chair. [00:22:13] Speaker 04: They said, you know, picture. [00:22:14] Speaker 04: Well, the picture they present is half the picture, okay? [00:22:17] Speaker 04: The picture of the tray chair, which is Sauter's chair, and University of Loft's convertible chair, the wave chair. [00:22:23] Speaker 04: There's really two pictures. [00:22:24] Speaker 04: There's the picture of the office chair, and then there's the picture of the chair in its detached form, which is really what this case is all about, is about [00:22:31] Speaker 04: a chair that is detachable. [00:22:34] Speaker 04: If it's just an office chair, even if it's got rocket rails on it that don't function, that's not this case. [00:22:39] Speaker 04: This case involves convertibility. [00:22:42] Speaker 04: That's what the patent is about. [00:22:43] Speaker 04: That's what the dispute was about. [00:22:45] Speaker 04: And the picture would be a picture of both. [00:22:48] Speaker 04: in its assembled configuration and its detached configuration. [00:22:55] Speaker 04: That's the picture. [00:22:57] Speaker 04: So the picture of the pin chair did not in any respect represent or look like the solder chair when you take the full picture into account. [00:23:07] Speaker 04: On the issue of the fixed chair and discovery, the court found that University Lofton, in all of its communications with customers, that it was represented as a fixed chair and its intent was to sell it as a fixed chair. [00:23:23] Speaker 04: There was no evidence that anybody was removing or intended to remove the pins or even could or knew how to remove the pins. [00:23:30] Speaker 04: The judge ordered the request for discovery from University of Virginia came very late after discovery had already occurred and after mediation and the court rightfully found that look these are two competitors getting a customer involved in terms of formal discovery is an issue and [00:23:50] Speaker 04: And then also said, well, University Law, we're going to make you produce every communication you have with your customers on this issue. [00:23:57] Speaker 04: And we did. [00:23:58] Speaker 04: And there's no allegation to the contrary. [00:24:00] Speaker 04: And the court said, through those communications, a solder can determine whether they think this is a farce or not. [00:24:07] Speaker 04: And clearly, it was not a farce. [00:24:10] Speaker 04: So in that respect, again, there was full compliance. [00:24:13] Speaker 04: And there is no need [00:24:15] Speaker 04: to reverse on the discovery issue. [00:24:19] Speaker 04: In terms of the removal of the images, again, Sartre's allegations all through the case and even in its appellate brief. [00:24:26] Speaker 04: was that we did nothing. [00:24:28] Speaker 04: I mean, they literally say, we did nothing to remove these images. [00:24:32] Speaker 04: And that's just not supported by the facts at all. [00:24:35] Speaker 04: And they hired an outside entity to remove these. [00:24:40] Speaker 04: The entity spent hours and hours and hours doing it, went word searches page by page, 450 pages on the website, 600 pages on the [00:24:50] Speaker 04: on blogs, going through blog entries from five years ago, page by page, looking for references to the enjoined chairs and moving them. [00:24:59] Speaker 04: And then Sauter did its own investigation before the 150 days was up. [00:25:05] Speaker 04: 17 hours, 17 and a half hours, the CEO of Sauter spent a lot of time, 17 hours, trying to figure out if he could find additional images. [00:25:14] Speaker 04: And he found some. [00:25:15] Speaker 04: And he presented it to University of Loft. [00:25:17] Speaker 04: It was an exhaustive list. [00:25:18] Speaker 04: It was his list. [00:25:19] Speaker 04: And they removed all those within seven days. [00:25:22] Speaker 04: The agreement has a seven-day cure period. [00:25:23] Speaker 04: No violation of the agreement. [00:25:25] Speaker 04: But they didn't stop there. [00:25:26] Speaker 04: That should have ended the case. [00:25:27] Speaker 04: We shouldn't be here. [00:25:29] Speaker 04: Right? [00:25:29] Speaker 04: That's what the original complaint was about. [00:25:31] Speaker 04: I agree with that. [00:25:32] Speaker 04: We shouldn't be here. [00:25:33] Speaker 04: And then they went out and spent dozens of more hours trying to find additional images, going through a side door in the University of Lafayette, basically into its upload directory. [00:25:43] Speaker 04: And the issue of the modified share, that didn't even come until later, until they'd done discovery. [00:25:47] Speaker 04: And actually, the University of Lafayette, actually, Judge Zuhari said, if the University of Lafayette had brought it to their attention, maybe it could have been resolved. [00:25:53] Speaker 04: I actually brought it to their attention in our response to their notice, their first notice, and said, [00:25:59] Speaker 04: Please understand, avoid any misunderstanding. [00:26:01] Speaker 04: Here's what we're going to do with this chair. [00:26:02] Speaker 04: We're going to insert this pen and disable it. [00:26:05] Speaker 04: So they were... Where's that in the record? [00:26:07] Speaker 04: It is in the record. [00:26:07] Speaker 03: Yeah. [00:26:08] Speaker 03: Where is it? [00:26:09] Speaker 03: It is... I didn't notice that. [00:26:12] Speaker 03: I didn't. [00:26:13] Speaker 04: Yeah. [00:26:13] Speaker 04: So in University of the Law's response to Sauder's first notice, I believe it is at Apex 1590 and 91. [00:26:23] Speaker 04: Okay. [00:26:25] Speaker 04: In that response, there is a paragraph that says, please understand, to avoid any misunderstandings, we're going to make this a fixed chair. [00:26:38] Speaker 04: At that point, there hadn't been any sale to University of Virginia or University of Dayton, which is basically where this inventory went. [00:26:46] Speaker 04: You know, another point to be made is sort of the academic nature of this, and that is there was no allegation of lost sales here or harm in terms of lost sales by Sauter. [00:26:58] Speaker 04: The inventory's gone. [00:26:59] Speaker 04: It was sold long ago. [00:27:00] Speaker 04: And so this is kind of an academic argument about whether the pin chair violates something or not, because they didn't suffer any harm as a result. [00:27:13] Speaker 04: So that [00:27:15] Speaker 04: Basically, I would say, you know, after University Loft had removed the images, Sauter agreed that those images had been removed and he went out and tried to find additional ones. [00:27:28] Speaker 04: At that point, University Loft had satisfied its reasonable steps, reasonable efforts to remove the images, and that's what Judge Zuhari found. [00:27:36] Speaker 04: And there are certainly sufficient facts to support that. [00:27:39] Speaker 04: So that is, I believe I've already discussed the issue on the cross-appeal, and I think I guess I would close my side with sort of this point. [00:27:52] Speaker 04: I think this case to me represents a situation where Sauder sort of engaged in this relentless effort to find any kind of breach they could. [00:28:01] Speaker 04: Regardless of the facts, they were going to find a breach and they were going to pursue this no matter what. [00:28:05] Speaker 04: They were going to try to. [00:28:07] Speaker 04: And so they sent this letter, this first notice, after the 150 days. [00:28:12] Speaker 04: It said a sale was pending, which wasn't. [00:28:15] Speaker 04: They had actually tried to make that sale, and it was not pending. [00:28:18] Speaker 04: It had been canceled the same day that they made that. [00:28:20] Speaker 04: It was through some entity called Rock By that University of Lafayette had never heard of on Amazon. [00:28:25] Speaker 04: And yet it wound up in their first notice that there was this pending sale, which there wasn't. [00:28:31] Speaker 04: And then it made a reference to these images. [00:28:33] Speaker 04: It made a reference to Sam's Club. [00:28:37] Speaker 04: The picture on there was years old and said it was out of stock and was not available. [00:28:41] Speaker 04: And then it made a reference to these images that were [00:28:44] Speaker 04: that they had found through 17 hours of looking on the Internet, and those were promptly removed. [00:28:50] Speaker 04: That should have solved this case, and that should have been the end of this case. [00:28:53] Speaker 04: But they asked for discovery over our objection. [00:28:56] Speaker 04: Court granted it, and there was extensive discovery engaged, and there was requests for admissions, document production, interrogatories, depositions. [00:29:03] Speaker 04: I mean, the whole gamut was engaged, and we had to go through that and incur fees to respond to this, even though we knew there was no basis for this lawsuit. [00:29:11] Speaker 04: And so then the second notice came as a result of the discovery that shouldn't have been had in the first place. [00:29:18] Speaker 04: And this, I think, relates to the fees. [00:29:21] Speaker 04: We spent a lot of money defending this case when there really was no basis for pursuing this in the first place. [00:29:26] Speaker 04: And no matter what the facts said, the allegations continued to be deliberate, willful, outrageous behavior by university law. [00:29:38] Speaker 04: And the court just said that's just not true. [00:29:41] Speaker 04: I'm just going to reject that. [00:29:43] Speaker 04: I'll give you this. [00:29:45] Speaker 03: I practiced law for a while, too. [00:29:48] Speaker 03: And there were points at which a client would say, I want to do this. [00:29:52] Speaker 03: And I'd say to them, you can do that. [00:29:57] Speaker 03: because a lawyer is the safety on the weapon of the law. [00:30:06] Speaker 03: That's what rule 11 is about. [00:30:08] Speaker 04: I'll give you that much. [00:30:10] Speaker 04: Well, and I think the governor on that behavior, too, is the attorney's fees provision, right? [00:30:16] Speaker 04: So if you're going to pursue a claim like that and you lose, you have to pay the fees for pursuing that claim. [00:30:22] Speaker 04: Yeah, the court didn't find rule 11. [00:30:26] Speaker 04: court. [00:30:29] Speaker 04: And I think that again, I think that that was an abuse of discretion, particularly because what's that? [00:30:37] Speaker 04: Did you bring a role? [00:30:38] Speaker 04: No. [00:30:42] Speaker 04: Midwestern lawyers. [00:30:44] Speaker 04: Um, the, uh, uh, so that's, that's our case. [00:30:49] Speaker 04: Any questions? [00:30:50] Speaker 04: I deserve my one [00:30:56] Speaker 01: Mr. Jacob? [00:31:03] Speaker 02: To respond to Judge Wallach's request, the testimony from Brad Shoemaker with references to the appendix are found at pages 41 to 42 of our first brief and pages 9 through 13 of our reply brief. [00:31:22] Speaker 01: Where is the testimony? [00:31:24] Speaker 01: The appendix. [00:31:25] Speaker 02: Oh, but the reference is the transcript page. [00:31:27] Speaker 01: Here in the appendix is the testimony. [00:31:30] Speaker 02: Okay, I can read all the appendix pages, right? [00:31:32] Speaker 01: No, I don't. [00:31:33] Speaker 01: Just tell me. [00:31:34] Speaker 02: Okay. [00:31:34] Speaker 01: Give us the best page you've got. [00:31:36] Speaker 02: It's Appendix 606 to 608 page, 609. [00:31:40] Speaker 01: 606, I was just, okay. [00:31:42] Speaker 01: What does it say? [00:31:45] Speaker 02: I thought you just wondered where I had a list of the pages. [00:31:47] Speaker 02: No. [00:31:47] Speaker 02: Okay, I'm sorry. [00:31:50] Speaker 03: We asked you for an appendix site, Council. [00:31:52] Speaker 02: Okay. [00:31:54] Speaker 03: 606 to 608. [00:31:59] Speaker 02: And 609. [00:31:59] Speaker 01: Where does he say the third parties were not in the way of us? [00:32:09] Speaker 02: He did not use any search engines, for example, Google or Bing, to access the ULC website directly or indirectly. [00:32:16] Speaker 02: That's in Appendix 609 and 610. [00:32:19] Speaker 02: He admitted there was still public access to the images and blogs in Appendix 598 and 599. [00:32:24] Speaker 01: That's like the same thing. [00:32:25] Speaker 01: The question is, who is this guy, first of all? [00:32:29] Speaker 02: He is the outside IT person that was hired. [00:32:32] Speaker 01: OK, so where does he say no third parties were notified? [00:32:38] Speaker 02: Let me think. [00:32:41] Speaker 02: Mr. Marciniak said that and I can show you if that's in his deposition. [00:32:45] Speaker 02: Some third parties were not hired. [00:32:48] Speaker 01: I contacted... I showed you the testimony earlier where he said I presume they were notified. [00:32:54] Speaker 02: I'm sorry, I can't hear you, Judge. [00:32:55] Speaker 01: I pointed you to his testimony earlier where he said I presume they were notified. [00:33:02] Speaker 01: He didn't say they weren't notified. [00:33:05] Speaker 02: but he also goes on in his testimony to say the ones he did not contact there was one specific he said he didn't contact him and have the credentials he didn't contact him, he said it was Mr. Collins' job to contact him Mr. who? [00:33:18] Speaker 01: Collins [00:33:20] Speaker 01: I don't know. [00:33:20] Speaker 01: Never mind. [00:33:21] Speaker 02: There's Mr. Marciniak and there's Mr. Shoemaker. [00:33:24] Speaker 01: Let's turn to the attorney's fees. [00:33:27] Speaker 01: Why, in the light of this specific contract provision, are they not entitled to their attorney's fees? [00:33:33] Speaker 02: Well, because they didn't do it timely, and they only did it after... What was untimely about it? [00:33:38] Speaker 02: Well, all throughout our brief, we have references to what they did do during the first 150 days and what they did not do. [00:33:46] Speaker 03: Oh, no. [00:33:47] Speaker 03: There's an attorney's fees provision in the contract. [00:33:51] Speaker 03: It says that if there's a suit under that contract, the prevailing party gets their attorney's fees. [00:33:58] Speaker 03: What's untimely about their request to the court after? [00:34:02] Speaker 02: There's nothing untimely about their request. [00:34:06] Speaker 01: Then you answer the question. [00:34:07] Speaker 01: So why shouldn't they have their fees? [00:34:09] Speaker 02: Because they are not, in my opinion, the prevailing party, because they didn't comply with the judges' hurry on his, in his opinion, even noted images still remain. [00:34:21] Speaker 02: But by June of 2018, after we sent two notices of default and listing off the images that still remain, they then responded to our notices and took them off. [00:34:33] Speaker 02: And they ignore, in that argument, [00:34:35] Speaker 02: that it's their firm of obligation to go out and do it. [00:34:38] Speaker 00: The judge did not rule for you on any of the issues that you raised. [00:34:44] Speaker 00: How can you say that they are not the prevailing court? [00:34:47] Speaker 02: Because they didn't prevail on every issue they brought before the court. [00:34:49] Speaker 02: They only prevailed in part. [00:34:53] Speaker 01: What is it they didn't prevail on? [00:34:55] Speaker 02: Well, they got our petition dismissed. [00:34:59] Speaker 02: So if that is a full, my understanding of the law, [00:35:02] Speaker 02: is you can prevail in part and not, you can still win a case and not prevail in every issue. [00:35:08] Speaker 03: Let me ask you the opposite. [00:35:09] Speaker 03: Sure. [00:35:09] Speaker 03: On what did you prevail? [00:35:12] Speaker 02: We didn't. [00:35:12] Speaker 02: We didn't ask for attorney fees. [00:35:15] Speaker 02: We put our attorney fees in because it was part of our prayer of relief, but we didn't file, there was no post filing motions on them. [00:35:21] Speaker 03: On what? [00:35:22] Speaker 02: Attorney fees. [00:35:24] Speaker 03: And you did not prevail on it. [00:35:26] Speaker 02: No. [00:35:26] Speaker 02: Well, we didn't have a separate motion for it. [00:35:28] Speaker 03: I asked you on what you prevailed and you've said nothing. [00:35:32] Speaker 03: Okay. [00:35:34] Speaker 03: Okay. [00:35:34] Speaker 02: Okay. [00:35:34] Speaker 02: Thank you. [00:35:35] Speaker 02: Thank you. [00:35:36] Speaker 02: Well, the one other comment I'd like to make, I don't know. [00:35:42] Speaker 01: Mr. Devote. [00:35:45] Speaker 01: Okay. [00:35:45] Speaker 01: Thank both counsel. [00:35:46] Speaker 01: The case is submitted concludes our session for this morning.