[00:00:00] Speaker 01:
chaos here.

[00:00:01] Speaker 01:
The next case for argument is 18-1197, Granetics versus Cisco.

[00:00:08] Speaker 01:
This really throws us off, Mr. Lee, when you're coming from the other direction, but we'll try to keep it straight.

[00:00:24] Speaker 02:
I thought I could start, Your Honor, by saying I'm still Bill Lee, but I am.

[00:00:28] Speaker 02:
And with my

[00:00:29] Speaker 02:
partner Lauren Fletcher, I represent Apple.

[00:00:32] Speaker 02:
I'd like to focus our argument time today on three errors.

[00:00:36] Speaker 01:
Can I, before you get into that, so I won't have to interrupt you, I'm assuming you haven't made any arguments, so I don't want to create a new one, I just want to confirm that's not an issue before us, is if we were to

[00:00:49] Speaker 01:
conclude, let's say for example, that the Cisco re-exam lives after the appeal we just read.

[00:00:58] Speaker 01:
There's still, we're confirming, we're getting rid of one of the patents here that was a subject of damages, but I'm assuming that everybody has assumed they all rise and fall together and so even though if one patent

[00:01:10] Speaker 01:
is gone in the earlier re-exam case, that doesn't affect the damages here.

[00:01:14] Speaker 02:
Yeah.

[00:01:15] Speaker 02:
Actually, two parts to the answer to the question.

[00:01:18] Speaker 01:
You want me to see on the question?

[00:01:19] Speaker 02:
Yes, I do.

[00:01:20] Speaker 02:
There is, for the other system, for the other pet not addressed by the Cisco re-exam, there is another re-exam that's being briefed to the court right now for that pet, for the 511 pet that will come to the court.

[00:01:31] Speaker 02:
So it's on its way.

[00:01:33] Speaker 02:
But to answer your question precisely, no one is contesting the royalty rate.

[00:01:39] Speaker 02:
across the patents, it would probably have to be a remand for determination of the number of units to which it applied, because there are different products at different periods of time that might have infringed the different claims.

[00:01:51] Speaker 02:
And so I think, as I'm trying to be as precise as I can, you have to sort of distinguish between rate, which no one can test it across the patents, and the question of the units to which they apply, because they will differ by time period.

[00:02:03] Speaker 04:
Wait.

[00:02:04] Speaker 04:
I don't understand that.

[00:02:06] Speaker 04:
I don't understand.

[00:02:06] Speaker 04:
And you didn't make that argument in your briefs.

[00:02:09] Speaker 04:
It's clearly teed up to you, because the only argument being made in the re-exams is that there's final, and those two should go away, basically.

[00:02:19] Speaker 04:
But one, on Cisco, I mean, they're making arguments on the merits, but they haven't made arguments related to final decision on that.

[00:02:25] Speaker 04:
So then when we're talking about district court, I don't see anywhere in your brief any sort of claim

[00:02:30] Speaker 04:
And show me if I'm wrong where that there ought to be a remand if we do in the other reexample.

[00:02:39] Speaker 02:
Your Honor, that issue is not, the issue addressed in these briefs are what happens if the court decides that Mr. Weinstein's second go with the damages is equally inadmissible.

[00:02:51] Speaker 02:
And if that, to go back to Judge Pro's question from the last argument, that would result in a remand.

[00:02:57] Speaker 02:
We did not address the question, I don't think any of us did.

[00:03:00] Speaker 02:
of what happens if you take the collection of these three appeals that you've heard today, and there's a variety of different possible results.

[00:03:07] Speaker 02:
If the first two were affirmed, then this case would become moot.

[00:03:13] Speaker 02:
If one case was, if the IPR case was reversed for some reason, but the re-exams were affirmed, that's in other circumstances.

[00:03:23] Speaker 02:
No one has, and then to go to your question, Judge Prost,

[00:03:27] Speaker 01:
Which I'm now very sorry I asked.

[00:03:30] Speaker 02:
Me too.

[00:03:30] Speaker 02:
Me too.

[00:03:31] Speaker 02:
So the answer is, did either of us say here are the different permutations and combinations and here are the possibilities?

[00:03:38] Speaker 02:
No.

[00:03:39] Speaker 02:
What we said is that if the damages were incorrect, they would have to be remanded for determination.

[00:03:44] Speaker 02:
The question of how these work together, remember at the time of the briefing, some of these, we didn't know we were all going to be here on the same day.

[00:03:52] Speaker 01:
Okay.

[00:03:52] Speaker 01:
And we'll ask if Mr. Lampkin can remember, even if I don't, to just take a couple minutes at the beginning to address that point.

[00:03:58] Speaker 02:
Okay.

[00:03:58] Speaker 02:
I'm sorry.

[00:03:59] Speaker 02:
So the three questions I'd like to focus on are the claim, the Court's claim construction of anonymity and the infringement judgment based upon FaceTime.

[00:04:08] Speaker 02:
Second, Mr. Weinstein's second pass at damages and the question of whether he has apportioned them or whatever you call what he's done, whether he's given you a reliable and

[00:04:22] Speaker 02:
sufficiently robust damages theory that it should have been admissible.

[00:04:27] Speaker 02:
And third, the question of the submissibility of the $1.3 billion number, which is supposedly a design-around number, but a number that was not used in the damages computation and really was used to prove infringement.

[00:04:40] Speaker 03:
Let me ask you a question about this last issue.

[00:04:42] Speaker 03:
Did the court

[00:04:43] Speaker 03:
in order or say that the $1.3 billion redesigned figure was not to be put before the jury?

[00:04:50] Speaker 02:
Gershengorn.

[00:04:50] Speaker 02:
Yes.

[00:04:50] Speaker 02:
Your Honor, the answer is yes.

[00:04:53] Speaker 02:
He instructed that the issue was not that it wasn't to be put before the jury, but the information was to come in as relevant to damages.

[00:05:03] Speaker 02:
Now, you know, there are some.

[00:05:05] Speaker 03:
Kennedy Do I understand this correctly, that the $1.3 billion figure was actually never made part of the methodology for damages?

[00:05:13] Speaker 02:
You're 100 percent correct.

[00:05:15] Speaker 02:
And so, Your Honor, to go to that issue precisely, the $1.3 billion number, an alleged design-around number, was never used by Mr. Weinstein in his Georgia-Pacific analysis, was never made a basis for his opinion.

[00:05:29] Speaker 02:
The only thing he did is put it out there because it was a check, a unilock check on his $300 million number.

[00:05:38] Speaker 02:
The second is he's not the person who computed the $1.3 billion number.

[00:05:43] Speaker 02:
the person who did, Mr. Jones, never put it into evidence.

[00:05:48] Speaker 02:
And Dr. Mr. Weinstein, you know, knew nothing other than the number.

[00:05:53] Speaker 02:
But probably never put what into evidence?

[00:05:56] Speaker 02:
The $1.3 billion number.

[00:05:58] Speaker 02:
So it came in through Weinstein.

[00:05:59] Speaker 02:
It came in through Weinstein just saying it, and then on cross saying it comes from Mr. Jones.

[00:06:04] Speaker 02:
And then I think the most important thing, Your Honor, to go to your question about the instruction and what was done with it, Vernetics opened on the number.

[00:06:13] Speaker 02:
asked every technical expert about the design around, it closed on it.

[00:06:19] Speaker 02:
This jury was allowed to ask questions of the witnesses.

[00:06:23] Speaker 02:
There was only one question asked during the entire trial.

[00:06:27] Speaker 02:
And that question was to our technical expert, and it was, why did Apple design around?

[00:06:33] Speaker 02:
If the court looks at the pages that follow, the answer is a technical one, and then Vernetics gets up and does a cross-examination that goes to infringement.

[00:06:42] Speaker 01:
Yeah, but let's assume, so let's assume though that the judge issued a curative instruction, and there are plenty of cases where even if we accept everything you're saying, we can say, yeah, and those things happen, and there was clear curative instruction going to the infringement.

[00:06:57] Speaker 01:
What confuses me is that instruction says it's not for infringement, it's for damages.

[00:07:04] Speaker 01:
And now Vernettix is telling us that they didn't use it for damages.

[00:07:08] Speaker 01:
So if I'm the jury hearing that instruction and the judge is telling me it's not for infringement or for damages, how is anybody arguing that it would have been used for damages?

[00:07:18] Speaker 01:
I thought the argument was that it wasn't used for damages.

[00:07:21] Speaker 02:
So.

[00:07:21] Speaker 02:
The argument's, you're correct.

[00:07:23] Speaker 02:
I mean, we said the number had no place in the case because it was, it didn't

[00:07:30] Speaker 02:
was not part of Mr. Weinstein's damages theory.

[00:07:33] Speaker 02:
To the extent that design arounds can be part of a Georgia-Pacific analysis, to go to Judge Rainier's question, it was not used for that purpose.

[00:07:40] Speaker 02:
His analysis, which is the six licenses and some... Right.

[00:07:45] Speaker 02:
He said, in fact, that he's not using it.

[00:07:46] Speaker 02:
He's not using it.

[00:07:47] Speaker 02:
And so, at the end of the day,

[00:07:49] Speaker 02:
the argument that it should come in was that it was relevant to damages.

[00:07:53] Speaker 02:
It was not relevant to damages.

[00:07:55] Speaker 02:
It should never have come in.

[00:07:56] Speaker 01:
But most of the discussion by Mr. Weinstein came on cross from you all.

[00:07:59] Speaker 01:
You can't blame vernetics for that, right?

[00:08:01] Speaker 02:
Well, Your Honor, I don't think you can blame our trial, Laura, for that, because once it's in, you have to try to address it.

[00:08:07] Speaker 02:
I mean, you try to keep evidence like this out, which we did.

[00:08:11] Speaker 02:
You try to keep it limited, which we did.

[00:08:14] Speaker 02:
But if you think about the fact that it's used as an opening

[00:08:19] Speaker 02:
on an infringement issue.

[00:08:21] Speaker 02:
It's used in the evidence with every technical expert, right?

[00:08:25] Speaker 02:
Not just a different.

[00:08:26] Speaker 01:
Yes.

[00:08:26] Speaker 01:
Okay.

[00:08:26] Speaker 01:
Well, here's my question, and here's, I think, part of the response from the other side to that.

[00:08:31] Speaker 01:
And, you know, a jury is a black box, and we don't know what they did or whatever.

[00:08:34] Speaker 01:
Right.

[00:08:34] Speaker 01:
But in this case, we have a pretty good idea how they got to the damages calculation, because it happens to be precisely the number of 302 million, et cetera, et cetera, that Dr. Weinstein was giving

[00:08:47] Speaker 01:
for the use of the licenses.

[00:08:49] Speaker 01:
So whatever you say, there's certainly sufficient record evidence to support where the jury got that number, which doesn't include anything about the 1.3 billion.

[00:09:02] Speaker 01:
So even if we're troubled about the 1.3 billion, can't we be pretty secure where the jury came up with its number and has nothing to do with that?

[00:09:11] Speaker 02:
The answer, Your Honor, is there are two answers to your question.

[00:09:14] Speaker 02:
The first is you can be secure as to where they got their number.

[00:09:17] Speaker 02:
You cannot be secure that the $1.3 billion had nothing to do with their accepting that number.

[00:09:23] Speaker 02:
The two numbers that were before... We say nothing to do with their accepting it.

[00:09:25] Speaker 04:
For what purpose?

[00:09:26] Speaker 04:
You've argued, I think, unless I'm mistaken, that you're worried they used that number to conclude that you conceded infringement, right?

[00:09:35] Speaker 04:
Isn't that what you've argued to us?

[00:09:36] Speaker 02:
We said two things.

[00:09:37] Speaker 02:
We said that it was used to basically suggest that we conceded infringement.

[00:09:41] Speaker 04:
So one of the aspects of why you think this number of being introduced to the jury is prejudicial is you think it will impact their infringement determination, correct?

[00:09:49] Speaker 05:
True.

[00:09:50] Speaker 04:
Okay.

[00:09:50] Speaker 04:
So the judge gave a curative instruction on that expressly, didn't it?

[00:09:56] Speaker 02:
Didn't he or she?

[00:09:57] Speaker 02:
He gave the instruction that Judge Rainier identified, but Your Honor, there are some things

[00:10:01] Speaker 02:
that an instruction is not going to cure.

[00:10:03] Speaker 01:
But let's assume we don't buy that.

[00:10:05] Speaker 01:
So did you make the argument that, alternatively, even if it were just used for damages, it was still improper?

[00:10:14] Speaker 02:
Yes.

[00:10:14] Speaker 02:
And that's what I was trying to answer to your question, Judge Prost.

[00:10:17] Speaker 02:
Where did you make that argument?

[00:10:20] Speaker 02:
I don't have it off the top of my head.

[00:10:22] Speaker 02:
I can get it for you.

[00:10:23] Speaker 02:
But we made the argument that.

[00:10:24] Speaker 04:
OK, before your rebuttal.

[00:10:25] Speaker 02:
No, it's in our opening brief.

[00:10:27] Speaker 02:
In our opening brief, we said that the 1.3

[00:10:29] Speaker 02:
billion dollars was used to make, to go to the second half of my answer to Judge Prost's question if I could finish the thought.

[00:10:36] Speaker 02:
Our number was 10 cents a unit, the Microsoft license.

[00:10:40] Speaker 02:
Their number, our number would have come to about 30 million dollars or so.

[00:10:45] Speaker 02:
That's the Microsoft license.

[00:10:46] Speaker 04:
But I guess Judge Prost's point is the jury came up with exactly the number that followed the damages experts' analysis identically, and that was the number they came up with.

[00:10:58] Speaker 04:
So it doesn't appear as though the jury used that $1.3 billion number at all.

[00:11:05] Speaker 04:
Why do we need to be concerned?

[00:11:06] Speaker 04:
You're saying it deprived of a fair trial on damages, but the jury adopted almost exactly what the expert articulated.

[00:11:14] Speaker 04:
Actually, exactly, not almost exactly.

[00:11:16] Speaker 04:
And I don't understand.

[00:11:18] Speaker 02:
Well, Your Honor, this court has addressed this issue.

[00:11:21] Speaker 02:
It's precisely the principle that you addressed in UNLOC, which is,

[00:11:25] Speaker 02:
If you have competing damages numbers, one's $30 million, one's $300 million.

[00:11:30] Speaker 02:
And incidentally, the $300 million is very close to the unapportioned number that you addressed in Fernetics 1.

[00:11:38] Speaker 02:
You have these two competing numbers.

[00:11:39] Speaker 02:
The jury is trying to decide which one is reasonable.

[00:11:43] Speaker 02:
And what Unilock said is you can't put in these big sales numbers, these big other numbers, that's going to make your $300 million number look reasonable.

[00:11:50] Speaker 02:
That's the president.

[00:11:51] Speaker 04:
How do we expressly hold in Douglas Dynamics

[00:11:54] Speaker 04:
that availability of non-infringing alternatives and the cost thereof is relevant to a damages analysis?

[00:12:01] Speaker 02:
Absolutely, 100%, Your Honor.

[00:12:02] Speaker 04:
So we've held that this kind of number is relevant.

[00:12:05] Speaker 04:
The district court issued a curative instruction saying, jury, don't use it for infringement.

[00:12:10] Speaker 04:
We have a jury determination on damages, which maps identically to an expert's articulation of how damages should be calculated, which didn't even use this number.

[00:12:19] Speaker 04:
I'm at a loss.

[00:12:20] Speaker 04:
I mean, we talked a lot about prejudice earlier today in one of your earlier cases.

[00:12:24] Speaker 04:
I'm at a loss for how you can convince me that there's an abuse of discretion here.

[00:12:29] Speaker 04:
And that's what you have to convince me of for this.

[00:12:32] Speaker 02:
Well, Your Honor, respectfully, the place I would disagree with the logic that you just offered is that the... It has three parts.

[00:12:40] Speaker 02:
Yeah.

[00:12:41] Speaker 02:
It's the first part.

[00:12:42] Speaker 02:
Okay.

[00:12:43] Speaker 02:
And the first part is this.

[00:12:45] Speaker 02:
You're right.

[00:12:46] Speaker 02:
You're 100 percent right that the cost of a non-infringing alternative could be used

[00:12:52] Speaker 02:
in a Georgia Pacific analysis.

[00:12:55] Speaker 02:
It wasn't, in this case.

[00:12:58] Speaker 02:
Not at all.

[00:12:59] Speaker 02:
They conceded.

[00:13:00] Speaker 02:
It's not the basis for the dispute.

[00:13:02] Speaker 04:
So that the reason, you know, I, the place that I would quarrel with logic is... So is your view any time anything is introduced that turns out not to be utilized by the expert in assessing the Georgia Pacific factors, it's absolutely off the table?

[00:13:18] Speaker 02:
It should come into evidence.

[00:13:20] Speaker 02:
It should not come into evidence, and under unilocked, if it's a number that is so extreme.

[00:13:25] Speaker 02:
I mean, remember in this case.

[00:13:27] Speaker 04:
But the jury didn't calculate anything based on it.

[00:13:30] Speaker 02:
Your Honor, remember in this case, we, in Vernetics 1 in 2014, we have a $360 million damage number, which this Court said was unapportioned.

[00:13:41] Speaker 02:
We go back down with very express instructions from this Court in the opinion on what should be done to apportion.

[00:13:48] Speaker 02:
And instead,

[00:13:49] Speaker 02:
We just took basically four of the six same licenses, redid the math.

[00:13:54] Speaker 02:
Five of them are for small amounts that are litigation settlements with tiny, tiny numbers.

[00:13:59] Speaker 01:
Yeah, the problem with that is there's a mix up in the briefs, and it's nobody's fault.

[00:14:05] Speaker 01:
But we keep going back and forth between apportionment and comparability of the licenses.

[00:14:09] Speaker 01:
And it seems to me you're moving to damages and away from what's 1.3 billion.

[00:14:14] Speaker 01:
It seems to me most of your arguments, and maybe they're very good.

[00:14:19] Speaker 01:
If I had been on the jury, maybe I would have bought them, which is these licenses were not comparable enough to be using the numbers in those licenses for this case.

[00:14:29] Speaker 01:
But isn't that a question for the jury?

[00:14:33] Speaker 01:
The jury had that question.

[00:14:34] Speaker 01:
It obviously believed there was sufficient basis to say, well, the licenses are good enough to adopt Dr. Weinstein's calculations.

[00:14:44] Speaker 01:
and aren't we sort of, aren't our hands tied in what we can do with that?

[00:14:48] Speaker 02:
You know, absolutely, absolutely not, Your Honor.

[00:14:50] Speaker 02:
Now, let me start at the beginning.

[00:14:51] Speaker 02:
There was, without a doubt, some of the issues that go to comparability of licenses and some of the issues that go to the question of whether the proportion overlap.

[00:15:01] Speaker 02:
Not so much because they always overlap, but because given the specific methodology that was used by Mr. Weinstein, they will overlap.

[00:15:09] Speaker 01:
But in using comparable licenses,

[00:15:13] Speaker 01:
Is the apportionment problem, because they too relied on the value, the base of which the numbers were derived from, include?

[00:15:22] Speaker 01:
Is that your argument on apportionment?

[00:15:23] Speaker 02:
No.

[00:15:25] Speaker 02:
The argument actually on apportionment, Your Honor, is if I turn you to page 21 of our brief, and I do that only because the information of the page is confidential, these are

[00:15:34] Speaker 02:
And I know over my time, but if I could finish this thought.

[00:15:36] Speaker 01:
No, no, no.

[00:15:37] Speaker 01:
We're going to cover these.

[00:15:38] Speaker 01:
Okay.

[00:15:40] Speaker 02:
If I would turn you to page 21 of our brief, these are the six licenses.

[00:15:47] Speaker 02:
And to be very clear on what was done, five of the six licenses are the same type of licenses you addressed in Burnett X1.

[00:15:54] Speaker 02:
They are running royalty rates on the full price of the products.

[00:15:59] Speaker 02:
Everything, Microsoft is the only lump sum.

[00:16:03] Speaker 02:
Everything else is different.

[00:16:05] Speaker 02:
All that Mr. Weinstein did is take the total number of products, the total dollars, divide one into the other, come up with a royalty rate, and then come up with an unweighted average.

[00:16:17] Speaker 01:
Just average them so that the license that is passed from... No, I understand that, but how does this go to my question, which maybe I'm just not understanding, is your objection

[00:16:28] Speaker 01:
to the individual licenses having, is your apportionment, I want to know what your apportionment is.

[00:16:33] Speaker 02:
The answer, Your Honor, is this, which is that, and I'll come back to the licenses, the answer is if you look at this, this methodology, which has a magnitude variation in what the per unit royalty rate is, is not an apportionment.

[00:16:49] Speaker 02:
It has nothing to do with the value of the patents.

[00:16:53] Speaker 01:
Is that because the licenses have different and more patents?

[00:16:57] Speaker 02:
No, actually, it's a number of different reasons.

[00:17:02] Speaker 02:
And this is where they overlap.

[00:17:03] Speaker 01:
That's right.

[00:17:04] Speaker 02:
Right?

[00:17:04] Speaker 02:
The licenses involve different patents, but they also involve different products, different periods of time.

[00:17:10] Speaker 01:
But most importantly... How is that not a comparability issue?

[00:17:14] Speaker 02:
Your Honor... I'm still trying to get to the heart of your abortion.

[00:17:17] Speaker 02:
Actually, it's a separate issue.

[00:17:19] Speaker 02:
So there are three issues when you think about the licenses.

[00:17:23] Speaker 02:
The question of whether they're admissible, right?

[00:17:25] Speaker 02:
You ruled in Fernetix I that they are admissible.

[00:17:28] Speaker 02:
That doesn't make them reliable for any damage analysis.

[00:17:32] Speaker 02:
And the best proof of that is you found them to be admissible on Fernetix I, but then you struck the damages theory or protocol that was based on it.

[00:17:41] Speaker 01:
So if they're not reliable, give me an apportionment reason why they're improper.

[00:17:46] Speaker 02:
So the question then is what is done with the licenses?

[00:17:49] Speaker 02:
And there are two issues which overlap.

[00:17:51] Speaker 02:
One is

[00:17:52] Speaker 02:
The licenses have to be comparable for the reason, you know, comparable enough for the reasons you're using them.

[00:17:59] Speaker 02:
And then you have to use them for a reason that is disciplined and reliable.

[00:18:04] Speaker 02:
What we have here is we have a set of licenses that are not comparable.

[00:18:07] Speaker 02:
They're settlement agreements.

[00:18:09] Speaker 02:
They are a small amount that you can see.

[00:18:12] Speaker 01:
You're not saying, though, that they should have been excluded.

[00:18:15] Speaker 01:
You're just saying is the jury should have given them less weight because of those arguments.

[00:18:19] Speaker 01:
No.

[00:18:19] Speaker 01:
So I'm back to where I started, which

[00:18:22] Speaker 01:
isn't that up to the jury?

[00:18:23] Speaker 02:
No.

[00:18:24] Speaker 02:
Your Honor, I agree with the first half of what you said, is we're saying that these licenses don't, they're not sufficiently comparable to be comparable, but they're also not sufficient to support the analysis that Mr. Weinstein did.

[00:18:38] Speaker 02:
It never should have gone to the jury.

[00:18:40] Speaker 02:
And the best indication of that is this page that's before you.

[00:18:44] Speaker 02:
And if you just look at it and take from it three things.

[00:18:49] Speaker 02:
One is that

[00:18:51] Speaker 02:
The variation between the largest license, the one that's closest to Apple, which is Microsoft, and the number that he came up with is a magnitude.

[00:19:02] Speaker 02:
The variation between the lowest to the highest is two magnitudes.

[00:19:07] Speaker 02:
The highest involve units that are less than, for the most part, 50,000 units.

[00:19:13] Speaker 02:
There are litigation settlements of small amounts.

[00:19:15] Speaker 04:
But this is all weight.

[00:19:16] Speaker 02:
It's not, Your Honor.

[00:19:17] Speaker 04:
This is not in feasibility.

[00:19:18] Speaker 04:
This all goes to the weight of which license

[00:19:21] Speaker 02:
Your Honor, if that were true, Vernetics 1 would have come out differently.

[00:19:26] Speaker 02:
I mean, you took the same issue, the same, not identically, four of the six licenses are the same.

[00:19:32] Speaker 02:
You took the same licenses, the panel decided that they were admissible, right, because you could make them sufficiently comparable.

[00:19:40] Speaker 02:
But then what the panel said is, let's look at what was done with them.

[00:19:44] Speaker 02:
And that's the Daubert issue.

[00:19:46] Speaker 01:
In every Daubert... I'm sorry, maybe I'm not recalling.

[00:19:49] Speaker 01:
In Vernetics 1, we were

[00:19:50] Speaker 01:
concerned about the using of the ultimate number for the iPhone or the iPad or whatever, the hundreds of dollars as the base.

[00:19:58] Speaker 01:
That was a really different issue.

[00:20:01] Speaker 02:
It was, but that was predicated in part upon the licenses where for the five of the six licenses in that case, the base that was used to establish the royalty rate was the full phone.

[00:20:13] Speaker 02:
So the issue was addressed in two parts of your opinion.

[00:20:17] Speaker 02:
There were three different damages theories addressed

[00:20:20] Speaker 02:
And Your Honor just articulated the first one.

[00:20:23] Speaker 02:
When you get to the bulk of the opinion, that's where you're talking about the admissible of the licenses.

[00:20:29] Speaker 02:
But the mere fact the licenses were admissible didn't make any of the three theories, right, sufficiently reliable to go to the jury.

[00:20:36] Speaker 02:
So that's where I'm trying to answer your question is, you know, Dowbear and White overlap, obviously.

[00:20:42] Speaker 02:
And where the precise line is, is a matter of judgment.

[00:20:46] Speaker 02:
In the first case, it was decided that it was not a matter of weight.

[00:20:49] Speaker 02:
It was an issue of the reliability of the analysis.

[00:20:54] Speaker 02:
The same is true here.

[00:20:55] Speaker 02:
I mean, if I could, the panel said, Mr. Weinstein, you did an apportion.

[00:21:03] Speaker 02:
We want you to apportion.

[00:21:06] Speaker 03:
We get back down to the district court.

[00:21:11] Speaker 02:
The licenses are admitted.

[00:21:12] Speaker 02:
Then the question is, so tell us how you

[00:21:15] Speaker 02:
you apportioned based upon these licenses?

[00:21:17] Speaker 02:
And the answer is, I can't tell you.

[00:21:19] Speaker 02:
I mean, this wasn't the first rodeo.

[00:21:22] Speaker 02:
This was the second go-around.

[00:21:24] Speaker 02:
And he's asked the question, how did you apportion?

[00:21:26] Speaker 02:
And the answer is, I don't know.

[00:21:29] Speaker 01:
But isn't it OK then?

[00:21:31] Speaker 01:
And have in our cases sort of Erickson and others sort of said, OK, apportionment is one thing.

[00:21:37] Speaker 01:
And we get into that with the entire market value rule and all this other stuff.

[00:21:40] Speaker 01:
But then we have

[00:21:41] Speaker 01:
principle that you can use comparable licenses to engage it.

[00:21:46] Speaker 01:
And that usually, in my recollection, doesn't involve an apportionment question.

[00:21:51] Speaker 01:
If you've got somebody who's licensed, let's assume Brunettics here had licensed Samsung for 60 cents.

[00:21:59] Speaker 01:
You can use that as a comparable thing.

[00:22:01] Speaker 01:
It doesn't matter whether or not, we're not going to do an analysis about the Brunettic Samsung license being apportioned.

[00:22:07] Speaker 01:
We can, our cases say, you can use that value of the license for the accused product to get you where you want to go, leaving aside all those apportionment issues we deal with.

[00:22:18] Speaker 02:
Actually, Your Honor, I agree with 90% of what you said, except I probably would define where you want to get to go as the place that you and I might depart.

[00:22:26] Speaker 02:
And here's the reason why.

[00:22:28] Speaker 02:
Where you want to get to go is what Gerritsen tells you you have to do.

[00:22:31] Speaker 02:
The damages have to be, whether you call it apportioned or valued, they have to value the contribution of the pen.

[00:22:40] Speaker 02:
If you're going to use licenses and claim that they're doing that, you don't have to call it apportionment.

[00:22:45] Speaker 02:
It's valuing the value of the pen.

[00:22:48] Speaker 02:
In the first case, to go to Joe Draghi, the licenses were admissible, but they had not been used in any of the three theories to

[00:22:57] Speaker 02:
the contribution of the patent to the product.

[00:23:01] Speaker 02:
So the answer to your question is the licenses, Erickson and the first case, in this case, do say licenses are admitted.

[00:23:11] Speaker 02:
But they're admissible for the purpose of valuing the patent.

[00:23:16] Speaker 02:
Now.

[00:23:16] Speaker 01:
Okay, so on what basis, as I said, that just brings me back to where I started.

[00:23:20] Speaker 01:
And I'm sorry, I really have been listening to everything you've said.

[00:23:23] Speaker 01:
But it just, it's really your argument, this is what the trial is about.

[00:23:27] Speaker 01:
They say these are comparable licenses and we're going to use them.

[00:23:30] Speaker 01:
You get to make a whole case saying, making the arguments you've made here.

[00:23:35] Speaker 01:
Look at these numbers.

[00:23:36] Speaker 01:
There's such a disparity.

[00:23:37] Speaker 01:
Look at the different patents that were used.

[00:23:39] Speaker 01:
Look at the different accused products.

[00:23:40] Speaker 01:
I think you made that argument at trial.

[00:23:43] Speaker 01:
And why is it not a jury question as to whether or not they're persuaded?

[00:23:48] Speaker 02:
Your Honor, because when you have an expert who's asked the question, how did you report it, he can't say.

[00:23:55] Speaker 02:
And then this at page 21 is the analysis.

[00:23:59] Speaker 02:
The question to this Court is, and if you go back to the kind of case that Daubert is, and you think about the science that was up, involved in Daubert and the difference between an association and causation, you're deciding a very precise scientific issue.

[00:24:18] Speaker 02:
The question here is, set aside how we characterize it.

[00:24:23] Speaker 02:
I use a portion in part because that was the focus of Vernetics 1.

[00:24:27] Speaker 02:
Look at this chart on page 21.

[00:24:29] Speaker 02:
And the question is, in a case where you're claiming hundreds of millions of dollars of damages, is it reliable to take licenses that have some similarities and some differences and merely divide the royalties paid by the total units and take an unweighted average?

[00:24:47] Speaker 02:
That is not reliable.

[00:24:49] Speaker 02:
You, you look forever

[00:24:51] Speaker 02:
to find a peer-reviewed journal, to find something else that said, that's a viable way to compute damages.

[00:24:57] Speaker 02:
And in, in Vernext 1, at the end of the opinion, the panel's opinion said, here's what you have to do.

[00:25:05] Speaker 02:
And while the word apportion was used, the predicate, the focus of the argument, of the, the import of the panel's opinion was, you have to come up with some way to value the contribution of the invention to the products.

[00:25:18] Speaker 02:
The only thing you have is this.

[00:25:22] Speaker 02:
And an unweighted average of licenses that vary by two magnitudes, with the expert not being able to say, here's why I use them, is not sufficiently reliable to make it to the jury.

[00:25:36] Speaker 02:
And that's our argument.

[00:25:38] Speaker 01:
All right.

[00:25:39] Speaker 01:
And we're not going to let you get to the anonymity infringement question.

[00:25:43] Speaker 01:
We'll take that up.

[00:25:44] Speaker 01:
OK.

[00:25:44] Speaker 01:
We never got to point one, but thank you.

[00:25:46] Speaker 02:
I got two of the three.

[00:26:00] Speaker 01:
Good morning, and may it please the court.

[00:26:01] Speaker 01:
Now, you are going to start for a couple minutes, and we're not going to count your time against arguing, answering the first question we raised.

[00:26:08] Speaker 00:
Absolutely.

[00:26:09] Speaker 00:
And I think the answer is this.

[00:26:11] Speaker 00:
In the, what I call the Apple re-exam appeal for the 504 and 211 patents, Cisco didn't challenge a number of the claims that support the FaceTime verdict.

[00:26:22] Speaker 00:
And those claims were specifically 1, 2, 5, and 27 of the 504 patent.

[00:26:26] Speaker 00:
So if the court were to hold that Apple is a stop,

[00:26:30] Speaker 01:
but Cisco can go forward, then the verdict would still stand because... Okay, so in the FaceTime, the 504, even if we not... Cisco did challenge the 211 stuff.

[00:26:42] Speaker 01:
So even if the 211 goes away, it's quite clear that the FaceTime products we were dealing with... And I think the parties agreed and under Catalina lighting, it just doesn't matter how many patents are infringed.

[00:26:52] Speaker 00:
What matters is that there's infringement.

[00:26:54] Speaker 00:
And so I think the answer to that question is, I'm sure the answer to the question is,

[00:26:58] Speaker 00:
even if the court were to uphold Cisco's challenge, it goes back to the board and the patent claims are canceled.

[00:27:05] Speaker 00:
It's not going to have an effect on the verdict so long as we reach final judgment without anything else happening.

[00:27:10] Speaker 00:
So I want to talk about whether anything else should happen.

[00:27:13] Speaker 00:
And I thought I should start with apportionment, or actually maybe perhaps with the cost of the design around the cost of the non-infringing alternative

[00:27:21] Speaker 00:
I think it's important that it was used for a specific and limited and entirely proper purpose.

[00:27:26] Speaker 00:
And that was to show that there really wasn't an economically viable design around a non-infringing alternative.

[00:27:33] Speaker 00:
And I turned to Page... And what is the purpose of that?

[00:27:35] Speaker 01:
Does that go to your infringement argument?

[00:27:37] Speaker 01:
Does that go to your damages argument?

[00:27:38] Speaker 00:
Damages only.

[00:27:40] Speaker 00:
And I think on page 1912 of the appendix, our expert explains exactly why he looked at that and why he uses it.

[00:27:47] Speaker 00:
And he says,

[00:27:48] Speaker 00:
to an economist, and he's talking about the cost of the non-infringing alternative.

[00:27:51] Speaker 00:
This isn't Dr. Weinstein, this is... This is Dr. Weinstein speaking, and it's on page 1912 of the appendix.

[00:27:56] Speaker 00:
To an economist, they set a limit as to what an entity would pay to license a technology.

[00:28:01] Speaker 00:
If you find a non-infringing alternative that's relatively inexpensive compared to the license rate, you're going to go with that.

[00:28:07] Speaker 00:
So it's going to actually push down, if you have a cheap non-infringing alternative, it's going to push down what the bargaining positions are.

[00:28:14] Speaker 00:
And then Apple, in turn, and this is on page 1968 of the appendix, uses it in exactly the same way.

[00:28:21] Speaker 00:
I've got to find 1968 first.

[00:28:24] Speaker 00:
On their cross.

[00:28:25] Speaker 04:
Just to be clear, what I'm reading at 1912, this is the trial testimony of Mr. Weinstein.

[00:28:31] Speaker 00:
Correct.

[00:28:32] Speaker 00:
That's exactly what he said.

[00:28:33] Speaker 00:
And so he did concede that he didn't use it in his calculation in a mathematical sense.

[00:28:37] Speaker 00:
He didn't take a percentage of the 1.3 billion.

[00:28:39] Speaker 00:
But he used it to inform the nature of the

[00:28:44] Speaker 00:
hypothetical negotiation that would occur.

[00:28:46] Speaker 00:
And then Apple used it exactly the same way on Cross in 1968.

[00:28:50] Speaker 00:
They got our expert, Mr. Weinstein, who conceded that if the peak value, the peak usage, would be 287 calls per second, that the cost of this design around using FaceTime through relays would only be $37 million.

[00:29:04] Speaker 00:
And they say to him and says, and you testified yesterday that the cost of a non-infringing alternative in certain circumstances can provide a cap or limit to damages.

[00:29:14] Speaker 00:
Sure.

[00:29:15] Speaker 00:
That's what you testified yesterday, right?

[00:29:17] Speaker 00:
I did.

[00:29:18] Speaker 00:
So this is entirely relevant and proper, and the jury instructions themselves identify non-infringing alternative as relevant to damages.

[00:29:25] Speaker 00:
The jury was entitled to know that it just was not only technologically inferior.

[00:29:29] Speaker 01:
So how does it factor into what the 300 million of the juries included?

[00:29:34] Speaker 01:
How did they...

[00:29:35] Speaker 01:
taking what the testimony was about it.

[00:29:38] Speaker 01:
So tell me what the jurors were thinking about the 1.3 billion.

[00:29:40] Speaker 00:
So the jurors are thinking there's not a technologically or economically good design around that's not infringing.

[00:29:48] Speaker 00:
That if you're thinking about going to relays, it's not going to work.

[00:29:50] Speaker 00:
And it's also very important that we had to address.

[00:29:53] Speaker 00:
So it bolstered their willingness to accept Dr. Weinstein's calculations?

[00:29:59] Speaker 00:
And reject the notion that Apple could just easily design around and rely on relays.

[00:30:03] Speaker 00:
And that's actually very important.

[00:30:05] Speaker 00:
Because, and I would like you to turn to page 31 of our brief.

[00:30:08] Speaker 00:
We have a diagram there that shows how this works.

[00:30:11] Speaker 00:
But one of the things that happens when you have FaceTime is that it has sort of a backup system.

[00:30:17] Speaker 00:
So if it can't set up that direct connection, which is the red line in the middle of the diagram in figure five, it will go to a relay server.

[00:30:24] Speaker 00:
a non-infringing system because it's not a direct connection.

[00:30:28] Speaker 00:
And the jury knew that five to 10% of the time, the direct connection is gonna fail, and you're gonna go to the relay server.

[00:30:34] Speaker 00:
And so the jury already knows that this relay server, a non-infringing mechanism, is a potential non-infringing alternative.

[00:30:41] Speaker 00:
And so we need to tell the jury, you can't do that and design around the patent 100% of the time, because it's gonna be worse quality, and we emphasize the drop calls and the lagginess and everything else.

[00:30:51] Speaker 00:
And because it costs a lot.

[00:30:53] Speaker 00:
And that was the way it was used repeatedly.

[00:30:55] Speaker 00:
The design around, the idea of a non-switching alternative would cost a lot.

[00:31:00] Speaker 00:
And I think to emphasize that we've never asked, never asked for a portion of the $1.3 billion.

[00:31:06] Speaker 00:
It was brought up only in that context.

[00:31:08] Speaker 00:
And in fact, it wasn't even used in closing.

[00:31:10] Speaker 00:
If you look at the closing, the closing mentions the cost of $51 million for a 21 period.

[00:31:16] Speaker 00:
It says $100 million to design around, but not $1.3 billion.

[00:31:20] Speaker 03:
At the end of the day, how much did the design around

[00:31:23] Speaker 00:
It was much less than 1.3 billion.

[00:31:27] Speaker 00:
Oh, so they, for an 18-month period, excuse me, a 21-month period, it was $51 million, but it didn't work very well even at $51 million for that 18-month period.

[00:31:37] Speaker 00:
And I think if you're going to design a phone system that's stable and robust and works, you design for peak usage.

[00:31:43] Speaker 00:
Like, when there's an earthquake in Los Angeles and everybody's calling their relatives to see if they're OK, you're going to have to meet that.

[00:31:49] Speaker 03:
Can you design around that was how much, 35 minutes?

[00:31:53] Speaker 03:
Pardon?

[00:31:53] Speaker 03:
$35 million?

[00:31:54] Speaker 00:
No, so to establish relays for Apple to try and get around the direct communications link for 21 months, it spent $51 million.

[00:32:05] Speaker 00:
But for that $51 million, it got a grossly inferior system, one that dropped calls, one that suffered laggages.

[00:32:11] Speaker 03:
But the jury didn't hear this.

[00:32:13] Speaker 03:
The jury did not hear this evidence or these facts.

[00:32:16] Speaker 00:
The jury heard all of that.

[00:32:18] Speaker 00:
It heard about the lagginess.

[00:32:19] Speaker 00:
It heard about the dropped calls.

[00:32:21] Speaker 00:
It heard about

[00:32:22] Speaker 00:
The fact that it was lower quality.

[00:32:23] Speaker 03:
That the design round would cost $51 million?

[00:32:28] Speaker 00:
Yes, that number was before the jury as well.

[00:32:31] Speaker 00:
That's correct.

[00:32:32] Speaker 00:
And then there's an objection to the $1.3 billion number.

[00:32:35] Speaker 00:
It's based on the fact that it was relied on a 10,000 calls per second peak capacity estimate.

[00:32:41] Speaker 00:
But that wasn't our estimate.

[00:32:42] Speaker 00:
That came from the testimony of an Apple engineer.

[00:32:45] Speaker 00:
He testified 10,000 calls per second.

[00:32:47] Speaker 00:
And it's not an unreasonable number if you think about it.

[00:32:49] Speaker 00:
There's 80 million Apple users.

[00:32:51] Speaker 00:
Back in 2009, it could well be that Apple's FaceTime was going to replace the phone.

[00:32:59] Speaker 00:
If there's an earthquake in L.A.

[00:33:00] Speaker 00:
and everybody starts calling their loved ones, you can have that peak usage.

[00:33:03] Speaker 00:
In fact, in Washington, D.C., Verizon has these old five ESS lucent switches.

[00:33:09] Speaker 00:
They have a capacity of 9,000 calls per second for a city of one million people.

[00:33:13] Speaker 00:
Apple has 80 times as much.

[00:33:17] Speaker 00:
If we go back from that, and then finally, the court didn't abuse this discretion in admitting it because he clearly said, over to the jury, this is not for purposes of infringement.

[00:33:27] Speaker 00:
This is to use only for damages.

[00:33:28] Speaker 01:
Why don't we move on to the damages?

[00:33:29] Speaker 00:
Pardon?

[00:33:30] Speaker 00:
Apportionment?

[00:33:31] Speaker 00:
Apportionment, yes.

[00:33:31] Speaker 00:
Sure.

[00:33:32] Speaker 00:
All right.

[00:33:33] Speaker 00:
So turning to apportionment then.

[00:33:39] Speaker 00:
This court actually previously upheld the admission of four of the six licenses at issue here.

[00:33:45] Speaker 00:
And Apple never identifies anything about the two additional licenses that are different.

[00:33:49] Speaker 00:
I don't think there's any.

[00:33:51] Speaker 01:
But that was upheld in another context.

[00:33:52] Speaker 01:
I mean, would you think what we did here would foreclose us from saying here that the licenses shouldn't have been used?

[00:33:59] Speaker 00:
I think it did, because actually, the court said, and I'm quoting, it explained that we found no abuse of discretion.

[00:34:06] Speaker 00:
And it said, all differences Apple identified were presented to the jury, which is precisely the point you're making now, allowing the jury to fully evaluate the relevance of the licenses.

[00:34:14] Speaker 00:
No more is required in these circumstances.

[00:34:17] Speaker 00:
They are the same and no different licenses here as there.

[00:34:21] Speaker 00:
But even setting it aside, the licenses were actually used in an entirely permissible fashion.

[00:34:25] Speaker 00:
There is no apportionment problem because Vernetix studiously avoided claiming a percentage of any value on the Apple phones that were attributable to something other than Vernetix's products, or Vernetix's technology.

[00:34:39] Speaker 00:
Apple might have a $1,200 jewel bezel.

[00:34:42] Speaker 00:
It can have a $4,000 ring.

[00:34:43] Speaker 00:
Yeah, I know.

[00:34:43] Speaker 01:
It's interesting, because you kind of proved one.

[00:34:45] Speaker 01:
I agree with you.

[00:34:46] Speaker 01:
You avoided doing one thing.

[00:34:48] Speaker 01:
But you did do enough on the other end, which is you don't have to even prove a negative.

[00:34:52] Speaker 01:
You have to show that the value of what you're asking for is related to the value added to the device by the patents.

[00:35:01] Speaker 00:
Exactly.

[00:35:02] Speaker 00:
And I think the expert did this, because each of the devices he looked at,

[00:35:06] Speaker 00:
excluded anything that was, for example, a server or anything that was much more expensive or much different than the way it did use VoIP phones and similar items like that.

[00:35:17] Speaker 00:
So these are things that use the technology, the easy DNS setup, which allows you to use a DNS to establish a secure link in the same way as the Apple phones do.

[00:35:25] Speaker 01:
And it uses... Yeah, but if in two contexts it was a litigation settlement and they had, you know, 400

[00:35:33] Speaker 01:
of these devices that used it.

[00:35:38] Speaker 01:
Are those numbers really equally as relevant as maybe Microsoft that at least have the same economies of scale that Apple might have?

[00:35:47] Speaker 00:
Microsoft was the litigation settlement is all.

[00:35:49] Speaker 00:
Every one of the licenses in the prior case in Vernetics 1 was a litigation settlement, and this court said no abuse of discretion.

[00:35:55] Speaker 00:
These are all arguments that go to weight, and the jury heard them all.

[00:35:58] Speaker 00:
And frankly, I don't think that they, basically what Microsoft's argument is here is, look, we have a multifunction device, and our multifunction device values this secure setup technique less, and our users value it less than, for example, a $250 VoIP phone.

[00:36:16] Speaker 00:
That's a fair argument to make to a jury.

[00:36:18] Speaker 00:
But it's not something that excludes all of the other licenses for the same technology that uses it in the same way.

[00:36:24] Speaker 01:
In fact, I think the jury would find... But the question is really, the question to the jury is what is the value added by the accused devices in Apple's product?

[00:36:31] Speaker 00:
Exactly.

[00:36:32] Speaker 01:
It has very little to do with all of this other stuff.

[00:36:35] Speaker 00:
Well, it has a lot to do with it because those products, those VoIP phones use the same product and the same technique, the same patented technology in the same way.

[00:36:43] Speaker 00:
They use it to easily establish a secure communications link.

[00:36:47] Speaker 00:
And that secure communications link is the same thing that Apple's using on its phones.

[00:36:52] Speaker 00:
And in fact, if there's an argument to the jury about who values this easy way of setting up secure communication links more, Apple's phones or a VoIP phone on the table, it's gonna be Apple's phones.

[00:37:03] Speaker 00:
Because the Apple phone is moving from network to network, from NAT to NAT, from place to place, and it's gonna have to constantly go through and set up these secure communications links when it's on the run.

[00:37:15] Speaker 00:
VoIP phone may not have to do that.

[00:37:17] Speaker 00:
This is precisely the type of argument Microsoft could make and did make to the jury.

[00:37:21] Speaker 00:
But the licenses are, the district court did not abuse its discretion holding their comparable and he didn't abuse his discretion allowing Mr. Weinstein to use them.

[00:37:29] Speaker 00:
And the jury was simply persuaded that these were comparable licenses and that this was an appropriate royalty.

[00:37:36] Speaker 00:
Should I turn for a moment to the issue?

[00:37:38] Speaker 00:
Oh, one thing I should point out about that is I know that the results of the first case and the results in this case in terms of the royalty

[00:37:46] Speaker 00:
are actually quite different, because you have to take the number of units into account.

[00:37:51] Speaker 00:
The first case was $368 million on approximately 175 million units.

[00:37:56] Speaker 00:
This case was $302 million, about 20% less, on 252 million units, about 50% more units.

[00:38:04] Speaker 00:
So if the court has any question about whether or not its decisions on how royalties are calculated and methodologies makes a difference, they make a difference.

[00:38:12] Speaker 00:
They made a big difference here.

[00:38:14] Speaker 00:
If I can turn very quickly.

[00:38:15] Speaker 04:
If you turn to something he didn't cover, you allow him to talk about it.

[00:38:18] Speaker 04:
If you sit down, you don't.

[00:38:20] Speaker 00:
So I take it then the court is asking me if there's, then if the court doesn't have any other questions, we'd be happy to see the remaining time to the court.

[00:38:30] Speaker 00:
Thank you very much.

[00:38:39] Speaker 02:
Very briefly, Your Honor.

[00:38:41] Speaker 02:
I think to correct something, which I'm pretty sure is correct,

[00:38:44] Speaker 02:
and to answer your question of Mr. Lamkin at the outset, in this re-exam, the one that's before you now, the first one, the one that we argued, the re-exam covers the same claims of the 211 patent that were an issue at the district court.

[00:39:00] Speaker 02:
So they actually are the same.

[00:39:02] Speaker 02:
And so one would have an effect on the other.

[00:39:05] Speaker 02:
And then the question after that of what you... I'm sorry, I don't understand.

[00:39:08] Speaker 04:
He stood up here and said in the Cisco re-exam there were a number of claims

[00:39:14] Speaker 04:
that are not included, that are in the district court litigation, that are not included in the Cisco re-exam.

[00:39:20] Speaker 04:
Am I understanding what you said correctly?

[00:39:21] Speaker 04:
Just, yes or no, please.

[00:39:24] Speaker 00:
Sort of.

[00:39:25] Speaker 00:
Challenged by Cisco, that are not challenged by Cisco, challenged only by Apple.

[00:39:29] Speaker 02:
Okay.

[00:39:30] Speaker 02:
I don't think that's correct.

[00:39:31] Speaker 02:
If I were to break it down for you, on the 211 patent, which is a subject to the re-exam,

[00:39:37] Speaker 01:
Are we all talking about just what remains from the Cisco re-exam and striking out the Apple re-exam?

[00:39:46] Speaker 02:
Yes.

[00:39:47] Speaker 02:
And the claims that are subject to the Cisco re-exam, the 211, are the same claims, covers the same claims asserted in the litigation.

[00:39:57] Speaker 01:
That's true, but not the 504.

[00:39:59] Speaker 01:
I mean, I don't think there's a difference.

[00:40:01] Speaker 01:
I mean, you're agreeing, but do you also agree that the 504 patent, which is also the subject of damages in this case, was not covered by Cisco's re-exam.

[00:40:12] Speaker 01:
It was only covered by Apple's re-exam.

[00:40:14] Speaker 01:
So that stands if we throw out Apple's re-exam.

[00:40:18] Speaker 02:
Except for something that I mentioned to your honor in my primary argument, the second appeal.

[00:40:23] Speaker 02:
which is there is a separate re-exam appeal on... Yeah, but that's a separate re-exam.

[00:40:29] Speaker 04:
It doesn't have anything to do with this case.

[00:40:31] Speaker 02:
Right.

[00:40:31] Speaker 04:
Or any of the cases in front of us today.

[00:40:33] Speaker 02:
It does, Your Honor, because it's a fully briefed appeal that will come to this Court that covers the 204.

[00:40:39] Speaker 04:
What does that have to do?

[00:40:39] Speaker 04:
So you think that we should not affirm a district court decision because there's some separate re-exam in the pipeline?

[00:40:46] Speaker 02:
No, I'm trying to answer Judge Pro's question, which is just

[00:40:50] Speaker 04:
looking at the claims, what's involved, and there's a claim, there's a re-exam that you heard today, which was... And her question was limited, as I understood it, to if we kick the Apple re-exams and the Cisco re-exams remain, how does that affect the damages result in the district court litigation?

[00:41:07] Speaker 04:
You're saying it doesn't affect it at all, but there is a separate re-exam in the pipeline that might.

[00:41:12] Speaker 02:
No.

[00:41:12] Speaker 02:
That's what I understand you're saying.

[00:41:13] Speaker 02:
This is why I was trying to be precise.

[00:41:15] Speaker 02:
It does not, it

[00:41:16] Speaker 02:
would have an effect on the 211 patent claim.

[00:41:19] Speaker 01:
And I agree.

[00:41:20] Speaker 01:
Why don't we move on?

[00:41:20] Speaker 01:
I want to really cover the $1.3 billion issue and briefly on the damages issue.

[00:41:26] Speaker 02:
Yeah.

[00:41:26] Speaker 02:
So very quickly, on the damages issue, if the Court considers the Vernetics 1 opinion at page 1229 and the two paragraphs immediately preceding subsection C of your opinion, what you say is, in the end, Vernetics should have, and then you tell Vernetics,

[00:41:46] Speaker 02:
what it should do to sustain a damage claim of this magnitude.

[00:41:50] Speaker 02:
They didn't do that.

[00:41:52] Speaker 02:
If the analysis at page 21 of the brief that I drew your attention to actually was a reliable methodology and a sufficiently disciplined methodology to do what Gerritsen tells us to do, if you have to evaluate the technology, why would it vary by two magnitudes?

[00:42:11] Speaker 02:
If it were a reliable methodology, why would the result vary by two magnitudes?

[00:42:14] Speaker 02:
The answer, Your Honor, is to your question, which is there is this place where comparability and his analysis overlap, and the fact that only one of them is even arguably comparable.

[00:42:26] Speaker 02:
Five of them include products that are very different by his own admission.

[00:42:31] Speaker 02:
Five, they're all litigation settled.

[00:42:33] Speaker 01:
So would you have us say that the court abused its discretion by allowing the evidence in, or are you just saying that just, just

[00:42:40] Speaker 01:
this evidence is, what are we to do with your argument?

[00:42:44] Speaker 02:
I think, Your Honor, we take it as a doubt or argument.

[00:42:46] Speaker 02:
And the question is, is the evidence, is the theory that he's offered and the method in which the theory's been implemented sufficiently reliable to satisfy what Gerritsen and what Your Honor said, whether called apportionment or something else?

[00:42:59] Speaker 02:
And the answer is no.

[00:43:01] Speaker 02:
Okay.

[00:43:02] Speaker 02:
And the definitive answer to that is just looking at the results of the

[00:43:06] Speaker 02:
Eric's himself does say you have to account for the differences.

[00:43:10] Speaker 02:
Last point on the $1.3 billion.

[00:43:13] Speaker 02:
In some sense, you can't have it, you shouldn't have it both ways.

[00:43:19] Speaker 02:
If you really can do this math and come up with $1.20 a unit on the unweighted average and say that's the value of the patent from these real-world licenses, then the $1.3 billion that is not tied to any damage analysis at all

[00:43:35] Speaker 02:
had no business being in the trial.

[00:43:37] Speaker 02:
And the best indication of that is, if you look at where the jury asked the question... Well, didn't Mr. Weinstein testify that that would constitute a cap?

[00:43:45] Speaker 02:
No, he didn't call it a cap.

[00:43:47] Speaker 04:
I thought that was the exact page that I read from the testimony.

[00:43:50] Speaker 02:
I think he did, but what Mr. Lampton drew your attention to, he in fact said, but he's not tying to his damages amount.

[00:43:56] Speaker 04:
Yes, but he said that value, he didn't use the number 1.3 billion, I don't think, in that sentence, but he said

[00:44:02] Speaker 04:
that value would constitute a cap, really.

[00:44:04] Speaker 04:
And it makes sense, right?

[00:44:05] Speaker 04:
Because if Apple could redesign for $51 million, they would surely do that rather than pay $300 million in damages.

[00:44:12] Speaker 04:
Your Honor, I think that is exactly... So he did tie it expressly to his damages analysis, because he called it the cap on what would otherwise be damages, which demonstrated why his number was so reasonable in my comparison.

[00:44:22] Speaker 02:
Your Honor, there's two answers to that question.

[00:44:25] Speaker 02:
If that were true, then Uniloc would be setting aside what Unilonic said.

[00:44:29] Speaker 02:
about putting in these checks for your numbers.

[00:44:33] Speaker 02:
And Unalak says you can't do that, particularly if you're not tying them.

[00:44:37] Speaker 04:
The second thing is... Didn't you also put in a number?

[00:44:39] Speaker 04:
Isn't he right that you put in a number for redesign before the jury at $51 million?

[00:44:44] Speaker 02:
Actually, Your Honor, that's the second point.

[00:44:46] Speaker 02:
That went into evidence for sure.

[00:44:47] Speaker 04:
And it's important... So you can put in a redesigned number, but they can't because their number is too high and you don't like it.

[00:44:52] Speaker 02:
No, Your Honor.

[00:44:54] Speaker 02:
What happened?

[00:44:55] Speaker 04:
Well, actually, the answer is yes, but you might have an alternative explanation as well.

[00:44:58] Speaker 04:
Go ahead.

[00:44:59] Speaker 02:
No, Your Honor.

[00:45:00] Speaker 02:
I think the answer is that the right thing for a trial order to do is move under Daubert to exclude it.

[00:45:06] Speaker 02:
If it's excluded, it's excluded.

[00:45:07] Speaker 02:
No one gets to it.

[00:45:08] Speaker 02:
If it's not excluded, then you have to do your best to deal with it in front of the jury.

[00:45:13] Speaker 02:
But it doesn't mean that you've waived your right to demonstrate that it should have been excluded in the first instance.

[00:45:18] Speaker 02:
We're coming back to go to Judge Crowe's question to the first instance.

[00:45:23] Speaker 02:
And the question here really is,

[00:45:27] Speaker 02:
If you have this $1.3 billion number, it's not used by Mr. Weinstein to compute the $300 million number, which is used during the evidence to basically suggest infringement.

[00:45:40] Speaker 02:
Remember that this design-around results from the first verdict at a point in time when the case is on appeal.

[00:45:47] Speaker 02:
There's a design-around implemented.

[00:45:48] Speaker 02:
And for FaceTime, we prevailed on that appeal and got a remand.

[00:45:53] Speaker 02:
That's when this design-around is occurring.

[00:45:56] Speaker 02:
For that reason, it was particularly prejudicial that it went in.

[00:46:02] Speaker 02:
And the $51 million number, Your Honor, just so you know, if you look at appendix 1199.

[00:46:07] Speaker 03:
Let's talk about the prejudice.

[00:46:09] Speaker 03:
So what happened?

[00:46:10] Speaker 03:
What are you saying that the jury did?

[00:46:12] Speaker 03:
It inflamed their passion.

[00:46:13] Speaker 03:
It caused them to think that damages would be higher, or they were unable to separate the $1.3 billion from the other

[00:46:23] Speaker 02:
Your Honor, it's a great question.

[00:46:25] Speaker 02:
There are two answers to it.

[00:46:26] Speaker 02:
The first is that it didn't separate damages from infringement.

[00:46:29] Speaker 02:
And the best indication of that is the question they asked of Mr. Avar expert.

[00:46:35] Speaker 02:
Why did Apple adopt the redesign?

[00:46:39] Speaker 02:
So it not only crept over it, basically, basically to put a wave, a tsunami over the infringement question.

[00:46:49] Speaker 02:
The second is the discussion I was having with Judge Moore.

[00:46:52] Speaker 02:
putting that big number out there that's not tied is prejudicial because it makes the $300 million number look reasonable.

[00:47:00] Speaker 02:
The appendix that I was going to give you is A1199.

[00:47:03] Speaker 02:
To answer your question, the $51 million number went in when Fournetics offered it in its opening.